Join us as we discuss buying equity or purchasing businesses outright. There are recommended ways of separating risk from your primary business. In this episode, we deep dive into the advantages of having a group and operating multiple companies as a singular portfolio.

We have seen it for years. I didn’t previously think too much about it. A group is just when you have a few complimentary companies and you need to say they are all in a family right? Wrong.

There was so much more to that, and there is a lot of value in doing this if you are actively investing in other companies.

This is the last episode in the long-term strategy series and it is indeed a belter!

Too many cooks can spoil the broth, in this episode Mark and John discuss the risks of bringing in too many investors. Why you should be careful who you get into bed with. The risk so Venture Capital investment and protections of having clear directors/shareholder agreements if you are going into business with one or multiple other parties.

Buy-to-build or buy-to-sell there are a lot of insights that we have seen over the years being discussed on this episode. Like all things, no one gets it perfect, regardless of whether it's your first time or your 10th time. Experience comes from repeating the activities.

When buying businesses there are a number of ways it can be achieved. When you first look into investment and what it means to buy companies you might think you need to have millions sitting in your bank. That might help if you are trying to buy a well-established and cash-producing company, but even then the reality is you are buying an asset and if it has credible value within it you can use that to raise vendor finance or private investment when it comes time to buy.

One of the key observations that we have seen over the years is that investors will not have working capital sitting ready to deploy, rather they are investors are great at what they do because they put their money to work. The term "liquid" is used for how much readily available cash you have on hand, this number is often surprisingly low. More so buying a company is maybe not as large a price tag as you might first think.

The company's value is determined across a number of areas, its debts, its self-sufficiency (does it need that MD in it to make it work), are you buying a job? When you buy a coffee shop that's often one ex-corporate staff looking to purchase fall into. That all drives the value down. Sustainable contracts and profits drive it up. 

When you build a business you could spend a small fortune building up a brand and securing regular clients, or you could buy a business that already has a foothold and start, and then you set yourself to growth and continuation of its next chapter. In this episode, we discuss a number of methods used when buying divisions, assets, equity or just outright ownership of a company. With the caveat of no money down.

A lot of business owners ask what is the best method for identifying companies ready for exit. You may have the money, time, or skills to acquire companies but first, you have to find the right opportunities to have those discussions.

In this episode, we talk about sourcing, and also how to structure and extract revenue from portfolios. Are you taking dividends, what role do pensions play in this type of investing? What about crowd funding and raising money on Kickstarter, Crowdcude, Betalist, and others?

In business, it's not just exit that triggers the need and wants for investment. Many businesses will use M&A activity to drive growth. Having 100% of a cake is all well and good but if you could have 50% of a cake and it was 30 times the size of what they 100% was previously it's not then surprising to see that investment remains popular.

We really enjoyed putting this episode together. Have you considered investment or looked at acquisition for your business growth?

Building a business is hard work, with 90% of new startups failing means that only 10% will get the opportunity to consider how best to scale up what you have built.

 

You might find yourself asking:

 

Who are the key players you will need in your team to make this happen?

How can we guarantee quality and processes are followed?

What is the overall plan and structure of the company now and long term when you hit scale?

Are there challenges ahead in the business plan that will prevent you from scaling?

How will you ensure you secure the best 14 "A" players, and also how will you hire the next 45 after them?

 

Successfully scaling a business is not as easy as it might seem. Anyone can read a few books and add reactively but making something larger while retaining what made it successful? That is a real challenge.

 

In this episode, Mark and John discuss various methods to consider when successfully scaling a business.

It takes a lot of sweat equity to build up a successful business. At the end of the day, after all the hours, days, and weeks we pour into our businesses, we want to know there is a light at the end of the tunnel. For many, that will mean selling your business. As far off as that may seem, it’s crucial to prepare for a big exit, right from the start.

For many savvy entrepreneurs, selling your business for a windfall of cash is the goal right at the outset. But even if it’s not your dream, no entrepreneur should rule it out. Selling your business can give you a large lump sum of capital, which can then be used to either buy other assets you can then build up or perhaps to expand another project.

But here’s the thing. Even if you build a business with zero intention of selling it for a big payday, and even if you never do actually sell, you should still build your business as if you are going to sell it someday. 

In this episode, Mark and discuss building a business mindset as well as looking to make your business profitable and sellable.

It takes a lot of sweat equity to build up a successful business. At the end of the day, after all the hours, days, and weeks we pour into our businesses, we want to know there is a light at the end of the tunnel. For many, that will mean selling your business. As far off as that may seem, it’s crucial to prepare for a big exit, right from the start.

For many savvy entrepreneurs, selling your business for a windfall of cash is the goal right at the outset. But even if it’s not your dream, no entrepreneur should rule it out. Selling your business can give you a large lump sum of capital, which can then be used to either buy other assets you can then build up, or perhaps to expand another project.

But here’s the thing. Even if you build a business with zero intention of selling it for a big payday, and even if you never do actually sell, you should still build your business as if you are going to sell it someday.

In this episode, Mark and discuss have a building a business mindset as well as looking to make your business profitable and sellable.

A lifestyle business is one that is geared toward supporting the owner’s income and personal requirements rather than maximising revenue and is often considered an alternative to retirement.

The goal of a lifestyle business is to create a sustainable and pleasant work/life balance. The business should be lucrative enough to allow the lifestyle the owner desires without having to sacrifice a personal life. The type of business may also be selected on the basis of personal interest, so that time spent working is enjoyable. The lifestyle business concept is sometimes contrasted with that of the startup, which is intended to grow rapidly and create significant profit.

On that basis, a startup may attract venture backing. Because it is not intended to generate significant growth or revenue, owners of lifestyle businesses usually have to provide all the funding themselves. 

In this episode Mark and John discuss the risks and rewards of a lifestyle business.

Choosing an exit strategy for your business might not seem like an obvious step when you’re just getting started, however planning ahead is an important part of building a business. An exit strategy is a plan for how you will eventually leave the business. It also includes details on what will happen to the enterprise after you have left.

All businesses need an exit strategy at some point, even if that just means transferring ownership of the company when one owner decides to retire. Leaving a business can be stressful, and emotions can often cloud your judgment. Should this occur, a good exit strategy that you’ve come up with in advance will enable you to address tough situations rationally. 

In this episode, John and Mark discuss parts when making your exit strategy.

What is your long-term business strategy? Do you have a succession plan in place?

You can’t run a business, regardless of its size, without talented people ready to move into key positions when the current occupants leave. Even the most successful employers can run off a cliff if they don’t have a solid succession plan in place.

Succession planning is a strategy for identifying and developing future leaders at your company — not just at the top but for major roles at all levels.

It helps your business prepare for all contingencies by preparing high-potential workers for advancement. In this podcast, we introduce the business strategy series and talk about succession planning.

Enjoy.