Nick HutchisonFounder and CEO, BookThinkers

One foundational thing that Rob Luna would recommend for those who have already started a business

15 Jan 2024 · 1 min

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In a brief interview, Nick Hutchison asks Rob Luna what foundational practice founders who have already started a business often overlook. Luna advises that entrepreneurs should design their companies with enterprise value and eventual sale in mind, rather than merely creating a job for themselves. He explains the concept of working "right to left" by researching how comparable businesses are sold—e.g., landscaping firms fetching 3‑4 times earnings—and reverse‑engineering the financial and operational profile needed to achieve a target exit valuation (e.g., $5‑10 million). Luna emphasizes starting this foundation now to build a $10‑15 million asset over a 10‑15‑year horizon, warning that many founders unintentionally buy themselves a job and end up with no real value to sell.

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For those that have started businesses, what's one foundational thing that a lot of people are missing that you'd recommend they start doing today?
Yeah, build it with enterprise value in mind, meaning build a business that's sellable, that somebody is going to want to buy from you. That means not buying yourself a job. A lot of entrepreneurs don't build a valuable business. They bought themselves a job and they don't realize it until they're stuck in that job. There's no value to it. So I always tell people work right to left, meaning take a look at if you're a landscaper, whatever your business is, look at other businesses that are being sold. Landscaping companies are being sold for 3 to 4 times earnings. Take a look at what those businesses are being sold for. Reverse engineer to say, okay, if I want to get $5 million or $10 million for my business, what do they look like? And then start today building that foundation to get there in 10 or 15 years. So that way, if you're in your 20s, 30s, by the time you're 45, you built a $10 or $15 million asset that you're able to sell. Far too many people just buy themselves a job. They're not building a valuable business.