Quick Book Summary: “Built to Sell” is a fictional journey of the Stapleton Marketing Agency run by Alex Stapleton. The business is a mess, stressful and hemorrhaging cash. Finding himself burnt out and ready to quit, Alex starts exploring the idea of selling the Agency and connects with a mentor, Ted, only to find out that his business is actually worth nothing. The book then takes you on an emotional journey of what it takes to sell a business. With Ted’s guidance as a mentor, Alex starts building a business that could run without him. He streamlines, delegates, focuses on one service and productizes his service business. The result, a profitable machine that becomes a true asset that he is able to sell.
I remember reading “Built to Sell” for the second time at the end of 2017, after I had reached mountains of frustrations with our Agency, Gingerbread Marketing. I guess the message didn’t sink in enough at the first read. Determined to build a sellable asset, this book lit a much-needed motivation within me to change the way I was running my business.
So I did just that. Streamlined and productized our offer, rebranded it, focused on automation, and came up with a new vision for what would soon come to fruition two years later in a successful exit. I credit this book for helping me achieve this amazing milestone in my life. Looking back on what I gained from the book–now post-exit–it is incredible to see the parallels from what I went through and the book’s key takeaways.
I think what struck home most with me was the book’s philosophy of “having options” or “an options strategy” mentioned on the very first page. The main takeaways for me of “Built to Sell” is to build a business that could be sold even if you have no intention of doing so. This was a huge part of the fun of building Content Pros. The challenge of building a sellable asset that could run without me.
In reality, I did want to sell Content Pros but also had no idea actually when that would actually happen. There wasn’t a specific timeline or date to do this. To be honest, I’m not sure if that would have changed things as everything fell into place pretty organically. Because we had structured the business in the right way with the “Built to Sell” philosophies, we were able to build an asset that ended up being something people wanted.
When the time came to do so, it was extremely seamless to sell. Again, because we had built in the “option”, it allowed us to explore that avenue. Something the majority don’t do. Most are building businesses that aren’t assets, rely on themselves, and they’re limiting their “options” and upside potential. Is that you? It sure was me with the previous businesses I started.
Even if you never want to sell, by building your business with a “sellable” mindset, you will have a much more successful business overall.
I support whatever you are trying to optimize for. Just don’t limit your potential options in a future that has many unknowns. Things change, people change, you change.
Below are my 5 biggest takeaways from this book that I think could be valuable as you build your productized service businesses into a sellable asset.
This is probably the biggest mistake most service businesses make. They try to offer everything to everyone. Without specializing especially at the beginning. You will never get traction and allow yourself the opportunity to scale. (See my post on Focus here) In the book, Alex runs a full-service digital marketing Agency and he literally says “yes” to anything and everything that is asked of him. Which he was able to do. But at a steep hidden cost to him, and his team. As the book progresses and he decides to specialize in one thing (Creating Logos), his business actually starts to transform into something special.
For me, this was incredibly relatable. When rur agency started, we offered everything: Emails, landing pages, funnels, content creation, funnel design, coaching, etc. Looking back it was crazy– all we tried to accomplish. Luckily, we specialized quickly and didn’t continue down the path of “everything” like so many do. Only when we decided to specialize in high-quality blog post content was when our business started to grow and most importantly, became something we enjoyed doing. The light started to flicker at the end of the tunnel.
Ted, Alex’s mentor in the book, walks him through many of the steps in transforming his business into a sellable asset focusing on one point in particular that I love. “Productizing” your service. “You have to turn your service into a product and standardize your offering,” Ted says. Without doing this, you will not be able to grow, scale, or sell.
In the book, you see Alex’s journey of specializing in Logos and then productizing the offering with a fixed price, and a unique 5-step creation process (SOP) his team latches onto, which he fine-tunes and continues to make better.
The financial transformation of Alex’s business was astronomical once he productized his service. No more proposals and customers started paying upfront for his services like a product. Although Alex’s story is fictional, it still hits extremely close to home and is spot on with my own experience and hundreds of other productized service business owners I know. For me,productizing your service at whatever level you deem fit is vital if you want to run a business you enjoy and non-negotiable if you are planning to exit down the road.
3. Remove Yourself
This is probably one of the most challenging aspects in the “productizing” process. So much of a business typically relies on the (you), the owner for decisions, goals, sales, and more. Most still, you are probably doing a lot of work and are a bottleneck in the process. You will have to audit yourself to see what actually relies on you within your business. Alex was stuck doing all the selling and meeting with clients. This took up all his time, and if a business relies on you to do the selling, it will be very challenging, if not impossible to exit. Alex’s first hurdle was to remove himself from doing the sales.
**I will like to add. Before doing this, you need to have a specialized offer, process and streamlined operations in place. If you don’t have this and try to outsource sales, you will be putting a bandaid over a bullet wound. Don’t put the cart before the horse.
See what you are doing every day and outline tasks that are high value and those that aren’t. This is a great way to start outsourcing and delegating work. Ask yourself what you truly love doing? The closer you can get to outsourcing everything so nothing relies on you, the better opportunity you will have to sell your company. If not, you will be subject to a long earnout or your business just won’t get the multiple you deserve when you do want to sell.
4. They’re “Customers” not “Clients”
This one is subtle but I think is one of the most powerful things you can do mindset wise. Most service providers refer to their customers as “clients”. It is important to create a distinction in your mind and how you do business. Clients buy services and Customers buy products. This was a huge mental shift for me personally and when my business partner, the entire team, and I latched onto this philosophy as we productized our service. Things started to make substantial shifts very quickly.
5. Clear Targets and Goals
My Last takeaway is ensuring you have a clear target. In the book, Ted has Alex stay in his beach house for a weekend to think about how much he would want to sell his business for. What is that number? Alex spent the whole weekend thinking about what his business was worth now and what it was really worth to him to sell based on all the hard work he had put to date. After much thought, he came up with his number which ended up being $5MM.
Once that number was defined, the goal was set. From there, he was able to reverse engineer what his business needed to hit in pre-tax profit in order to sell at that valuation. He had a clear target goal and much clearer steps to follow. Defining what your number is and reverse engineering the pre-tax profit you need to hit and average market value for service businesses (this fluctuates with the market).
**Bonus Takeaway: This one is more subtle, but when you look at the overall journey Alex was on. you will notice he had someone to guide him through the process–Ted, his mentor and coach. He was able to find someone who had already done what he wanted to do and literally follow in his footsteps. This guidance helped shape Alex’s decisions, limit his errors, and accelerated his progress towards his goals.
Built to Sell Thinking Time Questions:
- If you were to evaluate your business today how much is it really worth?
- What is the “Target” number you actually want to sell your business for, and how can you reverse engineer your goals for the business to meet that target?
- How productized is your service? Are you serving clients or customers?
- Do one or more customers account for more than 40% of your overall revenue? If so, how might you create a plan to spread that risk out and become less reliant on this one customer?
- Does your business rely on you or run without you? Could you do the laptop test and take one month off tomorrow and come back with no issues and the business running smoothly?
- Who has done what you want to do that you can connect with and hire as a coach or mentor to help you reach your goals?