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Book Summary – Built To Sell: Creating A Business That Can Thrive Without You

Built to Sell - Book summary

One of the most common mistakes entrepreneurs make is to build a business that depends too much on them. They become stuck in their business and can’t sell it even if they want to. Through a parable, John Warrillow illustrates an 8-step model that you can use to turn your business into one that you can sell, and develop options to exit your business. In this free Built to Sell summary, we’ll outline what’s involved in creating a business that can thrive without you.

For many small businesses, especially service firms, the owners are the business. The owners are so good at what they do that they become the go-to person in the company. Unfortunately, such businesses aren’t scalable or sellable, so the owner has no choice but to keep slogging on. John Warrillow estimates that probably only 1 in 100 businesses are saleable. Even if you don’t have the intention of selling your business, a company that’s built to sell will be valuable, scalable and sellable, thus giving you more exit options. Warrillow’s 8-step action plan in the book is developed after studying and interviewing hundreds of entrepreneurs.

Backdrop to the Built to Sell Fable

The fable is about a fictional entrepreneur, Alex Stapleton, who wants to sell his marketing agency, The Stapleton Agency. He approaches Ted Gordon, a family friend and serial entrepreneur, for help. Alex is shocked when Ted tells him that his business is worthless—The Stapleton Agency has no differentiating factor, is overly-reliant on him and 40% of its revenues depend  on 1 large client.

A generic, owner-dependent business like The Stapleton Agency can at best be sold under an earn out agreement, which means that Alex will get a small amount upfront for the company, with the remainder being paid only if he successfully achieves pre-agreed targets for 3-5 years. He’ll bear the bulk of the risks, while the acquirer enjoys the bulk of the reward from success. To sell his company without getting stuck in an earn out arrangement, Alex must first transform it with Ted’s help.

In our complete Built to Sell summary, we’ll explain the 8-step model (with associated tips) for selling your business as we follow Alex on his journey. Let’s now take a quick overview of what’s involved.

The 8-Step Model to Sell Your Business

It takes deliberate effort to build your business such that it can thrive without you.  From there, you can decide whether to continue to enjoy the business (which can thrive without you) or sell it.

Built to Sell summary_outline of the 8-step model

1. Develop a Standard Service Offering (SSO)

The whole idea here is to focus on 1 specific area that you do really well. After all, a small firm that tries to do too many things can never compete with larger firms with the resources to hire a range of talents. By focusing on a specific area, you can hire specialists to become #1 in your niche.

A Standard service Offering is a consistent process for delivering a specialized service that you focus exclusively on.  It must be a service that’s valuable to your client and can be taught to someone else. From our full book summary, you can learn the specific steps to define your Standard Service Offering, document your process and brand the offering. This step is vital for you to achieve the results for the subsequent steps.

2. Build a Positive Cash Flow Cycle

Buyers will only be interested in a business with a positive cash flow cycle, i.e. it generates cash.  You can get more details on how to do that in our complete summary.

3. Hire a Sales Team

To build a sellable business, you need to show that (i) you don’t need a superstar to bring in the sales and (ii) you have a diverse client base (such that no single client constitutes more than 10-15% of your revenue). In our full book summary, you can get more insights on (i) what this step involves and (ii) why you must drive this new SSO model for at least 2 years.

4. Stop accepting projects outside of your SSO

Commit to your SSO and reject all other projects. This is the toughest step, since your clients and employees will keep pushing you to make exceptions, and you’ll be plagued by self-doubt. Resist the temptation to give in, stick to your SSO and you will see a distinct shift with time–read more in our full Built to Sell summary!

5. Launch a Long-Term Incentive Plan for the Management Team

An acquirer will want to see that you have a management team that (i) can run the business without you and (ii) will stay after the company is sold. In our complete 13-page summary, we elaborate on why you shouldn’t use equity as a retention tool and how to build a viable long-term incentive plan instead.

6. Find a Suitable Broker

As you drive the model over 2 years, your business may improve so much that you no longer wish to sell it. However, if you’re still committed to proceed, then you must find a broker to represent you. You can (i) get a better idea of what this entails and (ii) get some useful tips to get the best selling price from our full book summary.

7. Inform your Management Team

The prospective buyer will eventually need to meet your team, and it’s definitely better for the team to hear about the sale from you than from rumors. Get details from our complete Built to Sell summary on how to present the sale to get buy-in from your team.

8. Convert the offer(s) into a binding deal

After the management presentations, you may get offers in the form of non-binding Letters of Intent. It’s vital to be prepared for the rigorous due diligence process that will follow, and to know the potential pitfalls to avoid.

Getting the Most from Built to Sell

In this article, we’ve briefly outlined some of the key insights and strategies you can use to achieve desired change. For more examples, details, and actionable tips to apply these strategies, do get our complete book summary bundle which includes an infographic, 13-page text summary, and a 25-minute audio summary.

Built To Sell summary - book summary bundle

This is an extremely easy-to-read book, with simple and practical tips that are reinforced both in the fable and in an executive summary at the end of the book. You can purchase the book here for the full details, or check out more details and resources at www.builttosell.com.

About the Author of Built to Sell

Built To Sell: Creating A Business That Can Thrive Without You is written by John Warrillow–an entrepreneur and who has over 20 years’ research experience into small and medium businesses. He founded The Value Builder System™ and has started and exited several companies. In 2008, he was recognized by BtoB Magazine as one of America’s most influential business-to-business marketers.

Built to Sell Quotes

“To sell your business, you need to demonstrate to a buyer that you have a sales engine that will produce predictable, recurring revenue.”

“You can’t be ‘kind of’ a specialist. Either you specialize or you don’t.”

“Stop using the language of a service firm and start using the language of a sellable business.”

“Buyers understand that entrepreneurs want to put some cash in their jeans but nobody wants to buy a sinking ship where the captain is about to jump.”

“Think big; remember that the company that acquires you will have more resources for you to accelerate your growth.”

Click here to download the Built to Sell summary & infographic

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