Find your owner type in 2 questions

PROFIT MASTERY PRESENTS
The Profit Move
The endgame most owners skip
{{current_date_full}} · Part 3 of 3 · Outlook
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▍ IN THIS EDITION

Hi {{first_name|there}}, this is Part 3, the finale of our planning series. You explained your business in Part 1 and diagnosed it in Part 2. Today we point it at the future. Three quick things:

•  The number that says most owners never plan the ending.

•  Colin on the endgame: the two questions that decide what you're really building.

•  The August Bootcamp, a bookkeeping gut-check, and your last free preview of the Full Edition, gating starts next Thursday.

THE NUMBER

1 in 3

A third of business owners have no plan for what happens after they leave.

You can't point your numbers at a finish line you've never named. That's exactly what this issue fixes.

Source: Gallup, 2024 (Pathways to Wealth study).

▍ THIS WEEK'S MOVE

Place yourself twice.

What: Answer Colin's two endgame questions below, once for where your business is today, and once for where you want it to end up.

Why: Most owners never name the gap between the two. That gap is your whole plan for the next season. When you can see today's box and your target box side by side, the next right move stops being a guess.

How: Two minutes. Write today's box and your target box on the same sticky note. Circle the one thing that has to change to move from one to the other. That's the move.

WORTH KNOWING

Your growth rate only matters if you chose to grow. Of all the numbers, growth rate is the one to watch first, but only if scale is your endgame. If you chose a lifestyle business, thinking big can mean fewer hours, not a bigger top line. Pick the scoreboard that matches the game you're playing.

The right move depends on the box you're in. Taking on debt to grow is smart for a Builder and reckless for a Cash Cow. Hiring a manager frees an Investor and buries an Owner Operator. There's no universally good move, only the one that fits the endgame you picked, or doesn't.

"Bigger" is a choice, not a requirement. A lifestyle business isn't a lack of ambition. It's optimizing for the parts of life you actually want more of. The only wrong answer is not choosing.

PARTNER PERSPECTIVE
from our trusted bookkeeping partner

If you don't trust your numbers, that's a bookkeeping problem.

You can't pick an endgame, or value your business, on books you don't believe. A few signs your books aren't ready to plan on:

•  Personal and business spending still run through the same account.

•  "Reconciled," but there are amounts in the bank line that never cleared.

•  A balance-sheet account that hasn't moved in six months (probably not real).

•  A chart of accounts with 100-plus lines (most owners need closer to 20).

•  Last month's statements still aren't in your hands by mid-month.

Clean books come before the plan. Cash, then books, then the system.

Need bookkeeping or tax help? Reply and we'll connect you with our trusted bookkeeping partner.

▍ FEATURED · UPCOMING

Our full financial system, taught personally by Colin King, CPA, CFA, and free for PM Pro members.

ALSO ON THE CALENDAR · FREE FOR PM PRO

Price for Profit, Not Just to Win the Job — Friday, Aug 21, 10am ET, virtual. Colin's 60-minute pricing webinar. A 5% price bump can swing profit 30 to 50 percent; he'll show you where yours is hiding.

Office Hours with Colin — Friday, Aug 14, 10am ET, virtual. Bring any numbers question and get it answered live in the PM Community.

Next Office Hours: Friday, Sept 11, 10am ET.

See all events and register →

QUICK POLL

One tap, and it tells us what to build for you next. There's no wrong answer.

▍ QUICK PROFILE

One quick question so we can tailor what we send you: what's your revenue band?

READER QUESTION

Colin: You don't have to decide forever, but you do have to decide for now. The best businesses are rarely built by people chasing an exit; they're built by people who got good at something and kept going. So start with the season you're in. In a growth season, the work is scale, and stepping back too early starves it. In a harvest season, the work is systems and the right people so the business runs without you, which is exactly what makes it worth buying later. Either way, one thing never changes: you can hand off the tasks, but you can't hand off understanding your numbers. Step back from the doing, never from the knowing.

Got a numbers question? Hit reply. The best ones get answered right here.

▍ THE CFO'S TAKE  Part 3 of 3 · Outlook

Colin King, CPA, CFA

The 4 Owner Archetypes

There is no universal definition of a successful business; instead, the owner's end goals define it.

To recap the planning phase up to now, we have:

•  Created a business overview document that describes the business in narrative form.

•  Completed the financial situation checklist to determine which financial tools will have the highest impact.

At this point we have to be ready for some number crunching, right? Not quite.

So far, these planning exercises have been looking in the rearview mirror. It's time to point our attention into the future.

The owner's endgame matrix

Picture two business owners running identical repair shops: same revenue, same profitability, same employees, same debt, same years in business. One feels like he's crushing it financially. The other feels like a stressed-out failure. How could that be?

They're each planning for a different endgame. The first owner wanted a steady paycheck, less stress, and to leave work at the office every night, and he built the business around those objectives. The second wanted to build a multi-location brand with a large team and a big exit in a few years. But he's still running the same single location and feels no closer to that goal.

Financial success is largely a subjective measure. To maximize financial performance, we first have to understand where we want to go. So before we read a single financial statement, we need to know the endgame. Otherwise there's no goalpost to measure against.

Tool: the Endgame Matrix. Decide where you're headed by determining which owner archetype suits you best.

How it works. Picture a 2x2 matrix with GROWTH on one axis and OWNER ROLE on the other. Think of each as a spectrum.

Growth. Scale means favoring fast growth and investment. "Scale" is business for "bigger": more employees, more customers, more complexity, more space, a bigger budget. The largest companies are built this way. Lifestyle means favoring stability and cash flow. Not "not working hard," but optimizing for other parts of life: family, free time, flexibility, the kind of work you want. Lifestyle businesses balance cash flow and workload.

Owner Role. Direct means the owner is deeply involved: in most decisions, handling many relationships, sitting in a key operational seat. Indirect means the owner has stepped back: few client or vendor relationships, minimal direct reports, not in a key operational role.

If you're trying to rapidly scale, it's very hard to maximize growth, minimize the owner's workload, and maximize cash flow all at once. And if you want a casual, less demanding business, it's unrealistic to expect it to grow significantly.

Answer 2 simple questions

Question 1: Would you rather have more cash today or a (much) bigger payday in the future? There's a trade-off between taking cash out today (profits, distributions, owner comp) and reinvesting for a bigger payday tomorrow. Some of us optimize for cash today; others will sacrifice today for a bigger tomorrow.

Question 2: Do you want to run the day-to-day (a "CEO") or would you rather be an individual contributor? Some owners are wired to lead and manage others through chaos: direct management, informed on everything, calling the shots. Others prefer to contribute their unique skills: indirect management, where the vision may still be yours but your role is a single seat. This isn't about your personality or your current role. It can be what you aspire to.

There are no wrong answers. It's preference plus where you want to end up. Take your answer to each question and see where you fall on the matrix.

▼ THE FULL EDITION BEGINS HERE

This week, the whole thing is yours.

Everything below this line, the four archetypes in full, the one metric each should track, and how to value your business, is the members-only Full Edition. This week it's on us, free.

Next Thursday, this line becomes a wall.

Part 3 is the last free preview of the deep half. Starting next week, the Full Edition is members-only, our first fully gated issue. PM Pro members get it, and the whole system, free, the newsletter included.

$1,200/year or $400/quarter. Includes the newsletter.

▍ THE CFO'S TAKE, CONTINUED

The 4 owner archetypes

1. The Owner Operator (direct, lifestyle). You own it and do most of the work. The business depends on you, which usually limits exit value (some would say you own a job, not a business). These can throw off good profits at high margins with a simple work life. This is where most owners are stuck.

2. The Cash Cow (indirect, lifestyle). An owner-operator business with a hired manager handling some or all of the day-to-day. Known as absentee or semi-absentee. Perhaps the hardest to pull off well.

3. The Builder (direct, scale). The owner is the engine pushing to new heights. Fast-paced, constant change, new customers and employees regularly. Cash flow is low or negative early, and the workload can be intense.

4. The Investor (indirect, scale). After a period of scaling and real cash flow, the owner hires a management team and optionally plays a reduced role (a single seat on the org chart). These typically have the highest exit value.

What we do with it

Look at the matrix again and you'll see two directions. On the upper half, you're pursuing growth, which takes sales, capital, and a real handle on your cost structure. On the right side, you're pursuing a smaller role, which takes letting go: a solid team, good systems, and enough profitability to cover the added people. A Cash Cow cares more about total company profitability; a Builder cares more about unit economics.

A quick reference on where to aim, by archetype:

•  Owner Operator: owner compensation, margins, pricing, workload (hours).

•  Cash Cow: free cash flow, the right people, systems and processes, margins.

•  Builder: unit economics, growth rates, capital needs, cash runway.

•  Investor: free cash flow, management performance, return on invested capital.

We call it an endgame matrix because it defines where we want to end up. There are seasons in the life of an entrepreneur, and those seasons move us from one box to another as we progress. So don't assume you're stuck in one box or can't move.

TL;DR: Answer two questions, today and where you want to end up: (1) cash today or cash in the future? (2) hands-on owner or individual contributor? Your answers place you in one of four archetypes. This isn't a permanent identity. Use it to clarify where you want to end up and which financial tools get you there.

What's your business worth?

If your endgame involves a payday, here's the version every owner should know.

Businesses sell for a multiple of earnings. The rough math: your normalized EBITDA (earnings before interest, taxes, depreciation, and amortization) times an industry multiple. A shop with $500K of EBITDA and a 4x multiple is worth about $2M.

A buyer pays for earnings that don't depend on you. They won't inherit your debt, your tax rate, or your capital spending. They're buying the profit the business makes without you in every seat. That's why stepping back usually raises value, and why the Owner Operator box, where the business is you, usually caps it.

So "worth more" has two levers: grow the earnings, and reduce how much those earnings depend on you. Clean books make both provable. You can't sell what you can't show.

This is the short version. If a real exit is on your horizon, that's exactly the kind of thing to work through in coaching.

▍ WORK WITH COLIN

Coaching is live, and that's a year of it above: monthly working sessions where you build the system with Colin, not homework. Reply to this email with COACHING and we'll set up a call to talk through how to best help you.

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▍ CATCH UP ON THE SERIES

New here? This was the finale of a three-part planning series:

•  Part 1: Explain your business in 45 minutes

•  Part 2: Diagnose your business in 15 minutes

Want a second set of eyes? Book a Numbers Review: a 45-minute working call, $100, credits toward PM Pro. Reply "review."

You've now explained your business, diagnosed it, and pointed it at the future. That's the plan. The plan isn't the point, though. What you do next is. So pick your box, name the one thing that has to change this season, and start. Next, we start turning the plan into the system.

Talk soon,
Colin

P.S. Two owners, identical businesses, opposite feelings about them. The difference was never the numbers. It was knowing which game they were playing. Pick yours.

Know your numbers. Command your cash. Scale with confidence.

The Profit Move is education, not personalized financial or investment advice.