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Creating a Sellable Service Business (Toronto): October 2&3Toronto, Ontario |
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Event Details
Most service businesses never sell. They are started by someone with a specific skill. Maybe that person hires a few people, but the clients still want to deal with the most knowledgeable person in the company – and that’s probably you.
So when the time comes to get out, you’re left with nothing. If you’re one of the lucky ones, you get approached by another service firm who offers to “buy” your company — but you actually don’t get a cheque. Instead you get a little card with a magnetic swipe that grants you access to the building where you have a job as a Vice President at a big company. You then must toil for three to five years for someone else, and if the stars align and the economy improves and if you can put up with the nonsense of big company life, you might get some money from an earn out.
I know your pain.
I’ve started four service businesses – a little marketing and design agency, a radio production company, an event business and a market research firm. Back in 2002 I got asked to lunch by a business development guy working for one of the big agencies. He wanted to “buy” my marketing agency if I was prepared to give them my clients and submit to a three year earn out with no cash up front. No thank you.
So how do you escape the service firm trap? The answer, in my experience having exited four service firms (the last acquired by a public company), involves re-making your business and positioning it more like a product company. It involves “productizing” your services by naming and branding them so that they can be sold by salespeople instead of only you. It involves turning the project-to-project hamster wheel off and creating a recurring stream of revenue. It’s a hard process, but not impossible, and it is made easier by applying some basic techniques that I’ve chosen to teach at a workshop I’m hosting in Toronto on October 2&3.
If you choose to come, you’ll learn how to:
1. Put your business on auto-pilot:
One of the keys to successfully selling your service business is to systematize and automate your processes, so you can walk away from the business after the sale and it can still run smoothly and generate a profit without you. Not only will you attract more buyers and be able to sell your business for more money if you have the right systems in place, you’ll also benefit now by dramatically increasing your efficiency and results as the business owner. At the workshop, you’ll find out how to:
- Create a reliable stream of recurring revenue so you can stop charging by the hour or project and be able to see how your revenue is looking months into the future – a key factor in creating a sellable business
- Reduce your reliance on a few big clients so you can stop grovelling for work and worrying they might leave one day
- “Productize” your service so you can hire salespeople to do some of the selling for you
- Eliminate the need to respond to a Request For Proposal (RFP) and get clients to start giving you work without tendering
- Increase the number and quality of your referrals so you can grow more quickly and profitably through word of mouth
- Reward and retain key employees without making them a partner – that way you retain all of the equity
2. Maximize the value of your business
Whether you want to sell your business now or in ten years, it’s nice to know you’re building a valuable asset as opposed to just walking on a tread mill. At the workshop, you’ll learn what drives up the value of your business and specific techniques to:
- Calculate the value of your company using the same methodology acquirers use so you’ll know if you’re getting low-balled
- Avoid the biggest mistake service firm owners make when getting their business ready to sell
- Structure your customer agreements to include the one sentence you need to sell your business for a premium
3. Negotiate with leverage To get the best price (and deal terms) when you go to sell your business, you need to understand how to negotiate from a position of strength. Part of having a powerful negotiating position is being knowledgeable about the process, and it also means understanding the strategies you can use to: The Agenda About twenty of us will meet for dinner and get to know one another over a glass of wine and a good meal. The next day, I’ll lead the workshop. I’ll explain a concept and give you some exercises to help you apply each technique to your business. I’ll wander around and work directly with anyone who has a question or just wants a partner to brainstorm with. You’ll be given a booklet to write your answers in so you’ll have all of your key ideas and action items in one place at the end of the day. With just a handful of people in the room, we’ll get plenty of one-on-one time together. This is a one time thing So why am I sharing these strategies now? And can you wait until the timing is better to attend one of my workshops? The short answer is no, this is a one time thing. The long answer is that, since my last business was acquired in 2008, I’ve been doing some writing and teaching. I like it all right but I’ve recently started to focus on a new software company I’m launching. A while ago I made a commitment to be in Toronto at the end of September. I live in France so I decided to make the trip a little more worthwhile and tack on a couple of days to teach this workshop. I have no plans to repeat this session so if you’re keen, you should come. Turn $1,000 into $100,000 Another question you might have is, “will it be worth the $1,000 plus travel and a day out of the office?” Fair question. My response is that your business could be your most valuable asset if you set things up right so investing a little to make it more sellable could pay off many times over. Let’s look at some numbers: according to my reader poll, most service business owners never get an offer to buy their company. Of the lucky ones I surveyed who did get an offer, the average bid was around three times earnings. I’m confident you can increase your multiple by following the techniques I’ll teach at the workshop. Four times earnings is very do-able. Five times is not out of the question. Six, seven — even eight times earnings or more are all possible. But I’m getting ahead of myself. Let’s be conservative and say you have a business generating $100,000 in profit before tax. At three times earnings, it’s worth $300,000. If, by applying the techniques you learn at the workshop, you can make your business worth four times earnings, then all of a sudden it’s worth $400,000. You can do the math on your own financials. Either way, I’m pretty sure the workshop will be an investment that will pay for itself many times over. And if it doesn’t, flip me an email after the session and I’ll refund your ticket price, no questions asked. The unmistakable, glorious feeling of control It’s a special feeling going from grovelling for clients to owning a sellable company. My fellow Inc contributor, and 37signals co-founder Jason Fried went through a similar process. He started 37signals as a custom web development shop and made the switch to a “productize” his service business. He described the feeling of turning a service firm into a sellable company as follows, “When you’re a consulting business, you have to say yes to big clients, who end up telling you what to do. You become beholden to the giant corporation who is paying you $60,000 for a project. I love the feeling of control I have now”.
Time & Date The event begins with an optional dinner on Sunday October 2 at 7pm The workshop runs from 9am-4pm on Monday October 3 To register, scroll up to the top of this page and click the green "Order Now" button.