Thread by @BrownTRobin

I’ve been working with a coach to expedite growth. My plan was to sell in 2 years and to 4x the company’s value in that time.

Through forecasting I’ve come to realise this isn’t likely. Here’s why..
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#amazonfba

On the surface it doesn’t seem unreasonable. 100% growth each year.

However, diving deeper there are big challenges.

To sell you’re gonna get a valuation mostly based on trailing 12months EBITDA
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Because of this you want to have all new products launched in Year1 so you maximise profit in Y2 before exit.

Extra issues - it takes around 3months on avg to get a product made, shipped and checked in to Amz. That gives us 9months

..but it also takes approx 6months from a product going on sale to the point of profitability (consider extra marketing and paying for reorders)

So now that gives me 3months - Not enough time to find/source and execute

As I see it we have a few levers we can pull:

Increase the timeline
Revise the goal down
Enter higher comp/revenue markets

I don’t want to reduce the goal. With further forecasting I settled on the following:

1. Exit in 2.5years (this gives a 9 month window to get products up and running)

2. Higher revenue markets

We’re also going to take a different approach. We have a target of additional 750k EBITDA.

Rather than finding/sourcing a ton of individual product I’m going to focus on categories/markets and pick 5-7 that do >100k EBITDA each, via variations

This should result in less sourcing and greater chance of economies of scale/better terms

Overall I found the forecasting exercise super helpful and definitely recommend doing it. It really helps with clarity on your objectives

I can cover my approach more if there's interest

If you're interested, please chuck a like or RT on the first tweet:

https://twitter.com/BrownTRobin/status/1497745850067730441?s=20&t=8tZ6QaUm9jIfYIDo8UXFtw