Start Small Before You Go Big

Whenever you want to acquire a business, it is easy to think "the bigger the business I acquire the more money I make". After all..

With real estate, the bigger the project, the more income that flows in right? Not so fast!

Sure an investor can make a huge amount of money buying a middle market business and have a nice chunk of cash pouring into their bank account from dividend distributions.

However, we need to understand that there is a term called called "building blocks".

Does a child automatically learn how to run? Absolutely not. The child first:

1. Learns to crawl.
2. Learns to walk
3. Then learns to run

Acquiring businesses falls into this exact progression that a child learns from crawling to running.

1. Learn how to acquire a small business that could go for under $250,000
2. Learn to run that business and grow it (Crawling)
3. Then afterwards, one can slowly acquire a business that goes for $500,000, then 1M, then 2M and so on and so forth.

Could one immediately acquire a business valued at 1M and above for the first acquisition?

Sure but if that investor doesn't know how to manage big challenges that come from running that large of a business let alone have cash reserves to whether any potential big storms after closing, all that it takes is one big event for that investor to go bankrupt.

Here is an exercise for you. Sign up for a Rich Dad account online at richdad.com and play the cash flow classic game. It is an excellent example of the building blocks theme.

Try acquiring a "big property" at first and see how well that works before acquiring smaller properties.

To your acquisition success.