• My rating: 3/5
• Useful notes on setting up a business for a potential sale.

Main Takeaways

• Seller-side-financed deals suck. Avoid.
• Use the term “customer” instead of “client”.
• Focus on one specific process where you can provide amazing value, where your clients are most happy with your work. Then double down on it. Develop a repeatable, teachable process. Focus on that and decline all other work.

On Specialization

“TED’S TIP # 1 Don’t generalize; specialize. If you focus on doing one thing well and hire specialists in that area, the quality of your work will improve and you will stand out among your competitors.”

“If you want your business to be profitable, enjoy fat margins, and thrive without you, you need to stop responding to RFPs (request for proposals) and start carving out your own one-of-a-kind product or service.”

“Focus groups used to be a great business. It cost about $2,500 per group to rent a facility and pay the respondents. We would charge $6,000 for each group and clear a tidy $3,500, or roughly 58 percent gross margin. I say “used to be a great business” because as other companies caught on to the profitability of focus groups, the competition increased, driving down prices.”

“In my business, I decided to develop an alternative to focus groups that I could control the pricing for. We called them “customer advisory boards.” A company that wanted consistent and candid feedback from its customers could hire us to set up and run an annual advisory board on its behalf.”

On Diversification

“TED’S TIP # 2 Relying too heavily on one client is risky and will turn off potential buyers. Make sure that no one client makes up more than 15 percent of your revenue.”

On the Importance of Scalable Processes

““An amazing thing will happen when you start turning down other projects in favor of promoting your specialized logo design process—you’ll instantly become more referable. If you offer a generic service like advertising or marketing, people will have trouble describing to their friends why you’re special because you are just like everyone else. If, however, you are the world’s best logo creators, you’ll be memorable and referable. For every advertising project you turn down, you will win a logo assignment.””

“Scalable things meet three criteria: (1) They are “teachable” to employees (like the Stapleton Agency’s Five-Step Logo Design Process) or can be delivered through technology; (2) they are “valuable” to your customers, which allows you to avoid commoditization; (3) they are “repeatable,” meaning customers need to return again and again to buy (e.g., think razor blades, not razors).”

Other

“but I want you to replace the word ‘client’ with the word ‘customer’ when you talk about the companies that buy your process.””

““Service firms refer to their customers as clients and product businesses refer to them as customers.”

““Tell them you’re proud of the growth you’ve achieved and that you’re at a point in your life where you’d like to create some liquidity for the value you’ve created so far and have an opportunity to participate in some of the future upside of the business.””