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1/ I wish someone had sat me and a number of other friends down as founders and had this heart to heart chat with us when we started.
Painful lessons that bite when we are trying to sell and take exits from our businesses.
Painful lessons that bite when we are trying to sell and take exits from our businesses.
2/ One.
It takes time and effort to close a customer. Once you have invested in building that relationship, it is a shame to only sell to them once.
Given a choice opt for models with repeat customers and recurring sales rather than a single sale or transaction
It takes time and effort to close a customer. Once you have invested in building that relationship, it is a shame to only sell to them once.
Given a choice opt for models with repeat customers and recurring sales rather than a single sale or transaction
3/ The only exception to the above rule would be high ticket items with above average margins.
But even in those instance there is an element of recurring revenue.
Recurring revenue matters. About 2x to 3x. Especially when it comes to exit valuations.
But even in those instance there is an element of recurring revenue.
Recurring revenue matters. About 2x to 3x. Especially when it comes to exit valuations.
4/ Two.
You have to chose a path. Product or service. You can't stay in hybrid mode.
Helping a friend work through a transaction. They would be worth 50x if they had ditched the services business. Because of services, they never truly committed to the product way.
You have to chose a path. Product or service. You can't stay in hybrid mode.
Helping a friend work through a transaction. They would be worth 50x if they had ditched the services business. Because of services, they never truly committed to the product way.
5/ Three.
You don't have infinite opportunities. You get a handful as a founder.
Filter out the ones that are not worth it, right at the start. Focus on the ones that will count.
Good ideas over bad ones. How can you tell the difference?
You don't have infinite opportunities. You get a handful as a founder.
Filter out the ones that are not worth it, right at the start. Focus on the ones that will count.
Good ideas over bad ones. How can you tell the difference?
6/ Good ideas come with inbuilt moats. You set the price, not the market.
They tend to be complex and hard. Takes a while to crack them. Not every one is up to it. They overlap with your area of specialization and interest.
Value is a function of monetization and complexity.
They tend to be complex and hard. Takes a while to crack them. Not every one is up to it. They overlap with your area of specialization and interest.
Value is a function of monetization and complexity.
7/ You don't have to start with complexity and difficulty.
Most of us don't. But by the time you are done, you should certainly end up with them in your portfolio.
On a call yesterday, the buyer on the other side literally said, "Show me the complexity, why is this hard?"
Most of us don't. But by the time you are done, you should certainly end up with them in your portfolio.
On a call yesterday, the buyer on the other side literally said, "Show me the complexity, why is this hard?"
8/ You have to build from day one with exits in mind.
That doesn't mean you tell people you are building to sell.
It means that you build with the perspective that the business will one day run without you as an owner.
Just this one little thing. Can't unlock value without it.
That doesn't mean you tell people you are building to sell.
It means that you build with the perspective that the business will one day run without you as an owner.
Just this one little thing. Can't unlock value without it.
9/ Four.
Finally. Write down your walkaway price on a piece of paper. Keep it with you in your wallet.
Update it every year. When someone offers it, take it. Don't change your mind at the last minute.
Some days are made for a transaction. When they cross your path, take them.
Finally. Write down your walkaway price on a piece of paper. Keep it with you in your wallet.
Update it every year. When someone offers it, take it. Don't change your mind at the last minute.
Some days are made for a transaction. When they cross your path, take them.
10/ Five.
Money in hand, money in the bank is worth more than all the money in the world in your model.
If you haven't built an organization that will last beyond you, best to sell when you are young, versus when you are old.
Money in hand, money in the bank is worth more than all the money in the world in your model.
If you haven't built an organization that will last beyond you, best to sell when you are young, versus when you are old.
11/ I have seen three transaction fall apart in the last month simply because no one sat us down and explained the above to us.
I wish they had. You no longer have that excuse.
I wish they had. You no longer have that excuse.
