https://www.youtube.com/watch?v=sEQNnsaeiAs

1 00:00:00.000 --\> 00:01:00.000 99 of businesses end up closing down
over a long enough time horizon only one percent of businesses ever get
sold or trained chance and the reason for that is not because you know
the the what you might think right you might think that it's because
business owners don't know how to sell their business or don't know how
to market the business to get sold but that's actually not the real
reason the real reason is because most businesses are worthless and so
what i want to talk about today is how to go from a worthless business
to a business that has actual value hi my name's alex from joseon
acquisition.com we're in a portfolio company that has 85 million a year
and i have nothing to sell you all right and so my goal here at this
channel is that there's a lot of people who are broke and i don't want
you to be one of them all right and so right now if you're a small
business owner um which you know there's 30 million small businesses or
whatever it is a lot most of these businesses don't actually have value
and the reason for that is because they are not businesses they are they
are jobs right and so if you remember robert kiyosaki's uh his his
wealth quadrant i think it goes employee self-employed uh owner and then

2 00:01:00.000 --\> 00:02:00.000 and then investor i believe that's the
quadrant i could be wrong but i'm pretty sure that's what it is at least
that's how i would draw it in my head in terms of some progression so
most of us have you know most people have jobs first right and then they
make a certain amount of money they're relatively skilled and they think
you know i could do something like this on my own right or i could do
something else on my own and so then they switch to self-employed and
what they don't know is that switch from box one to box two is that you
actually take a decrease in pay and the re the reason for that is
because you actually aren't that good yet you know how to do one thing
well here and because of that because you fit into a larger machine
you're able to earn higher pay because as a as a sum of parts uh you can
actually provide more value right but when you actually have to be each
of the parts you're not that good at it yet and so you become
self-employed and you actually make significantly less for a long period
of time the thing is is that most people who are self-employed have an
llc right and so they consider themselves to be business owners but the
reality is that they are not business owners they are self-employed and
even if you have other employees that work for you you were still
self-employed here's the litmus test for this right what happens is and
i have these conversations all the time because there's companies that
apply to to

3 00:02:00.000 --\> 00:03:00.000 become portfolio companies uh with us
so we can invest in the companies and help them help them grow and
that's just for fyi it's when you're over five million bucks a year so
if you're not there then don't worry about all this stuff is free so
just consume it all right the the thing that happens though is that they
stop doing the actual fulfillment of the thing whatever the widget is
whether whatever they're selling right where the service is they're not
actually doing the fulfillment and so in that moment they're like i now
own a business and i'm a business owner and now i can sell this business
and that's so far from the truth because there are so many other things
that must happen right in order for a business to be sellable because
for business to be sellable it must be an asset they can run without you
now you might think again here's the fallacy that your business can run
without you and that's because maybe you don't do the actual thing but
you are still involved in maybe the marketing and the sales right if you
can't get someone to replace you in that then you can't sell it now you
might think i'll just sell and then somebody else will do that it's not
going to be a sellable thing no one's going to do that because they're
like well you haven't done it well why would i believe that someone can
do it besides you because you haven't proved it and so what you have to
do is prove

4 00:03:00.000 --\> 00:04:00.000 to what a future buyer would be that
this business can operate on its own without you right and so the next
step right 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 pick one of the channels you want you
could pick referrals you could pick affiliates you could pick uh manual
outbound which is cold calls called emails whatever you could pick uh
owned media which is like all the people that you already have contact
with that you can message you could have uh earned media which is that
you you start creating a channel of your own that that a platform will
distribute your content that's how you generate a business or you could
do paid traffic right you could you could do paid media and start
running ads on a consistent way to generate sales right 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 and if you don't have that then you don't have a
sellable business now here's what happens next so first you you
productize your service so it's a consistent thing that you deliver it
over and over again you're not custom if it's custom it's gonna be
terrible and it's gonna be it's gonna be valued as a service-based
business which is

5 00:04:00.000 --\> 00:05:00.000 gonna suck and you're not gonna be able
to sell it you're gonna have a massive earn out which basically means
you're gonna work for the next five years to earn the exact same pay
except you no longer own the business and the person who gives you the
earn out has all the upside and you you take all the risk and they got
all the upside so no bueno there and so you've prioritized the service
you you you're you have a predictable acquisition process right and
you're like now i can sell the business ah wait there's more because the
thing is is that you still own all the hats you still might be managing
the sales team you might still be managing the marketing you stop it
might be innovating the product you still might be making uh all the
chief decisions right you still might even be operating the business
just not actually doing any of those things and so to say that like i am
now a business owner and this this works without me is not true you were
just you were doing higher level skills which believe it or not are more
expensive to replace believe it you know 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 your your director of marketing so
you can take that hat off and who's going to become the the chief
product guy who's going to be consistently innovating the product

6 00:05:00.000 --\> 00:06:00.000 and improving it so that it you know
delivers excess value to your customers right so you have all these hats
on and so the process of entrepreneurship of transitioning from
self-employed where you literally have a hundred hats right to
transition your business owner where you take all the hats off your head
and you were just a shareholder which is how i prefer to see it it's
like you have to think of yourself not as the owner but as the director
of the board as the as the as the chief shareholder in the company right
rather than the owner okay even even that change in language i think is
helpful and it was for me what we have to do here and if you're like man
that's gonna take a long time to do that duh that's why most businesses
don't get sold and that's why sometimes it takes years to build
something that's great right it might take you three years might take
you five years it might take you ten years right to get the business at
that point and if you're like man if i only just had xyz insert person i
could do this welcome to entrepreneurship like 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 like the rest of it is
people right people are the thing that are gonna run this machine for
you and that means you have to learn how to recruit have to how to hire
how to manage and

7 00:06:00.000 --\> 00:07:00.000 how to lead right and those are the
soft skills that are harder to to um uh they're less tangible but
they're just as important if not more so right when you look at the the
biggest billionaires and multi-millionaires out there they have they
keep their their their space around them very clean they know what they
stand for they know and people are attracted to them because they have
admirable qualities and traits and that is how you get the higher level
people so think about this so let's say that you've got somebody who
who's a who's a brilliant marketer who can generate demand like crazy
for you right well that person isn't going to work for someone who's
lower skilled than they are right 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
they want to do something that's meaningful and so um the the journey
here is understanding and this is the piece that i think most people
miss is that they don't even know the hats that they are wearing you
making decisions is a hat it's an important hat right and so selling it
without the person who can make decisions isn't a business right if
you're selling it and

8 00:07:00.000 --\> 00:08:00.000 you're still the chief chief marketing
officer you're the one who's controlling the messaging and the branding
and all of those things it's still like that that that role still exists
and so there's typically far more leadership that has to occur in order
for the business to be sellable and here's the thing now all of a sudden
all of these roles that you've been doing up to this point you've been
taking profit profit sell discretionary earnings 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
right 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 but that is okay because now you have 100 of your time back
and then you are truly a shareholder in the company and this takes years
not months not weeks and the thing is is you're going to hire somebody
who you think is going to be good at marketing and they're not going to
be and then you have to hire another person and then you think they're
going to be good at marketing and they're not then you got to hire
another person right and if you're like man that sounds tiring that's
the reason most people who own big companies are like it is hard to do

9 00:08:00.000 --\> 00:09:00.000 this this is not easy this is not for
the faint of heart you must have a long-term vision that you are
committed to because you will burn out if you're only doing it for the
money you will because once you've satisfied your personal needs you'll
just stop being you'll stop being inspired by the reason that you're
doing this right and the thing is is your employees will be even less
inspired because all of it starts with you and then gets diluted down
and so if you are not extremely potent right you are not extremely
distilled down in terms of your vision of where you want to go and why
you're doing this why this business even exists then other people be
even less so and less committed to that vision and you will attract
lower quality people and they will they will turn out and they will not
be skilled etc what happens is the small businesses become big
businesses because you need to slowly grow them so that you can
accommodate more people right who can actually do all of the things that
you do and the reality is that you're not going to find because right
now you're like well there's one of me so i just need to hire one more
person but that's not that's not reality right you might be doing six
things and you might have to hire six people to do what you are doing
and of course you do and that sounds unreasonable but welcome to
business and

10 00:09:00.000 --\> 00:10:00.000 so for businesses to be scalable
oftentimes they have to have significant enough gross margins and volume
to be able to uh pay for high quality talent to be able to actually do
these things to take decisions off your plate and where you get into the
point of kind of like hyper growth and hyperscale where you're starting
to talk 10 million 20 million 30 million plus per year right is when you
have people who come with solutions pre-loaded they come with experience
of having done the thing that you need to solve already so this like
you'll notice the transition the business owner and i'll tell you this
right now is that once you start crossing multiple eight figures the
people that you are hiring are better than you are at everything and
that's one of the that's one of the that's one of the weird things that
happens because in the beginning most people don't have the skills that
you do right and so you have to hire people who are not as good as you
are and then you have to train them right and then later on you start
hiring people who are okay at some things you still have to train them
on how you want it done so they have they've done the type of role in
the business in the past but they don't know how you want it done here
so you have some training but there's less and there's some experience
right

11 00:10:00.000 --\> 00:11:00.000 the level above that is when people
come in they know what to do they know how to do it better better than
you for your specific business and when that happens then you realize
how how little utility you actually have in the business and how your
really only role is to just recruit people right recruit people and and
cast the vision of where you or want to make the bet for the company of
where you want it to go and so anyways the reason that most businesses
are worthless is because they sell entirely customized things they sell
to everyone which makes it completely unscalable they're the ones who
are still heavily involved in the acquisition in the rain making and so
because of that um and then even then even after they've graduated from
getting out of the selling and getting out of the fulfillment the the
business still doesn't have value because they might still be the
talking face they still may be the spokesperson which means that the the
business has no value outside of themselves because no one else could
take it over right 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 and if you don't hit the milestones they get
your business

12 00:11:00.000 --\> 00:12:00.000 anyways and you get none of the money
right and so it may sound arduous to do this and it is 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 because i heard this from i heard this quote from an mit
dude who spoke from john warlow's book but anyways uh he said all of you
guys are busy selling your services what you should be doing is selling
your business right you as the ceo or the owner your job is to sell the
business the job of the of the sales people is to sell the products
right once you can make the transition from your businesses or your
products rather than your services of the business are the products you
look you move up in a level of um an order of magnitude right and so i'm
not saying that you should immediately be selling your business right
but you should be making your business sell a bull and 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 and this is a a key hack for negotiating fyi is

13 00:12:00.000 --\> 00:13:00.000 that don't need the deal the guy who
needs to deal the less is the way that you negotiate like that is like
everyone wants all these tricks and tactics and things for negotiating
the way to have the way to have the best negotiation is to have the most
leverage the way to have the most leverage does not need the deal simple
right simple not easy how about that and so if you want to sell your
business someday for a lot of money then the business must be sellable
and in order for you to do that you must get the business to the point
where you don't even mind keeping it because it's still cash flow so
much money to you and you don't do anything that is the position of fu
that is the position where you'll get the most money because now you
have something that people want no one wants a business where the owners
you know no one wants to buy themselves a job right and they don't want
to buy themselves your job and so you have to think and this is the
critical self-awareness of thinking like what are the actual things that
i do everyone likes to think oh no i don't do anything this thing ruins
itself except if you step away and didn't answer calls for two months
with the business store on itself probably not right so then we have to
look at what are we actually doing and it might be little little
fractional things that we're doing all over the place but we still have
to

14 00:13:00.000 --\> 00:14:00.000 quantify those things and we still
have to put processes around them and then hand them to people and see
how they do and then continue to improve them until eventually you get
to that promised land where you don't actually have to do anything and
you can still own the business and i mean to prove this like you can
probably own shares of companies on the public traded market they have
figured this out right and you can own a piece and participate in the
upside without ever ever looking at what apple is doing for their for
their roadmap right and so we have to get to that point as business
owners in order to make the asset that we own the most valuable thing
that we have probably the biggest thing on our net worth balance sheet
is all the the equity that we have in our businesses and to increase the
value of that equity we have to make it so that it actually a business
and we transition from employee to self-employed to owner right and then
the transition there goes from owner to investor because when you make
that transition that is when you start seeing your business for what it
is which is a sellable asset that sits on your net worth balance sheet
all right and so uh this is one of the hardest lessons that took me the
longest amount of time to learn i'm hopefully just translating this to
you because i i see so many people who are like i want to sell my
business but the business is not

15 00:14:00.000 --\> 00:15:00.000 sellable and it is worthless without
them and so we can't just say oh the next person's going to figure it
out because they're not going to i'll tell you right now they're not
going to you have to figure it out and what most people do instead is
they just start another business because they don't know how to solve
the problem and so we must confront the problems that we have which is
you have to articulate the thing that you don't know how to do as a
problem that you can solve which is i don't know how to insert find hire
direct a marketing director i do know how to find a vp of sales uh and
train them and manage them and grow them i do not know how to find a
chief you know product officer who's going to innovate the product on my
behalf and make it better than i ever could and make a better product
and make a better client experience around and consistently improve it
based on these metrics until we can articulate what the problems are we
cannot solve them and if we consistently live in this world of like i
just want to sell my business someday you're not going to be able to
until you put these pieces in place so that the business is sellable and
actually has value in and of itself separate from you and then when that
happens your net worth will skyrocket because now you have something
that everyone wants which is an asset that produces cash while you sleep
so anyways

16 00:15:00.000 --\> 00:16:00.000 uh my name is oxford mosey own
acquisition.com which portfolio company says 85 million a year i have
nothing to sell you keeping awesome if you like this hit the subscribe
button uh if you didn't like this i love you either way and i'll see you
guys next video bye
