Built to sell

A detailed guide for shifting (or creating) a business structure to something that isn't dependent on its founder. The Herculean process is made clearer through a fictional story of a logo company. I enjoyed this approach. The dialogue and scenarios felt realistic, which itself is a major feat for "business fiction". Warrillow writes from experience and provides seventeen framework tips, given at the end of chapters. There's also "Eight Steps for Creating a Company that Can Thrive Without You" and "Six Forms of Recurring Revenue" that are hugely helpful as well.

This book is a quaint book. The characters are fleshed out, and their stories endearing. It follows the journey of Alex, a business owner of an advertising firm. The first chapter establishes him as the guy who is doing all the heavy lifting, with his firm consisting of average-at-best generalist employees, and most of the business coming from a few clients. The revenue is not bad, and the business allows him to live a comfortable life with his family. Unfortunately, the stress and the pain of running this business has far outweighed the initial enthusiasm he had for having his own creative agency. He makes the decision to cash out.

Enter Ted, a serial entrepreneur and mentor to Alex. He has sold many businesses and is living a wealthy retired life. Alex goes to Ted to understand how, and for how much should he sell his business. Ted reveals to him that its current state is unsellable, despite being profitable and having good revenues. What follows is the two-year journey that Alex follows (with Ted's mentorship) to transform his business into something that can be sold.

The principles of this book sound solid on paper. Ted's advice is very convincing and is presented in a way that doesn't even come off as heavy-handed (which is tough for parables like these.)

Here are the primary takeaways from this book (although owing to the short length of the book, I recommend every business owner to read it in full) 1. Teachable: focus on products and services that you can teach employees to deliver. 2. Valuable: avoid price wars by specializing in doing one thing better than anyone else. 3. Repeatable: generate recurring revenue by engineering products that customers have to repurchase often.

Build to Sell

I thoroughly enjoyed reading this book. Whether I want to sell my business, or not, I shall remember to always build a sellable business. Only when something can run without me, I will have something that's valuable. Alex started off hating his business, and over the transformation, he actually started enjoying running the business way more (to the point where he considered not selling it off). The book is full of actionable practical tips, and the last 40 odd pages are pure non-narrative tips that generalise the lessons from the parable.

This book doesn't overstay its welcome and is sufficiently engaging. I recommend all business owners to read this. There is something here for everyone. This is a strong 8/10.

Here is what I got out of this book:

Step 1-4 focus on building value. 5-8 on selling the company.

1. Isolate a product with potential to scale.
- Specific offering. Not customizable.
- Develop a sales pitch for your product

2. Create a positive cash flow cycle
- Subscriptions
- Make sure no one customer makes up more than 15% of your revenue.

3. Hire a sales team
- Remove yourself from selling the product
- Hire 2 sales employees. They are competitive
“Your job as an entrepreneur is to hire salespeople to sell your products and services so you can spend your time selling your company.”

4. Stop selling everything else
“Business owners often believe that to be “customer centric,” they have to give customers whatever they want. But giving customers too much choice can be a detriment, especially if you’re trying to build a company you can scale and ultimately sell.”
- Customization kills scalability
- Lead your customers. Do not follow. Do not be afraid to end the business relationship if they don't like your standard product.

5. Launch a long term incentive plan for managers
- Prove your managers can run the company and will stick around. Not equity.

6. Find a broker
- Must be able to answer:
“Describe your sales cycle.”
“How many salespeople do you have?” “Describe your cash flow cycle.”
“Who are your customers?”
“How do you know if they are satisfied?”
“How often do they repurchase?”

7. Tell your management team
- Offer bonus when company sells

8. Convert offers to a binding deal
- Beware of earn-outs


Now for the hard part, putting these ideas into action.

It contains actionable advice for SMB owners. If you're an employee or freelancer, it could be used to create a strategy to transitionaing to a SMB.