The art of exiting your business, with Patty Block

As a business owner, you know the importance of planning for success. But have you ever thought about planning for the end of your business journey? 

Exiting a business is a critical process that requires careful preparation. 

With a solid exit strategy, you can maintain control of the outcome and get all the rewards for your hard work. 

Whether you're looking to retire, start a new venture, or sell your business, developing an exit plan ensures a smooth transition and the best possible conclusion for all concerned, including your employees and stakeholders. 

The sooner you begin planning, the more successful your exit will be.

In today’s episode, our guest Patty Block unlocks the doors on how to develop an exit plan for your business: what are the first steps to take, is there a process, and what to consider so that you can reach your exit goals?

Patty is a business advisor and pricing expert who believes that consistent business success comes from leveraging your hidden advantage, making informed decisions, communicating powerfully, and taking calculated action. 

Since 2006, Patty has empowered women business owners who are experts in their fields to turn up their power to price, sell, and run their businesses on their terms.

Patty is the founder of The Block Group Inc. and author of "Your Hidden AdvantageTM: Unlock the Power to Attract Right-fit Clients and Boost Your Revenue."  

We discuss:

02:33 What are some different ways you can exit the business?

04:26 What's the difference between exiting and selling a business? 

08:48 The importance of building assets and intellectual property.

11:27 Besides hiring, what else should you think about as you're trying to build assets in your business?

14:54 The importance of building systems and processes to support the business. 

29:01 How do you determine what is intellectual property? 

32:19 Why are intellectual property and branding valuable?

38:13 How do you catch yourself overdelivering?  

42:09 What's the one actionable step that someone thinking about exiting their company in the future can do in the next month to get them closer to that goal?

Resources:

Patty Block, Pricing Expert and Business Expert, The Block Group Inc.:
https://www.theblockgroup.net/

LinkedIn: 
https://www.linkedin.com/company/theblockgroup

Instagram: 
https://www.instagram.com/theblockgroupinc/

Facebook: 
https://www.facebook.com/TheBlockGroupInc

Twitter: 
https://twitter.com/TheBlockGroup

Email: 
pwblock@theblockgroup.net

Author of Your Hidden Advantage: Unlock the Power to Attract Right-fit Clients and Boost Your Revenue

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Chapters

• 2:33 What are some different ways you can exit the business?
• 4:26 What's the difference between exiting and selling a business?
• 8:48 The importance of building assets and intellectual property.
• 11:27 Besides hiring, what else should you think about as you're trying to build assets in your business?
• 14:54 The importance of building systems and processes to support the business.
• 30:14 How do you determine what is intellectual property?
• 33:32 Why are intellectual property and branding valuable?
• 39:26 How do you catch yourself overdelivering?
• 43:22 What's the one actionable step that someone thinking about exiting their company in the future can do in the next month to get them closer to that goal?

Transcript

Kathy (host):
Well, hello there, and welcome back to another episode of "Help My Businesses Growing" Podcast, where we explore how to grow and build a business that is healthy and sustainable. I'm your host, Kathy Svetina.

Kathy (host):
Running a business is as critical as knowing how to start one. But if you're like most business owners, it is probably the furthest thing from your mind. The process can get complex, challenging, and overwhelming if you don't know what to do.

Kathy (host):
But having an exit plan guarantees that you leave on your own terms, whether you are retiring, starting a new company or venture, or simply pursuing something else entirely. So how do you develop an exit plan? And where do you even begin? A quick reminder, all of the episodes on this podcast, including this one, come with timestamps for topics that we discuss, and each one has its own blog post as well. You can find all the links and detailed topics in this episode's show notes.

Kathy (host):
Our guest today is Patty Block. She is a Business Advisor and Pricing Expert who believes that consistent business success comes from leveraging your hidden advantage, making informed decisions, communicating powerfully, and taking calculated action. Since 2006, Patty has empowered women business owners who are experts in the field to tap into their power to price, sell, and run their businesses on their own terms. She is also the founder of the Block Group and the author of "Your Hidden Advantage: Unlock the Power to Attract Rightful Clients and Boost Your Revenue." In this episode, we will be talking about how to develop an exit plan and where to begin.

Kathy (host):
Join us.

Kathy (host): 
Patty, welcome to the show. Thank you so much for coming on here.

Patty (guest): 
Thank you. I'm excited to be here.

Kathy (host): 
I'm super excited that you're here because we're going to be talking about a really, really important topic that I think a lot of business owners forget about exiting the business. Because exiting the business is a complex and challenging process and can be filled with a lot of uncertainty and confusion. And many business owners already struggle with the idea of leaving their company behind. And the process, especially if you don't know it well, can be really overwhelming.

Kathy (host):
So where do you even start? What do you expect? How does the process look like? So I invited you here because I wanted to shed some light onto this topic. But before we even go into the process, as a housing woods, let's first talk about what are some of the different ways that you can exit the business.

Patty (guest): 
So there are several different ways you can exit the business. And the underpinning of all of that is what do you want. So I have a belief that women don't retire. And I know that that's true for me, I don't really have any desire to retire. And the women that I've worked with where I've helped them exit their company, they're exiting because they want to do something else. Or it's a hobby that they've had that they want to turn into a business. So that's probably the first thing that I recommend, is be really clear on what you want. What do you want to accomplish?

Patty (guest): 
Are you motivated by getting value out of your business for all everything you've built? So does the dollar amount mean a lot to you, for a lot of people, their businesses, their retirement plan, they may have savings or some retirement funds, but they count on selling their business so they can have those funds. And some people, it doesn't matter to them. Some people want to pass their business down to a family member, or sometimes a key employee. So there are lots of different ways you can structure it. But it all starts with what do you want? And what do you want your life to look like once you've sold or once you've exited that business?

Patty (guest): 
And I typically talk about exit as opposed to selling. First of all, because it's confusing since I also teach about selling your service. And so that can be confusing sometimes. But the other part is not everybody cares about selling. But they may want to exit and as I mentioned, pass down their company, or have it morph into something different, new, experiential. So there are lots of different ways that you can exit your company.

Kathy (host): 
And you bring out a good point of what's the difference between exiting and selling. What are some of the ways that you can exit? And how does that differ from selling when you thinking about planning to leave the business?

Patty (guest): 
So the women that I work with, I work only with women business owners, and they are experts in their fields. So a lot of accountants outsourced chief financial officers, attorneys, corporate trainers, and so they have a niche they have a very special experience and expertise. Nice. And so often they are the business. And that's a big challenge. Even when you build your team, even when you add additional services, sometimes you have intellectual property, that you almost always have intellectual property. But whether or not you've built that intentionally, is separate.

Patty (guest):
So what are the assets of the company, I cannot tell you how many times I've heard someone say, Oh, but I have nothing to sell. And that is almost never the case. Whether you've intentionally built up your intellectual property, and or you have a method, you have a book you have, whatever it is that you have used to build your visibility, and your network, and your client base. Those are assets. The first thing is shifting that thinking to if you want to sell what exactly are you selling, for a lot of accountants, in particular, they're selling their client list. And because accounting is so standardized, and regulated, so because of that, a lot of people don't have a unique process. And the buyers don't care about your process.

Patty (guest):
So the other thing I would say, in addition to understanding what you want, and what you want your life to look like, once you exit your company, is being open to the idea that every buyer is different. And there's not a cookie-cutter way to position your company for exit, without knowing what you want, and without knowing what kind of buyer you're looking for. So again, there is a difference between exiting, I've had some people who take their company, and they change the service, they want to do something different. Sometimes they have been a tax accountant, they want to become an outsourced CFO. And so they'll use all the intellectual property they've already built, but they morph into something else. And then they have a plan for exiting, perhaps by bringing in team members that can provide that service. So it's not all reliant on the expert.

Patty (guest):
So that's one way to exit. Another way is to build the assets of your company, and then go out to look for buyers. And usually, that's a particular type of buyer that you want to look for. And the other option that people use is closing the doors. The problem with closing the doors when you're finished working is first of all, there's no income. And so you may feel that if you're not quite ready to retire. But the other issue with closing the doors is that everyone that I work with cares about legacy. And they've built something and they care a great deal about their clients, their colleagues, their network, and their staff if they have staff. So they don't want to just close the doors.

Patty (guest):
One of the conundrums that I've seen is that I have women who will come to me and say, Yes, I want to exit my company, it usually takes about five years to position your company for sale. So the wise women that come to me and say, five to seven years from now, I'd like to exit my company, and I want to start working on that. That's the perfect timing. What happens is as we work together, they fall in love with their business again, because it's no longer a burden. It's really fun. And they're discovering new things. So sometimes that five to seven years become 10 to 12 years. And they're so happy doing what they're doing. So every situation that I've been in helping someone exit has been somewhat unique in that way.

Kathy (host): 
You know, as you were talking, one thing that really stuck out to me is, especially for service-based businesses (because you know, I am one of them), it always comes to a point where you get so embedded into servicing your clients and chasing growth that you don't really stop and think about how you're actually building your assets. Intellectual property is one of them, and the customer list, as you talked about, is another. So as you were talking, one thing that really stuck out to me is that other service providers should start thinking about their exit plan even if it's seven years down the line. It's about shifting from being embedded in the day-to-day operations of the business and not looking at the big picture. Now, you're thinking about how to intentionally build the business as it is now so that you have the most amount of assets in there that you can potentially sell. Correct?

Patty (guest): 
That's exactly right. And not only the intention but the clarity of what you want, what you want your life to be with or without your business, especially if you're going to kind of move yourself out of a leadership role or rely more on your staff. And maybe you need to hire higher-level staff—maybe you've been getting by with assistants. But now you need to hire a paralegal or a junior accountant or someone that's a little bit higher level, which means they're more expensive as well. And so having that intention of building your company as an asset is really key to positioning yourself in the market if you do want to sell.

Kathy (host): 
So if someone is at the beginning of this process, let's say that they know, "I want to sell in the next five years, and I know I have to start building the assets." They might have an issue with this. This is really daunting. How do I build this? Yes, hiring is one piece of it, making sure that you can hire people. And one of the things that I will tell you, that I think it's especially hard in the financial services sphere, is how do you hire people that have the expertise that you need? So it could be that you hire someone who's already far ahead in their career, then you have to manage the cost versus what do you need. Or you can hire someone who's more junior, and then you develop them. However, that takes you a little bit more time. But hiring aside, what else do you need to think about as you're trying to build assets in your business structure?

Patty (guest): 
So a lot of people are winging it, they figure out what they're doing as they go along, and that works until it doesn't. And one of the things that is really a challenge when you are customizing your process for every single client, it's there's a lack of consistency, there's a lack of structure, and sometimes a lack of confidence on your part. Because you start to wonder, should I be doing this differently? Maybe I should use different words to describe this, maybe this needs a different name. You start questioning yourself, and the more you question yourself, the more it will bleed through, and others will start to notice. And they'll sense that they may not be on solid ground.

Patty (guest): 
So my audience is divided into two groups. I work with women business owners who are experts in their fields. And the first group is the builders, who are very focused on growth. I have a book called "Your Hidden Advantage" that was written for the builders to use a system so that they are attracting the right clients, pricing for value, and structuring their business in a way that builds value. And probably most importantly, they're learning to talk about their business and themselves in a way that is building value. So that is the foundational piece for anything you want to do when you're exiting, especially if you want to sell.

Patty (guest): 
The second group of my audience are the Exeters. These are women who have been in business for let's say 25 or 30 years, sometimes they've owned multiple companies, and they want to position their company for exit. So the work that we do together takes that foundational piece and builds on it. The people who want to exit and want to sell are typically already generating a high level of revenue, they typically have a team, and they've purposely built those assets. But they've done it without an end goal. They've done it because they wanted to bring in more revenue, which is great. But bringing in more revenue does not necessarily mean you're profitable. And when you're looking for a buyer, that is what they're looking for. They're looking for consistency, predictability, consistent revenue, and that kind of structure. Whether or not they want your processes depends on the buyer. But they always want to know that there is recurring revenue, and it's consistent.

Kathy (host): 
So they're not essentially looking for the processes to buy, but in order for the business to be able to generate that type of profit, there do need to be some sort of systems and processes in place that are supporting this. And I always say to all my clients and to everyone: it's the systems and the processes that are actually building the company. It shouldn't be you or the people, it's the systems and processes, and you can just put people in as needed, right?

Kathy (host):
So, it's interesting because one of the things that I really see that people struggle with is the idea of how do I build the systems and the processes in the right way? So if someone is especially thinking about exiting, and they do need that because it's so important to be really attractive to the buyer, how does that look like? Do you have an example of a business, for example, that did really well with its processes and systems? And they were able to exit, get the most amount of money from the buyer? And how did that look like? And what did they really implement to get that?

Patty (guest): 
Sure, I can give you a great example because I just went through that process with a client, and we were just cheering. We were so excited about how it all came about. But also, I want to mention that with positioning for sale, the foundational pieces that I mentioned of building your pricing model, building the systems and processes, making sure you're attracting exactly who you want to work with, and that you're also finding those people. That you're not just relying and waiting for the phone to ring, right? So all of those pieces, having a great sales process, fit together.

Patty (guest):
So when I work with someone to help them position for exit, I become like an outsourced Chief Operating Officer, and I'm inside their company, helping them build all those processes and the structure that they need. There is no one right way. So your question was, "How do you know if you're doing this right?" And it's actually a real frustration because a lot of us are using the corporate model inside our businesses because that's all we know. A lot of us have come out of corporate, and the corporate model was designed years ago in the early 1900s. And it was designed by men for men. It never worked well for women. It doesn't work well today for women. And yet, because we all grew up with that model, that's all we know. So we ended up bringing that into our business and thinking that there's only one right way of doing something. And what I teach is, there's only your right way. So we need to determine what that is.

Patty (guest):
And that's what I do as I'm working with my clients, figure out what are their values. What do they believe? Some of those beliefs are limiting, some of those beliefs work to their advantage. So let's optimize the ones that work to your advantage and minimize or reframe the ones that don't work to your advantage. So it starts with mindset work, on the pricing model because, again, every time you add structure that works. So let me give you a little caveat around that. A good business owner, a good entrepreneur, someone who is successful understands you have to experiment, and you have to iterate what you're working on. Nothing comes fully formed.

Patty (guest):
So testing things with your market, seeing what sells better. Typically, if you package your services, it will sell better than if you give a general "I'm an employment attorney" or "I'm a tax accountant." Or if you give those generalities, people won't understand what makes you different. And then they will feel as though it's you're interchangeable. Your services are interchangeable. If you're billing hourly, they will have that same perception. They will think, "Well, hourly billing is very transactional. And if that's a transaction between me and my CPA, then I can go to any CPA because it's standardized. They all have to do the same type of work in the same way." That's true of financial planners. That's true of many attorneys.

Patty (guest):
So your job as the business owner is to position yourself in the market as offering something that is easy to identify, easy to talk about, and positions you as the expert, not as one of the experts, but as the expert. That's why you will hear people talk a lot about niching down to a very specific audience because that makes it more understandable for your audience to know that you would be a good fit to help them.

Kathy (host): 
You know, I'm not an accountant, obviously. But I do have a lot of communication with accountants - my clients, accountants - and I also have an accountant of my own. And one of the things that I realized is the profession is so, so, so important. Because if you don't have the accounting as a foundation of the business, you cannot plan for the future. You have no idea where the business is standing, you cannot make decisions. If, for some reason - and this really breaks my heart - is that accountants have sort of the way how they're positioning the services is just they want to trade time for money. And the value of accounting is not in an hour that your accountant spends with you. It's all the experience and the knowledge that they bring in, in the numbers, and making sure that everything is categorized correctly. They're able to give you the tax strategies. Another thing that I've also noticed is that accountants, their billing hourly - there's a huge difference between how they're servicing their clients versus the accountants who are not billing hourly and their billing on retainer - how they're treating their customers, and what type of customer support they have. There's like a night and day difference. And I noticed that because I work with accountants all the time. And I get always excited when on a discovery call that told me we are going on retainer, we do not bill hourly because I know that I'm going to get a much higher level of service versus someone who's going to send me a bill at the end of the month - here are my 10 hours that have worked in the stuff that you gave me, right?

Patty (guest):  
Yes. And if we look at it from the accountant's perspective, they're doing several things. They're building value by sharing with you how they structure their pricing, and probably why they structure it that way. You have an expectation, you're going to get better service. And also, you can budget. So that's the other problem with hourly billing is how many times have you gotten a bill that shocked you? Because you didn't realize that that three-minute phone call was going to be billed at 15-minute increments, right? So all of that works against the accountant, who is the business owner when they start talking about billing hourly. And this is how we work and this is my rate. Anytime you're talking about rate, you can't talk about a transformational service because it's transactional pricing.

Patty (guest): 
So what I often teach is how do you crack the code to move away from hourly billing. And there are lots of different structures you can use, monthly retainer is one of them. But one of the challenges that a lot of people run into in professional services is that sometimes the client needs a type of project first, like auditing their bookkeeping, or they need a particular thing done before they can get to the other part of the service. And so sometimes you need a pricing model with two elements to it, one that handles that upfront project, and the other way, it might be a monthly retainer. So there are lots of different models that work really well for service companies. But if you don't know that, and again, coming out of a corporate career, or if you came out of a firm somewhere, they don't do that. And so you wouldn't really know how to do that. And that's part of what I teach.

Patty (guest):  
So I have a program called value-driven pricing that focuses on that pricing piece for service companies. And then another program called painless selling to ideal buyers, because my belief is selling, doesn't have to be painful. And if you have a process, and going back to your point earlier about the structure and the processes, having a sales process will change everything in your business because you will function with so much more confidence and help your buyers be ready to buy. So it's more like matchmaking. And that actually works a whole lot better for women, in particular.

Kathy (host): 
Yeah, and I think that's a difference between the corporate model and the model that we should be using now. Because of what the corporate model, more of it is focused on, just sell it at any rate possible. At least that's how I experienced it. But when you do have a service-based business, it just doesn't work that way. First of all, you talked about doing some type of a mini-project or assessment. And that's exactly what I do in my business as well. Because as a fractional CFO, I have no idea what really needs to happen in the business until I look under the hood of the business. And that takes a little bit more time and effort on my part, versus just having a 45-minute discovery call or conversation. Because the client might not even actually be aware of what's happening.

Kathy (host):
So the way how I position my services, and I think originally I only did like hourly billing maybe for two months. And I'm like, I will never, ever, ever do that again. Because it's absolutely awful. It's awful for you as a provider. It's awful for the client. It's terrible for the experience. So the way how I structure it, again, I do the same thing. I do these mini-projects. We figure out what needs to happen. I give them a roadmap. And they can either hire me if they want to, or they can hire someone else. Or what also might happen is that it's just too early for them to hire a fractional CFO, but they do have people in their team that can take a part of that roadmap and implement it on their own.

Kathy (host):
So it's really a win-win for all of us because the client gets what they need. They can hire someone else if they want to, or they could hire you, and now you know what you're getting into versus trying to quote a price for something that you have no idea how it's gonna turn out, and what do they really actually need. And they only get the stuff that they really, truly need.

Patty (guest): 
Yes, and you made an important comment about the client not knowing what they need. And that is so true. Most of the time when a prospect comes to you, they don't know what they need, they only know what they want. And I use marketing as an example. So years ago, I knew that I wanted to raise the visibility of my company. And I knew that I needed to have a marketing effort. But I'm not a marketing expert. And that's why I needed a marketing expert, right?

Patty (guest):
So I didn't go in and say, "I need this, this, this, and this," because I had no idea what I needed. I went in and said, "What I want is to raise the visibility of my company. I want this to be cost-effective and streamlined. I don't want to spend a lot of time on it. In fact, I want you to do all the work. So please quote it with implementation." So I knew what I wanted and what the outcome was. But I didn't know what I needed. And so the expert then gave me a proposal and laid out for me what I needed and why they recommended it. That's why I needed them. And that's why your clients need you exactly.

Patty (guest):
So keep in mind that your clients often don't have a clue what they need. And you don't need to tell them what they need in the sales process. You just need to ask questions and listen, and really hone in. And the biggest problem I see with that for service providers is that we are so focused on the work that we forget about the sale. And while that prospect is talking, we're calculating in our heads how to scope the project, and that will scuttle the sale. So making that distinction, focusing on the sales process, you'll get to the calculations and the pricing and the scoping. But it's premature if you can't guide the buyer to be ready to buy it.

Kathy (host): 
That's why the processes are so important—because now you know how to take someone through the journey. And again, when you have the process in there, that's going to directly affect the profitability as well of the company. So originally, we read a little bit down the rabbit hole of, you know, how to price things. But I think it's really, really important, especially for service-based businesses because I see this all the time and actually had a conversation with someone yesterday who has 25 years of experience in management in HR. And he was trying to price something, and the immediate thing was, "I don't know, what is it about service-based businesses? The immediate thing is, 'Oh, this is how many hours it's going to take me, I'm going to charge this much per hour, this is how much it comes.'" Like, no, just the opposite. Stop it, stop it, stop it! It doesn't matter how long it takes, it matters: your expertise, the value that you're giving to the buyer. If it takes you 10 minutes, it takes you 10 minutes. But for you to be able to be direct and tell, "This is what you need. You need it to have 30 years of experience." That's what they're really paying for, not the 10 minutes that it's gonna take for you to deliver this thing. So I could really riled up about this topic, as you can see.

Patty (guest): 
Yes, and to your point, the more efficient you are, the more experienced you are, the less time it's going to take you. So if you do bill hourly, you will never be profitable. So there are benefits to you and to your client by having a pricing model that you can stand behind.

Kathy (host): 
Yeah, so let's talk about intellectual property. Let's switch gears here a little bit. How do you determine what actually is an intellectual property? You might have something already in the business, but you don't really know if it's an IP sort of item. How do you identify whether you have it or not? How do you develop it? I know this is a loaded topic, but I would like us to talk a little bit more about this.

Patty (guest): 
And I'm happy to talk about this. I'm not an attorney, so I'm not speaking from a legal perspective. I'm speaking from a management perspective and someone who helps people position their company for sale. So with that disclaimer, I will say that one really smart move is to find a good IP attorney, somebody who will identify the assets in your business and will help you identify what you can build.

Patty (guest):
So typically, what becomes an intellectual property asset are three things. First, anything that you have had trademarked. So if you have a registered trademark, that is an asset. And if you have other things that have not gone through that process, but you're using the trademark symbol, sometimes those can qualify as assets as well. It may be worth going through the regulatory process of getting a registered trademark or service mark if you are a service company. I have several trademarks and view those as assets.

Patty (guest):
The other things that are assets are your processes. If you have an Operations Manual, anything that you use to operate your company, that can be very valuable, especially if you have a buyer who cares about that and wants to keep your company going very much the way you have. And they want your operations manual. So that will become an asset. Most small companies do not have an Operations Manual, but you can build that. So that's another thing that you can do.

Patty (guest):
Also, photographs, videos, things that you're posting on social media, things that you've written, and anything that is copyrighted is an asset. With copyright, it's relatively simple because you don't have to go through a trademark process. With the US government, you label things as copyright, and you are automatically protected. So those are all assets. And again, I think people don't really understand the ins and outs of that and don't think ahead to doing that. But everything you write, everything on your website, everything should have a little copyright symbol on it.

Patty (guest):
There are lots of different things that you can do as you are intentionally building the value of your business. So if you have no intention of selling your business, then using the trademarks and copyright and those other assets improves your credibility, sometimes your visibility. All of those things will help you as you're growing your company, but they're critical if you want to sell your company.

Kathy (host): 
And a lot of times what I do for myself too is I have certain intellectual property, the way how I develop the processes and how I explain things. And how I actually label stuff, I have that as a trademark as well because I want to be the only one using it. And it's become recognizable. And I use that everywhere as well. So I've thought about this as an asset.

Kathy (host):
But now through the conversation that we had, I figured, you know, I have a lot of little things that might potentially be an asset as well. So I think it's important that you take at least every couple of years, or maybe if you can, every year, kind of like a broad audit of what have you developed over the years, over the last year, especially, that you can go and develop into more of a broader asset. Maybe you have to trademark it, have a copyright, whatever it might be, or you just have a simple list. These are the things that I have.

Kathy (host):
For example, for myself, every single social media post, every single picture, every single illustration, because I actually have an illustrator that does illustrations for me when I'm explaining financial concepts to people when I'm explaining it in ebooks that I have, or maybe on social posts that I have. I have those illustrations done for me directly, and they're done from scratch. Those can be assets as well. And they're done in my style.

Kathy (host):
So I actually have, we use ClickUp as a project management tool in my company. Every single asset that we have, every single post, every single thing that we have, it's labeled, and it's actually listed so that now I can take an overview of what do we actually have. And I think it's important for business owners to have that, to have a repository of all the stuff that you have built over the years, and it can grow exponentially, especially if you're a prolific content developer. You don't even know why you might have, and you have this treasure trove of assets that you had no idea you have.

Patty (guest): 
Right, there's that, and also remember your domains. So I think I own 40 domains, those are assets. And the I can sell them, right I can sell them on the separate market, or I can sell them with the sale of a company. So your domain names are also assets. So all kinds of things and you make a great point about keeping a catalog and auditing maybe once a year, so that you have that. But you will be more successful with that. If you have a good IP attorney who can guide you and help you be aware of pitfalls as well.

Patty (guest):
And I'll share with you. So one of the assets that I have it started with a story. So I want to share the story with you because I think it's a really good example of how this has become an asset for my company. And when I was growing up, my mom used to make these fabulous cookies. The whole house smelled good, it was warm, the cookies were gooey. And all my life I watched my mom eat the broken cookies. But it wasn't until I was in high school that I even thought to ask her, Why do you only eat the broken cookies? Do they taste better? And she laughed and said, No, I eat the broken cookies, so you can have the whole ones.

Patty (guest):
And not too long ago, I saw this really shocking statistic. 62% of women rely on their business for their primary income. And 88% of Women Business Owners bring in less than $100,000 a year. And all of a sudden this image of my mom eating the broken cookie popped in my head. And I realized there was a pattern that I had seen since I started my company in 2006. And I didn't have language around it. And what I was seeing is women who undervalue ourselves, we underprice our services, and then we over-deliver. And that's what I call the broken cookie effect.

Patty (guest):
Because our profit goes poof, very much from the role models that we watched growing up our mothers and our grandmothers who brought that spirit of self-sacrifice. And we bring that right into our companies. So the broken cookie effect is very representative of what I have seen in all these years of women who have limiting beliefs, and we all do, who then underprice over deliver and are not profitable on a routine predictable basis. And so it keeps our companies small and very limited.

Patty (guest):
So I had the broken cookie effect trademarked and have the registered trademark. And that is an asset that I can use in a lot of different ways. And I do and it's also included in my book. So talking about the hidden advantage, one of the things that is really important is there's a four-step process. And it includes stop believing the myths, narrow your focus, assess your value, and practice your power. And those four pieces all come together to build value in your company. And the broken cookie effect is a big piece of that.

Patty (guest):
So things that you may not recognize right away, as assets can be.

Kathy (host): 
I love it! That is such a powerful story of the broken cookie effect. This was a great, great visual as well. And I think it's going to be stuck in my head for a long, long time. So it's really good that you trademark it because it's such a powerful story. It's so, so important to really think about those myths and make sure that we're not perpetuating them in our own businesses.

Kathy (host): 
So, I do have one more question for you before we end. And we talked a lot about over-delivering and how it can be an issue. How does that look like in a service-based business? Because I've seen it across not just in women-owned businesses, but also in businesses owned by men. There is this perpetual thing in service-based businesses to over-deliver to our clients, especially when we're not on an hourly basis but rather on retainers. It feels almost like you have to be more involved than you should be, even though you might and should have a scope in your contracts. But there's always this question, "Am I doing enough? Will my clients be happy?" So, how do you catch yourself in over-delivering, and what does that look like?

Patty (guest): 
Yes, the first step is to have a good scope that is not just talked about; it's also written down. So, if you need to go out of scope, that's fine. Going above and beyond is admirable, but you should also be compensated for that. That's where we fall down. And I think part of that is fear. Because if I have to go back to my client to say, "This is not in scope, or I'm happy to work on this project and let's talk about it so I can give you a proposal," it feels scary. They can object. They can say, "Oh no, I thought this was included in the scope. You promised you were going to do this." None of that may happen. But we start to get the head trash where we feel afraid that it's going to turn into a conflict. And because of that, we don't want to take a chance on damaging the relationship with our client. So, we figure, "Oh, it's not that big a deal. I'll just take care of this and not worry about charging extra, and they'll really appreciate it." But the truth is, they don't even know about it. Because most of the time, we just over-deliver, and don't even say anything. So, your client can't appreciate it, you're not compensated for it, and you've changed the expectation. Now, they may expect you to continue doing that extra work with no compensation because they don't know the difference. They think, "You did it before, why wouldn't you do it now?" It really is a slippery slope.

Patty (guest): 
And if you have a really well-crafted scope of the work you're doing, and it's written, and you can refer back to it, then it's not personal, it's structural, right? And everything, even when your client asks you a question, you may take that personally like they're questioning your experience or you need to prove yourself. But that's not what your client is doing. They're just asking a question. So, if you can shift from taking things personally and use the structure of whatever you've produced, then there's nothing personal about it. You can refer back to that structure. You can say, "I'd be happy to work on this additional project or whatever they're asking for. Let's talk about priorities, what's the most important thing for you, and if this is a priority, I'm happy to give you an additional proposal." And they're going to be fine with that because they trust you. They like working with you. That's why they keep asking for things. So, that's all very positive. If you can keep your fear in check and not let your mind kind of go crazy from the standpoint of anxiety and fear, worrying that it's going to turn into some kind of conflict.

Kathy (host): 
Patty, you gave us a lot of good information here. A lot of good analogies—the broken cookie effect—I love that word. Before we go, and I asked this every single guest that comes on the show: someone who's thinking about exiting their company in the future, what is the one thing that I can do—something actionable—in the next month or so to get them closer to that goal?

Patty (guest): 
I would say, look at all your business processes and all your intellectual property. Just do an audit and review everything that you currently have. And then, be thinking about if there's something new you want to develop and make a list of all those things. Because, to your exact point, you'll be surprised at how many assets you really have and how many processes you have. But you'll also be able to identify the gaps and where you need to develop processes.

Patty (guest):
People often feel like it's a big monster and they have to create an operations manual or document every little thing. But that's really not the case. You can start small and just take one process and write it down. You can turn it into a checklist or create a standard form for a checklist. You can even find templates online by searching for sample templates. Checklists are great because not only can you use them, but you can also give them to someone who's working with you. They can use it to ensure that every step in the process is done correctly.

Patty (guest):
So, that would be the first step that I would recommend: see what you have and what you want to develop. Then, look at it from the perspective of whether someone would value all of these things in addition to buying your services. Would they value it enough to buy your company?

Kathy (host): 
You bring up a good point about looking at templates; that's what we do too. And there's, if you buy specific SOP programs, there are two really good ones called TrainFuel and Rebook. They have templates already that you can use, so you don't have to start from scratch. They provide a playbook of what to actually include, and you just plug in your own processes. So you don't have to think about where to start or how the format should look like; you simply start typing, and it will automatically format it for you. Those are the types of things you can use TrainFuel and Rebook for. Patty, thank you so much for being on the show. I really, really appreciate it. This conversation was very helpful for me too, so selfishly, I got a lot of value out of it. Where can people find you?

Patty (guest): 
Theblockgroup.net. The Block Group, that is my website. You can contact me through my website, and also find my book, Your Hidden Advantage, at yourhiddenadvantage.com.

Kathy (host): 
Thank you, Patty,

Patty (guest): 
Thank you.

Kathy (host): 
Thanks so much for joining us today, and I hope that this episode has given you new insights on the value of planning your exit from your business as early as possible. If you love this episode, you can find all the timestamps, show notes, blog posts, and links on the website newcastlefinance.us/podcast. Before I go, I have a favor to ask. If you enjoyed this episode and you're listening on Apple Podcasts, could you please go to the show and tap the number of stars that you think the show deserves? This helps the algorithm and allows other people to find and benefit from it as well. Thanks so much, and until next time!