The Blueprint To Buy A Business With No Money
The Blueprint To Buy A Business With No Money
What realization is essential for entrepreneurs transitioning to CEO roles?
The first major realization for me was understanding that I was the common factor in my failures. I was the bottleneck. I was too focused on being an entrepreneur and not enough on being a manager or CEO. Those are very different skill sets.
As businesses grow—from six figures to seven and beyond—there's a clear separation between the entrepreneur and the manager. When that shift happens, the business really starts to take off. I realized that if I could step away from the operational side, the chances of success would be much higher.
What are the benefits of acquiring businesses?
I recognized that my skill set—particularly problem-solving—was quite strong. I’m definitely an action-taker. When I see what needs to be done, I’m not afraid to roll up my sleeves and get to work. But I also instinctively felt that my skill set would be more valuable in a business where the areas I wasn’t good at had already been handled.
When you buy a business, you're essentially buying a set of problems. Often, that’s why the seller is ready to move on. As you start evaluating businesses from an acquisition perspective, you realize they usually have a few key issues. My theory was that if I could solve those problems, the business could be successful. And I was right.
With my first acquisition, I went in, solved the initial problems, and soon had a business that no longer required my daily involvement. I thought, “This is great! Why not do it again?” From there, I continued to acquire more businesses.
What should entrepreneurs consider when evaluating businesses for acquisition?
There are criteria you should use as guidelines, but they don’t have to be set in stone. My first acquisition was small in revenue, and I quickly realized I had essentially bought myself a job. So, you need to be mindful of that.
From a revenue perspective, look for businesses with at least half a million in revenue, ideally closer to a million. The reason is that if a business is doing this amount, it’s likely not just the owner running everything. There’s probably a small team, which means you’re skipping the startup phase. As a visionary, once you have a team that complements your skills, you can be more effective.
If you don’t have a team, you may hit a glass ceiling in revenue, like I did. For businesses making around $5 million in revenue, you’re entering the lower middle market, where private equity starts to take an interest. Micro businesses tend to operate with revenue of under half a million. However, as you move into the $1-3 million range, the owner is often the bottleneck, having grown the business from a startup. Removing the owner and leveraging the larger team, better cash flow, and more resources open up new opportunities for growth.
In addition to revenue, you need to evaluate the team and the age of the business. I prefer businesses that are at least 10 years old, though I might consider one as young as five years old. A business with 10 years under its belt has likely established its place in the market and survived some challenges. I don’t look at startups because of the reasons I failed in the past.
The people in the business are one of your biggest challenges. In my last acquisition, the mindset of the team was outdated, which made working with them difficult. It’s something to be mindful of. Even if the numbers and conversations with the owner look good, you need to assess the team. It’s tough to do this if the owner doesn’t let you engage with them, but it’s a big risk. For example, if a business has 10 employees and two leave, you’ve lost 20% of your workforce. You have to approach this carefully.
What steps can leaders take to effectively communicate with a newly acquired team?
I want to touch on personality profiling because it has become a key part of my acquisition process. I’ve done nine or ten acquisitions, and it wasn’t until the most recent one that I started using personality profiling. Even then, I didn’t profile the whole team. Moving forward, I would definitely include this in the due diligence process to better understand the dynamics.
When you enter a new team, it’s a unique experience. As a visionary, you bring energy and inspiration, and you need to have a clear vision for the business. You have to get the team to buy into that vision, just like if you were building your own team. You must set boundaries quickly because, like with children or pets, people will test your limits to see where the line is. It’s important to realize that this isn’t a popularity contest—not everyone will like you. From my experience, around 20% of the workforce may be against you, though they might not say it directly.
Through trial and error, I’ve developed my approach. After the acquisition, I stood with the previous owner and had an open floor for questions, making myself extremely accessible during the first week. I constantly reinforce the vision, getting the team excited and aligned. During this time, I also observe who’s on board and who isn’t.
Within two weeks of signing, I schedule one-on-one meetings with each team member. I ask them open-ended questions like how long they’ve worked there, what problems they see, and what they do. I let them fully express themselves, ensuring they feel heard. Some meetings last half an hour; others last three. This process is crucial.
Once I understand their perspective, I lay out the vision in detail. I explain what the next 12 months will look like and what we need to start doing in the next three months. Then I ask a critical question: "Do you want to be part of this journey?" If they don’t, that’s fine. Some people aren’t meant to stay, and others say they want to stay but lack the necessary skills or drive.
At that point, I start bringing in my own people. Hiring new team members dilutes the old guard and builds loyalty. I aim to make two or three quick hires, depending on the size of the business. This process takes time—if you can achieve it in six months, you’ve done well—but it’s time well spent.
How are acquisitions effective for scaling businesses?
Scaling and finding synergies through acquisitions can often seem theoretical, but putting them into practice is challenging. This is similar whether you're scaling organically or through acquisitions. At some point, you reach a stage where you have revenue-generating parts of the business, but then you need to hire admin staff or managers—non-revenue generators. This transition can take you from a profitable place to an unprofitable one, and it’s a stressful and difficult process.
Acquisitions can help leapfrog some of these challenges. For example, adding $1-2 million in revenue within a few months can give you the cash flow needed to hire managers. However, you then face new problems, such as integration issues. I’ve learned that all methods of scaling are tough—there’s no easy way. It ultimately comes down to choosing the approach that best aligns with your skill set. For me, acquisitions were the answer, but I also recognize that managing day-to-day operations isn’t my strength. So, I structure things to stay out of the daily operations and focus on the areas where I excel.
*This interview has been edited and condensed for clarity.*
