Can You Build a Business for Both Cash Flow and a Big Exit?

Business Lunch

Welcome to another episode of Business Lunch! In today’s episode, Roland and Ryan discuss the key differences between building a business for cash flow versus building it for a large exit. They dive deep into whether these two approaches are mutually exclusive, especially for bootstrapped businesses versus those with VC funding. If you’re wondering how to maximize cash flow while preparing for an exit or striking the right balance between reinvesting and taking money out of the business, this episode is packed with insights to guide your decisions.

Highlights:

“If you’re bootstrapped, you have a lot more flexibility than if you’re funded.”

“A healthy business kicks out large amounts of distributable cash regularly.”

“Cash left in a company can lead to bloat and actually slow down growth.”

“Exits aren’t always what you anticipate—there’s a lot more to the story.”

Timestamps:

00:36 – Introduction

00:55 – Can you build a business for both cash flow and exit?

01:57 – Insights into the path you pick when seeking VC funding

03:45 – Bootstrapped businesses and the flexibility they offer

09:19 – How excess cash in businesses can lead to bloat

11:35 – Cash flow management strategies: cash flow waterfall and budgeting

12:34 – How VC-backed businesses affect the path to an exit

14:06 – Building reserves for refunds and emergencies in cash-flow businesses

16:20 – Getting regular distributions VS waiting for a big exit

18:54 – Conclusion

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