Scaling to $12M/Year in Revenue: Lessons from Selling a Successful Business

In this podcast, entrepreneur Nathan Hirsch shares his journey of scaling his business FreeUp to $12 million in annual revenue and eventually exiting the company. He discusses the key strategies, challenges, and insights he gained throughout the process.

Nathan Hirsch's entrepreneurial journey is nothing short of inspiring. From college dorm room hustles to building and selling multi-million dollar businesses, his story is a testament to the power of timing, hard work, and strategic decision-making.

Watch full podcast below...👇

Starting and Scaling FreeUp

The Genesis of FreeUp

Nathan started FreeUp as a solution for hiring reliable virtual assistants (VAs) and freelancers. Initially focused on e-commerce sellers, the platform quickly expanded to serve various industries including real estate and marketing agencies.

Scaling to $12M/Year in Revenue

The growth of FreeUp was remarkable. Within four years, the company scaled to $12 million in annual revenue without relying on paid ads. Key strategies to achieve this included:

• Timing the market
• Building an MVP and iterating based on feedback
• Documenting the journey and creating content
• Implementing a robust affiliate program

‍Selling FreeUp

The Acquisition Process

In 2019, FreeUp was acquired by an SEO company called The Hoth. The acquisition was a strategic move that allowed Nathan and his co-founder to exit at a high point.

Life-Changing Offer

The offer from The Hoth was life-changing. It provided Nathan and his team with the financial freedom to explore new ventures and opportunities.

Factors in the Decision to Sell

Market Conditions

Several factors influenced the decision to sell FreeUp. The market was becoming increasingly competitive, and the economy was at an all-time high. These conditions made it an opportune time to exit.

Cash Flow and Profitability

FreeUp was incredibly cash flow positive, with minimal overhead costs. This financial stability made the business attractive to potential buyers.

Future Growth Prospects

Nathan and his team realized that scaling FreeUp to the next level would require significant changes, including potentially increasing expenses. This realization played a crucial role in their decision to sell.

Post-Sale Life and New Ventures

Life After Exit

Post-sale, Nathan moved to Colorado and became a foster parent. Initially, he planned to take a year off to travel, but the onset of COVID-19 changed those plans.

New Business Ideas

With newfound time and financial freedom, Nathan and his business partner began brainstorming new business ideas, leading to the creation of Outsource School, Ecom Balance, and True SEO.

Building a Portfolio of Businesses

Strategic Approach

Nathan's approach to building a portfolio of businesses involves finding reliable operators to run each venture. This allows him to focus on high-level strategy and growth.

Focus Areas

His businesses primarily focus on essential but often overlooked aspects like hiring, finances, and SEO. These "boring" yet critical areas provide stable and scalable business opportunities.

Timeline for Launching New Businesses

Rapid Prototyping

Nathan believes in launching businesses quickly. He aims to sell the product as soon as possible, even if it's in a beta phase, to validate the market and gather feedback.

Building Processes

Once initial sales are made, the focus shifts to building robust processes and scaling the business sustainably.

Team Size and Roles

Lean and Efficient Teams

Each of Nathan's businesses operates with a lean team. For example, Outsource School has three VAs, while Ecom Balance employs around 15 bookkeepers and a controller.

Role Distribution

Nathan handles operations and customer service, while his partner Connor focuses on marketing, content creation, and working with developers. This division of labor allows them to play to their strengths.

Podcasts and SEO

Importance of Podcasts

Podcasts play a significant role in Nathan's organic marketing strategy. They offer multiple benefits, including networking, SEO, and content repurposing.

SEO Strategies

SEO is another critical component. Nathan emphasizes the importance of backlinks and organic search traffic, which have been instrumental in the success of his businesses.

Partnerships and Social Media

Leveraging partnerships and social media has been a cornerstone of Nathan's strategy for scaling his businesses. He tells us how he did it: 

Partnerships

Nathan emphasizes the importance of forming strategic partnerships to boost visibility and gain new audiences. Some ways to do this:

• Create partner directories
• Exchange lead magnets
• Guest post on partner blogs
• Collaborate on videos

Social Media Presence

Social media is another crucial element. Nathan maintains a strong presence on platforms like LinkedIn, Facebook, YouTube, Instagram, and TikTok.

He has a dedicated social media team to manage and distribute content across these channels, ensuring consistent engagement with his audience.

Content Strategy and Repurposing

Nathan's content strategy revolves around creating high-quality content and repurposing it across multiple platforms.

Creating High-Quality Content

From the outset, Nathan's businesses focus on producing top-notch content that adds value to the audience.

Repurposing Content

Repurposing is key. Nathan's team chops up longer content into smaller, digestible pieces for different channels for enhanced consumption efficiency. 

• Convert podcasts into blog posts
• Create reels from longer videos
• Transform video clips into carousels

Multi-channel Marketing

Multi-channel marketing allows Nathan to reach a diverse audience across various platforms.

Utilizing Multiple Platforms

By distributing content on multiple platforms like YouTube, LinkedIn, and Instagram, Nathan ensures a broader reach.

Consistent Engagement

Consistency is crucial. Regular posting across all channels keeps the audience engaged and interested.

Content Distribution

Effective content distribution is crucial for maximizing reach and engagement.

Automated Distribution

Nathan uses tools like Transistor to distribute podcasts to multiple networks simultaneously.

Manual Distribution

His team manually posts content to social media platforms, ensuring each piece is optimized for its respective channel.

Most Effective Channels

Not all channels are created equal; some perform better than others.

Top Performers

For Nathan, Facebook and LinkedIn are the most effective channels for driving traffic and engagement.

Emerging Platforms

Platforms like TikTok and YouTube are starting to gain traction, showcasing the importance of diversifying social media efforts.

Personal Brands and Company Pages

Personal brands and company pages serve different purposes but are both essential for growth.

Personal Brands

Nathan and his partner Connor primarily use their personal brands to drive traffic to their businesses.

Company Pages

While company pages exist, they are not the main focus of traffic generation. Instead, they serve as a repository for high-quality content.

Using Personal Brands for Promotion

Personal brands can be powerful tools for promoting businesses and driving traffic.

Engagement Through Personal Brands

Nathan and Connor leverage their personal brands to engage directly with their audience, creating a more authentic connection.

Content Sharing

They share valuable content through their personal profiles, driving traffic to their company websites and blogs.

Balancing Multiple Companies

Balancing multiple companies is no small feat, but Nathan has developed strategies to manage this effectively.

Strategic Diversification

Diversification helps mitigate risks. Nathan prefers having multiple ventures rather than putting all his eggs in one basket.

Operator Empowerment

Empowering reliable operators to manage day-to-day operations allows Nathan to focus on high-level strategy.

Managing Multiple Companies

Managing multiple companies requires a structured approach and a reliable team.

High-Level Strategy

Nathan focuses on high-level strategic decisions, leaving the operational details to his team.

Team Empowerment

By empowering his team to make decisions and solve problems, Nathan ensures smooth operations across all his businesses.

Empowering the Team

Empowering the team is crucial for success in multiple business ventures.

Delegation and Trust

Nathan and his partner focus on empowering their team by delegating key responsibilities.

They trust their operators to make decisions and run day-to-day operations efficiently.

Providing Guidance

They act as executives or consultants, offering guidance based on their experience.

This approach allows them to focus on high-level strategy and marketing.

Future Plans and Exits

Nathan's future plans involve scaling his portfolio of businesses and exploring potential exits.

Building a Diverse Portfolio

He aims to own multiple companies, each managed by reliable operators.

This strategy helps in mitigating risks and ensuring stable cash flow.

Exit Strategy

While open to offers, Nathan is not actively pushing for a sale.

He builds his companies to be sellable but is content with holding them for the long term.

The Process of Selling a Company

Selling a company involves multiple steps and can be a complex process.

Initial Contact and Offer

The process starts with an initial contact and high-level questions about the company.

Once an offer is made, it is crucial to evaluate the pros and cons before making a decision.

Maintaining Business Operations

It's important to continue business operations as if the deal might not go through.

This ensures that the company remains attractive to the buyer and minimizes regrets.

The Due Diligence Process

The due diligence process is a critical part of selling a company. Some steps involved in it are:

Thorough Examination

Both parties vet each other thoroughly to ensure a good fit.

This includes reviewing financial records, business operations, and future plans.

Challenges and Length

The due diligence process can be lengthy and stressful, often taking several months.

It's essential to have all necessary documents and information readily available.

Feelings and Impact of the Sale

The sale of a company brings a mix of emotions and impacts. The most common ones include:

Relief and Joy

There is a sense of relief and joy when the sale is finalized.

It's a significant milestone that validates years of hard work.

Redemption and Reflection

For Nathan, the sale of FreeUp was a form of redemption from past business failures.

It provided a sense of accomplishment and closure to him.

Communication with Team During the Sale

Effective communication with the team during the sale process is crucial.

Transparency

Transparency is key, although certain details may need to be withheld until the deal is finalized.

After the sale, it's important to reassure the team about their job security.

Team Compensation

Nathan ensured that his team was well-compensated, distributing $500,000 from the sale among them.

This helped alleviate concerns and fostered goodwill among the people who were a crucial part of his team.

Tax Implications of the Sale

Selling a company has significant tax implications. It’s essential to plan accordingly. 

Tax Planning

It's essential to plan for the tax bill that comes with the sale.

Nathan recommends holding back money for taxes to avoid financial strain.

Investment Strategies

Post-sale, Nathan invested in the S&P 500 and CDs, maintaining a conservative financial approach.

Earn Out and Performance-based Deals

Earn-out and performance-based deals are common in company sales.

Understanding Earn Out

Earn out refers to the portion of the sale price paid over time based on the company's performance.

It's important to be comfortable with the upfront money, as the earn-out is not guaranteed.

Structuring the Deal

Nathan suggests structuring earn-out deals based on a percentage of revenue rather than business growth targets.

This ensures a fair arrangement for both parties and mitigates risks.

Selling a company is a multifaceted journey that involves strategic planning, thorough vetting, and emotional resilience. 

Nathan's experience with FreeUp showcases the importance of careful preparation, transparent communication, and a well-thought-out exit strategy. 

We hope this episode helped you understand the secrets of selling a successful business! For more such amazing business secrets, keep following this space.