Transcription
If you watch the next 42 minutes and take action, I guarantee 2025 will be your richest year yet, and Tim is going to show you exactly how. Tim is the millionaire founder of Fanbytes, an influencer marketing agency he founded at the age of 21. He grew it to 15 million in annual revenue and sold it just four years later for an eight-figure sum.
Timo, what are we going to learn today?
So the first thing is obviously what is the idea, right? Then what is the market, and then who are your customers? And then what is your business model? And then most importantly, when is the time to sell?
So let's start with the idea. A big problem that a lot of entrepreneurs have is that they come up with an idea in isolation. They think, "I think this would be good in the world; I should build a business around it." That is quite stupid because especially if you want to build something that's sellable, what you want to do is build something that you know the market would actually want.
The way I like to think about ideas is to imagine there is a man, and he's called Mr. Market. There are certain things that wake him up, and then there are certain things which he completely ignores. You want to make sure that you are focusing on ideas that this guy—let's call him Mr. Market—wants.
I typically put ideas into the four 'U's. Every great idea has the four 'U's, and I'm going to write this here.
So the first 'U' is something that is unworkable. By that, I mean that the customer basically has to be able to do a certain process, and they have a problem here which is unworkable—something that they have to do, right?
Then the next thing is actually unavoidable. This is basically a function in the actual job, or in the actual company, or in life that I just have to do, right?
Then the next one is urgent. By that, I mean that it is a problem which actually needs to be solved. Here's the thing: a lot of people build businesses or ideas, and you go to the customer and you say, "Hey, this would be good for you," and then they say, "Yes, but I also have these other 10 things that are actually more important," which therefore means that they're not going to take action at that very moment.
So the best ideas are always those where it's like, "This is a hair-on-fire problem." This is a very important thing you want to solve—hair-on-fire problems, not just nice-to-haves.
Then the final one here is underserved. Underserved is basically that there is a portion of the market where they don't have enough people who are solving that problem.
I'll give a very tactical example from my experience. Fanbytes actually fit quite a lot of these because in 2017, a lot of brands needed to tap into that Gen Z audience, and it was something that they desperately needed to do if they didn't want to get left behind.
So it was unavoidable. It also was quite urgent because for a lot of them, they were seeing influencers start to rise, and they thought, "If we do not tackle this influencer thing right now, our competitors are going to do that."
So then it became urgent. It also then was underserved because at that point, the biggest brands—the Coca-Colas of the world—could actually do it, but actually the small to medium-sized brands, and by small to medium-sized, we're talking about people with say 500 employees or less, which is actually quite small in the grand scheme of things, they didn't have the tools, the resources, the expertise to do that, and they were underserved.
Then the final thing was that for those who actually did know how to do it, it was unworkable because they were just using spreadsheets and all of that to try and contact influencers. It just didn't scale as much.
So because we ticked all those four 'U's, we basically had a very clean value proposition, which basically meant, "Right, we are actively going to make sure that this is a problem, and we are going to use a service which helps us to address the problem of scaling with influencer marketing."
Do you think it was critical to add another 'U' in there that people understood the market, or do you think like Elon Musk doesn't really know about rockets, right? So do you think that's part of it? Because you kind of knew this problem being part of that generation. Do you think that's part of the mix?
So I think that helps because actually there is another thing. If you imagine this is Mr. Market, right? Then there is, I'm going to say, another person, and this is you.
And actually, there is something called founder-market fit. People talk a lot about product-market fit, but actually founder-market fit is even more important, and that is what makes you the right person for this.
To me, it's a combination of three things: it is your position in life, your past experiences, and then it is your skills.
So to answer your question, when my two co-founders and I started Fanbytes, I was 21 in my second year of university. My COO was also 21 in his second year, and my CTO was 19, and he was in his first year of university.
So our position in life was that we were actually part of the Gen Z audience that we were telling brands how to engage with.
In terms of past experiences, I had actually sold before at 17. I had sold an online media business, so I understood media. My CTO, Mitchell, had also sold a data business at 17 as well, so we understood media and tech.
Then our skill set was that we also then understood social media, and we learned how to do public speaking and all of that. So actually, it meant that because of all these three things, we were perfect for this.
I've met a lot of people who it's like, "I want to build an AI tech SaaS thing," and I go, "Cool, what's your experience?" "Well, I've been in beauty spas." Right? So you should probably go find someone who can do it, which is then incredibly hard because you don't quite know what makes for good.
I can relate to this with Help Bank because I have the experience of knowing what problems entrepreneurs have. So providing a platform that solves those problems for people, and my position in life is I've spent 35 years learning all, so I know it, and my skill set is providing that knowledge.
Do you think—and I'm a big fan of this—adding your purpose or your sense of mission, did that come into play in your case?
So I know this is something you and I go back and forth on. When I was younger, I didn't have it, so I don't know. I'm asking more because when I was your age, I definitely didn't have it. I wasn't this successful at your age, to be honest, so it's very different.
I have a very interesting view on purpose. I actually believe that especially at the beginning of your entrepreneurial journey, your purpose can be, "I just want to make a bunch of money," and I want to make a bunch of money ethically, right? Because obviously, that was definitely me when I was younger.
But away, I was there. I just needed to pay to not be living on the streets anymore, you know? So that's, yeah.
And also, there is actually nobility in creating something that helps solve people's problems, and they pay you in money, right? So I don't actually think necessarily purpose is that key, especially if your end goal is to just build a sellable business that you may not deeply care about, but you care about what the business is going to be able to afford for you to do, which could be taking care of your family, taking care of your friends, changing your situation.
Now, that works very well for your first business, 100%. I think as you build more businesses, then that's where the higher purpose of serving others really comes in.
Well, in addition, your purpose here—I mean, you're an influencer today, whether you like that terminology or not, you are. So partly, you're involved in influencers; you see how they operate, and that makes you a better influencer today, right?
True. So there's— I retrospectively look back at my career from my gardening company to my agency to my investment business, and actually, all of them kind of were involved in starting businesses or helping people's businesses.
So the purpose is maybe not totally transparent at that early stage, but you want to be involved in influencers for some reason, right? That was kind of cool to you, right? They gave you a buzz.
Yeah, so your purpose is in the nuanced stage, in the very early stage, the seed stage of being born, isn't it?
Yeah, that is very fair. I think purpose is something realized over time, and often, especially when you're young, you can either lose sight of having a purpose just because you don't even think in that way. You just think in a very me-me place.
Then over time, as you start to realize more about the world, more about money, more about what's meaningful—like for example, I'm currently 29, and next week I turn 30. Interestingly, I've been spending a lot more time thinking about what is meaningful to me and how I spend my 30s.
I genuinely think that would not have been even possible if I hadn't basically spent my 20s just grinding and seeing choices.
But I would add on here, personally, I think maybe your purpose is too heavy at a younger age, but your passion definitely plays a role, right? So you had a passion for this. None of this would have worked even if you had the right position in life, the experience, and the skills if you didn't have some sort of passion for it.
That is true, and you haven't really left the industry. You've sold your company, but you're still in the influence.
Yeah, yeah, yeah.
One of the things about—I'm going to add it because I believe it so much—your passion. At least we won't say purpose right now because that's maybe too much, but passion.
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So before we even start to engage with potential customers, we also have to understand on a macro scale what actually is a good market. Because remember, the end goal that we're trying to do here is to build a sellable business.
I'm going to say something semi-controversial, which is to build a sellable business, it actually doesn't matter how hard you work; it matters what you choose to work on. That's a very important distinction because I don't think that I worked insanely hard. I just think that we chose a very good market, which meant that as the market was growing, we also grew with it, and that's the reason why we ended up having disproportionate results.
So here's what I mean by that. The most important thing is to determine if your market is growing and if there is a gap. Here's what I'm going to explain by the gap.
The gap is the expertise gap, or what is also called the capabilities gap, and it's basically the gap between what your customer is able to do by themselves—and it could be a business or it could be an actual consumer—and what you're able to do. The bigger the gap, the bigger you can charge, and the more you can charge, the more you can make, and the bigger a company you can grow.
So let's say that you have this here, right? Let's say you have here—I'm actually going to give this an X, and this is where your customer is.
So let's pick Fanbytes, my old company, as a very good example. The customer here wanted to get into influencer marketing, but they didn't know how to reach out to influencers, how to engage with influencers, what to say to them, how to execute a good campaign, etc.
We were able to do that very well because we understood the skills. All this here is just the gap—it's just how much we could charge. That's a good way to say these are pound signs, right?
Now, over time, what happens is if the customer starts to understand it more, because whatever, the market starts to consolidate, they make a relationship with an influencer themselves.
Exactly. Slowly, you hear, and then suddenly their expertise has—typical business school, by the way—they call this arbitrage, right? The normal business school terminology is called arbitrage.
Yeah, and so now you can see here loads of money; you can see here little money. The problem that a lot of entrepreneurs have, especially first-time and to some degree second-time entrepreneurs, is that they start a business thinking, "I know this," but then they don't have an awareness of where their target customer is in terms of their gap.
So they end up making a small amount of money. I have a lot of friends who start a wedding planning business. It's like, "Okay, well, join the club. Everyone who at least is in that business."
The people they are serving either they just don't have an understanding, so they don't really know what good looks like, so there's no gap, or the gap between you and them is just, "I can do this with the time I have," rather than, "I know something different to what you want."
So it needs to be growing, and there needs to be a gap. If there is something I want people to take away from this particular thing about the market, it is this equation, which is 65-35.
At the beginning of any business endeavor, spend 65% of your time actually investigating the market and how good it is. Read the research reports, go online, look at the forums, look at competitors—really spend time understanding this—and then actually spend 35% of your time looking at execution.
This is so important, and people just go into this mode, and then two, three years down the line, they go, "Oh, I probably shouldn't have started this business."
Anyway, because of all these other things, that's what Jeff Bezos said. He quit his job and went full on on Amazon because he saw a research chart that showed how many people were starting to buy books online.
Yeah, and he validated it with proper research. No one had an agenda to produce that research; that's one of his things as well. Make sure the research doesn't have an agenda.
But he said that's when he realized that it was moving to people buying stuff online, and he just stuck to that, even though there's an up and down in the market of that happening. He knew he did his research.
So we've spoken about what a good idea actually looks like. We've also spoken about what a good market looks like. Now let's say that you've validated all of those things. Now we're going to look at how to actually get to customers.
The reason why this is incredibly important is because you need to be very strategic and deliberate about it. I'll give a very specific example of how that has been done, not only by us but also by other people as well.
So customers—number one, if you imagine you have a universe of potential people, right? This is the universe; this is the total addressable market. What you want to therefore do is not say, "I'm going to go after all of these people."
What you want to do is go for this. This is counterintuitive for people because they want the whole market.
Yes, now you might ask, "Timo, there's all this money here; why not go here? Why go here? I want to be rich; I don't want to be small." Good question.
You want to go for the smallest possible market because that is going to be your hotbed for testing ideas and seeing what the market actually wants. You want it to be small, but you also want it—I'm going to introduce you guys to a new word here—referenceable.
What do I mean by that? So small because you want to have a small group of customers that is easy to go after. Referenceable because you basically want to go after people where if you do a good job for them, and then you then talk to similar people to them, you say, "Hey, we just did a good job for this person," then it's easier to sell them.
A good example for this is actually a lot of service businesses, which are like home services, like gardening and painting, etc. The best way if you want to get a customer is to say to down, "We just helped Sarah, and Sarah said we were great," not "We just helped someone in Liverpool," who perhaps they were the exact same person as you, but because the person has a close proximity—an even better person is, "We just—if I came to you to do your gardening, I'd say, 'Hey, we just helped another 40-year-old white dude called Simon, and this is exactly how we helped him, and his garden was actually the same size as yours, and actually, this is a picture of Simon saying this was really good.'"
As close as you can, that's going to be the way that you win.
Then the final thing is actually easy access. What I mean by easy access is that you want to have customers where you don't need to go through a bunch of hoops to just get to them. They are all clustered in a specific place.
So in our example with Fanbytes, in our first year, we did £400,000, and that was a small amount of money, but it was very intentional because all we did rather than focusing on the total brands who could serve us was that we focused on record labels.
And why was that important? Because record labels were quite small, and really there was only—there was only Warner, Universal, and I'm sure you can guess the third one.
I can't.
Okay, well, Sony. Oh, Sony, I forget about Sony these days.
And these guys basically have a bunch of sub-labels, but really these are the three OGs. So we went after them, and they were small, and we would just do really tiny campaigns with them—5K campaigns with them—and they would go well.
Then what we then do—let's say that we did this as Warner—we then go to Sony and say, "Hey, we just did an influencer campaign with Warner," and they say, "Wow, this is really good. How much was it?"
We would say, "10 grand," right? But that worked because it was referenceable, right? It was like Warner. By doing that, we could easily reference Sony because they're doing it; they have to do it.
Yes, going back to the whole four 'U's thing about it being unavoidable. People listening, okay, because you'll relate to this. They'll listen, "Okay, you went to Warner, and you got them to use you for the first time. How did you get them to use you for the first time?"
Yeah, so then that's going to be the final point here about easy access. So the first thing was that we actually did a trial campaign with them, and that trial campaign was incredibly cheap on our end. We actually lost money.
So like we put in our own money—a brochure?
You did a brochure?
Yeah, yeah, and we just said, "Hey, let's do a test campaign."
People don't realize this free has much value at the beginning.
So you can at least get a case study, yes. And once you got a case study, then you can upsell to Universal and say, "Well, this is worth 10 grand, you know, that's if you want it."
Right? There are so many people who have this stigma against free because they feel like it is devaluing themselves rather than seeing it as a business strategy.
Yeah, if you frame it right with the brand as well, it can be very bonding with the brand. "We're new; give us a chance; we'll prove ourselves to you, and if we prove ourselves to you, then you pay for it. And if we don't, fine, you've lost nothing."
That derisks it for the people that have a lot of risk fear in corporations.
Yeah, and then the final point here about easy access—so how did we get those?
So I want to then talk about two main strategies to get any customer. One is to ask yourself these two questions, right? One is, where do they hang out? And then the second one is, who has my customers?
So where do they hang out? So if you wanted to reach people like Warner, Universal, Sony, you would say, "Where do these people hang out?" And typically, it would be, "What do they read?"
Right? And we realized that actually there were three main big music publications that they read: Music Business Worldwide, Music Week, and Music Ally.
And we thought, "Oh, interesting. If they're all reading that, what if we just go there and just place an ad there, or we just go there and we say, 'Hey, we want to write a guest post for you about the importance of engaging with Gen Z?'"
People will come to us, and that's exactly what happened. Or maybe there are events that they are, etc. But really, we wanted to be super targeted.
And then the final thing is, who has my customers? So a good way I like to think about this is, let's say this is your service, right? X is your service. This is your service, right?
There are two question marks here, which is this and then this. So this is before, and this is after, and these are the services and products that people use before they use you and after they use you.
So let's say you were selling to accountants right now. If someone is using you for accountancy, they may also have a lawyer. Maybe they actually needed to engage with a lawyer on something, and then they needed you.
So then at that point, what I might then do is I might go and find a list of lawyers, and I might say, "Hey, you have people who might use my services. Can we do some kind of a deal where if you refer people to me, then also I will give you a kickback?"
Because to them, it's like, "Well, okay, yeah, sure, fine, easy money for me."
And then also there is the after. Maybe after they've now used you for accountancy, they now need someone to help them with filing; they need someone for estate planning; they need someone like that.
So what you're doing is you are looking at overall what the customer would need from you or to complete a specific action, and then who is before, who is after? How can I form the relationships?
Whereas this, "Where do they hang out?" is what do they read, what events do they go to, what YouTube channels do they watch, that sort of thing? And then how can I actually be part of that conversation?
Great!
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Now let's get back to the podcast.
Right, business model. I love this subject because this is something that a lot of people don't think about, actually ironically, until it's too late because they go to a market where there's need, but there's no profit.
Yes, business model. So actually, this may be the shortest part of it because a business model—I don't think that you need to reinvent the wheel on business models. It's either you're getting the customer to pay, or you are aggregating things for the customer to pay, right?
So Facebook is a good example where it's like free for us, but then other businesses are paying to access. So the customer in this case is not us; it's actually businesses, brands.
In other places, like service-based businesses, it is obviously the end customer. So remember the end goal here—the end goal is to build a sellable business.
A dirty secret of selling any sellable business is that you can draw a line. Let's say there is a graph. So this is certainty, right? And I am going to come up with something here, which is money.
So if anyone is buying your business, really there is a relationship between the level of certainty that you give them and then also the amount of money that you make.
So if you were—let's say this was 10, and this was whatever, 100 million or something. If you give me a certainty level of 9 here, then that means that I'm going to pay you more.
Certainty is basically a way of saying, "If I buy this from you, I'm certain that the business is not going to fail," or "If I buy this from you, I'm certain I'm not going to lose my money."
And the business model comes in very well because it dictates the way that you can price your services.
So this is why people love subscription businesses because they know that if I have people subscribing, then I have very predictable revenue for the next 12 to 24 months.
So when it comes to business models, you want to think about what is predictable and what is scalable. So you want something where you're not starting from zero every single time.
Naturally, early on, especially if you run, say, a services business, it can be very tricky to do that. The way that you do that is around how you construct your actual contracts, but also how you add in things that make it a lot more predictable.
So for example, with Fanbytes, there were so many times where we could have easily just taken a big campaign from someone. So we had L'Oreal coming in and saying, "We want to spend half a million with you."
The old us would have been like, "Yeah, great, let's do that." Whereas what we'd say is, "Great, but let's actually stretch it out over six months."
So then we'd say, "Rather than 500 grand for a one-time campaign, we might do the campaign over a long enough time period, but then you pay us 83 grand a month."
Suddenly, that exact same contract has been configured to ensure that it actually shows that in the next six months, we're going to be starting off from at least 83k every single month.
That's why agencies all love retainers, exactly, because it's a monthly amount of money as opposed to a large one-off sum that may or may not repeat.
Yes, that's very scary in any business.
In any business, you can also add in different elements of predictability. So let's say again that I came here and I said, "Hey, I'm going to do your gardening for you."
The first thing you think about is this is very much a one-time thing, but what if then what I did was—and if you paid, say, 50 quid every single month, what I would do is I'll come in and I'll do a hygiene check.
That hygiene check would be you just like pull out any weeds just to make sure that you're good. I'll just come over and give it a spray. It would take me 15 minutes, but now I have you for the next year.
I know that perhaps in the fourth month, you're then going to say, "Actually, do you know what? I need the garden again."
So now at first, you paid me, let's say £300 for one thing. I then now have you paying 50 every month for a hygiene check, and really, I now have you, which means that in the fourth month, in the eighth month, I've basically created another £300 because I'm always in your mind.
Funny you said at 15, I started a gardening company, right? That was my first ever business.
But the one maybe the lesson for the audience on this is that I actually accidentally charged £200 a month for the first person. I learned this monthly fee.
The big mistake I made is I didn't realize there was a winter in England because the winter came, and they canceled it.
So that's why you see brands like Whoop, for example. It's a 12-month contract.
Yeah, because you'll definitely dip. I dropped four months into using this. I was like, "Oh, I don't need it anymore." I stopped using it, and then I actually—I'm still paying for it, and I started using it again.
Yeah, so that's quite another way to go is to try and lock in that revenue.
So it's not just—I mean, Netflix let you cancel, but you know, when you're at that scale, it's probably a little bit different. You want to try and not let that be unpredictable.
And the reason why, again, this is very important is because when it comes to selling your business, people are paying for certainty.
I would pay much higher if you said, "In 12 months, you're going to make this," rather than, "In 12 months, I don't really know what's going to happen, but we'll see."
Right? This is going to play into when you sell the company too.
And then a final thing here is scalable. Scalable, scalable, scalable.
Now, there are a lot of businesses which are inherently scalable, right? E-commerce is scalable. Subscription is scalable.
But for people who perhaps are doing more one-time things, the best way to do that, or service-based things, the best way to do that would be to productize your service.
So for Fanbytes, it was very easy for us to just say, "You know, here's an influencer campaign. How much is it? I don't know, 20,000 grand," right?
Until what we did was package things up. So then we had things like our bronze option, so we had bronze, bronze, and then we had silver, and then we had gold, and then we even had like a platinum.
What that meant was that a customer felt like they were basically buying a service off a shelf, and it was incredibly easy. We had people buying 100 grand things in two days.
Like they came on Monday, and then on Wednesday, they had signed for 100 grand because it was like—were they doing this all through a website, or did they actually have to meet you to go through it?
It was just over Zoom calls, and the reason why was because we had made it super easy for them to buy. We also had a bunch of case studies, proof of concept basically for people.
Exactly, and we also had results. So predictable, scalable—that's the business model that you want to go for.
And again, if there's one thing I want you to be able to take away from this business model, it's actually just this graph here.
It is, I guess, the money-certainty thing. You want to introduce as many things into your business which would make it more certain what's going to happen in 12 months because then you will make more money.
Another final bit about selling your company—I'm going to share two main things. One is a checklist to know when you have something that is sellable, and then before that, I'm actually going to show when to sell your company.
The ultimate thing is something my team has heard me say, and I say to a lot of people is, if you imagine a graph again, we're going to go back to two graphs, and you imagine again that this is money, money, and this is time.
This is a chart which is like over time how much money you can make from your business. Now here's what happens: a lot of people try and basically sell at the maximum around here, right?
Because they want to get the most maximum amount from their business. This is incredibly stupid. The reason why is because if someone buys your company here, or if they intend to, then what you've effectively done is you've squeezed out all the growth from your business.
The best thing to do is to leave money on the table and potentially sell here. Now you might say, "Oh, even maybe actually here," where there's still a lot of room for growth.
Why is this important? Because you might then say, "Well, I'm losing a bunch of money because I could do all this." But what you're doing is now you have a much stronger story of growth.
So if I'm selling something to you and I say, "Well, here's all the different things that you can do with the business," suddenly for you, you say, "If I'm spending 30 million to buy a company, here are all the different things that I can actively show that I can make my 30 million back at least."
Because remember, when you're selling a company or when someone's buying a company, they're not buying it because they like you; they're buying it because they feel like they can make more money from the purchase.
So I call this the "leave some money on the table" strategy. Just like, you know, get to about 70% of the full journey, leave some money on the table.
How do you know when you're at 70%? So I'll give a very specific example again with my experience with Fanbytes.
So we sold the company in May 2022, but in October, we had three companies get in touch to buy us in six weeks, and that was actually very unusual.
It told me that actually the market was beginning to consolidate, and because it was beginning to consolidate, that's why people were very interested in buying.
To me, that was the big signal. It said, "Okay, companies are bringing this in-house. People want to consolidate."
I'm also seeing some of the big people—the publishers of the world, WPPs—I'm seeing them buy more companies to go in-house. Plus, more things are opening up around that, getting more competitive.
Yes, and so I went, "Okay, that's interesting." So the market is getting a bit more competitive; people are taking it in-house.
And then also the big companies already have said, "You know, influencer marketing is something that we are going to be very interested in," and it made sense to do it at that time.
Now the big thing about this growth rates thing is for us, our story was a bunch, right? We had 40% of our revenue coming from the US, but we didn't have a single person there, and that was very intentional.
Because then we knew if we had a buyer, we could say, "Well, you could go to the US with Fanbytes."
We also didn't do that much in paid media, just a bit, but we knew that the person who could buy Fanbytes, which was like a social influencer company, could tie in paid media, and then suddenly they could definitely add in more money.
And then the final thing here was we were always engaging with the heads of social, heads of influencers, but they're big like CMOs.
We didn't have actual relationships with them, and we knew that if we could take the exact same product to the CMO level, just a bit more senior, we would end up making a lot more money.
These were just some of the examples of the things that we said, "Right, here's all the ways that you can go from this 70% and take it even higher."
I think it's really interesting you pitching to the people that are going to buy you, just like you would any other client.
I did exactly the same. So I pitched to PwC if they copy this model in Hong Kong and all the other markets that they were operating in.
So then the value isn't the market I'm in, but in the market—all the markets they could be in.
Yeah, and I think that's so underrated. Some people will say, "Oh, I opened up all these offices." I could have opened up 50 offices, taken all this for myself, taken a huge amount of time to do it too, or I can sell them the potential of that, which is much easier for them to do it because they're already in 50 markets.
Yeah, easy peasy, lemon squeezy.
The final bit of this is what are the seven traits of a sellable business? I'm just going to go through these, and then you should have everything.
So one is customer concentration. One is customer retention. One is a management team. Productized service. Standardized delivery. Growth rates.
And I generally like to see growth rates of like 25% per year. So that's one, two, three.
And then the final one is repeatable sales motion. I'm going to go through these very quickly.
What I tend to do is I give everything a score out of 10. I give each of them a score out of 10, so your end goal is to try and get 70.
So customer concentration—you do not want any single customer to be over 15% of your revenue. Ideally, 10% max, max, max.
Because again, if you remember the graph that we created about certainty, if a customer is over 15%, then that means that if that customer is to leave, that's a pretty big chunk of revenue going.
A buyer doesn't want that, so they're going to basically discount you for that.
Customer retention—the best businesses are those that sell more to their existing customers. If every time I need to get a new customer, every single time I'm going, "Oh my God, this business is just a leaking bucket."
So actually, when we sold the company, we only had 80 customers for a business that was doing tens of millions in revenue. We only had 80 customers because we were just selling them more things, and they were increasing.
A management team, as you said earlier, we do not want the business to be dependent on yourself.
I actually had a video that's gone viral recently where this girl was making a million a year, and she was making 370k in profit, and she said, "Would I buy her business?"
I said no. The reason why was because it was just her. If it's just her, then if she falls ill or if she just decides, "I don't want to do this again," now suddenly who the heck is going to?
It's my problem with the personal brand influencer model. That's personally why I'm moving away from Simon Sinek to Help Bank.
That's the only way. I mean, personal brands become so important now, but I think it's one of the downsides of personal brand.
It is, and again, if you build something independent of you, that's how you win.
Productized service—all this means is that you have something which is very standardized, and people can just pick it off a shelf.
This is what we've gone through earlier. Standardized delivery—you want to ensure that the way you deliver anything, whether it's an e-commerce product, whether it's a SaaS product, whether it's a service, that basically you could take Joe Bloggs off the road, and he could read something for two or three hours and go, "I know how to do this."
There were several times in businesses, and I've advised a bunch of different companies where I tell the owner, "I say, like, take two weeks off. Just take two weeks off, right? Make manuals, but not that. Take two weeks off and see what breaks."
All right? Yeah, that's because often they take it off, and they either go, "I thought my finance team was completely fine, but turns out they keep asking me for stuff."
Right? So now I'm just going to make sure this checks in.
Then penultimate one—growth rate of 25%. I am a big believer in you never, never, never negotiate from a position of weakness.
If you have a business that is growing at least 25% every single year on average, that's something where you can say, "Right, there's a growth story here."
You do not want to sell when you have a flatline.
Then the final one is a repeatable sales motion. The best businesses are those where you know that if we put in this specific input, we're going to get this specific output.
So we know that if we do X number of cold calls, X number of emails, we know that this is actually what's going to come through.
Because again, if we go back to our graph of certainty, we know that if a buyer can then say, "Do you know what? I know that if I spend a hundred grand in sales and marketing into this business, and I know I'm going to get half a million back, oh my God, I'm just going to keep spending."
Whereas if it's like, "Well, we spend 100 grand, and I don't know, like we do some conferences here, we do some events here, I'm not quite sure what's going to happen," you do not want that at all.
And so these seven here are the factors that lead to you being able to sell for a maximum amount.
Anytime I'm talking to someone who wants to sell their company, anytime—even in Fanbytes, I went through this exact same exercise.
To be honest, if you're not selling your company, you should make sure this is benchmarked against your business.
This is just an operational structure that you need to have to have a sustainable business.
What you've just outlined is very important because this is not just a thing for building a sellable business; it's a thing for building a sustainable business.
Whether you decide that you want to run this company for your whole life and give it to your kids or whatever, thinking about your business in this methodical way is going to be very helpful.
And actually, maybe some more controversial—getting rich is very predictable. It's extremely predictable.
It is finding problems, solving the problems, creating a team around it, and keep doing it.
At this point, add this.
Right now, it's time to sell.
Right, let's do this.
And you and I both know enough very normal people who have been—I mean, both of us are very normal people, but we've been able to build wealth by just following pretty unremarkable businesses.
None of us invented Google or Facebook or anything crazy. We just saw an opportunity; we executed on it over a long enough time period, and then the outcome came.
And I really want—and this is why I actually even agreed to do this—was because a lot of your content makes the idea of starting a business and succeeding in business incredibly real.
It's just like, "Well, he did it; she did it; I could do it as well."
Thank you so much for sharing your knowledge, and thank you for listening.
And we're going to have some chicken now. See you later!