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To my knowledge, there is no other blog or book or lesson or presenter who shows someone the basic pieces necessary to generate wealth with real world experience as I will. It’s the nuts and bolts of the whole buy, build, sell process.

There are basically 4 steps:

1. Preparing – What you need to know prior to getting started.
2. Buying – How to find, value, negotiate, and purchase a business.
3. Building – What you can do quickly to increase the value of the business.
4. Selling – The ins and outs of selling your business.

Preparing

Ironically, as my most recent blog has pointed out (it’s ironic because it took me 18 months to write the blog that I should have written first), the most important part is your mindset and your attitude. Next, you’ll also need to take the first 3 steps to becoming wealthy including, always spending less than you earn, understanding the difference between where you are and where you want to be is education, and framing your goals into  Do x Be = Have context. Possibly most importantly, you need to have a clear motivation for being an entrepreneur (even if it’s different than mine) and you need to appreciate that the ethical route is always the most profitable. And make sure you’re able to get over your fear of failure in trying new things.

It’s important to understand that there’s no better, quicker way to go from very little money (let’s say less than $5,000) to a lot of money. You can even take it to the next level and setup a business to generate $1,000,000 per year if that’s your desire. Recently, as part of another blog, I’ve outlined a basic plan for how someone can go from $5,000 or less to $1,000,000 primarily through business. To stress the point even further that buy, build, sell is the best way to generate wealth for the average individual, review my suggestion to skip getting your MBA and just buy a small business for your business education.

Buying

In the buy, build, sell strategy, the part that will have the greatest influence on your profit is the purchase price so learn as much as you can for this stage.

First, you’ll want to know some basic questions to ask the seller about their business and maybe even what questions to ask about any given business idea. Then you’ll have to understand how banks value a business in case you need to go to them for financing and also how EBIDTA can tie into business values (since sellers and business brokers may reference it). As you start looking for businesses, you need to have some ideas of where to find businesses for sale for little money down and how to deal with the business brokers once you find one you’re interested in.

Before you start making any offers, it’s very important that you get the seller (or broker) to like you since then they’ll be more likely to accept your business valuation. It’s very simple to turn someone down you don’t like anyway. Once you’re ready to make an offer, make sure you only purchase the assets and then put them into an LLC filing as an S-corp. If you do that, you won’t have to spend nearly as much time fighting with lawyers. But since you may need one anyway here are a few tips for getting the best rates from your lawyer.

When you’re just starting out you may be considering a partner but make sure you don’t take on a business partner unless absolutely necessary.

Building

In the building stage you’re going to need to know what to do your first 2 weeks onsite at a business you’ve just purchased. If you don’t already know the difference between profits and cashflow, I’m sure you’ll learn very quickly.

Immediately you need to work on polarizing your company’s culture, improving teamwork, and communicating effectively. Right out of the gate you need to start setting up your business for running without you through the effective use of technology, incentives, and empowering your team. If you don’t do that immediately, you’ll soon be asked to do lots of things “in” the business that will take away from you working “on” the business. This is vitally important because if you’re not working on the business you’re not taking the time necessary to double profits, improve marketing, teach your team the importance of NLP, create systems, processes and scripts, or improve closing ratios. In other words, your primary focus for building value in your business is going to entail 3 parts:

1. Increasing Sales – through new and improved marketing and better conversion rates. In other words you have to make sure your system for taking a lead and converting it to a customer is top-notch. Don’t forget that your back-end sales (sales to existing customers) will always be your most profitable business. With that in mind, if you can buy an already profitable business that’s horrible at back-end sales you can quickly increase its value.
2. Cutting Costs – look at all of your expenses and simply cut those that aren’t needed. We reworked our accounting and phone costs alone to save thousands of dollars per year.
3. Improving Efficiencies – this is primarily about scripts, systems, and processes for every aspect of your business.

Don’t make the mistake I did and wait until cash gets tight to realize that cashflow is king and then start building recurring revenue while looking for quick, easy, cheap ways to generate immediate cashflow.

Chances are you’re going to run into some issues with team members so it’s helpful to know the proper way to fire someone without having to pay unemployment and effective ways to get your team members to do what they do best.

As you’re building your business you need to work on getting it to achieve critical mass by, in particular, hiring or training the 3 leaders every business needs to succeed.

In summary, you need to have a game plan from day one including an exit strategy or else you might end up like one of the 300 businesses in NYC who failed because they failed to plan for success.

Selling

Since this blog is getting long and selling isn’t much different than buying I’ll keep this short. You need to basically understand 3 things:

1. How to value your business just the same as discussed in buying so you can justify your price.
2. Where to list your business which is again the same places where you’d go to find a business for sale (such as bizbuysell.com)
3. How to foster relationships so that when it’s time to sell, you have a few personal contacts in mind.

With regards to the 3rd, you may want to get to know other business owners in your area who have complimentary (or even competing businesses). You may also consider hiring a leader who would like to take over and own their own business some day. If you have a franchise like mine, you will also want to stay in touch with owners in other areas as they might want to expand their operations.

The goal with this post is to organize and direct the many varied posts I’ve written about my adventure buying, building, and now selling my business over the last 18 months. As I add more posts I’ll try to keep this summary updated so you can always reference it for new material.

To your generating-wealth-through-business success, Bryan

For as long as I can remember my father was always imparting axioms and witty sayings on me such as, “your life is what you make of it”, and “you can’t control what other people may do to you but you can control how you respond”, and “you’re the only one who can choose what your day is going to be like every morning when you wake up.” Obviously those were all paraphrased and there were certainly dozens more.

He continued my education with tapes and stories from Zig Ziglar, and Dave Yoho, and Tony Robbins and eventually Brad Sugars. Somehow he would come in contact with stories of people overcoming impossible odds to better themselves. Quite literally this started in early elementary school for me.

There’s a reason books like Think and Grow Rich (#1466 on Amazon.com) by Napoleon Hill, The Richest Man in Babylon (currently ranked #5094 on Amazon.com) by George S. Clason, and How to Win Friends & Influence People (currently #151 on Amazon.com) by Dale Carnegie are timeless classics.
There’s a reason why movies like The Secret (Extended Edition) (#92 in DVD’s on Amazon.com) are so popular; creating an almost cult following. (Granted I did laugh out loud when the older gentleman said we don’t know how electricity works.)
There’s a reason why Brad Sugar’s spent more than 1/4 of his training on how to Buy, Build, and Sell businesses at his Entrepreneur’s Masters Class simply on having the right mindset.

And the reason is simple: The difference between those who are successful and those who aren’t is first and foremost their mindset. As one guy from The Secret pointed out, “Thoughts become things.”

“If you think you can or you think you can’t, you’re probably right”, is in fact, a cliche’ and yet it’s still true.

As I talk to friends and family about success, making money, building businesses and living an adventurous life, I make sure they know the most important part in their success is their mindset. If you truly believe you have the ability to do something you will do it.

This mindset has created 2 personality traits in me that everyone who knows me are abundantly aware of:

1. Confidence – some might even mistake it for arrogance
2. Fearlessness – or in other words, they believe I’m completely averse to risk

It’s important to understand that I was not born with either trait. In fact, as a child I was very cautious and always calculating before attempting anything new. If I wasn’t certain I could do it without getting hurt (physically, emotionally, or intellectually), I wasn’t going to do it. Though I always did well in school I rarely raised my hand and even if I was the best athlete on my sports team I would always feel as if I wasn’t good enough. Actually, high school athletics are what taught me that my biggest weakness wasn’t lack of talent or skill, but simply lack of confidence in my abilities. My point is these traits can be learned.

Every successful person has incorporated these 2 traits into their lives.

Confidence – At some point it occurred to me that absolutely no one will believe in me if I don’t. More importantly, if I believe in myself, others will as well. That’s what confidence is. Having the guts to take on something you’ve never done before, but know you can learn. Taking that risk of getting ridiculed, embarrassed or harassed by leading instead of sitting back and waiting for the safe move. If you’re going to be successful in business, in your family, as a teacher, or doctor, or builder, you have to lead someone somewhere and no one follows a person without confidence. As a coach of 5 year olds, I can assure you that even children won’t follow someone who isn’t confident in what they’re doing.

Fearlessness – This is simply a byproduct of confidence. School trains you to do what you’re told. Sports teach you the same thing (I can still remember getting yelled at for putting the basketball behind my back in a high school game). Your parents teach you to listen to authority. Throughout our lives, we are taught first how to obey and then, if we’re lucky, how to think and use our imaginations. Not being afraid to leave home, or move across the country, or buy your first rental property, or invest in the stock market, or buy a business (when you’ve never run one before), or write a book, or race a motorcycle, or stand up in front of an older group individuals and have the audacity to claim you can teach them something new is not done out of a lack of fear. It’s done because of confidence in one’s ability to succeed. Though I’ve told many people (inaccurately) that I don’t fear anything, what’s most important is that I don’t fear failure. No successful person does.

The very first step to being successful at anything you choose, is having confidence that you can succeed and getting over the fear of what might happen if you don’t.

Confidence and fearlessness are not natural traits for most people. Unfortunately, our youth teaches us to trust in authority more than ourselves and to fear the repercussions of what will happen if we don’t coalesce with the rest of the group. However, don’t use that as an excuse not to be confident and fearless. Use it as motivation to prove those people wrong.

My father knew that no matter what I decided to be in life (astronaut, paleontologist, NBA player, engineer and businessman were all on my list), my mindset and attitude were going to define whether I was truly great at my profession. What my father did not know, was that the foundation he was building for my mind would be echoed by my oncologist when I came home from college before the beginning of my sophomore year. Seven years ago Dr. Earle told me that the most important thing in determining my success in overcoming cancer was my attitude.

To your success in becoming confident and fearless, Bryan

In my last blog, we reviewed the 2 most basic types of people in any organization. Of course there are more specific and scientific personality tests and reviews along with detailed methods of how to best communicate with the 27 personality types, however who is ever going to remember 27 personality types let alone how they best interact with your own type? Moreover how are you going to remember exactly which person fits which type?

In contrast to that, my idea is simple, quick, and easy and though it won’t get you a perfect result every time, it’s certainly better than lumping everyone (including yourself) into one category.

That being said, in Marcus Buckingham’s book First, Break All the Rules: What the World’s Greatest Managers Do Differently, he lays out the exact 12 things that every person requires to be effective at their job. I have probably recommended that book half a dozen times in my blog and if you’re a leader or manager for any business you need to read it. So let’s get a quick and simple review of what Buckingham’s exhaustive research points out. All team members require the following:

1. Vision, Mission, Culture guidelines – What’s the big picture?
2. Job Description – Obviously this will be very detailed for intrapreneurs and more flexible for entrepreneurs. Absolutely no one can
3. Positive Reinforcement – Do not underestimate this power.
4. The right tools to get the job done – Nothing can be more frustrating. Intrapreneurs will have more tactile tools while the tools of an entrepreneur may just be pointing them in the right direction.
5. Someone at work they can trust – this is universal
6. Progress reports – everyone wants to know how they’re doing and how they can do better. No one wants to suck at their job.

He has 12 items on his list. I cut it down to 6 overall so read the book to learn how to determine if your business is setup for maximum profit and productivity. The point of this exercise is to point out that no one can manage themselves. No matter how entrepreneurial someone is, if they have a boss, they need direction. Period.

Another commonality is goal-setting, though the way that goals are set can be different. According to a Yale study from 1953, the 3% of graduates who had written goals had amassed more wealth than the other 97% of classmates years after graduation. So regardless of your personality, written goals are extremely valuable.

Everyone should have written, measurable, time-sensitive goals. Those goals should include levels of education, income, savings, type of work, family matters, travel ambitions and everything in between. I’ve gone as far as to make a list of all of the motorcycles I’d like to own in my lifetime. Several are already checked off however the list seems to be growing faster than I can control at the moment.

Now most people have a general “big picture” idea of what they want. Things like, I want a family, I want a job that I love, I want my kids to respect me, I want to retire at 65 with $2 million dollars, I want to see Paris, etc. etc. etc.  Now if you have all of that written down and you reference it often that’s a BIG step in the right direction. However you can do better. Here’s a quick 3 step process to setting goals:

1. You need to put everything into Do x Be = Have perspective.
2. You need to assign time frames.
3. You need to take into account your entrepreneurial or intrapreneurial tendencies.

The 3rd item is what we’ll address right now. As an extreme entrepreneur, my goals have time frames, but they are honestly relatively vague. For instance, in my lifetime I want to own at least 5 businesses, become a “young millionaire”, and write at least one book (though I have 4 in mind at the moment). As an entrepreneur, my immediate goal is to always find the best opportunity right now. That means in the next 12 months, I may write the book, buy another business, or get more schooling to help me learn more of the things that millionaires might know that I don’t. My point is, that my personality thrives on making the most of the moment. So instead of saying “I want to write a book by 2011″, I work on all of my goals at once and then go after the opportunity that’s best today, this month, or this year. In 2010 that may be writing that first book, or it may be visiting all the countries on my goal list, or it may be the next business. I’ll be working on all 3 and choose the path that is best at the time.

So how is that different than an intrapreneur? Intrapreneurs are more of the details individuals. They need specifics and they need specific time frames and they need a specific way to get there. Whereas I just need a “big picture”, an intrapreneur needs smaller goals to help achieve the larger ones. So if we take the same example of becoming a “young millionaire”, the successful intrapreneur will have a more specific goal list to achieve those goals.

For instance, their sub-goals to achieve the goal of becoming a millionaire might look more like this:

1. Buy a business with vendor financing in the next 12 months that has the potential to double in profits within a year with only the $5,000 I can drum up from selling my stuff and from savings. I must pay no more than annual cashflow plus assets for the business. It must have the possibility of paying me enough to live on while I’m growing it.
2. Build the business for less than 12 months and relist it on the market. It must have the potential to make me $100,000 profit when sold.
3. Reinvest the $100,000 in another business under the same criteria but with the ability to potentially sell for $300,000 profit within a year.
4. Of the $300,000, put $50,000 into down payments on cash producing real estate, $50,000 into the stock market and the other $200,000 into another business with the potential to be sold for $500,000 profit within 1 year.
5. Reinvest as much as necessary into a business that can either produce sufficient cashflow to make me a millionaire within 2 years of can be sold for $1 million in profit. The rest will be split between additional real estate and securities.

Why does the intrapreneur need so many sub-goals? Because something vague like “become a millionaire” seems so daunting an unattainable however when you break it down into small steps with specific time frames and details it becomes a whole lot easier for them to accept. Entrepreneurs can often feel much more comfortable and in-their-element with goals that are more vague. The exact details can at times make us feel trapped. That being the case is a detailed list bad for an entrepreneur? Of course not. As long as he can appreciate that it’s a guideline and the numbers and time frames will never be exact.

So my last question is, how does this help leaders better lead their teams?

As leaders, it’s our responsibility to provide progress reports, to develop job descriptions, and to help develop goals for team members within your organization. By now, I hope that it makes sense that those job descriptions, review sessions, and goal-setting meetings might be quite different for the 2 basic personality types.

To you success in providing the foundations of the common ground, Bryan

P.S. If you’re curious why my steps to becoming a young millionaire are primarily contingent upon buying, building, and selling businesses check out my blog on the topic.

Every business is comprised of 2 basic types of people.

Entrepreneurs and Intrapreneurs… Those who want risk, reward, challenges, and the excitement that comes with that and those who want stability, direction, consistency and the security that may come with that. Of course there are also those who just want a free ride and try to skirt responsibility, cut every corner, and get away with the highest pay for the least amount of effort, responsibility, or risk – but we’re going to skip over that lesser type and focus on the positive parts of an organization.

Before we delve into these 2 types, keep in mind this is an exercise in simplicity. It’s helped me determine and target which individuals I need to hire for which positions and it’s also helped me tailor, structure, and respond to those already on my team. Probably more importantly, it’s given me a greater understanding of my own requirements, desires, and motivations so that I can keep myself passionate and effective.

So which are you and how do you identify those around you?

Intrapreneur - These are the 9-5ers. The team members who don’t want to come earlier than starting time or stay late (though sometimes they may). They want to know exactly what they’re going to do that day, and know that next week, next month, and next year their paycheck will be there. For these types of individuals it’s very important that your leadership is consistent, fair, and direct. They want detailed, specific training. They want all the right tools and they want to know how to address any situation. These individuals are risk-averse and generally prefer repetition in their tasks so they know they’re doing what they do best constantly.

Entreprenuer – According to dictionary.com, entrepreneur is “a person who organizes and manages any enterprise, esp. a business, usually with considerable initiative and risk.” Within your team, whether they are leaders or not isn’t significant. They’ll naturally gravitate to the leadership positions and get people to follow their lead whether they’re given the title or not. They want excitement and a challenge. They are proud of their creative talents and want a forum to showcase them. Responsibility and appropriate reward for their risk-taking is very important. They hate being stagnant. If you aren’t helping them get better, faster, and smarter constantly, they won’t stay. Appropriately these are the traits of entreprenuers who venture into their own businesses, however with an environment that provides them the benefits of self-employment these individuals can thrive within an organization owned by someone else.

So why understand these classifications? As I mentioned above there are 2 main reasons:

1. To identify for yourself which one you are so you can understand your own strengths and weaknesses.
2. To identify which your other team members are so you can structure your communications with them to meet them on their level.

Let’s look at #2 first. What would be the difference between an Intrapreneur and Entrepreneur as far as appropriate compensation? The following video discusses some science that helps us better understand how to answer that:

The ROWE work environment is GREAT for entrepreneurial individuals. The studies he mentioned demonstrated that with those type of individuals working in complex, changing, challenging environments where “thought” is the primary value of the team members, compensating based on performance is counter-productive. However, intrapreneurs, who value consistency, will respond much better to simple tasks with compensation tied directly to their performance. Which is why in my organization, I work hard to incentivize those simple tasks.

So let’s jump back to #1 so we can better understand how introspection and clarification can help us perform at our peak. This is broken down into 2 sub-categories:

1. Our interactions with other team members.
2. Our goals for ourselves.

Let’s take a scenario and see how it might differ based on the circumstances. Let’s say you’re the leader and you’re implementing a new, exciting product in your business. Since your team members are in front of customers all day every day you have to get buy-in from all of them so how do you present it to an intrapreneur and an entrepreneur?

The intrapreneur will require a LOT of hand-holding. They want instructions, scripts of what to say, Frequently Asked Questions with the appropriate responses and all the benefits listed out so they can reference and recite them.

Entrepreneurs, on the other hand, need excitement. If they believe in the product and are excited about how it can help them and the customers whom they interact with, they’ll figure out the rest. They’ll learn how to answer the tough questions and the best way to present it in a way that’s comfortable and yet effective.

How do I know this is true? As one example, in my business we just started Platinum Care Plans which are simply extended warranties including all necessary maintenance. My entreprenurial individuals ran with it. My intrapreneurial individuals, at best, have started mentioning it to customers but have not sold one Platinum Care plan. Why? Because I didn’t present the information that they needed in the way that they appreciated so that they were comfortable enough to sell it.

Now here’s the real kicker, considering that I’m the entrepreneurial type (squared), is it any wonder that I presented the information in a way that was more digestible for the entrepreneurial team members??? Of course not. Which is exactly why we must understand how we fit into this scope. Next time I’ll do a better job of helping my intrapreneurs right from the start of a new product.

More importantly, understanding our own basic tendencies can help us more fully understand how to structure our business and personal goals. For instance, if you’re exceedingly entrepreneurial, at some point you’re going to want to go out on your own. You’re going to want your own business or be in charge of your own team with minimal oversight and you’re going to structure your education, contacts, and career choices to get you closer to that goal. If you’re exceedingly intrapreneurial, you’re going to generally look for a skilled trade and a reliable, predictable business where you can work. Now that skilled trade can be computer programming, accounting, or plumbing. It doesn’t matter much, you just want stability and the comfort that comes along with that.

Since this post is getting long, I’ll continue my next blog with more clarifications on what BOTH intrapreneurs and entrepreneurs have in common and require from their leaders.

To your success, Bryan

I finally finished Scientific Advertising by Claude C. Hopkins this past weekend and HIGHLY recommend it. The whole book is around 75 pages and can easily be read in a little over an hour.

There are 2 primary concepts that literally jumped out at me as I was reading. The first blindingly simple, yet profound, teaching of Claude C. Hopkins, that I originally attributed to Brad Sugar’s since he was the first one I’d heard say it, is simply:

“Your object in all advertising is to BUY new customers at a price which pays a profit.” (my emphasis added)

Did you hear that? Just like when you go out to buy a car, or parts, or insurance or anything else for your business you expect (even demand) to get something in return for your money, your marketing is no different. If you’re not verifying that your marketing is cost-effectively buying you new customers, then you are most likely just throwing money away. The second point that Claude makes is really just a further clarification of the above statement. On the last page he highlights the fact that pretty soon all advertising agencies will only get paid based on the results they deliver. Is that how you pay your advertising agency?

“The time is fast coming when men who spend money are going to know what they get. (hahaha, if only that were true in marketing today) Good business and efficiency will be applied to advertising. Men and methods will be measured by the known returns, and only competent men can survive… Enormous advertising is being done along scientific lines… We (advertising agencies) shall be prouder of it (advertising) when we are judged on merit.”

Does that describe your advertising agency??? Now it may be fair to assume that with the advent of new tracking methods such as Pay-Per-Click, Click-Thru-Rates, custom 800 numbers for each direct mail piece, etc. etc. that advertising agencies are indeed moving in that direction. I would tend to agree, except…  Scientific Advertising was published in 1932! Now do you see why it’s so important to understand the concepts of “Scientific Advertising” that he promotes? For 80 years we’ve been able to track the results of our advertising dollars in terms of the cost/lead and cost/sale and yet we still aren’t demanding that from our advertising agencies (or from ourselves if we handle our own marketing).

It seems to me, however, that times may be changing. Yesterday I was speaking with a gentleman who does sets primarily for commercials. He’s done it for over 30 years and has done sets for commercials, movies, TV shows, and music videos and so seems to have quite a range of experience. In his personal opinion, TV advertising rates have dropped off so much over the last few years he imagines it will nearly disappear entirely within the next few. Obviously I questioned him on that, but he insisted that, whether it’s simply a byproduct of the economy or not has not been proven yet, but if not, TV commercials are on the way out. Could that be because businesses are finally demanding results from their marketing or dropping it altogether?

As an engineer I love numbers, so in practical terms this is how you hold your advertising agency’s feet to the fire.

1. Track the following:
   1. Cost of advertisement
   2. Number of people who inquired because of it
   3. Number of people who purchased because of it
   4. Lifetime value of each customer
   5. Profit Margins
2. Calculate the following:
   1. Cost of advertisement/number of people who purchased because of it – This gives you your “cost/sale”
   2. Lifetime value of customer x Profit Margins – This gives you the profit you’ll make off of each customer or “profit/customer”
3. Compare the following: your “cost/sale” to “profit/customer” – If the “cost/sale” is higher than “profit/customer” drop that marketing project or figure out a way to improve it in a jiffy.

Let’s throw in a few numbers to make the point clearer.

• Cost of advertisement: $1000
• Number of people who inquired because of it: 10
• Number of people who purchased because of it: 4
• Lifetime value of customer: $2000
• Profit Margings: 15%

• Cost/Lead = $1000/10 or $100
• Cost/Sale = $1000/4 or $250
• Profit/Customer = $2000x.15 or $300
• Our Profit/Customer ($300) is greater than our Cost/Sale ($250) so we keep the marketing

Keep in mind that you should always be improving your marketing to be more cost-effective. In other words, even though we’ll make $50 profit on that advertising program, if we can improve our marketing or sales process to increase the number of people who purchased based on the same advertisement to 5 (an increase of 25%) our profit would double (increase of 100%) to $100 per customer. As the saying goes “the devil is in the details.” In our instance, “the profit is in the details.”

To get some practical ideas on how you can better track your lead sources to determine your cost/lead and cost/sale be sure to check out my blog about why Asking your customer “how did you hear about us?” is a waste of time and what to do about it…

To your Scientific Advertising success, Bryan