What do companies such as Tesla, WWE, and even Coca-Cola have in common? Besides being behemoths in their respective industries (we can debate Tesla is more hype than it is fundamentals), they all were purchased from their respective founders and taken to the next level by the buyer. Before Elon came along, the Tesla prototype barely worked. WWE was a small rinky-dink company in a fragmented industry and Coca-Cola was still a fledging soda fountain drink.
Have Immediate Cash Flow Day One. Buy Don’t Build.
Sometimes the worst person for a company IS the founder. And once more, as the founder, they are often too close to a company to see what exactly the problem is that is preventing a company from scaling and hitting that next level. Many founders find themselves in a position where the business isn’t a business for them but a job. Instead of working on the business, they work IN the business.
I have firsthand experience in this. I started a cleaning company earlier this year. In the beginning, I was the one answering the phone, fielding customer emails, and sending out quotes in addition to handling all the marketing and strategy. I was working in the business and it was just a job for me (A poor-paying one at that. It’s not uncommon for founders to take reduced or no salary in the beginning). In the startup world, this is called going from 0-1. It’s a lot harder going from 0-1 than it is from 1-2 because at the 0-1 phase it’s not a business yet. You don’t have systems in place. And there is no capital. 1-2 it’s a business. You have capital and maybe even some employees so you can focus on the overall business strategy.
We are especially in a time where it can be more advantageous to buy rather than build. There are approximately 2 million businesses owned by baby boomers. Sure, most of these businesses aren’t suitable for ownership (probably just 1 guy doing gigs under an LLC), however, even then there is lots of opportunity for those who find themselves in a position for an apprenticeship buyout type of situation.
Many boomers don’t have heirs who wish to acquire and continue the business, opting for careers entirely independent from their birthright. This is an opportunity that as of yet, has not been overrun. Namely, because it’s difficult to find these owners. Of course, this can be wrought with landmines such as businesses being dependent on one client, poor or nonexistent financial statements making due diligence nearly impossible, or employees all quitting on day one. Acquisitions can require a finesse that can require professional experts. Explore working with M&A advisors or business brokers to get a beeline into the acquisitions space.
Make things easy for you. Reduce your brain damage. Have Cash Flow Day One. Consider buying a business.