Escaping the Service Business Trap
“John Rood founded and operated Next Step, a test prep company that he grew to nearly $10M in sales. He successfully sold to a private equity group,” shares Sam Thompson a Minneapolis business broker and the president of M&A firm Transitions In Business. “This episode covers turning a service business into a subscription model, how you should pay yourself first and ways you can thrive in your life after you sell your business.”
This week we’re featuring an interview with John Rood, who built Next Step, a test prep business that helped students prepare for the medical school admissions test (MCAT). John Rood built Next Step to almost $10 million in revenue, with EBITDA margins ranging from 20–40% before selling to New Harbour Group, a private equity business doing a roll-up of test prep companies.
Although it was a financial windfall for John, his exit left him feeling empty inside. John drifted and ended up having a difficult time processing his newfound life, which led him to consider if other founders struggled with life post-exit. He began interviewing other entrepreneurs who had sold and is now putting the finishing touches on a book called Beyond the Exit, which will come out later this year.
During this interview, you’ll hear John’s journey of turning a service business into a product company and get John’s findings from his research with 71 exited founders. You’ll learn how to:
- Ensure subcontractors don’t do an end run around you to go directly to your customers.
- Pay yourself first.
- Escape the service business trap.
- Turn a service company into a subscription model.
- Differentiate yourself in a crowded market.
- Run a closed auction to sell your business.
- Thrive in your life after you sell.
- Avoid the biggest mistake founders make after they sell.