Entrepreneurship Doesn’t Really Start… Until You Sell Your Business
How Selling Your Baby Opens Up Doors of Possibilities…
Entrepreneurship.
Freedom obtained through sheer hustle, hard work, and a bit of good luck. Building a business whether it’s a content site, an e-commerce store or a bootstrapped SaaS can be an amazing portal to a whole different kind of life. When you stack up building a business against investing in other assets like real estate or stocks, there is just no comparison in terms of what kind of aggressive ROI you can get.
But here’s the thing.
There’s an even faster way of growing your networth than building your business.
The route? Selling what you’ve built.
I can already hear many first time entrepreneurs shaking their heads and entrepreneurs who have sold their business nodding along with me.
For first-time entrepreneurs, you might be wondering why would you ever sell? Making money online is the dream that many had when they first began their humble e-commerce store or other business.
Of course, many of those entrepreneurs didn’t realize the future problems that would arise from the cacophony of their own success.
Google algorithm updates that cause such intense graying of hairs for veteran SEOS, or entrepreneurs maxing out their credit cards so they can scale their Amazon FBA business to the next level as they re-invest into a new stock of inventory.
Or maybe you’re in SaaS and you stay up late at night fearing the next throw of the venture capitalist war chest. What happens if they suddenly fund a competitor to the tune of several million dollars against you?
All of these create what I like to call an entrepreneurial hamster wheel.
You’re constantly spinning, running at an ever-faster rate while often going hardly anywhere at all. You may have built a 7-figure e-commerce store, but considering all the capital you had to invest to get to that level, you may have far less in your bank account than you’re comfortable with.
Everyone loves talking about the revenue they’re making. Few want to have the somewhat grim conversation of the actual net profit they’re making.
To be clear, there is nothing wrong with this.
For a business to grow, you need to reinvest to make it shoot off more profit at an ever quicker rate. But there is a way to do this without making your hair turn gray, and without adding so many wrinkles to your face that you look ten years older than you should.
That solution is to simply sell what you built.
Why selling can be a huge relief
When you sell your business you gain all that “hidden” capital and equity you’ve built into the business. It’s very different than saying having a huge month in your e-commerce store. If you were still running the e-commerce store you’d likely take a large chunk of that net profit to go ahead and buy more inventory from your suppliers.
When you sell a business, there is no inventory to buy.
You’re free.
You’ve broken the hamster wheel.
When you sell you take chips off the table in terms of risk exposure and can truly profit all at once. For most entrepreneurs, it will be the largest capital windfall in their life. A capital windfall that is so large you can open up what I like to call the Doors of Possibilities that were locked to you before you sold the business.
You see, if the business could be boiled down to a simple Chess analogy it would go something like this:
Your net profit would be the king. You have to protect it at all costs. The liquidity you actually have on hand at any given moment? That’s the queen. In the game of Chess, it is the queen that makes all the winning moves.
When you sell your business you are giving your queen superpowers.
You can use that capital to build out a new business that has none of the previous stresses of the hamster wheel. Or you can use that capital to skip the timeline completely that comes with building a business from scratch by just buying businesses already making money.
This can be a huge advantage from the time it takes to build real wealth because you get to jump past all of that testing the market to see if the product is proven and you get to play with preexisting data where just a few tweaks of the system can lead to big wins.
You’ve already trained yourself on how to do all of this too because you’ve already built a successful business you could sell.
It’s not just an opportunity that opens in the online business space though when you sell.
The same capital that could turbocharge your next project could instead become the seed money to a burgeoning real estate investment profile. Or you can make wild bets you never would have on cryptocurrency or the stock market, bets that if they go bad don’t matter because you have plenty of capital leftover (if you’re treating it right).
There was a customer of ours who sold his business with us that then got paid out in crypto during a bullish bitcoin market.
He added several hundred thousand dollars on top of what he got paid from the buyer, cashed out, and now is using all that extra capital to turn his other projects into massive brands.
After selling more than 1,300 businesses ranging from $20k all the way up to $11 million, I’ve seen entrepreneurs do all the above many times.
This is why, in my opinion, that your business doesn’t really begin in earnest until you sell your business.
Is that 100% true all the time? Of course not. Is it true more than 80% of the time?
I would say a definite yes.
When is the right time to sell?
If you’re looking to time the market to sell your business for the highest price possible, then don’t.
Timing the market is almost never a good idea whether it’s real estate or digital assets.
Though, at the time of this writing at least, this is perhaps the best time I’ve ever seen to sell a business.
Multiples are high, institutional buyers are flooding the marketplace, and high-networth individuals are looking for assets that have higher returns with less hassle than traditional investments like real estate.
In short, right now is actually an awesome time to sell your business.
However, don’t sell because of that. Sell because you have a plan.
What will you do with all the capital you get? What is your plan after a profitable exit? Many entrepreneurs never consider this far, just like many entrepreneurs never realize the value of selling their business.
Ask yourself what your personal goals are first, followed by your business goals second.
Will selling your business help you get there?
If the answer is yes, then considering selling now or soon is a real discussion to have.
If your business is making $5,000 net profit per month, and you can cash out on that business for $170,000 in your pocket… Does that excite you? Is it interesting? Does your mind race with possibilities at what you could do with that kind of capital?
Finally, before you sell, ask yourself one more important question.
If you were the buyer looking at the business you’ve built, would you buy it? Most of us will say “Absolutely of course yes!” but really ask yourself.
Divorce yourself from what I call emotional equity. This is the equity we have in the business that is valueless to anyone else but us. We have it because often our business has set us free in some shape or form.
Maybe it set us free from a grueling job and commute, or let us express ourselves to our peak potential. Your business could have been the key to travel the world or spend uncountable nights with your family like how you couldn’t have done with any other career.
All of these things are wonderful.
But they’re emotional equity. Investors will use much more cold arithmetic to value your business, just like we will if you decide to sell your business on the Empire Flippers marketplace.
When you ask yourself this question and you come up with “No” or “Maybe not” then it could be a good idea to figure out why you’d answer that way. You may have some work cut out still.
Which is totally fine!
Selling a business might be what opens up the doors of possibilities, but I never said it was easy or without challenge. It is better to know what kind of obstacles you’ll face before you go into the process.
Still, it is the moment you sell your business that you’ll get that old, warm feeling you got the moment you made your first dollar in the business.
That exuberant taste of freedom.
That is when you’ll be able to open the Doors of Possibilities.
And that is when your true business begins.
