The Formula for Creating a $100M Business
Summary
TLDRThe speaker recounts the intense journey of scaling a business from zero to 4.4 million dollars per month in just 20 months. Despite the success, they faced overwhelming challenges managing every aspect of the business. After considering selling, they learned their company could be worth millions but required significant improvements. The speaker introduces the 'Value Acceleration Method' from acquisition.com, explaining the three key variables—customer count, lifetime gross profit, and risk—that determine a business's value. They offer ten strategies to unlock enterprise value and transform a profitable business into a highly valuable asset.
Takeaways
- 🚀 Rapid Growth: The business grew from zero to 4.4 million dollars per month in 20 months, illustrating an incredible growth trajectory.
- 🤯 Overwhelming Responsibility: The founder felt like a 'genius with a thousand hands,' managing every aspect of the business, which was emotionally and physically draining.
- 🎯 Constant Adaptation: The business required constant attention to marketing, customer service, and operations, likening the experience to a roller coaster of emotions.
- 🧘♂️ Seeking Help: Despite success, the founder felt isolated and unsure, seeking advice from masterminds and coaching groups to navigate challenges.
- 💡 Realization of Value: The business was worth millions, but there were significant issues to address before it could attract institutional investment.
- 🔍 Identifying Issues: The founder recognized the need to transform the business from a simple money-making venture into a valuable asset.
- 📈 Value Acceleration Method: Introduced a method to increase business value by focusing on customer acquisition, lifetime gross profit, and risk mitigation.
- 📊 Understanding Business Value: The script explains how a company's value is determined by the number of customers, their lifetime value, and the risk of future cash flows.
- 💼 Enterprise Value (EV): The concept of Enterprise Value is introduced as a key metric to measure a company's overall value.
- 🔑 Unlocking Potential: The script suggests that by addressing 10 specific factors, a business can unlock higher levels of Enterprise Value.
- 📚 Actionable Insights: The founder is set to share actionable strategies in a video that can potentially transform a business's financial outlook.
Q & A
How did the speaker's business grow in terms of revenue within 20 months?
-The speaker's business grew from zero dollars to 4.4 million dollars per month within a span of 20 months.
What challenges did the speaker face during the rapid growth of their business?
-The speaker faced challenges such as managing every aspect of the business with their spouse, dealing with the emotional roller coaster, and feeling overwhelmed by the responsibilities of hiring, firing, training, and customer management.
What was the speaker's initial reaction when feeling overwhelmed by the business growth?
-The speaker felt like a 'dancing bear on camera,' constantly needing to create more ads and drum up business to keep up with customer demands.
What made the speaker consider shutting down their business?
-The speaker and their wife, Laila, considered shutting down the business due to the immense pressure and feeling of being unable to handle the situation.
What advice did the speaker receive from an investment banking friend regarding their business?
-The investment banking friend advised that the speaker could get millions of dollars for their business but highlighted the need to fix several issues to make it attractive to institutional investors.
What is the 'Value Acceleration Method' mentioned by the speaker?
-The 'Value Acceleration Method' is a strategy developed at acquisition.com to transform a business that merely makes money into a highly valuable asset, which can significantly change one's financial life and that of their family.
According to the speaker, what are the three variables that affect a company's worth?
-The three variables are increasing the number of customers, lifetime gross profit, and risk, which is the likelihood of the business's continued success in the future.
What does the speaker mean by 'lifetime gross profit'?
-Lifetime gross profit refers to the total profit generated from a customer over the entire duration of their engagement with the business.
How does the speaker relate the concept of 'Enterprise Value' to the value of a company?
-Enterprise Value (EV) is the total value of a company, taking into account the three variables mentioned earlier: number of customers, lifetime gross profit, and risk, which together determine the company's worth.
What is the significance of the 10 items the speaker mentions for unlocking levels of Enterprise Value in a business?
-The 10 items, although not explicitly listed in the transcript, are implied to be key strategies or factors that can enhance the Enterprise Value of a business, leading to increased financial success.
Outlines
🚀 From Zero to Million: A Roller Coaster Journey
This paragraph details the author's rapid business growth from zero dollars to 4.4 million dollars per month within 20 months. Despite the financial success, it highlights the immense challenges faced, such as managing every aspect of the business, dealing with emotions, and feeling overwhelmed. The author describes feeling like a 'dancing bear on camera' due to the constant need to generate business through ads. They reached a point of considering shutting down the business but realized its potential value with the help of an investment banking friend. This led to the development of the 'Value Acceleration Method' at acquisition.com.
📈 Understanding Enterprise Value: The Three Key Variables
The second part introduces the concept of Enterprise Value (EV) and its significance in assessing a business's worth. It explains that EV is determined by three main variables: increasing the number of customers, improving lifetime gross profit, and managing risk. Using an example of a food cooking business, it clarifies how customer acquisition and profit margins impact the overall value. The author references Warren Buffet's principle of discounting future cash flows to present value. The paragraph emphasizes that mastering these variables can significantly enhance a company's value, ultimately leading to substantial financial gains.
Mindmap
Keywords
💡Revenue Growth
💡Emotional Roller Coaster
💡Value Acceleration Method
💡Lifetime Gross Profit
💡Investor
💡Enterprise Value (EV)
💡Risk
💡Mastermind Groups
💡Investment Banking
💡Exit Strategy
💡Institutional Investor
Highlights
The company experienced rapid growth from zero to 4.4 million dollars per month in 20 months.
The founder felt overwhelmed managing every aspect of the business alongside his wife.
The constant fluctuation in business led to a roller coaster of emotions for the founder.
The founder felt like a 'dancing bear on camera', needing to constantly generate new business.
A crisis point was reached where the founder and his wife considered shutting down the business.
An investment banking friend valued the business at millions of dollars, sparking interest in selling.
The business needed significant improvements to attract institutional investors for a sale.
The journey began to transform the business from a money-making entity into a valuable asset.
The 'Value Acceleration Method' was developed to increase a business's enterprise value.
Three variables affect a company's worth: number of customers, lifetime gross profit, and risk.
Increasing the number of customers can exponentially increase the business's value.
Lifetime gross profit is the profit generated from customers over their entire relationship with the business.
Risk assessment involves evaluating the likelihood of the business's continued success.
Warren Buffett's concept of discounted future cash flows was discussed in the context of business value.
Enterprise Value (EV) is calculated by considering the three variables of customers, profit, and risk.
Ten key strategies were developed to unlock higher enterprise value in a business.
The video promises to reveal these strategies for transforming a business into a highly valuable asset.
Transcripts
we went from zero dollars
to 4.4 million dollars
per month in 20 months and it also
sucked and that's what people won't tell
you because at the time I felt like the
genius with a thousand hands I was in
charge of every single apartment with my
wife and we were basically doing
everything while trying to managing and
Lead while seeing the company and hiring
and firing and training and onboarding
and dealing with more customers who
could possibly handle obviously what it
felt like for us was this constant
roller coaster of emotions and I felt
like a dancing bear on camera because
every time customers would start going
down and be like oh I gotta go make some
more ads I gotta go get on camera I
Gotta Go drum up some business and so
this thing felt like this rocket that I
was holding on to and I was sweating but
until I hit a wall and I didn't know
what to do and every time I went to
these like masterminds and coaching
groups I was by far the biggest person
in the room and so I was like what do I
do I don't know where to go it got so
bad that Laila and I my wife were
walking one day and she says let's just
shut this thing down I was like wait
hold on this might be worth something so
I called an investment banking friend of
mine and I said hey if I were to sell my
business like do you think I could get
anything for it and he's like oh you
could get millions of dollars for this
business and I was like wow that sounds
amazing so wait but not right now
there's a ton of things wrong with it
that you'd have to fix in order to get
an Institutional Investor to want to
invest the kind of money that you would
want to make an exit and that's what
began this journey of figuring out how
to take something that just makes money
into an incredibly valuable asset that
can change your life forever and your
family's life from a financial
perspective and everything about to show
you in this video is something that we
developed at acquisition.com called the
value acceleration method
now you've probably heard of big
companies like Netflix and Amazon and
Microsoft being worth two trillion 5
trillion one gazillion dollars and the
question is how does that even come to
be like how can something be worth a
certain amount right and so we talk a
lot about value provide value to people
make valuable content right but when
we're talking about value within a
business the person we're providing
value to is the investor who's going to
buy a share of it so there's only three
variables that are really going to
affect how much a company is going to be
worth in terms of your ability to
influence it one
is increasing the number of customers if
all else Remains the Same if you 10x the
number of customers you will 10x the
value of the business
sometimes more the next
is something I call a lifetime gross
profit which means the amount of profit
that you generate from these customers
over the lifetime of their stay with
your business for example if I own a
food cooking business and I sell meals
for ten dollars and I said sell 10 meals
on average somebody my lifetime Revenue
would be a hundred dollars but if I only
make a dollar on each of those meals my
lifetime gross profit would be ten
dollars and so if I want to make more
money I'll either have to get more
customers or make them worth more so
then what's the third variable because
this is pretty much all it takes to grow
a business which by the way is what it
is
you divide that by risk meaning How
likely is it that this will continue in
the future and so if you listen to Uncle
Warren he talks about the value of a
businesses is taking all the future cash
flows that it will ever generate
discounted into the present right and so
these are the things that are all the
cash flow that it's going to generate
for the rest of its time this is the
discount to the present and those are
the three variables that you have to
increase or decrease the value of a
company and all these three things put
together equal a term called Enterprise
Value or what a lot of people call
e v so take out your notepad because
each one of these 10 things unlocks
another level of Enterprise Value in
your business and you when you get them
all right you make a lot more money
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