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Many people shy away from acquiring businesses, thinking it’s far more expensive than starting up your own. However, acquiring businesses actually will take you just as much money and time as starting a business from scratch – and, it’s less risky, because starting a fresh new startup may not have the customer validation or recognition to guarantee success. You don’t need millions in the bank, or even the years of experience that you imagine when you think about the big wigs on The Profit or on Shark Tank.
I’ve mastered the art of acquiring businesses and share tips in my Acquisitions Academy, and the following are steps I’ve learned from my own experience. Like with anything you’re getting started with, the very first steps are key and lay the foundation for the rest of the process. The heart of getting started with acquiring businesses is finding business owners who are looking to sell, and making sure they can trust you. Without these initial components, it will be very hard to start acquiring businesses.
- Understand your skills and personal goals.
First, you have to abandon everything you may think about your capacity to acquire businesses. Even if you’re young and this is your first time doing anything remotely like it, you have to present an air of confidence. I tell students in my Acquisitions Academy all the time that most of acquiring businesses is mindset. You have to be confident about your ability to take over their businesses. So, have a list of your past accomplishments, your skillsets, and your network ready. Have them written down and taped to your wall to remind you of your capability everyday, or to rely on during a phone call. If you don’t appear confident, the business owner will sense it and the potential deal will be over. 80% of your communication isn’t actually your words – it’s what you’re communicating with your body language and vocal tone. Get into the right mindset first, and position yourself correctly.
I also find it highly effective for you to have your own personal goals ready going into these conversations. Ask yourself what you’re hoping to get from the experience. Profit, of course – but do you eventually want to start your own business? Do you want to swoop up real estate businesses and become a real estate mogul? Having a long term plan will help with your acquisitions strategy, and also help you with step three.
- Approach business owners.
Next, finding qualified sellers is key. I don’t recommend cold calls because they can take a lot of time for very little return on investment. What I do recommend is getting out there as much as you can. I tell my students to attend events and start to talk to people – that way, they get to see your face and get to know you. Network at a local five-star hotel. Go to business networking events. Talk to people, take their numbers, and invest time in building relationships. Take them to coffee and get to know their goals. People are looking to sell businesses more often than you think – and a lot of people can be persuaded.
As you meet people, you’ll also be able to filter through who is actually motivated to sell and who isn’t. Then after the first real meeting, follow up as much as possible. The first interaction won’t always be enough, even if they are motivated to sell their companies. Continue to email and call – life has ups and downs and changes frequently, so if you don’t hear back, that doesn’t mean the deal is off the table.
- Ensure the owner can trust you by appealing to their desired outcome.
I tell people all the time that acquiring a business requires a lot of talking….and even more listening. You’ll be speaking with business owners who are deeply connected to their businesses, and may have run their businesses for many decades. This is why listening is key: in order for the sale to go through, the business owner will want to know that you’ll keep the integrity of the company and that you’re the best person to bring the business to life. It’s scary for them to hand over the reigns of something they’ve spent so long building. It’s their lifeline.
This step will also include crafting a vision for the future of the company. Business owners don’t sell only for the capital that they’ll get out of the sell – they care about their employees and the reputation of their company moving forward. So, be prepared to go into the very first conversation with the owner with a high level plan for how you’ll help the owner achieve what they really want to achieve. I’ve seen people acquire multimillion dollar businesses for hardly anything once they master this aligned objective.
These three steps comprise the beginning stages of how to get started acquiring businesses. Finding the seller and establishing trust with the seller is key.