#349 The Psychology of Business Ownership: Why You're the Bottleneck

Hi, this is Jonathan Jay, and welcome to Business Buying Strategies, the number one podcast for anyone who wants to buy a business without risking their own cash. So last week my inner circle panel spoke honestly about what business acquisition is really like In this second panel discussion recorded at the Riverside Studios In Hammersmith, we get into the psychology of business ownership, why persistence matters, but so does knowing when to pivot, why you are often the biggest bottleneck in your own business.

And what it really takes to step back and let other people run the show. There's some genuinely candid stuff in here, including one story of losing everything and rebuilding in 64 days. I think you'll enjoy it. sometimes you are your own worst enemy.

So the psychology of business acquisition is what's happening in your own head more than anything else. This is a mental game, and if you can win the mental game, then all the practical stuff falls into place. And it's how you think about yourself when you go into negotiation, how you think about deal sourcing. You go to that that business event, that conference, how you speak to people.

That is what is going to determine your success. It's not going to be necessarily the sector or the niche or any of those things. Everyone thinks it is, but it's you that's gonna determine your success. Any thoughts on that?

So I was that founder. I started a business from Zero. It was a startup. We grew that to 10 million revenue in five or six years.

It was the toughest five or six years of my life. It was a hundred hour weeks. It was wearing many hats as is the startup nature of any new business. The stress, the gray hairs, the time missed from family events and various things.

It was really tough. Then I completed an acquisition, purchased or acquired 2 million of revenue and half a million on the balance sheet, and thought I just wasted six years of my life. I will never be a founder again. It's not gonna happen.

Absolutely not gonna happen. And now we are at advanced talks today with three businesses combined revenue of 20 million and about five, 5.5 million of ebitda. All that could be done in the next six to 12 months.

But that's a mental shift. And I guess the first thing for me that I realized was I need to replace myself here. I'm the bottleneck here, knowing when to replace yourself and step back out of the bull ring and observe and have a helicopter view of what's going on. And now my full-time job on a day-to-day basis is m and a great attitude.

Yeah. Anyone else? Anything? Yeah, so what I was gonna add in there is, I think it's a great point is when I look at myself is the businesses that we founded are the ones where I'm still the most heavily involved.

The ones where we bought them, half the staff don't even know who I am. And it's almost at the point where I think the best thing you can do is buy a few businesses and then sell or shut down the business you founded just to buy back the time. But we brought an o and one of the things that he said to me, which was really good is founders and people who start businesses are really bad at giving up the things that they're eight and nine in. So if you think about, if you lined up a hundred people in against the wall, there's gonna be things that you, as people who own businesses are better than 80, 90% of the people in that.

But unless you're only doing the thing that you are better than 99% of people, you're losing money. And your goal as a business owner is to find the people who are the 1% who can do what you are at the 80%. And that is a mindset. 'cause there is points where you look at it and you go, oh, like we're implementing new CRM, which I'm a bit of a geek.

When I was 15, I could program in eight different computer programming languages. I like doing tech. It's a good way of relaxing. And then you see people and they go, oh, to set up this CRM for you is gonna be 120 pound an hour.

Now, I grew up where dad was a fitter on the buses. Mum stayed at home. We never had a lot of money. There's still a mindset thing that in the back of your mind goes 120 quid an hour.

I'll just do that myself. And I started doing it and our C and said, what the hell are you doing? You're billing your time out at 500 to 750 quid an hour and you're refusing to pay 120 quid an hour to someone else so you can go sell your time for 500. Do I need to come around there and slap you?

And the answer was. Thank you. You just have Love it. Great.

Yeah. Thank you. Yeah, my FD or CFO he visits all of the subsidiaries. I don't go down there.

If I go down there, I feel like I'm just in the way because I can't really add, I can add value, but he adds it much better. And I'm a classic entrepreneur. I'm not a very good manager. And he is, so he's, it's good having that person to go down there and do a better job than you.

I think I should. I've never even been to one of our sites when, in my biggest company. I think I should maybe I take a bit too far. I should maybe go to one of them.

That is the plan boss. Yeah. Yeah. Very good.

Yeah. Similarly, I was a founder. I spent 15 years building my business up to four and a half million pound, done an acquisition, grew it added another one and a half million instantly. And I'm negotiating with another two, four and a half million pound companies that's gonna, all of a sudden we're gonna go to 15 million potentially within the next three to six months.

And the reason why I've managed to do that is because I stepped away from working in the business full time. I took away my desk. That was the first thing to do. Remove your desk.

You don't have a place to go. I don't allow inbound emails to come to my inbox from that company. I can only receive internal emails from people within the team, and they're on my leadership team. So I went from being the bottleneck in every possible way.

Every decision needed to come to me. And the way I worked that out is I did an accountability chart, okay, which comes from the entrepreneur's operating system. And it's who's responsible for sales? Who's responsible for marketing, who's responsible for operations, finance?

And my name was in every single box. And that's a problem. So I, the first thing I did is I worked out how do I remove my name from each of these? And I went which are the areas of the business that deplete me which takes away manager, and where am I really good at?

So I was great at sales. So I, the sales were the last thing that I gave away and the hardest thing to give away. But ultimately now I've got a leadership team. We meet once a month.

I have a managing director who runs a business for me, end to end. I meet with her for one hour a week. And we have a same page meeting where we just make sure that we are on the same page. I still have strategic direction about or input on the strategic direction, and she can veto me in everything that I say.

'cause I come up with a million ideas. I think they're all brilliant. Okay. But they I'm assured that they're not.

But I do come up with some goal every now and again, and her job is then to implement it and push that through the team. So just learning to find a way to step away. Let go of your ego. Because your ego tells you're the smartest person.

Your ego tells you the most important person. The fact of the matter is, I was the best person at doing all of those things in the business, but I wasn't the best person at any one of those individual silos of the business. And now I gave away. So my rule is that if as long as they're making good decisions, seven outta 10 times, that person is good enough to lead that side of the business.

'cause if I'm honest to myself, I was a seven out of 10 generally, but it's my money. So when I made a mistake, I felt it, and then I would berate myself and deal with it and move forward and work it out and see the action. Now they've got to that permission. They've got permission to fail, they've got permission to make mistakes, and they've now accelerated and gone from seven out of tens to eight out 10.

Now they're at 12 out of 10 compared to what I used to be running at. So that's separated the business and they have grown they have grown the business significantly. Without me being in the way and and I'm having a lot of fun alright. So I want you to imagine what would've happened if we'd met each other 15 years ago or maybe shortly after you started the business and you'd started the acquisition journey 13, 14 years ago rather than more recently.

What would the future have looked like? How would it have been different? I wouldn't be here right now. I'd be on my yacht somewhere, wouldn't I?

That, yeah I would've made, think I would've made a lot of changes in my life. I probably, I may not have got divorced, that they're toll on the family. Was significant, putting those hours in actual stress of being in the business all the time. Yeah.

Placed pressure at home hugely. Yeah. And, and the truth is and I'll be honest and vulnerable, I lent a lot into alcohol to ease up. I'd get home at nine and 10 o'clock at night and everyone else would be in bed, and I might have a bottle of wine or two and then, just to ease down, go to sleep and then, and go and do it again.

And that would be at least five days a week. And then at the weekend and very often if I did get home early, I'd read the kids a story and then the laptop will come on and then, it's one o'clock in the morning and the wife was in the spare room and Oh, I was in the spare room, to be honest. But and, but it has a tell, it has a cost on you to run a business that way. So we've gotta find a way to, to step away from it.

So the, to answer your question, that might not have happened. I, it might have done anyway, right? 'cause I was young and ambitious and I was looking to grow. It just would've been a different outcome.

But, the cars, the money and all that good stuff, the impact I would've had on the world would've been significantly greater. Yeah, great answer. Thank you, Patrick. Yeah, so I, I did the similar to you, Adrian, the organizational group structure.

When you're speaking to banks and stuff, they will want to see in an org chart and a little bit like yourself, I noticed, but my name was in a lot of the boxes as well. And one of the changes that I made is that my office is actually in a separate office to the team. Because I wanna be doing focused work on working on the business and the operations and the commercial team need to be thinking about growing it. Now, within two days of completion of my acquisition I simply logged into the bank and in, in in Tide.

Tied bank, there's a function called Chase. And I just looked at the unpaid invoices and I was like, why are they not being paid? And they just gave me some, I didn't think they, they knew the answer to it because it was so focused on the day-to-day who turned up late today that, why is that job not complete like that type of thing. So I did a really simple thing and I pressed Chase on about 10 invoices and within 20 48 hours of completion, 250,000 pound got paid.

And the seller rang me up and he said, what you done? So I was like, I've just chased invoices which you should have done, but you was too busy on site and dealing with customers and staff and things like that. So for me, separating the two roles, which is me working on the business, I know we hear that a lot in this sector specifically, but within 48 hours I noticed that was something that I saw direct. Return and investment, if you like.

So love it. Yeah. Great. Anything similar?

Anything anyone wants to add? Yes, Rob. I think one of the, one of the reasons we struggle sometimes to delegate is this whole sort of control thing and people aren't gonna be able to do it as well as we can. And sometimes you end up with you, what you should be doing.

We know we should be bringing on a people into leadership roles. I think there's a, there's, aside from the fact that you never get the benefits, there's a real risk if you don't do it from a, like an internal progression perspective. If you've got talented people that you've grown to a point or you've paid to recruit or whatever it is or that have come through an acquisition and you can't let go, those people will leave and you will never escape the trap or you have to then go and start paying crazy recruitment fees, bringing in external people that don't necessarily fit the culture, don't necessarily share the same vision.

So I think yeah, ha having a group of people around you and having a development plan for yourself to say I need to be able to let go of X, Y, Z. How does that. Actually gonna happen in practice to let go of it. I need to know it's gonna get looked after.

And what does that person that I've tapped on the shoulder for that need to do to get in a position to take it off me. Otherwise you just go, there you go, your problem. You deal with that. If it starts then coming back to you 'cause you've not developed that person, that acts against your instinct to, to do it again in the future with the next person.

So to set yourself up for success, beginning that delegation journey, you need to make sure that you're doing it right and setting it up to succeed, because otherwise it will negatively reinforce back and, oh, whenever I give it to people, they just can't do it and they never do it as well as me. And we just feed that back into the cycle and we never break it. You can't just go get rid of it or, or do it with big sweeping brush strokes. You've gotta take real care to, to bring people through.

And then that creates a, that's a retention tool as well. It's a recruitment tool. And the whole thing then starts building from there. And you can build a management team quite.

Surprisingly quickly with a good culture if work on that groundwork. Oh that's really good advice. The, sometimes the less you do, the more you earn where traditional thinking is, the more you do, the more bricks you lay, the more tiles you fit, whatever it might be, the more you earn because you're being paid by the hour and by effort and by hard grind. Where now it's about leveraging other people's knowledge and skills and in terms of acquisitions is about leveraging someone else's lifetime's work or 10 years of work, leveraging that into your group of businesses rather than you going out and do 10 years of work.

'cause none of us have got enough time to do all that work, to build all those businesses by ourselves. Let other people who've had enough of their business. Let you take them over for compensation. There's money changing hands, but for that compensation, which then gives you the building blocks for what it is that you want to achieve, and then one day someone's gonna do it to you.

When you feel you've reached the end of the path with that business, then someone will take it from you and compensate you for your work. But you've gotta decide whether you want to be the hunter or the hunted. And right now, buying smaller businesses, growing your group, you are the hunter. And then at some point, and some of you on this table are thinking about this already, you will put your yourself in the position of allowing yourself to be hunted, but controlling the process and let someone then give you what you want for your group that you've put together.

Harry? Yeah, though I, following on from what everyone said as well, but just from what Jonathan said, it's the conversation one I have with sellers is that I'm merely the new custodian of your business. I'm taking over your business, your legacy that you've built. I'm literally the custodian at the moment and I will then pass it on to whoever's gonna take it next.

But I think the guys have put your hands up who are business owners as well and I think we're all guilty of this and it's been highlighted on the table as well that no one's gonna do as well as you in your eyes. 'cause it's not their company, it's not their money, it's not their business, it's your business, it's your legacy, your baby that you've started and built. So I think Adrian mentioned if someone can do 70% and it's a really hard thing to let go of, it's great, but it just frees up your time your head space to go and do acquisitions and focus on things.

And it's just finding we are normally the bottlenecks and the acquisitions we've done. Even the current one, which we did less than a year ago and you can normally promote with within it as well. So there's a great guy who was running it as the GM who was now our MD and he's almost being let off the reins and he's doing, he's going great guns. And usually the people you want within the company where the owners held them back 'cause they are the owner and the boss.

But the best people are usually within the company that you're buying. Yeah. Great. Any other thoughts on that?

Yeah, I was just gonna add there though is, and I think this is where it's easy for us sat here 'cause we've already gone through this is Jonathan talks a lot about, it's not about buying businesses, it's about the person you become in the process. And it's easy for us to sit here and go, it's ego that stops people giving up these businesses and ego that stops people putting in the processes. I actually think a lot of it is fear because people don't trust someone enough 'cause they don't know how they got to where they got and they don't know how to get it back if they make a mess of it.

So if you don't know how you grew your business to the level you did and it happened by accident, you're afraid to give someone else the control because if they mess it up, you don't know how to fix it again. And this really occurred to me a couple of weeks ago 'cause we were doing a fast track and someone came up to me and they said, I've got two questions for you. One, what number is too big that it scares you? The answer was simple.

There isn't. If I could buy a 10 billion pound company tomorrow, I would. Secondly, they said, are you not afraid that if you make it get it wrong, you'll lose everything? And I turned around quite honestly and said No, because I know that I could replace my income in 30 days if I lost everything and I'd be right back where I am now in 12 months time or less because of the skills that I know.

And they went white and because they didn't know how they got to where they got to go. And I think you've got to try and understand what it is that's stopping you. 'cause it's easy sometimes to say, oh, it's ego. I'm doing this because I don't want to give up control.

Instead of admitting to yourself, you don't want to give up the control 'cause you're afraid you don't know how to fix it if it goes wrong. And I think that's a big honesty a lot of people need to do when they look at themselves is say, am I afraid or am I being egotistical? And recognize whether where fear is. 'cause fear will destroy your success and eat you as inside before you can stop it.

So I we'll have a break in a few minutes. So I remember in my early twenties grow, I, I grew up, my, my parents had a business, but it was a business that was really a job. They were working evenings and weekends and of course when you're a kid, when you are at home, evenings and weekends. So that was a business that was in conflict with family money, which is what you were saying a moment ago.

And all I could think of was, wouldn't it be amazing to have money? Wouldn't it be and as you get older and you start to put it into numbers, and of course, I was early twenties, yeah, I wanna be a millionaire. I wanna be a millionaire. And I'd work out all the sums if I did this and I did this.

And and it just seemed so far outta reach. But what I was missing was a vehicle I didn't have, I wanted it, I have the desire. But I didn't have a method to get there. I didn't have a vehicle, I didn't have a business to, to get there.

And then when I got the business to get there, and it all happened really quickly, and then suddenly you've got a million pounds sitting in the bank, you go what was the big deal? And actually your life, I still lived in the same place. My life didn't change. My friends were still the same.

I ate the same food, wore the same clothes, went to the same places, went to the same places on holiday. Actually nothing changed. And it was like, so what was all the fuss about? And then you realize that it is about your mindset more than the, than a physical process.

And I actually think that everyone can benefit from having a tough time in their life to having everything taken away from them or losing everything and then building it back up. Because as you were saying, Martin, once you've done that, you know you can always do it and that gives you an incredible confidence. Everything can be taken away, but you still can do it again because they haven't taken away your attitude. They haven't taken away your mind.

And I think that gives people an incredible confidence to say, whatever happens, I can do this again and again. And that is, that's self-belief. And that is the person you become in the process of buying a business. Increased self-belief, confidence, ability to talk about money, where most people in the UK don't like talking about money.

Being able to actually talk about money and price and negotiate incredible skills. So even if you don't buy a business, the skills that you learn in the business buying process will be with you for the rest of your life. There's value there, even if you don't do an acquisition for some time, any. Thoughts on that?

Well, A question for you actually. 'cause you just said that, you kept the same friends. Okay. Is that still the truth?

How much has the change in your peer group and people around you had an impact on, on, on the journey you've been on? It's a good question. So I, I don't have any wealthy friends, so the people that I went to school with, the people I've known since I was a teenager some of them are struggling right now. Like you wouldn't believe.

And I discovered very quickly that your friends do not want your advice. They really don't. And you want to give it, you want to help because you've been there and you think look if you just change this. And, but people do not want your advice.

Free advice is never wanted. When you pay for advice and everyone listens, but free advice, no one listens. So yeah, there they're exactly the same. But I think the.

The but you, but those are your friends who are like a constant throughout your life, but then you can choose your professional peer group. So I was in a room recently with just last week with a group of people who are all doing very well in business. And there was some people in that room who've done incredibly well in business. And I feel myself being stretched.

I'm thinking, oh maybe I need to think a little bit bigger. So everyone needs to get around people who are ahead of them on the journey. Doesn't mean give up your friends, but it does mean choose your professional peer group wisely. Cool.

That the reason why I asked the question I've made a, I've had to make a lot of changes and to my friends because I found that they had an unhealthy mindset. And as I've grown and moved forward in life, I've found the connection with them to be more tenuous. Yeah. And so I've worked really hard at focusing on building a peer group of people that stretch me.

But not just financially, spiritually, morally healthily, so my friend more friends go to the gym than used to. So I, I start going to the gym more things like that. So I surround myself with people that I wanna spend time with. Not just money, say all the different areas of life so that I'm constantly looking at growing, but also looking at maintaining a one hand up, one hand down mindset.

So I'm looking at being around people that I get to add value to them, as well as other people adding value to me too. Great answer. Any thoughts on that? Just to extend on the point that you mentioned Jonathan and yourself Martin about rebuilding, if you was to lose it all.

I dunno if you remember Adrian, I told you in Mar Baya I used to be an engineer, but by trade, that was what I did before I went into property. And I left employment in April, 2021 to go full time. And I actually lost all of my money in the June. And my wife at the time, she wasn't working and I had a 3-year-old daughter who the group is actually named after.

And I remember very vividly on near Father's Day, she was coming down the street with a a laminated piece of paper that said My daddy is the best and all that. And I actually, I. I had just lost all of our money that, that day. Through trying to diversify, I was like two months into being self-employed, I was trying to diversify, trying to really just push the boundaries of what was possible.

And that was on June the 18th, I think it was a Thursday. And by the Saturday I had, we had a couple of options. There was no one coming to save us and the only thing that I could do was rely on me and my business and my skills, which I thought I had. Obviously, evidently I was questioning that.

And we ordered two whiteboards from Amazon and on the Monday we wrote the figure that we lost. I divided it into time and how long do we wanna give ourselves to make this money back? And we said, what about six months? And I said, no I wasn't that long.

And then we eventually, it settled on 90 days and I said, oh, actually I'm not working weekends. So then we ended up 68 days. We did up two weekends and various days in between, and we actually made the money back in 64 days. But by default, I created a business model, which we now have today.

And every, we still follow the same process. Every Monday morning we write a figure on the board, which is our now weekly goal, and divide that into the tasks and goals that which we're gonna use to, to get there. And going back to your point, Martin, obviously none of us want to go through that process, but I, by accident, created a business model that I can rely on. If I did lose everything tomorrow, I wouldn't like to go through it again.

But I'm confident that I could. Turn it around. Maybe not in 30 days. I did it in 64 days.

So pretty pleased with the outcome in the end. No, that's really good. Really good. Thank you very much.

Alright let's take a 10 minute comfort break and we'll resume. Thank you. Thank you. And thank you.