How to Increase Company Value by Ending Founder Dependency

Want to increase company value without grinding out more hours? The fastest lever is not revenue. It is reducing founder dependency. In this episode, Gene Hammett shares a real client story: a business doing $4 million in revenue, worth roughly $8 million in enterprise value. Seven years later, after serious investment in leadership development and building a team-driven company, that business is worth around $50 million. And the founder just took a vacation where he fully unplugged. No emails, no calls, no meetings, no driving sales. Gene breaks down the Founder Freedom Factor, why buyers pay less for companies that depend on their founder, and the leadership shifts that turn your team into the engine of growth. If you are the bottleneck in your business, this episode shows you the path from founder-dependent to team-driven. Want to build a business that runs without you? Learn how at Core Elevation. Episode Highlights & Time Stamps 0:06 Founder Dependency Value 2:46 The Value Formula 5:09 From Eight to Fifty 7:09 The Unplugged Vacation Test 8:32 Building Team-Driven Trust How do you increase the value of your company? In this episode, we break down the three critical drivers that determine business value: profitability, risk, and Episode Summary Is your business truly valuable or is it only valuable because you're running it? In this episode, Gene Hammett reveals one of the biggest blind spots keeping founders from building a high-value company: founder dependency. While many entrepreneurs focus on increasing revenue and profitability, they often overlook the factor that can dramatically impact their company's valuation—the ability for the business to thrive without them. Gene introduces a powerful new way to think about business value: Company Value = EBITDA × Multiple × Founder Freedom Factor What You'll Learn ✔️ Why founder dependency lowers business valuation. ✔️ The hidden formula that drives enterprise value. ✔️ How buyers evaluate risk when acquiring a business. ✔️ The difference between founder-led and team-driven companies. ✔️ Why building trust and ownership within your leadership team increases company value. ✔️ How the "Unplugged Vacation Test" reveals the health of your business. ✔️ The leadership mindset required to create lasting founder freedom. Resources & Next Steps Ready to take your leadership energy to the next level? Explore free training and resources at training.coreelevation.com and getfounderfreedom.com to help you identify energy leaks, strengthen your leadership presence, and elevate your team's performance. 🌐 Explore More: training.coreelevation.com 🎧 Listen to the Full Episode: Growth Think Tank Podcast

• 0:00Speaker 00

  Your company depends on you for every decision, probably every fire, and certainly most of the sales inside your business. That dependency is quietly capping your business worth. I watched a client go from roughly eight million in enterprise value to about 50 million in seven years. I know seven years is a long period of time, but that's a lot of stuff that gets done. And that's the reason why this isn't something you just do right before you sell the company. It takes time. The actual difference was not the market. He built a team he could actually trust. Today, we're going to talk about increasing company value. Increase your company value can go through a number of different things. I'm going to give you the formula.

• 0:41Speaker 00

  You probably already know, but I'm going to give you the new formula, the actual formula. But in general, increasing your company value means that you are running a healthy company, that you are growing, you have reduced as much risk as you can. There's a level of certainty that a buyer can look at and go, yes, I see that continuing to grow beyond where it is today, and so I'm going to buy it. They're not going to buy something that looks hard, that looks like a turnaround. I know there's people out there that turn around businesses, but for the most part, investors are not looking for that. They're looking for something that is got an opportunity for real growth, and they know that down the road, it will be worth more than what they pay for. And the effort they have to put into it isn't monumental.

• 1:27Speaker 00

  Hi, my name is Gene Hammett. I am a founder coach, CEO coach. I work with founder dependent businesses that are really good at what they're doing. They have real businesses. They probably have 15 or more employees and they want to grow their business to be team driven. What that really means is create a business that can scale beyond them. And that is the basis of my work over the last 10 years. I've been a coach for about 16 and I share all this with you through the podcast so that you can understand that there is a new way. If you've ever thought there's going to be a better way. I wish this was different. It starts with understanding what I'm sharing with you in this episode. Increasing your company value is a big part of what we do, but the real core

• 2:08Speaker 00

  of the work we do is help you be a better leader so that your company runs itself and that you spend most of your time developing the people, not driving the business board. And that being said, if you want to go a little bit deeper with this, I've got a free book that you can download absolutely for free, Get Founder Freedom, and you can find it at getfounderfreedom.com. There's a short video on there that if you watch it even before you put in your information, that you will see if this is right for you. Are you ready for this level of change? And the book is not very long, but it is very targeted at those that want to find founder freedom in their business. So let's dive into today's conversation. The first point I want to make is the valuation for founders and the thing

• 2:52Speaker 00

  that they really need to understand that they often ignore, or maybe they're just a blind spot. The traditional company value is EBITDA times multiple. EBITDA is your profitability number, and it's a calculation that you know how healthy your company is. The multiple is the risk associated with this. And risk is a very broad way of doing this. There's a lot of factors that go into it. It depends on your industry. It depends on your level of EBITDA. It depends on the growth of your company. It depends on how well your company's run. It also depends, do you have a founder-dependent business or not? And so what I've done, just to help you understand this, is you can't really control all of the things inside of your multiple. So we slice out what you can control.

• 3:36Speaker 00

  You can control your founder freedom factor. So the new formula, if you will, is company value equals EBITDA times multiple times founder freedom factor. Just to make this simple, founder freedom factor is the level of dependency that your current business has on you as the founder. If you are making every decision, if you are the firefighter, if you are driving sales, getting things across the line, if you are driving new opportunity for growth, you're still a central part of the Business and that's not a bad thing. But in order for you to increase the founder freedom factor, you must be able to understand that your job is to build up the people around you

• 4:20Speaker 00

  so that you no longer are the doer in your business. You're no longer the strategic thinker and you also don't carry the torch of all people development and people problems and tough conversations and people leadership. You have support along the way. Now that's a lot of work to do, but that's the core which I've done with my, my clients. And that's one reason why I'm going to share this story with you. If you're listening to this show, chances are you're a founder who's built something significant, but you're still too deep in the day to day to see the path forward. That's exactly what the founder freedom strategy call is for. It's free. It's 30 minutes with me personally and we'll pinpoint exactly what's keeping you stuck and what you need to do about it.

• 5:03Speaker 00

  Book your time with me at my personal URL, schedulewithjean.com. Now back to the podcast. About seven years ago, I started working with a client. They were doing about four million in revenue. EBITDA was probably around a million. Their company value was, if we're very generous, eight million. They were probably doing closer to two million in revenue or EBITDA, sorry. When I, I say those numbers to you, very conservative. It's probably worth a lot less than eight million, if we're honest. But I was having a conversation with, with this, you know, former client. They actually a current client, but, but no longer coaching him. We were working in different capacities now and they were telling me the story of going on vacation, which I'll get to in a few minutes. But this story that I wanted to, to, to, the part of this, I want you to really reflect on this is

• 5:47Speaker 00

  going from eight million in company value to now 50 million because their EBITDA is much bigger. Their market, the, the multiple is around six to 10 and the business runs pretty much without this founder. There's still work to be done. There's, he's still showing up most days. He just came back from a vacation, which I am going to tell you about in a second. Cause that's a real test, but this, the story that I want you to really understand here is that, that enterprise value, the calculation, isn't just about profitability, isn't just about the multiple. It's about the, the founder freedom factor. And when he got out of the day to day work, when he built a team and really did this well, he was able to create the business of his dreams.

• 6:28Speaker 00

  And so what I really wanted you to leave you with is buyers do not pay a premium for a business that comes with a mandatory founder. Think about that for a second. Mandatory founder is founder dependent. And they're not going to pay a premium and many buyers aren't going to buy it at all. If they feel like it requires you because you get a big check, you may want to leave. You're not handcuffed to the business anymore. I know there's earn outs and all those things, but the earn out term can go from three years down to six months. Sometimes in that transition in six months, you can probably give, but do you really want to work three years or more? Just having a job and having a boss after you've been, you know, doing your own thing for many years? Probably not. So that's the story of going from eight million to 50 million.

• 7:10Speaker 00

  The real test of team driven is this, the unplugged vacation. No emails, no calls, no meetings, no pushing sales forward, no people problems to address. Sounds like a dream, right? I will admit in my early days of being an entrepreneur, my thought of a vacation was I like to get up early. I like to do my best work early. So I would get up between six and nine before my family got up and I would knock out work, catch up on things, respond to anything. And make sure my fingers on the pulse of everything. I had to learn the hard way that that's not truly a vacation. That's, that's just changing locations while you work. A true vacation is one where you truly unplug, where you are not working. So that when you come back to work, you're refreshed, you're recharged and you're, you have this passion and drive to go to work again.

• 7:55Speaker 00

  Founders need that employees need that. And so I really believe the real test of a team driven is can you do that? You know, if you can't unplug for two weeks, you don't have a company that you own. You own a job. And so you want to really think about can your business run without you? Not forever, but for two weeks. It's a really good test. If you're involved in any of the things that we talked about, the fires, the people problems, the driving sales, whatever it may be. And you need to feel like you need to check in, you need to stay on top of things. You need to keep holding people accountable, have some meetings on the side, get up early. It's not the true meaning of a vacation. All that being said, if you want to increase your company value, you want to focus on the founder freedom factor.

• 8:38Speaker 00

  How founder dependent is your business? When you think about getting yourself to a team driven business, it's probably not a term that you know, think about, but it's a team that you can trust. To a team that takes ownership of the issues that when a problem or a fire comes up, an issue is, is, is. Identified, they bring not just the issue to you, not just solutions, but they bring to you a proactive approach that is well thought out, well documented, and it's workable. It may not be exactly what you would do, but it's workable. That's team-driven. Ownership is a key part of that. They take ownership of this. They take pride since their identity is tied to them being that kind of employee,

• 9:19Speaker 00

  partner in a business, team member, team-driven. It's the dream for many entrepreneurs. Because once you have a truly team-driven, you can spend most of your time in what I call Level Four of my Five Levels of Leadership, which is the people leader. And once you've spent enough time in people leader, you can build all of the eight freedoms that's in the book. If you want to download that free book, go to GetFounderFreedom.com. It gives you the playbook behind this of creating the company of your dreams, increasing your company value. Just go to GetFounderFreedom. It's free. Make sure you watch the video. I think it'll help you. All that being said, today's story was about increasing company value, about truly understanding what does it take to create freedom and what you can control, what you can't control, giving you some insight and some context around this.

• 10:04Speaker 00

  This is the work we do. This is the work that we love to make an impact of. I've got plenty of stories around this. This company's going well beyond even 50 million in revenue or value. But what you really want to focus on today is, are you willing to change the way you see leadership and change the way you see your role so that you get beyond founder-driven? Only you know the answer. My name is Gene Hammett. I love to help you. If I can, reach out to me in any way. If you want the book, GetFounderFreedom.com. Download for free. And when you think of growth, then you think of your show. Think of Growth, too. As always, the courage, just imagine.