For many, one of the goals of starting a business is to sell it some point. After the first few crazy years of entrepreneurship, you can start earning a regular income stream if your business is successful. Plus, building a sellable business can be a way to fund your retirement later on down the road. If you are planning on creating a business that can sustain itself — and be attractive to a buyer later on — you might consider three things that will help you find that measure of success:
These are criteria laid out in the book Built to Sell by John Warrillow. I reviewed Built to Sell over at AllBusiness.com, but I thought that the three characteristics of a business that is sellable warranted a little closer attention.
We’d like to think that we are irreplaceable, but that is the first pitfall of an entrepreneur trying to build a sellable company. Instead of being the company, it is important that you focus on making sure that your employees can handle themselves. This means that your business has to provide products and services that you can teach your employees to deliver. Your employees need to be teachable, and you need to set up an organization that can learn to function without you. It’s hard to sell a company that has to be whipped into shape after you are gone.
Obviously, you have to build something of value if you want to sell your business down the road. Think of how you can improve your processes — and teach your employees to deliver on the process. Create products and services that provide true value, and look for ways to add even more value such as establishing well-known brands and building a solid business credit history. What your business is selling has to be in demand if you expect to find a buyer for your company.
Your success has to be repeatable. Warrillow recommends that you generate recurring revenue for your company by creating products and services that customers keep coming back for. That way, your customer base remains loyal, while at the same time expanding as you gain new (hopefully loyal) customers. Being able to garner repeat business is important when you want to create something with staying power.
About Built to Sell
I found this an engaging book. It follows an entrepreneur named Alex as he works to transform his business into something sellable. At the beginning of the book, Alex is involved in every aspect of his business. He has no clear idea of what product or service he is really trying to offer. He is beaten down and burning out. But then he gets a mentor, and starts to focus on products and services that meet the three criteria above. He slowly works to transform his business into something that can be successful without him — and sold later on down the road.
I really connected with this book because, even though I’m not trying to build a sellable business, I have felt like Alex as I struggled to find a service that people wanted to buy, and as I tried to find a focus. Overall, I found the book helpful, and full of practical information that I could use.
Disclosure: I received a free copy of the book for review. Other than that, no compensation was received.
Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.