If You Want to Sell Your Business Someday… Watch This

Summary

• If you want to build a business you can sell, never sell the goose, which is your core value creator; instead, sell the eggs, which are the outputs or products.
• For instance, if you have a coaching business helping others, focus on setting up systems and price points that your students can replicate, making their businesses valuable as a group.
• You can aggregate a large number of recurring successful businesses and sell them as a package while keeping the main business intact.
• If any part of your business is heavily dependent on you, it becomes significantly less valuable and harder to sell.
• Look for components of your business that are sticky and recurring, like products or services that customers will keep buying regularly without needing a personal touch.
• Google "mergers and acquisitions" in your industry to see what kind of businesses are being bought and why.
• When raising money, you can sell a small percentage of your business if other investors see potential growth, as this can fund further expansion.
• Businesses that have lots of smaller sellable units (like Amazon stores or event spaces) are more attractive to investors as they can be aggregated for a higher sale price.
• Collaborating with potential competitors to form larger groups can result in higher sell prices due to volume premiums, where big investors buy in bulk for more profit.
• Always think of your business as a product that could be sold to a customer, with that customer being the investor or acquirer.
• If you develop businesses that others eventually want to buy, make sure there's low keyman risk involved by removing heavy reliance on any single individual, including yourself.
• Look into rolling up smaller profitable businesses and selling them in bulk for a higher multiple than selling individually.
• Utilize co-ops or group buying strategies to negotiate better rates for needed supplies, which benefits all involved parties and makes the business more attractive for a sale.
• Always focus on the system behind the product or service you’re selling, which can reduce the need for you to be directly involved, increasing its attractiveness to potential buyers.

Video

How To Take Action

I would suggest implementing these strategies to make your business more attractive for sale and increase its value.

Identify the Goose and the Eggs

First, figure out what your "goose" is—the core value creator in your business. This is the thing that consistently generates value for you. The "eggs" are the outputs or products that can be sold. Don't sell the goose; sell the eggs. For example, if you're running a coaching business, the coaching systems and methodologies are your goose. The individual coaching sessions or spin-off products are the eggs.

Systematize and Decentralize

A good way of making your business less dependent on you is by creating and documenting systems. Train key employees to handle important tasks. This makes your business more attractive to buyers because it reduces "key-man risk," the risk that the business would suffer if you were no longer involved.

Recurring Revenue

Look for parts of your business that generate recurring revenue—products or services customers keep buying. Subscription models are a great way to create such revenue. For example, if you own a gym, consider offering monthly memberships instead of one-time passes.

Market Research

I would suggest Googling "mergers and acquisitions" in your industry. Look at the types of businesses being bought and why. This will help you understand what makes a business attractive to investors.

Collaboration and Aggregation

Collaborate with potential competitors to form larger groups. For example, if you own multiple event spaces, consider aggregating them with other event space owners. Larger packages are more attractive and can be sold for higher premiums.

Raise Money Smartly

If you need capital, think about selling a small percentage of your business rather than the whole thing. This can help fund expansion while maintaining your control and vision.

Co-ops and Group Buying

Utilize co-ops or group buying strategies to negotiate better rates for supplies. This benefits all members and makes the business more attractive for sale.

Build a Sellable Asset

Focus on making your business a sellable asset. If you are a media company, for example, either have a product that your audience buys or sell advertising space using the impressions you generate.

Start with low-cost, high-value actions like systematizing operations and creating recurring revenue. Then, move onto more complex strategies such as fundraising and potential roll-ups. These steps will not only make your business more attractive to buyers but also increase its overall value.

Quotes by Alex Hormozi> #### "You're trying to sell the Goose when you should be trying to sell the eggs"

– Alex Hormozi

"Most people are trying to sell the goose rather than sell the eggs"

– Alex Hormozi

"You never want to sell the goose you want to keep the goose and let it keep laying golden eggs"

– Alex Hormozi

"There's something that creates value and then there's the thing that is valuable"

– Alex Hormozi

"The thing is that the goose often is incredibly valuable but not sellable"

– Alex Hormozi

Full Transcript

if you want to build a business that you can eventually sell this video is for you I've built and sold nine companies the last one I sold was 46.2 million and so I'm just drawing on my experience from selling those to different partners competitors private Equity strategic buyers so that I can tell you the things that I've learned so that you can get there much faster than it took me there was a guy who had uh rental events so basically he started an event business where he would he'd basically have a venue that he would rent and uh you know he'd have two three events a week there and he would charge whatever the you know the the day rate is for the event and that would be more than what his rent was and that was the entire business and so he had three locations he sold those and then he started uh a coaching business or an education business around helping other people find event spaces rent them out and do the same thing that he did right and so he was like Hey I want to sell this business the way that you sold gym launch and after talking to him I was like dude I think you're going about this all wrong you're trying to sell the Goose when you should be trying to sell the eggs and this will be the common theme throughout this is that most people are trying to sell the goose rather than sell the eggs and you never want to sell the goose you want to keep the goose and let it keep laying golden eggs right so that you can keep selling them and for those you who don't know the story of the the goose and the golden egg uh I'll read it to you it's 2 seconds there was once a countryman who possessed the most wonderful Goose you can imagine for every day when he visited the nest the goose had laid a beautiful glittering golden egg the Countryman took the eggs to the market and soon began to get rich but it was not long before he grew impatient with the goose because she only gave him one egg a day he was not getting rich fast enough then one day after he had finished counting his money the idea came to him that he could get all the golden eggs at once by killing the goose and cutting it open but when the deed was done not a single golden egg did he find and his precious Golden Goose was dead there's something that creates value and then there's the thing that is valuable and so figuring out which of the things that you have in your business is the goose and which of them is the eggs is one of the the highest leverage things that you can do because you can build towards the exit intelligently and so in this business I was like hey man you're getting all these uh people on using your system systems and your processes and your price points I was like you're doing all the work that a rollup would have to do if they acquired a bunch of these businesses I was except you're doing it up front and so why don't you know this ahead of time and say Hey I want to build so that I can have the hundred or 500 or thousand of my students who are using my system for doing event spaces I should use all of those guys and I should set it up ahead of time saying hey use these colors and use these systems and use these price points and in the future if you're successful if you're the top 10% of the students here I have an opportunity where you can roll up and sell with me in a group of 20 or 50 of these and so here's the thing if that's the business model then you can just roll up 20 to 50 every other year and have a massive exit while you still keep the goose that brings those people in and the thing is is that the goose often is incredibly valuable but not sellable and that's what's that's the difficult part about this right and I'll give you a counter example so for me acquisition. comom is my Goose right like am I going to sell acquisition. comom not really there are some things that I'll talk about in a second about like transactions you can have at the goose level but what what really makes sense for me it's for me to sell the eggs it's for me to sell the subsidiar it's for me to sell the companies that acquisition. comom invests in right so the big picture is understanding what is your goose and what are your eggs so I'll give you a different story so I had a dude who uh who who saying he had a couple Amazon stores you'll notice this recurring theme had a couple Amazon stores and he did well with those and sold the Amazon stores and he started teaching people how to sell you know to start and build Amon Amazon stores and I was like okay he's like so I want to potentially sell this company I was like well the thing is is that this business isn't very recurring it's not very sticky uh it has huge keyman risk with you being the face of it like not a lot of investors would a want to buy it or B if they did they wouldn't b a lot of money for it I was like so why don't you think about a way to get all these people that you're helping start Amazon stores uh bundled together so that they become a sellable asset because the thing is is like just like the event business that guy had already sold three of the event venues we know they're sellable businesses they're very straightforward they're faceless like they're relatively turn key same thing with Amazon stores like they're faceless like another investor can say okay how much does it cost what's my you know what's my yield what's my return going to be over time okay and like these are very sellable things and so it takes a lot less effort to take something that is already very sellable and just think how can I do way more of them or how can I make them bigger rather than try and take something that inherently has a ton of uh key man risk isn't recurring um has a lot of volatility in terms of acquisition like all of those things make it not very attractive to a potential investor real quick if you want to sell your company or make it into a sellable business acis.com just started our Workshop division for companies that we don't own which is just walking through the process that we do to build significantly more valuable companies at an accelerated Pace we have it here at our headquarters in Vegas and so if that sounds interesting you go to acquisition. comom hit scale and follow the steps and if you qualify our guys will be in touch so let's get t for a second how do you figure this out with your business so the first thing is is that is there something that's dependent on you if anything is dependent on you for the business it's inherently going to be significantly less valuable number one number two is there a component of your business or of your customers businesses that's very stickier recurring so for example gyms micro gyms for gym launch intrinsically they they don't get sold very often so there's not a market for small service-based facilities like person training Studios things like that a lot of people don't want to buy that why because they have keyman risk at their level too right whereas if I had if I were helping uh franchise chains of restaurants like subway uh you know improve their profitability then there would be a clear exit path because franchise that are existing trade all the time same thing for accounting firms because they have high Revenue retention and so basically if you look at all the different things that exist in your business whether it looks at your customers you look at different service lines that you offer within your business and then the overall watching business itself one of those things should have some level of Revenue that sticky and that doesn't require a face and there there's a lot of other factors but if I had to like pick a couple those would be two um that would be really important that I'd be trying to sus you know pull apart to figure out what is the egg and what is the goose and the easiest way to know if you're right about this is looking for m&a activity so mergers and Acquisitions activity for that type of business so if you look if you Google like coaching business m&a ity one it'll show you how much there is and if you don't find a lot then you'll be like okay maybe there isn't a big market for this number one number two if you do find some what is the difference between those businesses and my business and then you'll be able to bridge the gap and say oh these are the things that these buyers like not these other things and then you can start orienting your effort and your business model around the things that investors have proven that they like what I don't want to go is try and sell a product to a market that doesn't exist so you have to zoom all the way back out and think of your business as a product and an investor or potential acquir as a customer and so somebody might listen to this and say okay well what about gym launch like gym launch was uh that type of business well the one thing is that gym launch was really dangerously close to being a franchise and so I knew what franchise laws were and so I purposely like name system fee by the ways what you need to be a franchise name as in everybody's under the same name system everyone use same systems and there's a fee Associated and so if you have all three you have a franchise and if you don't have a franchise and you're doing all three of those things you have an illegal franchise uh which means you're actually subject to getting sued and all that kind of stuff and so if you're in the business of helping people do a specific type of business you either have to pick uh name and system with no fee which most people don't do right but you could do that you could go name and fee like CrossFit for example like they have a name and there's a fee but they give No Business Systems right or you go systems in fee but no name right which was gym launch we didn't tell everyone that they had to unify under one flag now one of my potential ideas that I was thinking about for gym launch in the future was maybe I will start a franchise off the side of it and with the best people I'll plug them into there now and that will be covered under franchise law right but the reason that Jim launch was sellable is that the big things that everybody needed which was that keyman was removed so I was no longer involved in the delivery I was no longer involved in the ads I had a leadership team in place right all of those things the the recurring Revenue it is recurring Revenue business we did have relatively good annual retention um of customers uh and we had multiple acquisition channels and over time I grew gym launch to be bigger than me at the time and here's a here's a nugget that people don't don't get you see me now and you see Jim launch right the thing is is that this Dynamic of the size of of me and audience you know influence now uh and JY launch like I am bigger than gym launch now when I sold gym launch gy launch was much bigger than me and so that's the big thing that people Miss is that like if you're bigger than the company you will always be keyman risk for the business now in that instance you can sell the goose if you are bigger but you usually have to sell a minority and what that means is like people aren't going to take a risk that you're going to leave but you're saying I want to take chips off the table or I want to either fund an acquisition or I want to like expand in this way and so an investor will happily Bet On You by investing in your business that's what raising money is fundamentally and so if I had so like acquisition. comom I probably can't exit acquisition. comom nor would I really want to because I'm associating myself so strongly with it for such a long period of time but what I could do is I could raise money off acquisition. comom and say look at all of our Holdings and I'm going to sell 5% or 10% of acquisition. comom at a monster valuation so that I can either take chips off the table if I wanted to or more realistically I would say I want to go buy this massive company and I want investors to help me do that and look out it will add uh value to all the other Holdings that we have so we'll get a disproportion return on it right that me doing that isn't really an exit it's a transaction or a liquidity event but it's not me leaving the business like you look at Beast Industries right like uh with uh with Jimmy uh Mr Beast he he raised at the holdco level so that means that Beast Burger the the the software he has uh Feasta bles all of them are under that big thing and so he's not he can't exit his YouTube channel but he can sell a portion of it to fund more growth which is what raising money is and so he's be able to do that if you look at um look at Elon right Elon is inpally linked with the companies that he has and so his way of doing that is like they're mostly public companies uh with the exception of SpaceX and so by doing that the public participates but he's not leaving he's the owner of the business he's still running the business but he allows other people to participate in the growth of the company overall so back to smaller businesses so I had a a media company um that reached out to me and was like hey I'm trying to figure out um like how I structure my media company to become sellable he had a number of stars or talent in his in his kind of like stable right and so if you're in that business you basically need to pick one of two directions so either you get all of the guys in the stable to support a product so they'd be like hey this is our hair gel this is our dip this is our whatever right and ideally you want that consumable to be a recurring thing something that and when I say recurring it doesn't have to be recurring but it can also be reoccurring meaning uh if I use hair gel I might not want to have a subscription for it but if I when I run out I buy more of the same thing like I'm not a recurring subscription for Coca-Cola products but I do Buy cocaa stuff on a reoccurring basis and so if you get enough exposure then people will buy that right and so the idea here is that for him either has to have a product or he sells advertising space and The Impressions that he's able to consistently generate become the product right like so if you're a media company it's one of those two things you're either you're either pushing all of that those Impressions that you're getting from your stable into one product you own or you're saying I'm going to let any advertisers come in as long as it makes sense for our brand or the brand of the talent uh to place ads on their and I'm selling media space itself those are the two ways that that business would work now if he wanted to exit that business he can't exit the Stars the stars are what generate The Impressions now if he's not a star he could exit the business if he has the stable of stars and he's selling advertising space but if I were him I would say well I would rather just have this incubator where I could just blow up uh products and again which one's the goose which one's the eggs in this instance having all this massive media and Impressions and whatnot that's the goose and then the eggs would be the products that we'd sell through that distribution Now using the strategy I was saying before he could raise money by saying I'm going to sell 10% so I can front all the capital for this massive launch because if you have a ton of Impressions is one of the big issues that a lot of creators have is that their the their Impressions and their Fame far surpass their wealth and so in order for them to accommodate the demand that they have they'd have to basically have a ton of money they don't have to Buy in inventory um and get you know third like Logistics set up and like all these other things up front to do it right right because you want to do a good job because you can only have one reputation and so they have to front all this stuff and if you don't have money it gets very hard right and so that's where sometimes having like you're not exiting your brand before you have the product you take a tiny bit you give it to somebody else so they can bet on you and then you can put that money towards something that will make everybody more money now um I'll give you a fourth example of this so I had an accounting firm uh kind of like coach consultant whatever you want to call it reach out and um he was like hey I'm trying to think about the ultimate version of my business now his business was a business World role it made a lot of sense because there's a lot of m&a activity in the accounting space um for a variety of reasons but one of them is that uh the book of business is just worth a lot of money there's usually high gross margins or net margins in the business uh it's incredibly recurring and sticky like people don't normally switch who they're doing their taxes with year to year to year and so they have massive ltvs um the hardest part of the business bus's acquisition is getting customers but get keeping customers is actually not too difficult in that business as long as you do a good job and so he was like how do I sell my accounting firm coaching Consulting thing and I was like well that's not what you want to sell because no one's buying that but what people are buying is accounting firms in glob together and so the the top version of your business is having a rollup of 10 20 accounting firms that you can exit every one or two years and exit for 100 million bucks or whatever and you take your slice and you say hey I'm the one who's putting this deal together and I get 20% get 30% whatever and if you're thinking about this and you're like well why would somebody give up that kind of percentage well here's how it works so when you buy in bulk right when you go buy toilet paper or Costco as a consumer when you buy in bulk you get a discount like the more you buy the less you pay per roll that makes sense what's interesting is that in investing it's a volume premium so basically the more profit you have the bigger the company is the bigger the rollup is the more you get per and it's because big money is lazy and so they will pay a premium to not have to do as many deals because deals are costly it cost a lot of time a lot of attention and so if you have to do a 100 deals versus doing one deal you'll pay a premium to only have to do one deal and so if those individual accounting firms could sell at call it uh four times earnings on their own right if they can sell in aggregate together for call it 12 times earnings then even if they give up 30% of the 12x they're still double as good as they were before and so everybody wins and the thing is is that I spend a lot of time trying to find those types of situations in business where it's like literally everyone wins it's like if we work together rather than be competitive if we can collaborate and I'm telling you all the guys that I know who make gobs and gobs and gobs and money like it's so rare that you're actually competing against people like I used to say this in the weight loss world I was like we're not competing against each other guys like because I had obviously a big community of gym owners and we had tons of gyms that are on the same Market I was like guys we're competing against the couch like we're competing against Netflix we're not competing like we're competing against chocolate like we're not we're not competing against each other right like it's it's only I think it's like 11% of Americans like have a gym membership it's still a tiny percent of people who go to the gym and and that's have a membership not even use their membership and so I mean just look at how many fat people there are like it's not like it's not like the problem doesn't exist right and so people get really obsessed about their competition rather than just thinking okay how can we collaborate and we can all get better because the thing is is that the private Equity buyer the ultimate person at the top of this food chain who who uh Aggregates fragmented Industries those guys don't think like small business owners they just think think oh this is really fragmented I'm going to roll all these together and make a much bigger thing they don't care that you have some sort of animosity cuz they just remove both Founders who have egos and say cool these two work well together and I can see some synergies in terms of cost and I can get more profit and own more of the market they just don't think about it like that and so all the richest guys I know are just like like it's so funny because there's these these these blood feuds that exist between businesses that are local but like the guys who you eventually sell to if you you know succeed and do a good job with it those guys don't care at all and they just roll everything together anyways and so we have this whole Obsession about like competing but like the reality is that if you collaborate you end up making a lot more money I'll tell you another quick example on this so there was a dental association that we were looking really heavily into so they had like 700 uh dentists that were in their Association and dentists have to buy like floss and toothbrushes and toothpaste and whatever you know other stuff they need right and so they spend like 20 30,000 a year on kind of like consumable products that they have to use in their practice and so what they did was they did a co-op in terms of group buying so they said hey let's all come together rather than be competitive let's collaborate and let's buy together as one and by doing that they're able to negotiate a big discount in rates and so the discount that those guys would save in buying together exceeded the cost of the annual membership which by the way brilliant model and so like as long as you plan on being in business why would you not want to have a savings that's in excess of the cost of an association which if you ever have the opportunity to do that like I said great model especially in a niche and so they they did exactly what I'm talking about is that he took the top you know 11 of the of the dentists rolled them up and they sold it for 120 million but the PE group damned them was extra smart we were bidding against them um for the business was like hey you know what we'll buy your business too while we're at it because we'll buy your goose and the eggs because they all they saw was wait you have 700 other dentists in here well that's our that's our egg pipeline for the next 5 years and so they just was like cool so we'll do this roll up and we'll pay you a a premium on your uh Revenue which was actually recurring to be in in defense of this business which is again why it was sellable because they just knew that they're like okay well we'll do this rollup but next year we'll just grab another 20 of them or another 50 of them and keep add adding it together and so the thing is is that the most valuable version of that business wasn't actually that business it was the eggs of that business and so making sure that you understand which is the goose and which is the eggs for the business that you're building then I can Orient my whole business to shoot out as many of these eggs as I can and by doing that you have a goose that lays golden eggs and ideally you hold on that goose and you pet that little Goose as long as you can