To What End?

Almost every creative business owner I speak to tells me that they would like to one day sell their business.  Yet, when I ask who would buy the business and why, most often I am met either with their larger competitor or a blank stare.  Both don’t do justice to the power of the question(s).  Deciding who would be a likely (and perhaps unexpected) buyer provides an invaluable roadmap as to what path your creative business should take.

Key to the analysis is understanding the niche your creative business fills, its potential for growth – both in terms of geography and/or product expansion – and what hidden value might be unlocked by the buyer.  Several examples:  Amazon’s purchase of Zappos.com for $900 million.  Zappos has announced that it will be entering several different markets using its “Powered by Service” credo on top of Amazon’s incredible distribution and purchasing infrastructure.  Did Zappos build its business for Amazon to buy?  Probably not.  But did they think of the compelling value they would offer to Amazon?  Absolutely.  Closer to home, take a look at the Knot’s purchase of WedSnap (the Knot for Facebook) earlier this year.  The similarities in the two businesses are striking, but for the platforms.  There had to be a consideration in the minds of WedSnap’s owners that, if they proved successful, The Knot would be a buyer.

However, there is a gulf between creative businesses and, say, tech businesses.  Creative businesses do not have the luxury of creating the platform without worrying so much about how they are going to make money.  Those who would be willing to buy or invest a substantial sum in your creative business are going to want to see that there is a market for your art and that it can thrive at scale.  Twitter can prove its value with its user base.  Colin Cowie, no matter how fabulous his events, can’t prove his value based on his events alone.  His business value will be based on his lifestyle brand and the trends of his initiatives — both in terms of dollars and customers.  If it is Colin’s goal to one day sell his business, he will have to think about his brand beyond events and who will most value what he is doing in this arena.  Simply, no one is going to pay him alot of money for his events business.

Having the discipline to see beyond today will afford you the opportunity to analyze the highest (and possibly hidden) value of your creative business.  Your work will then be to reveal and justify that value to those who you think will care the most.