The Secret to Sellable Businesses

Summary

• To build a sellable business, focus on creating high recurring revenue rather than assuming you must develop a software product.
• Strong multiples in business valuations come from consistent revenue streams, not necessarily from being a software-based company.
• Many non-software businesses achieve high recurring revenue, and this could be a more strategic focus when considering business models.
• Starting a software company can be costly, with some burning through $300,000 a month while only making $5 million in revenue.
• Venturing into the software business without technological expertise or a trusted technical co-founder carries significant risk.
• It is crucial to have sufficient knowledge to assess whether a potential technical co-founder has the right skills for your business.
• Consider alternative business opportunities that can generate steady income without the complexities and high costs associated with software development.

Video

How To Take Action

If you want to build a business that's easy to sell, I would focus on creating steady money that keeps coming in. This doesn't mean you have to make a computer program or app. You see, the trick is that businesses that make money regularly are worth a lot. It's not just because they're about software.

A good way of doing things is to look for business ideas that make money all the time, but don't involve making software. This is smart because making software can be super expensive. Some businesses spend a ton of money and don't make much back.

So, it's important to think about how to keep making money without all the tech headaches. If you don't know a lot about technology or don't have a partner who does, you could be taking a big risk. Before teaming up with someone, it's key to know enough to tell if they're really good for your business.

Look for other ways to make money that you know well and that don't cost so much to start. Things like monthly services, subscription boxes, or any business where customers pay you again and again can work great. Choose something you understand and that fits with what you like doing. This way, you can grow your business without worrying about the huge costs of making software.

Quotes by Leila Hormozi

"You can build a sellable business without making it software"

– Leila Hormozi

"It's because it has recurring revenue"

– Leila Hormozi

"There are many businesses that have high recurring revenue"

– Leila Hormozi

"I would be thinking about that which is like what's a business I could build that has very high recurring Revenue"

– Leila Hormozi

"If you don't know technology and you don't have somebody's a technical co-founder… there are so many reasons to not do it"

– Leila Hormozi

Full Transcript

you can build a sellable business without making it software the reason that software gets such good multiples is not because it is software it's because it has recurring Revenue there are many businesses that have high recurring revenue and so I would be thinking about that which is like what's a business I could build that has very high recurring Revenue that doesn't involve software because I talk to so many software companies 5 million in burning 300,000 a month I've built it it is very expensive and if you don't know technology and you don't have somebody's a technical co-founder that you also are smart enough to know if they're actually a good technical co-founder it's just like there are so many reasons to not do it