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If The 4-Hour Workweek inspired me to start a bootstrapped business, Built to Sell inspired me to think of eventually selling it. John Warrillow is an expert when it comes to building sellable businesses. He even runs a podcast called Built to Sell Radio, with hundreds of interviews of people who sold their businesses talking about their experiences.
There is so much value in stories told by the people who have sold their businesses before – and the book is precisely that: a narrative of someone willing to sell their business, getting the helpful advice of a mentor who has done this many times before. Filled with quotes and aphorisms, the book delivers sound and actionable information on how to prepare your business for being eventually acquired.
The trick is to structure it for a successful acquisition from the beginning. Both the formal shell of the business as well as the actual services and offerings can be optimized to be made easy and lucrative to sell.
Warrillow suggests focussing the core business efforts on providing one service exceptionally well. Specializing is the name of the game. Pick something that you can become better at than anyone else. Build expertise, either through learning or by hiring experts.
A business that can run without you is sellable. When you are still needed for the day-to-day operations of your company, potential buyers will be scared away. What if you won’t stay onboard? What if they can’t find someone to replace you? That’s why you want to be come replaceable, or better yet, replace yourself while running the business already.
If you have a lot of customers, you will distribute the risk of cancellations. If you only have a few big clients, not only does a single client quitting take .a big chunk out of your revenue, it also puts you at the mercy of their internal processes and politics. Don’t be dependent.
The most attractive businesses have standardized offerings. Most modern SaaS businesses already do that, as standardizing is the only means to achieve economies of scale. For a buyer, “bespoke” is not an indicator of quality; it’s a source of trouble. By delivering the same service to all of your customers, any improvement for a single customer will be an improvement for all of them. That will net the business a premium when it is sold.
Having read this book early in my entrepreneurial career, I was fortunate to build FeedbackPanda with selling it in mind. Danielle and I never really wanted to sell it, but we structured it as a highly automated, heavily standardized, and extremely focussed enterprise. We weighed all decisions about product and infrastructure choices as to how they would affect sellability. This paid off, literally, when we finally sold the company. Everything was in order, clearly documented, highly automated, ready to hand over because we removed ourselves as much as we could.
For anyone who wonders how their existing business can be made more sellable, the book gives excellent advice on how to retroactively implement these concepts. Built to Sell will show exactly how to take care of this from the very first day for anyone who has yet to start their business.
You can find more books on bootstrapping and detailed reviews on the Bookstrapper’s Bookshelf.