This week in Built to Sell News, we’re covering three ways to maximize the value of your business by getting it to thrive when you’re not around:
- Hire a 7-7-4-5 to run your business
- Replace yourself by niching down
- Create a Question Diary
The essence of building to sell is getting your business to thrive without you.
In this week’s episode of Built to Sell Radio, Casey Cavell tells the story of getting his baseball facility franchise, D-BAT Academy, to run independently.
Inspired by Cavell’s story, here are three ways you can get your business running without you—without breaking the bank:
- Hire a 7-7-4-5 to run your business
Ever heard of the Kolbe A Index? It’s a psychometric assessment that measures the ways you instinctively take action. It’s a great barometer to use when assessing a COO or General Manager who will run the daily operations of your business.
Here’s what to look for on the four attributes Kolbe measures, on a scale from 1 to 10:
Fact Finder: 6-8
This attribute measures how someone gathers and shares information. For your operational hire, look for the sweet spot of someone who gathers a lot of info before taking action, without succumbing to analysis paralysis.
Follow Thru: 5-8
This category focuses on how you organize and design. You’re looking for someone who requires systems, structure, and organization, so they should score relatively high here.
Quick Start: 4-6
This one’s about how you deal with risk and uncertainty. Chances are, you have a higher-than-average risk tolerance. For your #2, look for someone who balances you out with a healthy dose of risk aversion. Watch out though because if they score too low, say a 1, they might not be a fit for an entrepreneurial company.
Implementor: 3-7
The last bucket covers how you handle space and tangibles. This is the least important metric for an operator, but if you do decide to track this, look for someone in the middle who is able to keep things working the way they should, and construct tangible solutions when needed.
To learn exactly what to look for in a candidate’s Kolbe assessment, watch this clip.
- Replace yourself by niching down
The reason most owners can’t replace themselves is that a substitute would be too expensive. Trying to replace your breadth of experience would likely require a very high-salaried employee. If you can’t afford to replace all of what you do, niche down your core offering.
For example, Cavell’s baseball business could have catered to a broad range of players: professionals, softball, slow-pitch, fast-pitch, beer leagues… but instead, he got super specific on who his business was for: 5-10 year old kids.
Sure, he could have charged more per customer if he catered to college athletes and aspiring pros—but those elite athletes would expect to get a hitting coach with years of expertise, and Casey would have to staff for that.
On the other hand, when you have a business where one of its primary objectives is to give an 8-year-old an awesome birthday party, well, an entry-level employee can deliver on that.
When you only require a narrow band of expertise, you can bypass the high salary that comes from someone with a wide breadth of experience.
PS: Want to get an entry-level assessment you can use to hire high-potential entry-level employees? Chad Rubin shared his tested method on a recent episode of Built to Sell Radio.
Listen to Chad Rubin’s interview
- Create a Question Diary
When Jodie Cook was building her social media agency, she made a conscious choice every time an employee came to ask her a question.
The easy thing to do is just to answer the question. But she forced herself to write that question down, along with every other question she was asked.
And she turned that Question Diary into a business manual that documented how to do every single task required of her employees.
Her manual came in the form of an Excel spreadsheet with 50 tabs, each one documenting a specific process, like payroll for example.
Challenge yourself to do the same: when you’re asked a question, resist the urge to just answer and move on. Document those queries and turn them into a standard operating procedure (SOP) that enables your staff to develop expertise in their role. The go-to reference becomes the manual—instead of you.
Does the idea of writing down processes make you shudder? Think you can’t possibly find the time to document this way? Remind yourself that SOPs make your business valuable to a potential acquirer. And repeat Jodie’s mantra to spur you on: “no earnout.”
Listen to Jodie Cook’s interview
Tool:
If you want to put Jodie Cook’s advice into action and start documenting the processes your employees need to master, here’s a free guide for developing SOPs.
📣 Quote of the Week
“I was the general manager, I was the COO, head of operations, head of birthday parties. I was literally doing the majority of that and my highest paid person on staff was like $13 or $14 an hour. So (potential acquirers) realized, ‘If he’s gone, well, who’s doing it? If I buy, then who’s replacing you?’ And I just didn’t have that person.”
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– Casey Cavell
📽️ Clip of the Week
In this clip, Ahmed walks us through his decision to sell, even when the option of growing his business to a greater valuation was still on the table.
🏆 A World Series Championship Trophy
Sometimes, the most valuable trophies aren’t material things. They’re experiences. When Chicago-based Cavell sold his first tranche of equity in 2016, he treated himself and some friends to tickets to the World Series championship. They saw games 3, 4, and 7 of the finals between the Chicago Cubs and the Cleveland Indians (now Guardians), and witnessed the Cubs’ victory on home turf. He has yet to secure a trophy from his most recent exit.
📈 Recent Deals
- Chocolate and cannabis: a match made in heaven. That’s why Hershey Canada paying Canopy Growth $53 million in cash sounds so sweet—but alas, the two aren’t teaming up. Canopy Growth had been operating in an old Hershey chocolate factory in Smiths Falls, Ontario, and is now selling the facility back to Hershey in an effort to cut costs.
- Occidental acquired Carbon Engineering for $1.1 billion. Carbon Engineering is a pioneer of direct air capture (DAC) technology, capturing carbon dioxide from the air and storing it permanently or using it to create clean fuel. Sounds like a strange pairing for an oil company to acquire someone battling fossil fuels, but the strategic deal enables Occidental to gain new revenue from tech licenses and royalties, and diversify with alternative fuels. The $1.1 billion purchase price will be paid in three equal annual payments, with the first coming when the deal closes later this year.
This Week’s Contributors
Courtney Symons, Editor-in-Chief, Colin Morgan, Executive Producer of Built to Sell Radio, John Warrillow, Host of Built to Sell Radio, Daphne Parsekian, Copy Editor, and Denis Labataglia, Audio Engineer.
