Podcast Summary: The Side Hustle Show – "Built to Sell: Design a Business to Run Without You (Greatest Hits)"
Podcast Information:
- Title: The Side Hustle Show
- Host: Nick Loper of Side Hustle Nation | YAP Media
- Episode Title: Built to Sell: Design a Business to Run Without You (Greatest Hits)
- Release Date: February 6, 2025
- Description: An in-depth discussion on creating a sellable business model that operates independently of the owner, featuring insights from entrepreneur Tyler Gillespie.
1. Introduction to the Topic
In this episode, Nick Loper delves into the concept of building a business that can operate without the founder's constant involvement, making it attractive for future sale. The guest, Tyler Gillespie, shares his experiences in creating and exiting multiple productized service businesses.
2. Guest Introduction: Tyler Gillespie
Timestamp: [01:09]
Tyler Gillespie, a seasoned entrepreneur and long-time listener of The Side Hustle Show, is introduced as an expert in productized services. He emphasizes the benefits of service-based business models, particularly their scalability and sellability when designed correctly.
Notable Quote:
"You're not limited by your own skills. You just have to have the ability to find clients and then other people with the skills that they need." [01:54] – Tyler Gillespie
3. Building a Productized Service Business: Applause Lab
a. Initial Motivation and Starting the Business
Timestamp: [04:17]
Tyler discusses the inception of Applause Lab, a service designed to help e-commerce brands obtain video testimonials. Despite having no background in video production, Tyler identified a significant need based on his experiences with previous businesses struggling to gather testimonials.
Notable Quote:
"I think a lot of people don't have the optionality. So when I started Applause Lab from day one, it was very much intentional with just how I was designing the business." [03:06] – Tyler Gillespie
b. Overcoming Challenges and Scaling
Timestamp: [08:11]
Tyler recounts the initial challenges of scaling Applause Lab, particularly the inefficiencies of one-on-one interviews. To address this, he transitioned to an asynchronous interview model using pre-recorded questions, significantly streamlining operations.
Notable Quote:
"We ended up switching from the one to one interviews to more of an asynchronous interview style... which really streamlined operations." [08:20] – Tyler Gillespie
4. Marketing and Sales Strategies
a. Cold Email Campaigns
Timestamp: [12:58]
Tyler highlights the effectiveness of intensive cold email campaigns in acquiring clients for his previous business, Content Pros. By sending up to 20,000 emails monthly with personalized touches, they achieved a 3-5% positive reply rate.
Notable Quote:
"We were averaging like a 3 to 5% positive reply rate on all of our campaigns, which was at the time really, really good." [13:15] – Tyler Gillespie
b. Networking and Referrals
Timestamp: [19:03]
Beyond cold emails, Tyler emphasizes the power of leveraging personal networks and strategic partnerships. Building relationships within the industry can lead to valuable referrals and collaborations.
Notable Quote:
"Growth comes from your network initially just people closest... that's why it's so vital to build up your network and cultivate relationships." [19:03] – Tyler Gillespie
5. Pricing and Positioning
Timestamp: [20:10]
Tyler explains his approach to pricing Applause Lab competitively by analyzing market rates and positioning his service between high-end enterprise solutions and low-cost DIY software options. This strategic pricing made Applause Lab an attractive option for a broader range of clients.
Notable Quote:
"We ended up using a service called VideoAsk... and we created your own special capture link... that was a no-brainer for the cost." [22:18] – Tyler Gillespie
6. Designing the Business for Exit
a. Clean Processes and Bookkeeping
Timestamp: [29:20]
Tyler underscores the importance of maintaining organized processes and detailed bookkeeping from day one. Implementing systems like Profit First ensures the business remains attractive and easy to evaluate for potential buyers.
Notable Quote:
"I highly recommend following like Profit First... all things from day one that just made it really kind of effortless to potentially sell." [29:20] – Tyler Gillespie
b. Recurring Revenue Models
Timestamp: [26:52]
To enhance the business's sellability, Tyler focused on incorporating recurring revenue streams. By offering packaged services and annual subscriptions, Applause Lab achieved consistent income, a key factor for attracting buyers.
Notable Quote:
"Recurring revenue is a huge thing... my packaged offerings were priced a little higher and then I offered them a subscription which was a yearly subscription." [26:52] – Tyler Gillespie
c. Depersonalization
Timestamp: [39:14]
Depersonalizing the business means minimizing reliance on the founder for daily operations. Tyler shares strategies like outsourcing and automation to ensure the business can function smoothly without his constant involvement.
Notable Quote:
"The more team you can have implemented and built around yourself where you could close your laptop and step away... the better off your business is going to be." [37:43] – Tyler Gillespie
7. The Exit Process
Timestamp: [29:00]
Tyler details his experiences selling both Applause Lab and Content Pros. Applause Lab was acquired by a competitor, Testimonial Hero, through strategic partnerships and referral systems. In contrast, Content Pros was sold to a private equity firm after listing with a broker.
Notable Quote:
"We had about five or six video editors, a full-time customer success manager... serviced almost 80 customers." [31:43] – Tyler Gillespie
8. Tips for Designing a Business to Run Without You
a. Passing the Laptop Test
Timestamp: [36:53]
Tyler introduces the "Laptop Test," encouraging business owners to assess if their business can survive without their daily input. Striving to manage the business effectively in their absence enhances its attractiveness for sale.
Notable Quote:
"If you closed your laptop today, how long would your business survive? The more team you have, the better." [37:43] – Tyler Gillespie
b. Operating Like a SaaS Company
Timestamp: [38:36]
Adopting SaaS-like models in service businesses—such as ensuring recurring revenue and reducing churn—can significantly increase predictability and value.
Notable Quote:
"When you start operating yourself and thinking like a SaaS company, that's going to put you in a really good position." [39:11] – Tyler Gillespie
c. Productizing Services
Timestamp: [39:14]
Productizing services involves creating fixed-scope, fixed-price offerings that clients can purchase easily, akin to buying products on Amazon. This approach streamlines operations and enhances scalability.
Notable Quote:
"How can you position yourself like someone is going to come to your site and buy something, like they're buying something on Amazon." [39:14] – Tyler Gillespie
d. Depersonalization
Timestamp: [40:55]
Reducing the business's dependence on the founder by building a reliable team and delegating responsibilities ensures smooth operations and increases the business's marketability.
Notable Quote:
"Depersonalizing the business lowers the risk profile for someone to buy it." [43:29] – Tyler Gillespie
e. Predictability
Timestamp: [44:48]
Ensuring consistent and predictable revenue streams, team growth, and lead flow makes the business more attractive to potential buyers by demonstrating stability and growth potential.
Notable Quote:
"Predictability is what investors want... it lowers the risk profile and makes your business more valuable." [44:48] – Tyler Gillespie
9. Conclusion and Key Takeaways
In wrapping up, Tyler shares his top tip: seeking mentorship and external perspectives to avoid pitfalls and enhance business growth. He emphasizes the importance of having a mentor or mastermind group to provide critical feedback and guidance.
Notable Quote:
"You can't read the label while you're inside the jar. You need a mentor or mastermind to share your progress and get a second pair of eyes." [50:40] – Tyler Gillespie
Nick Loper concludes the episode by encouraging listeners to apply these strategies to build businesses that are not only profitable but also designed for a seamless exit, highlighting that such businesses offer increased value and reduced dependency on the founder.
Additional Resources:
- Newsletter: Productized Services by Tyler Gillespie
- Podcast: Productized Service’s Free Weekly Podcast
- Website: sidehustlenation.com
- Free Offer: Download the free list of 101 service businesses ripe for productization at sidehustlenation.com
Final Thoughts: This episode provides a comprehensive guide on creating a scalable, sellable service business. Tyler Gillespie's insights into strategic planning, marketing, pricing, and operational efficiency offer actionable steps for side hustlers aiming to build businesses that can thrive independently and attract potential buyers.