Reinvent Your Business

“What do I need to do in order to sell my business?” I've been hearing this question ever since I started helping other business owners rapidly achieve financial freedom and have happier more enjoyable lives. There are so many ways to answer that question!  Christopher Snider, CEO of the Exit Planning Institute, subtitled his book Walking to Destiny (2016): “11 Actions an Owner MUST Take to Rapidly Grow Value & Unlock Wealth.”  John Warrillow’s book, Built to Sell: Creating a Business That Can Thrive Without You (2010), contains 17 tips and 8 steps. Having spent more than ten years learning about, living in, and writing about the Far East, I couldn’t help but absorb some Asian concepts into my way of thinking.  In the spirit of Zen simplicity, I offer this answer:  reinvent your business.

I know that’s easier to say than to do.  Only about 20 percent of owners will successfully reinvent their companies to the point that they are salable. For small and midsize businesses, getting owners and their companies ready from a change in ownership requires reinventions in personal, financial, and business arenas.  Owners have to imagine in detail what they want their lives to be like after a liquidity event.  Their advisors must help them to discover the current market value of the business, to understand the gap between that value and the financial requirements of the owner’s envisioned life after ownership, to cast a vision of a best-in-class business that will be salable even in a buyer’s market, and to keep them on the path of turning that vision into reality.

Step 1:  To thine own self be true, i.e. Play to Your Strengths. The first and most important step in reinventing your business is self-examination. You must arrive at a deep understanding of yourself and the people who make up your team. As the leader you should understand your own personality type, strengths, and weaknesses; as well as the personalities, strengths, and weaknesses of your people. Don’t spend a lot of time trying to fix your weaknesses.  Play to your strengths and surround yourself with people who are strong in areas where you have challenges. 

Step 2.  The Right People.  In his book Good to Great (2001) Jim Collins wrote, “The executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get people to take it there.  No. they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.”  I wrote about this topic back in the July 5, 2017 in an article entitled The Right People. The right people are not copies of yourself, they are complementary to you and each other so they can become a high performing team.

Step 3.  The next step in reinventing your business is to figure out what the business does best and to focus your efforts on that.  Many small and midsize businesses try to be all things to all customers.  I once worked for a company that acted like the word strategy was spelled O-P-P-O-R-T-U-N-I-T-Y.  They were Information Technology generalists, with an unofficial motto of “We’ll walk their dog if they will pay our rates.”  They wanted to be seen as thought leaders, but the market branded them as a commodity IT company. An ancient Greek maxim states, “A fox knows many things, but a hedgehog knows one big thing.” Collins built upon this saying when he developed the Hedgehog Concept: “a simple, crystalline concept that flows from deep understanding about the intersection of … 1. What you can be the best in the world at …, 2. What drives your economic engine…, and 3. What you are deeply passionate about.”

In Built to Sell, John Warrillow’s parable about reinventing a struggling firm into a salable business, successful serial entrepreneur Ted Gordon gives struggling business owner Alex Stapleton this critical piece of advice: “Don’t generalize; specialize. If you focus on doing one thing well and hire specialists in that area, the quality of your work will improve and you will stand out among your competitors.”  There are many more steps in the journey of reinvention, but if you want to be able to sell your business, you must figure out your strengths, build a team of the right people, and then figure out what that team is really good at doing – and do that one thing better than anybody else.