Built to Sell: Book Summary
How to Build a Business that can Succeed without you
John Warrillow, an entrepreneur and business owner, highlights the difference between building a company for sellability and building one to maximize success. He wrote the book as a guide to teach entrepreneurs how to develop their businesses to sell, especially founders who feel tied to the company but want to explore other ventures, and how they can repeat that same success without having to work daily.
The book is divided into three main sections: Sellability, Wealth Alignment, and Operating Framework.
The first section explains what it means to be built for sellability. The second part talks about maximizing value. The final section explores the importance of having a well-defined operating framework.
Sellability – What Is A Company Built to Sell
A company built for sale is repeatable. Its operating framework is well-defined and makes its owner efficient because it has an effective running system without the owner needing to be present.
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.
How responsibilities are distributed within an organization is also crucial in making a business scalable and repeatable.
People start a business for four main things:
- to earn income
- fund their lifestyles
- put sponsor their kids’ college education or save for retirement,
- achieve the American Dream.
Many considered these to be the four pillars of a business plan. Warrillow argues that not all founders build their businesses to accomplish these objectives equally well.
Successful companies provide one apparent reason why they exist, define what success means in the business, and establish the specific, measurable actions that define this success.
Wealth Alignment – Connecting Success With Your Personal Bottom Line
“When business owners say they want to be rich, they often mean that they want their businesses to be profitable” (Warrillow, 2016).
The standard idea of operating a company for “success” or “profitability” is ensuring that a company can still remain profitable even if the owner leaves. Success in a lifestyle business usually requires you to reinvest the profits back into the company, which creates an opportunity cost of not having that money as part of your bottom line. Another problem is that when the business owner eventually leaves, he takes the “success” along with him.
Operating Framework – Making Money While You Sleep
“When companies think like this, they become scalable and built for sale.”
The third section outlines how to build a scalable company. Warrillow teaches that if management creates a scalable, repeatable business model, the business becomes more attractive because it creates opportunities for potential buyers to benefit from your efforts.
It’s important to differentiate between wealth generators and wealth consumers. Wealth generators are companies that generate their cash flow by themselves. The second type, wealth consumers, require funds from outside sources outside the business to survive and thrive.