The Expensive Job

I have a client I've known since 2003. I'll call him Gary.

When I met him, he was selling payroll services and had an idea — a concept in the HR technology space that he believed in enough to spend years trying to build. We worked on business plans together, laid groundwork, had the kinds of conversations that go nowhere for a while before they go somewhere.

At one point, Gary connected with an insurance agency in Florida that operated in the employment space. He told them about his concept. They seemed to love it. He went to work with them, spending the week in Florida and coming home to his family on weekends. After a year, they fired him and kept his idea. He hadn't protected it. I had advised him to. We didn't yet have the kind of relationship where he listened the way he listens now.

He came back to Georgia, moved into the specialty insurance space, worked for two agencies in a row that ended badly, and eventually decided to start his own firm. I helped him with that too.

For almost a decade after that, Gary worked. Hard. He built a real book of business, developed genuine expertise, took care of his clients. He made $300,000 to $350,000 a year.

And he had a job.

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In 2018, Gary came to see me. I remember it specifically because it was my birthday. He sat down and told me he was worried — not about this year's revenue, but about whether he had a business he could actually sell. He had been thinking about what he needed to retire comfortably, and he had arrived at a number.

Twelve million dollars.

I asked him what he thought his business was worth today. He said he wasn't sure. I told him: based on what I knew about his book, his structure, and how his industry valued businesses like his, he was probably looking at $600,000 to $700,000.

He was stunned. We sat with that for a moment.

Then he asked: *What do I need to do?*

That question is one of my favorite things a client can ask. Not "is this possible?" Not "is this realistic?" Just: what do I need to do? We spent the next couple of hours working backward from $12 million.

To net $12 million after taxes, Gary needed a transaction value of roughly $20 million. To justify a $20 million transaction value in his industry — where multiples move significantly based on revenue and profit thresholds — he needed approximately $4 million in EBITDA. To generate $4 million in EBITDA at the margin profile his business could realistically sustain, he needed revenue of around $10 million. We looked at his average revenue per client, figured out how many clients that implied, then worked out the sales headcount and support staff required to generate and sustain that revenue at that profit level.

By the end of that conversation, we had drawn the org chart of the business Gary needed to build. We also had a timeline: he would need to maintain that performance level for at least two to three years before any buyer would pay the number he was looking for.

He left my office with a plan. He went to work.

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That was eight years ago.

Today, Gary's business has grown from $350,000 in annual revenue to $4 million. He is netting $2 million a year in profit. He has also deliberately repositioned his client mix toward larger accounts — doing significantly more with fewer, better clients. His headcount has grown from one person and a part-time bookkeeper to a team of twelve. By almost any measure, this is a remarkable story of disciplined execution over a long arc of time.

And his business is probably worth about $4 million.

That is a genuinely good outcome. It is also exactly half of what he needs, and the gap tells you something important about the nature of his problem — because the gap has almost nothing to do with revenue or profit. It has to do with sales.

Gary is still responsible for 100% of new business. Every client relationship of consequence runs through him. His support team is excellent; his operations are solid; but walk out the door and the engine of the business walks out with you. In the language of the people who will eventually evaluate his company, Gary is still the business.

A buyer looking at his numbers will see $2 million in profit and ask the same question buyers always ask: *What happens if he leaves on day one?* Until Gary can answer that question credibly — until he has replicated his sales capacity at least two or three times over in people who aren't him — the multiple will reflect the risk. Hence $4 million instead of $20 million.

He knows this. He is now actively searching for sales talent, and thinking seriously about bringing on a partner — someone with an ownership stake, someone whose interests are aligned with the long-term value of the business, someone who would have an insurable interest in Gary's life and could use insurance proceeds to purchase his share from his estate if something happened suddenly. That kind of structure changes the risk profile of the business in ways that matter to buyers. It also, frankly, changes the risk profile for Gary.

That part of the story is still being written.

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I have watched the expensive job trap catch some of the best entrepreneurs I know. Not because they were careless, or because they didn't work hard enough, or because they didn't build real businesses. But because the skills that get a business to $300,000 a year in revenue are not the same skills that get it to $10 million. And the founder who is indispensable at every stage of growth eventually becomes the ceiling of their own company.

The transition that creates real enterprise value — the kind that shows up in multiples instead of just profit — is the transition from founder-as-operator to founder-as-governor. From the person who does the work to the person who builds the systems and the team that does the work. From the one who closes the deals to the one who has built something that closes deals without them.

This transition takes longer than founders expect. In my experience, two to three years at minimum, often more. Which means the time to start thinking about it is not six months before you want to sell. It is now, whatever now is.

A useful test: if you disappeared for two weeks with no phone, what would happen to your business? If the honest answer is "it would mostly be fine," you have built something. If the honest answer involves a list of things that would go wrong, you have more work to do — and more time to do it than you might think, if you start today.

Gary started in 2018. He's not done yet. But he is playing a different game than he was playing on my birthday eight years ago. The number on the scoreboard has changed. The direction is right.

That's what building a business looks like, as opposed to building a job.

If any of this sounds familiar, I'm always happy to talk — no meter running.