A YouTube masterclass discussion between Dan Kennedy and Darcy Juarez about preparing businesses to be saleable even if a sale is years away. They encourage early planning (3–7 years), adopting systems-driven operations (the 'McDonaldize' idea from Michael Gerber), and evaluating businesses with investor-oriented tests (e.g., 'Would Warren Buffett buy this?').
But even if you never actually sell or it's more distant than that, it's 10 plus or 20 plus years in your future, there are still reasons to devote some thought to whether or not you are creating a saleable company or an unsalable company. Foreign.
Welcome to this month's Masterclass. I'm Darcy Juarez here with Dan Kennedy. And Dan, this month I wanted to talk about a little bit about one of your new books here, an obs guide to selling your company for top dollar. And while every business owner might not be thinking about selling their business right now, we thought this would be a really good topic about why you should be thinking about how you sell and why you sell and what you do, even if you're not thinking about doing that or it might be in the future or might not be whatever, what you want to do.
Yeah. So most people, first of all, they start to think about it very late. It's not like selling a house where you can decide this week, you put it up for sale next week and hopefully you have an open house or two and you sell it. Selling a company is nowhere near that simple and it requires some advance planning. That doesn't mean you can't move quickly, but the sort of the workable range is three to seven years of getting ready precisely because nobody thinks about it until they wake up one morning and decide they really want to do it. But even if you never actually sell or it's more distant than that, it's 10 plus or 20 plus years in your future, there are still reasons to devote some thought to whether or not you are creating a saleable company or an unsalable company. There are, there are disciplines of thought that are pretty useful, particularly to entrepreneurs who typically are undisciplined thinkers. So whether you sell or not, much of what we talk about in the book and much of the experiences that people who do sell that live to tell their tales often what surprises them that you can use well in advance. So one of the disciplines of thought, you can sort of credit it to Michael Gerber and the book the E. Myth, which probably a lot of people have read the synopsis, is that you want to build your business as if it was going to be McDonald ized, even if it isn't. And so you know, the beauty of McDonald's, which is once again, at the time we're recording this, the most valuable restaurant company they had dropped down to number two for a little while, another backup at number one. But the beauty of McDonald's is, is that they built A true systems driven business with the humans completely interchangeable. At the restaurant level, there's really no employee that is mission critical. The entire system is mission critical. And the labor force for quite some time has been teenagers with raging hormones and far more interested other things than getting the fries right. Seniors who either have something to do or to supplement Social Security, they're back in the workforce, really uneducated people who can't get really any other jobs. And so if that's going to be a workforce, you better have good systems. Now you say, well, that's not going to be my workforce. Right. But most people overestimate the capabilities of their workforce, particularly if they try to scale. Like I have a client right now and they're working towards a thousand sales agents in the country and one of the models that they're using is successfully, it's a pretty complex product. It's successfully selling with a sales force of 13. And I have said to them, that's about as many as you're going to ever get who are going to make this sale. The way they are making the sale, it's far too complicated. It's too reliant on that individual's capability. Now, if you want to stay small and, and you want to be really efficient, you go look for those winners. But if you want to scale, the system has to be so good that a McDonald's employee can, in this case go make that presentation, structure the details of the product and come home with a signed order. So Gerber's theory was that you McDonaldize whether you're ever going to McDonaldize or not. And I concur, I think that a valuable business is disconnected from the, the owner, operator himself being day to day essential, you know, so the simple test is can you be away for two weeks and not check in and they can't get you? Will you do that or not? And most business owners know they would be in trauma, right? And most of the time for good reason. So this is one of the good mental disciplines. Another one that comes from preparing to sell is would Warren Buffett buy this business? If it's too small, they just imagine it bigger but doing what it is the way it's doing it. Would Buffett buy this business? And there's a book and I couldn't find it. I must have loaned it to somebody and I don't know the title, but there's a book written by the founder of Herzog Jewelers who sold Buffett. And the book is something like How I Sold to Warren Buffett. Or why Warren Buffett. It's a really good thin book because it lays out exactly why Warren bought a chain of jewelry stores and why he wouldn't buy a different chain of jewelry stores. And Buffett has bought some very diversified types of businesses, retail, manufacturing, transportation, where he's in for a third or more, and in some cases owns the companies outright in so. And he's arguably the most successful business investor.
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