Critical Mass vs. Automation

**Rain** · May 18th, 2012, 03:57 PM

Let's say your goal is to make $600,000 a year passively ($50,000 a month).

Would you build a business worth millions and eventually try to sell it for a whopping $12 million? ($12 million invested at a conservative 5% per year yields $600,000 a year in passive income.)

Or would you "simply" build a business that earns $600,000 a year (after expenses), and then focus your efforts on automating it?

Both have their challenges, as does any Fastlane endeavor, but which do you prefer?

Automating a business may not be easy, but is it easier than multiplying the size of the business by 20 (approximately), and then finding a buyer?

Building a multi-million-dollar business may not be easy, but is it easier than risking your business getting damaged or going bankrupt in a volatile economy and marketplace, with decreasing (real) wealth and increasing government regulation?

Automation, while great, can take a lot of control out of your hands, which leaves you open to additional risk. Making the millions up front is easier said than done, but once you have them, you have them (although, you are still at risk of the dollar imploding... but, I guess, who isn't?).

Fastlaners, what are your thoughts/plans/ideas?

**Pinnacle** · May 18th, 2012, 04:21 PM

Are you asking because you're trying to figure out what to do, yourself?

**The-J** · May 18th, 2012, 04:41 PM

I'm going for the former. I expect to reach my wanted income level before I can liquidate. But it's really up to the person.

MJ wrote an article about this. Here it is:

6 Reasons Why I Sold A Business With A 6-Figure Monthly Cash-Flow

**Rain** · May 18th, 2012, 04:47 PM

I've personally concluded that while there is obviously no easy route, automating a $600,000/year business will be easier than building and selling a $12 million business. At the same time, I was just curious to hear everyone's thoughts on the subject, and what they plan to do for themselves.

**Pinnacle** · May 18th, 2012, 05:05 PM

I will automate a six-figure/yr business and sit on it long enough to get my life in order and relax a bit, then sell and elevate my lifestyle.

**PatrickP** · May 18th, 2012, 09:40 PM

Well to me a company with 600k before taxes is worth at least 3 times that or 1.8 million So to get to 12 mil worth it would be a multiplier of 6.666.

Or you could figure get a company to 600k passive live on 150K then you bank approx 250k per year for 10 years in the mean time your business if growing at a conservative 7% so after 10 years it is bringing in approx 1.18 mil or a worth (3 x that amount) 3.5 mil So you have 2.5 mil in the bank and a business worth 3.5 mil you are up to 6 mil.

Or we could try to figure out who would win Superman vs Mighty Mouse lol

Probably better just getting a company to grow as much as possible and worry about the money thing later

**The-J** · May 18th, 2012, 10:01 PM

Originally Posted by PatrickP

Well to me a company with 600k before taxes is worth at least 3 times that or 1.8 million So to get to 12 mil worth it would be a multiplier of 6.666.

Or you could figure get a company to 600k passive live on 150K then you bank approx 250k per year for 10 years in the mean time your business if growing at a conservative 7% so after 10 years it is bringing in approx 1.18 mil or a worth (3 x that amount) 3.5 mil So you have 2.5 mil in the bank and a business worth 3.5 mil you are up to 6 mil.

Or we could try to figure out who would win Superman vs Mighty Mouse lol

Probably better just getting a company to grow as much as possible and worry about the money thing later

My goal is liquidation and it's a goal that I will never lose sight of. The timing, however, will decide itself.