If you want to start a company, read this first.
During my time working at Harvest (the social media company I co-founded), I met some pretty cool people. One of those people was an owner of a company called Double Tap Media. Tim Gosnell is a wealth of knowledge and his company was what I wanted Harvest to aspire to be.
After meeting Tim in person for the first time, he mailed me a book (So cool. Who does that?) called Built to Sell by John Warrillow. The book is a work of fiction but based on real stories from the business world.
Whether or not you are actually trying to sell your company one day, this book will get you in the right mindset to get your business to a place where if you left it tomorrow, it could run perfectly without you.
Here are some of my top takeaways from the book.
1. If your company cannot operate without you now, it wont be able to when you walk away.
Many small business entrepreneurs have the habit of wanting to start many companies. That is, after all, the entrepreneur mindset. However, as entrepreneurs we must be careful not to leave our projects too soon.
It's easy to build a company to the point where it is growing and functioning really well, but when the owner steps away, it all falls apart. This is because the owner still has a huge hand in decisions and what goes on in the day-to-day operations of the company. Let alone if that owner is the top sales role and closing the big deals. Obviously, when they make an exit, there will be a huge gap in revenue and operations.
2. If you are able to "sell" your company but you remain the most important asset, you will continue to work at your company after it is sold.
This point closely follows the last. If you are somehow able to persuade someone to buy your company and it's not a fully functioning machine, you will have to stay and work at the company for a set number of years until you can hand off your position to someone else. The exact terminology escapes me, but some smart business people will buy companies that aren't ready, but put this kind of agreement in the contract. They understand that the owner and his or her people are still very much an important necessity to the workings of the company and will need to be replaced slowly in order for the machine to keep functioning well.
So, if you want a clean break, make sure your company is ready to continue on without you.
3. Mindset is everything — customers not clients — products not services.
So, how do you start to make this machine that doesn't need you to run it?
It starts with mindset.
First, if you are in the service industry it is very likely that your services are as great as they are because you personally provide them. In Built to Sell, the main character owns a logo design company which started out as just him creating designs for hire. This person's style and expertise were the company. Therefore, this owner had to create a proven process for creating logos that he could hire and train others to follow. This needed to be a near perfect process that was kept simple.
The main character was encouraged by his mentor to start referring to his logo design process as a product and not a service. It was a product designed by the company to work perfectly if each step in the process was followed correctly.
On top of that, the mentor told the main character to start referring to his "clients" as "customers". Customers buy products and clients buy services.
With this mindset in place, the main character was able to start looking at his company as an entity that sold products to customers with a simple method of operations.
A machine that consistently creates a great product no matter what parts are used is the type of machine worth buying.
4. Can your company be "copy and pasted"?
So, if you can work to get your company to a place where all operations are set in stone and it is now proven process that can be run by anyone (obviously with the proper capacity to do so), you have created a business worth buying.
Further, if selling the company is not something you are planning to do anytime soon, there is always the option of franchising your process or opening up multiple offices.
If your process is able to be “copy and pasted” to get near similar results, you can train an entire new staff of people to run those processes in various other locations.
Conclusion
Easier said than done, I know. But I agree that this is important stuff! I think for any company, old or brand new, some of these ideas should be strived for so that you have a way of cashing in on all the hard work you’ve done, handing it down to your children or trusted colleague, or even franchising out the operation.
And even if you have no intention of selling, wouldn’t it be nice to go on vacation knowing your business won’t crumble while you’re gone? You can turn off your phone, kick up your feet, and know your business is working for you, not the other way around.