Built to Sell Radio Ep 527 How to Avoid an Earn-Out (Even in a Service Business)
Most business owners hit a fork in the road.
Stay "on the tools" and keep making great money. Or start feathering back your personal involvement so the business can grow beyond you.
In this episode of Built to Sell Radio, Dr. Michael Filosi walks through how he made that shift in a dental practice, without jeopardizing cash flow. He didn't rip the band-aid off. He reduced his patient days one day at a time while the practice added clinicians and transitioned patients carefully. Over a few years, his billings went from roughly 43% of revenue to single digits, and he only went to zero once the business was already producing most of his take-home income.
In this episode, you discover how to
- Spot the "capped upside" moment when your time becomes the constraint
- Feather back from four days on the tools to three, then two, then zero
- Time each reduction using numbers, not hope
- Transition customers off the owner without breaking trust
- Remove key-person risk by ensuring no one producer dominates revenue
- Keep cash flow steady while you trade personal production for enterprise value
The result: Filosi sold his practice and collected 100% of his cash at closing, which is almost unheard of in dentistry.