Interview with John Warrillow - author of Built to Sell
Just 1% of small business owners successfully sell their businesses each year, though most of the vast majority of small business owners would like to think their business is sellable. This stark reality is one that John Warrillow ran up against early in his career and now spends his time sharing ways to avoid that reality with other entrepreneurs.
Recognized by B to B Magazine's "Who's Who" list as one of America's most influential business-to-business marketers, John is a frequent speaker on a variety of issues that impact small business owners. This month he spoke with us.
John's books, Drilling For Gold and Built to Sell: Turn your Business Into One you can Sell have caught on in the small business community. His focus, unlike most books marketed to entrepreneurs is not about running a business but rather about building a business that is sellable.
As an entrepreneur in the service industry, John's words, during his interview resonated with me. One of his key points is that if you ARE the key asset of the business, then it isn’t worth much if you sell it. If the service you offer is not easily replicable by others within your organization, then you have less a business than a "job" in a company that only employs... you.
Wow - strong, but true words!
It's just this type of expert advice and easily understandable concepts that makes John's book so readable and on target for entrepreneurs hoping to cash out and profit from years of hard work building a sustainable business. John’s easy-to-read book outlines 14 steps to building a business that potentially is lucrative to prospective buyers.
Since I've heard much about John and his book it was a pleasure to find out who he admires (Bo Burlingham is the editor-at-large of Inc. Magazine) and what companies he thinks have a great model for developing a business that can be sold profitably. (A company that takes a service generally sold by local businesses and replicates the service on a national level – fascinating reading.)
John's experience as a small business owner, he has started and exited 4 different companies, gives him the depth of knowledge to write frankly about the challenges small business owners make. He shared some of his insights with us in his very approachable style.
Enjoy!
Q: Who were your early role models and what were the main things you learned from them?
A: Bo Burlingham is the editor-at-large of Inc. Magazine and the best selling author of The Great Game of Business, Small Giants among others. Bo agreed to write the foreword for my book so we collaborated. He's an incredible storyteller and a wonderful human being. He has the ability to distill a, complex business concept into a language anyone can digest.
I hope 5% of Bo's ability as a storyteller rubbed off on me.
My three favorite books for entrepreneurs are:
1. Small Giants by Bo Burlingham (key lesson: you don't have to be big to have a great business)
2. The E-Myth by Michael Gerber (key lesson: work on not in the business)
3. The Four Hour Work Week by Tim Ferriss (key lesson: get a life!)
Q: What inspired you to write "Built to Sell"?
A: I have started and exited 4 businesses in my career. In 1997, I started Warrillow & Co. as a boutique consultancy. Over time, I built the company but eventually hit a plateau: I was doing most of the selling and clients expected me to be personally involved in their project's execution. This of course constrained our ability to grow. I earned a good living but the cash flow was inconsistent and I continually struggled to balance client service and business development.
By 2004, I had decided to sell the business. I met with a few M&A advisors who explained to me that my business was not worth very much: I was told the best price I could hope for was 50% of revenue or 3 or 4 x EBITDA and even a deal at these low multiples would only be possible if I agreed to stay on for 3-5 years. I did not receive this news well.
At the beginning of 2005, I committed to changing our model so I could sell the business for a higher multiple. Over the next year, I transformed our offering from a billable hour consultancy to a subscription business where we charged an annual, up-front fee for a series of market research reports. We discontinued custom consulting and transitioned 100% of our revenue to recurring subscriptions. We went from 5 or 6 clients to 100 subscribers. Personally, I went from hand-holding each client to not knowing most of our subscribers.
In 2008, I sold the business to an American-based Fortune 1000 company.
I took some time off and realized I wasn't ready to "retire" so I wrote Built To Sell to share my experiences of transforming a business into something sellable with other business owners who would like to own a business they could sell one day.
Q: What did you learn in the process of putting together this book?
A: The statistics around selling a business are stark:
• 97% of all businesses in America are small businesses – virtually all would like to think their business is one they could (they may not want to yet) sell one day
• 50% of small business owners want to exit in the next 10 years
• Just 1% successfully sell their business each year
Q: What is an example of a great company that people have never heard of?
A: The School Photography Company is a U.K.-based company that has approached the business of photography in an entirely different way that makes their company a valuable, sellable asset. The School Photography Company specializes in taking classroom photos. They have a special formula for getting kids to come into a room, sit down quickly, and smile broadly at just the right time. They teach their secret formula for herding munchkins to a group of young photographers eager for the work experience. Each year school principals repurchase their services to take the obligatory classroom shot and document the progress of their flock. Customers - both parents and principals - value The School Photography Company's work because they get kids out and back into their classrooms quickly and efficiently.
The typical photo studio that takes a hodgepodge of assignments is nothing more than a glorified job for their owner. And therefore, when the owner decides s/he has had enough, there is nothing to sell. The School Photography Company in contrast is a business that is not dependent on any one photographer while offering a repeatable and valuable service. They have a scalable formula and a sellable company.
Bio:
John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently John transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board (NASDAQ: EXBD). In 2008 he was recognized by BtoB Magazine's "Who's Who" list as one of America’s most influential business-to-business marketers.
Recognized by B to B Magazine's "Who's Who" list as one of America's most influential business-to-business marketers, John is a frequent speaker on a variety of issues that impact small business owners. This month he spoke with us.
John's books, Drilling For Gold and Built to Sell: Turn your Business Into One you can Sell have caught on in the small business community. His focus, unlike most books marketed to entrepreneurs is not about running a business but rather about building a business that is sellable.
As an entrepreneur in the service industry, John's words, during his interview resonated with me. One of his key points is that if you ARE the key asset of the business, then it isn’t worth much if you sell it. If the service you offer is not easily replicable by others within your organization, then you have less a business than a "job" in a company that only employs... you.
Wow - strong, but true words!
It's just this type of expert advice and easily understandable concepts that makes John's book so readable and on target for entrepreneurs hoping to cash out and profit from years of hard work building a sustainable business. John’s easy-to-read book outlines 14 steps to building a business that potentially is lucrative to prospective buyers.
Since I've heard much about John and his book it was a pleasure to find out who he admires (Bo Burlingham is the editor-at-large of Inc. Magazine) and what companies he thinks have a great model for developing a business that can be sold profitably. (A company that takes a service generally sold by local businesses and replicates the service on a national level – fascinating reading.)
John's experience as a small business owner, he has started and exited 4 different companies, gives him the depth of knowledge to write frankly about the challenges small business owners make. He shared some of his insights with us in his very approachable style.
Enjoy!
Q: Who were your early role models and what were the main things you learned from them?
A: Bo Burlingham is the editor-at-large of Inc. Magazine and the best selling author of The Great Game of Business, Small Giants among others. Bo agreed to write the foreword for my book so we collaborated. He's an incredible storyteller and a wonderful human being. He has the ability to distill a, complex business concept into a language anyone can digest.
I hope 5% of Bo's ability as a storyteller rubbed off on me.
My three favorite books for entrepreneurs are:
1. Small Giants by Bo Burlingham (key lesson: you don't have to be big to have a great business)
2. The E-Myth by Michael Gerber (key lesson: work on not in the business)
3. The Four Hour Work Week by Tim Ferriss (key lesson: get a life!)
Q: What inspired you to write "Built to Sell"?
A: I have started and exited 4 businesses in my career. In 1997, I started Warrillow & Co. as a boutique consultancy. Over time, I built the company but eventually hit a plateau: I was doing most of the selling and clients expected me to be personally involved in their project's execution. This of course constrained our ability to grow. I earned a good living but the cash flow was inconsistent and I continually struggled to balance client service and business development.
By 2004, I had decided to sell the business. I met with a few M&A advisors who explained to me that my business was not worth very much: I was told the best price I could hope for was 50% of revenue or 3 or 4 x EBITDA and even a deal at these low multiples would only be possible if I agreed to stay on for 3-5 years. I did not receive this news well.
At the beginning of 2005, I committed to changing our model so I could sell the business for a higher multiple. Over the next year, I transformed our offering from a billable hour consultancy to a subscription business where we charged an annual, up-front fee for a series of market research reports. We discontinued custom consulting and transitioned 100% of our revenue to recurring subscriptions. We went from 5 or 6 clients to 100 subscribers. Personally, I went from hand-holding each client to not knowing most of our subscribers.
In 2008, I sold the business to an American-based Fortune 1000 company.
I took some time off and realized I wasn't ready to "retire" so I wrote Built To Sell to share my experiences of transforming a business into something sellable with other business owners who would like to own a business they could sell one day.
Q: What did you learn in the process of putting together this book?
A: The statistics around selling a business are stark:
• 97% of all businesses in America are small businesses – virtually all would like to think their business is one they could (they may not want to yet) sell one day
• 50% of small business owners want to exit in the next 10 years
• Just 1% successfully sell their business each year
Q: What is an example of a great company that people have never heard of?
A: The School Photography Company is a U.K.-based company that has approached the business of photography in an entirely different way that makes their company a valuable, sellable asset. The School Photography Company specializes in taking classroom photos. They have a special formula for getting kids to come into a room, sit down quickly, and smile broadly at just the right time. They teach their secret formula for herding munchkins to a group of young photographers eager for the work experience. Each year school principals repurchase their services to take the obligatory classroom shot and document the progress of their flock. Customers - both parents and principals - value The School Photography Company's work because they get kids out and back into their classrooms quickly and efficiently.
The typical photo studio that takes a hodgepodge of assignments is nothing more than a glorified job for their owner. And therefore, when the owner decides s/he has had enough, there is nothing to sell. The School Photography Company in contrast is a business that is not dependent on any one photographer while offering a repeatable and valuable service. They have a scalable formula and a sellable company.
Bio:
John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently John transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board (NASDAQ: EXBD). In 2008 he was recognized by BtoB Magazine's "Who's Who" list as one of America’s most influential business-to-business marketers.
Labels: business, John Warrillow, selling
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