Built to Sell Summary Review | John Warrillow

Creating a Business That Can Thrive Without You

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Introduction

Built to Sell is a compelling story of an entrepreneur’s journey to create a valuable and sellable business. The story revolves around Alex Stapleton, a business owner who struggles with his advertising agency’s dependency on him. With the guidance of his mentor Ted, Alex embarks on a transformational journey that turns his business into a valuable, sellable enterprise. Through Ted’s advice, Alex could transform his company from a worthless asset into a successful business worth $5 million.

This engaging narrative teaches entrepreneurs the crucial steps to building a business that can thrive without them, making it an attractive acquisition target.

Warrillow explores the various factors that can affect a company’s success and how to build a successful business without its owner. He also provides a step-by-step guide that will help readers follow their own path.

In 2012, both Inc. and Fortune chose Built to Sell as one of their top 10 picks for business owners. 

About John Warrillow

John Warrillow is a successful entrepreneur, speaker, and bestselling author. He founded four companies, including The Value Builder System, which helps business owners improve the value of their companies. Warrillow’s expertise in entrepreneurship and business management has made him a sought-after speaker at various events and conferences.

His other bestselling books include The Automatic Customer and Drilling for Gold. Warrillow’s work has been featured in several publications, including The Globe, Mail, Entrepreneur, and Forbes. 

StoryShot #1: Turn a Worthless Company Around

Alex owned an advertising agency known as the Stapleton Agency, which had seven employees. Sarah, the agency’s senior designer, worked on various projects for MNY Bank, the company’s client. During a meeting with John Stevens, the head of marketing at the bank, Alex showed eight different mockups for the bank’s brand.

After meeting with Sarah, Alex informed her she needed to make some changes to improve the work she was doing for the bank. The next day, Sarah told him she was quitting. She was the best designer in the company, but she was not happy about her new job and was going to leave. Alex was also thinking about selling his company. The agency was not doing well financially, and the other employees were not particularly good at any task.

Before making a big decision, Alex met with Ted, a wealthy entrepreneur who had sold several companies. He told Alex that the company was not doing well financially, and it was competing against other firms. He also noted that it would be difficult to sell the company without major changes.

Alex had taken on various projects requiring diverse talent. However, being limited to hiring generalists instead of specialists impacted the overall quality of the work. Ted advised Alex to specialize in a specific area, allowing him to hire experts and improve the quality of his services.

StoryShot #2: Follow a Five-Step Design Process

The agency’s logo was the best thing the company could do, and they used a five-step process to create it:

1. They first asked the client about its goals, and they also asked them silly questions, such as “What would a cookie taste like?” The designers then sketched out ideas.
2. Before creating the final design, they created a better black-and-white version of the logo based on the client’s feedback. Ted suggested Alex focus on logos, as this strategy would allow him to focus on one field.
3. Ted also told Alex that he should not have a client that brings in more than 15 percent of the company’s total revenue. In Alex’s case, MNY Bank was the client of the company, which contributed 40 percent of the company’s revenue.
4. He then created a sell sheet that detailed the process of his logo design. 
5. He then contacted some of his previous clients to see if they liked it. He met with a client named Zucca, who was developing a new product and needed a new logo. After talking about his process with her, she was hooked and asked for a proposal.

StoryShot #3: Sell the Process

Ted told Alex that he should learn how to master a process that would allow him to control everything the company does. For instance, if the company started selling a product, it could ask its clients to pay in advance to establish a positive cash flow cycle. Also, if Alex wanted to sell the company, he would have to find people who could deliver the same quality of work.

Ted then told Alex he should create an instruction manual that would explain the process of his logo design. He said perfecting it would allow his employees to do the work he did. After completing the first draft, Alex presented his manual to his team.

During the meeting, Elijah, the company’s youngest designer, was unhappy with the strategy. After talking to him, he decided to leave the company. This was a slight relief for Alex, as he would have one less designer, but it could also affect the relationship between the company and MNY Bank.

A letter from Urban Sports Warehouse informed Alex that they wanted the company to handle all their marketing. He was thrilled about the opportunity, but he knew that it was the right decision to reject the offer. Since his company was more competitive than other agencies, they would require him to work for them for five years. He would also have to meet certain milestones in order to get fully paid.

StoryShot #4: Build a Sales Team to Take Your Business to the Next Level

During the next meeting, Ted and Alex would talk about his sales engine. One of the most important factors that a potential buyer would consider when it comes to choosing a company is the stability of his team. He needed to make sure that he had the necessary changes to improve his team.

After talking about his sales engine, Alex decided to let go of Dean, his account director, and Tony, his copywriter. This would allow him to hire two more salespeople.

He met with Blake, who had experience in the advertising industry, and Angie, who had been a successful product salesperson for small businesses. Both of them had the necessary skills and knowledge to help the company grow.

Ted told Alex to avoid hiring Blake as he had the necessary skills and knowledge to help the company grow. He had the necessary experience to cater to clients and sell services. However, Alex needed to hire a product specialist, and Angie had the necessary skills to sell products. He then hired her and brought in a former colleague named Seamus to work for him.

Harry, the company’s accountant, informed Alex that he would be losing money this month due to the fees that he and his team charged for a logo. Ted, however, assured him that they were fine and that they were currently implementing a new system.

They would be able to start doing well in three months, and the next two years would not be easy. Ted also told Alex that he wanted to get the company to a value of $5 million. At this time, the company was worth less than $500,000. 

StoryShot #5: Overcome the Challenges of Scaling Up

Ted was cryptic when he told Alex about the price that he came up with. He said that he would write it down and put it in an envelope, which he could find later on. By December, the company had 11 employees. Angie and her colleague, Seamus, were training the new salespeople, and this was affecting their work.

Ted suggested that Alex should create a management team, which would involve his current employees taking on the role of managers. However, this process would be very messy. Instead of giving his managers equity, Ted told them to reward their loyalty and work by implementing a long-term incentive plan and a raise.

Mary, an account manager at MNY Bank, helped Alex by providing him with high-yield CDs and a credit line increase. By the end of the year, the company’s revenue had reached over $2 million. Despite the positive financial situation, Ted suggested he wait a few more years before selling the company.

Mark, a broker from the firm, told Alex he should sell to Multicom, a multi-billion-dollar agency. He then met with Peggy, a financial advisor from EMG Capital Partners, and she suggested two smaller tech firms. Ted told Alex to go for Peggy as she was the better option, as settling for a big company would eliminate any competition, and it might not be the best deal.

StoryShot #6: Create a Business Plan to Achieve Future Growth 

Peggy suggested that Alex create a business plan that would outline his company’s goals for the next three years. Ted told him to think of a big company such as Starbucks as he wanted him to be more creative and bold. In his second draft, he projected that the company would have a revenue of $12 million.

After receiving the draft, Peggy prepared a teaser for the company, which would be presented to a group of potential strategic buyers. These types of buyers were more likely to pay the right price and would be able to maintain the company.

When Ted updated him about the company’s numbers, which were sent back to the office, Alex referred to the company as a client. Ted then told him that he should start referring to everyone as a customer.

StoryShot #7: Encourage Team Success Through Rewarding Benefits 

During their next meeting, Peggy informed Alex that the potential buyers would like to meet with his management team. The members of the team were very enthusiastic and worked hard, but they would also end up with a different owner. Alex felt guilty about selling, as he would be able to benefit from the money, but he would also end up with a different manager.

Ted advised Alex to reward his team with a one-time bonus after the sale, but to forgo stock options, as this would make the process complex. Everyone in the team was surprised by his decision, and they agreed that he was an entrepreneur. He promised them a $10,000 bonus after the company had been sold.

StoryShot #8: Take the Final Steps

Simon and Alistair from RTX Printing, a division of RTX Global, visited the office of Peggy and Alex to discuss their interest in buying the company. The meeting went smoothly, and during the end, Simon asked Alex why he wanted to sell.

Alex initially hesitated, but he told him that he wanted to maintain a stable financial situation and spend time with his family. Peggy then told him that this was not the ideal answer for potential buyers. They needed to feel that the owner was motivated and would be able to help during the transition.

A couple of weeks later, Peggy informed Alex that the company was receiving an offer. After receiving a $6 million offer, Alex was very excited, but Ted noted that the letter of intent was a non-binding offer. Despite this, Alex was still positive about the potential buyers’ offer.

Due to the investigation being conducted by the Print Technology Group, Alex was starting to feel frustrated by the delays in the deal. He decided to approach the potential buyers directly instead. He told them that he was ready to walk away if they did not show an immediate effort to close the deal. Marcus then promised him a closing meeting within a couple of weeks.

Before the deal closed, Marcus informed Peggy and Alex that the offer had been lowered to $5 million due to some concerns about the company’s scaling strategy. During the meeting, Alex was furious and needed to think about it. Ted then told him to open the envelope that he had hidden a year ago. After seeing the $5 million offer, he accepted it. The two parties closed the deal on November 30.

StoryShot #9: Follow These 10 Steps to Successfully Sell Your Business

Selling your business can be a daunting task, but it can be made easier with the right preparation and strategy. By following these 10 steps, you can ensure that you maximize the value of your business and successfully find the right buyer.

Step #1: Focus on a Scalable Product or Service

To create a sellable business, entrepreneurs should focus on offering a product or service that is scalable and not dependent on their involvement. This allows the business to grow without being limited by the owner’s time and expertise. By creating a scalable offering, business owners can build a more valuable and sellable company.

Step #2: Create Standard Processes and Procedures

Standardization is essential for creating a business that can run without the owner’s constant involvement. By establishing processes and procedures for all aspects of the business, employees can operate effectively and consistently, increasing the company’s value. Standardization also ensures a smooth transition when the business is sold.

During the transition year to a “Standard Service Offering”, focus less on the profit and loss statement. Emphasize the cash flow statement as the key daily management report for that year.

Step #3: Create Recurring Revenue

Recurring revenue provides stability and predictability. It makes a business more attractive to potential buyers. Businesses can become more stable and valuable by developing recurring revenue and subscription-based models. 

Typically, generic and owner-dependent businesses sell for a minimal upfront payment and a 3-5 year earn-out, placing most of the risk on the seller and potential rewards in the buyer’s hands. To counter this, build a business that allows for the majority of proceeds to be received upfront.

Step #4: Give Employees Autonomy

You must empower your employees to make decisions and solve problems independently. This autonomy allows the company to operate without your constant involvement and demonstrates that the business can thrive without you.

Step #5: Create a Self-Sufficient Team

Ask yourself: If you were to take an extended vacation, would your business continue to operate smoothly? If the answer is no, your business relies too heavily on your involvement. To build a valuable and sellable company, work on removing yourself from daily operations and focus on creating a self-sufficient team.

Step #6: Delegate

Delegation is a vital skill for entrepreneurs who want to create a sellable business. By delegating tasks to employees and allowing them to take ownership of their work, you can free up your time to focus on higher-level tasks and build a company that can run without you.

Step #7: Create a Diverse Customer Base

A business with a diverse customer base is more resilient and attractive to potential buyers. Relying on a few large clients can make a company vulnerable to changes in the market or client relationships. By cultivating a broad range of clients, entrepreneurs can reduce risk and create a more stable business.

Step #8: Identify Your Unique Selling Proposition

What Makes Your Business Stand Out? To build a sellable company, entrepreneurs need to identify and communicate their unique selling proposition (USP). This USP should set the business apart from competitors and make it more appealing to potential buyers. By focusing on what makes your company unique, you can create a strong brand identity and increase its value. 

Step #9: Build a Strong Management Team

A strong management team is crucial to creating a sellable business. Potential buyers want to see that the company can continue to thrive without the owner’s involvement. By hiring and developing competent leaders, entrepreneurs can create a self-sufficient organization that is more valuable and attractive to buyers.

When looking for an advisor, make sure you’re not the largest or smallest client and they know your industry. Avoid anyone who only brokers conversations with one client. Try to create competition for your business and do not let yourself be manipulated.

Step #10: Prepare for the Sale

When it’s time to sell your business, preparation is key. You need a minimum of two years of financial statements based on the Standard Service Offering model before considering selling your company. Optimize financials and ensure all contracts/legal documents are in order. Present an interesting case for future growth potential.  By being prepared, business owners can negotiate from a position of strength and maximize the sale price of their company.

Final Summary and Review

Built to Sell provides a roadmap for how to build a business that is attractive to buyers and will fetch a high price. Warrillow uses a theoretical approach to explain the story and the various business tips in Ted’s Tips. Although this method may not work for every business, most of the tips are general. He also provides a list of the most important ones that are numbered in Ted’s Tips. Although the interactions between the characters in the book feel robotic, they provide Warrillow with all the necessary details to explain the story.

Let’s review the key takeaways from Built to Sell one last time.

• Focus on a scalable product or service
• Standardize processes and procedures
• Generate recurring revenue
• Empower employees to make decisions independently
• Delegate tasks effectively
• Cultivate a diverse customer base
• Identify and communicate your unique selling proposition
• Build a strong management team
• Prepare for the sale of your business

Remember, the journey to building a sellable business is not an overnight process. It takes time, patience, and commitment to put in place the principles outlined.

So, are you ready to take the first steps toward building a business that is built to sell? Don’t wait any longer. Your future self will thank you for it. Tag us on social media and tell us how Built to Sell insights inspired you to create a sellable business.

Rating

We rate Built to Sell 4.2/5.

How would you rate John Warrillow’s book?

Editor’s Note

This piece was first published in October 2022. It was revised and updated on 23/03/2023.

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