By Dorie Clark
I recently read John Warrillow’s excellent “Built to Sell,” a short, business parable (in the vein of “The Go-Giver“) about how to create a company that other people will actually want to buy. The main problem small business owners have, Warrillow posits (like Michael Gerber before him), is that they’re too involved in the day-to-day operations of the company. That means acquirers will only be interested in ponying up if the owner agrees to stay on for several years post-purchase — and there’s a lot that can go wrong between now and payday.
What to do instead? Warrillow suggests removing yourself from the equation as much as possible by having your company specialize in doing one thing well (the book’s hero decides that his ad agency will focus exclusively on logo design), developing a clear and repeatable process (“our five-step logo design process”) and building a sales team ASAP (no one wants to buy a business where you’re the sole rainmaker). That’s great advice for entrepreneurs building toward a “liquidity event” — but, as Warrillow points out in a great interview with Tim Ferriss, it’s exactly the wrong move for professionals whose business and personal brands are more tightly entwined. That’s why the most important branding decision you’ll ever make is what type of personal brand to cultivate.
Leaving aside your investment portfolio (or stock options), there are two fundamental ways to make money in business. The first, which I’ll call the “Business-Builder Model,” is to construct a company that thrives on scale and makes a profit on others’ work. Your law firm has 500 employees, you make a profit of X percent on your associates’ hourly rate, and you’ve got a successful business model. Same with ad agencies (as in Warrillow’s example), large consulting firms or the like. If you’re the owner, your personal brand must be different from — and usually less prominent than — your corporate brand, or you’ll never be able to sell it. (To its detriment, even a company as large as Apple — so identified with CEO Steve Jobs — suffers major stock dips on rumors about his health.)
In the second model — the “Expert Model,” more appropriate for solo practitioners and some executives — your personal and business brands are essentially synonymous. That’s because your business model depends on you getting famous and people paying a premium to work with you specifically. Instead of selling a process or a commodity, you’re selling access to your unique insights, applied to the client’s situation.
Warrillow is right to counsel the business-builders to hire staff who are “good at selling products, not services” because they will “be better able to figure out how your product can meet a client’s needs rather than agreeing to customize your offering to fit what the client wants.” You really, really don’t want every widget buyer demanding a different color. But when you’re the brand, it’s fine to personalize your advice. In fact, that’s how you make money. (I can read “Getting Things Done” like everyone else, but I really want David Allen to come to my office and set up the system for me. And I can hire plenty of executives to be my SVP, but I really want the one who got famous for leading a business unit turnaround at her previous company.)
The two models — Business-Builder and Expert — are exact opposites, and if you try to blend them, you’re not going to get far. You can succeed with either one, but you have to decide early on which you’re going to pursue.
Which path have you chosen? Why?