THE NINE LAWS
CHAPTER #3.9
LAW #9: A PROFITABLE BUSINESS
Definition:
“A turnkey business is a for-profit operation that is ready to use as-is the moment it is purchased by a new owner or proprietor. The term "turnkey" is based on the concept of only needing to turn the key to unlock the doors to begin operations, or to put the key in the ignition to drive the vehicle.”
If you follow and perfect Laws 1 through 8, you can create a turnkey asset that you can sell for five times EBTIA.
Note: While this might not be every gym owner’s goal, many gym owners aspire to have a turnkey asset, meaning the business continues to run smoothly without the owner present on a day-to-day basis, making it a business they can then one-day sell.
Tip: A true turn-key asset does not rely on the owner in order to maintain success. You will need to remove yourself from the daily business operations and train someone else to essentially replace you in all of the roles that you perform.
This does not mean that you can just walk away from your business and assume that it will continue to function.
Weekly guidance and oversight are definitely required. (You can bet that any high-functioning CEO will still be overseeing their business, even if they are not required to work in it.)Roles, responsibilities, compensation etc all need to be firmly handled by people who will stay with the business once it is sold.
This is a process.
Big corporations often have ‘golden handcuffs’ periods where past CEOs stay on board during the transition period of new ownership / leadership. You will need to essentially complete this transition before selling (or listing to sell) your business in order to get the full 5x EBITA value.
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