Take it from Rob Rowsell, a successful business owner and entrepreneur: there are three and ONLY three reasons why you should buy or start a business.
1. To sell your business to the highest bidder
2. In order to scale your business
3. So you can passively own that business
In this video, Rob details the factors that you should consider, as well as the goals you should keep in mind in any new business venture.
Want To Start A Business? Are You Sure?
Rob started the clip by immediately laying out said reasons. Just like the first habit from Steven R. Covey’s “The Seven Habits of Highly Effective People” outlines, every business owner needs to begin with the end in mind. Then, we get to the business of unpacking each reason you would want to start a business.
Setting the End Goal of Selling Your Business
When you decide to buy or start a business with the intention of selling it, you must be prepared to work toward that goal each day. Every move that you make on a daily basis should lead toward making it attractive for a potential buyer. This statement is true, whether it involves your daily operations process, investing in the property, or cultivating an appealing work environment.
When potential buyers called to show interest in one of Rob’s previous ventures, he instantly recognized that some factors that were out of place. However, his situation dictated that he had to accept that it was “good enough”. He learned to be better prepared for the next time the phone would ring.
Start A Business To Scale It – Strategies to Implement
In Rob’s past experience as an auto repair shop owner, he scaled his business via acquisition. Specifically, he grew the business by adding more locations. He also improved the existing shops by building additional bays and installing more lifts. These steps were a must as the brand continued to grow and attract more customers daily. This of course also meant Rob scaled the business by creating new positions and growing his staff. When potential buyers come calling, they are looking for a turn key investment. In a business like automotive repair, this means franchises that have built trust in their community over the years.
Owning Your Business While Earning Passive Income
What does passive ownership look like? In effect, the business generates passive income for you while you focus on other pursuits. You have thoroughly trained your managers and assistants on every facet of running the business. They do not need you looking over their shoulders, and the business runs smoothly in your absence.
If that is your ultimate goal when you start a business, then it means working less than ten hours per month in it. That is the work hours number that Rob and his wife Claudia agreed upon after crunching the numbers. Their home state of California’s liability laws caused this business plan to be very difficult. Changes in employees’ lives would make it extremely difficult for Rob to avoid having to put out fires in person. Thus, once their automotive repair business had scaled to a certain number of locations, passive ownership was impossible. At this point in its growth, selling it was a must.
Start a Business – Figure Out Now What Your Exit Strategy Is
Just like Chapter Four of Rob’s best selling book Addicted To Life states, you must prepare now for what is coming! Whichever reason you choose to start a business, do your homework. Laying the foundation well in advance for your end goal will ensure that you get the maximum return on your investment.
If you intend on selling your business someday, you should make sure all of the legal documents to facilitate a sale are stored safely online. In fact, you should have all of these files on hand before you even start the venture! Just gathering all of this information could take up to three to six months. Slow and steady wins the race, so don’t rush and get sloppy.
Scaling your business or working toward a passive ownership model will take even more time. You will want to consult with successful people in your field and others to see what those end goals look like. Accepting help from colleagues who have been there already is never a bad move.
The Big Takeaway
Rob wants everyone to be clear on what their business exit strategy is before they buy. Just like a college freshman, you have time during your career to change your “major”. That is to say, things won’t fall apart if you fall in love with the industry and decide not to sell or scale back your schedule to own passively. However, you should still take every step available to you in order to prepare for what your end goal is now. That way, you won’t get caught with your pants down if you change your mind later.
Join Our Community
Do you own multi-family rental properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the ATL ATL Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth via real estate. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!