Did you get into entrepreneurship wanting to build a job?
How about a prison?
Then you need to read this article, because I’m about to show you how you’re probably building a business you do not want.
First a quick story to set the stage…
I was in Istanbul, Turkey with celebrity entrepreneur BB Andersen working on a management-consulting project for a client.
I was pretty green to the whole international consulting game. Choking down a $50 cigar while we were negotiating a business deal, we got into looking at the numbers.
From the outside the business was very profitable. 800K a year profit and a solid growth curve. Guy wanted 3x bottom line to sell it.
BB looked through everything, took a puff off the cigar and said that the business was worth a million dollars MAX.
Things got a little tense and the owner said he was insulted.
Then BB asked the million dollar question: “If you died tomorrow would your business still run?”
That my friend is a powerful question:
Why Profit Is A Poor Indicator Of Business Valuation
If you answer no to that question you have to face the brutal honesty that you have a job (it may be high paying, though you’re tied to it).
This is always a sore subject with some of my guru friends who own these prisons. Where if they don’t work they get no paycheck from their clients.
Here are some other questions to ask:
How much money did you earn LAST MONTH from work you finished 5 years ago?
If you wanted to sell your business this year, could you?
Shift From A Job To Building An Asset To Make More Money
So before we talk about how to make the shift, lets look at a huge positive: As businesses work to create assets they usually make a lot more MONEY!
Take our Turkish Client. He went from 800K a year to 2.1 Million in 12 months. And he was working only about 6% of the time he was working before.
I know the math does not seem to work. Yet, when you get it there is a palm to forehead moment as you see building an asset means you work less and have more to spend.
When you build an asset, the focus is on creating income WITHOUT having to be involved in the income generation.
Whenever you can do this the asset is VERY sellable.
When the asset is sellable, investors will become VERY interested and pay a premium.
And you’ll be able to spend more time on the beach.