Build Your Business So You Can Sell It
Posted On Monday, February 15, 2010 at by Sun Jun
My day started really early. I woke up at 2am today and couldn't get myself back to sleep. And so I decided to continue reading The E-Myth Revisited: Why Most Small Business Don't Work and What to do About It. That's when I encountered this idea of building your business so that you can actually sell it. It was an interesting read as I never thought of establishing my own business so I can just sell it. For me, and probably for most of us, going into business means keeping it running so that the money will keep coming as well. This book really changed the way I think about running businesses. If you want to learn more about building your business so you can sell it 'Continue Reading' this article.
Come to think of it, it was not my first time to encounter this idea. A few years back, my sister told me of a friend who was actually aiming to do this. She said that after her friend successfully established a business, her friend was able to sell it for millions! Now, her friend is putting up another one looking to sell it in the future as well. Giving it a deeper thought, this idea actually doesn't sound so bad. However, the question is, how do you establish your business to make it worth so much, how do you make it so that you can sell it for millions? Just like what my sister's friend did.
The Business as your Product
Michael Gerber, the author of the E-Myth books, provides us with a simple answer. He said that the key is for entrepreneurs to treat their business as the product itself and not think of the items they are selling or the services they are providing as their product. In treating the business as the product itself, the entrepreneur works on improving the business itself and as a consequence at the same time satisfying the needs of the customers as well.
He said that it is important to build a system that is independent of the capabilities of the person doing it so that the same process can be replicated else where. It is also important to build a system so that the customer is treated to the same experience every time he/she patronizes your business. This is what the author referred to as the Franchise Prototype. Particularly, the author is referring to Business Format Franchising where in a system is built to run the business and people are only needed to run the system. This, he says, gives the business a higher chance of success.
All along, the author was actually introducing to us the concept of franchising. He explained why developing the system to run our businesses is very important. This way we can open up branches of our businesses else where and give it a higher chance of success. He didn't really say that you have to sell your business but in case you want to sell it some time in the future then doing without a system on how to run things will definitely not benefit you. Furthermore, having a system is actually beneficial for the entrepreneur because it allows him to be not working in it but still earning from it. This way your business doesn't have to be your life.
It was truly an inspiring read. I must say that I agree with the author. Especially for small businesses, setting job descriptions, writing operations manuals, and other seemingly insignificant system processes are oftentimes skipped or totally ignored. Although the success of a business is also dependent on so many other factors, developing a business format will definitely increase its sustainability. This is why I think a lot of family businesses don't last through generations because the business format is not passed on properly from one generation to the next.
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I actually started writing about this book in a previous post about the different personalities involved in a business here.
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You have hit upon the point of franchising. Build your business as if it were a product. Especially for small businesses, those written job descriptions and processes are indeed important. Build something that works and it can be developed as a franchise. Thsnks for the info.
Thanks Don.
I agree when you mention small businesses don't thrive through generations because the business format or system they use (if ever there is one) can't afford the owner to leave the business, say for a year or even a month.
They created a business where they became it's employees.
The challenge of building own business system--wherein the owner can afford to literally hands-off the business--is huge for small business types.
The question for the entrepreneur is can he/she conquer and take on the challenge?
If the answer is yes, then he/she's on the way to millions.
Otherwise, the business will be part of that never-took-off or closed-down statistics.
Thanks Jervis!
You are right.
A friend once told me... We build a business and business are like fishes... You grow the fish and then someday... A bigger fish eats it. Or eats you. :)
Way cool, some valid points! I appreciate you making this article available, the rest of the site is also high quality. Have a fun.
Interesting read. It seems that the business arena is ever changing. People start branching into different aspects of marketing and selling. I hope to read more from you.