If you own any part of a ‘service’ business you must read “Built to Sell”.
John Warrillow has crafted an effortlessly readable, but incredibly important, book on business strategy for owners and decision makers in ‘service’ businesses.
I keep putting quotes around ‘service’ because I’m not sure John and I agree on the precise definition. From my perspective, almost every company is a service business. IBM thinks of itself as a service business. John uses the word to describe the huge number of businesses that provide non-physical products. These are usually small businesses, but in aggregate they’re a big part of the North American economy – and an even larger part of the healthy economy.
“Built to Sell” provides invaluable insight into the strategic dilemma faced by every service business owner when they start to think about their exit strategy. Traditional service businesses – using John’s definition – receive the lowest exit valuations of any type of business.
During his thoroughly enjoyable narrative, John describes the hypothetical transformation of a small service business into a ‘product’ business. Several times, I laughed out loud. John brilliantly led me down the path taken by most service business owners and let me smack my head right into the brick wall. I felt it in my gut as he described the agonizing decisions required to transform the business into a fundamentally more valuable, and sellable, model.
John also illuminates some of the pitfalls when selecting an M&A advisor. One of my favorite passages is:
TED’S TIP # 14 Avoid an adviser who offers to broker a discussion with a single client. You want to ensure there is competition for your business and avoid being used as a pawn for your adviser to curry favor with his or her best client.
“Built to Sell” also includes a vivid, and accurate, description of the emotional roller-coaster experienced by most CEOs going through an exit.
The book conveys valuable lessons that can only be effectively described by those who have lived painfully, and expensively, though them.
If you own any part of a ‘service’ business, and aren’t planning to bequeath the shares in your will, buy a copy of “Built to Sell” and visit John’s blog at www.BuiltToSell.com