On my Business owners and Entrepreneurs podcast – Transition Guy I interviewed best-selling author John Warrillow, author of Built to Sell and actually created the value builder system. We talked about building your business to sell it.
Selling Your Business Takes Planning
Just because your business is doing well and is an attractive prospect doesn’t mean it is saleable. Let’s talk about exit strategies and building your business so that it gets the highest price when you come to sell it. As business owners and entrepreneurs we are hardwired to solve problems, right. The most immediate problems are always right in front of us.
The customer who needs a quote. The employee who’s dissatisfied. We like to solve problems. However, the process of selling a business is almost the opposite. It requires more discipline where the payoff is years into the future.
You Are Not That Valuable
The saleability of your business is not specific to the amount of blood, sweat and tears you have put in 24 hours a day 7 days a week for the last 20 years. It is of no interest whatsoever to the buyer. In fact if that is what your business demonstrates then it means you are integral to the running of the business – this means that the business becomes a less attractive proposition as it is only valuable with you at the helm. That means you will need to earn out when you sell. You could be beholden to working for the company for many years as part of the sales fee.
Find Your Rainmaker
Ensure that your rainmaker or top salesman shares his knowledge to make an army of top salespeople for you. Your team doesn’t rely on one person. Make sure your product is standardised and everyone can sell it. It is easier to teach a bunch of people how to sell a standardised product/solution. Make sure you are clear on what you are chasing. Do you want to build a valuable company which you can sell on or are you chasing the most money now? The biggest deal? Be aware that in many cases there is very little relationship between the size of your company and the value. Don’t just focus on the top line revenue. Buyers are looking for other things as well.
Scaling And The Art of TVR
Identify your T V R. TVR stands for teachable, valuable, repeatable. Think about all the products and services that you sell today and score them on a scale of one to 10 – then score them on how easily you can teach your staff to distribute them. The second attribute is valuable, which is how uniquely are you positioned to provide that service? If it’s a commodity that they can get from lots of other providers, give it a zero. If it’s something that you really are the only one providing, give it a 10. The third attribute is repeatable, and this refers to half the purchase cadence of your customer base. Is this a product or service that your customers have to buy on a regular basis? If so, give it a 10, if not, give it a zero. And then simply look at all of the services that you’ve scored and identify which ones are the highest and which ones are the lowest.
If you want to discuss how to exit your business get in touch
To listen to the Transition Guy podcast click here
Remember, failing to learn is learning to fail.
