Another spot of time allowed me to chew up a recommended read, Built to Sell by John Warrillow. Working with 1st time entrepreneurs is a job I take VERY seriously. Think spiderman – with great power comes great responsibility. I find the toughest thing to do is allow the entrepreneur time to get stuck, to screw up, and to ask the right questions. Teaching this cycle is more empowering than doing things for them, in my opinion.
Enter Warrillow’s book – a fantastic story about a services company stuck behind the cash flow monster – illustrates so many ways to build value within a company – regardless of its phase. I’m adding to my entrepreneurial recommended reading list for these reasons:
1) great outline of the value and cashflow distinctions between services, product, membership and blended companies.
2) enlightening philosophy regarding building your company to sell (value) – and then deciding later whether or not you really want to sell it.
3) the different between selling to clients or customers – though I may disagree – the discuss around the language you use in daily work will distinguish you in your market is priceless.
4) a list of questions you should be able to answer about your venture: 1) describe your sales cycle, 2) how many salespeople do/will you have and why, 3) describe your cash flow cycle, 4) who are your customers?, 5) how do you know if they are satisfied?, 6) how often do your customers buy again?
5) long term incentive plans versus equity splits
6) when selling your venture, the buyer wants to know that you’ll support the transition. Great language: “I’m proud of the growth our company has achieved, and I’m at a point in my life where I’d like to create some liquidity for the value we’ve created so far AND have an opportunity to participate in the future upside of the business.”
7) the importance of understanding what motivates your team, and the willingness to make changes.
8) understanding your customer profile and the willingness to retire a client relationships when necessary.
9) the family dynamic and the necessity of being replaceable in your business.
10) time alone for the founder is necessary to evaluate and produce future vision.
Often a startup is running so fast to score any revenue, they are torn in multiple directions by multiple prospects. Understand who and what your business is for what clients will support focus, and this is so often abandoned in early stages. Pivot if you must, but do your homework, and burn the old business model behind you.