Sellability Driver 3 of 8: The Switzerland Structure

The third driver speaks of a business being independent – not dependent to one customer, one employee, and one supplier. A business should be able to diversify by not being too dependent to one customer, one employee, and one supplier.

Video Transcript:

The Switzerland structure gets its name from the country of Switzerland, so if you know any of the history of Switzerland it’s pretty amazing, they’ve taken the subsession with being independent, you know they didn’t join any of the two world wars, they didn’t send troops to Iraq, they didn’t even join the UN, before the referendum of the entire country to decide whether to join or not, they ultimately did. It really goes to the idea that as a country they are obsessed with this independence, not being overly dependent on anyone – factions or regime so to speak. That’s essential for being a sellable company, that independence of any one constituency. The three most important groups you’ve gotta make sure you are independent of are number 1 – customers, so you can’t have an overly concentrated customers set, you gotta have good diversification among your customer set. Number 2 – employees, you can’t be overly relying on any one employee, and number 3 – not sometimes as intuitive as the others, you can’t be overly dependent on any one supplier either. So customer, employee, supplier, you gotta be independent of those three because for a buyer coming in, they’re gonna look at your business and if they see that your overly dependent on any one of those constituencies, they’re gonna discount the business because it’s just too risky for them. so to improve your score, you’ve really got to make sure you’ve got good diversification on your customers, make sure you’re not overly reliant on any one employee, and you’ve got diversification on your supplier as well.

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