Small Business Buying, Building and Selling

My reason for writing this is because I’m asked by lots of people all the time how can they make money like me. Compared to the rest of the world, if you live in the USA, have a place to live, more than a few changes of clothes, and fresh food every day you’re rich. However, that’s not what we’re talking about. We’re talking about being able to have the things that you want, take the vacations you desire, and live in the homes you dream of.

The first 3 steps to becoming wealthy are:

1. ALWAYS spend less than you make.
2. Understand the difference between where you are and where you want to be is EDUCATION.
3. Put your goals into the Do x Be = Have context.

If you cannot do any one of these three things, then you will either never become wealthy or your only chance of acheiving great wealth is inheritance or the lottery. For the latter, you will most likely squander whatever you’re given anyway, since you don’t know how to spend less than you make no matter how much you make.

1. Always spend less than you make. Time and time again you hear people, couples, children, etc. say if they only made another $5,000 per year or got that raise they needed everything would be fine. All the bills would be paid and they’d be out of debt in a jiffy. So what happens when they get the raise? They buy a new house, a new car, a new flat screen, etc. because they need those things and now they can afford it. Do NOT fall into that trap. If you cannot survive for the next 3-6 months with little or no income, then you have a problem. If your goal is to be wealthy, your FIRST step in that direction should be to have enough money in savings or other liquid assets to survive for 3-6 months with little or no income! If you cannot manage your own finances well, you will never be able to manage 2 or 3 or 100 times that much money for a business. Conversely, if you understand how to manage your own cashflow, translating that to business is a cinch.

Before buying my first business I had about 5 months where I only worked part time. At that time I owned 2 sports cars, a beautiful house with a 3-car garage, 1 motorcycle and the normal stuff you’d expect from a bachelor.   At the end of the 5 months I was down to 1 sports car (that I refinanced to lower my monthly payments), no motorcycle, and a whole lot fewer motorcycle and car parts then before. I needed to turn those possessions into liquid assets to pay my bills. The lawyer bills alone from the business purchase were more than I made on the sale of my car and motorcycle together! If an opportunity presented itself, would you be able to come up with the necessary cash to make the investment? Even if it’s as simple as buying and reselling a vehicle because it’s such a great deal.

2. Understand the difference between where you are and where you want to be is EDUCATION. Rich people know something that you don’t. What is it? Maybe it’s how to buy, build, and sell a business. Maybe it’s how to invest in real estate. Maybe it’s how to master the stock market. Maybe it’s negotiating skills, or public speaking talents, or simply how to find the best deals. The reason they have more money than you is because they know more than you about generating wealth. So how do you bridge that gap and learn what they know (and much more)???  Start with The Best 6 Books to Teach you how to Generate Wealth and then spend some time on my recommended reading selections. If you want the quickest (though still incomplete) lessons to get you up to speed, read my blogs. It will be worth the time and the price is right.

3. Put your goals into the Do x Be = Have context. Obviously you need to read my blog on the topic to understand the full scope of this algorithm. However, a quick summary is simply this: know what you need to Do to become who you need to Be to get what you want to Have. In other words don’t just set goals, set the correct goals!

As a quick example of this, to purchase my business I needed 2 assets:

1. The cash (including the vehicles to sell to generate the cash) to pay the lawyers and support myself.
2. The knowledge to convince someone else to lend me the rest.

Moreover, I knew becoming a business owner was putting me on the right track to become who I needed to Be to obtain what I wanted to Have. Which is ultimately why I buy, build, and sell businesses.

To your success in generating wealth, Bryan

When I started business “consulting” at the ripe old age of 20 with no actual business ownership and management experience, I ran into a few problems. My job was to implement a new software system that would significantly change the work flow of a business. In that process I would have to recommend ways to handle leads, in-bound and out-bound calls, inventory, receivables, and offer suggestions on what management reports to run. I learned that to get buy-in it was necessary to explain WHY they needed to do all of this. No matter how much I knew or how many businesses I helped, a 21 year old wasn’t ever going to get much respect right away. So I learned a quick way to build rapport is to use “experts” to make some suggestions instead of me just making them. In other words I learned to use books to backup my expertise and build instant credibility. I furthered that credibility by publishing articles in trade magazines when I was 22… But that’s a different story.

So after years of reading books on real estate, investing, business building, sales, marketing, and psychology here are the ones that offer the BEST advice for wealth building in the order of importance.

1. Billionaire In Trainingby Brad Sugars: If you don’t know this guy then you need to. He retired with $10 million in the bank at age 26 for a few years. Then got bored and launched what is now the largest business coaching business in the world, Action Coach International. Now at age 34 he’s been involved in over 50 businesses and is using the formula in this book to become a very young billionaire. The best book of its kind.
2. Ready, Fire, Aim: Zero to $100 Million in No Time Flatby Michael Masterson: Masterson’s approach is a bit different than Sugar’s which is why I liked it. Masterson talks in detail about starting and growing a business step-by-step, whereas Brad says don’t waste your time starting one, just buy one. Regardless, Masterson has turned himself into a hundred millionaire and retired for the first time at age 39. He provides some excellent tools particularly his insights into marketing and back-end sales.
3. The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About Itby Michael Gerber: One of the best business books ever according to Inc. magazine. Gerber breaks down the reason most businesses fail to the owners misunderstandings about business. The greatest misunderstanding – that because I’m a good plumber, electrician, accountant, lawyer, etc. I’m gonna be great at running a business that will allow me to use my sweet skills.
4. First, Break All the Rules: What the World’s Greatest Managers Do Differentlyby Marcus Buckingham: After interviewing 80,000 managers in 20,000 different organizations over 20 years Buckingham has broken down the best way to measure employee productivity and happiness to 12 simple questions. If 12 is too many he even gives you ways to shorten that list depending on your goals. If you EVER plan on doing a performance review or have employees, read this book.
5. Built to Last: Successful Habits of Visionary Companiesby Jim Collins and Jerry Porras: The greatest lesson I took away from this book was that Gerber and Sugars are right. Even the greatest businesses over the last 100 years were founded to be great businesses from the start NOT to provide a great product. That’s a VERY important distinction. Sorry to dissapoint all those high-ranked business schools that say you need the product first.
6. The Millionaire Mindby Thomas Stanley: This book is a compilation of data from survey’s answered by over 1300 millionaire’s. Some of his findings are quite interesting. The most important 2 were that the number 1 thing millionaire’s attribute to their success is “Being honest with all people.” The second is that most millionaires were at or below average according to our fine education system. They were mostly college dropouts , C students, and averaged less than 1000 on their SAT’s.

Though I’ve read Robert Allen’s Nothing Down for the 90sand Hagstrom’s The Warren Buffett Way and Peter Lynch’s Beating the Street along with dozens of other books and online services related to real estate and investing, I have very purposely left those out. I’m not saying they’re poor books, because they are all VERY good (Robert Allen inspired me to buy my first rental property at 21) – however, as Brad Sugars points out in “Billionaire in Training” you don’t climb the capital ladder (i.e. real estate and stocks/securities) until you’ve climbed the cash flow ladder. In other words, until you have cashflow to backup your real estate investments and securities in case of trouble, you’re wasting your time with those. I know in the instance of both my real estate investments and stocks/mutual funds I NEEDED cashflow (from my job) to cover them.

To your success, Bryan