The following is a guest post by John Warrillow. John writes a regular business column for several publications, including Inc Magazine, The Globe and Mail, and BNET. John is also the author of the book “Built to Sell: Creating A Business That Can Thrive Without You”, which is set to go through it’s second printing this week. Included in this 2nd edition of his book is a new section that provides examples and his own personal experiences with the various steps described in his book on how you can build a business you can sell (you can read my review of the first edition of John’s book here).
Following the release of my book “Built to Sell” last year, I’ve had the opportunity to talk with several business owners about their companies and the challenges they face as their business grows and evolves.
As Tanveer writes about leadership and managing employees, I thought I’d share some of the questions I often get asked by business leaders about managing customer expectations, developing their employees and how to involve your team in the process of selling your business when the time comes to put it on the selling block.
Q: These days, there’s a lot of talk about the importance of customer service and doing whatever it takes to make them happy. How do I balance this against not spreading my company resources too thin?
A: I’m a big believer in leading your customers, not following them. If Steve Jobs had listened to his customers, he would have never developed the iPod. Nobody would have told Jobs in a focus group that they want a thousand songs in their pocket because it’s impossible for most people to imagine something that doesn’t exist, if not knowing what your company is capable of creating.
That’s why I think companies need to focus on selling less stuff to more people. Pick the one or two things you do better than anyone else and lead the market.
For example, in my research company, we sold too broad a list of services which pushed my employees way out of their comfort zone. In an effort to compensate for their lack of experience in all of the things we were peddling, I insisted on approving every project which meant I went from being the driver of my business to its bottleneck.
We finally picked one thing – a research subscription – and started selling it exclusively. Suddenly my employees didn’t feel out of their depth anymore and our customers benefited from the improved support and expertise provided by my employees in response to their queries.
Q: A lot of successful business leaders admit that one of the keys to their success is their ability to say ‘No’ to opportunities that don’t fit with the vision they have for their organization. In today’s challenging economy, though, is it really prudent to turn potential customers away?
A: It’s critical. Companies that do too much are not memorable. Companies that are the best at one thing are infinitely more referable and as a result, grow more quickly.
Take any typical photographer and compare them with The School Photography Company in Danbury, England. The School Photography Company does only one thing: they take school pictures using a process that allows the kids to come in and out of a classroom in 8 minutes. Given the fact that they can take these school pictures with little interruption in the school day, the school headmasters will gladly refer them to other schools.
If The School Photography Company had started to offer wedding photos and baby portraits, they would go from an easily referable business into a totally unmemorable, undifferentiated mishmash of services.
Q: What’s the best way to go about building a team which can start taking over some of my day-to-day responsibilities?
A: One thing you should do is avoid any one who has worked for a professional services business like a consultancy or ad agency. They will want to re-invent your service or product because they think in terms of customization. Customization is the enemy of scale. I like hiring people – in particular for sales roles – who have sold things (not time or services) like cell phones, cars or houses.
The other thing to do is break down what you do into a series of processes and write an instruction manual for each one. Imagine you’re Henry Ford and building the first assembly line. You have to describe each step so that someone could perform the function without you hanging over their head.
Q: I’m finding it hard to let go of responsibilities I’ve had for the last few years, which I’ve been told is causing me to micro-manage my team. How can I let go of this need for control?
A: Again, I think bosses feel the need to control when they are asking their employees to do too much, too soon. The culprit is usually a company that offers too many services and products pushing employees way out of their comfort/competency zones.
What you need to do is reduce the number of things you sell and you’ll find the urge to control things will diminish.
Q: What’s the best approach to tell my management team/employees that I’m selling the company without causing friction/stress/concerns over the future of the business?
A: Telling your employees that you’re planning to sell your company is a delicate task. I would divide your employee base into two buckets: 1) your key managers and 2) everyone else as you need to tell these two groups two different messages at two different stages in the process.
You need to tell your key managers in advance of the sale because you want their help in selling the business. You need to merchandise a team of managers to would-be buyers. As such, your managers need to be let in on the secret early on. Be sure to give them a cash incentive if the business is sold (and a stay bonus to help you with the transition) and ask them for their discretion.
The rest of your team should not be told until after the sale is confirmed. Granted, this will cause friction and concern among your employees. That’s why when the time comes to announce the news, you need to be as forthright as possible.
I like the way Michel Arrington told TechCrunch employees he had just sold to AOL. Arrington avoided the typical robotic description of the strategic benefits of having a new corporate parent and opted for a more personal, less polished explanation of his decision:
The truth is I was tired. But I wasn’t tired of writing or speaking at events. I was tired of our endless tech problems, our inability to find enough talented engineers who wanted to work, ultimately, on blog and CrunchBase software. And when we did find those engineers, as we so often did, how to keep them happy. Unlike most start-ups in Silicon Valley, the center of attention at TechCrunch is squarely on the writers. It’s certainly not an engineering-driven company.
AOL, of course, fixes that problem perfectly. They run the largest blogging network in the world, and if we sold to them, we’d never have to worry about tech issues again. We could focus our engineering resources on higher-end things, and I, for one, could spend more of my day writing and a lot less time dealing with other stuff.”
While he didn’t get into the details of the earn-out he signed, he did make it clear that there was some form of retention bonus tied to future performance, which is another example of his admirable transparency:
I fully intend to stay with AOL for a very, very long time. And the entire team has big incentives to stay on board for at least three years.”
Arrington was also careful not to gush about how wonderful AOL is, presumably in consideration of his audience, who may not have been thrilled with the idea of TechCrunch losing its independence. He made it clear he respects AOL, but also throws out the possibility that they might fail:
AOL has a very big vision for the future. They may succeed or they may fail, but at least they are all running in the same direction.”
The point here is that you need to recognize that while this might be an opportunity for you to move on to something else, you still need to take care of the people who helped you build this business.
By involving the appropriate team members before any deals are made and being transparent and up front about what your business – and consequently your employees – will gain from the sale, you’ll provide your employees with the same thing selling your company will provide you with – a positive outlook for the future and the possibility for new opportunities.
John wanted me to share with my readers a special promotion he’s offering to celebrate the second release of his book this Thursday, April 28th. Readers who buy one copy of his book “Built to Sell” will be given “a $65 basket of goodies”, including a one year subscription to Inc Magazine, The E-Myth ebook, The Four Pillars of a Sellable Business, A BizBuySell Valuation Report, a 2-hour conference call with John and a $25 Kiva loan in their name.
To learn more about this special promotion and how to redeem your purchase of his book to receive these bonus gifts, visit the “Gifts” page on his website at BuiltToSell.com.
Some other posts you may enjoy:
- Looking To Sell Your Business? Read “Built To Sell” First
- Will Businesses See The Elephant In The Bigger Picture?
- Why Integrity Still Matters
- How To Build Your Team For Success
- Preparing For Tomorrow’s Leaders Today
- Coffee House Book Review – “Wikibrands” by Sean Moffitt and Mike Dover