Renee Matlock, the owner of The Private Practice Coach, shares with clients her wealth of experience, gained over 30 years of building a profitable, multi-disciplinary private practice.
BLOG: Can Your Business Thrive Without You
Can Your Business Thrive Without You?
John Warrillow’s book Built To Sell details his methodology for creating a business that can thrive without you, and therefore, be of value to a buyer when you are ready to step away permanently. As you are building your business, start thinking about how you can make it ‘sellable’—even if you are not planning to exit from your business in the near future. Planning is key. Begin with the end in mind!
The first step in building a company that can thrive without you is to find a service or product that has the potential to scale. Scalable products/services meet three criteria:
(1) They are “teachable” to employees, or can be delivered through technology;
(2) they are “valuable” to your customers, and;
(3) they are “repeatable,” meaning customers need to return again and again to buy
The most teachable services or products tend to be the ones that clients value the least. Alternatively, the products and services your clients value most are the least teachable. The trick is to combine one or more services or products to create the ideal offering.
The single most important factor in driving up the value of a company is ensuring revenue is repeatable, meaning clients have to repurchase somewhat regularly. Although all recurring revenue will have a positive impact on your company’s value, some forms are more desirable than others. John Warrillow’s forms of recurring revenue are (from least to most valuable):
- Consumables – Consumables are disposable items clients purchase regularly but that they have no solid motivation to be brand-loyal toward (i.e. toothpaste).
- Sunk Money Consumables – Sunk Money Consumables are more valuable than basic consumables. In the case of these items, the client has made an investment in a platform (i.e. the razor handle that takes replacement heads).
- Renewable Subscriptions – Even better than having loyal clients who repurchase, is having revenue that is guaranteed into the future (i.e. magazines).
- Auto-Renewal Subscriptions – Unlike a magazine subscription, for which you have to make the conscious decision to re-up, an Auto-Renewal keeps billing until the client tells you to stop. (from a collection standpoint, this is similar to retaining a credit card on file for client expenses).
- Contracts – The only thing more valuable than an automatic renewal subscription is a hard contract for a defined term. (i.e. recurring school district contracts)
Once you’ve isolated what is teachable, what your clients value, and what they need most often, document your process for delivering this type of product or service.
Next, name your offering, along with each of the steps you take to deliver it, to differentiate your offer so that you can set its price and payment terms.
After you come up with a great name, write a short description of the features and corresponding benefits of each
step in the production of your offering.
Many business owners find themselves trapped in an unsellable business because clients only want to deal with the owner. When a client relies solely on the owner, the business is reliant on its owner as well making it unsellable.
Are you ready to take the next step to a thriving private practice?
