Many business founders create companies that heavily depend on their personal involvement, leading to difficulties when they wish to sell the business. To build a sellable asset, entrepreneurs must establish a business that can operate and grow independently. In the United States, out of approximately twenty-three million businesses, only a fraction are sold each year, indicating that most businesses are not structured for sale. John Warrillow suggests an eight-step process to ensure your business is part of the small percentage that is attractive to buyers, thus avoiding the trap of owning an unsellable business.
Many entrepreneurs start businesses based on their passions and talents, which can lead to a successful and profitable venture. However, a business that is heavily reliant on the owner's input can pose challenges when the owner wants to retire, start another venture, handle personal financial matters, or simply wants to have less involvement in the day-to-day operations. The solution to these challenges is to restructure the business to operate and generate profit without the owner's constant involvement. When selling a service company, owners often receive an initial payment and the rest is contingent on meeting performance targets in the future, a process known as an earn-out. However, this can be risky as the owners may not meet the acquiring company's performance goals, putting a significant amount of the company's worth at risk. Many business owners find themselves trapped in an unsellable business due to the customer's reliance on the owner. The key to creating a sellable business is to create a company that can thrive without the owner's constant involvement
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