How do you build a consulting business with a view to selling it eventually? What's the secret formula to guarantee success?
In Episode 032, Jack has invited David Barnett who is an Amazon best selling author and has been working with small businesses for over 20 years and currently works with entrepreneurs around the world helping them to buy, sell, finance and manage their businesses. Based on his solid foundation and experience, David will share how one can build a consulting business with a view to selling for a profit eventually and what buyers are looking for in a consulting business?
The Good, the Bad and the Ugly of a Business Broker
"I decided I would become a business broker and I joined up with an international business brokerage company and the reason I chose them is because they gave me access to training and so I'm on the east coast of Canada in a province called New Brunswick and I was the first person ever in New Brunswick to be certified as a business broker and so I was able to bring a higher level of professionalism to the trade here in New Brunswick and in my business brokerage, I did that for three years. I sold 36 companies for other people and so I was very successful as a business broker. But what the story doesn't tell you is that the cash flow of that business is terrible. When I was a business broker, I was basically earning a commission from the business seller when the business was sold and even though I sold 36 companies in three years, there were three different periods, some of them up to nine months long with no closings, so imagine for nine months you're spending money on rent your office, staff advertising the budget at home and no money is coming in at the top and so it was very stressful and if you look at my photo online, you'll see that I have grey hair on the side of my head and all of this grey hair comes from that time of my life."
From a broker to a consultant
"And what I realised later is that was the market trying to speak to me. These were people who were trying to learn and it was only later after I got out of business brokerage when my mind was opened to understanding a different way that I realised that people don't necessarily want someone in the middle who takes a piece of the deal. People want guidance and advice and they're willing to pay for it. In much the same way that you go to an accountant for help with your tax forms or you go to a lawyer for help with a contract. People will pay for competent advice. And so my business today is simply based upon people coming to me to help them through the process of either buying or selling their businesses.
What are the buyers looking fro when they buy a business?
"Buyers are only looking for one thing when they buy a business. They are looking for cash flow. They want to pay money to you in order to secure a stream of revenue for themselves, and so what that stream of revenue looks like is different based on different kinds of businesses."
Why would a business owner want to sell his business?
"And so we've got poor health, we've got burnout, we've got divorced, we've got relocation and the last one was retirement. So out of the top five reasons that people ended up wanting to sell a business or needing to sell a business, only one of the five is planned for. The other 80 percent of the time, people were not planning with their business. And so that's why it's so very important when you are building your business, you need to get these things in place. Systems, processes, procedures, products in place, as soon as you can because you need to be running your business at all times as though it might go up for sale because the things that can push you to need to sell your business are sometimes things that you never expected."
Want to know more about David and its Leadsology?
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Jack HM Wong Is an author of his Amazon bestselling book Cracking the Entrepreneur Code: 7 Tips to Build the Business You Always Wanted. He has been featured on CBS News, Fox, ABC News and NBC News. His mission is to improve the quality of lives of over 1 million people worldwide. His message to people who are stuck in the rat race is straightforward - "Anyone can start Any Business, Anyhow, Anywhere and Anytime".
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