Looking for a Built to Sell book summary? Check this out:
“Don’t generalize; specialize. If you focus on doing one thing well and hire specialists in that area, the quality of your work will improve and you will stand out among your competitors.” – Built to Sell, Page 17
Built to Sell Summary
“Built to Sell” by John Warrillow is a practical guide for entrepreneurs and business owners looking to increase their company’s value and make it attractive to potential buyers. The book is based on the author’s experience working with hundreds of small and medium-sized businesses.
“In each business I’ve sold, we created a standard service offering, a consistent process for delivering our product or service. We made sure the product or service was something clients would need on a regular basis so we could count on recurring revenue.” – Built to Sell, Page 18
It provides a step-by-step process for creating a company that can operate independently, allowing owners to step away and reap the benefits of their hard work. In addition, the book offers valuable insights and strategies for creating a scalable business model, building a solid management team, and positioning the company for a successful sale.
“When people are the main assets of the business – and they can come and go every night – the business will not be worth very much.” – Built to Sell, Page 23
The book’s central theme focuses on specializing, doing one thing well, and hiring specialists. This way, the quality of the work will improve, and the business will stand out among its competitors. Also, Warrillow stresses the importance of not relying too heavily on one client as it is risky and will turn off potential buyers. He recommends that no one client should make up more than 15 percent of the revenue.
“Owning a process makes it easier to pitch and puts you in control. Be clear about what you’re selling, and potential customers will be more likely to buy your product.” – Built to Sell, Page 23
Warrillow also suggests creating a standard service offering, a consistent process for delivering products or services. He believes that when the product or service is something clients need regularly, it will generate recurring revenue, making it more attractive to potential buyers. He also emphasizes that owning a process makes it easier to pitch and puts the business in control.
“Don’t be synonymous with your company. If buyers aren’t confident that your business can without you in charge, they won’t make their best offer.” – Built to Sell, Page 24
Warrillow also states that when people are the main assets of the business, it will not be worth very much. He advises business owners to build a company independent of the founder, so buyers will be confident that the business can operate without the owner in charge, thus making the business more valuable. He also suggests productizing the service, charging upfront, and avoiding the cash suck.
“Avoid the cash suck. Once you’ve standardized your service, charge up front or use progress billing to create a positive cash flow cycle.” – Built to Sell, Page 26
Another important recommendation from Warrillow is that you should hire people who are good at selling products, not services, as they will be better able to figure out how the product can meet a client’s needs rather than agreeing to customize offerings to fit what the client wants. He also suggests finding an advisor who is not the largest or smallest client and someone who knows the industry. Finally, he advises avoiding an advisor who offers to broker a discussion with a single client, as it may lead to competition for the business.
“Don’t be afraid to say no to projects. Prove that you’re serious about specialization by turning down work that falls outside your area of expertise. The more people you say no to, the more referrals you’ll get to people who need your product or service.” – Built to Sell, Page 31
The last big recommendation from Warrillow is that business owners think big and write a three-year business plan that paints a picture of what is possible for the business. He also suggests building a management team, offering them a long-term incentive plan, and having at least two years of financial statements reflecting the standardized offering model before selling the company.
Built to Sell is an awesome book if you’re looking to build a business that scales and has the ability to be sold in the future. I can’t recommend it enough. Plus, it’s a short read.
My Notes from Built to Sell:
“Take some time to figure out how many pipeline prospects will likely lead to sales. This number will become essential when you go to sell because it allows the buyer to estimate the size of the market opportunity.” – pg. 42
“Two sales reps are always better than one. Often competitive types, sales reps will try to outdo each other. And having two on staff will prove to a buyer that you have a scalable sales model, not just one good sales rep.” – pg. 43
“Hire people who are good at selling products, not services. These people will be better able to figure out how your product can meet a client’s needs rather than agreeing to customize your offerings to fit what the client wants.” – pg. 49
Stop doing the selling yourself and hand it over to a capable person.
“Ignore your profit-and-loss statement in the year you make the switch to a standardized offering even if it means you and your employees will have to forgo a bonus that year. As long as your cash flow remains consistent and strong, you’ll be back in the black in no time.” – pg. 57
“You need at least two years of financial statements reflecting your use of the standardized offering model before you sell your company.” – pg. 58. This seems like a good general rule of thumb, but I don’t believe it applies for every situation and business.
“An acquiring company wants to see that there is a management layer in place and that the management team has some form of long-term incentive plan that will encourage them to stay after the business is purchased.” – pg. 68
“Build a management team and offer them a long-term incentive plan that rewards their personal performance and loyalty.” – pg. 68
“Find an advisor for whom you will be neither their largest nor their smallest client. Make sure they know your industry.” – pg. 77
“Avoid an adviser who offers to broker a discussion with a single client. you want to ensure there is no competition for your business and avoid being used as a pawn for your adviser to curry favor with his or her best client.” – pg. 81
“Think big. Write a three-year business plan that paints a picture of what is possible for your business. Remember, the company that acquires you will have more resources for you to accelerate your growth.” – pg. 84
“Don’t issue stock options to retain key employees after an acquisition. Instead, use a simple stay bonus that offers the members of your management team a cash reward if you sell your company. Pay the reward in two or more installments only to those who stay so that you ensure your key staff stays on through the transition.” – pg. 94