Go ‘Fund’ Yourself (Step 4)

If the ‘hustle’ or ‘journey’ isn’t what drives you and your goal is to make a ton of cash all at once and ‘get out.’ Here is Step 4.

Once your Lifestyle Business is firing on all cylinders you now need to invest into scale. You should scale through automation not by outsourcing. Also, recurring revenue is key so if you are in a time and materials model you need to begin shifting to a subscription based model or productize. Even if that means sacrificing some revenue to get there.

The idea is this, if someone can buy you and run your business from day 1 without interruption you are going to win big. Build your company like you are building a car to sell. Think about the driver. Or in this case, the next driver.

Formula:

Build for Exit = Revenue / EBITA ratio, Invest in productization, recurring revenue,

So let’s pivot back to our friends at the SaaS company. They are at 5M in revenue. The way to maximize valuation would be to run this formula.

$5m in revenue @300k per headcount at $150k cost of funds. =2.25M EBITDA -2M invested in growth, productization, and automation.

Goal is within 3 years to double every ratio every year. Go from $5M in revenue $20M in revenue. Because of productization your revenue per unit goes down but thanks to automation your revenue per head count is now $1.2M per 150K. Bringing your EBITDA to $17,850,000.

This would put you in the exit ballpark of $100M. And because you didn’t raise capital in the beginning, its all yours (after taxes and professional fee’s of course).