Definition
Wealth Acceleration Factor (WAF) = the rate at which each dollar of net profit growth translates into wealth growth, for the operator's chosen wealth equation.
- Slowlane WAF ≈ 8%/yr — compound interest on saved capital.
- Fastlane WAF = Industry Multiple × 100% — every $1 of additional net profit grows asset value by the multiple.
Industry multiples reproduced from source (Inc. Magazine, June 2009 — Ch 18 table)
| Industry | Multiple |
|---|---|
| Advertising | 2.85 |
| Beauty Shops | 4.10 |
| Bars / Drinking Places | 2.70 |
| Carpet Cleaning | 5.22 |
| Computer-Related Services | 8.19 |
| Employment Agencies | 5.40 |
| Engineering Services | 6.32 |
| Gasoline Stations | 3.70 |
| Grocery Stores | 11.34 |
| Medical Labs | 2.62 |
| Misc. Retail Stores | 3.62 |
| Patent Owners and Lessors | 14.56 |
| Physical Fitness Facilities | 3.56 |
| Plumbing / HVAC | 4.52 |
| Surgical and Medical Equipment | 17.32 |
| Used Merchandise Stores | 4.92 |
Note: these are source-period figures (~2009). Treat as illustrative; current public-comp multiples may differ.
Worked example from source
Engineer quits and builds a medical-device company. Industry multiple ≈ 17. After ~6 years, net income = $1.2M/yr.
- Asset value ≈ $1.2M × 17.32 = ~$20.8M (book quotes $18.4M using 15.3 average)
- WAF = 1,700% — every dollar of additional net profit raises company value by ~$17.
Vs. the same person staying employed and saving 10% at 8% — Slowlane WAF capped at 8%, growth measured in tens of thousands per year.
Two-flanked attack
A single operational improvement (acquire customer, reduce cost, raise price) compounds twice:
- Income now (cash flow)
- Equity later (asset value × multiple)
Liquidation Event — converting paper to real
Asset value is paper until liquidated. Liquidation = sale of the business (or asset) to a buyer at the industry multiple. Required to convert WAF into spendable money.
Source's cautionary tale: John Twitnuts declines a $640M acquisition offer, growth stalls, sells for $2.5M later. Liquidation timing matters — paper millionaires aren't real millionaires until they exit.
When WAF doesn't apply
- Businesses violating Commandment of Scale (too local for a buyer at multiple).
- Owner-operator businesses where buyer is paying for the owner (a personal practice with no transferable system).
- Brand-dependent on the founder (the asset disappears when the founder leaves).
These businesses generate income but liquidate at low multiples — sometimes only at salvage value of equipment.