Make sure you build a database of high-value prospects and customers that you can continuously market to. Think of your email list as a gold mine. These are people who will one day need your product or service. Many are already repeat customers. But for those that are still on the fence, if you’re not top of mind when they are ready to buy, they’ll take their business elsewhere.
As a part of our series about “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit, I had the pleasure of interviewing Allan Dib.
Allan Dib is a serial entrepreneur, rebellious marketer, and the bestselling author of The 1-Page Marketing Plan: Get New Customers, Make More Money And Stand Out From The Crowd. He is also the founder of The Marketing & Business Academy, an online community where entrepreneurs learn essential business and marketing skills. He’s started and grown multiple businesses in various industries, including IT, telecommunications, and marketing, with one of his startups named in Australia’s Business Review Weekly’s Fast 100 list.
Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
About seven or so years ago, I was at the tail end of a high-pressure tech company I’d built. I was doing well financially, but it wasn’t feeding my soul. I needed a change, so I started creating a detailed vision of what I wanted (even though I had no clue how it would happen).
I knew I wanted to build a business around the lifestyle I wanted. Here’s what I came up with:
- I never want to wear a suit again for work purposes.
- I only want to work 25–30 hours per week on my schedule.
- I only want to work with people I enjoy helping.
- I want to make a massive impact on the lives of entrepreneurs.
- I don’t want to travel or commute for work (unless I want to).
- I’ll only work on projects I find exciting.
- I will look forward to Mondays.
- I’ll have an inspiring view of the bay from my home office.
I sold my Telecommunication’s business and started my marketing consultancy. I knew I wanted to be in success education, but that’s pretty broad. So I started in an area where I had invested a lot of time and money, one that’s been crucial to business growth in my past businesses — marketing.
You see, while a lot of business owners know they need marketing, they’re pretty clueless when it comes to what they suppose to be doing. They try a bunch of tactics and wonder why they’re not getting the results they want. I know because I made many of these mistakes in my first business.
I’ve had years to learn what works and where business owners struggle, and I wanted to give back in a way. So I formed a business where I could teach owners or entrepreneurs how to build a strategic marketing plan and implement it. I love what I do, and I love that it affords me the lifestyle I want.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
In my first business, a mentor advised me to become a damn good marketer if I wanted to attract more customers and scale. I knew nothing about marketing, but how hard could it be?
Thinking I had this waxed, I bought an admittedly creepy stock image and slapped some copy about how long we’d been in business, what our services were and how to reach us onto our advert. It cost me a couple of thousand dollars that I didn’t have to run it in a well-known business magazine, and I didn’t get one lead from that advert.
Not a single call or email. To make matters worse, I tried the following month again, except this time I made the logo bigger. Still, nothing, unless you count my mom calling to see how successful the advert had been.
What I learned was you can’t hack marketing, much like running a business. You need mentors who can advise you. Otherwise, you’re shooting from the hip.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Products will make you money, but systems will make you a fortune.”
And this has been true in my life. It’s one thing to build a great product that customers want to purchase. But the real money is made in building a company or brand that investors want to buy from you. And the only way to do that is to structure your business for success.
I’ve sold several businesses during my career, and it’s the systems I’ve built that have resulted in my big-ticket to financial freedom.
Ok super. Thank you for all of that. Let’s now shift to the main part of our discussion. Can you tell us a story about how you were able to build a business from scratch, scale and sell it to a bigger firm?
Bootstrapping. All of my businesses have been built through bootstrapping. I used some of the money from the sale of my previous business to get my telecommunications company up and running.
But I didn’t just decide overnight, “hey, I’m going to sell this business, and then I’ll think about the next one once the money’s in my bank account.” I’d already begun working on my side hustle. I knew the kind of people I’d need to build my business, and I’d already put out feelers.
To me, business is a team sport. If you want to scale, you need three types of people. You need the entrepreneur (that was me). Most entrepreneurs are visionaries. We have all these great ideas but aren’t terribly good at following through. The other two types of people I knew I needed were a manager (a marketing manager, to be exact) and a specialist (the implementer).
And from all the mistakes I’d made in my previous business, I knew I needed to start with the end in mind.
I had to know why this business existed and how I would go about exiting it one day. So what was my plan? These were the questions I identified as crucial to my success.
- How’s it going to end?
- Who will your buyer be?
- Why will they buy your business?
- Will they buy you out for your customer base, for the revenue, for the intellectual property?
- How will they get a return for their investment?
Answering these questions helped me visualize precisely who my buyer was and why they would buy from me.
From there, I hired a talented team. I invested in marketing and built a list of high-value prospects. We built business systems or processes that were easy for my people to follow. And we looked at how we could deliver a world-class experience for our customers.
I always knew I would sell. I get bored and need a change. But that’s just me. You might have absolutely no intention of ever selling, and that’s okay. You still need to think about the exit. So many business owners only begin to think about selling their business when it’s too late.
From the start, I was engaging with competitors in my industry. I’d go to industry events and chat with these people. I’d arrange to meet them for coffee. We were on good terms because it’s often your competitor who buys you out.
I knew which competitor was most likely to buy my business. So when we entered into negotiations, I said, “Look, I know the industry multiple average is X, but I’ve built intellectual property that I think you’d be interested in buying. I’d be open to selling this. If you bought this special source, you could apply it to your existing business.”
So I outlined all of the benefits, and the rest is history.
Based on your experience, can you share with our readers the “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit”. Please give a story or example for each.
1.) You need business systems. If the know-how of running a business is stored in your brain, you’ll never attract an investor. The person who buys your business wants to come in, wave you off, and the company continues its upward trajectory. If they can’t do this, you’ll never sell. So in my telecommunications business, we had systems for everything. We had a system for how to respond to unhappy customers. When to escalate a matter to upper management. When to offer a discount. When to upsell a new product. Anybody could come in and do the job with little to no training. This is massively powerful to an investor.
2.) Make sure you build a database of high-value prospects and customers that you can continuously market to. Think of your email list as a gold mine. These are people who will one day need your product or service. Many are already repeat customers. But for those that are still on the fence, if you’re not top of mind when they are ready to buy, they’ll take their business elsewhere.
For example, I have a database of about 45,000 business owners and marketers. Some have been on my email list as long as two years before making a purchase. Some I’m still nurturing. But eventually, they’ll either opt-out or make a purchase. If I hadn’t captured their contact details, they probably would have moved on to a competitor. So it’s vital that you build that email database of high-quality prospects.
3.) Employ intrapreneurs. These are people who don’t need to be micromanaged. They bring new skills to your business and help you to expand your services or products. They don’t need your permission because you trust them to make great decisions. I’ve hired a team of intrapreneurs who are just as committed to my business’s success as I am. They’re coming to me saying, “Allan, we need to do this to expand the business. We need to be offering this service or restructuring, whatever.” They’ve allowed me to step back and focus on what I do best. And they’ve massively grown my business. So don’t be afraid to hire intrapreneurs.
4.) Keep the exit in mind. From day one of opening your business, you need to be thinking of the exit. You need to be able to answer these questions:
- Who is your ideal investor?
- What do you want to earn when selling your business?
- What do you need to do to achieve that goal?
And then every decision you make needs to have that goal in mind. So you want to ask yourself, will this help me get closer to my exit goal. If not, it’s not the right decision.
5.) Technology augments your abilities. Use it to do the heavy lifting. But what do I mean by that? Well, technology gives you a strategic advantage. It helps you to deliver a world-class experience. This often translates to a larger market share, a greater share of wallet, and a higher customer satisfaction rate, which helps create raving fans for your business, drives loyalty and referrals, what every business owner wants.
Here’s an example. I like to automate much of my marketing. So I invested in a CRM. My team and I crafted an evergreen email sequence, which each new subscriber would receive after joining my mailing list. Now I only wrote this sequence once, about five years ago. I’ve made minor tweaks, but I don’t have to go in and manually send it to every subscriber I get. My list is 45,000 strong. Can you imagine sending that many emails a day? Instead, my CRM handles it for me. So technology can have transformational power in your business.
In your experience, is there a difference in approach for building a service based business versus a product based business when you have the intent to eventually sell the business. Can you explain?
No. While there are minor idiosyncrasies between a consumer-facing business and a product-based company, you’re dealing with humans at the end of the day.
So you want to do a lot of the same things. You want to build marketing assets and deliver value through education-based marketing. You want to grow a database of potential customers and build a series of business systems that can be turned into standard operating procedures.
Also, you need to innovate your product or service delivery continually. Expand where you can and deliver a world-class experience that creates raving fans or customers for life.
How does one go about the process of finding a buyer?
Start by thinking of yourself as an investor. If you were looking to buy your business, what would you need to see to be convinced that it’s an excellent investment?
From my time as an angel investor, I can tell you the number one thing a purchaser looks for — do you have a business, or are you the business. But what do I mean by that? Well, if your business needs you on-site or available 24/7 to keep operating, it’s not a saleable asset. It doesn’t matter how good your services or products are or how profitable it is. You won’t attract the right buyer (if any).
So you need to structure your business with a logical investor in mind. They can clearly see a path to exit and a return on investment.
With each business I’ve sold, I had a firm view in my mind about which competitor would buy my company. So while you don’t need to be friends with your competition, you need to be on good terms.
To do that, I’d arrange friendly coffee meetings or chat with them at industry events. But really, you want to keep in touch with who’s making waves in your field when it comes to mergers and acquisitions? Who is in angel investing or raising capital?
Having these players on speed-dial is massively beneficial to you when you’re ready to exit.
How can one decide if it is better to build a business in order to exit, or if it is better to stick around for the long term and let the company bring in residual income, or if it is better to go public?
Interesting question, and not unlike a common objection I often hear from owner-operators. Some people love what they do. They make a good income and can’t ever see themselves selling up. But like it or not, one day you will want to retire, or you might have to. For example, you could get sick and need to sell, or you decide to move but can’t take your business with you, whatever.
When that time comes, trust me when I say you’re going to want to walk away with a substantial cash injection in your bank account. If you’ve spent your adult life building it, you’re not going to want to close your doors or sell for a pittance. And if you haven’t built your business with an exit in mind, you’re out of luck. It’s far too late to restructure, and it’ll take years to turn things around.
My advice. Even if you can’t see yourself ever selling, build your business to exit. And ironically, businesses that are very attractive to buyers are also very attractive to you, the owner. They make a good profit, they have great business systems, and are run under management.
But if you’re unsure whether to go public, stick it out long term or let the company bring in residual income, I’d say go with your gut.
Can you share a few ways that are used to determine a good selling price for the business?
The standard practice to determine a good selling price for your business is to use earnings multiple. For example, if a business makes a profit of 1,000,000.00 dollars a year, you’d apply the average industry multiple to get your business’s value. Now, if the industry average is five times the multiple, the business value is 5,000,000.00 dollars.
But I like to get away from that because it puts a cap on your business’s value. I prefer to demonstrate to the investor the benefits of purchasing the intellectual property of my business. And I’ve used this approach when selling my previous companies.
So I’ll say. “Look, not only are you purchasing the earnings and customer base, that’s important. But if you buy the intellectual property (special source) and apply it to your business, here’s what’ll happen. You’ll increase efficiency, profits and attract better talent.” So selling the special source is a more powerful way to increase the selling price of your business.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
As I’ve got older and wiser, I’ve realized that life’s too short to be doing stuff you don’t want to do. If I can help people go after their entrepreneurial dreams and build a financially lucrative business that gives them the lifestyle they desire, I’ve achieved my ultimate business goal.
How can our readers follow you on social media?
Thank you so much for joining us. This was very inspirational.