Today, I spoke to John Warrillow, who is the author of Built to Sell: Turn Your Business into One You Can Sell. In this interview, John talks about how to build a company that can be sold. His advice just might change how you’re currently building your business.
How can you tell if your business is built to sell?
Go on vacation. If that works without a hiccup, take a three month sabbatical. To be “Built To Sell” your business needs to be able to run without you. The best acid test is to see how your business performs when you’re not there. Start with a short vacation and plug any holes that you notice when you return. Build up to a point where you can go away for a full 12 weeks without the business being negatively impacted.
Do you have to start with the mindset that you want to sell the business if you want it sold in the future?
You want to build a business you could sell, not necessarily one you want to sell. If you could sell your business, it means your business can run without you which means you can keep it and let others run it or just do the part of the business you really like or sell it if someone offers you a fair price. Its about having lots of options.
What are some steps to creating a sellable company?
The first and most important step in creating a business than can thrive without you is to isolate a product or service that meets three criteria:
1) It has to be teachable to employees (or you can program technology to deliver).
3) It has to be repeatable so that customers have to re-purchase on a regular cadence. For example, Jim Hindman looked at the typical service station and realized they were too reliant on the master mechanic who owned the place. He isolated oil changes as a service he could provide that was teachable to an untrained mechanic, valuable to customers because they don’t want to give up their car for half a day just to get an oil change and repeatable because you need to get your oil swapped every three months. Jim started Jiffy Lube and ended up selling it for $42 million.
Is it wise to promote the fact that you’re selling your company? What impact does this have on your customer base?
No, you want to make sure nobody finds out until the very last minute. That’s one reason to get an intermediary (business broker or mergers and acquisitions professional). Their job is to run a professional sale process and keep your identity confidential until prospective buyers sign a Non Disclosure Agreement.
John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently, he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board. Watch this video to hear John’s thoughts on starting and growing a business you can sell. John and his book “Built to Sell” have been featured in CNN, MSNBC, Time magazine and ABC News. John was recognized by BtoB Magazine’s “Who’s Who” list as one of America’s most influential business-to-business marketers. John now divides his time between homes in Toronto, Canada, and Aix-en-Provence, France. He is a husband and father of two rambunctious boys.