The Best of Buying a Business

Speaker A: Hey, y', all and welcome. Welcome back to something just a little bit special. You know us, uh, Krista with a K and Greg. And together we've taken you on an incredible ride through over 100 different podcasts. We've explored cities, shared tips, laughed about life, dug into history, talked travel, food, sports, and everything in between. Each show has its own personality, its own rhythm, and its own communities of listeners who've been right there with us for the entire journey. But now it's time to shine a spotlight on the very best of the best. Over the next stretch, we're going back through our episodes to pick out the ones that truly stood out, the one that made us laugh the hardest, taught us something new, inspired us, or just captured that spark that makes podcasting so much fun. We've poured a lot of ourselves into these shows, and we're excited to bring you the highlights that we're the most proud of. So whether you've been with us since episode one or just found your way here today, you're in for a special treat. This is our chance to celebrate everything that we've built together, one episode at a time. This is the best of a collection of moments, stories, and conversations that remind us why we love doing this. Sit back, press play, and let's relive the the magic.

Speaker B: Hey, y'.

Speaker A: All.

Speaker B: And welcome to Buying a Business, the podcast that guides you through the real world journey of owning your own business, whether you're purchasing an existing one or building one from the ground up. We dive into everything from due diligence and financing to operations, legal musts, and what it really takes to make it work. No fluff, just honest talk about the hard work, smart moves, and careful planning it takes to succeed. Let's get down to business. Real specific, uh, businesses that are for sale, but we're going to walk you through a process, both looking inside yourself to what you need to think about to make sure you're ready for your own business, and also if you are ready for business. What does your. What's your profile? Right. Um, what's your personality going to want? What's your, uh, background? You know, we went over risk tolerances last time, and you really need to know your risk tolerance before you jump into a business. Um, you have a lot of things at risk. I mean, the reward when things go well is absolutely amazing, but it's a, ah, it can be a real struggle, um, and you could potentially lose everything. So you got to make that decision. And what's worth it, you got to be willing to if you lose everything, find a way to start over again and get it done again, or go back in the workforce, if that's available to you. So today let's talk about defining your ideal business profile. So let's build on the crucial foundation of understanding your financial capabilities and risk tolerance. The next step in assessing your readiness for business ownership involves defining your ideal business profile. This isn't simply about choosing a business that sounds appealing. It's about identifying the type of enterprise that generally aligns with your skills, aspirations and lifestyle. This process requires careful inspection and realistic evaluation of your capabilities. So, you know, just because you like doing something like, um, let's say water skiing or boating, that doesn't mean that you are qualified, uh, to be successful at something in those industries. You know what I mean? I mean, how are you going to start a boat business? Are you going to start making boats? I mean, we have someone that lives down the street, um, Mr. Freeman, who makes Freeman boats. They're catamarans. The power, Power boats are amazing. He pretty much started off by making boats in his garage and now it's one of the most popular and famous boat boat brands, uh, in America and worldwide. Absolutely amazing. And good for him for doing it. We need more people that can do things like that. But think about it. If you have no real experience other than enjoying going out on a boat and maybe, you know, getting, getting behind a bonus water skis, what do you really know about running the business? Now if you go from, you know, something that you've done before, that you worked in an industry for years, uh, maybe you volunteered your time for a long time and you had fulfillment in that, but it wasn't a money maker for you. But now you find a way to help people and make money for yourself. I mean that's, isn't that a win win right there? I think that's what we should all aspire to do. Um, so the first aspect to consider is your preferred industry.

Speaker A: What, what are you passionate about?

Speaker B: What industries do you understand? Well, your existing knowledge and experience will significantly influence your success. Jumping into an industry you know nothing about is a recipe for disaster. If you have a background in technology, for instance, acquiring a tech startup might feel more comfortable than buying a bakery. However, a passion for baking and a strong business acumen could make the bakery viable option. The key here isn't to limit yourself, but to carefully weigh your existence, um, your existing, not your existence, but your existing expertise against your desired trajectory. Consider conducting a, uh, thorough research into industries that interest you. Look at Market trends, growth potential, competitive landscapes, and potential changes. Don't be afraid to network with professionals in various fields or gain insights and understanding the realistic different industries. I mean, so say you're interested in a car wash. Uh, go seek out someone either whether you know them or not. Maybe a friend of a friend of a friend who owns a car wash. Big, small, self service, fully automated, doesn't matter. Uh, discuss it with that person. I guarantee you in 90% of the cases, these people, these business owners will be open to discussion with you about what it takes to get started. They love to share their stories. I mean, love to, I love to share my business stories. Most of them. How, how they got started, um, what capital to take, what market did they look at? They will share a lot of this with you. Uh, there's always those, you know, out there who aren't, aren't going to share anything and you know, that's, that's on them. They got to live with themselves and look at themselves in the mirror. Most business owners are going to share with you, uh, now they don't necessarily want you to come open up next door to them. However, you know, that is America and that is the competitive way. So don't be shy to go out there and tell people what you want to do and get to know some people already in the business. I've done that with almost every business that I've done. Um, and listen, it also depends on what kind of business you're getting into. It helps when you know a lot about the business that you're getting into, but you don't have to be an expert. Um, really you just need to know how to run a business. So depending on the size of business and kind of business, lots of times you're going to get into a business that maybe you don't know everything about and you're going to surround yourself with people that do know that business and then together with you as the center piece of everything and holding all the people around you together, you grow that business and you grow it together. Um, but you got to find the right people, trusted people, make sure you do extensive background checks on even people that you know, um, and trust to make sure that you can just get together, hold it together, uh, and then move forward and you can do great things as a group. They got to be the right people and you got to be the right person. But that's, that's what, that's what I like to think that I'm good at. And um, that's the way that I Go into my businesses. So next we need to define your ideal business size. Um, this is closely linked to your financial capabilities. The risk tolerance. A small business with a manageable workload may be a better starting point than a large complex enterprise, especially if you lack substantial experience. Small businesses offer a lower barrier to entry, allowing you to gain valuable experience to build a foundation before potentially scaling up. However, they might also offer a lower earning potential initially. So you may start small, don't make a lot of money, and then grow it over time, and then goodness knows what you can grow something into and that's on you. On the other hand, a larger business presents greater opportunity for quicker growth and profit, but also carries significantly more risk and requires a higher level of management expertise and initial capital one way or other. Whether it's your money, family money, investor money or loans, consider your resource, both financial and human. A larger business, um, necessitates more employees, advanced technology and robust financial infrastructure. Do you have the capacity to manage this complexity? Are you comfortable with the increased level of responsibility and potential risk pressure? Let's look at three scenarios here. Scenario 1. An individual with limited capital, an experience, may find a smaller established retail store, a more manageable acquisition than a large manufacturing facility. The learning curve is less steep and the financial risks are lower. Scenario two, an experienced manager with significant financial resources and a strong management team might be well suited to acquire a larger, more complex business with a substantial growth potential. They possess the necessary skills and resources to navigate the challenging, uh, and capitalize on the opportunities that exist within, within that, uh. Scenario three. Uh, a family owned business, even if it's quite sizable, might be attractive to an individual wishing to leverage their family's network and experience, thereby reducing risk and complexity. However, family dynamics must be careful considered before taking the sleep. I mean, uh, come on, getting into a family business, even if you're in the family, I mean, that can be an absolute nightmare. Um, I'm telling you, I'm, um, not a big fan of partners on any level. Sometimes you have to have them. Um, there's a lot of things that go into partnerships. Uh, I'm just getting off on a tangent here. So you're going to get this. If you need capital and you go to someone who has money, and even if that person has no idea what the business is that you want to start, that person is still going to want control of your company. They're going to want 51%. Here's their reasoning. Well, I put in all the money. Okay, what's your reasoning? Well, uh, it was my idea. I know the business inside and out. I can make this work. And I'm spending all the time, um, and all the effort to get this done and I'm bringing to the table all the money that I currently have to put into the business. You're both right. There's ways to set that up. Yes. The person who's putting in most of the money may end up owning 51% in an LLC. That there's two things that that doesn't mean, that doesn't mean that that person has day to day control over the business. You will have a, uh, different contract that states what your uh, responsibilities are in the business and that's running the day to day operations. There are some things that you need to be transparent about. You know, money accounting, that kind of thing. That's obvious. You would do that anyway. And also the pay structure. Uh, just because someone owns 51% of an LLC does not mean that they automatically get 51% of the net profit. Okay? These things are mutually exclusive. So that if you're doing all the work and you want 80% of the net profit and your investor is happy with 20%, there's ways to work that out within your business. So remember that. Okay. Remember also that the idea, and that's all from talking about going into business with the family. Because family can't go into business with family half the time. Imagine being an outsider coming in and trying to deal with all the family dynamics.

Speaker A: Good luck.

Speaker B: But it is a possibility and I'm

Speaker A: sure it can work.

Speaker B: Uh, remember the ideal business size is directly proportional to your capacity to manage it effectively. Don't overestimate your capabilities. Start smaller and scale up gradually as your experience and resources grow. So beyond industry and size, determine your preferred management style is essential. Are you a hands on guy? Um, do you enjoy being involved in the daily operations and a little bit of micromanager in you and all that kind of stuff? That's not me. Um, or you have more of a delegative approach. Your management style should align with uh, the nature of the business. I mean I'm, I'm hands on, but I'm hands off. So once I find the right people, you know, then I'm going to delegate to them. This is your, this is what you're supposed to do. This is your job. This is your job. This is your job. Now go do your job. When you run into issues, let us know and let's have some meetings and talk about things as we go. But you do this, these are, this Is what you can do on your own without, without dealing with me. Person 2 this is what you can do on your own without reporting to me or asking permission or working me through every single detail that's going on all the way through your core, you know, four or five people that are in your top level management structure. So um, there's ah, in addition to industry size and management style, several other critical factors should shape your ideal. I'm just going to list these off for you. I think they're pretty uh, pretty self explanatory. Location of course. Location, location, location. Customer base. Do you have, are you getting a business or buying a business that already has a good customer base or is the customer base something that you feel you can grow quickly? Are you marketing to other businesses or are you looking for um, directly to the consumer? Level of technology integration. You know some businesses are heavy on technology while others are more traditional. Depends um, on what, what you do. Uh, growth potential. I'm a growth guy. I don't want to be stagnant. If I'm going stagnant I feel like I'm treading water and I'm eventually going to drown. So I want to grow, um, I want to grow my business. I want to get more people involved. I want to change people's lives that come to work for me uh, in a positive way. So I want to add that if we're doing a good service or providing an important product, uh, then I want to be able to do more of that so we can affect um, our consumers lives in a positive way. Uh, work life balance. If you think that you're going to be your own boss and suddenly you don't have to work much anymore and it's going to be like a big vacation, um, you're wrong. Um, so I got into a business and I was, it was a franchise and I was sold. Ended up being a bill of goods. I don't know exactly what that means, bill of goods but I hear it all the time. Um, so I was told that there was going to be a management team, a billing company, uh, franchise, uh, development, all these things. Well when I got into Wasn't there. I mean it just, it wasn't there. So I was supposed to just have a conference call and follow spreadsheets, you know, two or three days a week. And that was pretty much my involvement. Well three, three to four months in it. I saw that that wasn't going to work. Eight months in it. I have to divest myself from the, the franchise and from the management company and eventually the billing company and everything that went along with that. And I had to start over myself. And this is when I didn't know very much about this business. And I surrounded myself as quickly as I could with people that I trusted and that were experts in the field, to my knowledge. So, um, just saying, you're going to have to work hard. It's not going to be a 9 to 5 job. There may be travel. You're. You're going to be taking your work home with you every single day, probably 24 hours a day, depending on what you're doing. So you got to keep that in mind. It's a grind. I mean, it really is a grind, um, but it's also very rewarding. So investing the time to develop a comprehensive business profile is an investment in your future and your future success. So, absolutely, go do that. Um, do some research on that, and then let's get back together next week and, uh, we'll go the next steps of buying a business. Good luck. Uh, pick the right business. And coming from a man that has pretty much owned my own business since college, um, all different kind of businesses, from medical businesses to cleaning businesses, to the mortgage companies, uh, to financial planning firm. I mean, I've done a lot of, uh, construction firm, landscape construction firm. Done a lot of different things. Um, most pretty successful, a couple of not so successful, we'll call them failures. But I've learned a lot in the process. So it's. What I'm saying is, you know, do your research, do your homework, but let your gut be involved in the decisions that you make. And you're not going to hear that very often. And if anyone ever tells you that your business, your small business, uh, and you shouldn't take it personally, has no freaking clue what they're talking about and stop listening to them right then. Because that business is yours and it is personal. And if it's not, it's never going to work. That's all I got to say. So anyway, y' all have a great day, and I'll see you next time. And until then, God bless you all. Make some good decisions.