#351 Transferable skills and remaining detached

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 We are back at the Riverside Studios in Hammersmith this week, tuning in on my panel of Inner Circle members, answering questions about buying a business from a live audience this week. They consider the choice of sector for someone who has never been in business before, how transferable skills from other occupations can be valuable when applied effectively, and how to remain detached from the business.

When you attempted to mark in. And get your hands dirty. These are important lessons for every deal maker and I hope you enjoy them. you mentioned about not even going to see your business and being relatively removed.

Is that the exception? Because I like the idea of, you having somebody else to manage it and, I personally think I'd be quite a bad mad man manager. I'd hire my friends and my family and the business would implode in a year. So the idea of having somebody else do it, and I just have that contact with that person.

And if you do that, what controls do you put in place to manage your risk? So we've got an MD still in that business and I. Yeah. And we've got contracts managers who run the jobs and they do it so well, they do it better operationally than I ever did it.

So I my my tactic is to not meddle too much 'cause you don't wanna upset the apple cart. I might have taken that a bit too far, maybe, but but I do plan to start doing site visits just so we can try and spot efficiencies. But it's a fine line, right? If the business is doing okay operationally, you don't wanna upset people, you ain't broke, so don't fix it.

Yeah, exactly. You start throwing your weight around. But me and my FD we're gonna start visiting sites more from morale and to try and, to meet everybody, buy them breakfasts, buy So it is something I should be doing, but really I'm a shareholder. I'm not the business owner, I will start doing it.

'cause I wanna make the business as, as good as it can be. I think it would mean a lot if I do start visiting, no, 'cause I was gonna say, wouldn't you want to like the business to put a face to the name I'm the new owner or just leave it as it is? I suppose it depends what the driver is there. 'cause my ego's in check.

I don't really care as long as it's, but and there is, the seller is still the MD of the business and he's great at what he does. He's got, we are adding, I had a meeting with him yesterday and there are things that we are doing that, collectively we're gonna improve from a back office perspective. But yeah, I think boots on the ground are important. But I think, yeah, it is something that I will add value, but I could probably not do it and it would still continue to grow as long as it's doing well then.

Yeah. Thank you. just gonna have a quick bit. So I think it, it's quite natural in the early stages, post acquisition when you're.

Meeting everybody, working out who's who getting all the integration done to, to get into a business to get stuck in. Particularly if it's not business you're massively familiar with, there is a real danger. You start getting sucked in operationally and you start standing on senior management toes, and that's a quick way to lose your senior managers. And so I think if you are looking to do a, a full, guns blazing, buy and build, and that transaction volume is important you've really gotta be going in with the mindset of I'm going in to get out as quick as I can.

I'm going to put the reporting in place, I'm going in to make sure the team's set up. I'm going in to make sure we've got a clear direction of travel that, what, whatever your structures you need to do to get straight back out of it again. As soon as you start oh, I'll just lead this project, or I'll just start that, or I'll just investigate this. It's a slippery slope.

And then 18 months later you find yourself the operations director. Yeah, exactly. And from my just to add to that, I am busy. I, it's good to recognize your highest value task and mine is meeting clients and that's what I'm doing.

So that frees me up to, to try and bring more business in. That's my focus, rather than getting involved in how they're delivering the jobs. 'cause they're already good at doing that. That, that's what I've bought.

I also merged my main business. I started with them operationally. So they've taken, not only have I, I've offloaded my part that I was doing, which I wasn't doing as well as them. So it, it's just it depends, I think is the main answer on what you're acquiring.

I just wanna refer you to the Robert Kiyosaki quadrant. So it's a employed, self-employed owner, investor. My strategy is every business that I'm gonna acquire, I'll be an investor. I'm not having another job, my job is this being, this is me getting paid today.

I'm not being paid, I'm Jonathan. But this is me doing my job, right? This is me learning from people around me, putting myself in front of an audience where I'm having to challenge my thinking and making sure that when I'm sharing with others I'm learning as well. So for me, every business I acquire, I will be an investor and will not be an owner and will certainly not be an operations guy.

So it'll be really clear on what it is that you're looking for. But for me and Ben, I would say to you, why would you go backwards? It's definitely a backwards step. So if you are already at that investor module, I don't see why you would go backwards, especially if it's already working.

So yeah, so for me being an investor go to the top of the quadrant. Straight from the word go. Yeah. I think funding from what Adrian said as well, same sort of thing.

And if it is your first business that you're buying, this is my kinda mindset as well, make sure your first one's a decent platform business. So it's got a decent management team in place. It's got. People running it day to day.

So the acquisition we did if you extract the owner out, he was the owner, took him out, nothing changed. Business ran, had management team in place. Very experienced management team as well. You don't wanna be buying yourself a job unless we always, Jonathan says that, we always say that as well.

You don't be buying yourself a job. You don't wanna be buying a business and your role, my role is strategy, growth, efficiencies, et cetera, et cetera. But day to day you should be involved with, I don't have a desk. I don't have anything day to day there, but senior team reports to me and we look at how we can grow and improvements and maybe new avenues that they haven't looked at because they've always been looking at a certain way.

Whereas you, as a new owner will come in and say what about these avenues and why don't we look at growth this way? Because they've always been set in their ways. Or like most of the retirement sales, they took their foot off the gas the last couple of years and the business has been stagnant. There's a lot of the accounts that you guys will see from your sellers will probably have a static turnover in net profit for the last couple years, purely because of the, that reason.

The business owner's taken their foot off the gas and they just lost interest. And it's your opportunity now to put it back on and grow it. two quick fire questions, if I may, for Harry and for Adrian. Just building on what you've just said, Harry, actually, interestingly about the platform type business as a starter, which makes sense, your own journey, I was interested in what you said before you started with one, maybe you didn't start with, but barber shops early on, which I always think of as a classic sort of owner operator type situation.

So I wondered why you chose to start with that. And sorry, just quickly, Adrian, if I may, I think you mentioned before at the start bed and breakfast and holiday lets, and the like of something else you're doing. And I wondered if you just say a little more about that strikes me as very interested in how you're approaching that and what the aim is with that, if you wouldn't mind. Thank you.

Wonderful. Sure. So I did, fast track. I did it on Zoom during lockdown.

So it wasn't a live event. It was looking at Jonathan on my laptop. And following the process, and for me it was like, okay, is anyone follow this process? I, at the time, I, my, because of lockdown we were non-essential.

So we were supplying clothing to shops, which everything was in lockdown at the time. And I'm thinking I need, I was sick of having debtors and things overseas, factories and all the headaches I had. So I wanted a service where someone, 'cause we dealt with the high street I could see the decimation of the high street back, back in 2019, for example, business rates, all the things that, I dunno if anyone works or supplies retail. So for me, I wanted something where, what's the reason where, and everything was going online.

So why would people go to make high streets or a shopping center and it's gonna be personal care, your nails, your hair, whatever it is that you want to physically be there as opposed to buying online. I can't cut hair. But I understand the concepts of a barbershop. You go in, you get your hair cut, you pay, you leave.

So he says, great. Okay. And I'm sitting at my barbershops over the years and it's something that was in my head. And you sit there thinking, right?

There's 10 people queuing up here. There's two guys. They charge 10, 15 quid or whatever. And in my head I'm doing the mental maths.

Not much really going on here. You've got some product, you've got this, there's no debtors. You don't get your hair cut and have an account and say I'll pay you later. You pay, you leave.

So every day it's generating cash, credit card money cash money. So I acquired two purely for that reason. It was a cash flow model. And I've said this on stage before where I'm into my cars and supercars and things, and they basically fund that.

My daughter's private school fees were funded by one and my portion Range Rover was funded by another one. So it's the Kiyosaki model again, having assets. I'm not a property person. I have a home and I add commercial property, but I'm not a property investor, so I haven't got no clue about that.

But for me, I wanted an asset which paid for those things. Every month, all the finance payments are paid for, kids', school fees are paid for. By that it doesn't come outta my pocket. And that was the reason why.

And I did that on three year deferred after 18 months 'cause of post COVID. I did a deal with both sellers. I've come into some money, took 30% off. One of the sellers, in fact was a father, two young kids.

It was 10 days before Christmas. And I rang him and I said, look, the outstanding, I can't remember how much it was say for wrong sake, it's 15,000. I said, look, I'll pay you 7,000 now. He's no.

We'll keep going through. And I said, look, Christmas isn't two weeks. I'm on my laptop. I've got your payment details on screen.

You'll have it by the time I put the phone down. Alright, go on then. So that was it. Done.

So I tested the letters. The deferred and the early payment. I've come into some money and it works. But yeah, barbershops purely for that.

And I've still got, I sold, funny enough, I sold one last year. I paid nothing for it. It was a, what do you call it now? No money in so it's been cash flowing for the last, what, six years.

And I sold it for 90,000 pounds as a seller. I got them all the money on day one, full belt and braces contract with the seller. He already owned two in the area. Mine was prime position.

It was opposite coffee shop next to m and s at the entrance to a shopping center. So the footfall was very good. He was desperate for my site. And I said, look, here's the number I want.

He said, all right, then we did a deal. So I kept one. Just don't get free haircuts instead of my friends. But but yeah, but that's the reason behind that.

Yeah, so as I mentioned to the lady before, I'm an r and d specialist the holiday let was something that I learned from a guy called Aaron Curry. He's a property trainer and so they're eight bedroom or eight bay bedroom or larger. So I've got an eight, 10, and 13 bedroom properties in coastal regions. And they're up on sacks, cottages and cottages.

com, and yeah, they're self-contained. They, so it's multi-generational holiday, lets so it's a family. It's at granny's 80th birthday. The children and grandkids, they all go on holiday together for a weekend or for a week and and the house becomes a destination.

So everybody's staying in the house. And so some of the bookings, I'm getting like 45, 50 bookings a year in these properties, I mean in Skanes, one of them, right? And it's absolutely killing it. It's not a place I would personally go on holiday.

I, it's again, it's a business model. That, and I bought one with my own money and I bought two with other people's money. So I've got joint venture investors that I'm working with them and they're just cash flowing and it takes me 15 minutes a week to manage 'em. I've got a little WhatsApp group and I don't do it anymore, my fiance does.

It's a hands off investor strategy and that's why I chose holiday. Lets as a particular venture. Hi Jackie Wilkinson, thank you so much for sharing your expertise. I've currently doing my own extra strategy.

I'm looking to leave the military in the next couple of months, so very new to this business ownership and all of this. My question is, I've got a lot of experience in leadership and executive leadership, but. What I don't understand is which sector to go into. Like what, as a newbie going into this, who has a logistical background, but I'm not sure if I wanna go into that area.

Where would you suggest starting what, are there any sectors that are more easy than others? And it's that kind of advice because at the moment we are scatter, gunning or sectors, but you've gotta get to a focal point and rationalize down and become more focused. So looking for that initial advice on what you would suggest, Jackie? I'll say a couple of things.

I'm sure the guys will give more detail, but the way I did it, I went into the sector I'm in with no prior experience or knowledge. So , , in my mindset, I wanted something with recurring income. So it had to come in every month, every year for a certain period of time. I'll give you an example, like your broadband or your mobile phone, right?

You just pay it every month. , So I looked to, you chose three sectors and wherever, wherever that platform business lay, we had multiple conversations wherever the first business lay that was the sex focus on. So if that helps. So if you've got a couple, I would focus on three.

They could be diverse, they could be similar. And wherever the first one lands, then that can, and it's gotta have, like I mentioned earlier, your first business guys for all of you, decent platform, business, decent management team in place, you're not buying a job. Hope that helps. Yeah, it's a really good question.

So what I'm gonna suggest is you approach it from a different angle, and that is start off with what sectors do you not want to do. For example, with us is we have certain sectors, no matter what happens, we will not buy in that sector. So you, those sectors are specific to you. So Ben has a fantastic business that's connected to the construction sector for me.

Construction is one of the sectors we will not touch. We won't touch retail, we won't touch hospitality. We then have an internal criteria that we will only buy in sectors that are either immune to AI or can exploit ai, but are under exploited as a sector for yourself. You may turn around and say we've got these different sectors.

Hey, once you narrow that, still there a lot of sectors. I would add the other caveat for yourself and go, which sectors are deficient in leadership that you can make an impact from? Because you've come from the military, you've got a specialization in logistics, you've got a specialization in leadership. There's very few businesses out there in anything that cannot benefit from logistical experience and leadership experience.

So have some fun with it. Don't make it too restrictive, but also don't buy a business. You're gonna hate I was in your position, I wasn't quite sure. I didn't think I wanted to do.

Exactly the same as the business I've been running for years. So be a bit broad. Just play about with the different criteria and then see what comes back. So providing you've, it's all, you can see where you can add value to that, that bit of whatever you're selecting, but then see what comes back and then make sure that the deal adds up and just analyze it from that way.

'cause then you might find something that you didn't even think you were gonna go after, but you it might be the best deal that, that you find. I think another thing just to think about is try not to be too clever with it. And there are very well trodden paths in buy and build strategies in certain industries where there are proven trade buyers, PE buyers at the end of it. And certainly for your first one, I would suggest, you stick to something that's been relatively well trodden might mean you face a little bit more competition.

But the last thing you would wanna do is end up buying in a sector or something that's really niche and they're just not being a buyer at the end of it. Or they're being so few transactions in that sector that no one has any idea what they're worth because they never get, they'd never get sold. So I think just, yeah, you can go anywhere with it. But yeah, looking at stuff where there's good comparable evidence and a very transparent path that makes getting funding easier.

Because you're not trying to persuade a finance company that you are your niche buy and build in something they've never seen before, is a good a sound bet. So just, yeah, keep it simple and keep it tro to. Yeah. So funny 'cause I'm actually going through this process with my son.

So he's 26 years old. He's just completed his management accounting training. And so we've agreed that we're gonna do some acquisitions and we're focusing just on geography. 'cause he doesn't have a clue what he wants to get into, he's university, he's done three years in working for we by any car.

com doing management accounts. And he go, okay, so he now wants to follow me down the journey. So we've picked a geography, we've picked a company size, and we're just gonna send the letters out and see what comes back. Then there's no preconception, there are some rules.

So he's not gonna buy mechanics, right? He's not gonna buy a garage. He's not the, he's not that big alpha male type, so he wants to go in a business where he's gonna be. Seen and respected by the people for what the person there he is.

So similar, not gonna buy a construction business, he wants to go somewhere. So find a business for yourself where you think you're gonna go and add that value where you are gonna fit in to that environment. But go with geography as well, because you don't wanna be your first business being 200 miles away. Let's get it really nice and close and local to you.

Okay? Just to follow on from that there, when I was in a similar position several years back, I had one or two businesses that were businesses that people wanted the product or the service. They didn't need it. So that caused some issues with lockdowns, various other things.

People don't need your service, so you don't need to go to a bouncy castle. But you need your haircut, you need your waste taken away. You need a coffin, all of us did a coffin at some point. You need to have your fire and gas detection systems tested by law.

So there's certain industries that I looked at, regardless of what happens in the world, you still need that service. So I've got a broad range of businesses, half of them are what people need and half are what people want. So I've covered both bases there. So regardless of what happens in my m and a path, I've got several sales storage businesses that is guaranteed revenue every month upfront.

If people don't pay, they don't get back in. That's my safety net, if you like my anchor and I have fun with the rest, so if I can give a another answer, it's a slightly different. So you're getting a whole variety of responses here. I'd start keeping a note in my phone of sectors because it's easy to think of something and then forget it.

So I'd be noting things down, but I'd spend some time on the internet looking at all the private equity news sites. It's far easier to be successful if lots of other people are being successful. Or you can be finding your own way, doing something no one's ever done. You could be the pioneer or you can rinse and repeat.

A well trodden path. As Rob said. I would be I subscribed to, I dunno how I found them. I just must have searched the internet, subscribe to news sites, private equity, Newswire.

I think that's one of them. And I would just get their email every day, a roundup of deals that's happening. I saw one recently about, . Occupational health.

And I saw a I think it was during one of the inner circle meetings, wasn't it? Yeah. 'cause yeah, 'cause Dean was sitting at the front and I said, look what I just saw over lunch. A private equity, taking an interest in, in, in occupational health which kind of tells you there's some money to be made because they only do it if there's money to be made.

Because that's all they're interested in. They're not trying to help people with their health. They wanna make money. So that's a signifier that there could be a market there.

And markets go in and out of fashion. Care Homes, it was all about Care Homes wasn't there at one point. And then there were a few unfortunate big care homes, where they were over leveraged and it just imploded on itself. So it's gone out of, it's gone out of fashion, but it will come back in.

So there could be an argument for saying, I'm playing the long game here, and I know in 10, 15 years time, it'll be all the rage again. Because every private equity investor is looking for the next big thing, and then the Shine wears off it for a while because maybe some deals go wrong and it happens. Guy Hands, I always recommend Guy Hands' book, he couldn't put a foot wrong and then it started to go wrong. So he bought in a big garden Center business, crashed and burned bought EMI.

The record was all went horribly wrong and then suddenly as a result, no one wants to touch Guy Hands. Okay. Which is a shame 'cause he had an incredible career. It was a great book to read.

So you could be riding high and then things go wrong. But then one day someone's gonna say, wait, let's get guy hands do it. And he has a success and he's riding high again. So you'll see sectors that go through these cycles of success, and no one wants them anymore.

And success again. So it's not about a right or a wrong answer, and it's not about this is a great sector or not a great sector. There are some sectors that are clearly declining. Print I don't think anyone says there's a great future for traditional print, but there might be for something more specialized.

I don't know. So you are unlikely to wake up with the answer. So it's more of a piece of detective work. I think we've got one more before lunch.

Over the past four to five years what have you learned about yourself and how have your character and mindset shifted? Oh, brilliant. So what have you learned about yourself and how has your character and mindset shifted? Let's keep this to quick, succinct answers and we can rattle down the row.

Which end? Should we start go. You are more invincible than you believe you are. I stopped exchanging time for money.

I, if you think you can or you think you can't, you're right. For me, resilience is key. Don't say I can't do that. Change your mindset to How can I do that?

My biggest takeaway from this is getting people in, like my fd, who's just been, it's just been a game changer. I wish I'd done that years ago before I was ready. they've been stolen, I think every single thing that's been said, but it's everyone in the room, the community, what we have the mastermind WhatsApp groups, inner a circle in an airs boardroom for us that were in them. It's really powerful and you'll get there quicker with the help and support.

You can't do it by yourself. You think you can, you can't. But yeah, community. I think the change for me in mindset and over the last sort of few years has been around identity and now, you go from being employee to business owner and as things progress and you narrow down your skillset.

My identity has shifted from business owner to acquisition entrepreneur. And when people now say, what do you do? I don't say I own, I'm an letting agent or a sales agent. I don't say I own a business.

I now say I'm an acquisitions entrepreneur. And that has a completely different Yeah. Get a lot more questions. People don't run away from you quite so quick.

The estate agent. Love it. Love it. Really good.

Really good. What I'd love you to do, please, is show some appreciation to these guys for all of their contribution before. Thank you very much. Thank you.