Industry Magazine Commercial Kitchen Spring 2016 | Page 13

THE BIG THING TO REMEMBER
WHEN SELLING YOUR BUSINESS IS
THAT IF IT’S NOT VALUABLE TO YOU,
IT WON’T LIKELY BE VALUABLE TO
SOMEONE ELSE EITHER, ESPECIALLY
IF THE ENTREPRENEUR CAN’T STEP
OUT UPON SALE.
3. Overdependence
Having a giant client is great for fast growth, but when
they are more than 15 percent of your business, that can be
a red flag for a purchaser. There is a risk of attrition when a
company is sold, and if the big player leaves they may take
all the profit with them. No need to drop the big customer,
just get more of them.

4. Cash Flow
If a buyer has to invest more than the purchase price to
make the company achieve maximum value, they are going
to discount the sale. Warrillow says the highest value
companies are those that can finance their own growth
internally. Hoard that cash and grow steadily. Focus on cash
management and efficiency to get top dollar.

5. Recurring Revenue
John Warrillow has been a recurring revenue evangelist
ever since he first took the stage. Customers who have to
renew save on cost of acquisition and stick around longer.
Companies with recurring revenue and low attrition provide
bankable models that attract buyers with deep pockets
looking for long term, low risk ventures. If you currently eat
what you kill, find a way to make your product or service
renewable and addictive.

6. Unique Value Proposition
A commodity business will bring low value due to low
margins. Only competitive advantage can warrant premium
pricing and create barriers to entry. If your competitors
can’t match your differentiation without investing time,
money and effort, buyers will pay more to have your edge.

7. Customer Satisfaction
Any business with unhappy customers will be in decline
in short order. Warrillow is an advocate of using Fred
Reichheld’s Net Promoter Score to demonstrate your
customer loyalty and referral opportunities. Grow your
customers and you’ll grow your value. It’s that simple.

8. Strength of the Management Team
If you are wondering how you are going to achieve all of
these great things with your business, you probably don’t
have the right management team. If you are the only one
who can make things happen at your company then buyers
will only want to buy you. Warrillow makes clear that the
buyer wants to invest in a company, not an entrepreneur.
SPRING 2016

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