By: John Warrillow
A business book told through an engaging story. That is a difficult line to toe but this book did a fantastic job.
The story follows Alex Stapleton, a business owner who wants to sell his marketing agency. Alex has built up a small company with a few employees, but he wants to have more time with his family and is stressed out by his work. He seeks out a mentor that has sold several businesses successfully to help him get his business under control so he can get rid of it.
The lessons flow week by week as the two meet and implement the strategies and tactics below.
- Business success lies in specialization in a single service.
When you start a new business, how do you make it successful? Should you concentrate on one service or take any business you can get no matter if it fits in your wheelhouse?
The advice: Focus on one service.
A focus on one service allows clients to see the company’s core strengths. As a result, people will come to you with specific problems that you can solve better than anyone else.
When clients can’t go to other firms to receive the same quality of service, you can negotiate higher prices.
Further, when the results are good, clients will recommend you. Word of mouth will earn you new business.
Another benefit to specializing is that it allows you to hire the best people for a specific job. Because you aren’t spread out through multiple services, you can hire a few experts in a single area.
You don’t have to train generalists to do a variety of skills. Instead, you allow experts to do what they are good at with less oversight from you.
- For long-term success, build a business that can run without you.
When a company is young, the founder is often involved in almost every aspect of the business.
BUT in order for the business to grow, customers shouldn’t associate the company entirely with its founder.
If you meet with every client and oversee every decision, your clients get used to talking about everything with YOU. And YOU undermine the ability of your team to serve your clients because they only want to deal with you.
If you are tending to every sale, you cannot serve your team and help them grow. You cannot work ON your business because you are IN the business too much.
You should have an overview of the business activities, but the day-to-day operating should operate smoothly without you.
- Hire at least two salespeople who know how to sell your specific service.
Having employees dedicated to sales not only generates money, but it also frees the founder to lead the business.
Hire 2 sales people. Why?
First, healthy internal competition motivates employees. By competing with each other for commissions, they’ll generate more business.
Second, by having multiple salespeople, you’re minimizing risk in the event that someone gets sick or leaves.
Because you are selling a standardized single service, you need talented salespeople that can show how your specific service is exactly what the customer needs to solve their problem.
- Over Reliance on one big client puts your business at risk and makes it unattractive to potential buyers.
It is tempting to go after a big client. It is a good thing. But be careful about reyling on them excessively.
If they are late on their payments, it drastically affects your business.
Being heavily reliant puts you in a bad position to negotiate.
If you want to pivot and offer a different or more specific service, you can’t afford to risk losing the big client.
And if your goal is to sell your business, you want to show a potential buyer a less risky business with the ability to attract many clients instead of one big one.
- Offering a standardized service will save you time, lead to better cash flow and make your company attractive to buyers.
In a customized service, you do not get paid until the very end when the client is happy after several revisions. Excessive revisions take time and that becomes expensive.
In a standardized service, the customer knows what to expect and so you get paid at the beginning. Like a product. This improves cash flow.
Standardized services make it easier to estimate product delivery. You can set your clients expectations better. And you can allocate your time and resources better.
All of these factors make your service more efficient and improve cash flows, which make the business easier to operate and more attractive to buyers.
- Create incentives for managers to stay in the company even after it’s sold.
If/when you sell your business, you will want the employees to continue to have jobs. Also, the buyer will want your rockstar team to stay on and continue to grow a thriving company.
It is important then to incentivize your team.
This is such a vital part of being a business owner and entrepreneur. You want to incentivize everyone to play the same game. When you win, your people should win!
You can accomplish this by employee stock options or performance incentives.
I prefer performance incentives. This requires you to set key performance indicators. Your people then know what it means to do a great job and are rewarded handsomely for it.
- The right broker will help you sell the company for the best price by arranging negotiations with different potential buyers.
The right broker will arrange discussions with different potential buyers. This competition will result in a better price.
Pick a medium-sized brokerage firm.
Big firms may not give you the time you deserve.
Small firms may not be taken seriously or have an adequate network of buyers.
You want a broker with experience in your industry. They know enough to connect dots for other businesses to see the value in your business.
Making a decision to sell is a big one. You own your own business because you value the freedom to work on what you want and benefit directly from the fruits of your labor.
Setting your business up to be attractive to a buyer gives you both of those. Often after setting your business up this way, you get to work on the things that are fulfilling and provide jobs to people that are passionate about them. You might not want to sell after all.
Determine the one specific service you can be excellent at that your clients need.