Alex from Acquisition.com discusses the common misconception that businesses fail due to lack of sales or marketing skills, when in reality, most are simply not sellable because they operate more like jobs than businesses. He emphasizes the transition from self-employed to business owner, stressing the need to replace oneself in all roles, from fulfillment to marketing and sales, to create a sellable asset. Alex highlights the importance of productizing services, establishing predictable acquisition processes, and hiring skilled individuals to take over various roles, ultimately leading to a business that can thrive independently of its founder. He also touches on the necessity of a long-term vision, strong leadership, and the ability to attract and retain high-quality talent.
"99% of businesses end up closing down over a long enough time horizon."
This quote emphasizes the high failure rate of businesses over time, suggesting that closures are a common part of the business lifecycle.
"The real reason is because most businesses are worthless."
This quote identifies the core issue behind why businesses close, which is the lack of value in the business itself, not just poor sales or marketing strategies.
"Hi, my name is Alex from own acquisition.com. We own a portfolio of companies that does $85 million a year."
Alex establishes his credibility by mentioning his association with a successful portfolio of companies.
"And so my goal here at this channel is that there's a lot of people who are broken. I don't want you to be one."
Alex expresses his intention to educate his audience to avoid common pitfalls that lead to business failure.
"Most of these businesses don't actually have value. And the reason for that is because they are not businesses. They are jobs, right?"
Alex clarifies that many small businesses lack value because they do not operate independently of the owner's direct labor, resembling jobs more than enterprises.
"And so if you remember, Robert Kiyosaki's his wealth quadrant, I think it goes employee, self employed owner, and then investor."
By referencing Kiyosaki's wealth quadrant, Alex provides a framework for understanding the progression from employment to business ownership and investment.
"But when you actually have to be each of the parts, you're not that good at it yet."
This quote reflects the challenges faced by new business owners who have yet to master the various roles required to run a business effectively.
"But the reality is that they are not business owners, they are self employed."
Alex distinguishes between being self-employed and being a business owner, with the latter requiring a business that can operate without the owner's constant input.
"Because for a business to be sellable, it must be an asset that can run without you."
The ability to sell a business hinges on its capacity to continue operating without the owner, defining it as a sellable asset.
"And so what you have to do is prove to what a future buyer would be that this business can operate on its own without you."
The quote outlines the necessity for business owners to establish their business's operational independence to attract potential buyers.
"And so the next step is that you replace the acquisition. So first you have the services that you're not doing, then you replace the acquisition process to be something that is reliable."
Alex advises on the critical next step of replacing oneself in the acquisition process to create a reliable, owner-independent system for generating business.
No matter what it is, you have to have a consistent process where, you know, if you put x effort or x dollars in this side that you will get y outcome on the other side, right?
This quote emphasizes the importance of having a reliable and consistent process in business that can predictably turn inputs (effort or money) into outputs (sales or outcomes).
So first you productize your service. So it's a consistent thing that you deliver it over and over again. You're not custom.
Productizing a service means creating a standardized offering that can be delivered repeatedly without customization, making the business more scalable and sellable.
You still might be managing the sales team, you might still be managing the marketing, you still might be innovating the product, you still might be making all the chief decisions, right?
This quote highlights the challenge of entrepreneurs still being deeply involved in various aspects of their business, which can hinder the process of becoming a true business owner.
And so now you have to go find someone who's going to become your vp of sales so you can take that hat off and who's going to become your director of marketing so you can take that hat off and then who's going to become the chief product guy?
The quote outlines the necessity of hiring executives to take over major roles within the company, allowing the entrepreneur to step back from day-to-day operations.
The game is about people, right? Once you have the model and you have some of the tactics in the beginning so you can get some initial traction, the rest of it is people, right?
This quote stresses that after establishing a business model and gaining initial traction, the focus of entrepreneurship shifts to people management and leadership.
You have to have more skills to attract the type of people that you want who are going to help you run this business and grow it, because they have to believe in the vision.
The quote implies that to attract skilled individuals who can contribute to business growth, an entrepreneur must possess a skill set that inspires confidence and aligns with the company's vision.
And so there's typically far more leadership that has to occur in order for the business to be sellable.
This quote indicates that strong leadership is required to prepare a business for sale, ensuring it can operate without the original owner's daily involvement.
Selling it without the person who can make decisions isn't a business, right.
The quote underscores that a business dependent on its owner for decision-making is not truly sellable, as it requires independent leadership to sustain operations.
to this point, you've been taking profit. Profit, sell, discretionary earns SDE right from the business, when in reality a lot of that profit must be allocated back to the roles that you're doing, but you're not choosing to pay yourself for it, right?
This quote emphasizes the common mistake business owners make by not accounting for the value of their own roles within their profit calculations.
What happens is a business will become more sellable as you replace all of the pieces that you're doing and oftentimes the margin will drop.
The quote explains that a business becomes more attractive to buyers when the owner's roles are replaced by employees, even if it means a reduction in profit margins.
And this takes years, not months, not weeks.
This quote underlines the long-term commitment required to successfully transition from an owner-operated business to one that is scalable and sellable.
And the thing is, you're going to hire somebody who you think is going to be good at marketing and they're not going to be.
The hiring process is iterative and often involves making mistakes before finding the right talent, as described in this quote.
You must have a long term vision that you are committed to because you will burn out if you are only doing it for the money, you will.
This quote highlights the importance of having a vision beyond financial gain to sustain motivation and prevent burnout.
your employees will be even less inspired because all of it starts with you and then gets diluted down.
The owner's vision and inspiration are crucial in setting the tone for employee engagement, as stated in this quote.
What happens is the small businesses become big businesses because you need to slowly grow them so that you can accommodate more people who can actually do all of the things that you do.
The quote explains the growth trajectory of a small business into a larger entity by hiring employees to distribute the workload.
And so for businesses to be scalable, oftentimes they have to have significant enough gross margins and volume to be able to pay for high quality talent.
This quote discusses the financial prerequisites for scaling a business, which include sufficient margins and sales volume.
So you have to hire people who are not as good as you are, and then you have to train them, right?
The quote describes the initial phase of hiring, where the owner must invest time in training employees who may not initially possess the same skill level.
The level above that is when people come in, they know what to do and they know how to do it better than you for your specific business.
This quote indicates the advanced stage of hiring where employees are more skilled than the owner in certain areas, enhancing the business's capabilities.
The reason that most businesses are worthless is because they sell entirely customized things.
The quote identifies a common pitfall where businesses are too customized and owner-centric to have sellable value.
Unless the person agreed to a three or five year earn out, which then means that you transfer the ownership to someone else, they get all the upside.
This quote touches on the concept of an earn-out agreement, where the business's value is tied to future performance and the original owner may lose out if certain milestones are not met.
But I can tell you that having now gone through this process, it is one of the most worthwhile things that you can do is look at the business as a true sellable asset.
The speaker reflects on the rewarding nature of transforming a business into a sellable asset, as per this quote.
all of you guys are busy selling your services. What you should be doing is selling your business.
This quote, referencing advice from an MIT individual, suggests that owners should focus on creating a business that can be sold, rather than just selling services.
"You as the CEO or the owner, your job is to sell the business. The job of the salespeople is to sell the products." "But you should be making your business sellable."
These quotes emphasize the distinction between the roles of the business owner and the sales team. The owner's focus should be on making the business appealing to potential buyers, which is different from the day-to-day sales of products or services.
"The beauty of this is that when you go through this process, you end up having phenomenal leverage in any kind of negotiation that you want to have in the future." "The way to have the best negotiation is to have the most leverage."
These quotes highlight the strategic advantage of making a business sellable. By doing so, an owner gains leverage in future negotiations because they are not desperate to make a deal.
"That is the position of Fu, that is the position where you'll get the most money."
This quote refers to the ideal state for a business owner, where their business is highly profitable and self-sufficient, making it very desirable to buyers and allowing the owner to command a higher price.
"And so you have to think. And this is the critical self-awareness of thinking. Like, what are the actual things that I do?"
This quote underscores the importance of self-awareness for business owners in understanding their true involvement in the business and the necessity of creating systems to replace their role.
"And to increase the value of that equity, we have to make it so that it is actually a business. And we transition from employee to self employed to owner."
This quote describes the progression a business owner should undergo, moving from hands-on work to a strategic position where the business is an asset that contributes to their net worth.
"Until we can articulate what the problems are, we cannot solve them."
This quote conveys the necessity of recognizing and defining problems within the business to address them properly, which is a step toward making the business sellable.
"So anyways, my name is Dr. Mosey own acquisition.com, which is a portfolio of companies that's $85 million a year."
This quote serves as a credential, establishing Dr. Mosey's authority on the subject of making a business sellable and valuable.