In last week’s post, I launched this miniseries.

Over the next few weeks, my goal is to convince you to stop trying to manage EVERYTHING in your business—and just focus in on your cash flow.

Because it’s your most reliable path to building wealth as an owner.

And the best part? You don’t need your business to be “worth” anything on the open market. All you need is a firm that can be run profitably.

But first, you need to get clear on what you want.

Generational Wealth vs Freedom

Most of the owners I’ve met want freedom, even if generational wealth was what they were after at first.

I define freedom as being able to live life fully without needing to do anything just to bring in money.

Others might define it as having a million dollars.

But no matter how you define freedom, it’s more attainable than you might think.

In just 2 years, my business alone has generated enough excess cash to fill my family’s cash reserves and fund our retirement.

And I’ve done this simply by running my business well.

Building Freedom

If you can build a 7-figure business on 20% margins and live below your means, you can put aside $100k per year. I know that last part is possible, because my wife and I never go without and live on less than $100k every year.

Let that $100k/year compound at 10% and you’ll have $10MM after 25 years.

This is a far more reliable strategy than maximizing your enterprise value in the hopes of maybe getting a similar-sized check when you go to sell. And it’s virtually impossible to mess up.

If you decide that your goal is to build a $100MM business, more power to you.

But I would advise having a better reason for doing that other than trying to prove to yourself that you can.

Do I plan to sell my business one day?

Of course.

But I also plan to become independently wealthy by generating excess cash and living below my means—so that I never have to exit to live my life.

Accounting is hot right now. So if I could get to $10MM of EBITDA today, I could likely sell Scalable for 12x. But I’m not banking on that being the case forever.

Too many owners focus so much on exits that they risk years of their lives on the future state of the economy, brokers, buyers, and the general market for the business.

But if you build a business on sound economics, your path to wealth is much simpler and more secure.

Focus on the business over the exit.

Running Profitably: A Few Resources to Get You Started

If you’re thinking, “Great, so how do I get to 20% margins?” here are a few resources to check out.

In this post, I walk you through my top tips for managing cash like a pro.

In this post, I show you which KPIs to track so that you' know your cash position at all times.

And in this post, I share the 7 pieces of low-hanging fruit that’ll seriously transform your business.

As always, feel free to reach out via email or shoot me a DM if you have questions. I’m happy to help.

Putting It All Together

Here are your top takeaways from this week’s post.

1. Focusing so much on enterprise value that you lose sight of profitability is a risky strategy. Doing so, you’ll miss out on years of compounding the excess cash from your business.

2. Running profitably, on the other hand, is a risk-free way to build wealth. Anyone with a profitable business can do it, and it’s a much more reliable strategy than waiting for a buyer or banking on the future state of the economy for that big check.

3. Check out my linked posts if you’re ready to run profitably and need some help getting started.

Hungry for More?

1. Follow me on Twitter and LinkedIn for daily content to take your business to the next level.

2. Shoot me an email with your questions or requests for what you’d like me to write about next.

‘Til Next Time,

Connor