John Warrilow – Built To Sell

Just about every business owner I have ever spoken to, when asked why they started their business, has the word ‘freedom’ somewhere in their answer.  Scheduling freedom, income freedom and the freedom to do what you want, when you want.
Fast forward to the reality for many business owners and they are free to be at work as much as they can, their wallet hopes everything they need is free and they are free to do whatever they want – as long as that is going to run their business.
Then they dream of selling this prison.
It’s tough to find buyers of self-made prisons these days.
John Warrilow, the author of Built To Sell, has a better idea.  Build your business to the point that you are not needed, so you have the option to sell it when you wish and you can sell it for a dollar amount that makes freedom much more real.
Listen as John details the ways to prepare your business for sale.  This is advice every business owner should hear, whether they intend to sell soon or not.
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We are locally underwritten
by the Bank of Sun Prairie.

My name is James Kademan, entrepreneur,

author, speaker, and helpful coach to
small business owners across the country.

Today we are welcoming/preparing to learn
from John Warrillow, who is super awesome.

He’s the author of Built To Sell,
which you’ve probably seen. Host

of the Built to Sell podcast, and founder
of the Value Builder System.

So, John, how are you doing today?

I’m great. James, how are you?

I am excited because one I’m
familiar with your book.

I have to apologize because I was not

familiar to your podcast
until you reached out.

But the Value Builder system,

I just recently learned that I actually
hired a coach that used that software.

That’s awesome.
It was incredible.

So we have a lot to talk about, I guess
as far as that goes, sounds great.

So let’s go back way back in time and just
tell us, how did you end up in this whole

helping people sell their business
or value their business world?

Yeah, it goes back a while.

20 years ago, I used to run a market
research company, and I built it up to

maybe five or 6 million in sales,
probably 25, 30 employees kind of thing.

And it was profitable.

We had month to month, maybe 20%
to 30% profit margins each month.

So it was a good business.

We had great clients with Bank
of America, Microsoft.

These are all clients for us.

And so I decided I want to sell it.

And I went to see a guy in Toronto.

And I said, what do you think it’s worth?

Kind of rubbing my hands together,
waiting for the number.

It kind of depends on the answer
to a couple of questions.

He said, You’re in the research business.
So who does the research?

And I’m like,
I’m involved in some of the research.

It’s big clients.
I can’t step away.

And he’s like, okay, who does the selling?

And I’m like, yeah, I’m involved.
It’s Bank of America.

Of course.
I’ve got to do some of the selling.

He’s like, all right,
let me get this straight.

You’ve got a research company.
You’re doing the selling.

You’re doing the research.

I could feel that the hair on the back

of my neck going up, and he’s like,
I can’t sell your company.

There’s nothing to sell.
It’s worthless.

And I started to rebut him, right.

Like, I’m like, you got to be kidding me.

Like, Microsoft, Bank of America.

They don’t care about a client list.

They care about a business
that they can run without you.

And as long as you’re in the middle,
it’s worthless to them.


And, man, I’ll tell you what.

I left that meeting feeling
like about this tall.

I left that meeting and spent two or three
years really transforming that business.

We built a subscription model.

We hired sales people.

We got me out of doing a lot of the work.
And ultimately,

it was acquired by a publicly traded
New York Stock Exchange listed company.

So it had a happy ending.

And that really sort of started my journey

into helping other owners,
who may have experienced something similar

where they’re told, hey, their business
isn’t worth what they thought it was.

Or maybe they want it to be
worth more than it is.


Kind of how to basically think about
improving the value of your company.

So that’s kind of what I do.

Very cool.

So once you sold your company, I imagine,
to a company that size, you probably did.

Stepping out of that role.

We moved to Europe.


Three years in a little village called

Exxon Provost, where we raised
our kids and lived like Expats.

It was the most incredible
time of our lives.


The thing about the school system is

in France is that you have six weeks on,
two weeks off throughout the whole year.


So they take two weeks at the end
of October for a vacation called Tucson.

And then they have another two weeks
of Christmas, two weeks in February.

They don’t have as long a summer break.

But they have these many breaks.

And so we just made it our mission to get

in the car every six weeks and go
to another part of Europe.

So we went to Spain and Italy and Sweden

and Denmark and all
over England and Wales.

It’s just the most incredible
time of our lives.

Oh, my gosh.

That’s awesome.

How old were your kids at that time?

Kids were young, so they were
six and four at the time.

And then we were there three years.

So when we came back, there were
nine and six, something like that.

Nine and seven.

That’s fun.

And I think to go back to what
we’re talking about today

that’s I think one of the true

blessings of running your own company gosh
knows there’s enough problems, right?

Like, enough headaches.

But one of the great benefits is that you
can take a step off the career ladder.

It’s not going to work at Microsoft or
Proctor and Gamble,

where you’ve got to get to the next rung
on the ladder because there’s a guy behind

you or a Gal behind you
who wants your spot, right?

Unless you keep going up,
you kind of get kicked out.

And if you take a pause and say,

I want to take a sabbatical,
I want to leave for a year.

I want to leave for two years.

That’s basic career suicide
in Procter and gamble.

And yet, as an entrepreneur,
your skills are timeless.

They are transferable.

If you can start a business in 2021,
you can start one in 2031.

Like, it’s the same skill set.

I think that’s really important.

And it’s one of the tremendous luxuries
of being an entrepreneur is you get

to take a year off or two years off to go
do something for you,

your skill set and your career
trajectory doesn’t have to suffer.

Very true.

It’s interesting.
After I sold my first business,

I still had two businesses, but they were
not nearly as involved as that first one.

And I took that time to write my first

book, which just kind
of accidentally happened.

It wasn’t like, hey, I’m going
to sell my business and write a book.

It was just like, what do I do now?

I’m a young guy.
That’s one of those.

Like, okay, I sold the business.

It’s not somebody else’s
blessing and cursed.

What am I going to do today?

It’s the whole Midwest work
ethic or something like that.

I couldn’t just go to a beach.

I don’t know if we had
a beach to go to, but anyway,

we got to do something.

I was in the same boat
when we were in Europe.

By the third year.
I was kind of, like,

kind of getting a little bit antsy,
like, I need to do something

for the book.

I’ve written the book Built to Sell.

And so in the back of the book we put

together, we said,
Go to buildtell dot com.

And you can take a little questionnaire
about how sellable your company is.

And so this was sort of the way that we
originally thought about selling books.

And I was starting to get calls from,

like, brokers and consultants and saying,
hey, could we license that questionnaire

you put on your website to evaluate
if someone was celebrating or not?

I’m like, after the fifth phone call,
I’m like, hold on a second.

All these coaches and consultants

and brokers want tools to help
evaluate the businesses anyways.

And that ultimately led to Value builder
of the company you’re referenced

at the beginning, which is
a nice management software.

So that’s how it all came up.

So tell me, how did you end up writing
Built to sell? Did that come about as you

were going through the process of selling
your business and transitioning

from essentially a job owner
with employees to a business owner

and being able to sell or
does that come about after?


So it’s funny.

My lawyer,

he said, you’ve got a lot in common
with another client of mine.

Tom Deans and Tom Deans had
recently written a book.

I don’t know if you’ve ever had Tom

in the podcast, but he wrote a great
book called Every Family’s Business.

And my lawyer said, you should meet Tom.
I’d never met him before.

He happened to be in the same city as us.

Okay, so I said, sure.
And we met.

We had lunch totally out of the blue.

And he had written this book,
and it was a parable

about the dangers and follies
of transferring a business to your kids.

Oh, sure.

Some of the big traps there,

and he heard my story, and he’s like,
John, you got to write this stuff down.

And I left that lunch.
No word of a lie.

And I went to the top floor of our house,
and I started typing,

and that’s what triggered
the initial manuscript for sale.

Very cool.

So at that time,
this is of interest to me because I’m

speaking at when words collide,
which is actually in Canada.

Oh, great.
In August. So at that time when you were

writing your book or writing
the manuscript for the book,

did you have a plan for publishing or
marketing or selling the book,

or was it more just something to give
the clients and stuff like that?

Why didn’t clients.

I’d like a company that had
bought our business.

And literally it was.

There was no back end.

It wasn’t part of the funnel.

It wasn’t part of sales strategy.

So many nonfiction business books.

It’s how we win companies.

It’s a glorified business card.

Yet at the time,
that was not the motivation.

And I think in funny way,

it was a very pure book in that respect,
because there wasn’t I’ve since written

that about a customer and the art
of selling your business, which were more

really books to support
the business value builders.

So they were more like I would think about
I was writing things like, oh,

I should include this because that
references this part of our business.

So it was much less pure,

but built to sell was actually
a very I didn’t have a grand plan.

I didn’t have a publisher.

I didn’t know what I was doing.

All right, that’s cool.
That’s cool.

So how did you end up?

I guess once you had it written and you’re
like, Whoa, I got this manuscript.

What’s next steps?

Did you end up self publishing or going

through traditional
publisher or vanity press?

I’m just learning all this stuff.

No, it was a vanity project.

In a way, I self published it.

I worked with kind of a contractor

who sort of helped me design the book
and hired an editor and so forth.

And I somehow got to a guy
named Borlingham.

I think I was writing for Inc.

Dot com at the time.

And Bo who’s a wonderful guy.

He wrote the book, staking
the outcome with Jack Stack.

He wrote The Knack with Norm Brodsky.

He wrote Small Giants, which is
probably his most famous book.

Many, many other books.

Anyways, I somehow must
have gotten it to Beau.

I can’t remember if I calls on,

call him or sent it to him,
and he emailed me back.

And Bo was an editor at large
for 25 years in magazine.

He’s got a big profile.

Wonderful guy.

I was really caught off guard when
he actually reached out to me.

He said, this book is
actually halfway decent.

You really should think about getting

a publisher and I was like, all right,
how does that work?

And he’s like, well,

the first thing you do is you need an
agent and you’re going to call my agent.

And so he gave me the name of his agent,

and I called her up, and I said,
Bo told me to call you.

And she said, Well, if it’s a friend of
BoE’s and she read it and she said, yeah,

I don’t mean to equate it
in any way to this book.

But she said, it really feels
like a modern day emitted.

I’d been given to EBITA as a kid, right?

Go read the E myth.

It’s kind of like the Bible
for entrepreneurs.

It’s the first thing you read it’s.

Everybody’s sort of Goto book.

And to be even mentioned in the same

breath as Michael Gorba, I was like,
oh, my gosh, that’s very generous.

Anyway, she sold it to Random House,
like, the big publisher in New York.

And they kind of gave it life.

So here we are.

That’s very cool.

So I want to go a little bit down

the rabbit hole of the whole
publishing thing.

Because I’m talking to a lot of authors.

I wrote a few books, but I didn’t have the
patience to find an agent or publisher.

And maybe part of it is I don’t want to
have the patience and then being denied.

So I’m like, it’s 20.

I don’t know if that was 2017.

Back when I published that self publishing

all the way, click a few
buttons and away you go.

So I was talking with these

authors and who I’ll call

pseudo Masters or teachers,

because I don’t necessarily know if
they know what they’re talking about.

But they seem like they do.

And they tell me, hey,

if you self published,
you’ll never get published by one

of the big ones because they
look down on self publishing.

And my thought was, I’m cool with that.

But my other thought was,
how do you know that?

So it sounds like your experience
was the opposite of that.

It does.

And look, I don’t hold myself as

a publishing expert,
so I’m happy to share my experience.

That’s enough.

When I built a sale with some publishers,

I described when my agent pitched it
to Random House, they said,

we like the book,
but if we’re going to publish it under our

it really needs another chapter or another

section to make it appear like a brand new
book, because the self published wouldn’t

have been in the marketplace
for a few months.

And we’re not into publishing second hand

books like, we want it to be
fresh, brand new book.

And so we added, like, a whole kind
of implementation plan to that book.

And that was that so.

No, I didn’t get a sense that there was

any sort of looking down
on the self published route.

I think

there’s all sorts of publishing,
I think, has become in people’s minds.

Certainly people on the outside look at it
as sort of polarizing,

like you’re either a self published
author, and it’s really just a vanity

project, and there’s no
legitimacy to it whatsoever.

Or it’s a six figure advance
from Simon and Schuzer.

And those are the two options.

Actually, the reality is there’s lots
of shades of Gray in between there.

Like lots of points that I continuum.

There’s this hybrid publishing model now
where it’s quasilegitimate publishing.

There’s also legitimate publishers
who give really low advances if you

promise to buy a truckload
of books yourself.

And that’s no more vanity publishing
than the self published books.

There’s everywhere in between
that spectrum, I think it comes down to,

at least for me, what’s the business
objective for this book?

What potential audience?

Why am I writing it?
Et cetera.


So after you wrote the book or as you were
writing the book, it sounds like the whole

value builder system came to fruition,
or you had the idea for it.

That’s right.
Is that the idea?


When we were promoting Built to Sell,

I bought Built to Sell,
dot com, the website.

And again on the website with this

how sellable is your company?

And that’s how advisors
started to find us.

And that’s when the kind of light bulb

moment went off and said, okay,
I should start a business providing

practice management tools to advisers
who want to reach this market.

All right.

So then when you decide, hey,
I’m going to start this business,

I imagine talk to your wife and say, hey,
I’m going to start another business.

Get out of the house.

Did you do the coding originally
or did you hide it out?

They wouldn’t let me near that.


I worked with a couple of different firms

over the years,
and since then, we’ve got a team on staff

that does the coding,
but we still work with some folks

from overseas that do some
of the kind of heavy lifting.

We’ve got a VP engineering in Toronto
who does the sort of the strategic

thinking and the overall
planning for the tool.

But, yeah, we’ve got a team outside

of the country who does some
of the development work.

Nice. And how difficult was
that to essentially put what you had

in your mind as far as valuation into this
software tool via the programmers?

It’s tough, man.

I would tell you a lot of people want
to prioritize their service or build

a technology software
from a service business.

And it’s a tough transition.

I just did a podcast
with a woman who made that shift.

She had

an insurance brokerage,

and she got fairly low multiples
for the first two companies.

I think she got, like, one and a half,

two times profit, and she thought,
I want to do better.

So she changed her consulting
business into a technology business.

She took basically all of her processes

and systems, and she made them essentially
a software product and system.

All right.

And she ultimately sold that company
for eight times or four times.

So like a much bigger
exit than her first two.


But she’s somewhat among the minority.

I think it’s very common for service based

businesses to want to have a product based
business or want to have a technology

business because they’re aware
of the heightened, the better multiples.

But it’s much more difficult.

I think one of the challenges is that as
service business owners,

I think we are hardwired to want to create
a custom solution for the client.

We grow up around solution based selling
and consultative selling and finding out

what the customer wants and providing
them with the solution.

All these things,
they sound good on paper, but effectively,

what that means is you’re creating
a custom solution for every customer.

And as long as every project is different,

there’s no way you can scale
that business, because in order to slow it

beyond you, you need to be
able to hire people.

And as long as you’re doing a different
custom job for every project,

you’re never going to hire good people to
be able to run the business without you.

So that’s one of the traps.

I think a lot of service companies fall
into when they make the transition.

It’s interesting and extremely

coincidental that you mentioned that
I have a call answering service.

We have agents,

we’re completely customizable,
and we’re growing to the point where

we’re scaling very quickly.

So 2021 has been a boon for us.

But now we’re learning where the little

things are that we do that are
not necessarily scalable.

They’re not scalable the way
that we’re doing them.

And one of those is customizable thing

just in the brain or the memory power
of each of the agents trying to remember

or be fluid with all
of those different systems.


So it’s interesting we’re having to break
off into pods so that not every agent

knows every client,
which is a huge paradigm shift,

but one that we knew we’d
have to go to eventually.

But I don’t know.

It’d be today.


We didn’t want it to be today.

We talk a lot about

most small businesses.

I’m talking kind of sub 20 employees.

Most small businesses sell a lot
of things to a few people.

So think of that.

I was doing a podcast yesterday for a guy

who does have a bunch of work in
construction, like, think of the general.

The guy who comes in does
a kitchen, does a bathroom.

Every job is different,

lots of different clients.

And that’s really the essence

of an unsellable business selling
lots of things to a few people.

The opposite is a very sellable business

where you sell one or two
things to lots of people.


And so when you think about your televotry
service, it’d be interesting to think

through, how can we narrow what we offer,
kind of reduce the level of customizations

that we’re offering and really start
to zero in on one thing, I’m reminded of

an interview I did
with Stephanie Breedlove.

I’m not sure if you’ve ever
had Stephanie on the show.

She’s an amazing entrepreneur.

She did payroll for Nannies.

Oh, really?

If you’re like a parent who has a nanny
to pay, you call up ADP like Stephanie did

in the early days, and they will give
you a crappy customer experience, right.

They’ll bounce your call around
to six different people.

And it’s not a great experience, right.

Because they want to do payroll
for Proctor and Gamble for four.

They don’t want to do it
for you and your nanny.


And so Stephanie realized there’s
a business opportunity here.

So she started this company,
Breed Love and Associates.

They do payroll for parents
of an entity pay.

So she built it up.

And she told me she reached
about 300 grand in revenue.

So it’s like Stephanie and one employee.

And she reached a fork in the road where

it was getting harder for her to use your
personal network to win new customers.

So she’s like this for conversion.
What do I do?

Do I sell more to my existing customers?

Which every business pundit was telling

her to do, because it’s,
like, eight times easier.

Cross sell another service
to an existing customer.

So you get busy parents.

What else do they need?
They will.

They need meal delivery services,
like lawn care, all this stuff.


And then the other road,

the much more difficult road was to
find more parents who had a nanny to pay

effectively double down on our
strategy of doing payroll for Nay.

All right.
And she gets to the stop at 300 grand.

She’s like, I’m going
to take the harder road.

And so she grew much more
slowly over 25 years.

Think about it 25 years.

She built it up to $9 million in revenue.

All right.

But it’s not Google.

It’s not Tesla.

It’s a slow burn.

It’s a more realistic number as far as
businesses go than a Google or a Tesla.

But check it out.

She builds it to 9 million
in revenue, 10,000 customers.

And she decided that she wanted to sell.

And she went out and looked at who would

be the most strategic
acquire for the company.

And at the time, Care.

Com was in an aggressive growth.

More Care dot com is like the Angie’s
list of care providers plug in.

I live in Madison, Wisconsin,
and you press search and out comes all

the babysitters that have been rated
five star in Madison, Wisconsin.

So you can hire one feeling confident

that you’ve got someone who’s
going to take care of your kids.

All right.


Well, at the time,
they had 7 million subscribers.

And so Breed Love went to them and said,
look, we’ve got 10,000 customers here.

We’re doing 9,010,000 customers.

You’ve got 7 million subscribers,

all of whom need to pay their
nanny or pay their babysitter.

Like, if 1% of your 7 million
buy my payroll service,

that’s a company seven times the size
of my business today, right?

If 2-5-I mean, it’s incredible.

Anyway, long story short, Care.

Com acquired Breedlove’s
business for $54 million.

That’s a multiplier.

Think of it.
This is not a $9 million profit business.

This is a $9 million revenue.


And so she got six times top line revenue.

My point is when it comes to making
your company more valuable

and a choir is going to look
at your business and say,

Is there something here that they have
done that is so unique that it would take

us years and many millions of dollars
to do exactly what they’re doing, right.

If the answer to that is yes,

then the chances are they’re going to pay
a premium for your company if you’re just

selling a bunch of commoditized
products and services.

If you’re selling a lot of things to a few
people and none of which you’re truly

differentiated on, they’re
not going to want to buy you.

They’re going to want
to just compete with you.

They’ll let your price,
they’ll outbid you for jobs.

But if you have the courage,

when you reach whatever the $300,000 fork
on your road is where you’re like,

I’m going to double down
on my original proposition.

I’m not going to take the easy route
and start cross selling a bunch of stuff.

I’m going to just do one thing that’s when
you build real value with your company.

I like that.

It’s interesting.

I guess anecdotally here when I was using
the coach that was using the value builder

system on your software, you had little
dials where you could adjust it.

And my thought was that it was going

to take in the neighborhood of six months
to negotiate back and forth, find a buyer.

All that jazz, which is a pretty accurate.

And I figured if I was buying this
business or I take it back if I was

considering buying this business
and because the dollar amount for this

particular business was six
figures, it wasn’t crazy.

Seven figures or something like that,

my thought was, how much would I have
to spend in marketing to essentially

duplicate the brand awareness
that my company had?

So instead of just buying James’s company,
I’ll just spend some money on marketing,

get the name recognition
equivalent that he has.

How much would I have to spend?

So it’s interesting, I guess, comparable.

I was looking at marketing where you’re

looking at just the utility of it or
the expansion or the customization of it.


You’re looking almost like
the replacement value.

I mean, it’s not exactly apples to apples,
but when you sell a company,

the cheapest way you can unload your
company is to sell it to assets, right.

Like sell the desk, sell the trucks,

and you can sell it just about any
business by selling the assets, right?

There’s a market value.

Not very much.

It’s got a liquidation value, but you
can sell it what you really want to do.

I think that the kind of job description
of entrepreneur is to maximize what

accountants call goodwill,
which is the difference between what you

sell your company for and the
value of your hard assets.

That’s called goodwill.

And if they’re just buying what it would
take to replicate the kind of brand equity

you have, they’re not really
buying a lot of goodwill in there.

There’s a little bit, but not a lot.

What buyers really care about is
your future stream of profit.

So they’re trying to figure out,

is this company going to create
profits in the future?

And if so, how reliable
are those estimates?

And that’s what drives up
the value of your company.

If you can make the case that your
business is bulletproof and it’s kind

of an annuity stream,
and it kind of chunks along without a lot

of involvement from you,
that’s a really valuable company.

And that’s why recurring revenue is one

of those big drivers
of value in your company.

If you could create some recurring

and what I mean recurring,
I mean, it’s automatic.

You don’t have to stimulate demand.

You don’t have to get customers to buy.

They buy automatically, either on, like,

a service contract or
a subscription or something.

Those businesses tend to trade at much

higher multiples because
they’re more predictable.

And buyers are looking to buy future
profits, and they pay more when they can

feel confident that future profit
stream is going to continue.

That’s cool.

So one of the things I want to ask you

about with the value builder system is it
had to take a lot of homework to figure

out what industries have,
what multipliers and all that.


a lot of numbers or a lot of verticals
that go into the whole algorithm to figure

out what the end number is. I guess as far
as that goes, how did you figure that out?

Just a quantitative market research.

My former company was a quantitative
market research business.

When we went to build the algorithm,

we did a big quantitative market research
study and looked at offers being

offered to business owners what
industry they were in and what drivers.

And Interestingly,

the industry does definitely
impact the value of your company.

A SAS software business is trading on much

higher multiple than a graphic
design studio as an example.

But I think we oftentimes
run a little bit.

The risk of feeling like our evaluation is

preordained, meaning
we’re guaranteed to get the prevailing

multiple because plumbing companies
are trading at five times.

Therefore, I should get five times.

And I think we’ve seen valuable instances

where companies can earn more than
two X the prevailing valuation.

If they focus not just on the industry

they’re in, but on some of the other
things that we’ve talked about today.

Equally, I’ve seen instances where

companies get less than half
the prevailing valuation,

even though they’re in a very
attractive industry, because

there are things about the structure
that draw down the value of your company.

So I think industry is important.

It’s a major factor
to the value of your company.

But don’t go in with horse Blinders to say

that’s the only thing that matters
because there’s lots of other things.

Recurring revenue is a big one.

Having one thing that makes you really

unique is what we refer
to as monopoly control.

It comes from the old
Warren Buffett statement.

He buys companies with a deep
and wide competitive moat.

Monopoly control.
That’s what Stephanie Breedlove had.

She was the one best payroll company
for parents got a nanny to pay.

So that’s one of the other drivers
that you really want to focus on,

what’s the one thing that you
could do better than anybody else?

Okay, that’s interesting.

I like that.

I had another guest on the show that said,
riches come from niches or something.

Riches whatever it was.

And it took me a little while
to just ponder that and think,

maybe I’ve been doing it
wrong this whole time.

Yeah, I’ve been trying to target
essentially every small service business.

In the end, we should be
more focused on that.

It’s interesting.

I think if you can carve out a really

unique niche or niche, depending
on where you are in the country

again, what do acquirers buy?

They buy what they could
not easily replicate.

And therefore you really want
to build something that you are

the world’s expert in to give
you that competitive moat.

I’m reminded of another guy I interviewed

on my podcast named Jay Steinfeld,


I don’t know if you’ve ever heard
his story, but amazing story.

He starts blinds right around the time.

Jeff Bezos is selling books online,
and he’s, like, Bezos can sell books.

I can sell blinds, window coverings.

And turns out, it’s a lot harder to sell

blinds than books because
you have to measure them.

You got to pick the fabric,
you got to install them.

But he sticks to it,
and he doesn’t go off piece.

He stays on lines online.

That’s all he does.

And over, I guess a 30 year run, 93 to
well, maybe more like 25 year run.

He builds it to 100 million dollar
company just selling blinds.

That’s a lot of blinds.

Yeah, it sure is.

And it’s enough to get
the attention of Home Depot.

Home Depot at the time was like a $90
billion company, but they were having

problems in the blind space because
Jay was beating them every day.

All right.
And so when they looked at blinds.

They saw two things.

Number one, a way to quickly
leapfrog into the blinds category.

But the other thing is,
it was important to Home Depot,

and it’s the hidden reasons a lot
of strategic by companies is for them.

They were struggles to get
people to buy on their website.

Think about your own behavior.

If you want to get a new faucet for your
kitchen or you want to get a refrigerator

or you want to get some lumber,
you don’t go to Home Depot.


My guess is you probably
go into a store, right.

But that’s a whole lot more
expensive for them to fulfill.

You coming into the store than it is
to do a few clicks on the homedepot.


So Home Depot is trying to get people

to buy complicated products
that need to be installed online.

Sound familiar exactly the not
the Jstinefeld had solved at blinds.


So they were getting a two
for when they bought Jason.

Number one, they got leapfrogged
number one in the blinds category.

But the other thing was that they could

take that learning that he had discovered
for complicated products that needed to be

selling them online and graphed
it across their entire business.

90 billion of revenue.

They could get, like,
1% better at selling stuff online.

That has massive impact
for a $90 billion company.

That’s what I’m talking about.

When I talk about monopoly control,

it’s finding one thing that you can
be the world’s dominant player.

And even if it’s something as obscure as

blinds, if you can be the dominant player,
you’re creating monopoly control

and that’s attractive
to acquires, that is cool.

That’s very cool.

So stuff like this stuff that you learned

from selling your business,
writing the book,

or is this more from helping clients
and learning from their experiences

that you’re helping them along with a lot
of the stuff we built to sell radio.

To be honest,
the tool value builder

and the corresponding tools are
all steeped in market research.

They are rigorous research that allowed us

to build those algorithms
that run the tools.

Then we’ve had tens of thousands

of business owners go through it
and validate the algorithm every day.

So it is sort of self healing if you are
in that regard, the stories I’m sharing

with you today, Stephanie Breedlove,
the Jay Steinfeld.

They all come from Build to Sell Radio,
which is a podcast.

I do where we interview a different

entrepreneur every week and we ask them,
tell me about your exit.

And so we just interviewed people who sold
the company, and we asked them about

the things they would do differently
if they had it all over to do again.

All right.
And so I.

A little bit of a story.

I tell a lot.

Do you remember Sully, the guy who flew
the airplane into the Hudson River?


It goes back maybe ten years ago now,
but basically, he was this legendary pilot

that done everything
there is to do in a plane.

He was a trainer,

flooding every kind of airplane
yet he never in his career had

the opportunity to land
an airplane on the Hudson River.


It’s probably a good thing it’s a perfect
parallel for the entrepreneur because as

entrepreneurs like,
we do everything in our companies.


We open the doors in the morning,
we do the marketing plan,

we hire the people, we deal
with the customers, the complaints.

We do it all.

And you learn by doing over years
and you get really good at what you do.

Just like selling, just like selling,
no matter how good you are at selling your

widgets or running your small company,
you probably haven’t got a lot

of experience landing
the plane on the Hudson.

In other words, selling that company.

You’ve sold a couple of businesses.
That’s rare.

Most people only get one shot.
All right.

He had one shot to grease the landing.
He had 95 lives in his hands, right?

I think a lot of entrepreneurs,

you got one shot at this.

You built this business over years,

maybe decades, and they’re just
unforced errors that we make

that, I think can oftentimes wipe a lot
of money off the table just by just

knowing some simple things about how
to maximize the value of your company.

So that’s kind of what we
do with Sell Radio fair.

You remind me of something because I’ve

coached a few people selling their
business, and I remember,

particularly there’s one guy
that was selling a company.

He was making a six figure income,
probably working 15 to 25 hours a week.

How do I get that gig?

This is the thing.

I feel like he was one of those guys
who left a lot of money on the table,

and she was tired of the business
he’s been working it for.

I want to say, a neighborhood of 15 years,

there’s a commercial cleaning company,
and he was essentially the guy that was

on calls when an employee didn’t show up
at two in the morning to clean some bar.

Sure, he had to get in the car and go
mop up Duke or whatever it was.

And he was tapped out,
and I had phoned him a buyer.

And the buyer was kind of lowballing.

And I’m like, I think you can do better.

I think you can do a lot better.

And he essentially asked me,
how long will it take?

Like, it’s tough to put a timeline on it,

but I would say minimum six months,
maybe a year or two, depending.

This is pretty focused type of buyer that
you’re trying to sell in this market.

It’s going to take a little while.

And he’s like,
how fast can we sell it to this guy?

So I’m like realistically financing.

So six weeks,
it depends how fast the bank will move.

And he’s like, just do it.

But I think you could get a few hundred

thousand dollars more,
and he was just so tired of it.

He just wanted to wash his hands,
move on with his life.

I’m so glad to share this story because I

think it is the biggest error
we make as entrepreneurs.

We call it riding it over the top.

But you hold on to your company too long,

you hold on until you’re tired,
you’re bored, you’re frustrated,

and then it’s not worth anywhere near
what it is when it’s on an upswing.

And this is just such a tragedy
because you’re absolutely right.

Had you made a couple of tweaks to his

business model,
negotiated from a position of strength,

he could have gotten potentially
multiples more for what he had built.

But he was exhausted and tapped out.

And I think that’s a tragedy.

There’s an antidote to that or
an alternative way of thinking.

I call it the freedom point,
which is where the sale of your company,

along with whatever assets you built

outside of your company,
would create a nest egg large enough

to live comfortably
for the rest of your life.

All right.
And I think when you reach that point,

I think it’s worth pulling up and saying,

Do I want to continue?

Do I want to get to the next level?
Because the next level may not be

something you value as much as
the financial freedom you’ve created.

Fair. What’s the point, right?


you’ve created if you make that value
liquid, if you hold it,

you are effectively the gambler at the
poker table is just won five hands.

And who knows when the next pandemic,

the next recession is going to happen
and what you thought you had,

which was financial independence,
gets flittered away.

So I think Buffett was the one who said

it’s insane to risk something you value
for something you do not.


It’s such a simple term,
which he’s such a guru at.

But the idea is,
for most of us as entrepreneurs,

we don’t want to be the next Elon Musk,
the next Steve Jobs.

Most of us, I think, are motivated
by independence and freedom, right?

That’s our primary need.

Our primal need, if you will, right?

Is independence.

And so once you reach that again,

the freedom point when you sell your
business, the after cash,

the after tax proceeds is a big enough
nest egg for you to basically have freedom

to do whatever you want
to work if you want to.

But not.

I think it’s just a really good
moment to say, okay, is now the time.

And there’s lots of other reasons
to build a business beyond that point.

Maybe you want to create a legacy,
you want to build it, whatever.

But I think at least when you reach it,

it’s worth pulling up and saying,
Do I want to risk it?

Is the next million dollars
in revenue the next ten employees?

Is that worth it to me?
Maybe it is.

Maybe it isn’t that’s fair.

I love that, because that actually gives
a trigger to actually saying is now

the time or is not instead of just going
your day to day and then thinking, oh,

wait, one of these days,
I should get out of here.

Yeah, I’ll tell you a story
on that because it’s a tragic story.

But I think it’s one
that people need to hear.

It’s from a guy named Rand Fishkin,
who I interviewed maybe a year ago,

he wrote a great book
called Lost and Founder.

But Ran built a company called
Maz SEO Software,

search engine optimization software
if you want to get ranked on it.

Oh, yeah, I know mine.

So Rand builds up 5 million or so
in revenue, but it’s growing quickly.

He’s expecting to get to ten,
and he gets a call from a guy named

Brian Halligan,
who is a cofounder of HubSpot and Halogen,

says, Look, Rand,
we’re kind of weak on SEO.

We love what you’re doing.
We want to buy your company.

And Ran says, okay, how much?

He says $25 million
of cash and HubSpot stock.

So this is a $5 million business,

and he’s offering five times revenue,
which that’s a pretty big number.


But Rand had been told by some advisers

that his business was probably
worth four times revenue.

And remember, he was at five,
but he was getting to ten,

and he thought there was a good
chance he might get to ten that year.

And so he’s doing the math
on forward looking

forward ten.

And we could get four times ten.

That’s 40.

And he said no.

And so instead, he
continued to run the business.

They raised some venture capital.

The venture capitalist forced him to push
them to build a bunch of products.

None of them were really
in his wheelhouse.

They really started to bleed cash.

The VCs ultimately removed
Ran from the company.

Oh, no.

And I interviewed him.

I said, Well, at least you’ve got your

stock, right, rand and he said,
you know what, John?

Based on the way the VCs invest, they
use what are called preferred shares.

And that means they get
a preferred return.

And based on the length of time they’ve
held, my shares are probably worthless.

And I said, but ran,
what would that offer from HubSpot be

worth these days, given the appreciation
of HubSpot stock, now that it’s public,

and he said it would be
worth close to $200 million.

That’s called riding it over the top

brand was gracious enough
to share that story with me.

And it was just a reminder that
when you reach the freedom point

and the sale of your business would
basically give you enough money to do what

in the hell you want to do
for the rest of your life,

it’s worth pulling up
and thinking about it.

Yeah, it’s worth thinking about it.

And that may sound like
greedy or money hungry.

It’s not intended to be that way.

It’s just that if your primary motivation

to start a business was to create
financial freedom and selling your

business would give you that,
then I think it’s worth just saying this

is what I wanted,
but I got to pull the trigger first.

Yeah, you could almost argue the whole

greed or money hungry
thing on the flip side.

You totally could.


if you keep riding this,
that’s risk like you mentioned right now,

you could essentially have essentially
what you’re working for, your goal.

You’ve achieved your goal as long
as you say yes at this moment.


And then whatever you do
from that point on is up to you.

So, oh, my gosh.

But they don’t go to the beach.

You couldn’t live more than three
months without having to visit, right?

Like you’re like.

I can’t not do something.

I don’t even know how my wife
wants to go on vacation.

She wants to sit on the beach.

I don’t even know how
to just sit on the beach.

I want to go see the world,

meet some people, try the food, just check
out other businesses wherever your head.

I don’t find any fun in sitting still.

I think you’re not alone, though.

I think most entrepreneurs
are wired exactly the same way you are.

We love the innovation.

We love the new thing.

We did some research
a little while ago where we looked

at the reasons owners end up regretting
their decisions to sell their company.

And the number one reason is that they are

all push and no pull,
meaning they’re all frustrations about

their current business, which are
pushing them out of their company.

So it’s frustrations with employees,

frustrations with regulation,
red tape, blah, blah, blah.

Yet they’re like, oh, I’ll figure out what
I want to go do after I sell my company.

The most successful EBITA.

The happiest people after exiting are
the ones that got really clear upfront

on their pull factors, which are
the things they want to go do next.

I interviewed a guy.

This goes back a while.

I think it was episode 100 Built.

Radio name was Sean is
Sean Osman, 39 years old.

He runs an it consultancy,
a couple of million dollars in revenue,

and he realizes he’s been living
in Denver his entire life.

And he’s like, I want
to live on a sailboat.

That’s a weird thought for a 39 year old

guy who’s been living in Denver
for a long time, like, landlock.

There’s no water.

No lot of water.

It’s not like he’s from Miami
or something like that.

But he’s like, no,
I want to live on a sailboat.

And so he commits that by his 40th

birthday, he’s going
to live on a sailboat.

And so he takes his business
and he takes it to a broker.

Broker comes back, gets him an offer
of 2.6 times profit, and he accepts it.

And I interviewed him on the show.

And I’m like, But Sean 2.6 is like,

in a baseball analogy, like,
that’s a solid single.

But it’s not like getting
it out of the home run.

How come you’re so happy?

And he’s like, yeah, John,
I don’t think you get it.

I live on a sailboat.

It was kind of cliche.

It was like, my whole life is like,
got to maximize value.

And he was like, yeah,
maximizing value is important.

But actually, what you want to go do
next is probably even more important.

And so I think it’s a really important

lesson for us to learn is that before
you sell, get really clear.

So you say you want to travel,
where do you want to travel to?

What do you want to do while you’re there?

What food do you want
to eat while you’re there?

What people do you want to meet?
Like, get really clear.

And I think that gives you the motivation

and the focus to just to actually take it
over the finish line and sell your company

when so many others kind of just
stay on through inertia, right.

And then you ride it over the top.

That is cool.

I like that man.

I always think of James Bond,
where Q was lowering.

I’m trying to think of the James Bond
guy was at the time.

Q said, always have an exit strategy
before he passed away.

I can’t place which one.

I’ve watched many of them, but they all
kind of meld into one another these days.


Have an exit strategy.

I call it an options
strategy, not stock options.

But I like the idea of building a business

that you could sell, because when I do,
like, a speech or whatever for a bunch

of business owners, I’ll say,
how many of you guys want to sell?

And, like, maybe of 100 business owners, I
might get one person to raise their hand.

Part of it like, I don’t want to reveal
to the world that I want to sell, right?

Most people are like, no, I’m happy.


I’ll sell when I die,
whenever all that good stuff, right.

And then I’ll ask you
a different question.

I’ll say, okay, fair enough.

How many of you would like to know you
could sell your business if and when

you’re ready, every hand goes
in there at that point, right.

Because I think we all want to know
that we’re building an asset that has got

value, that when we’re ready
on our terms, we can sell.

And that’s what I mean
by an option strategy.

It’s like building it so
that you could sell it.

And the definition of that,
as we talked about at the very beginning

of this conversation is like,
It can run without you.

And if it can run without you, you’ve got,
like, the ultimate poker hand, right?

You could sell.
You could bring in a manager to run it.

You could bring in a private equity group,
sell 60% of it, keep 40% of it.

You can do any number of things.

And you’ve got all
the cards at that point.

But if it’s a business that’s dependent on
you showing up, it’s not really sellable.

And therefore you’re kind
of trapped in your company.

So I think the most important thing

to do is to get it to a point
where it can thrive without you.

And that just gives you all the cards.
That’s cool.

I like that.

I remember whenI first sold.

When I sold my first business,
I realized that I own a job,

and I gave myself essentially six months
to remove myself from being necessary.

I set up some ground rules where,

essentially, I could still
be a part of the business.

But if I ever got hit by a bus,

the business will still keep
moving and not lose pace.

It took a little bit to figure out.

What do you have to do?

What do you have to invest in?

Who do you have to hire
all that kind of stuff?

But that made it way easier to sell

the company that ended up buying it.

It was harder to convince them that I

wasn’t needed because they wanted
to keep me on for six months.

I’m like, no,

I’ve made it so that I’m not needed.

I just interviewed a woman

on Built On Radio whose name,
forgive me, it just slipped my mind.

But it’s one of the most recent episodes.

She built a consultancy,

a marketing agency that specialized
in social media in the UK.

And so if you know anything about

marketing services businesses,
they’re almost always

sold using an earnout where you get
a little bit of money up front,

but then you have to hit a bunch
of targets in the future.

And if you do all things stars aligned,
you get an extra payment.

Well, she didn’t want anything
to do with an earn out.

And so she went out and really
structured the company.

So that was no longer dependent on her.

And she invested heavily and her time
primarily in building out processes like

employee manuals and processes
for people to follow.


And I said to her, I said, that sounds
like an entrepreneur’s worst nightmare.

Sitting down and like,
writing processes for three months.

That sounds like the absolute worst
thing way to spend your time.

And she’s like, yeah,I get it.

It probably feels like being in jail.

But if you wanted to be in jail,

would you rather be in jail
for three months or three years?

And her point was that, yeah.

Take your medicine up front, right?

Three months sucks.
And productizing or systemsizing.

Your business is really boring work.

If you do it, you’re going to really

minimize the need for you to stay
on with your acquirer for 2345 years,

which for a lot of entrepreneurs,
is like a prison sense, right?

People love to do their own thing.

The independence decision making,

the freedom working for a big company
is like, it’s the opposite of that.

It’s torture for many.

And so her point was, yeah,

take your medicine now or take
a whole lot more down the road.


Jody Cook is her name if you want to.
Jody Cook.

All right.

Very cool, John.

I feel like we could talk for hours

because the whole exiting business is such
an important

deal with businesses that I feel like
is overlooked by the majority of them.

They spend so much time trying to start it

and build it that they forget
that there’s an end game.

The last chapter.

There should be an endgame, I guess,
as far as that goes outside of dying.

So at any rate, John,
where can people find you?

Just head over to

We got a bunch of things there
that folks can take a look at.

So, yeah, just

And then the value builder system. Is
there a link to that on there as well?

Got you.

Well, easy enough.

And then Value Builder,
where I phone it was through a coach.

Can people use that independently?

100% of our users for Value Builder do
so at the invitation of an advisor.

So we call them Certified Value Builders.

Value Builder is actually a practice
management software for advisers,

business coaches, and they
use it with their clients.

Got you.

If folks are interested, we can get them
in touch with a certified Value Builder.

Just go to

Got you very cool. And then your podcast,
where can people find that?

Anywhere good podcasts are available.

So Stitcher, Spotify,
iTunes, it’s called Built To Sell radio.

Got you.

Well, John, thank you so
much for being on the show.

This is super cool.
Hey, thanks, James.

It’s going to be with you.
I am impressed with how many people

and how many businesses that you
have helped through this.

And you make it seem so simple.

But maybe it is easy
for me to say hard to do.

But I think it’s worthwhile investment.

Very cool.

This has been
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And, of course,
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available wherever fine books are sold.

We’d like to thank you our wonderful

listeners, as well as our guest,
John Warrillow, author of Built To Sell,

host of the Built To Sell podcast
and founder of the Value Builder System.

This guy just helps people exit
businesses, which is awesome.

What else we got here?

Past episodes, of course,
can be found morning, noon, and night.

The podcast link found

John, thank you so much
for being on the show.

This is a lot of fun.

Thanks James.
All right.

Thank you for listening.
We’ll see you next week.

I want you to stay awesome.

And if you do nothing else, of course,

enjoy your business and make
sure that you exit it right.



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