The 5 Requirements We Look For in a New Client

We work as advisors to help businesses monetize their brand equity. In other words, we use our considerable experience having built and sold a business to help a select group of businesses do the same. But how do we select our clients? And what do we look for?

We look for the factors that we believe are necessary for them to achieve a successful acquisition. Many entrepreneurs want to get paid for their innovations. There’s a ton of legal services out there that are only too happy to sell them patents, trademarks, and copyrights. They’ll even put together licensing agreements and provide introductions. But from our experience, the way you make the most on your concept is to wrap it in a product, wrap the product in a business, wrap the business in a brand, and build your brand to the point that it attracts your acquirer.

It involves a lot of inglorious hard work and takes longer than you think. The sales cycle alone may be more than your budget can tolerate. But if you have what it takes, it’s doable! What does it take? Well, aside from persistence, excellent cash flow management, excellent personnel management, and excellent distribution management, it takes a certain kind of business.

We can’t help everybody. But everybody we help has to succeed. Our reputation is based on it. How do we mitigate our risk on the front end? How do we know when we are looking at a business that can benefit and will benefit from our advice? These are the requirements we look for in any new potential client.

Coachability

Simply, are they coachable? Will they take advice? Will they listen and apply? Are they willing to do what’s necessary even if it’s work they hadn’t planned on? Do they have respect for the experience being shared? Are they willing to work hard and long hours and make personal sacrifices? And lastly, the most important, do they take responsibility for their own actions and that of their business?

Scalability

Is their business scalable? Is there a product, service, or application that can be duplicated and achieve an increasing volume of sales? Is their product codifiable, mass-producible, and widely marketable? Does it satisfy a market-wide need or solve an unaddressed problem? Have they distinguished themselves with a product that has little or no competition?

Seasoning

Do they have some previous business experience? Do they have experience with their own product or market? Have they either achieved a breakeven or positive cash flow yet? Do they have at least some customers? Have they learned about what changes their product needs to be more acceptable to the market? Do they understand the value of sales overproduction?

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Can their business ever run without them? Are they willing to delegate? Do they know what they are good at and what they are not? Are they willing to admit it? Have they ever considered replacing themselves? Are they writing down everything including job descriptions, policies, procedures, checklists, and sign off sheets? When they make a mistake, do they learn from it and improve their documents to make a reoccurrence less likely?

Acquirability

Are they in business for the expressed purpose of eventually selling their business? Do they know who the top 5 potential acquirers are in their field? Do they know how big they have to be to pique the interest of an acquirer? Have they researched the metrics necessary to achieve before they would be considered as an acquisition target? Can they ultimately part with their business? Do they want to sell in 2-5 years (even if it takes 10)? Will they make the strategic moves to get the attention of an acquirer?

If they have something that improves their industry or makes the world a better place, if they can answer yes to most of these questions, and if we have good chemistry, then we can make a big difference, save them tons of money and time, and relieve a lot of the fear of the unknown. We want to use our experience to help others succeed faster!