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John Warrillow tells us why you shouldn’t wait until you want to sell your business to start thinking about creating a valuable company. Do you know how The Value Builder System™ can 7X your EBITDA value? Tune in to this latest episode with John Warrillow to find out more.
Show Notes
Creating business value is one of the fundamental goals of entrepreneurship. In this episode, John Warrillow advises not to wait until you want to sell the company and develop its value. Instead, you should develop it from the very beginning. John shares his know-how in 7x your business’ value and provides a bit more insight into the entrepreneur’s mentality.
About John Warrillow:
John Warrillow, an award-winning entrepreneur and advisor, boasts an impressive track record of starting and exiting four successful companies, one of which was acquired by a public company. He is renowned as the mastermind behind The Value Builder System™, a powerful software that empowers business owners to enhance the value of their companies. Through his network of Certified Value Builders, Warrillow’s system leverages diagnostic tools like the Value Builder Score, a metric that has seen companies achieving scores of 90 or higher being valued at twice the average-performing business.
In addition to his pioneering work, Warrillow is also a celebrated author with notable contributions to the business world. His books, including “Built to Sell,” “The Automatic Customer,” and “The Art of Selling Your Business,” help business owners create valuable, sellable companies, harness recurring revenue streams, and master the art of successful business exits. These invaluable resources provide actionable strategies and proven hacks that can elevate any business to new heights of success and profitability.
- John Warrillow believes that business should be structured in a way that doesn't depend just on the owner. You do not always need to be present. This will help you to build a tremendous value for your company and make it resistant to any major changes. [09:56]
- Building a company from scratch might change the angle you look at it. Occasionally it turns out that the value is not what you think it is. On the other hand, that revelation can trigger the understanding of what actually can drive the value of your company. [17:20]
- John claims that for most entrepreneurs their first business is often like training wheels. Their goals are to understand what the full life cycle of a business looks like and what potential outcomes are. [20:05]
- To become a better entrepreneur you need to figure out what type of entrepreneur you are now. John highlights 3 types of them: those who are driven by competition; the ones for whom independence plays a major role in everything; and entrepreneurs who want to master their craft and be recognized for their expertise. [23:25]
- John mentions the freedom point as the one where entrepreneurs realize that the sale of their business created enough wealth they never need to work again. It does not necessarily mean you will not work again but you simply do not have to. [29:48]
John Warrillow’s advice for entrepreneurs:
“As a buyer, you want a company that’s going to succeed without the owner. You’re going to write a check to the owner, and they’re going to go off into the sunset, you’re going to want a business that continues after he or she leaves. Buyers, not surprisingly, pay a huge premium for companies that can run without the owner, which is the premise behind the book, Built To Sell.”
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Creators & Guests
What is Beyond 8 Figures?
At Beyond 8 Figures, we believe in DELIBERATE entrepreneurship. It means creating a solid foundational framework for your entrepreneurial journey, building from a place of passion, and intentionally aligning your actions with your goals so that you can create success on your terms.
Join A.J. Lawrence, the journeyman entrepreneur with several 7 figure exits, as he shares honest conversations with successful entrepreneurs about their experiences starting and scaling businesses to $10M and beyond, the realities of being a modern-day entrepreneur, advice for practicing deliberate entrepreneurship, and more!
How To 7X Your Business’ Value with John Warrillow
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[00:00:00] A.J. Lawrence: Yeah. Thank you so much. So listening to beyond eight figures, this is ha the journeymen entrepreneur with another beyond eight figure episode for you on the show, we talk with top entrepreneurs about the realities of building an eight figure business. What success really means to them and hear from them about some of their winning strategies and tactics tune into each episode to learn how to grow your business beyond him.
[00:00:26] A.J. Lawrence: And more importantly, create your own personal legacy.
[00:00:38] A.J. Lawrence: hi everyone. And welcome back to another episode of beyond a figures. It's A.J. They are journeymen entrepreneur and we have another wonderful episode. So today's guest is an author of amazing books, like built to sell on the new, the art of selling your business. I read, built to sell a year and a half [00:01:00] after I sold my last business.
[00:01:01] A.J. Lawrence: And almost every page felt like a stark reminder of all the mistakes I had made previously. Uh, it is incredibly well-written and. Very quick and easy and deep. And if I had a time machine, that book would be on the top of my list of books to bring back with me. I use it so much now that I am building another business and I'm really excited to start incorporating the art of selling your business to.
[00:01:28] A.J. Lawrence: So John, welcome to the show. We're so excited
[00:01:33] John Warrillow: to have you. Yeah. So anyway, great to be with you A.J. I a after built to sell the book. I started to do this podcast called built to sell radio where you interview entrepreneurs about their. And what I noticed was that there was most of the entrepreneurs I interviewed, you know, they get an industry average, multiple.
[00:01:52] John Warrillow: So if they're at a service businesses, you know, they might might sell for one times revenue or something, you know, something similar to that. And, and yet there are [00:02:00] some entrepreneurs that I interviewed that seemed to punch well above their weight. They're selling often times multiples of revenue as opposed to multiples of EBITDA.
[00:02:09] John Warrillow: And it got me. Kind of really fascinated about like, what are they doing differently? How are they approaching their business to sell in a different way that gets. Outlandish multiple. And so that's really what I've started to think about. We've done 300 episodes. And so I distilled what the best practices of some of these entrepreneurs that seem to punch above their weight, into this book, the art of selling your business, which lays out a bit of a blueprint for entrepreneurs to follow, to maximize their take at the end of the day, when they, when they go.
[00:02:44] A.J. Lawrence: So the value builder system, does that follow the book or does the book kind of also based on that, you know, for me.
[00:02:53] John Warrillow: Yeah, no, I run a software company. My day job is the value builder system where we help entrepreneurs improve the value of their business. [00:03:00] Uh, but no, you know, the value builder system is more about how do you create a valuable company, uh, so that you could sell.
[00:03:07] John Warrillow: And most of the entrepreneurs we work with actually don't want to sell. But they would like to know they could sell. It's funny when I do a speech to entrepreneurs, you know, after the pandemic, I'll hopefully be able to do more, more of that again, but I'll, I'll have entrepreneurs say like, how many of you want to sell your business?
[00:03:22] John Warrillow: And if I have a room of a hundred people, maybe one hand will go up in the air. Yeah. If I asked the question, how many would like to know you could sell your business? If, and when you're ready, like virtually every hand goes in the air, right? Like we all want to be building an asset that is valuable. And so that's really what we focus on a value builder.
[00:03:40] John Warrillow: It's really just building a valuable company, regardless of whether you want to sell it or not. But the artist selling your business book is really about that final stage. How do you harvest the value you've created by punching above your weight? When it comes to seller?
[00:03:53] A.J. Lawrence: It is an interesting. I'm also in the position where I'm looking to buy a company [00:04:00] as part of my journey and what I find funny, he was like, okay, looking for aspects in, you know, what you're talking about, you know, from if like companies that have set themselves up correctly, but hoping they don't fully recognize it.
[00:04:14] A.J. Lawrence: Fortunately it's that? Yeah. The thing, but the value in having that asset. Yeah. I know I sold because I was burnt out. Um, my own company previously, and I've had this conversations with other insurance, just like you have where it's like, the thing that we don't like is when we're forced in the business, when you're constantly trying to put the fire.
[00:04:36] A.J. Lawrence: So, you know, looking at your systems, looking at the books, talking about it and talking about that. Environment. It feels like someone's talking to us like, oh yes, you can actually enjoy it. There are fun parts beyond just the typical things we find. How often do you see people kind of take aspects of your books or mix and match?
[00:04:57] A.J. Lawrence: Yeah. And then truly [00:05:00] implementing what you consider to be the core aspects of them work affective aspects.
[00:05:06] John Warrillow: Well, yeah, I mean, I hope that we hear that a lot and we do hear that a lot. And, and I, it brings me an immense sort of satisfaction. When I hear somebody who had a company where they were at the epicenter, they were working too many hours.
[00:05:21] John Warrillow: They were very stressed out and migrate to a business where they're really sitting on top of the business, running it as opposed to kind of doing the work. And I think. You know, that is a gratifying feeling. I, you know, I think of Debbie king, uh, Debbie King's one of our certified value builders, but she, before that she, uh, ran a, uh, really interesting, but deeply dependent business that was particularly dependent on her personally, that was in the, in the space of doing data analytics for associations.
[00:05:51] John Warrillow: And it was. Business. That was very, very customed. Every job was custom. Every project was unique and, and every client wanted Debbie because [00:06:00] she was the guru and she read, built to sell. And. I'm done. I, I'm not gonna build this business, which is effectively just a job for me. I'm going to create a valuable company.
[00:06:09] John Warrillow: And she went about completely transforming her business into one that was, subscription-based not dependent on her personally. And then she sold it. And now. Great. Thankfully Joe joined the value builder community is one of our, one of our advisors. So I love hearing stories like that. I do have the luxury of hearing them maybe once, once or twice a month.
[00:06:32] John Warrillow: And I get these emails from somebody I never, never know that said, you know, like I read your book and it changed my life. Uh it's uh, it it's obviously hugely gratifying.
[00:06:43] A.J. Lawrence: Do you have your people, you know, talk to people at different aspects of the growth? Like I probably should have if I had known about it earlier more when I was in that million and a half, two and a half.
[00:06:56] A.J. Lawrence: A few years into the business, you know, then automatic [00:07:00] customer probably as we were scaling and growing more towards the four five. And if I had been smart, when I did start having those selling conversations near six it's like, that's how I would kind of. Where do you normally tell people to sort of bring your, you know, your books and bring the concepts into their, their efforts?
[00:07:20] John Warrillow: Yeah, so, I mean, it is a bit of a trilogy, so built to sell is about how do you build a valuable company, automatic customer. How do you accelerate the value through recurring revenue and then the art of selling your business? How do you harvest the value? And I would do to me in that order, I would read them in that order.
[00:07:34] John Warrillow: And I would sort of apply them in that order. Um, ideally you rebuilt the sell before you even start a business because it allows you to create. From the ground up. That is so that it's not dependent on you personally. You know, I, I had a really cool interview with a guy named Greg Alexander, Greg built a consultancy and he was in, it was called SBI sales, benchmark index, and he had one of the principles and built the sell was [00:08:00] that you build a company from the beginning so that it's not dependent on you personally.
[00:08:05] John Warrillow: And Greg sort of had that idea. If the epicenter of his soul, he was like, I'm not going to build SBI the sales benchmarking company, even though he himself is a very dynamic leader, great presenter and amazing sales person. He's like, I'm not going to build this so that it's dependent on me. I'm going to hire people the best of the best to kind of build it out.
[00:08:27] John Warrillow: So he did that and he started very small, uh, literally from his kitchen table, built it up. So that it was generating $30 million of annual revenue. At the along the way he decided to sell his company and a lot of entrepreneurs when they sell, they go from the sort of backseat or they're sort of sitting on their business, working, you know, as Michael Gerber says, working on not in their business to the point where they're actually in the midst of trying to actively sell their business, they get much more involved.
[00:08:57] John Warrillow: Right. They're doing the negotiations with the [00:09:00] buyers. They're sort of doing the pitch decks and the presentations and so forth. Greg. Avoided that temptation. He was like, I started this business so that it could be run without me, and I'm going to finish the journey in the same posture. And so he empowered his president to sell his company.
[00:09:21] John Warrillow: This is a business entering $30 million of annual revenue. He sold it for $162 million. The punchline of the story is Greg never met. The buyers, they wrote a nine-figure check and Greg never met them. He let his president run the entire negotiation. Now Craig was in the background approving the kind of key milestones along the way, but that's what I mean from starting from scratch with this premise of a built to sell business is not the.
[00:09:54] John Warrillow: On the owner, it should be structured really from the get-go so that it can run [00:10:00] without the owner. And if you follow that through all the way through to the day you want to sell it, it can be a recipe for creating a tremendous amount of value. Because again, if you put yourself, I mean, uh, Asia, you know this from the standpoint of, you're now interested in buying a business.
[00:10:17] John Warrillow: You know, as a buyer, you want a company that's going to succeed without the owner. You're going to write a check to the owner. Um, and they're going to go off into the sunset. You're going to want a business that continues after he or she leaves and buyers not surprisingly pay a huge premium for companies that can run without their owner, which again is the premise behind the book.
[00:10:41] A.J. Lawrence: How hard do you think it is for people? Like how hard and then over what type of period of time to start incorporating the value building assistant, you know, just cause I think that is maybe the overall company versus the individual box, which are
[00:10:55] John Warrillow: individually. Yeah. So I'll give you a sense of, of what we [00:11:00] know, because of course it varies by owner, but what we do know is when the average.
[00:11:06] John Warrillow: The business owner starts with us. We invite them to complete the value builder questionnaire, which is the first intake questionnaire. And the average score on that is 59 out of a possible 100. That's an amalgam of eight you're scoring eight key drivers of your company's value. Things like recurring revenue, growth, potential financial performance, that kind of stuff.
[00:11:26] John Warrillow: Um, the average. 5,900 possible 100. And when we, when we look at the offers, those companies have received, uh, they are on average 3.5 times. Pre-tax profit. Now the after picture is when you go through the value builder system and you improve your score up to 90, out of a possible 100. So these are the sort of best performers.
[00:11:49] John Warrillow: Those businesses are trading at 7.1 times, pre-tax profit or more than. The average business. The other thing that's kind of unique about the 90 plus [00:12:00] guys and gals is that they are almost three times more likely to have received a written offer to buy their business. And if you, again, if you go back to what I think entrepreneurs want, most of them don't necessarily want to want to sell, but they want to know that.
[00:12:13] John Warrillow: And getting inbound offers, uh, leaves you in the catbird seat, right? You, you can, you can decide to engage or simply play one offer off the other to see if there's a bidding war at hand. Uh, it gives you tremendous leverage in the negotiation to be approached as opposed to be the one approaching. And so that's the, the essence of.
[00:12:35] John Warrillow: Uh, the value builder system. And to answer your question directly, like how long does it take to go from a 59 to a 90? Again, it depends on the company. Uh, depends how quickly it's growing, how, how, you know, the appetite they have to, to really, uh, uh, invest in some of these, uh, some of the principles, but, uh, but it can be kind of months or years, depending on how long, uh, uh, and how dedicated the, the entrepreneurs,
[00:12:59] A.J. Lawrence: what kind of [00:13:00] led to you wanting to create.
[00:13:03] A.J. Lawrence: Yeah, this type of system. What part of your earlier entrepreneur journey? Like what were you doing that kind of made this, like, you know what, I think I want to talk about this and we want to then build systems around this. I want to create this system.
[00:13:17] John Warrillow: Yeah. I, you know, I, I remember the day I was in a, in a boardroom in Toronto with a guy named Perry Maley, he, uh, he's an M and a guy mergers and acquisition professional.
[00:13:26] John Warrillow: And I walked into his office that day, feeling like I was sitting on a bit of a gold mine. I had built a quantitative market research business where we did analytics and, and, uh, all kinds of, of research for very large enterprise organizations. So our clients. You know, apple was a client, American express was a client bank of America with a cloud, these massive companies.
[00:13:50] John Warrillow: And I thought, you know, someone was going to want to buy my customer list. Right. And, and we had, you know, we had, I don't know, five or 6 million [00:14:00] in revenue at the time we were probably 30 employees. Like it was a successful business, uh, you know, on the. And so profit margins were on a 20 to 30% month over month, you know, like it was good.
[00:14:13] John Warrillow: It was a good business. And so I, I went to Perry and I said, you know, like, what do you think it's worth kind of rubbing my hands together. And he said, well, cut. It depends on the answer to a couple of questions. And I said, shoot. And he said, all right, well, who does the research? And I'm like, well, you know, like I I'm involved in the research, you know, like we do work with Google and apple, of course I'm still sort of hands on.
[00:14:33] John Warrillow: And he says, okay, well, who does this. And I'm like, well, you know, like I'm selling to these massive companies. I, you know, I've got to, you know, it's my company. I gotta be part of the sales process. And he says, okay, let me get this straight. You got a research company where you do the research and you do the selling.
[00:14:48] John Warrillow: And I'm like, yeah. And he's like, well, I can't sell your company. There's nothing to sell. It's worth. Uh, I remember those [00:15:00] words like it was yesterday. I mean, he, it was, it was really tough for me to hear that, uh, because I've walked into that office thinking I had this just tremendously valuable company that someone would want to buy a client, might buy my client list.
[00:15:11] John Warrillow: And again, this goes back 25 years ago. So this is a long time ago. Uh, but it kicked off for me, this, this journey, this search for. Like, what does drive the value of your company if it's not your client list? And if it's not these fortune 500 customers and it's not necessarily just EBITDA or revenue, like what, what, what is the driver?
[00:15:36] John Warrillow: So it, it sort of kicked off this journey. I, you know, we transformed that company. Into a subscription model, uh, with recurring revenue, uh, we hired salespeople. It wasn't dependent on me anymore. Ultimately it was acquired by a New York stock exchange listed business in 2008. So it has a happy ending. It has a Cinderella kind of story to it, but it wasn't happy to hear those [00:16:00] words that my company was worthless.
[00:16:03] John Warrillow: I think he is as I think back onto why I'm so passionate about this topic and, and why, you know, we're, uh, we're so focused on this sort of niche. It's, it's, it's probably because of that conversation with Perry and how much. Taught me in a, in a sort of tough love kind of way, but what does drive the value of a company?
[00:16:23] John Warrillow: Yeah.
[00:16:24] A.J. Lawrence: And I remember in reading your book now, I had been courted by holding companies from some of the large advertising firms and even opened my open kimono open, gave him open access to my books for awhile and talking what I found so interesting was they had been hitting me so much about, there was no value without me continuing.
[00:16:47] A.J. Lawrence: Yeah. And just basically prepping me for bad in reading your book. I was like, shoot. If I had actually done the things I wanted to do, which would have been yeah. That, [00:17:00] yeah. I, I remem yeah, very much that like moment where you're just like, ah, things have to change. Do you find that's how most entrepreneurs come through to your books and start your system?
[00:17:12] A.J. Lawrence: They've had this moment where the value isn't what they think
[00:17:16] John Warrillow: it is. Yeah, that's it. That's exactly right. So the, the typical kind of persona for, for pretty much all of what we do, but in particular value builder is an entrepreneur who is told their business is not worth what they thought it was. And whether that's from their accountant, a friend, a buyer, uh, anybody who turns around and says, yeah, it's not really.
[00:17:39] John Warrillow: You know, worth what you thought it was. And like, like I did and I, and I get it, you know, your business is your baby. It's you think it's your ticket to a great retirement, et cetera. Uh, but when someone tells you it's not worth what you think it is, it can be hard, but. Yeah, I think in the best entrepreneurs, it, it triggers up a [00:18:00] discovery of, okay, well, what will drive the value of your company?
[00:18:04] John Warrillow: And so I think it's, you know, it's funny for a lot of entrepreneurs. Um, you know, we don't get to practice selling our company. You know, I I'm reminded of, um, the guy who celly, who landed that airplane on the Hudson river, like 10 years ago, he was, he's like a 40 year veteran. Of, uh, flying, was it teacher, I think, and trainer.
[00:18:29] John Warrillow: And so it was kind of like he'd done everything there was to do in an airplane. Right. And yet he'd never had the opportunity to land a plane on the Hudson river and the stakes were high. Right. Yet hundreds of people on board or at least a hundred people on board and he had to get it. Right. And I, for a lot of entrepreneurs, I think they're, it's kind of like their selling moment, right?
[00:18:48] John Warrillow: Like. They build a company for 25 years. They know everything there is to know about hiring employees, marketing plans, like blah, blah, blah, blah, blah. They've done it all right yet. They've never sold the [00:19:00] company and that's, uh, that's a whole different skillset. And it's one of the reasons that, uh, that we're super passionate about what we do is because, uh, I think we we're, we're adding a lot of value to in a, in a topic.
[00:19:12] John Warrillow: The business owners can be, uh, excused for not knowing anything about, because it's just not something you do every day. And yet it has, as you rightly mentioned in your introduction, you know, a, a, the stakes are high. Like if you screwed up, it can be a once in a lifetime mistake. Yeah. And
[00:19:31] A.J. Lawrence: I know I left millions on the table, but know, I love the Sally thing because immediately made me feel like one of those, uh, inexperienced test pilots that like hits the ground.
[00:19:42] A.J. Lawrence: I like, I lived jumped out of the plane. That's kind of how I feel like, yeah. I feel, you know, after the fact, yes, I'm successful. I lived, um, not that I landed the plane or did anything that well, I just lived,
[00:19:58] John Warrillow: um, [00:20:00] you know, I'm glad you. Be positive and philosophical about it. I think for a lot of entrepreneurs, their first business is often their training wheels business.
[00:20:11] John Warrillow: And I don't mean that in a pejorative way. I don't mean that to in any way, negate or minimize your first business. Cause I know it was a significant company with lots of clients and lots of revenue and we kind of have to get the first one out of our system to, to sort of, uh, figure out what the full life cycle journey is.
[00:20:31] John Warrillow: And understand what the end looks like. So we all know the feeling of seeing a movie for the second time. You kind of know how it ends. And I think that's a very good thing to go through too many owners. I think my personal opinion, build one business and look down their nose at the concept of selling it.
[00:20:50] John Warrillow: And I think that's a mistake because the. Premise of selling that the full life cycle of a company. I think you learn more in the last chapter than you do in any of the freebies chapters. [00:21:00] I think you learn what drives the value of your business through the eyes of an acquire. Like they will tell you what drives the eye, you know, in your case it was, it was you, they wanted you to stick around.
[00:21:10] John Warrillow: And so they could clearly, you know, that's clearly. Uh, communicating to you as an owner of that, you're too dependent on the company that you need to create systems and productize your service and all that jazz, which you've now done in your next business. So. For a lot of entrepreneurs. We miss that lesson because we never go through the process of selling, uh, you know, for many, you know, they'll say, oh yeah, I'll sell in five years, you meet them up five years later, he said, Hey, did you sell that company?
[00:21:35] John Warrillow: But oh, no, we're still trying this. Or we're going to add this. We're going to w you know, we're, we're probably another five years away from selling and they just, like, I gotta, I've got a buddy of mine who I've known for a plebe 15 years and. You know, he's talked about selling for probably 10 of those years, but still hasn't pulled the trigger.
[00:21:52] John Warrillow: And I just think, oh, uh, you know, never, you never know when the next pandemic, the next black Swan is going to be. And I [00:22:00] think if you built a valuable company, There's a really strong case to be made to, to, to monetize some of that value.
[00:22:08] A.J. Lawrence: Well, one of the things I found interesting sort of as people started seeing, you know, like after the shock of the member and I've seen in, you know, Looking at the systems you talk about and the pieces companies that had systems around decision-making and sort of, not that they had planned for a pandemic, because I think, you know, in my craziest ex thing, I don't think I ever had plant pandemic, but companies that had systems and structures in place where something like 80% more likely to return to previous growth also then to jump on what you talk about, entrepreneurs on the first thing it's becoming easy.
[00:22:47] A.J. Lawrence: To do both creative business and to sell a business at various value points that I think what I'm not hearing them much is this idea around how to become a better [00:23:00] entrepreneur. What it's usually so focused on individual business or the other piece, but in looking at your value building system, it seems so many that people are people who are out on their multiple journey.
[00:23:12] A.J. Lawrence: They've already done it a few times. If not more. How do you see that entrepreneurial journey of multiple business owners or multiple actions occurring over this? Five 10 years.
[00:23:25] John Warrillow: Yeah. So one of the things we talk a lot about, uh, with our certified value builders is, is, is this concept of mountain climbers, freedom fighters, and craftspeople.
[00:23:33] John Warrillow: So there, what we've discovered is there are three types of entrepreneurs, uh, based on, or you could segment the small business market into three different types of owners based on their psychographics or their motivations. As a human being mountain climbers are mostly. To grow a company they're motivated by achievement, uh, by success, by acknowledgement, by competition.
[00:23:55] John Warrillow: So all external sort of forces and they are very keen to grow and, and [00:24:00] build a business. Freedom fighters are the second segment and they're motivated by independence. So they don't want to create the next Google, the next Tesla, the next Shopify, they. Really trying to create a company that gives them the ultimate independence, independence of what they do, who they work with, what projects they work on.
[00:24:20] John Warrillow: Financial independence is also important, but not because they want to buy a Ferrari, but because they want to feel free and independent of any one controlling force. Uh, I remember I interviewed Jason free the guy behind. And I talked to them about the transition from the original version of 37 signals, which was a custom web design shop into base camp, a project management software.
[00:24:44] John Warrillow: And he said, you know, what I love today about base camp is that I've got tens of thousands of customers. And I build the software that I think will. The most meaningful to as many of them as possible. No one client tells me what to do [00:25:00] anymore. And he hated that feeling of being beholden to a big client and loves the feeling to having tens of thousands of customers.
[00:25:07] John Warrillow: So that's a freedom fighter. In my view, the third group is called a craftspeople and they are motivated by mastery. Meaning they want to be acknowledged for being a GRU, an expert at what it is. Do. And so a lot of, you know, plumbers, carpenters, photographers, writers, they're not trying to build great businesses or even big businesses.
[00:25:31] John Warrillow: They're really trying to be acknowledged. And what gives them a tremendous source of pride and purpose is being acknowledged for their expertise. And it can be their Achilles heel because it often keeps their business very, very small often just them, uh, because they are. Almost needy of the third-party acknowledgement of their expertise to answer your question in a very long-winded way.
[00:25:54] John Warrillow: Mountain climbers are the most likely to be serial and [00:26:00] portfolio entrepreneurs. When I say serial entrepreneurs, you've heard that term before. Obviously it means that they've had many companies in their, in their past. Um, portfolio entrepreneurs are slightly different. They are running more than one business simultaneous.
[00:26:16] John Warrillow: That's the definition of a portfolio, entrepreneur and mountain climbers are most likely to be both of those things. And so. Well, I think about your question, you know, what is the life cycle and the journey of, uh, of a, of a typical business owner? I would say for most freedom fighters and crafts people, they want, they create one business, uh, and in freedom fighters case, they sell it and they.
[00:26:40] John Warrillow: In the case of craftspeople, they will never sell it because it's too dependent on them personally and Mo in the vast majority of cases, whereas mountain climbers are much more likely to get in and out quickly. And the technology that you referenced, the global marketplace for talent and, you know, ubiquitous, wifi, et cetera, those just accelerate the, the, the, [00:27:00] the gestation period for mountain climbers.
[00:27:03] John Warrillow: I, you know, I interviewed a guy, um, Just Decky is, is his surname. He built a company that builds that built like a, an app that helps you create an iPhone app. So if small businesses who wanted to create an iPhone app couldn't afford 60 grand for a developer, he built this app and I think from start to sale, it was like eight years and sold it for more than $20 million.
[00:27:27] John Warrillow: Created a lot of value in eight years. Uh, that's what I'm, that's what I'm seeing more of, especially technology enabled businesses. But that's, it's only one of three different kinds of options.
[00:27:40] A.J. Lawrence: No, and I, I liked that because yeah, I think, yeah, I know craftsman, I know people who are running the same business in their sixties, that like they had in their twenties and they're happy and it's like who they are.
[00:27:53] A.J. Lawrence: It provides a good living, but it's never going to be insane. And then yes, I know the people who are [00:28:00] like, Crushing it as much as possible while they're running, but the moments they can sell it they're, you know, happy as a clam, never to talk about business again. And then I think others of us are like, okay, how do we use what we've learned?
[00:28:17] A.J. Lawrence: And then, yeah, I like, I like how you kind of put that. Um, when would you suggest a business start looking at the value business, that value building system, or would you have them focus on working with advisors? To kind of come into that system. Coming
[00:28:35] John Warrillow: to you just to get it. When you hit a million dollars in annual revenue, that's a great time to, to, to, to, uh, start leveraging value builder, um, a million dollars in revenue roughly equates to five to 10 employees.
[00:28:47] John Warrillow: And that's a great spot because you've got enough of a teams, uh, where you can start to create systems and processes and release. Build it so that it's not dependent on you. If you're [00:29:00] a hundred thousand dollars in revenue, uh, you know, at that stage, it's a hundred percent you, right? And so while we can help, we can, it's, there's a limit to how much we can help, but once a business reaches seven figures, um, there's a little bit of infrastructure.
[00:29:14] John Warrillow: There's a few employees. That's where we can really, I think. Really hit the ground running. So once you hit that milestone, um, and I think also there's probably a top end where value builders sort of is less relevant. You know, what it, my experience is that once a company generally gets to be worth a ramp, you know, 10 million.
[00:29:37] John Warrillow: Maybe as much as 20 million. Um, it's very rare that it's owner led still. In most cases, entrepreneurs reach something called the freedom point where they realize that the sale of their business will create enough liquid wealth that they never have to work. Again. I'm reminded of Rob walling. I interviewed for the show, uh, he built up a great little business [00:30:00] called drip, built it up to $2 million in annual revenue was entertaining offers at between nine and 12 times revenue.
[00:30:07] John Warrillow: And he pretty quickly realized this is life-changing money. I never have to work again. And he chose to sell the business. That's the freedom point. And that doesn't mean you don't, you won't work again, but you create enough wealth that you don't have to work again. And so most entrepreneurs kind of realize that somewhere around $10 million of value could be five, could be 15, but by 20.
[00:30:29] John Warrillow: Those businesses are very rarely 100% owned by their owner, their original founder. They're usually private equity led or they've fallen into the hands of a strategic, or there's a second or third generation of family, you know, led leadership in place. But it's very rare that the, like an owner, like the Jeff Bezos's of the world that go from scratch to billions of value, they're very, very rare.
[00:30:53] John Warrillow: Most people reach five or 10 million bucks in value, and they're like, I'm outta here. This was a great run, [00:31:00] but this is enough money for me to live the rest of my life. I want to,
[00:31:04] A.J. Lawrence: speaking of that, I know, you know, And legacy has kind of a very broad, quiet. Yeah. How you think about it legacy. But do you think about, you know, the legacy, like are you building these systems so you can leave it for your family if value, sell it, you know, how do you consider legacy as you look at what you're doing?
[00:31:27] John Warrillow: Yeah, the L word, uh, you know, I'm not a big legacy guy, I think in a hundred years, very few people will remember anybody in a thousand years. Nobody will remember anybody that lived today. And so I think legacy is, is, is sort of, uh, It's the kind of thing that, that frankly fills people's egos, but really, I don't think is very meaningful.
[00:31:49] John Warrillow: So I'm not looking to create a legacy. I don't believe in dynastic wealth. I'm not a fan of family businesses. I think most family business transitions usually [00:32:00] end up hor horribly badly. Um, For the kids or for the owner or both. So I've just not a big fan. I would never pass a business to my kids. I would never sell a business to my kids ever full stop.
[00:32:12] John Warrillow: Never if I had any sort of aspiration for a legacy, it would, it would say. Yeah, I think that it will expression, give your kids roots and wings. It would simply be to give the kids, uh, our kids, uh, you know, roots. They feel like they're part of something. If you know this value system and wings to go do whatever they want to go.
[00:32:32] John Warrillow: Do I have no interest in, in, in them doing what I do and I would hate that. And so I hope they go do something totally of their own volition. And if, if I, you know, if I'm lucky enough to have kids who. You know, functioning members of society and doing what they love and are happy. Then that is plenty legacy for me.
[00:32:53] John Warrillow: I don't need any, you know, I don't, I don't, I don't want, I don't want, you know, I'm not worried about what people are going to say [00:33:00] about me in a hundred years. Cause I don't think many people will remember. Yeah.
[00:33:04] A.J. Lawrence: And I think most of us it's as, yeah, it's a great concept, but it is really, for me it's I don't want to give my kids enough money to do nothing, but I want to be able to give my kids the ability to do the things.
[00:33:16] A.J. Lawrence: That they're willing.
[00:33:17] John Warrillow: I think that was sort of sort of philosophy, right. Not enough to do anything but not enough to do nothing. Well,
[00:33:25] A.J. Lawrence: yeah, but he is. I do find it funny because his thing was, I'm only giving them 10 million.
[00:33:32] John Warrillow: Right.
[00:33:32] A.J. Lawrence: You only get 10 million. Okay. Okay. Sorry, dad. Yeah. Oh, well, well, thank you.
[00:33:38] A.J. Lawrence: Thank you very, very much. I'm really excited, you know, that you were able to come because you have had a big impact on, you know, the way I look at creating and building businesses and also kicking myself in the rear view mirror. Um, I think, you know, I'm excited to be able to read your newest book, but then kind of [00:34:00] diving more into the value business system.
[00:34:02] A.J. Lawrence: I really think more entrepreneurs to take a look at this because I do think it is. Great concept. And I think, you know how you look at the, and how you carry it can create so much more value. So I thank you so much for coming on the show and. Hope to have you on next for your next book. And hopefully more when you talk about these journeys we're doing as entrepreneurs.
[00:34:25] John Warrillow: Thanks, Jay. Appreciate it.
[00:34:27] A.J. Lawrence: Remember down in the show notes, you can find links to all the books and learn more about his program and other efforts. John's an amazing person and you will not go wrong by reading the books. It will help you so much on your entrepreneurial. And remember why not also check out all of our social links?
[00:34:47] A.J. Lawrence: Come follow us, comes on, open the newsletter and always let us know how we can make the show better for you. All right, everyone. Thank you. And I hope you have a wonderful day and I'm looking forward to [00:35:00] talking to you again. All right. Bye-bye
[00:35:08] A.J. Lawrence: this episode of beyond eight figures is. But your journey as an entrepreneur can communicators meters. So if we can help you with anything, please just let us know. And if you liked this episode, please share it with someone who might learn from it until next time, keep growing and find the joy in your journey.
[00:35:25] A.J. Lawrence: This is AIJ and I'll be talking to you soon. Bye-bye.