In This Episode
If you’ve been around us at all then you know one of the things we specialize in with our coaching is helping people with buying and selling companies. Not only have we helped hundreds of people with various transactions, we’ve also bought and sold several businesses ourselves. So as we finish one year and head into the next we thought it might be a good topic to address for those of you who are thinking about buying a business in the new year. This could either be an add on to your current business or perhaps it’s your first business.
When I say we have personal experience with buying and selling companies, this is something Adam spent the first decade of his career doing full time on Wall Street. During that time Adam was involved in everything from multi-billion dollar deals to ones that were several million and everything in between. Jack has personally bought, fixed up, and then subsequently sold five different business. And earlier this year, Adam and his wife purchased a dormant franchise business that they’ve resurrected and are continuing to grow.
During the show we shared not only several of our personal stories but those of our clients who have had some experience with buying companies. In fact, it’s one of the fastest ways to accelerate the growth of your business. Some key topics we cover today include:
- Engage/Take Action: it’s important for you to get out and do stuff. Talk to and see people vs. just investigating.
- Buying It Right: nothing can make a deal go south faster than buying it wrong. This could mean overpaying for the deal or sending too much cash out at closing or something else. We have met so many folks who have bought their business wrong where everything has to go perfectly for them to succeed. Any of you business owners out there had everything go perfectly in your business for even a day let alone months or years?
- Some of the Best Deals Are Ones You Don’t Do: part of the process of figuring out what you want to buy should include going out to see several different opportunities. This way you can get a better feel if this particular deal is right for you. We’ve even had clients who have jumped in and started running the company before they owned it to help move the deal along. But that deal, like many others we’ve seen, died before they made it to the finish line. And that’s usually a good thing.
- What Do You Bring To The Table?: one of the reasons we are such big fans of buying a business vs. starting one from scratch is that you have the benefit of history when buying a company. Depending on how good the records are you’ll be able to see what went right and what perhaps went wrong with the business. Then the question becomes, what would you do differently? What are you bringing to the table that would have helped avoid some of those prior pitfalls and what are you going to bring to the table going forward that is going to help with the growth and success of your new business? If you can’t figure out how you’d add value to this business then chances are you should probably walk away from the opportunity.
- Don’t Go All-In On Your First Deal: one of the things we’ll counsel folks on when it comes to buying a company is to be sure not to tap into every financial resource you have to buy that business. It puts too much pressure on you to succeed and will likely push you into making decisions that are too short-term focused vs. being focused on the long-term health of building your business. Plus there are many things you’ll learn doing your first deal and perhaps running your first business that you can apply to the next one. Make sure that whatever resources you’re putting toward this new deal would hurt if it didn’t work out but it won’t tank you if it doesn’t work out.
Few things are more fun and exciting than buying your first business. Not everyone is cut out for it, but if you are you’ll be hard pressed to find more exciting things to do in your business. Maybe today’s show will give you that spark and confidence you’ve been looking for to do your first deal!
People, Companies and Resources We Mentioned in the Show
- IRS (https://www.irs.gov)
- Armature (https://en.wikipedia.org/wiki/Armature_(electrical))
- How Did Jack Buy His First Company, DSSB Show from December 20, 2018 (https://dirtysecretsofsmallbusiness.com/episode/how-did-jack-buy-his-first-company/)
- Young Rembrandts (https://www.youngrembrandts.com/gcw-oh/)