This blog is going to tie a whole bunch of other blogs together so try to keep up.

As I mentioned in my explanation of why I buy, build, and sell businesses, its important to find a business that you can grow very rapidly. Another way of stating that is to find a business that’s about ready to reach critical mass. According to wikipedia, critical mass is The amount of a tendency needed to keep it going on its own momentum. In other words, you get your business setup with such a strong foundation that now it’ll take off and stop growing linearly and start growing exponentially! With that strong foundation, your profits will grow exponentially as well (and probably faster than your revenue).

So here are the components needed for any business to reach critical mass.

1. You focus on improving the business through the 6 Stages of business evolution
2. You have the 3 Leaders every business needs
3. You have Systems, Processes, Procedures and Scripts in place for everything
4. You have a program in place to maximize Back-end Sales and to generate Referrals from every sale

This may be the most simplistic way to view a business running on all cylinders, however all of these points are needed to achieve that massive growth. Keep in mind, most businesses do not have more than 1 point of critical mass. They can only have a massive growth period once in their existence which is why it’s so important to know a business that’s about at that point. More importantly you need to know how to take it past that threshold so you can then sell it and cash in on that amazing growth.

Ok so let’s look at each point in a little more detail:

1. The 6 Stages of Business Evolution

In his book, The Business Coach, Brad Sugars steps you through these 6 stages. At his Entrepreneur’s Masters Class he goes into even more detail. I haven’t written a blog about it in detail yet so here’s a quick overview of those stages.

1. Mastery – Mastering Money (cashflow), Time, Delivery, and Reporting (most businesses are stuck here)
2. Niche – You no longer can be compared to competitors because you have something unique
3. Leverage – You’re leveraging (doing ever more with ever less) all aspects of you business
4. Team – You know how to recruit and get the right people in the right spots
5. Synergy – Everyone and thing is working together
6. Results – Just a natural by-product of everything else

2. You have the 3 Leaders every business needs:

A leader leads people and a manager manages resources so it’s important that they’re leaders. Those leaders are the following:

1. Service and Operations Leader
2. Sales and Marketing Leader
3. Finance and Administration Leader

3. You have the Systems, Processes, Procedures, and Scripts in place for everything.

Those systems include your software and computer systems as well as the systems needed to effectively deliver your product. The processes and procedures are the methodologies that you use to put those all into place. They of course all need to be documented to deliver consistency and to get someone trained and up to speed as quickly as possible. Scripts are the methods in which you effectively communicate with your customers, vendors, and maybe even each other. They should all be based on strong NLP principals.

In my office last week we just hired a new Office Administrator for Sales and Marketing and the person training her has given her a whole packet of the procedures, processes, and scripts we’ve developed over the past 5 months. It’s amazing how quickly those things can get someone trained and productive. It also helps you quickly determine if they’re up to the task or if you made a bad hire.

4. You have a program in place to maximize Back-end Sales and to generate Referrals from every sale

I tied Back-end sales and Referrals together because they’re basically the same thing. If I can drive down my cost per lead for marketing by getting referrals from every sale or by increasing the times a customer comes back to buy from me, I’m way ahead of the game. Building that loyal customer base is critical and an essential piece to acheiving critical mass. The way to do that we’ll have to address in a later blog.

So now you have a basic understanding of all of the pieces necessary to acheive critical mass, however don’t forget that this also gives you the perfect formula for determining what businesses have not yet acheived this. In other words, these are the businesses you want to buy! The businesses that just get by or manage consistent single-digit growth. If you’re like Warren Buffet you look for the businesses that have a strong position in the market but have been undervalued or beaten up by speculation in the market. Warren Buffet’s strategy, however is long-term. We however like to think short-term and repeat that short-term buy, build, and sell again and again. Warren Buffet himself said that he could generate 50% or better annual returns if he didn’t have so much money. In other words if he could just invest in small to medium businesses that are about to reach critical mass he’d be an even richer richest man in the world. Makes sense to me. Does it make sense to you?

To your success, Bryan

We’ve had a couple of adjustments to make between my 2 businesses lately. Namely, our top sales person based on revenue generated quit with 2 days notice…  The day he provided his notice I launched 2 new radio ads that on the first day he wasn’t in the office “indirectly” generated 6 leads in one day. I say indirectly because none of the appointments have been run yet so I don’t have any feedback from our sales professionals as to the prospect’s reason reason for calling. Obviously asking them how they heard about us is a waste of time, which is why both ads have a specific offer only available by mentioning the ad.

Writing a job description shouldn't be this hard...

At any rate, there are a few important aspects to recruiting:

1. ALWAYS be recruiting.
2. Have a plan so when you find the perfect person you can impress them.
3. Have a basic job description that you then tailor to that “perfect” person.

When people ask me if we’re hiring my standard response is “we’re always looking for great team members.” Finding loyal, hard-working, reliable team members is one of the hardest parts of business so if you meet the “perfect” person for your team while visiting another business are you really going to sit by and do nothing? Great people pay for themselves. Granted, you may not have a spot in your current business right that moment however you may have one over the next few months or years as your business matures. Heck, you may even buy a business for that perfect person to run. I personally had someone recruit me for over 5 years before I called them up one day and said “so do you still have an opportunity for me?” (of course he did).

So now that your eyes are open, how do you know they’re “perfect” for the team? Moreover, how can you make sure they’re “perfect”?

This is where my opinions differ a bit from Brad Sugars, Michael Gerber, Michael Masterson and even Marcus Buckingham (their books are all in my Recommended Reading section). Actually I agree with all of them as well – I just decided to blend their philosophies…

Before we get into the job description, you absolutely MUST have your Vision, Mission, and Points of Culture. Not only is it crucial for you to make sure you find someone who can fit into that culture, it has been the absolute best recruiting tool I possess. When you bring out your Points of Culture during the interview process, people are impressed. They immediately respect your attention to detail, focus on ethics, and business savvy. If for no other reason than it seems to be common sense, yet they’ve never seen anyone else do anything like that.

Back to the job description… Make sure you have one for every open position in your company. That description does not have to be extremely detailed, but it should include at least the top 3 responsibilities for that position (that’s a Brad Sugar’s concept though I can’t remember from which book). Compensation, Team members for whom they will be responsible, and a general description of their overall goal are necessary prior to an interview. My descriptions also include a section for “Test and Measure” where I list specific numbers they’ll be responsible for improving through testing and measuring. For instance, Average Dollar Sale, Closing Ratio, Daily Break-even, etc. may all be important “Test and Measure” concepts for a particular position. It’s my responsibility as the Team Leader to provide them with those numbers and provide the education and resources necessary to improve them.

So your pre-interview job description may look something like this:

Compensation: Fifteen percent commission of all gross sales with a target of $50,000 in sales per month.

General Responsibility: Generate new revenue for the business by presenting the best solutions to our target market.

Specific Responsibilities:

1. Present products to clients and prospects
   
2. Generate leads on your own in addition to those generated through our marketing
3. Ensure that every client is so happy they’re excited to provide referrals

Test and Measure:

1. Average Dollar Sale for your sales
2. Average # of transactions per year per customer
3. Closing ratio

The need for those basic points is simply to make sure you are being realistic in your search for the perfect person. It’s basically common sense things like you wouldn’t try to recruit someone making $50,000 per year for a $10/hour position even if they are perfect. The job description ensures that you’re focused on the person with the proper traits.

Now here’s the important part, after you find that person, interview them, and learn a bit about their passions, talents, and skills, you need to expand on your job description to ensure that new recruit will be doing what they do best as often as possible (Marcus Buckingham harps on that in all of his books).

For instance, my current openings are in sales. Your stereotypical sales professional can’t stand paperwork, is rather disorganized, but is extremely outgoing, excellent at building rapport quickly, reading people, and isn’t afraid to ask for an order.  That type of personality would lend to having all appointments, follow-ups, paperwork etc. handled by someone other than the sales professional so they can just focus on getting in front of prospects. His job description might include generating new business by cold-calling or canvassing because he enjoys the challenge. However, what happens if you find a talented sales professional who is organized, loves to know how a business works, enjoys building longer-term relationships, and even feels comfortable documenting what they do. Well you write up her job description to focus on setting up relationships with complementary businesses who can be constant lead sources, you have her document the steps she took to build those relationships, and for the most part you don’t require her to do any cold-calling or canvassing because if she’s not passionate about it she won’t be good at it anyway. If possible, you probably still want someone else in your office managing the paperwork, appointments, etc. however a person with that type of personality may be more effective juggling her own schedule because of her highly-organized nature.

This is where I differ a bit from Michael Gerber who focuses on creating your organizational chart right from the beginning with full job descriptions. The chances of you finding the person who fits your detailed job description perfectly on every point is nearly impossible. If Michael Gerber had actually ever owned a business before writing his book he would know that.

Michael Masterson, on the other hand, teaches that all of your top-level people should have the same job description – “Whatever is best for the customer”. Sorry, that’s just a prescription for chaos… Reference my blog on the lessons 5-6 year olds taught me for a better analysis of why.

In summary, ALWAYS be looking for new recruits, be prepared to set yourself apart from any other business the recruit has ever dealt with, and then tailor your job description to focus on her doing whatever she does best as often as possible.

To your success, Bryan

It’s amazing when you consult for businesses throughout North America – particularly when you’re intimately involved with their billing software – how many “questionable” things you learn.

I’ve seen:

1. Paying people under the table.
2. Canceling cash transactions in the computer and pocketing the money.
3. Trade deals.
4. Running the expenses to remodel a home through the business.
5. Paying salaries to family members who don’t even work in the business.
6. Buying a company motorcycle.
7. Paying country club memberships directly from the business.
8. Writing off business trips and meals where business was never discussed.

And if your accountant approves of one or more of the above, get a new accountant because they’re not liable – you are. Those write-offs are only gonna be legit for as long as you can avoid an audit.

So why the overwhelming pressure to “cook-the-books”? The simple answer is of course taxes. When someone in America makes more than $100,000 per year about half of his income goes to the government so I can understand how people can get a bit bitter… However there are a few reasons why not doing things “by the book” or why sneaking unethical transactions through your small business is a bad idea.

1. It devalues the business when you go to sell. If you’re ever buying a business NEVER include cash deals that aren’t on the books as part of the value of the business no matter how well documented they are. I can put together a spreadsheet in about an hour “documenting” the last 3 years of over-the-counter cash transactions that I pocketed and never got deposited in my bank account. If the business hasn’t paid taxes on it, then don’t include it. You have no way to verify. Additionally, when valuing a business based on Seller’s Discretionary Earnings or Cashflow, etc. you can only add back so many “owner perks” before the buyer is going to wonder if maybe a great deal of those perks might just be necessary for your type of business. You bet I would certainly use that to negotiate the purchase price down.
2. It will catch up with you. And maybe the only way it’ll ever catch up with you is by you not being 100% comfortable every night knowing that the IRS will never find anything out of line. Business is a means to an end. That end being more freedom – particularly of your time.  But if that free time is haunted in the back of your mind with, “How do I conceal X if I get audited” then how can you completely enjoy it? CFO magazine from July/August 2008 had an article titled Don’t Mess With the IRS – Tougher Enforcement has Companies Rethinking Tax Strategies. It makes the point that the IRS is better funded, has better legal talent, and for the first time ever, actually wants to take people to court because they’re so confident in their new abilities to win. And they’re making waves. CFO points out that in 2002 corporate tax penalties amounted to $335 million while in 2007 they totaled $939 million. Nearly a three-fold increase in 5 years. Don’t be naive and think “well those big sheister corporations deserve to pay all that money but they’ll never worry about my small business.” You don’t have a full staffed legal team for them to even fight. It’s just a matter of time before small and medium business’ start feeling the repercussions of the “New IRS”.
3. There are legit ways to minimize taxes. However they can be a bit challenging and finding a good accountant is even more work…

Don’t get me wrong. It makes me physically ill to think of how many thousands of my dollars are going to wasteful government spending and redistribution of the wealth programs…  If it gets bad enough, then I’ll move to another country that’s more tax friendly (more on that later) however for now, the possibility at the American Dream and making millions in America is still alive and well so I’m going to pay my fair taxes and make sure my business’ are legit. With that in mind, here are a few legal tax minimization ideas you may want to consider:

1. Rental Real Estate – You can deduct up to $25,000 in losses from passive income against active income if you’re an “active participant” in that real estate and you don’t make more than $100,000 per year. It gets more complicated from there…
2. Equipment Leasing – Leasing equipment from one business to another business, or from your person to your business is a great way to get money to your pocket with minimal taxes. More importantly it’s a great way to shield your business from the liability that having employees driving vehicles would present. In other words, if company A owns your trucks and leases them to your primary company B and someone sues the company that owns the trucks because they were in an accident, all they could take would be the trucks… Not the rest of your business. Admittedly its a bit more complicated then that, but you get the idea.
3. Multiple Business Entities – If you have a pass-thru entity such as an S-Corp or LLC, you don’t pay any Self-Employment tax or FICA. In essence, any distributions that you take out of those businesses saves you 15.3% on FICA taxes right off the top. You must, however, pay yourself a reasonable salary. You can’t take all of your income in distributions. Also, all corporate expenses (i.e. forming your business entity) plus the formalities necessary to keep it up and running are deductible expenses. Depending on your type of business you could also incorporate in a state without state income taxes such as Nevada, Wyoming, Texas, or Tennessee.
4. Personal Loans – Loaning your business money and then taking a reasonable interest rate against that loan is a form of passive income. It’s not taxed the same way as active income (no FICA, I believe).
5. Like-kind-exchanges – If you buy and then sell a business, you can defer your tax indefinitely by buying another business with your capital gains. The same is true for similar real estate transactions. Obviously if you can’t completely and legitimately eliminate the tax, your next best option is to defer it for as long as possible.

The list can go on-and-on. Granted, as in all my business dealings, I err on the side of creativity which is why I would never setup any of these programs without my accountant’s and lawyer’s blessing.

Simply put, according to The Millionaire Mind, “Being honest with all people” is the number one trait millionaire’s attribute to success – dealing with the IRS requires that same level of honesty.

For a few more resources on legitimate ways to minimize your exposure while improving your marginal tax rate, check out How to Pay Zero Taxes 2009 (How to Pay Zero Taxes) and The Corporation Manual.

Oh yeah, and don’t forget the purchase of those books can be deductible.

To your success, Bryan

Sorry for being a bit slow on the blogs lately. My 10-day, 2800 mile, cross-country motorcycle ride kinda had me preoccupied. Then of course coaching football to 13 5-6 year old boys has also cut into my 80 hour work weeks.   As a matter of fact, if you EVER think you’re a great leader, volunteer to teach 13 kindergarten and first grade boys how to play flag football… Teaching a handful of these kids in a classroom certainly must have its challenges, however football has it’s own nuances that the classroom does not. For instance its a physical sport and everyone knows a boy’s favorite thing to do is wrestle, tackle, push, and tease so having them go from that to learning something new is never a smooth transition. Additionally, each kid is learning something different and all at the same time. One is learning to be a quarterback another to be a running back another a wide receiver another a center. It’s actually more like the team in a business than in a classroom. Most importantly – You just gotta get all of them running in the same direction.

So here is a quick summary of the lessons my 5 and 6 year old players have taught me about effective leadership already (all of which apply to adults):

1. Everyone has preconceived notions. I have one player who has older brothers and has obviously watched football on TV. He’s really fast and so a running back would be perfect for him. However this is flag football so running straight up the middle, like they do on TV, isn’t generally the best way to avoid getting your flags pulled.
2. Work with what they can do and what they like. I have another player who is particularly rambunctious. Always goofing off, tackling other players, not listening, throwing grass etc. So I gave him a single objective on defense. Pull the player with the ball’s flag. He’s one of the 2 smallest players on the team and yet he pulled more flags than almost everyone else combined. He absolutely loved it and obviously I encouraged him every time. He got so good at it that he once pulled the flag of the running back before the quarterback had time to hand him the ball. The referee wasn’t real sure what to do and I couldn’t help but laugh.  So when I asked him what his favorite part about football was guess what he said? “Pulling flags!”
3. Let them understand why its better for them to do something. The fearless player who runs up the middle does it because that’s what the pro’s do. So how do I get him to run around the other team to the outside instead? Well I can tell him to do so, or teach him why its in his best interest to do so. “OK running backs, what’s your goal?” “Score a touchdown!” “Great, so in which direction do we run?” “That way!” “Straight up the middle” “Yes!” “If you run up the middle do you think they’ll get your flags?” “Uh, yeah” “So since your so fast you think they could get your flags if you ran around them?” At this point you should have seen the excitement on his face. It was like the whole world was open to him and now he could score limitless touchdowns (those looks alone make coaching worth it).
4. Give them structure. If you don’t have specific drills, specific breaks, specific plays, huddles, team meetings, key phrases (like “freeze!”), and some ground rules it’s chaos. Honestly my team is chaos. I’m still trying to figure out this structure thing. I like to think I’m better at it in business but now I’m not so sure… And that structure doubly applies to the dads who are helping out. They’re even more lost without specific instructions.
5. Provide encouragement but don’t be too nice. As mentioned in #2 above you have to encourage, however if you don’t also discourage certain behaviors you have a riot on your hands. That’s my problem. I’m too nice (which makes me think I have the same problem in business). The kids need specific guidelines as to what’s acceptable (like your business needs Points of Culture) and when they’re out of line they need to have some sort of punishment (sitting next to coach and not participating is always a good one).
6. Never assume everyone understands because you’re so great at explaining things. This results in kids running in the wrong direction. It has the same effect on your business, which is why procedures, position descriptions, scripts, incentive-based pay, Points of Culture and other VERY specific documents are necessary.
7. Reward success. Kind, compassionate mothers everywhere are going to chastise me for this one, but if a child (or adult) drops the pass, fumbles the football, misses the tackle etc. you don’t give him a sticker. He’s not stupid. He knows he didn’t succeed so why would you confuse him by rewarding him? Now when he does well, you (as the highly respected coach) better be the first one to congratulate him!
8. Do what you say you will. If you tell a team member you’re going to stop practice if they keep misbehaving, then stop practice. Threats without consequence carry no weight. Even a 5 year old figures that out real quick.
9. Ignore the ignorable. My mom taught me this one. When a group of boys are sitting in the middle of a field they are going to throw grass on each other. It can’t be stopped. It’s an impossible force of nature that cannot be overcome. So ignore it. Often times there are things in our business that require the same selective ignorance… Not everything warrants our attention.
10. You don’t know everything. Since I’m a nice guy, and not a brilliant coach, we took turns handing the ball off to different players to run. One by one each player got a chance. Another of the littlest guys I was a bit concerned about… I really wasn’t sure what he could contribute to the team and what I could encourage him to do. So when it was his turn to run he took off and ran for a touch down. His next rotation around he ran in for the extra point. In practice today we didn’t have any goal lines so he ran all the way down the field and back to me (the line of scrimmage) with no one catching him. I don’t think anyone has ever pulled his flag! Looks are deceiving. The shortest legs are not necessarily the slowest. Man am I glad I gave him a chance and, more importantly, so is he!

In First, Break All the Rules: What the World’s Greatest Managers Do Differently, Buckingham points out that you always do better by having people who are good at something keep getting better than having someone who is not so good improve. You build up his strengths and ignore his weaknesses. You don’t spend time trying to overcome his weaknesses. Granted, as small children they have a lot of growing and learning to do so what may be a weakness now could certainly become a strength later. However for adults, that’s almost NEVER the case. Adults love doing what they do best, will be proud of themselves when they do it, and will continually work to get better at it because of that pride. They’ll do even better with some encouragement and continual education from their leader.

Wait a sec – that sounds exactly like my 5-6 year olds. Let them play the position they love – some prefer running, others throwing, others catching, and others getting flags – encourage them when they do it well and they will make themselves better. And if you’re a decent coach and can help them learn what they need to do to become even better, then they’ll be immeasurably more excited with their new found knowledge. The team at your business works the same way. That’s why we have team meetings, regular reviews, benchmarks, reports on performance, commissions, bonuses, processes and procedures, scripts and a Team Leader (which I tell everyone is most synonymous with “coach”). My job as a coach (and team leader) is to help everyone do their jobs to the best of their abilities.

What’s your goal as a leader (coach) in your business?

To your success, Bryan

P.S. You know what’s most amazing? These kids taught me all of this in only 4 practices and 1 game so, so much for that MBA.

Are you an expert at business like these guys were at building houses in the sides of cliffs???

An entrepreneur is someone who is an expert at business. More specifically, buying, building, and selling businesses. An entrepreneur is not the same as a capitalist. A capitalist creates wealth out of nothing. A capitalist creates capital with just an idea or knowledge. That idea could be a book, a talent, a business, real estate, a security or almost anything that can be converted into capital.  An entrepreneur, however, by definition (at least by my definition) deals entirely with businesses. He or she is a master at them…

At this point I’m not a capitalist, however I’m an entrepreneur (successful hasn’t been proven yet, though).

It amazes me at how many business opportunities have come my way since I decided to become an entrepreneur. At least every week someone approaches me to help them with a business, to buy a business they are selling, or to a buy a business they know is for sale. Some are not good ideas… Others are… Keep in mind, out of 50 businesses you evaluate, 1 will be good – so you better always be evaluating.

So what does it take to convince people you are the entrepreneuring genius that they should be talking to before ever considering a great (or not so great) business idea? Actually it’s pretty simple. You just have to convince everyone around you that you know more about business than they do. Here’s the quick process for doing that:

1. Tell everyone your expertise is business. Not the product or service of a business – just the business – any business.
2. Be an expert at business.
3. Let people know you’re always looking for new business opportunities.
4. Learn how to evaluate business’ quickly and ask the right questions as soon as you’re presented with an idea.

The first 3 are pretty direct and/or have been addressed before so we’ll skip past those.

Number 4 is so important because it immediately affirms what you’ve told people – that you’re an expert. Experts know the right questions to ask because they know what answers they need to hear. In other words, a great entrepreneur knows what that “perfect” business opportunity looks like. Make sense? Ok, so what are a few questions I ask as soon as I learn of a business? My questions focus on a few basic categories and vary by business type. For instance some of these things will vary depending on whether it’s a service business or a product based business.  Generally I would prefer a product based business because it’s a lot simpler. Service based businesses genrally require people with specialized skills. Now if finding people with those specialized skills is easy then a service business could be a great investment.

1. Growth Potential
2. Profit Potential
3. Worst-case scenario
4. Complexity
5. Up-front Cost

Growth Potential – In essence we’re determining current market and wallet share compared with total

1. How many customers do you have?
2. Are they all in a database?
3. What are you doing to cross-sell, up-sell, and add-on to existing sales? (remember it’s always cheaper to have a current customer buy from you again than to have a stranger buy from you the first time)
4. What’s the population in this area?
5. Why do people do business with you?
6. What kind of marketing are you currently doing?
7. How are your salespeople trained?
8. What products do you sell?
9. Have you tried to sell X (similar or complementary) product to your customers?

Profit Potential – trying to figure out where to cut the fat while growing the business. More sales does not guarantee more money in your pocket.

1. What are your profit margins? (Gross and Net)
2. What is your total take home? (i.e. company cars, travel, meals, etc.)
3. How have you negotiated prices with your suppliers?
4. How do you manage the office, inventory, payables, receivables, service, etc.? (in essence i’m looking for inefficiencies that can be replaced with technology and automation to save time and money)

Worst Case Scenario – Ideally the business is currently existing in a worst-case scenario and still surviving which presents you with the maximum upside potential. Also, I need to know if I could possibly make it any worse.

1. Do you have any competitors? Who? (monopolies are always nice)
2. Why do people choose to do business with you instead of them?
3. What are your daily goals for each employee?
4. Do your employees know at the end of the day if they had a good day?
5. Is anyone paid an incentive such as commissions, bonuses, etc.?
6. How often do you perform employee evaluations? (the employee questions help me determine overall business efficiency by guaging employee effectiveness)
7. What do the owners do for the business?
8. Are the employees happy and effective? Do they plan to stay?

Complexity – Since I don’t want to be personally involved in the product or delivery of service for a business, how hard would it be to teach someone new? Additionally, is the business too complex to manage remotely? Most of this is common sense. You can look at most businesses and determine if they’re simple or complex.

1. How long has each person been working here?
2. How long does it take to train a person for x positon?
3. How do you find new people for x position?
4. Do you do any work or sales online?
5. Do you have any business management computer systems in place? (not just accounting software, but software that will allow me to get a snapshot of the whole business across the globe)

Up-Front Cost – This is basically supposed to tell me 2 things: How much money do I need out of pocket and how much can I pay for the business versus what I can sell it for?

1. Are you willing to vendor finance?
2. Are you willing to sell or lease the property that houses the business? (if selling I can always get a bank loan for real estate to provide instant cash to the seller making a vendor finance more attractive on the balance)
3. Why are you selling?
4. What’s your time-frame?
5. How long have you been selling? (This tells me if I’ll be able to quickly resell)
6. Have you ever had your business professionally valued? (tells me if they understand business valuation or I can “educate” them on the true value of their business)
7. How did you determine your asking price? (give me more insight into their business valuation knowledge)

Obviously there are more questions you ask when evaluating a business. When I’m actually sitting down with a business owner who’s selling their business I might spend 2-3 hours asking questions. At this point in my entrepreneurial career I do that partially to learn of the business opportunity and partially to see if that owner knows something I don’t.

As a warning, you never talk about the asking price or negotiate down from that price without ensuring that the business owner likes you, trusts you, and knows you can make their baby succeed. We’ll get more into negotiating the best price for your business in another blog.

Notice that I highlighted the top 2 questions in each category. If you want a super-quick way to evaluate a business in just a few minutes, ask those questions and make sure you know the “perfect” answer ahead of time. When you start asking those questions off the top of your head when someone mentions a business idea, I guarantee they will respect your knowledge and start viewing you as the business expert you claim to be. Once everyone knows you’re a business expert the opportunities just start flowing your way.

To your success, Bryan