Ever wondered how you could build a business that operates without you? Today we talk with John Warrilow about how to build a company that is worth buying, the importance of recurring revenue and how to build it, and more importantly, how to sell a company and live happily ever after.
If we want to scale up a business, it's all about the one thing whether it's payroll for nannies or Annieglass...and just keep doing that. As . an entrepreneur you may not thrive on repetition but the people working for you do. - John Warrillow
Three Things We Learned
We now live in a 'Subscription Economy'
Recurring revenue or subscription-based revenue is a key piece in today's business model. There's even a subscription service for Christopher's new favorite underwear and toothbrush replacement heads. Recurring revenue is king. Buyers love it. Unilever acquired Dollar Shave Club for 5 times it's worth because of the recurring revenue and the beauty of it is the revenue will continue to recur without the original owner.
A big personality is unsellable
It was popular several years ago to have a personal brand. The founder needed to have a huge personality and usually, the company carried her or his name as well. While this was great for top-line revenue growth, it's absolutely horrible for the value of the company. That's the definition of an unsellable company. One way around this is to look for a product that they can start leading with. Instead of Dr.'s Johnson and Johnson's company, they began leading with Johnson & Johnson Baby Powder. They were able to successfully separate themselves from the leaders of the company.
You've gotta niche down
Focus on selling one thing that you are truly a differentiator of. If you think of it from an acquirer's perspective, they are making a build versus buy decision. If your company is cross-selling and has a diverse line to sell and the prospective buyer could just lower their prices to compete, that's what they're gonna do. But if you've got one thing that is really tough to compete with, something that is unique, your business becomes really attractive.
John Warrillow is the author of the celebrated, “Built to Sell: Creating a Business That Can Thrive Without You” and he isPresident of Warrillow & Co., a strategy and research firm that specializes in helping Fortune 500 companies get inside the head of small business owners.
The firm counts twelve of the Fortune 100 and seven of the top ten business-to-business spenders in the United States as customers.
Warrillow & Co.'s client list includes American Express, Bank of America, British Airways, Citibank, IBM, Microsoft, and Visa.
John Warrillow studied at Queen's University in Kingston, Ontario, and started Warrillow & Co. in Toronto, where he lives with his wife, Jennifer.