Season 2, Episode 5 - Revisiting The Exit Factor with Jessica Fialkovich

In this important repeat episode, Diane sat down with Jessica Fialkovich, the founder of Exit Factor during our first national conference in October 2025. Jessica discussed her newest book, The Exit Factor.

Jessica provides valuable insights as to why she wrote the book -- how she wants to help business owners obtain VALUE out of their business and exit on their own terms, and for owners to think of "the day after..."

We then we dove into the 5 key areas of the VORTEx model:

Phase 1 - Value Your Business: What is your business worth today in the marketplace, and what is the value gap for the owner?

Phase 2- Optimize Your Financials: Clean up extraneous expenses, and determine how to improve both gross and net margins.

Phase 3- Record What You Do: This part is the key to making a business saleable - we take a brain-dump from the owner and document all processes, key contacts and critical information to be able to run the business without the owner.

Phase 4 - Transform Your Growth: This is the fun part - how can you grow your business to create something with high value and attractiveness in the marketplace?

Phase 5 - Exit, But Not The End: Whatever your exit looks like, a key point is to know what you will do the "day after" - many people want to retire from their business but don't think about what they are retiring TO.

It was a great opportunity to learn from Jessica directly, and she makes obvious that her passion for helping business drives her. Thank you for visiting us at The Transition Table!

You can order the book by clicking here: https://tinyurl.com/32mffu7s

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Transcript

Diane 0:00

Welcome everybody to the transition table. This week I am actually in Florida with Jessica Fiakovich, our corporate president, because we are having our first official Exit Factor conference. And today I'd like to talk with Jessica about her new book, The Exit Factor. And the main question I have for you, Jessica, is why did you write this book? You wrote how to get, what was it, how to get the most when selling your business, which is a great book. I highly recommend it. I have read it. And so this one's a little bit different. So can you tell me a little bit about why you felt it necessary to write this book?

Jessica 0:43

So I got great feedback. Thank you on getting the most for selling your business. And really the intention for that book was when you're about a year away from selling your business to a third party, right? What can you do to maximize the value, maximize the cash in your pocket? And all the way the back of the book, I don't know if you remember it, there was a little section that said, if you have six months until sale, do these things. If you have one year to sale, do these things. Well, there was a little section that said, if you have three years or more, do a couple things like this. And I got a lot of questions and feedback and said, can you expand upon that three years or more? Or things I can do to improve the value of my business, even if I don't want to sell. Maybe I want to give it to the kids. Maybe I want to sell it to the employees. Maybe I want to hire a CEO and take a step back. So that's what the exit factor book is. It's almost like a prequel to getting the most for selling your business. It's what can you do far in advance of an exit? And when I say far, it could be one year, it could be three years, could be 10 years, it could be when you first start your business. But what are things that you can do in your business? So you can improve the time investment you make as an owner, you can improve the money investment you make as an owner. Right. And then ultimately you have the freedom to choose how and when you want to exit, which is all great.

Diane 1:59

And as we know, the book is called The Exit Factor. And we are both part of the Exit Factor team. Megan and I have talked about the vortex model and things like that. But what I found really valuable in the book is that you really some excellent tidbits that business owners can use to try to do some of these things on their own. And I guess I'd like to know what are some of the biggest ones that you feel add the most value?

Jessica 2:27

Yeah, it's a great question. I've been involved and overseen more than 1,500 exits in my career. And largely when you look at the ones that have been very successful versus the ones that have not, there's some common alleys in them. And it's nothing, it's not rocket science, right? But it's things that I think as business owners, we get busy and we forget on how to do the fundamentals well. So the first is long-term goal planning. And this is in the first phase, it's in the uh the book separated in phases like the vortex model, like you talked about. But it's not just goal planning for your business, but your life. What's your vision for the future? What do you want to do personally five, 10 years down the road? Because that's probably going to inform what happens with your business more than anything else, right? When I think about my life, I have a four-year-old, as you know, right. And so I try and imagine my life. We call it when Bricks is seven or Bricks is 12. And that kind of anchors me. And we call this the inspiring vision of what do I need my life to look like? And then backtrack what does that mean for the business? So that's great.

Diane 3:28

And I'd like to just add on to that a little bit because obviously my business partner, who happens to be my husband, Art and I, are at a different stage of life. Yeah. But Art very wisely talks about that there are three things to think about after you exit your business. One is doing something physical, whether some kind of exercise; something intellectually stimulating, which could be taking a class or learning how to draw, or there's so many different things. We can incorporate travel into that, but some people love to travel, some don't. And then the third is doing something for the community. And that's something that I know for you and for us has really driven our lives all throughout the process. That's not something that, but for a lot of people, they've been so focused on the business. There are so many different ways that people can give back to the community.

Jessica 4:18

And it's very, very important, especially when you're looking at a phase of life when you're not going to be working, right? To have some type of passion and purpose that you can focus on. Yes.

Diane 4:25

And I think having a passion and purpose as a business owner, it's important too. But everything seems to be just focused in that one area. So what would be another good one?

Jessica 4:34

So we talk about financials a lot. And I know you and Megan talk about financials, and it kind of gets hit home a lot in our community about the importance of financials. But ultimately, when I look at business owners and when they feel like they're forced to make an exit decision, it's usually one of two reasons. Either the business isn't making enough money for them to support their lifestyle, or it's sucking so much time away from their personal life that it's starting to affect relationships, even health sometimes. So the next two areas are focused on those two. How do we get money back in our business? So the business is starting to produce a return on investment for us. So looking at different things like profit margins in our industry and how can we save costs? And then the other thing is providing us time, right? And so the third area that we look at in the book is what are you doing currently in your business and how can you leverage those around you and technology, right, to save you time. So it's not just as much as we talk about delegation a lot, but I find a lot of times business owners will delegate a task, but not the responsibility. So in the book, we talk about delegating the full responsibility.

Diane 5:42

And as entrepreneurs, and we are also both very type A people, giving up that control can be really, really hard. And I wanted to also add a twist to that because my new soapbox is that many business owners think that by running expenses through their business will help reduce their taxes. And that's true, but it also is a value killer. It is. And I will die on that soapbox.

Jessica 6:07

Yeah, which is interesting because we'll skip over the fourth aspect that we talk about in the book. We'll jump to the fifth, right? Yes. Because taxes is important, right? I'm a big proponent of you should legally pay your taxes, but there's a lot of tax benefits for business owners because we are building and supporting the local economies, right? Absolutely. But unless you've heard me say, there are a hundred other great ways to save taxes rather than stuffing expenses into your business. So in the book, we do talk about some tax saving strategies, especially on that exit and just tax preparation in general, too.

Diane 6:40

Right. Because when you exit, there is this large, as we say in the exit industry, liquidity event. And you want to figure out a good way to manage that. And that is important as well, because that for a lot of business owners, their business is what, 80% of their total asset base? Yeah. That's a lot of money that's coming to you. So that's why I think there's some great things in the book. And I think also we skipped over the fourth, but being able to leverage the value, it has such an enormous effect on the long term.

Jessica 7:14

And it the whole purpose is that you may not be thinking about exiting your business now. It might not even be for three years down the road. And this is an interesting thing. We were just in a session talking about the generational differences between how baby boomers and millennials run businesses, and you can make sweeping generalizations, right? Obviously, everyone individually is different. But the millennials, because they're so serial mindset of jumping careers, jumping businesses, they're very focused on how do I build value in my business now, no matter if I'm exiting or not. So I have that choice. And that's the mindset we're trying to talk about with all business owners. Because I know you've seen in your M&A career that most times when someone chooses to exit, right, it's not something they planned for.

Diane 8:01

Most no. And I've even done valuations for businesses where there was an unexpected death in the family and the survivors just didn't know what to do. And that to me is the most tragic is that if someone hasn't even thought about these things, it's just awful. Megan and I talked about that because we talked about succession planning. Yeah. And the way not to do it is if you watch Succession. Yeah.

Jessica 8:26

Great example of what not to do, right? Correct. So, but and I think just overall, I think the message I want to get out there, and we're working together with this exit factor, is that this is not about us, right? Uh, 87% of businesses in the US do not move on to new owners. They close their doors, right? There is no successful exit. And really, that is such an important dynamic. If we think about that, not just for ourselves as owners. Yes, 80% of our wealth is tied up in a business. If we don't have a successful exit, that impacts our life. But what happens to those around you? The family repercussions, all those employees that lose their jobs, their families, the local economy impact. You can talk about that just as its own podcast topic. But when a small business closes, that revenue that the customers are spending don't usually go to another main street business, it goes to a big corporate conglomerate. Right, which is not helpful.

Diane 9:21

No, and small businesses are the backbone of America. Right. Yes, we see the Amazons, we see the Walmarts, but we know that at the end of the day, there are so many small businesses that provide so much value to the community. So I think if we can help those owners get that value back out, it's really, really helpful.

Jessica 9:39

So I'm hoping that the book is a tool. There's also a toolkit that goes with it. So when you purchase the book, you can go to the website and download the toolkit and really it provides a system and a structure for business owners to think about really long term planning in their business.

Diane 9:54

Which is key.

Jessica 9:55

Yes.

Diane 9:56

Well, great. Thank you so much for coming today, Jessica. We really appreciate it. Thank you again. And uh we'll see you again next week. Thanks. Thank you.