How to Craft an 8-Figure Exit | Ryan Daniel Moran

Have you noticed how great the world is recently? I mean, think about six months ago, how uncertain we were, how freaked out we were, and now everything's just fine. There's something to be said about this from a business perspective because many people were sitting on the sidelines for the last six months. And we've had all of this movement go into the online space. We've had all this movement, all this new investments moving into the marketplace. We've had all this stimulus money moving to the marketplace. So what do we do about that? So if you, like the rest of the world, are starting to come out of this and you're saying, I don't think I want to go back to work, or you're saying, I think it's time for me to double down on the business that's moving. Well, then here's how we do that. Because if you start the business with an exit in mind, you will not only position yourself to have the exit, but you will also just build a better company. Because the business that sells for the most money is the business that you don't want to sell. Now, a big thing that I realized when I was selling my company was that valuation and profit are different. And when you are building a company for an exit, you're building for valuation, you're not building for profits. This is the big braingasm that most solo entrepreneurs are missing and that keeps them held back because they're optimizing for profit. Why? Because to them, profit equals lifestyle, profit equals success. To most small entrepreneurs, the success of a business is not determined by how much you can sell the business for, is determined by how much you can put into your pocket month over month over month. That's amazing. That's awesome. But that's a cash flow business. That's a business that can never grow outside of the founder. That's a business that is going to have a hard time being positioned for a sale later on. And sometimes there's a trade off between those two things. Sometimes you have to eat less profit in order to invest into higher valuations. That means taking some of that profit and putting into things like team and infrastructure or traffic or areas of growth that will help accelerate new areas of the business. So that's the first piece. And on the other side, when this is a bit of a mind warp, but sometimes if you have given the perception of maximizing profitability, then the valuation of the company can go down. Why is that the case? Reason for that is because when you have maximized profit means you have kind of flatline in your profit. It sends the signal that that might be all the meat that exists on the bone. And so if that's the case, then another person who's coming in to buy the business doesn't see the same value add potential that was there before and they might be willing to pay less money. This isn't always the case, but the important thing is that a group of systems from the buyer and a group of systems from the seller come together to create more value and more profit. In other words, when you are selling the business, you have to have something that when plugged into another business, increases the value of both. An example of this, Primal Kitchen. Primal Kitchen was started by blogger Mark Sisson Five, five years ago in within three to, I think it was three years, he sold to Heinz for $200 million. This is a blogger. A blogger sells a business for $200 million. Now when Heinz comes in, what are they buying? They're buying the customer base, the awareness, they're buying the audience. They're buying the existing profit line. Yes, they're buying, but the least important of that was profit. Get that? The least important part was the profit of the business. When Heinz comes in and buys a company, they're buying top line revenue, they're buying exposure and brand awareness and they're buying the audience. Why? Because Heinz can roll out product after product after product. They can bring in their systems to drive down costs, they can bring in additional advertising to boost revenue. That is how real business is done. Inside of our trainings, we break this into three categories. We have audience, sales and product. When we look at product, you can develop the best product in the world and be broke if you don't have sales channels. Now you can have great sales channels and crappy products and go out of business because you're just a marketer and you're selling stuff. But you don't have anything that is adding value to people's lives. So you have no, you have no depth to the business. And you could have sales and product but be vulnerable to competition if you are not building an audience. And you could also be an audience and be broken because you're just famous and nobody buys from you. So the real magic is when you combine a great product with good sales channels and a good audience. And when you have all three of those that are good enough, you're in business and you have the potential for an eight figure exit. Now one of the common concerns that entrepreneurs bring up when I talk about this is they're looking at, okay, how Do I pay myself while also building something that has a potential for an eight figure exit. And this is where collaborative capitalism comes into play. So when you're building something to sell and you're building with the intent of making the biggest pie possible, then the focus is not what do I take off the table, it's how do I create as big an exit, as big a pie as possible. And sometimes that means you go raise capital, it means that you are okay managing debt. It means that you use other resources that make that pie as big as possible. Instead of looking at how do I drain the bank account so that I can, I can protect my freedom. Remember, freedom is not how much money you have, it is doing what you want to do. So this always comes back to building the business that you want to build and then building the systems to keep you in the spot that you want to be on a day to day basis. And sometimes that means being willing to go out and sell 20% of the company at a lower than you want valuation so that you can make the investments in the people, the advertising and the vision for the business that you want to build. So when you come together with those people that can provide funding or provide infrastructure, then you're able to build a much bigger pie. It's that idea of two plus two equals five. It's very hard to build a business that you can sell just operating as a solopreneur. It's very difficult to build a really big pie when you are committed to controlling as much of the pie as possible. It's really difficult to have a big exit if you're unwilling to create partnerships or to build the infrastructure that's needed for you to walk away. Think about that for a second. Most of us, most solo entrepreneurs are so focused on profit that they can't walk away from the business. That's not a business that you can sell. So the thing that needs to be in mind is are you putting enough investment into the business for you to be able to walk away? And if so, then you have a business that you can sell and where do you put that money? You put it into building great products into good sales channels and building the audience so that you're building as big a pie as possible and you are in the position to sell that for, for eight figures. Now what I like to do to make this thing happen fast as possible is you carve out a certain amount of the business to raise your seed capital. Then I like to carve out a small amount of the business that's 10 to 20% for partnerships and audiences. That's board members, advisors, but most importantly, it's people who have audiences. So if I create a partnership with an audience that has 100,000 people and that helps me get to 100 sales a day much faster, then I have basically cut out a year's time of grind and it cost me 20% of the business. But now I have a very predictable way to get sales for any product at high profit margins. I'll make that trade all day long. One of the best assets that you have in your business is the equity and the control of that pie that you're building. And guess what? Jeff Bezos only owns 19% of Amazon. Mark Zuckerberg only owns like 18% of Facebook, and I think Elon Musk owns 20% of Tesla. They're all doing just fine. Wealth is always going to expand. The universe is always going to expand. The world is always going to expand. And the first rule to money is you have to have ownership of what is expanding. And the fastest way to do that when you are first starting out and you got no money, is to cast a vision for a business that you can then go recruit the assets to expand. So if you watch this video or you're watching a clip of this and you're sitting here going, this all sounds great for people with money. I'm here to tell you the best way to get in the game is to decide what you own is to create something that you own because that's going to expand the most. Especially when you're operating with the mindset of I can bring in other connections and relationships that can help me grow this pie. I'm Ryan Daniel Moran from capitalism.com we help entrepreneurs build seven figure businesses. When you're ready for us, we'll be ready for you and you can start your journey@capitalism.com start.

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