The Sellable-Sector Checklist
Pick a sector, build a genuine USP, and backwards-plan the exit
- Difficulty
- Advanced
- Time to result
- ~ongoing to results
- Steps
- 5
- Confidence
- 70%
Mike Winnet applied a personal checklist to choose a sector where a sellable business could be built. First the sector must meet certain market conditions and let him offer a genuine alternative, not a marginal price cut like the interchangeable recruitment agencies he cites. Second, he beat incumbents by doing the opposite of industry norms: where e-learning was sold per course on long contracts, he offered a Netflix-style monthly subscription with all content included and a no-lock-in cancellation policy. Third, the exit was defined first: he set a target sale price and date within the first weeks, then backwards-planned every decision toward it, deliberately creating competitive tension between potential acquirers. He is candid that a large exit still depends heavily on luck and cannot be guaranteed by any formula.
Origin
Mike Winnet worked in two startups and as a sales trainer setting up franchisees week after week, decided he was building other people's businesses with knowledge he could apply himself, and used his checklist to enter e-learning with three friends, building Learning Heroes.
Core principles
- 01Enter a sector only where you can offer a genuine alternative, not a 1% price cut
- 02Beating incumbents often means doing the exact opposite of industry norms
- 03Decide the exit price and date first, then backwards-plan every decision toward it
- 04Competitive tension between buyers, not a single bidder, sets the sale price
- 05A business is worth only what someone will actually pay for it
How to run it
- 1
Screen the sector against market conditions
Apply a fixed set of market-condition criteria to a candidate sector. Mike entered e-learning despite no background in it because the sector met his checklist, not because of prior expertise.
Watch out Avoid sectors everyone is already piling into and getting rich from; crowding erodes the opportunity.
- 2
Demand a genuine alternative
You must be able to offer a real USP, not the same thing 1% cheaper. He contrasts this with recruitment agencies started by ex-recruiters who claim to be different but only shave fees.
Watch out Claiming to be different while copying the incumbent model is the most common self-deception.
- 3
Do the opposite of the industry
Where e-learning charged per course, per head, on long contracts, Learning Heroes offered an all-you-can-access monthly subscription with free new content and a no-questions cancellation policy.
Pro tip When rivals say your pricing must be wrong because it is so cheap, you may have found the right contrarian model.
- 4
Set and backwards-plan the exit
Define the target sale price and date at the outset, then make every subsequent decision by working backwards from that endpoint.
Pro tip Mike's team fixed 'this is the day we sell and this is how much we want' in the first couple of weeks.
- 5
Engineer competitive tension between buyers
Target multiple companies that might want to acquire you, including rivals protecting their client base, so more than one bidder is at the table when you sell.
Watch out A single interested buyer has no reason to pay a premium; tension between buyers sets the price.
In the wild
Mike and three friends built Learning Heroes, making short animated explainer e-learning sold to corporates. They rejected the industry's per-course, long-contract model for a monthly all-access subscription with free new content and free cancellation. They planned the exit in the first weeks and backwards-planned toward it, creating competitive tension between acquirers.
→ They sold roughly 2.5 years later for about £8m in cash (an ~£11m headline deal), splitting around £2m each between four founders.
Common mistakes
Copying incumbents with no real USP
Entering a sector by undercutting fees 1% while claiming to be different, like most new recruitment agencies, gives customers no genuine reason to switch.
Turning customers into competitors
A model where you teach others to do exactly what earns your money, as get-rich-quick gurus do, is self-defeating because your buyers become your rivals.
Selling too early and leaving money on the table
The acquirer resold Mike's business as part of a $2.8bn deal nine months later; his share could have been triple, showing an exit is timing and luck, not a repeatable guarantee.
Is it for you?
Best for
Operators with transferable experience who want to build a differentiated business for a planned acquisition exit.
Not ideal for
Founders pursuing a lifestyle business or anyone hoping a taught 'system' guarantees a large exit regardless of luck.
From the transcript
“I got a kind of checklist that I think a business would work in this sector... There has to be certain market conditions. You have…”
“Why don't we do the complete opposite? So, we'll just it's pay a monthly subscription... Similar to Netflix.”
“This is the day we are going to sell and this is how much we want. So, every decision we made on that way was…”
From the episode
The Contrepreneur Formula Exposed: Behind The Scenes - Mike Winnet - #098
Mike Winnet