The 4 Ks of Buying a Business

I do a lot of networking, both in person and virtual. I talk to entrepreneurs and about-to-be entrepreneurs every day. I just did a speed “dating” business event where new and aspiring business owners got 10 minutes each with a different professional: ten minutes to pick the brain of an attorney, 10 minutes with a banker, then an accountant, then a marketer and so on. Being a business owner is sexy now and everyone wants in. (Thank you Gary V!)

But every person I speak with thinks being an entrepreneur means starting from scratch. And unless you have a ton of cash laying around, the start up route is probably a terrible idea. It’s a long, slow, uphill battle that costs a lot of money. You’ll probably fail, because 90% of startups do, and if you do end up making money, it won’t be today, tomorrow, or even next year. It’ll be down the road, after you’ve begged, borrowed and stolen every dime you could get your little startup fingers on.

But then I suggest another option…to buy an existing, profitable business…

And their mind is blown.

Actually, the “mind blown” doesn’t happen until later. Their first response is disbelief, even anger. Yes, I’ve had strangers on FB get mad when I suggest they buy a business. “That’s not helpful!” they shout. But others will sometimes chime in and point out the many merits of buying, over starting, and how the poster is asking for help but not being open-minded when solutions are presented.

So why would you want to buy an existing business anyhow? Let me count the ways:

1. Product market fit.

2. Existing customer base.

3. The Lindy Effect-the longer something has survived, the more likely it is to continue to survive.

4. Known profitability.

5. Trained staff.

6. Proven systems.

I could probably go on all day.

Even if you already own a business, there are another million reasons to buy a business. Essentially, you should buy whatever your business is missing, or whatever component you would like to add, such as,

1. A general manager.

2. A sales team.

3. A complimentary product line.

4. More customers.

5. Proprietary software.

6. Expanded territory.

Again, all day long.

For example, perhaps you’re in the market to hire a general manager for your business. Hiring is a tough process. How do you know what kind of employee they will be beyond the interview and the honeymoon phase? You watch them at the competing business on the other side of town or maybe the neighboring town. You can see their work history, know what kind of culture they’ve created, see what kind of growth they’ve led.

Now your wheels are spinning, right? You’re climbing aboard! You’re seeing the light! Buying a business is a fan-tabulous idea!

Buying a business is the answer to all our problems, but only if your first name is Warren or Elon, or you’re some other multi-bazillionaire. But not for little old you, right?

WRONG!

Because Even a Waitress Can Buy a Business!

And I promise, it’s much easier than you may think.

The Kirkman 4 K Approach to Buying a Business is based upon gaining knowledge in four key areas simultaneously.

Know yourself.

Know your industry.

Know how to transition and run the business.

Know how to do the deal itself.

Start with knowing yourself. Know your net worth, your skill set, your cash on hand, your ability to secure financing, your credit score. Make a list of the things you would like to be doing all day and the things you don't want to do any of. List all the quirky things you would like, maybe the ability to take your kids to work with you sometimes, to be able to work from home some days while you care for your elderly grandparents. Do a deep-dive on the life you want to have, as well as your starting point. Look through business for sale listings online and note what piques your interest and why.

Know the industry you're interested in. Try to stick with an area you already know, using skills you already have. The banks are more willing to loan when you have relatable experience. Speaking of loans, your ability to borrow money to buy a business will be based on your credit score and the cash flow of the business you are buying, not on how much money you make at your current job.

Know how to do a deal. This is a complex topic and you will need to bring in professional advisors, but don't get hung up here. Just take in little bits of knowledge at a time. One thing I will say is this, there are many, many ways to get money to buy a business.

Know how to transition and run the business. Again, this is a huge topic to grasp but it only takes baby steps. The seller is going to provide at least some training. It's also a great idea to team up with someone that has already bought a business. That's a big part of how I had so much success. I'm developing a partnership program and community for women now. Stay tuned for more details, because I want to buy a business with you!

I have so much more to say about this, but I’m off to a conference in Atlanta…

Peace Out!