“You see this here doughnut? What you got is the hole.”

I’ll never forget that sinking feeling when a business valuation expert told me that about my company. I couldn’t believe it.  I was stunned.  Humiliated.  12 years of building my law firm—all that blood, sweat, and treasure—and have nothing to show for it … ?

>>>

Years earlier, I had joined up with a friend and a fellow lawyer to form a law firm. Such chutzpah on my part! Because I was only five years out of law school and what they taught you about actually running a law business wouldn’t fill a thimble. So I thought, “Teaming up with someone else will be the ticket to doing things really, really well.”

Smooth sailing? More like a rollercoaster. Did you read the part about going into business with a friend?  I was not good about setting boundaries. It took a long time to wake up to the fact that I was getting the short end of the stick. When I wanted to make changes, my partner didn’t want to share the stick.

We fought over management responsibilities. We fought about strategic direction. We fought about money. I was at my wit’s end. I had tried everything to grow this business, wondering, “Am I a moron?” “What the hell’s the matter with me that I can’t figure this stuff out? Why is everyone doing well and I’m stuck?”

That’s when I realized the firm had to end. I was doing everything that Marian Williamson said you shouldn’t.  She said, “You’re playing small doesn’t serve the world.  There’s nothing enlightened about shrinking so that other people won’t feel insecure around you.”

So I decided to sell out to my business partner and go away. I was done.

That’s when I went to that business valuation expert. I showed him the numbers, the clients, the staffing. And I said “Tell me. What’s a fair offer I can make my partner? What is all this worth?”

He took a deep breath—which is never good.  He looked me right in the eye–that kind where you know, “here it comes.” He held up a sprinkled doughnut and said, “you see this doughnut here?  What you got is the hole.”

He continued, “There’s nothing to sell. Your business depends too much on you. If you want out—cheap and fast– close the doors.  Resign. Move on. ”

I was so humiliated I didn’t whether to laugh or cry. Me, the bigshot business lawyer.  I had to walk away because I had nothing but the hole in a doughnut.

I had put my heart and my soul into that business for 12 years. Running down the wrong road very enthusiastically. Thinking, “well, I’m gonna get there eventually.” And I didn’t.  What did I get? I put off getting married. Didn’t have kids. Got thyroid problems for the stress.

Sad, but true. Because of my ignorance, when my business partnership imploded, I had no choice but to close my doors and start again.

I hadn’t built a business. I had built a job. Our income stream flowed like … a rollercoaster. Up and down. Peaks and valleys.  And with all of the similar exhilaration and anxiety. We didn’t have predictable repeat revenue to count on.

Here’s what I learned from that:  The value of your company isn’t based on past success.  That’s not what buyers or investors look for. They buy its potential to earn money in the future.  Few things better indicate future success than predictable, repeat revenue streams.

That’s one of the reasons our firm had no “enterprise value.” And why I had a hole in a doughnut.