Built to Sell: Why a Business Plan and Reality Don’t Match and How To Fix It.
John Warrillow, who is an entrepreneur and business owner himself, highlights the difference between building a company for sale-ability and building one to maximize success. The book was written as a guide to teaching entrepreneurs how they could build their business to sell, especially owners who are tired of working all the time how they can achieve that same success without having to work every single day.
The book is divided into three sections: Sellability, Wealth Alignment, and Operating Framework.
The first section includes an explanation of what it means to be built for sale-ability. The second section is about maximizing value. The third section is about the importance of having a well-defined operating framework.
Sellability – What Is A Company Built to Sell
A company that’s built for sale is repeatable. It has a well-defined operating framework and makes its owner efficient because the system can be turned on and off without the owner needing to be present. The distribution of responsibilities within an organization is also important in making a business scalable and repeatable.
A business exists so that people can do four things: earn income; fund their lifestyles; put their kids through college or save for retirement, and achieve the American Dream. These are considered the four pillars of a business plan. Warrillow argues that not all businesses are built to achieve these objectives equally well.
Successful companies provide one clear reason why they exist, concretely define what success means in business-oriented terms, and specify the specific, measurable actions that define success.
Wealth Alignment – Connecting Success With Your Personal Bottom Line
“When business owners say they want to be rich, what they often mean is that they want their businesses to be profitable.” (Warrillow, 2016)
The traditional idea of operating a company for “success” or “profitability” is to ensure that a company can still make money even if the owner, who is often the only key employee, leaves. There are important considerations with this business model. Achieving success within a lifestyle business requires regular reinvestment of profits into the company, which in turn creates an opportunity cost associated with not having that money as part of one’s personal bottom line. Another concern is that the business owner will eventually leave, and “success” will be lost.
Operating Framework – How to Make Money While You Sleep
“When companies think like this, they become scalable and built for sale.”
The objective of the third section is to outline how companies can be built for sale-ability. Warrillow explains that if management creates a scalable, repeatable business model, the business becomes more sellable by creating opportunities for other people to benefit from your efforts.
It’s important to distinguish between wealth generators and wealth consumers. There are two types of businesses. The first is wealth generators, which are companies that generate their own cash flow. The second type is wealth consumers, which means that they require capital infusions from sources outside the business in order to survive and grow.
“A system is a framework for operating a business that you can turn on or off without relying on the owner or key employees to keep it running.”
