I named this post imaginary value based off the idea of imaginary numbers. Just because the additional earnings and value accumulated that we are about to talk about are not real or tangible at this point, it doesn’t mean they don’t exist.
Ok Josh, you’re off your rocker. What are you talking about?!
When you start a software venture and it makes say $2,000 per month net profit for example. Cash in hand, you pocket $2,000 every month, before taxes. However, if you’re new to starting companies, like I was a few years ago, you don’t see the additional value. Right now, you might be thinking, “Wow, I’m only making $2,000 after all this work! That’s only $24k a year. It’s not nearly enough to justify all this work.”
One of the first things most beginners miss is the increase in company value. Let’s assume your company is worth 12 times monthly net profit. So now after 1 year, you have a $24,000 company. So if you sell out, you actually made approx. $48,000.
Then, you have things like the brand name. You won’t always own the brand but it will always be attached to your résumé. If the company takes off after you sell it, that résumé item really holds a lot of value. By résumé, I don’t just mean applying for jobs, but it will allow you to get media coverage, and if it was big enough, maybe even a book deal!
If you replicated the process of building a similar company a couple more times, you could even write a book or create a course on it. You’ll have 3 brand names (that you may or may not own anymore) that you can mention in your sale pitch.
Then you have what you learned. Experience is one of the best forms of education. You can take what you just learned, and apply it on a bigger idea next time. After each success, your chance of success increases. You know the process. You’re much less naive. It’s like my good friend Don tells me, your first million is always the hardest.
Another form of imaginary value is the connections you make. Your business likely made new connections with suppliers, freelancers, investors and many forms of people who can add value to your business. I personally owe a large portion of my success to mentors — not paid mentors but more experience people who lend advice once a month. With these people now added to my life, every aspect of my future projects will be better off with their opinion.