Transcript

Welcome to the hundredfold business podcast, where Christian men learn the principles, strategies and tactics to grow their businesses, top line, bottom line, and finish line. I want you to discover the secret to applying biblical truth to business growth for the greatest kingdom impact. So in the end, you hear from your Heavenly Father, well done.

Welcome to the hundredfold business podcast, where Christian men learn how to grow their top line, their bottom line and their finish line. And I'm your host, Josh Fonger, founder of 4th Soil Ventures. And today we've got a special guest.

We have Michael Sipe. Michael is ex Army Ranger, captain, entrepreneur, mergers and acquisitions advisor, executive coach and bestselling author of the Avada Principle. He's founded, built, bought and sold multiple companies for his own account as a mergers and acquisitions advisor over the last 34 years.

He's evaluated more than 5000 businesses in about every conceivable industry. Michael serves as executive coach to successful business leaders who are in the top 1% of income earners in the United States, helping them design their companies to finish strong and exit well. All right, Michael, well, thank you for being on the show.

Thank you for making the time. You bet, Josh. Nice to see you.

Now, I'm really excited to talk about your two books, the best selling book, the Avada Principle, and then also your new book, Finish Strong and Exit Well. But before we get into those topics, before we get into those books, what I'd love to do is start by talking about your spiritual journey, as in how has God directed your path to get where you are right now in your career? Well, I was raised a Christian, and so I believed in Jesus basically for my whole life. That is different necessarily than following Jesus.

So I believe in Jesus. I mean, even the demons believe in Jesus, right? So I believe in Jesus, and I was raised that way, but I don't think that I could probably brag on my following aspect for a long time. I've been in business for a long... I just turned 70, so I've been in business a long time, ever since I was in fourth grade, so you can do the math.

And in the most recent iteration of that, I've been selling companies for about 35 years. And so I worked in Silicon Valley for a long time, and the mergers and acquisitions business, as you may know, it's rough sometimes, and it's very intense. And so I was probably like many people that are listening to this podcast, and many people in business.

I was devoted to my business. I had a young family and a marriage, but I was devoted to my business and felt like I needed to be because it was intense. And so if you look at how I define worship in the Avada principle, I basically worshipped my work.

And now I wouldn't have said that, and I can say it in hindsight now, but in the middle of it, I wouldn't have said I worshipped my work. So I went to church on Sunday and sometimes went to a small group or a Bible study on Wednesday, but basically Monday through Friday, well, actually Monday through Saturday, well, actually Monday through Sunday afternoon, I worked. And so although I can call myself a believer, call myself a Christian, it was really segmented.

So most of my life was devoted to work and then family and kids and then church on Sunday, and that's kind of what I thought it was like. And then fast forward to, oh, I want to say 2012 or 13. I met a man named Buck Jacobs, who is the founder of an organization called C12, which is the largest Christian peer group advisory program in the country.

And so I met Buck and he said something that really rocked my world. He said, you know, what's the point of your work? And I'm like, well, like to make some more money and then I don't have to work anymore. He's like, that's a really bad answer.

But, you know, as I've been involved with mergers and acquisitions now and helped many, many, many people exit, and I asked that question, you know, why are you working? What are you trying to accomplish? A lot of times what I hear is the same answer I had. Well, just to get a little more, you know, another house, a better yacht, a bigger plane, well, just more, a bigger company, acquire another company, whatever it is, just more. And Buck challenged that and he says, no, that's actually not what it's about.

I'm like, okay, I don't have a better answer. What's the answer? And he said, well, if you'd been called into work as a school teacher, your primary mission would have been to advance the gospel in the schools. Not an easy task, but that would have been your primary mission.

If you had been called to be a policeman, then your primary mission would be to advance the gospel on the police force. Not a particularly easy mission. But, and if you've been called to be a doctor, then your primary mission would be to advance the gospel in a hospital or wherever.

And if you've been called into a government service, then your primary mission would be to advance the gospel in government service. Not an easy task, but you've been given an easy one. So you, I said, this guy can only handle a little bit.

So you've been called to be an entrepreneur. And therefore the purpose of your life is to advance the gospel in the marketplace. And the reason that's easy is because there's no rules.

You can do whatever you want to. You're not constrained by government restrictions or whatever. Obviously, you know, we have to abide by the law, but basically as an entrepreneur, you can just make stuff up and you can do whatever you want to.

And so that's the point of business is to use your business as a platform for ministry to leverage the abilities, skills, resources, contacts that God has given you to advance the in the marketplace. And that is both a tremendous opportunity and quite an obligation as you've heard to those who much is given, much is expected. So what did that transition, so that massive paradigm shift for you, and then did you immediately go write the Avada principle book right afterwards, or was it like a 10 year journey of what does this look like as I apply it to my business? No, I had no clue what he was talking about.

I mean, I heard the words and I was like, Oh, that sounds cool. I have no idea what to do with that. And so anyway, the short story is, is I joined C12 as a franchisee and worked with C12 for a while and fumbled my way along trying to really get the idea of what it was like, because there's a huge tension.

As you know, as a business owner and a business leader, there's a huge tension of the pull of the business. And then now here's this new thing. Hey, this is what we're really supposed to be doing with this.

How do you actually do that in a way that's compelling, that's not weird, that actually attracts people, that's fragrant, it's not repulsive and doesn't run people off. And you have met people that profess to be Christians that actually are fairly offensive and run people off, which is actually not what we're supposed to do. We're supposed to attract people to Jesus.

And so I've worked with a bunch of CEOs and wandered through that whole process for a few years. And then ultimately we put together the 10X program, which is for Christian CEOs and entrepreneurs. And after a few years of that, I sort of distilled a lot of the, I don't want to say the learnings because I'm still learning, but some of the lessons, if you will, out of that journey into the Avada Principle.

So again, for everyone who doesn't know yet, what is the Avada Principle and where is the basis found in scripture and what are the components? Sure. So where it came from is you, as you've been a coach to CEOs and to business owners, and you know that one of the most common things that you hear is, hey, I need to get my life in balance. And I think that is foolish.

But I didn't have a better alternative. If you think about balance, I mean, there's no way you can be in balance. You're always balancing because you're always out of balance.

And I, so in my martial arts practice, we were always working with balance, taking our opponent's balance, working on keeping our balance. But balance is not a static concept. So it's the idea of having your life in balance doesn't make a whole lot of sense.

And if you think about it, Jesus' life was not in balance. Like Jesus is way out of balance, right? And so he wasn't taking vacations, you know, he didn't have a family. So, I mean, he focused on one thing.

And so his life was not in balance, but I don't think that you could say it was not fruitful. And so I was looking for an alternative to that concept and came up with the concept of an integrated life. And I thought, okay, I'll research integrated life.

And interestingly enough, there's very little that's been written on an integrated life. The best writing on it sounds something like that. It sounds something like this, an integrated life is one that's integrated.

An integrated life is one in which you integrate the different parts of your life. I'm like, this is not useful. And so in trying to figure out how to articulate the concept of an integrated life, I went to some of the earliest Hebrew in the Bible and discovered a word called avad.

That's one of the first words used in the Bible. And it's where God instructed Adam and Eve to go avad in the garden. And so avad originally meant to work.

And then throughout the Old Testament, about 400 some odd times, the word avad, and as it evolved into avada or avada, depending on your pronunciation, it came to integrate three concepts of work, worship, and service. And so the impetus for the avada principle was trying to understand what an integrated life would look like for a Christ follower. And to me, and the synthesis of the book, is it looks like work, worship, and service.

So if you were to, let's just say you own an accounting firm, got several clients like that, and you're saying, I want to live this avada life, what would that look like? What do they have to do to prepare to work like that? Well, the first part of work, worship, and service is to not resent your work. And unfortunately, I find a lot of people, even entrepreneurs, that sort of resent their work. They're like, I go to work.

You know, if you ask someone, you know, how's your day going? I'm just working, you know, grumble, grumble, grumble. One of my friends who's also a believer is a lady named Kalen Ellsbury. And Kalen had cystic fibrosis as a child.

If you know anything about cystic fibrosis, this is pretty much a death penalty early on. And through a long and fascinating story, Kalen survived. And I heard her speak the other day, and she said, I'm so grateful to be able to work.

You guys should all be grateful to be able to work. Because I didn't used to be able to work. And I could have been dead.

But I'm actually alive, and I get to work and serve, which is also part of this. So it's an incredible privilege to be able to work. And so the first part about work is we have to have the right attitude about it, that this is actually work as unto the Lord, which is what we're instructed to do in Colossians.

Work as unto the Lord. Everything really should be focused on glorifying God out of our work, which you can do as an accountant, or you can do as a policeman, or whatever. So first thing, shift your mindset about work.

Work is not a curse, though there was a curse on work. The work is actually a privilege, an opportunity that God commands us to do. And then, so if you're first to get the right attitude about work, then how do you then go to work every day worshiping? Well, the second piece to this is where I spent most of my career, which is worshiping my work.

And I think that any honest entrepreneur would say that there's a real tendency to do that. And if you really think of the fundamental definition of worship, it's where do you focus the majority of your attention? Where is your primary attention? And if that is work just for the purpose of working, or for the purpose of advancing, gaining financial benefit, whatever it is, then frankly, that's worship. And so we have to figure out how to modify that perspective to where we're actually worshiping the Lord through our work.

So our work becomes worship as unto the Lord. So this is a mental shift, but it's actually an offering. If you think about it all day long, we can make an offering of our work as worship unto the Lord.

And so there's obviously more to worship than that. But you asked the question about work, and that has to become an offering. So I've used the math of like half of your waking hours as an entrepreneur are probably working, working your business, working to grow it.

And so you can tell yourself you're making the mental shift, but how do you know you've gone from worshiping money, seeking money, seeking that as the primary focus of your business to seeking God's kingdom first in your work? How do you know when that actually has happened? Well, you certainly know when it hasn't. It could be. That's right.

Right. I mean, that's between you and me and our listeners and the Lord, right? Yep. But we know when we are prioritizing our personal advancement.

Part of the challenge here with your question is it goes back to this idea about balance. And so trying to say, well, you know, there's this amount of time and this amount of time and whatever. No.

You know, the Apostle Paul says we should pray without ceasing. We should be in conversation with the Lord all the time. OK.

Of course, I never fail on that. I'm like... I did once yesterday. Yeah.

Once I forgot to talk to God or to listen to God. So the issue really becomes more one of, you know, how's my relationship with the Lord and how much in conversation am I with him in the context of my work? And if basically I park my conversations with Jesus until tomorrow morning's devotional or until Sunday or until right before I go to bed, that's obviously better than nothing. But then I'm devoting the rest of my time to conversing with myself or whatever.

And I would say that that's a pretty good indication that I'm not worshipping the Lord through my work. Well, let's let's continue on with the serving. Maybe that's the easy part.

So so then is there any mind shifts or things that need to happen where someone goes from, OK, I'm going to integrate my faith into my business now. And there's this concept. So we have work is work and it's worship and it's service.

What kind of transitions have you seen your 10X group make and what does that look like? Well, there's a lot of reasons that people serve. So one of the reasons that people serve is out of duty. So I was a military officer and, you know, as a military officer, we have a duty to serve.

We sign up for it and much of the motivation for service is dutiful. Nothing wrong with that. But it's important to realize that that's a different motivation for service.

Sometimes people leave their family. I'm just saying that where is the primary allegiance and wherever our primary allegiance is, that's where our primary service needs to go. And then the final piece is really this mind shift again that service is a privilege.

You know, it's not a burden, it's an obligation. If you think about it, it's really hard to force service on someone. Here, I'm going to serve you.

Well, actually, no, thank you. You don't need to do that. You know, stop helping.

So actually the authority to serve is granted. Permission to serve is granted. Permission to serve is granted by the Lord.

That's grace. Permission to serve is granted by other people. And so it's actually a privilege to be able to serve.

So there's a significant mind shift here that causes us to step into service in a, you know, a sacred way, if you will. So for your clients, your business owners who make this shift, they start following the Avada principle, do their customers, their employees, do they see, I mean, there's obviously a difference that happens with the owner, but does the marketplace notice a difference and correlate to people hearing more about Jesus? Like does that connection happen? Well, we have it totally mastered and all of us do this perfectly, of course, not. So this is a working process, right? This is, we're all, you know, developing and, you know, some days are excellent and other days are not so excellent where we, I mean, they may be excellent in some ways, but they're not excellent in this way.

And so, yes, I would say over time, you know, all of us become more attractive and not attractive, like personally, but more attractive to the people to learn about the gospel. And, you know, so I have people that have joined 10X who are not believers, but they're so fascinated by what's going on that they want to be part of it. And then they grow and then accept the Lord and get baptized and, you know, learn to pray and all of that stuff.

And so we're in 10X, we're a big tent in Christianity. We're not a denomination or a particular, you know, church affiliation. And then we have the same thing happening with success stories, gospel success stories with people who talk about a customer or a vendor who comes to know the Lord through the witness and the testimony of our 10X members or just other businesses.

That's great. So I'm going to totally change gears and we can talk about this for hours, but I want to hear about your new book, Finish Strong and Exit Well. I know this is a huge topic for my clients, anyone who's a small business owners, they want to know how do they prepare the company to sell it.

And most of them are ignorant on how to do that. I'd love to have you, with your experience, share with us, again, from a biblical perspective, what is this process like? How should it be done? And what are we neglecting to do? So I guess we'll start with some easy questions. What should the average business owner be aware of when they're preparing to exit? Well, I should first of all say that the Avada Principle is really more of a spiritually focused book.

And Finish Strong, Exit Well, while it has an ulterior motive, is really pretty much a straight ahead business book on how to position, prepare, package, and sell a business for top dollar. And that's what I've been doing with my M&A clients now for 35 years. So it's kind of the distillation of 35 years of helping people do successful deals and transition with dignity.

Underlying that is really a kind of the point of integrity. So whether, you know, I don't just work with Christian business owners to sell their company. I work with, you know, all sorts of people, but they have a, regardless of spiritual orientation, but they all have an ethical orientation, and they run an honorable business.

And there are many people who run honorable businesses that are not believers. In fact, you know, sometimes they run more honorable businesses than people who profess to be believers, unfortunately. So one of the keys to successful exit is you actually have to run an honorable business and position it and prepare for a successful transition, not a dump of the business onto some unsuspecting victim who's going to have to deal with the mess that you made.

No, there's a way to operate a business over time where the systems are put in place and the people are put in place and the practices are put in place where the business actually has value. And it doesn't just have value in the moment. It has continuing value, longevity.

You know, people used to build businesses for generations. You know, they would start a business, not because they just wanted to make a buck and spend it and sell it off to, you know, grandmother Mary in the public market. They would build a business to hand down to their kids.

And while that's not happening so much anymore, occasionally it is, you know, I have clients that are five generations and three generations and two generations of businesses, but for the most part, businesses aren't built necessarily to hand down to kids anymore because the kids don't want them. But that doesn't mean that there's not a generational legacy that shouldn't be built into the foundation of a business. And that takes design work and it takes energy and it takes integrity that, hey, we're not just building this so I can sell it and get out or make enough money so I don't have to work anymore.

We're building something that has lasting contribution and value in the market. And when we do that, then the business has inherent wealth and it has a value that far exceeds a business that's just been built for, you know, just a short-term gain of the owner. So basically through this book, you're going to find people like that.

Is it hard to find owners who think that way, who really are more about legacy and value and generational wealth and care in that way? Or is that easy to find people who are like that? Well, fortunately, I've been selling companies a long time and so all of my business is referred in. And so, you know, I market or advertise really. And so the answer to that question is that the people that are referred in are referred in by people who are like that.

And so I don't know if it's easy to find them because I don't go looking for them. So they find me and, you know, they tend to have that same sort of perspective on how they operate their business and how they care about their employees and how they care about their customers and their vendors and how they build an enterprise that has longevity far beyond their tenure. So just because they exit doesn't mean the business should die.

In fact, if you see that a business is going to die when the owner exits, it's not worth anything and it's not very sellable. And so business owners who build for generations to come and have figured out how to solve problems for customers that are really significant and recurring and of significant enough risk that there's a high margin there that people are willing to pay for solving those problems, those businesses are worth a lot. And when people leave them, retire, leave, move to somewhere else, they can leave with dignity knowing that they've actually accomplished something of value for many, many, many years to come.

Well, let's use an example and then you can maybe put your methodology into a client. So I've got one client who has a manufacturing company, they manufacture paint. So paint for road work and so specialty paint.

What would be the kind of things that he would want to build in early on so that someday those things are already built into the company so that it could be sold someday? What would those things be to raise value? So one of the things is how special is a special paint and how defensible is that product line? I'm not saying it has to be or doesn't have to be, but the more special the specialty paint is, the more inherent value there will be. So if he has a patent, for example, on the paint or a proprietary process about how the paint is constructed or how long it lasts or why it doesn't crack or whatever it is, those proprietary aspects about the paint could be significant to value. And the more that that's possible, and some of that is what I would call real, like the product actually doesn't crack or I'm just making this up, I don't know.

But some of it is in the story that's told about the product. And so that story is the marketing piece. So how is the product positioned in the marketplace so that people say, man, there's lots of paint out there, but I want this paint.

That's the job of marketing. And so great marketing also enhances value because of public perspective. And so there's plenty of brands that aren't any, like Coke is, I don't really drink Coke that much, but I don't think Coke is much different than like Kirkland brand or whatever, really.

Some people think so, but the brand is significantly better. And so the marketing piece is a place to add value in positioning a business for sale. So you've got the product and you've got the positioning of the product in the marketplace, but then you also have the execution on how the product is made and how that all goes together and the efficiency of that process.

And so that also has an opportunity for value enhancement. It also has an impact on margin. So marketing has an impact on margin.

Operations and efficiency have an impact on margin. So margin is super important. Most important number in the sale of a business is gross profit margin, not net profit margin, gross profit margin.

And so operating efficiencies and marketing drive gross profit margin. And so intentionally going after gross profit margin through effective marketing and through operating efficiencies adds and builds value in the business. And then the people in the business and the staffing and how they're organized and how aligned they are and the allegiance that they have to the business that also produces value.

And then the systematization of the processes and how the business goes to market and delivers its products and services in a reliable, dependable way, those systems also add value to a business. Because if you think about it from the standpoint of a buyer, a buyer is concerned about the risk of buying a business and is it going to transition well? And so the more that a potential seller can eliminate the risk or mitigate or minimize the risk, obviously there's always risk in business, but the more that can be mitigated, the higher the value is going to be. And that's all done intentionally, not by accident.

So if someone is interested in selling a business, when should they start really focusing in all those things you just mentioned right there in terms of getting prepared to sell? I mean, I'm guessing it takes a while. So what would your advice be? Well, as Stephen Covey said, you should begin with the end in mind. So one of the issues though is that it's not about beginning with the end in mind of selling, it's about what do you build? What are you building? People exit, I mean, everybody exits sometime, right? One way or another, first or however, you're going to exit your business.

But then the question is, what kind of business did you exit? So all of this conversation could start from the very day of founding the business. But since many people who are listening probably already missed that point and they're in the middle of operating or toward the end of operating, they should start now to look at how do they build a legacy business? What are the elements of that? And then whenever it's time for them to leave the business, they'll be able to do so knowing that they've actually built a business that glorifies God, that produces real and lasting value in the marketplace. And they've just handed it off to someone else to continue the legacy while they move on to whatever else it is that God's called them to.

Well, Michael, I know we could keep talking about this and get really into the details, and I would love to do it, but I know you've got a call coming up in just a minute here. So I want to leave you with a final question, and then we'll wrap up here. So this is something I want to ask all my guests who come on the show, and it has to do with faith, which is what would you say to somebody who has been keeping their faith a secret, kind of been private about it in their business? Like what advice would you give somebody who's been private up until now? Well, there's so there's like the happy news and there's the not so happy news.

So the happy news is that the more that we share the good news and people respond, it produces great joy. I mean, it's an incredible fruit of our work. So that's the happy news that, you know, we see lives changed and people's situations improve, and we see them come to love the Lord and see them begin to work on some of these principles we've been talking about.

That discipleship is a joyful experience. I mean, it's really happy and one that we can seek and seek soon. That's the happy news.

The not so happy news is Jesus said, hey, look, if you're embarrassed about me before men, which is when we don't tell anyone, we're not telling people because we're embarrassed about Jesus. And we just got to be blunt about that. And that's pretty, like that's harsh, but when you boil it right down, we're embarrassed about Jesus.

And he said, this is a bad plan, right? If you're embarrassed about me, then I'm going to be ashamed of you before my Father. And we're all going to stand before the Lord. And I think it would be really painful, like incredibly painful to like, you know, we've been saved and we're accepted into heaven.

But to have Jesus stand before the Father and say, Mike, I just got to say that we're ashamed of you because you were given so much. Like we gave you so many blessings, gave you so many opportunities. And I just got to tell the Father that you just, you let us down.

You know, you didn't do what we asked you to do. You were ashamed of me. And I'm ashamed of you.

I mean, you know, you're going to hang out with us forever. But I mean, that's like, I don't think we want to be there. No, we all want to hear well done.

Yeah, definitely. That's a big one. Well, I just thought of a follow-up question.

Just in one minute, this is gonna be helpful for those who are afraid. They're afraid of being out. Let's just say, has anything bad happened to you? Have you been persecuted? You've been run out of town? Anything scary happened to you after you've been public with your faith? Well, we live in America.

So, you know, we're unlikely to be beheaded for our faith. That doesn't mean that people won't come after us or whatever. But, you know, the Bible probably talks about being courageous as much as anything else.

You know, certainly the Old Testament talks about being courageous, be bold, be courageous, go for it. I mean, literally, what's the worst that could happen? That's what Paul said. What are you going to do, kill me? Okay, so cool.

You know, but in America, we're unlikely to get killed. And so it's all going to work out fine. Most of that stuff is just the devil trying to talk us into not speaking up, and he succeeds a lot.

And so we need to realize that that's really the spiritual battle that we need to fight is that Satan just wants to keep us quiet because of all these horrible things that might happen, like we might get killed for our faith. Well, unlikely in America. Okay, good.

So not so scary after all. Well, Michael, I appreciate you again making the time, and I wanted to thank you for your wisdom today. I took a lot of notes, and a lot to grapple with.

And I'd recommend both of Michael's books. If you're thinking of exiting, certainly check out that book and the Avada Principle. I know that was transformative for me.

I read through that book. And then stay tuned. Next week will be another episode in the hundredfold business podcast, again, helping you grow your top line, bottom line and finish line, glorifying God as you grow your business.

And if you need help with your business, certainly you can go to my website at 4thsoilventures.com. Get some help there. Otherwise, thanks again, everybody. And grace be with you, brothers.