May is get caught reading month, and do I have a great suggestion for you. John Warrillow’s new book “Built to Sell.”
Starting and growing a successful small business is difficult and risky. In the early stages, you make lots of self-sacrifices and you work long hours for little or no pay. In fact, if you are funding the business with your personal assets, the business may deplete your bank account in order to meet its cash flow needs. When I started my business, I use to say, “I love my job so much I pay to go to work every day.”
Of course, as a business owner, you take these risks because you believe in the end your hard work and financial commitment will pay off. However, too many entrepreneurs make the mistake of creating a job with a comfortable revenue stream, instead of a business that is sustainable. In other words, the owner is the business. So if they decide to retire and cash out, there is nothing of much value to sell. That’s why only one out of every 100 small businesses are sold successfully.
John Warrillow, author of “Built to Sell: Turn Your Business into One You Can Sell.” found himself in that situation in 2004 when he wanted to sell his consultancy firm. “My name was on the company. It was called “Warrillow & Company” and all the customers wanted to talk to me because my name was on the door. I did a lot of the selling and took all the headaches when things went wrong, and I said I’m getting out. So I tried to sell the business and I failed. It was a huge flop.”
Warrillow decided to spend the next four years turning his company into a sellable business. In order to do that he learned he needed to focus on a product or service that could scale. A scalable business, according to Warrillow, is one that meets three criteria: 1) It is teachable; 2) It is repeatable; 3) It is valuable.
“Think about the photographer who goes out and takes pictures — customized shots. He becomes the one the customers rely on. If he tried to hire someone to take the photographs, the customers will say no I like your shots. You can’t get beyond a certain ceiling,” Warrillow says.
“Then, there is a company called the School Photography Company and all they do is school photos. That’s repeatable. It is teachable. Don’t need a famous photographer. It is valuable because it is a product the customers want. So you have two businesses, one that is not sellable and one that is definitely an acquisition target,” he continued.
Once you have identified your standardized product offering, Warrillow advises to stop accepting projects or opportunities that fall outside your core business offering. Stick to your knitting.
Warrillow ultimately transformed his boutique consultancy business, into a recurring revenue model subscription business which he successfully sold to The Corporate Executive Board (NASDAQ:EXBD) in 2008.