Generating $50,000 a month in cash flow from an acquisition in 90 days… Sounds like a wild pipe dream, right?
I thought so, too.
But when a Lab member approached me with this goal, I couldn’t resist the challenge to see if it could actually work.
Now, this member wasn’t like most of my Lab members. She already had an impressive track record, managing hundreds of real estate properties that generate steady cash flow. Clearly, she knew how to build wealth. But now, she was shifting her focus to business acquisitions, which is why she had joined the Lab six months earlier.
“I want to generate $50,000 in cash flow each month, after principal and interest payments, and I want to do it in 90 days. How can I make this happen?” she asked.
At first, I thought, “Come on. Let’s be real.” Her question was more than ambitious – it was audacious.
But then, she shared that she was applying a framework called rapid transformation coaching.
I hadn’t heard of this style of coaching before, but essentially it’s about collapsing timelines: taking a long-term goal, like a 10-year vision, and working backward to figure out what would need to happen in five years, two years, one year, and even just 90 days.
The idea behind rapid transformation coaching is to strip away the noise, focus on the critical actions, and attack the goal directly.
As someone who thrives on big, bold challenges, I couldn’t resist digging into this.
I decided to approach it as an academic exercise to see if we could break it down into actionable steps.
My own acquisitions over the last decade generate between $250,000 and $300,000 in monthly cash flow, but I had never been challenged to generate a significant amount of cash flow in a condensed time period. While this method was different from how I’ve typically operated, I was excited to see what this approach could reveal.
Spoiler alert: I figured out how to do it.
I developed a five-step framework to generate $50,000 of monthly cash flow in just 90 days, but just as a fair warning: although it seems simple on paper, it’s not easy.
If you’re ready to work hard and think strategically, you might be able to achieve this as well by following this guide.
Let’s dive in.
Step 1: Target the Right Cash Flow
To generate $50,000 a month in cash flow, you need a business that’s capable of producing $600,000 annually in seller’s discretionary earnings (SDE) after debt service (principal and interest payments on the loan you use to acquire the business).
The $50,000 goal is net, so we need to factor in debt repayment. To be safe, we’ll target a business with around $1.2 million in SDE.
The next part is reverse engineering the purchase price based on the SDE of a business.
I always gravitate toward higher-margin businesses because they tend to face less competition, and they offer better returns, making it easier to generate consistent cash flow. That said, if I’m targeting a business with $1.2 million in SDE, its valuation is typically going to fall between 4.5x and 5.5x SDE. This means I’m likely looking at a $6 million purchase price.
If the business is valued at 5x SDE, that puts the purchase price at $6 million ($1.2 million x 5). Of course, this is just a rough estimate, and there could be some variation depending on working capital, closing costs, and other factors. But by focusing on businesses with high margins and keeping an eye on the SDE, revenue, and valuation, I can start to build a solid profile for the type of business that will generate the cash flow I’m after.
This approach keeps my search grounded and focused, making it easier to evaluate the right opportunities as they come along. Having a clear target for cash flow and understanding the numbers behind it is the foundation of this process.
Step 2: Choose the Right Industry and Company
Not all businesses are created equal when it comes to generating consistent cash flow.
To achieve $50,000 a month, I also need to focus on industries and companies that align with this goal, because cash flow can be so variable from industry to industry. Here’s what I prioritize:
Recurring Revenue
If consistent cash flow is the goal, recurring revenue is non-negotiable. Recurring revenue eliminates the peaks and valleys that come with inventory cycles, seasonality, or market fluctuations. Think subscription-based businesses, service contracts, or anything with predictable, repeatable income streams.
Here’s where I’ll admit something: I’ve never acquired a business with truly recurring revenue. Many of my acquisitions have had repeat customers, but not the subscription-style consistency that some industries offer.
However, there’s a trade-off with companies that have recurring revenue. Businesses with recurring revenue models often come with higher valuations, which might not fit every acquisition strategy.
Still, if you want predictable cash flow, this is where you start.
Strong Demand
Next, I look for businesses with strong, sustainable demand for their products or services. In Buy Then Build, I discuss the Acquisition Entrepreneurship Matrix, which defines four acquisition types, including the eternally profitable business.
This is where I want to focus – a business that solves a perennial need and has consistent customer demand.
Low Competition
Defensibility is another critical factor here. I target businesses in fragmented markets with no dominant players. These markets offer a built-in competitive advantage, reducing the risk of being outmaneuvered by larger competitors. A defensible market position, whether geographic or niche, makes cash flow more reliable over time.
Growth Opportunities
Finally, I always look for operational upside. A business with room for improvement offers two things: a chance to increase its value and an opportunity to stabilize and grow cash flow.
Whether it’s improving efficiencies, optimizing marketing, or refining processes, operational improvements build equity in the company while ensuring you can meet debt obligations and strengthen reserves.
By focusing on businesses with recurring revenue, strong demand, defensible positions, and operational potential, I can confidently identify opportunities that align with my cash flow objectives and long-term growth goals. This framework ensures every acquisition is a step toward consistent, predictable income.
Step 3: Structure the Financing
Financing a $6 million business acquisition might sound daunting, but with the right approach, it’s entirely achievable. Here’s how I would structure it to set up for success.
SBA Loan: The Core of the Plan
An SBA-backed loan is one of the most accessible tools for financing an acquisition of this size.
These loans allow you to secure up to $5 million, and if the deal looks solid, many banks will stretch to $6 million. The SBA’s structure makes this the best financing option, giving you access to significant capital at competitive terms.
Source: Eqvista
Of course, banks will require you to have skin in the game. A 10% down payment is typical for an SBA loan, so for a $6 million acquisition, you’d need to bring $600,000 in cash to the table.
While it’s technically possible to make this work with less – say $300,000 – it’s much easier and more credible to approach lenders with $600,000 to $750,000 in hand. That extra cushion will smooth the process and signal your commitment to the lenders.
The Role of Seller Financing
Another form of financing that you can utilize to help structure the deal is seller financing. Sellers may be open to financing through a seller note, an earnout, or even a forgivable loan.
For instance, $600,000 of the deal could come from seller financing, reducing the amount of outside capital you need to secure upfront.
The remaining financing – around $4.8 million – would come from the SBA loan. When you piece this together, the structure looks like this:
What About Private Equity?
If you don’t have $600,000 to $750,000 available, private equity can be an option. You might turn to private investors, friends and family, or firms that back searchers.
Source: Dealroom.co
However, this approach comes with trade-offs. Equity investors will expect a return on their investment and often take a preferred position, which could mean giving up as much as 80% of the total equity in your acquisition. This significantly reduces your personal upside, which is why I’m cautious about relying too heavily on equity partners for deals like this.
The Bottom Line
An SBA loan is one of the most effective and approachable ways to finance a business acquisition of this size. With the right structure – combining your cash, seller financing, and SBA debt – you can secure the necessary capital while maintaining control. It’s not just about getting the deal done; it’s also about setting yourself up for long-term success.
Step 4: Find the Deal
When it comes to sourcing the right business, especially under a compressed timeline: work with brokers.
Brokers (also known as intermediaries, M&A advisors, or investment bankers) are your fastest path to finding a business that’s ready to sell. Forget the romanticized notion of uncovering an off-market gem. While that idea works in real estate, business acquisitions are a completely different ballgame, and off-market deals are far more challenging to execute.
Not to mention they take a long time to source – much longer than 90 days.
Source: BizBuySell
Why Brokers Are Essential
Every business is unique, and sellers are often emotionally invested in their companies. They’ve poured years of effort, resources, and sacrifices into building their business. Unlike a landlord flipping one of ten rental properties, a business owner is likely parting with their primary source of livelihood.
In my experience as a broker, it’s not uncommon to spend six to 24 months working with sellers before they’re truly ready to go to market. They need time to grasp their business’s value, understand realistic pricing, and envision life after the sale.
If you’re working on a 90-day timeline, you don’t have the luxury of time. That’s why brokers are your best bet.
How Brokers Help You Move Faster
Sellers Are Ready to Sell
Brokers work with business owners who are mentally prepared to let go. These sellers have already done much of the heavy lifting – organizing financials, understanding their valuation, and ensuring their business is market-ready.
Detailed Business Summaries
Most brokers will create a Confidential Information Memorandum (CIM) or similar documentation on the business, which is vital for selling the business to interested buyers. This document includes key financials, operational details, and market positioning, all of which will allow you to quickly assess whether the business aligns with your cash flow and acquisition goals.
Clear Asking Prices
Many brokered deals come with a listed asking price, giving you an immediate sense of valuation. If the price is fair, you can make an offer on the spot, fast-tracking the process and getting a Letter of Intent (LOI) without unnecessary back-and-forth.
Fast-Track Tip
If the valuation aligns with your expectations, don’t waste time negotiating. By offering the asking price, you can secure the LOI quickly and shift your focus to due diligence and financing. This approach not only saves time but also positions you as a serious buyer in the seller’s eyes.
The Power of Brokers in a Tight Timeline
Brokers streamline the acquisition process. They connect you with businesses that are ready for market, saving you months of effort in vetting and negotiations. For a timeline as ambitious as 90 days, brokers are your most reliable allies. They can help you target the right opportunities without unnecessary delays.
Step 5: Adopt the Right Mindset
The final – and arguably most important – step in this process is adopting the right mindset.
I’m serious when I say this is the foundation for success.
Most first-time buyers, and even some experienced ones, fall into the trap of overanalyzing. They dig too deep, search for reasons not to move forward, and hope to eliminate every conceivable risk.
The result? Paralysis.
If you’re serious about hitting an ambitious 90-day goal, you need to reframe your thinking.
Source: LifeHack
Picture this: you’ve found a business that’s been around for 20 years, generating $1.2 million in seller’s discretionary earnings (SDE) annually. The numbers work. The deal is on the table.
What’s next?
Focus on closing. At this stage, it’s not about perfection – it’s about trusting the process. Take the information at face value, and understand that due diligence is your safety net. That’s where you’ll validate the details and ensure you’re not walking into a bad deal.
But the mindset shift has to happen first. You can’t afford to waffle or hesitate. If you get stuck in endless deliberation, you’ll lose the momentum you need to succeed. Confidence is critical. You have to be ready to move forward, close the deal, and commit.
And let me be clear: this isn’t “buy and chill.” It’s “buy then build.” Generating $50,000 a month in cash flow isn’t a passive endeavor.
You’re stepping into an owner-operator role, and the work begins the moment you take over. At least in the beginning, stabilizing, optimizing, and growing the business will require focus, energy, and effort.
The plan is clear, and the steps are actionable. The question isn’t whether the framework works – it’s whether you’re ready to commit to it.
If you’re looking to acquire a business in the next 12 months, the Acquisition Lab is your first stop. Reach out to us today and get on the fast track to becoming an acquisition entrepreneur.
