When it comes to buying and selling businesses, there’s a lot to know about. Not only do you have to be knowledgeable in acquisitions, but you also have to know how businesses run, how finances work, and how deals are structured. Although each one of these aspects could be enough material to be a college degree, buying a business is easier than you think.
In fact, Ryan Tansom doesn't know why more people aren't doing it! According to Ryan, there are a few important rules to abide by when buying your first, second, or tenth business.
🧠 What You Will Learn
📈 Build Your Knowledge
Whether or not you are familiar with financial statements already is beside the point. You need to be knowledgeable in business operations, period. For example, you wouldn't buy a car without knowing how many doors it has, would you? The more knowledge you have about your particular industry (or the industry you’re buying in) and how the acquisition process works, the better. Don’t have the time or otherwise? Build a team.
🔎 Build Your Team
A team can be crucial in filling your gaps when buying a business. According to Ryan, you could lose out on hundreds of thousands of potential dollars simply because you didn't know something! But, a team isn’t just a team, it has to be a quality one. Ryan recommends steering clear of filling your team with CPA’s, lawyers, or other professionals that work off of client volume. Buying a business takes a special level of detail, and you need to be sure your team can give it to you. Oh, and one more thing.. Make sure whatever role they fill is what they do day in and day out for a living!
🎯 Build Your Plan
Now that you are knowledgeable and have a potential team, you need a plan. There are many routes you can take when acquiring a company, and there are many routes to sell it down the line. Ryan says to make sure that you start with the end goal in mind. Give some thought to things like, “How much do I want this to sell for at what point” By planning ahead, your business is likely to sell for maximum profit down the line.
📃 To Conclude
Successfully buying a business in 2020 can be done many ways, but it all comes down to a concrete foundation. In Ryans years of experience, he boils it down to building your knowledge, a team, then a plan.
“I figured out that the whole growing and selling, mergers and acquisitions industry is very fragmented and siloed so we created the company that I wish I would have had a couple of years prior to the exit.”
Ryan Tansom, 1:31
“There’s an idea that businesses are worth something at some point. Knowing why you’re building this business and knowing how much it should be worth is the number one thing you should know before you even start.”
Ryan Tansom 12:43
“Let’s say this $500k company had paid out 3x, (so 1.5M) You would only need $150k, because it’s only a 10% down payment and you can take out an SBA loan, to buy it.
Ryan Tansom 32:50
“A lot of sophistication hasn't been put behind these businesses so they’re not worth that much...But there’s a lot of ability to apply that [technology and processes] to them”
Ryan Tansom 50:23
About the Guest
President and Co-Founder of Arkona
Ryan is an expert in the acquisitions space. In 2014, his family business sold for over 10M and has been teaching business owners how to grow the value of their business with an end in mind ever since. Today, Ryan is a resource through educational courses and Strategic CFO Services. He is the host of the popular podcast, Intentional Growth™ that has 210+ episodes, 310,000+ downloads, frequent keynote speaker and soon to be author.