In fact, the book is just as valuable to small business owners who are looking to make their businesses better, and don’t want to sell.
Bo Burlingham, in his Foreword of Built to Sell, by John Warrillow, says it best:
“The point is that the best businesses are sellable, and smart businesspeople believe that you should build a company to be sold even if you have no intention of cashing out or stepping back anytime soon.”
In 2008, Warrillow received an offer he couldn’t refuse, and sold his business, which was built using the principles of this book. Today, Warrillow and his wife and kids live the good life in Provence, France, thanks to the sale of that business.
This book is actually the second edition, updated with an Implementation Guide, and published in April, 2011 by Portfolio / Penguin. The original version, published in 2010, is written in parable form, and is well-loved by many, including the Small Business Trends Book Review team, and you can read the original review, by Book Review Editor, Ivana Taylor.
I had received a review copy from John Warillow and couldn’t wait to tell you about it. But I didn’t want to regurgitate the information from the original book review (and it’s terrific, and I recommend checking it out), so I spoke to Warrillow, and asked him about some specific parts of the book that really called to me. Here are some highlights from the interview:
Question: What is the number one reason small business owners tell you that they buy your book?
John Warrillow: I hear most often that it’s because they want to grow their businesses. They’ve often reached a ceiling on their earnings. Maybe it’s $200,000. Maybe it’s $700,000. Whatever it is, they want to understand how to make their businesses scalable.
Question: Making a business scalable seems to be an important concept in your book. Can you describe what you mean by that?
John Warrillow: A scalable business has to meet the three criteria I detail in the book: 1) a service or product that is “teachable to employees,” so that the owner isn’t always the one doing the work; 2) a service or product that is valuable to your customers, and is not a commodity; and 3) a service or product that is “repeatable,” meaning customers need to return again and again to buy.
Question: It’s clear how some products are scalable, such as razors. In your book, the main character, Alex, creates a scalable business out of logo design, which many people consider a “non-scalable” business, since it’s a professional service. Is this just an outlier, or can service businesses really create “scalable products?”
John Warrillow: Here are two examples. I know of an attorney, who, instead of offering her services on an hourly basis, like the vast majority of attorneys, offers them in a product package, such as $5,000 for a no-contest divorce, and $1,200 for a new business incorporation. Another example is Hassle Free Home Services, Inc., created by Jim Vagonis. It offers customers a single point of contact for all of their home care needs, by paying a flat fee for one year, in a renewable annual contract.
Question: What’s the most common question you get about your book?
John Warrillow: It’s “why can’t I offer scalable products or services and still do custom work?”
Question: Ah, the old, why do I have to have a niche, why can’t I offer everything argument…
John Warrillow: Yes, and it’s the concept I’m most passionate about. That’s one of the reasons I wrote the implementation guide. In it I describe trying to do just that at one point in my market research business, and failing miserably. I also reiterate throughout the book that the key to success in transitioning to offering only a scalable service or product is to always charge upfront, so you have positive cash flow. You may have some bumpy times, but after a year or so your business will generally grow steadily.
Question: You also make a point about describing your clients as customers, not clients, in a scalable business. Can you explain that a bit more?
John Warrillow: The term “client” implies a consultative, personal relationship. It’s not the kind of thing that can be scalable. If your company has clients, it implies that each client has a one-to-one relationship with someone at your company, often the owner. If your company has customers, the entire team works with them.
As always, I have to thank John Warrillow for writing a great book, one of my favorite business books of all time. The second edition is even better with the addition of the Implementation Guide. Run, don’t walk to get this book. Your business will thank you.