Built to last or built to sell

By Stephanie Tsatsaos, Rapid RevOps.

A common company-building paradox many entrepeneurs face is the question, "Are we building this to last or building this to sell?" The smartest entrpeneurs will do both.

Built to Last author John Warrillow refers to having an “options strategy” rather than an “exit strategy”, as a company-building strategy that the most successful entrepreneurs deploy that focuses on building an enduring business that is built to last and at the same time maximizing its value. The idea is to build to stay but be ready to leave – building the systems, team, structure and processes in place so that if conditions change or the right buyer approaches, you are ready and in the best position. Here are some of the key tactics John Warrilow suggests when developing your “options strategy”:

1 - Don’t generalize; specialize. Establish your company core focus – the thing your company is best at and loves doing and stay in that lane. This puts you in the best position to stand out and do it better than anyone else!

2 - Pay attention to your customer concentration. Most experts recommend that no one client makes up more than 15% of your revenue. Relying on one or two big customers may keep your lights on but will turn off potential buyers.

3 - Establish and simply document your proven process (your way of delivering the product or service from start to finish). Train your marketing, sales and operations/service teams on this process so they are clearly sharing this with your potential customers (making it easier for them to buy).

4 - The company needs to be bigger than you. You may or may not be staying on with the purchase. Either way, to maximize the value of your business, your buyers need to feel confident they are buying a well-oiled machine that can thrive without you.

5 - Know your numbers in your sales process. When buyers are looking at your company, they are likely doing the math to see how big the opportunity is and sizing market. If you have figured out your sales numbers (# of leads to get a meeting, # of meetings to get a sale/job, etc.) this not only gives the buyer confidence but helps vision what’s possible.

6 - Establish your leadership/management team with an incentive to stay with a simple stay cash bonus. Get the right people in the right seats and offer a cash bonus paid in installments to those that stay through the transition.

7 - Help the buyer see the vision and opportunity with a long and short-term plan. Companies that run on EOS® use the Vision/Traction Organizer to document this.