BOOK REVIEW: BUILT TO SELL

AUTHOR: JOHN WARRILLOW

Why do most people go into business? To earn an income or t o increase their income. For the latter type the business is a side pursuit to their job. What happens when the business makes more money than you have imagined in the first case or gets in the way of your main job, in the latter case? This is the beginning of the end.

In the former case the owner pushes up his living costs at the expense of the business and in the latter case the business owner decides in favour of keeping his job and the certain income that comes with it, and folds the business.

In “Built to Sell” author John Warrillow suggests an alternative, What if you built your company in such a way that you could sell it? That would mean for our first business owner, when he starts making too much money there is a process of investment of those additional funds to increase the value of the company and make it more sellable or in the second case the businessowner can sell his side hustle rather than just fold it.

"If we learnt how to build our businesses for sale – even if we never want to sell them, it will also ensure their sustainability and longevity....

The number is that barely one in a 100 companies in Uganda live to see their fifth birthday. But someone pointed out to me that is never the end of the business owner who just goes ahaead and opens another business. No wonder we are among the most entrepreneurial country in the wolrd.

So the author using a fictional narration a la Rich Dad, Poor Dad, begins with the businessowner who is stressed out and wants to sell his business. Unfortunately despite having buit it for five years, the way in which it is structured, with him as the center of gravit of the business, means it is worth nothing. A business is not the buildings, cars and machinery but the systems that take labour, capital and land and convert them into saleable products, that’s what investors are buying. 

The book therefore is how he restructures his business to make it saleable.

If there is only one quote to take away from the book it is “You should always run a company as if it will last forever, and yet you should also strive constantly to maximise its value, building in the qualities that allow it to be sold at any moment fro the highest price buyers are paying for businesses like yours.”

If you building it to live for ever you are unlikely to raid the till every Friday evening and to maximise its value the author urges that you focus  your offerings, build a sales force and a management team. Essentially build a company that can go on with out you. Think about it, no one wants to by a business where the star of the team is living, the value is that the functions of the company have been institutionalised, that you can place anyone in charge and the system will still work, that is where the value is.

Think of any business and the trouble they go through in the transition from the original founder to the next generation. The figure was that there was only one company with indegenous founders that has transitioned from one generation to the next in the last 50 years. This was true ten years ago and is probably still largely true.

What we are talking about  is a mindset change from subsistence, working to support your family and you to commercialisation, where you build a business to take advantage of market opportunities in a sytematic way...

 Easier said than done. It requires business owners to not see themselves as working in the business but rather working on the business. How do you tell the carpenter, who built his workshop from the ground up to stop working on the workshop floor with the th other carpenters step back, cretae a sales generation system, build and manage a team, who in turn manage the carpenters? You can say the same for the butcher, the farmer or the florist.

"We are still a very agrarian society where hard work is measured more by the sweat on your brow and the dirt on your hands. This book is saying business owners need to shift towards creating the intellectual property that is the business...

The book is a must read for every one in business, those going into the business and those who have been burned by a prior business but what to get back into it. It encourages a major mind shift which if achieved could reduce the attrition rate of our businesses. 

Of course the everyday challenges of business mean that not every thong will go to plan, but it does not hurt for businessmen to have a basic business model on which to overlay their experience, at least it will offer them a better chance than before at success.

As it is now even the MBAs among us blunder into business and hope for the best. This book might help in reducing that uncertainity.

Available on Amazon.