The Fastest Growing Entrepreneurs Think In Multiples

I’ve started more than a hundred companies. Thirty of them are still running.

Did I plan to build all those businesses when I started? Not really. There was something that couldn’t keep me away from building. I didn’t understand it myself earlier.

A relationship from one company opened doors in another. A mistake I made years ago saved me from making it again. Working with regulators gave me an understanding of the market that would have taken years to gain otherwise.

I wasn’t just building a business. I was building things that would outlast it.

None of that was a plan I set in motion. It kept happening. Unknowingly, I had invested in accumulating things that kept paying. This was the impact that compounded my business.

So how do we get there? It starts with a story.

One carried water and one dug a well

One man carries water. He’s paid for every trip and he’s good at it. Another spends three months digging a well and earns nothing the whole time.

In month one, the carrier is obviously right.

In year ten, one of them is still carrying.

Every conversation about money ends on the same note. How do I earn more? There’s an answer. Do more work, make more sales. It works, and it has a ceiling. The ceiling is you.

The better question is what you’ve built that earns without you.

That’s a multiple. It gets paid whether you turn up or not. That is how you break the ceiling.

Every business has a multiple. You just need to find it

Being on the investor’s side of the table made me see one thing we do without paying enough attention to.

I have seen the same business getting valued for different amounts. Two businesses, same industry, sometimes even the same street, both earning a million dirhams a year. Today, one is worth three times that. The other is worth eight.

The difference was what the earnings depended on.

The business valued at 3x depends on its founder. He holds the relationships. He makes the pricing work and he is the reason the work is good. No investor wants to pay for someone’s job. They want to invest in a business that can keep working without the person who built it.

The business that was valued at 8x earns from customers who renew without being asked, through a process anyone can run, with no single client big enough to sink it. Take the founder out of it, still most of it stays. That kept its value higher.

That’s the difference between carrying the water and owning the well. So the question isn’t whether to think in multiples. It’s what your multiple is today, and what would move it.

Many founders have asked me whether their business can scale in multiples. My answer usually depends on how they answer these four.

1. Does the customer remember you or your company? If the customer remembers you more, it means the relationship is with you, not the business. That loyalty leaves when you do. That type of loyalty won’t pay dividends for the company.
2. Does the revenue repeat? Every booming business knows one thing for sure. They would know how many repeat business will land next January. If your business is not doing that, it won’t multiply.
3. How much of a say does your biggest client have? One client at forty percent of revenue is not a strength, however good that client is. For the business, it is a single point of failure with a friendly face.
4. Can someone be trained to run the process? This is the least interesting question, yet, the most reliable. It is a good measure to see if the business has the potential to scale. If the process is something unique to you, and only in your head, that’s not a solution for scale.

Most businesses that can’t multiply are failing at least one of these. Usually they know which.

Why this matters more in the UAE

Dubai’s economy is estimated to double its size within a decade. The population is climbing at over five percent a year, heading toward 6 million by 2040. New company registrations are up more than a quarter. The market you sold into last year isn’t the one you’re selling into now.

That cuts both ways.

If your business is linear, a compounding market doesn’t do much for you. You get a few more customers, you work a few more hours, and you stay roughly the same size relative to everything around you. You’re growing and falling behind at the same time, which is a strange thing to experience and almost impossible to see from the inside.

But if you’ve built something that compounds, the market’s growth becomes your growth. You didn’t work harder for it. You built something shaped to catch what was already moving.

Most markets ask you to manufacture your own growth. Here, some of it is being manufactured for you. The only question is whether you’ve built something that can receive it.

Final thoughts

Income buys the life you’re living now. Most of us need it and there’s no shame in it.

Multiples buy the years you haven’t reached yet.

So take a block of your week and protect it. Spend it on something that compounds. Be it a channel, a reputation or a system that handles more without costing you more.

It won’t pay you this quarter. It’s the only work that’s still paying you in ten years.