Building with the End in Mind: Selling a Business with John Warrillow
If you're an entrepreneur who doesn't want to work forever, then you need to keep the possibility of selling your business in mind. It wouldn't hurt to already think of an exit strategy even if you're just starting out. Not only will it help you accelerate your growth more smoothly, but you will also be sure to get a good value for your business.
In this episode, John Warrilow joins us to talk about building and scaling company value faster. He walks us through the teachable, valuable, and repeatable (TVR) process to help us discover and identify key products and services we can offer. Learn to detach yourself from the business to generate value!
If you want to learn how to accelerate your company value with the end goal of selling a business, then this episode is for you.
Here are three reasons why you should listen to the full episode:
- Discover how to build, accelerate and harvest your company value.
- Understand why it’s important to remove yourself from the company brand when selling a business.
- Learn how to use the TVR process in growing and selling a business.
WATCH NOW (and check out the Resources and Episode Highlights below):
- Download the workbook and jot down relevant notes as you listen to/watch the show
- The Influence Alliance — A business-building community for changemakers who want to build a sustainable and scalable business they love.
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- Connect with John: Twitter | LinkedIn
- Learn more about John’s work: The Value Builder System | Built to Sell
- Built to Sell Radio
- Interested to learn more from John? Here are his books:
- Check out these companies John mentions:
[01:59] Value Is More Than Just Profits and Clients
- John shares that his first business was in market research. They served big companies like Microsoft and Telstra.
- He used to think his company had a lot of value because of his client list.
- When he approached an acquisitions professional, that person told him there was nothing to sell.
- If you do everything in the company, it won’t be able to survive without you.
- For a company to be valuable, it needs to be able to exist without its owner.
[04:41] The TVR Process: Scaling Value and Selling a Business
- When you want to scale your company value, you need to identify something you do not need to deliver personally.
- Discover your value through the TVR process. Your services or products need to be teachable, valuable, and repeatable.
- You’re looking for a service or product that can maximise its scores on all three attributes.
- Look into productising your offers and billing process. These can accelerate your company value in all three attributes immensely.
- Listen to the full episode for an in-depth explanation of the TVR process!
[12:02] Build with the End in Mind
- In selling a business, you need to learn to make business decisions based on what strategic acquirers look for.
- Many entrepreneurs tend to focus on top-line revenue. However, top-line revenue and company value are two different things.
- Think like an acquirer. This mindset can help you make the right decisions for your business.
- John shares a concrete example of strategic decision-making in the full episode.
[15:36] Identify Investment Theses
- John recommends hiring an M&A professional when selling a business.
- If you can’t afford it, identify an investment thesis on your own.
- Do as much research as you can and look at how trends are shifting.
- An investment thesis is really about seeing how a business can quickly multiply its value.
[18:57] Building Value Takes Time
- Some entrepreneurs believe that cross-selling is easier than finding a new customer. While this may be true, this can decrease your company’s value.
- Differentiating yourself is crucial in selling a business. You do this by offering unique value, whether in services or products.
- Acquirers usually work on a build versus buy decision framework. They would choose to buy a business that offers something hard to build.
- Don't just look at your revenue; it's better to have a specific and targeted niche than to sell to the general public.
[24:30] Subscriptions Over Transactions
- Subscriptions are recurring revenue that can help you identify strategic ways you can grow faster.
- It’s more effective than relying on only transaction revenue.
- You can create recurring revenue to make selling a business easier no matter what industry you’re in.
- John shares how a flower selling business used recurring revenue to its advantage in the full episode.
[29:29] Remove Yourself from the Equation
- Selling a business will be hard if you have your name on the company brand.
- A business is more than just the revenue; it's the visibility and reach it has built over time.
- We often don't see beyond the near future, so keep your options open and explore what's possible, such as selling a business!
10 Powerful Quotes
[03:56] ‘I thought value was determined by the revenue that we had, the profit that we had, the client list that we had. And what I learned later, was that for a company really to be valuable, it has to sort of be able to thrive without the owner.’
[05:06] ‘So many businesses, the reason they can't grow is because they're too involved in the business.’
[12:41] ‘As you build your company, start to make decisions through a lens by which you ask, “How would this impact their view of us, the strategic acquirers we'd like to get acquired by?”’
[19:18] ‘That's the thing with entrepreneurship, we should always be looking at now but always looking at the future and being able to see where are things shifting.’
[20:06] ‘The biggest mistake, I think, we make as entrepreneurs is we cross sell too many products and services.’
[24:38] ‘Acquirers value subscribers at subscription revenue at a multiple of what they do transaction revenues.’
[25:59] ‘No matter what industry you're in, you can create some recurring revenue, and it will have a material impact on the value of your company.’
[28:37] ‘When you know the lifetime value of a customer, when you feel in your gut and you know on paper that you can quantify… the lifetime… worth of revenue from this one customer, guess what? It allows you to invest in salespeople.’
[29:19] ‘The recurring revenue model is the secret sauce to driving up and accelerating the value of just about any business, even a retailer.’
[30:48] ‘If your surname is in the name of the mastermind or the membership organisation, that can undermine its transferability to somebody.’
John Warrillow is the founder of The Value Builder System, simple software for building and accelerating company value that has been used by thousands of businesses worldwide. The system uses several diagnostic tools, including the Value Builder Score, that can help you double your value compared to average-performing businesses.
John is also passionate about sharing his vision of changing our mindset about company value. He wrote the best-selling and one of the best business books of 2011, Built to Sell. He also wrote The Art of Selling Your Business and The Automatic Customer.
He is also the host of Built to Sell Radio, ranked by Forbes as one of the world's top 10 best podcasts for business owners.
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In selling a business, you must be able to differentiate your company from the rest of the market. Focus on building value over revenue, just like how John Warrillow builds with the end in mind.
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