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Build Your Company to Exit – Finn's Cave

finnscave.com · 992 words · saved by 1 readers

If your long-term goal is to move from labor to capital, then you need to build your business into an asset that you can personally “exit”, not a high paying job. Assets can be sold or held once you have exited, but they do not require your day-to-day participation. Assets give you free time and capital to invest. The “gravitational pull” of a service business is to stay small, never let the owner leave operations, and never be acquirable for more than 2-3X EBITDA (if at all). You have to fight this gravity by: 1) Focusing on a niche and creating actual moats in the business 2) Building the organization and management to be independent from you Moats and Niches When you are the driving force of your company, it is easy to be in the “we do stuff for money!” business. Your relationships and insights drive new opportunities, and your can-do attitude pushes the company to say “yes” to everything under the sun. Take your time to understand the market and opportunity set, but to set the stag

If your long-term goal is to move from labor to capital, then you need to build your business into an asset that you can personally “exit”, not a high paying job. Assets can be sold or held once you have exited, but they do not require your day-to-day participation. Assets give you free time and capital to invest. The “gravitational pull” of a service business is to stay small, never let the owner leave operations, and never be acquirable for more than 2-3X EBITDA (if at all). You have to fight this gravity by: 1) Focusing on a niche and creating actual moats in the business 2) Bui

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