You know, I'm willing to bet that
somewhere near you, there's probably a
business you've walked past for years
without giving it very much thought. And
that business may very well be worth a
million dollars. You see, what people
imagine a million-dollar business looks
like and what it actually looks like are
usually two very different things. So,
let's see how everything works and how a
business could pay you a good income for
years, then give you a second payday
when you sell it. Welcome to Alox. Let's
start off with number one, how the price
is worked out. So, to own a
million-dollar business, you might need
one that earns around 350k a year. A
buyer paying three times those earnings
would put you just over that
million-dollar mark. That 3x is called a
multiplier and it gives you a rough
starting price based on what similar
businesses have sold for. The important
part is which number you're multiplying.
A shop can sell $1 million of goods and
spend nearly all of that keeping the
doors open. Those sales alone won't
justify a million-dollar price. For a
small business, buyers usually care much
more about the money available to the
owner after the bills are paid. They
want to know what income they're buying,
how much work comes with it, and how
likely that income is to continue. If
the owner works full-time, their pay is
often included in that earnings figure.
So, a buyer who plans to hire someone to
take over will have to allow for that
salary. You can see why they'd want to
know exactly what the owner does all
day. The kind of business matters, too.
In reported deals from 2025, restaurants
sold for an average of about 2.25x
annual owner earnings. Retail stores
averaged about 2.7x and online shops a
little over 3x. For profitable software
businesses charging subscriptions, a
separate report put the typical deal at
almost 4x yearly profit. You still have
to check whether the owner's pay has
already been deducted because the
reports handle that differently, but
there's a reason buyers might pay more
for a subscription business. If
customers have been renewing for years,
well, the buyer has some evidence that
they'll keep paying. And software can
often add customers without adding much
to its cost. Compared to a restaurant,
which has to buy ingredients and prepare
another meal every time it sells one.
The customers might already be leaving
the app, or the software might need
expensive work. A buyer is going to
check that before paying a higher price.
You also hear about technology companies
selling for several times their revenue,
meaning the total money coming in before
expenses. Buyers can use that approach
when a company is growing quickly and
spending heavily to grow further.
They're making a bet on how much profit
it could produce later. But for the sort
of profitable business you might build
yourself, around 3x yearly earnings is a
useful starting example. It tells you
the scale of what you're aiming for
before you get into details on a
particular business. But now let's
explore something else entirely. So,
number two, what's the difference
between a 10k, 100k, and a $1 million
business?
Well, a 10k business might get most of
its value from equipment, a website, and
a few customers. Someone could pay for
that because it saves them the trouble
of setting everything up themselves. Or
it might be a tiny online business that
already brings in a little money each
month. At that stage, there might be
very little to sell beyond what's
already there. The potential you see in
the business matters much more to you
than it does to somebody being asked to
pay for it. Around 100k, you could be
looking at something that provides a
useful income. For example, a small
store earning 40k a year would reach
that price at 2.5x earnings. The
attraction for this one is that somebody
else could step in and take over and
carry on selling. They can see which
products get ordered, what it costs to
supply them, and how customers find the
business. You've already worked out
things that they would otherwise have to
learn for themselves. But to reach $1
million, you need enough income to
support the bigger price, with good
reasons to believe it'll survive a
change in owner. The business could
still be quite small. In one published
sale, three friends built an online
skincare brand with 11 product
variations. By the time they sold, they
were making around 40k a month in
reported net profit. Some customers had
ordered the same product eight times.
The agreed deal was worth about $1.1
million with some payments depending on
how that performed afterward. That's a
fairly easy business to picture, right?
A small range of products, suppliers
producing them, and customers who come
back when they run out. Getting to that
level would take work, but you can
understand what the owners built and why
someone wanted it. And still, most
businesses never get there, which brings
us to number three. Why so many
businesses get stuck. Now, the difficult
part here is that a business can provide
a decent living without becoming
particularly valuable to sell. You could
run it for 20 years and still struggle
to find someone willing to pay a large
amount for it. But often, too much
depends on the owner. You're the person
customers ask for. You're the person who
brings in the work, and you're still
doing much of it yourself. Taking on
more customers means working more hours,
and eventually, there aren't many hours
left. Now, hiring can solve some of
that, provided your prices leave enough
to pay them. If they don't, well, you
get caught doing everything yourself
because handing work over makes the
business barely worth running. A buyer
might still want it and be happy to take
over your job, but their offer will
reflect the hours involved and what
they'll earn for doing them. A company
doesn't automatically more just because
its owner has been working hard for
longer. No. And you can also get stuck
depending on one customer. A large
account might give you more work than
you've ever had, but losing it could
wipe out most of the income. Someone
buying that business will have to take
that risk into account. The useful
question is what could you change that
would make the income grow and hold up
better. You might have customers who
would happily buy more often, or work
you could charge more for because it's
become expensive to deliver. If you
found a way to add 50k to yearly
earnings, a buyer paying 3x that income
would add another 150k to the price.
Now, they would need to see that
improvement last, of course, and that
gives you a reason to look beyond this
month's income. A change that keeps
earning more money can benefit you while
you own the company, and again when you
sell it. And this is the kind of stuff
we go deeper on inside the A-Lock Zap.
And right now we're running a special
promo for everyone who's serious enough
about growing their business in 2027.
We're rounding out the end of the year
here, so inside the A-Lock Zap we're
running the great founder lock-in. So
many founders turn 12 weeks of work into
3 years because they change priorities
every couple of weeks and hope for the
best. But no more. If you don't know
what's holding you back, the A-Lock Zap
will help you to identify your hurdles
and design a path over them. The app
costs $29 a month or $199 a year, but
with the great founder lock-in, you'll
secure the first 12 weeks of coaching
for $59.99 and every 12 months after
that for $82.99, and you can cancel
anytime you want. Scan that QR code to
lock in and we'll see you on the inside,
but let's get back to business, shall
we? So far we've talked about selling,
but who is actually buying? Number four,
who would pay you $1 million?
Now, your buyer could be someone who
wants to run a business, but would
rather take over one that already works.
They can look through the accounts, meet
the staff, decide whether the income
would cover their own pay and any loans
used to buy it. And for that person,
you're offering a way into business with
customers already in place. They still
have to run it well, but they can
examine what they're getting into before
committing their money. A competitor
might have a different reason to want
it. If you've built a successful shop in
an area they want to enter, buying yours
will it gives them location and
customers immediately. They can skip the
process of opening nearby and trying to
persuade your customers to switch. They
may also be able to run it more cheaply
than you. A retailer that already has a
and delivery routes could add your shop
to those operations. That could leave
more money from the same sales, which
may justify a higher offer. Amazon's
purchase of Whole Foods shows that logic
on a much larger scale. It bought an
established grocery business, then added
connections to its other services
including Prime benefits, grocery
delivery, and package pickup. Buying
competitors also reduces competition,
which is why large retail deals can face
scrutiny from competition authorities.
But a buyer might have every reason to
keep your shop open. The sales and
customer relationships are part of what
they're paying for. And you could also
sell to a business owned by private
equity investors. We've got a whole
collection on private equity inside the
app. These firms bring together money
from investors, buy businesses or stakes
in them, and aim to earn a return before
selling their investments later. A group
that already owns several local service
companies might want yours as the next
edition. It could combine some office
work and purchasing while keeping the
teams that serve each area separate.
Your business might fit into something
much larger than you ever intended to
build for yourself. Angel investors
usually come in at an earlier stage.
They put their own money into a young
company for a share of it, or through an
agreement that could turn into shares.
In this kind of arrangement, you're
generally still the one running the
business, and the money helps to grow
it. An angel agreeing that your business
is worth $1 million doesn't mean that
they are buying you out. No, they're
usually funding the company's next stage
while you keep running it. So, it helps
to think about who could eventually want
what you're building. A buyer who
already serves your customers, sells
related products, or operates nearby
might have a very practical reason to be
interested.
>> [music]
>> And number five, how long would it take?
Well, there are sales that make reaching
$1 million look remarkably quick. One
online beauty brand launched in January
2020 agreed to a deal worth about 1.15
million after roughly a year of trading,
but the founder had already spent 10
years selling online and another 3
months researching that particular
business before launching it. A lot of
what made the first year possible had
been learned much earlier. The deal also
included payments tied to future
performance. In another reported sale, a
sports product business reached a deal
worth around 1.9 million after about 3
years. By then, it was making roughly
63k a month in reported net profit. Now,
these are pretty successful cases
selected just for examples, so they
can't tell you how long the average new
business is going to take, but they do
show you what's possible when the
product finds its customers and the
income becomes large enough to interest
a buyer. Knowing the industry or having
customers you already reach can save you
a lot of time here. You might still
spend months finding out what people
will pay for and whether you can make
enough money providing it. And you also
do need a track record. One good month
is encouraging, yeah, but a longer
history gives a buyer more to work with
in deciding what the next few years
might look like. And reaching the 1
billion dollar mark doesn't mean you
have to sell. If the income is good and
you enjoy running the company, you can
just keep it. Having a business that
someone else could take over gives you
another option when your plans change.
If you do sell, the price won't
necessarily end up in your bank account.
Debt, fees, taxes, and any other owners
affect your share, and some payments
might arrive later or depend on the
company's performance. But you'd have
built something that paid you along the
way, and you could fund a substantial
part of what you want to do next. For a
starting point, look at completed sales
of businesses that you realistically
could run. Find out what they earned and
how involved the owner was. Then,
consider what you would need to build to
reach that level from the customers you
could serve to the money left after
serving them. You might just find the
business you need is quite a bit smaller
than the one you had in mind. All right,
that's a wrap for today, Lex so we'll
see you back here next time. Until then,
take care, my friend.