Business mentor and Inc Magazine contributor Norm Brodsky spends a lot of time encouraging the next generation of entrepreneurs, so when he shares the question that he gets asked the most, you can believe that it’s on the mind of most young business owners:
What is the most important thing to focus on as I’m building a business?
In a recent article for Inc Magazine, Norm shared his response to this entrepreneurial mind-consuming question. The answer might surprise you as much as it does the young business owners that Norm speaks to. Norm’s usual response?
“You should build it as if you were going to have it forever and yet, at the same time, build it so that you could sell it tomorrow for as much money as possible, even if you don’t intend to.”
Surprised? Here’s why Norm’s words are sage indeed, and worth considering even if your business has grown beyond its startup phase.
Beware of Shortcuts
As Norm discusses in his article the difference between building a startup and building to sell are virtually none. The key is the overarching philosophy that you, as the business owner, adopt as your company grows.
“Building a company to last forever means you don’t take shortcuts. You always make decisions with the long-term health of the business foremost in your mind.”
Many new business owners are tempted to fast track their growth wherever possible, and shortcutting certain processes – like recruiting competitors’ salespeople – is an easy move. Norm uses his own hard lessons in this area as an example of why certain practices seem like big time savers, but cost much more than they’re worth in the end. The problems with his sales force started right away.
“To begin with, I found that salespeople from competitors had a lot of bad habits I couldn’t change.”
Worse, Norm had problems getting his “veteran” salespeople to follow his direction on new approaches and sales techniques. They were convinced that they knew better, and couldn’t be told otherwise. This kind of bad teamwork hits a business both in revenue and in company culture. When Norm hired on new salespeople, and trained them himself, he discovered that his new recruits performed just as well, if not better, than the folks that he hired away from his competitors. A costly mistake that took time to correct.
His bad experience with sales recruiting is exactly what Norm means when he cautions against taking too many shortcuts that seem to bring a startup into profitability quickly, but cost time and money in the long run. If you’re building a business to last, you have to play the long game from day one.
Implement Best Practices
Norm also talks about implementing a few best practices in business as another way to build a solid foundation for your business that will help it to last through the startup phase into success and even succession.
“If you’re also building it so you could sell it for as much money as possible — which is actually a similar idea [to building a startup] — you’ll implement best practices. By best practices, I mean things that add value to the company.”
Best practices include any steps you take that increase the value of your company and make it more attractive to a prospective buyer, even if you don’t intend to sell. As a thought exercise, consider what would make a company attractive to YOU as a buyer, and build your business accordingly. Norm gives us some examples of best practices, which include:
- A stellar CRM process where you stay connected with both new AND long-term customers, preferably with renewable contracts
- Consider certified financials (audited and certified by an independent party), which promote honest accounting and make you look more attractive to bankers and potential buyers
Norm’s case study focuses on business startups, and how best to build them, but there’s plenty of relevancy for established SMB owners who are looking to sell right now or have a timeline in mind for selling at some point in the future. If you take Norm’s advice – always keeping your company’s long-term health in mind – then you’ll look more attractive to partners and investors now, and even to prospective buyers in the future.
Read Norm Brodsky’s article in its original form at Inc. Magazine’s website.
Originally posted on blog.birthingofgiants.com
Lewis Schiff is the author of Business Brilliant: Surprising Lessons From the Greatest Self-Made Business Icons, the executive director of the Business Owners Council and the co-founder (with Norm Brodsky) of BEN Global Mentorship that helps business owners transform their companies into scalable enterprises and, eventually, enduring institutions with help from rockstar entrepreneurs from around the world.