Founder of FE International. We help sell online businesses. Speaker. Columnist at https://www.entrepreneur.com/
Whatever stage you're at in your business - starting, or ready to sell- one day you're going to leave your business. Hopefully it's by a successful exit.
Since founding FE International in 2006, Thomas has done several hundred million dollars in deals. They invest loads of time with each business to increase the selling success rate (currently 94.1% for FE International, vs. ~20% in the industry).
In the last several months, Thomas has done several deals ranging from a few hundred thousand to a few hundred million.
Here are the top lessons Thomas works with entrepreneurs on to sell their businesses.
When you do come to sell, you need to be in a position to prove any of your claims. If you claim your users doubled over a period, you need to show how you measured that.
If you want to test pricing, incrementally measure the success of testing pricing on a smaller group.
Companies that have been successfully sold take small, incremental risks. If you're not failing often, you're not trying hard enough. You should be continually testing experiments to see what works.
Key mistakes when people are just starting out is to give away far too much value for not a lot of return. Don't sell lifetime subscriptions to your product to a cheap price. Don't give away annual plans at a massive discount.
If you're ever going to sell, MRR growth is a big factor. Focus on sustainably growing MRR and decreasing revenue churn (customer churn doesn't matter as much).
People paying you the most money are probably sending you the least number of complaints. Put things in place to keep those valuable customers happy and you can churn the lower value customers without affecting revenue churn.
Word of mouth has a CAC of zero, but it's hard to scale a business whose growth strategy is word of mouth.
Ignore customer churn and focus on revenue churn. Focus more on the cohorts that are paying you the most.
Don't fall victim to feature creep: focus on revenue.
Build in expansion revenue. Don't have an unlimited plan, let users pay you more the more they use your platform.
Sell while it's still growing - don't wait until it's shrinking.
I'm sending out a beautiful PDF eBook of notes from every MicroConf 2018 Starter and Growth talk – both Speaker and Attendee. Want a copy?