Think You Need to Be Rich to Buy a Business? Think Again! With Jonathan Jay
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05/08/2023
Show Notes:
Despite what you may think, you don’t have to be ultra-rich to buy a business. You don’t even need to invest your own money to buy a business successfully. And our guest today will tell you how!
Meet Jonathan Jay. Jonathan is the Managing Director at Dealmakers, an expert in business acquisitions, and an entrepreneur since the early age of 19. He has been buying and selling businesses successfully for over 30 years. Just during the pandemic, he made 48 business acquisitions to create the 4th largest group in his sector in under three years. After getting asked repeatedly for advice and tips on business acquisitions for years, he’s decided to finally start sharing his wisdom with the world. That’s why in 2016, he started running support groups and training for people who want to buy their first business without risking all their own money.
Jonathan believes that you don’t need to be a private equity firm or very wealthy to buy your business. You just need to follow the right process.
In this episode of the Think Business with Tyler podcast, we talk about what it takes to buy your first business, why it’s better to work with profitable businesses, the most effective buying strategies, and the potential challenges you might face along the way.
If you want to hear some first-hand advice for buying your first business, make sure you tune into this episode to hear what Jonathan says.
Guest-At-A-Glance
💡 Name: Jonathan Jay
💡 What he does: He’s the Managing Director at Dealmakers and an expert in business acquisitions.
💡 Noteworthy: Jonathan has been successfully buying and selling businesses for over 30 years. Now, he’s helping others buy businesses successfully through his consultations.
💡 Key Quote: “I describe it like a jigsaw where we’ve got all the pieces of the jigsaw, and we need to just slot them all together, and when we put them together, the picture becomes clear. And on the picture, it says, ‘We’ve bought our first business.’”
💡 Where to find Jonathan: LinkedIn
Key Insights
You don’t need to be rich to buy a business. Despite what most people think, you don’t have to own a private equity firm or be ultra-wealthy to buy a business. As a matter of fact, anyone can do it. Jonathan has created a detailed process for helping others acquire businesses successfully. He explains, “Most people think is that business acquisition is for people who are very wealthy. It’s for the private equity firms, and you can’t do it as a small business owner or you can’t do it as an individual. And that’s absolutely not the case at all. […] Instead of another ten years of effort to get to where you want to be, let’s make it ten months of effort to acquire a business that doubles your size so it’s accessible to everyone. You’ve just got to follow the process, follow the system, and you get the results.”
Successful business owners are more realistic. Successful business owners are much more realistic when it comes to the price of their business. So, if you want to get a good deal when buying a business, look for strong and profitable businesses. Jonathan explains, “The people who are the most unrealistic are the people who have the weakest businesses, and they haven’t made much money over the years. So they feel as though selling their business is the chance to get back that money that they didn’t make and to pay them for the effort that they have put into the business. When you’ve got a seller who’s got a good, solid, profitable business, they are way more realistic because they’ve made their money over the years. They just want to retire. They don’t have to make it all on the exit. They’ve made it over the decades of owning the business. So interestingly, you get a better deal with a successful business.”
The best way to buy a business is directly through the owner. Instead of browsing through broker websites and relentlessly competing with other buyers, Jonathan suggests trying another approach. He prefers to go directly to an owner who is thinking of selling but is yet to put their business for sale. He explains, “What I prefer to do to go to the owners directly. I want to go to an owner who hasn’t yet listed it for sale but has been thinking about selling their business. So they haven’t yet got to the point of signing that contract with the broker, but they are serious about selling. So this is a direct-to-owner conversation, and that is the most powerful one you can have because when you are talking directly to the owner, you can find out about their motivations for selling.”
Build relationships with people. One of the greatest challenges that everyone faces when they buy a new business is people management. This is when relationship-building becomes your priority when you buy a business. You absolutely need to get the employees in your corner. Jonathan explains, “What we want to do is we want to build relationships. We want them to realize that this is not an aggressive move. This is you’re taking over from Joe, who was at retirement age, and Joe was thinking of closing the business. You’ve actually rescued everyone’s jobs. You are the knight in shining armor, and you are going to help them grow the business by supporting them.”
Top Quotes
“As long as it doesn’t risk everything, because why would you risk everything you’ve built up over the decades for a business? That just doesn’t seem right to me.”
“If they don’t like you, they won’t sell to you. And if they really like you, then they’ll be more open to that owner’s finance, for example, they’ll be more open to better terms because they like you, they trust you, they want to do a deal with you. They can see you as the future owner of the business that they’ve built up over the last two decades.”
“The legals for buying the business are very straightforward, really quite easy. The bits that take the longest are the financing. If you’re bringing in asset finance, you are financing the accounts receivables. That takes a longer time because those companies do due diligence on the assets. And also the property aspects of the deal always take a long time.”
“If you win over their hearts and their minds, then you’ve got a real force for good. If the staff turn against you, it, you don’t sound a chance.”
“I think if you are confident and you never, ever give up, surely that’s all you need in life. Because when you look back at your younger self, if you look back at your teenage self, probably most people would say, I wish I had more confidence. That’s what you would tell people. So if you believe in yourself and you have that self-confidence, then you can do anything, including buying a business.”
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