Can You Learn Anything From This Entrepreneur Who Exited 93 Businesses?
The video Matt reviews today has made a crazy claim, but besides that point, it has some good tips. This video gives three tips on how to get the most value out of your business when you’re selling your business.
There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!
Video Transcript:
Business Advice Video:
I’ve exited 93 times. There are three questions I get asked every single time I exit a company. Number one, it’s EBITDA, right? Like what’s your bottom line? Number two, it’s your IP. What are you doing that’s different than everyone else? And then thirdly, an operating system.
Matt’s Review:
I’m still thinking about the fact that he said he’s exited 93 times. He doesn’t look that old. So having sold 93 businesses, if you sold one a month, it would take you six, seven, eight years to get to 93 and selling one a month. So I don’t know what he does or how he’s gotten to that figure or if he’s exaggerating a little bit or he just has a minority stake in a whole bunch of things and he’s counting an exit as selling out a tiny equity share in a company. Anyway, it doesn’t matter. It’s just that’s a shockingly high number to me. But what he’s saying I think is valid, right? What matters when you sell a business is how much it makes. That’s really what drives 99% of the value. There are things that can make the multiple a little higher, a little lower, but ultimately, if you’re not selling profitably, if you’re not generating positive net income, there’s very few people who are going to want to buy your business. There are some cases where VC-backed businesses that have been losing money get sold out to bigger investors who believe there’s some future down the road where it works. But the vast majority of all small business owners have to be making positive income, positive cash flow, positive EBITDA for anybody to be interested in buying your business. And then you have to have good management systems in place to get the highest price. If you’re a sole owner operator, or you’re the owner, and you have five or six people, but you’re still the main business, right? You’re not going to be able to sell for nearly as much as if you’ve grown it to the point where you have a management team. So I think that’s a huge goal for any small business owner should be to get to the point where you’re not just doing barely seven figures, barely a million dollars, and you still make all the decisions. You want to get it to eight figures, you want to get to $10 million where you have a management team. value of the business to you by getting to that next level is going to be huge. And without that, you’re going to get way less, but it’s not any harder, it’s just different. And then the middle thing he said was intellectual property. You’ve got to have some unique selling proposition. Something about the business that differentiates it and makes you get picked over your competition for whoever your target customer is. And that’s not just when you sell your business, that’s for any good business should have competitive differentiation with the other choices. If you don’t have anything that makes you different and better than the competition, why would you expect people to pick you as a customer even if you weren’t selling, never mind selling the business. So all good points. However he got to do it 93 times, I don’t know. But what he’s saying is valid and worth considering if you own a business and you’re thinking about an exit, whether six months from now or six years from now or 16 years from now, these are all valid points to getting the most value from your effort in building and growing that business.
