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The blog for ambitious founders.

My blog covers the MANY highs and lows of starting, scaling and selling my business for 7-figures, in just 4 years. If you're an ambitious entrepreneur then add your email below to get a new episode delivered every Wednesday.

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Show me the money... (investment, money off the table, acquisition).

During the 4 years that I ran my business, I 'took money' 3 times.


None of the times did I need to take the money, but each time I did for a specific reason.


Reducing your equity in your own business should never be taken lightly. But often it's possible to make your remaining equity worth significantly more than the full equity you started with.


Rather than give my advice on what you should do, I'm going to tell you about each of the 3 times I took the money, and why.


I hope it can help you get the most value and enjoyment from the equity in your own business.


The message that changed everything. Money in the bank!


Investment

Probably the most common way of swapping equity for money is investment. In this scenario you're not technically selling your shares, but diluting their value by creating additional shares that you sell in return for money into your business.


Yes, remember, this is money into your business. not your own pocket.


Some people seek investment in order to set-up their business. Maybe to cover initial costs like tech development, or physical stock. But for me, the money wasn't to start-up, it was to speed up.


You see, one of the most confusing elements of running a fast growing business is, the faster you grow, the less money you have in the bank. Your revenue climbs at a rapid pace, but so do your costs. And usually you have to pay for the costs quicker than you get paid the revenue.


It's called working capital and the reason why so many fast growing companies need to raise investment. But if you looked at their P&L it's likely that you would think they were swimming in cash.


That was the situation with my own business.


After 2 years of solid organic growth, you would think that investment would be the last thing on our mind. Triple digital revenue growth each year and strong margin. But cash in the bank was stopping us from going from fast to ultra-fast.


So I raised money, to allow us to hire ahead of revenue. To ensure that we always had spare capacity to take on and service new clients. It was still a constant game of catch up, but the funds allowed us to at least be a couple of steps ahead of where we needed to be.


The impact was a complete step change in growth. My equity in the business reduced from 100% to 85%, but the value of my remaining shares was twice as much.


It was a lesson that businesses that are growing, profitable and winning can still benefit from raising money, if it means they can accelerate even faster.



Money off the table

While investment is the most common way of taking money, this is probably the least considered.


Very similar, but instead of raising money for the business, you are selling shares to put money in your own pocket.


It's likely that the founder of a successful business has the vast majority of their net worth sitting in shares of their business. You could say all of their eggs in one basket. And while that business will hopefully go on to get more and more valuable, there's a chance that it won't.


So taking money off the table allows the founders to de-risk their investment portfolio basically. Sell some shares so they have a win, but still keep most of their future wealth in the business that they continue to run.


I did exactly this after 3 years of running my business. I sold 10% of my shares, reducing my equity down to 75%. The money I made allowed me to pay off my mortgage, meaning whatever happened, the business had been a success for me.


At the time, I knew that we had to push things even harder if we were going to realise the exit valuation that we wanted. Pushing harder meant taking more risks. I'm a naturally risk-adverse person (I think most founders actually are, despite the reputation).


So taking money off the table at that stage meant that I had de-risked and could give everything to push for the big exit.


That ended up coming almost exactly 12 months later.


Acquisition

It's the milestone that many business owners dream of, but very few get to.


People do it for different reasons. The money, the accolade, the boredom, the stress.


It was always a goal for me from day 1. Really for the money. But after 4 years, when I accepted an offer to sell my business, I think it was a mixture of money, accolade, boredom and stress.


I have a bit of a low attention span, and apart from my marriage, can't think of many things I've done for 4 years. For me, it was time to move on to new things.


I'm a solid introvert and managing a team of 80+ people by the end wasn't my idea of fun.


Selling my business was always my dream, but by the time the moment came it felt necessary as well as aspirational.


It's a tough slog running a business, especially chasing relentless growth month after month. The acquisition was the big win at the end, but I really believe it wouldn't have been possible without me taking investment and money off the table along the way.




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