Escaping the Service Business Trap with John Rood | Built to Sell Radio

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.

Show Notes & Links

John’s Book

Connect with John on his website

Definitions

Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.

About Our Guest

John Rood

John Rood is an entrepreneur currently leading Proceptual, a platform for AI and Machine Learning regulation compliance. Previously, he co-founded Next Step Test Preparation, growing it into a national leader in health sciences exam prep, which was acquired in 2018. He specializes in building strong teams and driving them towards success through clear strategy and operational efficiency.