Full of gems for any business owner looking to maximise the value of your business. John Warrillow is the master at explaining the eight key drivers that potential acquirers would look for when deciding just how they would value your business.
John is a best-selling author, serial entrepreneur and founder of the Value Builder System, a unique method of examining your business and identifying the key areas where you can add value.
If you want to know what to look for and what pontetial acquirers might look for, then listen to this podcast.
Also, as a gift to you, if you would like to take the Value Builder Score Questionnaire, then just click this link and it'l ltake you around 15 minutes to complete. We'll then arrange for a follow-up call to give you the report. https://bolton.actioncoach.co.uk/about/increase-the-value-of-your-business/
We also have a Value Builder Freedom Workshop coming up soon. JUst drop us a line at bolton@actioncoach.com to be added to our waiting list.
Enjoy the show.
Full of gems for any business owner looking to maximise the value of your business. John Warrillow is the master at explaining the eight key drivers that potential acquirers would look for when deciding just how they would value your business.
John is a best-selling author, serial entrepreneur and founder of the Value Builder System, a unique method of examining your business and identifying the key areas where you can add value.
If you want to know what to look for and what pontetial acquirers might look for, then listen to this podcast.
Also, as a gift to you, if you would like to take the Value Builder Score Questionnaire, then just click this link and it'l ltake you around 15 minutes to complete. We'll then arrange for a follow-up call to give you the report. https://bolton.actioncoach.co.uk/about/increase-the-value-of-your-business/
We also have a Value Builder Freedom Workshop coming up soon. JUst drop us a line at bolton@actioncoach.com to be added to our waiting list.
Enjoy the show.
Okay, welcome to the action coach business extra podcast. My guest today is the best selling author of Built to Sell and the automatic customer with a third book on the way I believe he's a fellow podcaster is the host of built sell radio, which Forbes magazine ranked in the top 10 of podcasts for business owners. And this is serial entrepreneur having started and exited four companies before I found in the value builder system. Welcome to Mr. JOHN warrillow. Welcome, john. Thanks, Paul. Good to be with you. Great see it. We're going to talk more about value builder and how people can build value into their companies in a little while. But I just wanted to start by asking you, john, how you got started?
John Warrillow :Well, I've been Yeah, I've been involved in a couple of businesses. My last one, I had to make a fairly big shift to making it less dependent on me and I wrote about that and Built to Sell. And I speak about, you know, building to sell quite a bit these days, not so much but in the past quite a bit. And when I would get conversations going about sort of how do I drive and prove my value? I realised that was really a neat For helping people focus on what makes their business more valuable, not just bigger, a lot of people are focused on on kind of scaling their business as large as they possibly can. But oftentimes that comes at the expense of value. And really, it was through some of those conversations that we started to come up with the idea for value builder which is a new company where we help entrepreneurs through coaches like yourself, improve the value of their company leading up to an exit
Paul Limb :best selling author of Built to Sell which was laid on to the the podcast as well. That's how many podcasts if you don't know john, you just celebrated
John Warrillow :Yeah, anniversary. Yeah, is that thank you for acknowledging that 250 a quarter, quarter, quarter thousand if you will, a 250 K. So it's, we interview a different entrepreneur every week of the year. And my focus is on the very last stage of their business lifecycle. So it's really on the selling of the company. So what you know what made you think about selling, what were the mechanics around it? What were the biggest mistakes you make, and so forth. So that's, that's built to sell radio.
Paul Limb :Yeah. And obviously the value builder system as well, that we're going to talk about in a little bit more detail. As a value builder practitioner myself as well, we run regular workshops around building value into companies. And there are three elements, obviously, to start in running and selling a company, obviously, you need to build it, hopefully accelerate the growth of that company and then harvest it as best you can. And we'll talk about all those three elements over the next half hour. So, john, so if we talk about value builder, obviously, you've talked about the reasons why you started value builder, and that's to help as many business owners as you can. As a business coach, that's my job, as well to help build value into companies for business owners so they can have the life that they dreamed of when they first went into business, but often get stuck on the hamster wheel of business, or as you've called it, often the the only is Trump, if you will, if you want to talk about that a little bit in terms of the audience. Trump.
John Warrillow :Yeah, I mean, Michael Gerber was the guy who first coined the term, the entrepreneurial seizure, if you've read the E myth, you know, a lot of people have that idea where they have a concept. They're an industry expert at what they do. And they think why should I work for this bloke? Why don't I go and start my business. And so there they go and start a business and it goes pretty well. But because they have lots of industry expertise, it means that customers often ask them to go much beyond what their original conception was for a business idea. And as as they get further and further away from their business idea, the business becomes more and more dependent on them personally, because they're the only ones who can deliver the job. And so the company traditionally will plateau. Maybe it's 300 pounds and 300,000 pounds in revenue or 500,000 pounds in revenue. But it plateaus. And so that's when the owner needs to sort of pull him or herself out of the business and get it to run without without them. And that's the You know, that's the the essence of a Built to Sell company is one that can thrive without the owner. Interesting. It doesn't have to be that you want to sell it, it can be that you want to get your life back right and and that's the essence of it's the very same things that make a business fun to own are the same things that acquirers look for when they go buy a business. So whether you want to sell or just hold it in perpetuity, it's good to focus on it, what acquires care about
Paul Limb :Yeah, and it's, you know, it's about that freedom. You know, we the next workshop we're running is the freedom workshop, and, and it's fantastic business owners having that freedom to choose what they do. You know, I come across business owners all the time who really love getting on the tools still, but it gives them the choice of what they're doing when they do it. And that's the important thing.
John Warrillow :I'd be interested in your perspective on this. Paul, what I'm seeing over here in North America is a lot of business owners have have gone back into Their business in a much more in the weeds of it than they ever want to. They have they have laid off some staff, other staff have gotten sick other staff have are caring for people who have gotten sick during COVID. And as a result, the owners are have gone from having this wonderful lifestyle where they kind of checking in on their business a few hours a week to doing all the things they haven't done for years and years and years. And so right now is is a great time to pull up. And as we start to reopen the economy, is to say, Whoa, hang on a minute. You don't want to be at the epicentre of your company, you've got to put the structures and systems in place that allow you to pull yourself out and and and for your business to continue to run without you. So it's been a good reminder, I think of the last couple months that that we've still got work to do and helping owners structure the company so that they can run without them. Yeah, it's
Paul Limb :been exactly the same here in the UK. JOHN. We've had We've had an odd number of business owners who furloughed all the staff and their eyes, either the only person or one of one or two people still left working in the company. They're getting back on the tools, they're going out and doing the jobs themselves and keeping their ...
John Warrillow :How do we send an invoice again?
Paul Limb :Yeah. I don't turn the computer on even. But it's such an ideal time now to be looking at your company and planning for the future. I think because
John Warrillow :I agree.
Paul Limb :Yeah, as you said in one of the one of the presentations that you did, you know, if you have a if you had a house that got the comp got demolished in it in a storm, would you rebuild it exactly the same way? And now is the ideal time to think about your business, don't you think?
John Warrillow :I agree 100% because you know, when business is good and thriving, thriving on on, on all cylinders, so to speak. We make these little decisions that have the habit, an unfortunate sort of ramification where they stack one on top of the other and they get among Momentum inertia of themselves. So maybe we start selling a product or service, it's a little outside of our sweet spot. But you know, it's revenue and a customer asked for and so we maybe hire someone who's not quite a cultural fit, but they're okay. And and you know, now that they're working and we train them, why bother getting rid of them? Well, all that's been thrown out the window, right? So all of that is it's an opportunity to re examine everything, the culture, you're kind of trying to build. The value and value is important, I think in this context, because when an acquire looks at business, whether you want to sell in 10 years, 50 years down the road, when an acquire looks at a business, they're going to look at your products and services, and they're going to pay a premium for things they cannot do easily. And they are going to deeply discount the products or services that you sell, which are commoditized are me to products. And for many of us it we have lots of those products, right? Yeah, and they suck up cash. They suck up mental energy. And even though they're helping us improve our top line turnover, they may not be actually contributing much to the value of our company. If we redeploy that those resources to more valuable products and services, I think it can mean a much more valuable exit down the road. Yeah, yeah.
Paul Limb :I think that's why value builder. The value builder system is so great, because a lot of business owners that the problem is they don't know where to start. They know they need to do something, they know they're stuck working in the business, they normally need to redesign it, but they don't know where to start. And I think the value builder system gives them a great framework of different areas of focus in the business where they can where they can start working on building value into the business and as you say, it doesn't necessarily need to be because they want to sell. You know, there's a whole host different reasons for building the value of the asset in the business. And let's have a look at those eight key drivers. john oliver. The first and most obvious one is his financial performance. But it's not just about the numbers, is it?
John Warrillow :No, it's not. I mean, financial performance, I get a question a lot. Should I focus on my top line turnover or bottom line profit? The cheeky answer is both. Neither is necessarily more important. But both are important as a rule of 40, which a lot of acquirers look at, in particular in the technology world where you're even to multiple your earnings before interest, tax depreciation, and your growth rate on a percentage terms add up to 40. And if they add up to 40, so 30% profit and 10% growth or 20% and 20%. That's a very, that's a very valuable company in particular in technology context. So that rule of 40 is something to chase. And to think about it, it makes it makes you have to focus on both top line and bottom line, and that can be incredibly valuable. The other piece of it is the efficacy or the quality of your bookkeeping and this is often something that A lot of owners overlook, right? Because the you know, no one wants to be doing bookkeeping or accounting and but it's important and and acquirers get very nervous when they can't trust the books. And so starting now, whether you want to sell in 20 years or 10 years or five years, starting now I think is a really important process. Yeah,
Paul Limb :yeah. And it's so easy now with the advent of the cloud based accounting software that we've got all the different packages, it's so easy. Are you guys
John Warrillow :on zero or in QuickBooks or what? Yeah,
Paul Limb :we've got zero QuickBooks sage. And there's another one called free agent zeros. I think it's the biggest in the UK just at the moment. But it still surprises me. I've still walked into potential clients and started talking to them about their bookkeeping, and there's a bag comes out with full of invoices from the last right, then I must go through these sometimes. So you know, it doesn't exactly add value to what they're looking at. I mean, just imagine the look at an acquirer would give it when they walk through the door. Yeah. That financial performance is the first one and the next one is obviously the growth potential of the company and the size of the industry and the size of the market that the work in it.
John Warrillow :You bet so really it comes down to when an acquire buys a business they're looking at what is the future and most entrepreneurs we want to be sort of judged on the past how much revenue we you know, generate in the past or much profit we made, but acquires our thinking about the future if we buy this business, what is it that we could do with it? I just did a podcast with the guy who started dream water Do you know dream water? No, I don't know if you ever seen that five, five hour energy bottles is legal five millilitre bottles, you get them at the gas station and stuff like Yeah, he did the opposite. He created dream water, which are five millilitre bottles, like shots of water that helps you relax in the evening. And, and so when he looked at the growth potential of this business, any consumer packaged goods company With distribution could slot that product into their distribution and almost overnight catapulted for grow it exponentially because you had one product and relatively limited distribution through pharmacies and some supermarkets but you know, consumer packaged goods like a Unilever could acquire that it turned out Ironically, the highest bidder was a cannabis company. They bought it, they paid 34.5 million US dollars for a business turning over $10 million. So a very, very premium multiple, but he had multiple bidders. And it was it was a huge success story. So it just goes to show you the growth potential. What your company will do in the future is so very important when it comes to the value of your company.
Paul Limb :Yeah, and I think one of the things that business owners don't do is actually investigate the market enough to understand what actually is the market value, what's the total market value of their particular products and services. In the UK market for those here, and what are those services? Or what are the products called the Add to that to it to increase, you know, the market that they're aiming to
John Warrillow :not only increase but also differentiate again, if you're selling a commodity, if you're selling lawn care services, painting services, a sand that people put in their, you know, in their and their garden or whatever, if you can compare on an apples to apples basis, that product or service with another, it's very difficult to get an acquire interested in buying that company, because they'll just say most quiet acquisitions are done by companies at least five times the size of the target. And so they're gonna look at that business and say, well, we're selling sand. Well, if we just drop our price by 5%, we'll pick up all of his business or all of her business right? Or we're selling lawn care what so what you want to do is not only I think, think about what product or service can you grow, but how can you create a defendable, market position, something that makes you truly unique in the marketplace. You know, I'm foreshadowing one of the other drivers. But that's really important in when it comes to your growth potential focusing in on the one thing that makes you unique or special. Yeah,
Paul Limb :yeah. And the next one always makes me smile because of the name of it the Switzerland structure, named after one of our European neighbours, of course, who remained fiercely independent. And it's all about how Reliant a business is on one particular supplier, one particular customer or one particular employee.
John Warrillow :Yeah, you guys think you're focused on on independence? Brexit you should see the the Swiss I mean, the, the history is unbelievable. They didn't join either the world wars, you know, I mean, they didn't, you know, join the US, the Euro, and so forth. So yeah, they had this obsession with independence. And so it's really making sure your company is not dependent on a single customer employee or supplier. And again, what's what's unique is not that you want to sell yourself Company. But what that does is give you diversity among your risk, right. So if you're relying on a single supplier, the problem is that sometimes that supplier can change strategy. I know a telecom company, they instal phone systems in small businesses. And you have a you have a via in the UK. So he got to a point where 93% of his supply was coming from Avaya very naturally they were giving him better terms, longer terms to pay better margins and so forth. And, and when he went to sell a $26 million business, nobody was interested. And when they asked kind of why they all said, well, you're too dependent on Avaya right 93% of your supply. If Avaya changes strategy, they go to wreck they decide not to use resellers, they go bankrupt. They change their terms, you're out of business. And so even though you may have to give up a point or two of margin, making sure that you are independent of any one customer employee or supplier i think is a big big driver of value.
Paul Limb :Yeah, yeah, definitely, particularly at the moment with a situation around the the uncertainty of the economy. You know, if you're reliant on one supplier and they go under because of the pandemic, then where does that leave you and the value of your business. So, really relevant right now, I think.
John Warrillow :I'll give you an example. Paul, we just I just did an interview for built cell radio with a woman. Here's the thing, the problem with having a an over dependence on a single customer in particular or a single employee, or even a supplier is is that you may be able to sell your business but you ultimately have to have to commit to an urn out. And an urn out is where the risk is really put back on your shoulders, where you are asked to hit a set of goals in the future. I just did an interview this woman she started this little salad company in Oregon making salads she built one successful location she went and got investors to invest and in fact, one of her advisors was an investor which is which was a problem. She got money on a two and a half x, what's called a liquidity preference meaning that when the buyer comes in, the investors get two and a half x their money before she gets anything. She went to sell the business and she was only able to get an offer that essentially wiped her out of any value. And the only value she got was an urn out meaning Okay, future profits of her business. That was in October of 2019. In March 2020, Oregon, all restaurants were shut down and her earn out became zero, even though she'd built this amazing business. She didn't actually pull out any money because of an urn out. And again, the Switzerland structure is is usually the way acquirers will deal with a company that is too dependent on a single supplier customer. Yeah, they'll give you an urn out. She
Paul Limb :also had a few choice words I think at the time, I think so. I think so. Yeah. So the next key driver, I've got to take you to task about this john, the valuation ttt So, where on earth
John Warrillow :seesaw?
Paul Limb :seesaw, please, so tell us more about the valuation Cecil Jones. Sure.
John Warrillow :So if you think about a child's playground, and you think the heavy kid gets on the light kid goes up on the seesaw. Same thing is true. When it comes to the value of your business meaning the more cash your company accumulates, the the less the acquirer needs to invest in working capital, and therefore the more they are willing to pay for your business because when an acquire it goes and buys your business, effectively, they are writing two checks, right, they write a check to you the owner, but they also write a check to your company for working capital. And so the bigger the check, they have to write for working capital because you've got a negative cash flow cycle for example, the smaller the check, they are willing to write to you. In inverse of course, if if they don't have to write a check to you for working capital, then they're willing to write a bigger check. And again, this this doesn't have to be about Wanting to sell your business imminently. But once you get your positive cash flow cycle in place, it allows you to grow without diluting yourself, right? You don't have to take on investors, you can really grow, you can sleep at night. And, and so that's going to be important element of building the value of your company making sure. And again to draw the distinction cash is actually money coming into the bank, whereas profit and loss is, as we talked about financial performance is an expression, you know, basically done by accountants. Yeah,
Paul Limb :yeah. And again, you know, I speak to business owners know, who really don't understand the numbers so important. You know, there's been some surveys done about business failures in the UK. And I think in the first five years 80% of SME startups fail. And the number one reason is for business owners not understanding the numbers during that time. So, so important. And then the next one I think, you know, if you to ask any startup company any any young entrepreneur About recurring revenue that that would be the one that they understand helps them to build value and accelerate the growth of the company. And now you've got a great ebook that we're going to make available to people if they want to sign up afterwards about those nine subscription models, so we're not going to go through them all, but maybe we can touch on one or two of those. And just to help people understand what we mean by recurring revenues for the business. Yeah, I
John Warrillow :mean, young people, you know, running a SaaS company software as a service company, no recurring revenue all day long. But oftentimes, businesses who have been around a while look at recurring revenue and people that's just not the way it works in my industry, maybe they distribute a plumbing part or they have a retail shop or they have a manufacturing business and they're like, Oh, you know, that's nice for software companies, but, you know, we sell a thing, and I always tell them about the story of H bloom. h bloom is in the business of selling flowers. They were thinking about a high school, high street flower shop, and high street flower shops have a problem because they got to pay rent. A big problem right now. They've also got inventory which dies the moment the farmer cuts it off the vine typical flower shop High Street flower shop will throw out 60% of its inventory every month. Because they buy wrong. Yeah, yeah. And and and so they've got to stimulate demand. How do they do that? Well, they again get very expensive High Street space. So it's a really broken business model. These guys son, you Panda and Brian workout cart came along and said, How do we reinvent this business? And what they built was h bloom, a subscription based flower company. You might say, well, who on earth buys flowers on subscription other than, you know, people who are going through a divorce and they're trying to move back there? No, they're there. They're made with monthly subscription. But actually, that's not the target. They target. They focused on high end, hotels, restaurants, spas, wealth management companies, who want to give sort of that very prestigious image. And they said, we'll sell you a subscription to flowers. We'll come we'll get rid of the old one. We'll send you a commercial grade invoice because your business, not a consumer. And it became a huge success in industry, high shot by your high street retail, which is not usually one indicative of recurring revenue. So I think, you know, you mentioned and you're making a great that you're making available to your colleagues that nine subscription models, but there are nine and I think virtually every company again, whether you're retailer, manufacturer, distributor service company can create some recurring revenue. And that just makes your business so much more predictable. And again, you may say, I don't want to sell but remember the predictability of a business is so precious because when you're sitting here, saying how many how many trucks or vans or lorries Am I gonna need on the road in six months? How many technicians Am I going to need next year? you're guessing if you're working on a transaction business model, whereas if you've got subscriptions and subscribers and you're checking how how readily they recur It's it's much easier to predict your business.
Paul Limb :Yeah, we're talking to two of our clients right now about how they can introduce recurring revenue models into their business. One of them is as a beauty salon, and one of them is a hairdressers. So they're they're both looking at how they can introduce a subscription model into their business a recurring revenue stream into their business by by producing a sort of bronze silver gold level offer for all of their clients. And they can just pay on a monthly fee regardless of what we have each.
John Warrillow :there's a there's a gret is a subscription based hairdresser, guys. haircuts in I believe they're in in Seattle, Washington. Here's what they did, because here's the thing with subscription. If somebody comes in once a month for a haircut, and they pay whatever it is $25 25 pounds. You could say, Okay, well we'll put it on subscription. It'll be 12 times a year and it's 12 times 25 300 pounds. Nobody's going to take that deal right? Because people would rather the 300 pounds in their pocket than giving it to you in advance right? So it's got to be some really serious benefit for them. What they did was they said, Look guys, we're gonna we're gonna give our club members the people who subscribe the best time spots so there's no when people want to get a haircut so they get preferential demand they also get the neck shave whenever they want to come in. So as guys I need a haircut right now as you can tell, Yeah, me too. But but most of us get their hair cut once every whatever four or five weeks but think we get the kind of the mess the back of our neck every two or three weeks. Well, there you have so for their club members or subscribers that come in anytime, and we won't charge you. And so for guys to get their hair cut once every five weeks, it's a nice thing to build a pop in 10 minutes have a shave the back of the neck. That's just one of the little tiny things they've done to make it special for their subscribers.
Paul Limb :Yeah, yeah. I think building that extra value in for your clients is so so important, something that we talk to about our clients about their customers all the time. The next one we've already touched on, which is monopoly control about differentiating your business. And again, that can be around the services that you're offering, and really differentiated and adding value and making yourself unique in the marketplace. And the next one is, again, reflects what we were just talking about in terms of customer satisfaction, you know, how do you get your clients to repurchase from you? And also refer you how do you turn them into raving fans of your business? So they're going to become your salespeople and start referring to others and that can obviously have huge amounts of value to the business?
John Warrillow :It can but it's tricky because most business owners offer an amazing experience to their customers. And if they ever say what if you ask a business owner, hey, why did customers choose you over your competitors? They'll say oh, we offer great customer service. The question though becomes, are they buying you personally because they know that you're going to oversee the delivery of that service for product or your company. And in most cases, they know that it's because the owner is going to oversee their job that they are going to get great service. And so what we have to do is go from the owner offering great customer service to institutionalising great customer service across the company. And the best way that that we know of how to do that is through Net Promoter Score. And this is the quick survey, you ask your customer scale of zero to 10? how likely are you to recommend this to a friend or colleague? And it turns out that question is highly predictive that the company will grow in the future. And so that can be a great way if you're an owner and you want to say, what is it that we can do to make sure we have raving fans as customers using the Net Promoter Score questionnaire, can be a great way to tease out are separate. Do they love me as the owner or is it my company and that's a really important distinction. Yeah,
Paul Limb :yeah. And that takes us on to the last driver of as well, which is hub and spoke. And just how Reliant is your company on you. And I know one of the questions in the value builder score questionnaire that we're also going to make available to anybody who is actually listening to this on wants to get more information is around how well they know each of their customers personally. And you know, every business owner that I speak to is really proud when they tell me that they are on first name terms with every single one of their customers, and are surprised sometimes to learn that that's going to decrease and increase the value of the company.
John Warrillow :Absolutely. It makes common sense, right? Because when you think about it from an acquires point of view, they're gonna buy this company, they're gonna write you a big check and then you're gonna ride off into the sunset, they're gonna be left holding the bag and if you hold all the relationships that people value, you personally No, you personally, there's nothing there that they haven't bought much as their business is going to Or go down as you leave. And so what they want to ensure is that their relationships. First of all, there aren't a lot of customer concentration issues which we measure through Switzerland structure. Second of all, the relationships don't rely on you personally being there. And so you know, that comes down to making sure that you're not at the epicentre and we're coming up to high season for holiday time. I know you can't travel that much, but, but for those of you who can travel a little bit, it can be a great opportunity to see how well your company does perform without you. You're taking a couple of days off and see what breaks down. Is it sales? Is it marketing? Is it is it product delivery? Is it operations and that's where you know, you need to bolster your, your systems.
Paul Limb :Yeah, I mean, we often set a challenge. We know we'll go to a lot of networking meetings, do short presentations. One of our challenges is always Can you take five or six weeks out your business, don't take your telephone with you. Don't take your laptop talk with you. What kind of state is your company going to be in? When you get back? Is it still going to be growing? Is it still going to be making profit acquiring new customers satisfying everybody that they've already got? And the answer that in the vast majority of cases is, is No, it isn't. And it sends a shiver down the spine at the thought of having to do that. So it's a great starting point to understand, you know, the areas of business that you need to look at. So that that's, that's the eight key drivers know, the value builders score questionnaire is a great tool as a starting point. For anybody who wants to delve deeper into those eight key drivers. Can you just tell us a little bit more about how that works, john?
John Warrillow :Yeah, it's essentially an acquires view of your business. And you're gonna say, Well, I don't want to sell my company. That's fine. What you can do by getting the value better score, see how an external person and investor acquire would view your company. So whether you want to sell in five years or 25 years, you can start to look at the decisions you're making through the lens of an acquire and I think the question Like how well do you know your customers is an example of maybe actually educational, in and of itself, what we hear from a lot of owners who say, well, it helped me think about my business differently in a way that I'd never thought about business before. I've kind of grown up in business and thinking about revenue and profit and cash flow. But I've never really thought about the the nuances of value. So I think it can be an educational experience in and of itself. And then when you and your team Paul go, and kind of share with owners their results, I think they're really going to see some major improvements and some ways to very quickly add tremendous value to their company.
Paul Limb :Yeah, we've done that multiple times. Now with with people who've completed the value builder score questionnaire, it only takes sort of 13 1415 minutes to complete a very short questionnaire it's complete. But when you show them the report and the content and the areas that they can work on in the business, and then give them access to the rest of the You build a system to help them with that, and coach and through that, it can make an amazing amount of difference to the business. And we've seen the, the benefits of that with our clients already. It's amazing. So we're gonna put the link for that in the description on the bottom of the podcast. So anybody who wants to take advantage of that, do a quick 30 minute questionnaire, get the results from that, it'll give you a great starting point for your business. So that's value builder, but it's not just about building value into the company. It's about what you do, when you do decide that perhaps you're coming up to the stage where you want to consider what to do next. And obviously there's there's the growth and building parts. There's the acceleration through through making sure that the eight key drivers are working for you. And then there's the third element which you call harvesting. And there's three elements to that in the john in terms of things to consider before you start building it you you're negotiating leverage, if you will, and and really whether you can punch above your weight when it comes to Getting the right multiple of profit for your business.
John Warrillow :That's exactly right. And yeah, that's a that's a book that I've written called the art of selling your business coming out in January of next year. And it's exactly as you described, it's how do you punch above your weight when you sell your company and and there's a lot of people that will try to take advantage of you, when you sell your company. They're private equity companies out there that will try to get your company for pennies on the dollar. There are large companies that try to pick up small businesses in particular and stressed and distressed times. And so this is really your antidote. This is the the way to fight back in those in those conditions is to is to build a narrative. And you know, anybody can sell a business for an industry standard multiple, but really that the magic the dream water at selling a $10 million business for 34 and a half million dollars. The magic is in the the nuances in the story that you tell the narrative that you that you that you that you weave along the way and that's it That's important element and most of us only have one shot at at a successful exit to fund your retirement. And so it's important to get it right worth worth Spanx. Stop thinking about it. Yeah, there was one particular story. And
Paul Limb :I can't remember the name of the company or the lady. And you will I'm sure. I'm putting you on the spot now. It was a lady new who started an accounting system service for for people who were employing nannies in the
John Warrillow :Oh yes. Stephanie. breedlove. Yeah.
Paul Limb :Stephanie Bree love. Yeah, I mean, can you name like that? So tell us tell us that story.
John Warrillow :Yeah, briefly. So she she built a a payroll company that pays nanny parents who have nannies and opare they, they would pay them and beautiful little business $9 million in revenue. And, and you think, okay, maybe she she got one times, you know, turnover So, so $9 million would be a classic. Sort of revenue multiple of a, of a service based business, she sold it for $54 million, fully six times top line revenue. I mean, it's just it's just incredible story. The way she did it is she looked out in the universe and said, who would my business be a strategic acquisition for In other words, it would be worth much more in their hands in mind. And she discovered there's a company called care.com out there. 7 million subscribers to care.com. Think of this business as you plug in your postal code. And it pulls up care.com pulls up a list of care providers, au pairs and nannies and teachers in your local market. All Star rated by the parents who've hired them so it allows you to find an au pair in your local market. So Kara come is 7 million parents who are subscribers, most of them need to have a nanny they need to pay. Bree Lovett built this little $9 million company on the backs of 10,000 subscribers. So she made the case to care calm Look, if just 1% of your 7 million subscribers by the way. payroll service, that's a business seven times my size. That's how she got that's the narrative she Whoa, to get them to spend $54 million on a $9 million business,
Paul Limb :and an amazing story and a great one to end one on nothing. It's just so important to to identify who could be potential buyers for your business when you start looking at them.
John Warrillow :It is but I want to end on this note, Stephanie did it for 25 years, it was a hard slog. It wasn't an overnight success. And she focused on the eight drivers along the way. Her net promoter score was 75% plus did one thing so you had monopoly control. It was payroll for nanny, she didn't do payroll for anybody other than nannies. She had great monopoly control. She had recurring revenue, she had it all. And so whether you want to sell now or in 25 years thinking about these drivers, gets you to that finish line, I think in much better shape.
Paul Limb :Okay, john, it's been a real pleasure talking to you night. It's always Always an education when when I hear you speak, just tells me your new book which is coming out in January.
John Warrillow :It's called the art of selling your business.
Paul Limb :I shall be placing my pre order immediately.
John Warrillow :So it's great to see you.
Paul Limb :Yeah, you too. We've got a workshop coming up in about four weeks time the freedom workshop. So if you want to learn more about value builder, please register and come along for that the details will be on the description. We're going to put the questionnaire the vulnerability score questionnaire on the description for the podcast as well. And if you want any more information at all, please contact action coach Bolton on Bolton action coach calm. JOHN has been an absolute pleasure. Thank you very much for your time, and I look forward to speaking to you soon.
John Warrillow :Cheers. See you again. Take care Transcribed by https://otter.ai