You spend years building your business. Why not put in a fraction of
that time to optimize your valuation?
There are only two ways that you can increase the value of your
indie startup or SaaS business.
99.9% of courses online are courses that teach you the first way.
A digital marketing course? That’s a course about the first way.
Copywriting course? Still the first way.
E-commerce optimization? Outbound sales? Wordpress, JavaScript,
no-code site building, search engine optimization…
Yeah — all these courses or products are still only teaching you
about one of the two ways you can grow your business' valuation.
The majority of people who want to grow their business' valuation
focus 99.9% of their actions on the “first way”.
The majority of courses produced every year, every month, every week
are about the first way.
This course is about the second way.
Both ways take work. The first way is what most entrepreneurship
stories are about. Years of hard work. Long nights coding. Saturdays
and Sundays working out content marketing strategies, digital ad
campaigns, etc.
Novels and non-fiction books are written about the pain and the
journey of “the first way”.
The second way happens in the blink of an eye. It can happen over
the course of an afternoon or a weekend. It requires some
preparation (that is the point of this course) — but it is not a
marathon.
Here’s the crazy part. The part that is so crazy it almost sounds
unfair:
The ROI on the second way of growing your business value can easily
have an equal or greater ROI than the first way.
What?
OK, so enough of this suspense and mystery.
What am I actually talking about?
Well, one of the hardest lessons to learn in business is that your
effort doesn't necessarily match how much you earn.
This is what makes business different from earning a salaried wage,
where by its very nature, your effort can go up and down week by
week and your paycheck stays the same.
Business is about leverage.
The first way is about working hard to find a product or service the
market wants to pay for, and then delivering that product or service
to the market. Simple... sort of.
The second way is about investing a very small amount of time to
build “instant leverage”.
Now, before I thoroughly define the ‘first way’ and the ‘second
way’, I have one caveat.
The information I am about to share is not for everyone.
Here’s a reason this information might not be for you:
This information, and the Models for Makers course, is not for
people who have $0 in revenue and are looking to get inspiration, an
idea, a magical lantern that lights the way to product-market fit.
There are so many other courses for that. Email me, I’ll point you
in the right direction. If you have no business and no revenue,
seriously, email me, and I’ll point you to amazing courses that can
help you “get started” on growing a business.
OK, with that caveat out of the way, let me define the first way and
the second way.
The second way to grow your business’ valuation
The second way to grow your business’ valuation is to increase the
revenue or profit multiple that someone is willing to pay for it.
To achieve this goal (increasing the multiple someone is willing to
pay for your business), you don’t necessarily need to do anything
that falls under the first category.
I mean, yes, you do need to have built some kind of business, using
the methods and tactics of the first way, to get to the point where
you can leverage the power of the second way.
But the second way doesn’t take nearly as much effort.
Let’s illustrate this with an example.
Let's imagine that with blood, sweat, tears, long nights, caffeine,
and a ton of work, you have been to get a business up to $40,000
MRR.
An impressive number. Even entrepreneurs who have built $100 million
companies can acknowledge that getting to $40,000 MRR is a huge
milestone — you're almost halfway to the magic $83,333 MRR number
which indicates you are making a million dollars a year.
Rounding up a little bit, you are making half a million dollars a
year before expenses.
If you have 70% profits, you are making over $300k a year. Not bad.
Now let's imagine that someone comes along and wants to buy your
$40k MRR business.
Naturally, you meet with them. It’s like a first date.
Maybe they are really hot for your company, and they just blurt out
a number they want to buy you for. That could happen.
But what’s more likely is that you will go on several dates before
they reveal their intentions to you.
They'll look to build your trust (and their conviction), as you
share more and more of your numbers, tell them more and more of your
secrets.
At some point, they may let you know they are preparing to make you
an offer.
Before they do this, there is often a critical moment. This moment
is often literally the last thing they do before they state a number
that could be the number that changes your life.
They will say something like “can you send me a quick financial
model — historicals and forecasts”. They may use different lingo.
They may call it a pro forma. They may ask for other attachments,
Stripe receipts, stuff like that.
But what they are doing is getting really down and dirty into the
numbers so they can give you a number that will change your life.
At this moment, the chess moves you make within a few hours over a
few days could be nearly equal in value to the entire history of
your business.
Now, let’s get back to your MRR.
Stick with me, we are going to do a bit of napkin math. It’ll be
fun, I promise.
Let’s say you are doing $40,000 in MRR.
That means you are doing $480,000 in ARR (annual recurring revenue).
$40,000 times 12 months in a year.
Now here is the kind of unfair, insane, crazy part.
Your buyer may have a range in their head of what multiple they are
willing to offer.
Let’s say that range is between 4x revenue to 8x revenue.
Meaning depending on the quality of various factors they can see in
your business, they may offer somewhere between 4x and 8x revenue.
At 4x revenue, they will make you an offer of $1,920,000 USD for
your business, minus legal fees, accounting fees, paying off any
bills you haven’t paid yet etc. etc.
At 8x revenue, they will make you an offer of $3,840,000 USD for
your business.
That is almost a $2 million difference.
This is the second way.
The second way is about maximizing the value of your company with
data-driven storytelling.
This situation where you maximize your value could be for an
acquisition offer to buy your company.
But the second way also comes into play when someone wants to invest
an amount of money into your company at a certain valuation. How you
present your company can make you hundreds of thousands of dollars —
even millions — simply by how you model the story of your company.
Here’s what I have learned in raising venture capital (and selling a
company for millions of dollars one time — that’s a whole ‘nother
story).
Even the best entrepreneurs — even the ones that already know how to
use Excel — can mishandle the art of the second way at critical
moments.
Offers get revoked and life-changing deals get incinerated, because
a business owner can’t sprint at the right speed at the right
moment.
A part of “the second way” is the storytelling ability and charisma
of the owner. That’s part of it. How well you pitch. How well you
sell the vision to an investor or buyer.
This is a financial modeling course. I am not going to teach you the
part where you charm investors in the first place. That's a complex
topic and there are other courses for that.
But there is another storytelling asset that comes into play
literally 99% of the time. It’s unavoidable. Like emergency health
insurance, it’s something you probably weren’t thinking too much
about until it becomes absolutely critical to have it.
It’s your business’ financial model. A wonderful story told through
Excel or Google Sheets tabs. A story that has a past, a present, and
a future.
How well you tell this story: the past (your verified historical
financial performance), the present (a snapshot of where things are
at this month) and the future (forward-looking estimates of how your
business can grow) is a HUGE part of whether that buyer or investor
deems you to be a 4x or an 8x.
Whether you get $2 million extra, or don’t.
Or — if your business is ten times bigger, whether you get $20
million extra... or don’t.
Models for Makers was created to help you to absolutely crush it at
telling this story.
Yes, at a tactical level, this course is about upping your Excel
skills and helping you build cash flow projections. You will learn
that stuff.
But this course is about much more (coming from someone who has
taken a business from nothing to being acquired by a private equity
group).
This course is about turning you into a VALUATION WARRIOR.
Someone who feels confident that when the time comes, over those
short but critical hours and days of negotiation — you will be able
to extract more value out of your company, however you decide to do
that.
The Internet in 2024 is bursting at the seams with courses, videos,
and products that will help you grow your business the first way.
Models for Makers is about the second way.
