Small Deals = Huge Gains

Don’t listen to the “big boys”.

They’ll pound their chests and shout about wasting time with small deals. Their mantras sound like…

“Go big or go home!”

“It takes the same amount of time and effort to buy a big business as it does a small one, so why bother?”

“Hire an operator and get passive income.”

I don’t entirely disagree with their logic. But I 100% disagree with the reality behind their claims. I love to go on Caribbean cruises and Labadee, a slice of Haiti controlled by Royal Caribbean, is one of my favorite stops. It’s a beautiful beach, with always perfect weather and calm, warm waters. But they also have this spectacular, thrilling, zip-line ride. They drive you to the top of the mountain in an open-air bus, hook you up to safety equipment, and send you sailing out over the open water of the bay, lickety-split, then back to a thin sliver of land, or so it appears from that height. But first they take you on a mini ride; a training ride. It’s not very high or long or fast.

But it’s the perfect way to learn the ropes, to know what to expect for the real ride. It gives you a chance to try sitting up for a slower experience; and laying flat to increase the speed and exhilaration. Plenty of people, myself included, would be more than happy to jump right onto the main ride. But the training ride teaches you how the equipment works, how to control and enhance your zip, and it gives the ride attendant peace of mind, knowing you have at least a little experience.

It puts you in control.

Do you see the correlation to buying a small business… before buying a big business?

If you’re ready to buy a bigger business, go for it! If not, don’t just enjoy the view from the bus, get in the game. This is the most important part! There is no shame in buying a small, profitable, business. Then when you're ready, buy another and move up the ladder. You remain in control.

• Small deals result in huge financial benefits.
• Buying a job is the best first step when buying a business.
• You don’t have to be married to your first business, or any business for that matter.

Enough said, really. But I’ll go into each bullet point a little more.

Small Deals Result in Huge Financial Benefits.

My first deal was small, micro even. I recall our sales price was about $180,000, plus $10K for the computers, desks and filing cabinets. Still way under $200K. But it made sense for us. My partner got what he wanted-Control. The seller got what he wanted-Relief plus Income. And I got what I wanted-Entrepreneurship and a Raise.

For me and my daughters, this micro deal elevated us to a level we just couldn’t have gotten to any other way. And it was so fast! My paycheck from the business was larger than the tips I had been making. The business paid for our health insurance. Hell, it paid for itself. Every “loan” payment was made from the business bank account. Plus, there were profits left over after all this. Over the next five years, my bank account grew to 6 figures, I built a new house, and nearly doubled the value of the business. Double is still micro, but I sold the business and no longer worry about money, at least not much?? I only take on the fun projects because buying even a tiny business gave me big financial independence.

Buying a Job is the Best First Step when Buying a Business.

If you’re already wealthy and looking for angel investments, then I’m not talking to you. But you, you with the J-O-B, yeah, I’m talkin’ to yous! Even if you like your job, it’s still a job and your employer is benefiting more from your efforts than you are. (At least they should be.) So who cares if you buy a new job? You’re already punching a time clock for someone else, so you should have no qualms about punching a clock for yourself. This is the starting point. The launch pad. The education.

When you work your business every day, it gives you the opportunity to learn how to be an entrepreneur, how to sell, how to manage people and processes. How do you hire and manage someone to do things you’ve never done? How do you know if they’re doing good work, or robbing you blind. How do you determine where to make improvements if you don’t even know the processes? You first buy a job, then grow organically as well as by buying another business. Once you have a strong grasp on operations, you begin to work towards two exits. The first exit is to work your way out of the day-to-day running of the company. Then you can work towards the sale of your business, if that’s your goal.

Buying a job bonus- You’ll likely be able to negotiate a higher portion of seller financing if the deal is too small for more traditional financing. We once sold a business in exchange for a privacy fence as the down payment…anything is possible!

You Don’t Have to be Married to Your First Business, or Any Business for that Matter.

"It’s all about passion! Follow your heart! Love what you do and you’ll never work a day in your life!", another opinion I don't entirely agree with.

My mantra, "Just get in the game!" Just buy a profitable business and learn the ropes. When you’re tired of that particular game, sell out and find another court, or another sport. You’ll be able to do this because you worked on your two exits from the beginning. A business is just like any other asset that can be bought and sold. You’re not stuck, no way, not with entrepreneurship. Buying a profitable business will open so many doors. The opportunities will be flying at you left and right, even faster than if you were zipping over the ocean in the tropical breeze of Lovely Labadee.

Did I change your mind?

How do you feel about buying a small business now?