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Getting My Hands On a Baby Boomer's Business

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AdamBoyd

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Aug 1, 2019
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Glasgow, Scotland
Hi All,

I've read both Fastlane and Unscripted and I've been around on the forums for the best part of a year now.

I've been entrepreneurial since my early teens (I won't bore you with all the 'selling t-shirts from my bedroom' stories that you've heard a million times). To cut a long story short, a couple of years ago I opened a pizza restaurant in my city which I operated for around 2 years with 2 partners who were older and more experienced than me. That business gave me an immeasurable amount of fantastic experience managing people and fully running a business that turned over almost £1m per year (I was the most active Director). I made the decision to come out of the business though as there simply was not enough money for all three partners to earn a living and one partner wasn't pulling his weight - which can lead to all sorts of problems.

I accidentally discovered during the running of the business that I had a knack for digital marketing and, in particular, social media. So, I took over the management of the social media of the small group of restaurants that one of the other partners also operated. I didn't advertise my services whatsoever and I was reluctant to tell others what I did for a living as I went from the guy who owned a share in a restaurant to someone who plays around on social media (despite the fact the social media was paying more than owning a restaurant for FAR less effort). As time went on, I started to talk about what I do to friends and family and before I knew it, I had the Managing Director of a public company asking if I could help with their marketing. I now run the social media for a large region that the public company operates in.

At 25 years old, I work for myself as a freelance social media manager with 2 big clients (a group of 5 restaurants and public company mentioned above) and I'm earning more money than most 'slowlaners'. I have complete control over my day/time and, to be honest, I can get the work done with a lot of spare time left over every week. HOWEVER. Instead of creating a scalable business, I've created a well paid, easy-going job for myself - and I always worry that I'm not building anything for the future. Social Media is important now, but will it be important in 5 years? I see this as a temporary situation and I need to harness my free time to build something for myself for the future.

So, after the long-winded back story - onto the main event.

I spend a lot of time with people who are older than me. I enjoy their company far more than other people my age who seem to have a totally different mindset to me and would rather talk shit and have a laugh than discussing business, investment and things that are happening in the world. This led to me spending quite a bit of time with my Father in Law and his friends, most of whom own their own businesses or are self-employed in some way or another. One of them has built a very successful business over the past ten years after struggling in a couple of slow lane jobs in his industry.

He and his wife have done a fantastic job building up a base of customers and they have taken on a couple of staff, albeit reluctantly, to help cope with the growth. However, they are in their mid 50s now and they are fed up with what they do and would rather enjoy life without the everyday stresses and hassles of running a business. Neither of their two kids are interested in the business and the 2/3 staff that they have taken on are 'not management material'. They do not want to list their business for sale because they are worried about the harmful effect it may have on trading with existing suppliers and customers and they have no one within the business or family who is interested in taking it on.

I picked up on this and expressed interest in it. I met with him and we explored the possibility of me taking it over. However, although I don't know the exact numbers of the business, I know that their sales are in excess of 1.2million annually and they have a very good profit margin. Because of this, they are hoping to sell the business for 1 million (even though they're not telling anyone it's for sale - crazy right?). So, we're talking pretty big numbers for a 25 year old guy. He seemed interested in exploring the option of my financing the purchase of the business through the business profits after taking over and it looked like I may be onto something.

However, after a few days, he came back to me and said that he doesn't think it's the right thing for them to do at the moment. Despite the fact he's looking to sell the business, I think he's worried that by me buying it, he's not able to completely walk away and would still be tied to any problems that may occur in the future due to my being a family friend. I get the impression that he wants to sell the business to someone he is not connected to at all and he can completely detach himself from it. His wife is also overly cautious with everyone to do with the business. She was very much against bringing on a salesman (despite the fact he now generates over £40k per month for the business). I don't know his wife as well as I know him and I'm worried she's sceptical about me and my ability to learn/run the business.

Although it's a very specialised industry and I would have a lot to learn, I know that I can add so much to the business and I can get growth from other areas that they might not have explored yet. It has a lot of potential and I'd love to get my hands on it. I offered to work for them for 6 months for free to learn the business and also show them what I am capable of, but he said he couldn't ask that of me (even though I'm 100% willing to do that). I asked him what they're going to do if they can't sell it and he said that they may just have to ru it for as long as they can, make as much money as possible and then close it down. This made me sick to my stomach! What a waste of a profitable business that would be.

Is there another way I can approach this that I am not seeing? I need a fresh set of eyes to take a look at this situation from an unbiased point of view to see if there's another way I could try to get involved in the business to let them get to know me more.

After reading this thread on taking over businesses from baby boomers, it just reinforced how much of a great opportunity this could be for me to really build something for the future.

Let me know if you have any thoughts. Apologise for the poorly written post - I've just been typing as I've been thinking.
 

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ljb7

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Adam, long time no speak! (Luke, from FB). Sounds like you've progressed a lot since those Amazon days. Good for you.

It also sounds like a promising situation you've found yourself in. My advice would be: pursue the hell out of it if you think its worth it. I have no idea what industry this company is in, but if it's as dated and slow-moving as I'd expect, then bringing some youthful energy into the fold can make a huge impact.

Understand that this guy and his wife have worked hard to build this, even if they're looking to move on. They probably want to 1) Make a clean break from it, and 2) Get their money's worth.

Right now, him being interested is all you really need. If he is so opposed to letting you work free, figure out what the lowest salary he feels comfortable paying for you to take on the reigns and show him what you've got for the next 6 months. It may just be 1-2k, whatever. You need to figure out how to make them both feel comfortable with this arrangement, and then show them exactly the level of responsibility you can take. Hell, you may even be able to get them excited about things again. Young gun energy does that to people.

Frankly I don't see what much you have to lose here. Go all in, and keep us updated!
 

elusive97

Bronze Contributor
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Nov 28, 2019
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Yorkshire
Hi Adam! Your story sounds great, you're making awesome progress :) I don't have much to add but look forward to hearing updates
 

Lyinx

New Contributor
I've Read UNSCRIPTED
Oct 28, 2019
21
19
14
Lancaster County, PA
My experience:
grew up in the family biz (started when I was 3 or 4, taking hardware out of bags), and now run the day-to-day operations in the office.
2? years ago, bought 15% of the biz, just to start paying attention to the numbers a bit more.
Now? Happy I did it, it pays well, and I'm getting the education of a life-time :)

My advice?
ask the older couple if they would be interested in selling a share (25%?) of the biz for $$$,$$$ up-front (so there's no risk to them)
ask them who their person is who does their legal paperwork, have them write up the business with a profit share system (probably based on who has what % of ownership)
have a buy-back clause, where at the end of one year, the couple can buy this % back at the price given, if they
over the next year, you'll be tweaking things on the back end to make sure it's friendly to this kind of operation (bank accounts were in his name, now they need to be under biz name) and this will make the entire business legal and make you happier.
Other things that might be under personal ownership that should be changed over:
ownership of property (or lease agreement with owners)
bank accounts
line of credit account
credit cards
tax id number may need to be updated to reflect multi-member ownership

After one year, make a decision:
1. All-in with owners stepping out
2. All-in with owners coming by one day every other week (you would pay them hourly as a consultant, step down hours as needed until weaned)
3. All-in with owner working part-time (from your set-up, doesn't sound like they would want that) have owner do grunt work/clean floors in back/etc... and be available to ask questions if needed. This is where we're at with my father, he does deliveries to local shops, he can talk with the customers (which he likes very much), and he's still involved with his "baby", but is not involved in the day-to-day operations.
4. staggered purchase over time: you buy 25% now, another 25% in 2 years, and so on... it provides the owner with a slow withdrawal period... I do not suggest this route unless you want to keep the owner heavily invested.
5. full-out purchase with loan from owner: this is a nice touch for someone that does not have the cash up-front... you might borrow 25% from the bank, pay that to the owner up-front, and then pay the rest to the owner as a loan over the next 10 years. If you default, then they get back the business or part of the business (whatever you put up for collateral) the benefit to the owner is that they don't have all that income in one year, its spread out over 10 years or so.

that's my $.02, there are hundreds of ways that this could play out, have fun!
 

94blackbird

Contributor
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May 21, 2015
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Cleveland, Ohio
The one part that stuck out to me was the skeptical wife. It sounds like she's the one that's not ready to let go yet, especially if the guy was ready to do an owner financed deal to sell you the business, then came back a few days later having changed his mind. It sounds to me like she is the one you need to win over, especially if she is negative nancy about any change in the status quo with regards to the company.

If it were me, I would probably also spend some time researching the hell out of the specific industry this company is in, and come back a couple weeks to a month later with at least a basic understanding of what the industry is, what it does, and how it does it. I wouldn't look to be a subject matter expert over night, but knowing enough to prove the seriousness of my interest. Keep pursuing them. Squeeky wheel gets the grease'm.

Failing that, maybe go nuclear and start a competing firm? You know enough to know that this is something you want to be involved in. Unless this is a super capital intensive business to start, I can't imagine that you wouldn't be able to quickly get up and running, especially if you can apply your digital marketing skills to grow.
 

BizyDad

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Despite the fact he's looking to sell the business, I think he's worried that by me buying it, he's not able to completely walk away and would still be tied to any problems that may occur in the future due to my being a family friend.
I doubt the family friend is the only issue. Let's dig a little deeper.

Maybe he is questioning your ability to lead the team he built. Maybe they won't want to follow a 25 yr old social media whiz who used to own a restaurant. Maybe he is worried you don't have the right industry knowledge. Maybe he is worried that you will make bad decisions leading to lower sales, then default on the payment plan, and he'll have to take over from you and clean up the mess.

Can you imagine? 3 years into his life of traveling and retirement he has to put all that on hold to go back to work and fix the problems you created? What will his employees think? What will his wife think?

He doesn't want people to know he is selling. Which probably means he doesn't want his employees to know. So how can he bring you in to the business as a "test run" for 6 months?

The politics of that could be bad. Why wouldn't he just sell to an employee of he has to finance the whole purchase?

I mean you mentioned there would be problems. Have you thought about what kind of problems and do you have a plan to overcome them without his help?

He, and his wife, probably have a lot to worry about.

If you want to close this deal, you'll need to overcome all their objections, especially the ones they aren't telling you.

You have to think like them.

What are you doing to show them you are the guy to run this company?

Because all I've heard is you are willing to learn for free. That's something. And good for you for throwing your hat in the ring.

But you have no risk. You have no "skin in the game". If you fail at this business, you have a track record of leaving.

So put yourself in their shoes. If that's all you got, they are better off finding someone with the right experience and a million dollars to pay, aren't they?

So what else can you do to take their fear away?

How can you make it so that selling to you is the best alternative?

I'll share how I've done it. So I also run marketing agency. I have several boomer clients. Two want me to be the guy they sell to.

Why?

Three reasons:

1. I've been showing up in their office monthly for years. I know the employees. I know the business. I know how it all works. IF I buy it, they know it will be a smooth transition.

2. I'm their marketing guy. They know I can grow this business because that is what I've been doing for the last X years. I listen to their phone calls. I coach their sales people. I know their numbers as good or better than they do. If they finance their purchase to me, it will feel less risky than some others because I will grow the thing. They know this.

3. I asked about their plans for retirement. It was an easy way for me to open the discussion about positioning the company for sale... And then casually mention I might be interested in it. Someday. That led to them wanting to talk numbers and structure. So I already have a rough framework for the deals. One guy will be retiring in 2 yrs. All I need to do is save up X dollars by then for the down payment. He'll finance 50% of the purchase.

I'm sharing this with you because you have a great idea. And even if this business owner doesn't sell to you, you can and probably will find one that will. Hopefully more than one.

But you have to get inside the mind of a business owning boomer if you are going to pull this off.

I hope this helps.
 
OP
OP
AdamBoyd

AdamBoyd

Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Aug 1, 2019
30
28
45
25
Glasgow, Scotland
I doubt the family friend is the only issue. Let's dig a little deeper.

Maybe he is questioning your ability to lead the team he built. Maybe they won't want to follow a 25 yr old social media whiz who used to own a restaurant. Maybe he is worried you don't have the right industry knowledge. Maybe he is worried that you will make bad decisions leading to lower sales, then default on the payment plan, and he'll have to take over from you and clean up the mess.

Can you imagine? 3 years into his life of traveling and retirement he has to put all that on hold to go back to work and fix the problems you created? What will his employees think? What will his wife think?

He doesn't want people to know he is selling. Which probably means he doesn't want his employees to know. So how can he bring you in to the business as a "test run" for 6 months?

The politics of that could be bad. Why wouldn't he just sell to an employee of he has to finance the whole purchase?

I mean you mentioned there would be problems. Have you thought about what kind of problems and do you have a plan to overcome them without his help?

He, and his wife, probably have a lot to worry about.

If you want to close this deal, you'll need to overcome all their objections, especially the ones they aren't telling you.

You have to think like them.

What are you doing to show them you are the guy to run this company?

Because all I've heard is you are willing to learn for free. That's something. And good for you for throwing your hat in the ring.

But you have no risk. You have no "skin in the game". If you fail at this business, you have a track record of leaving.

So put yourself in their shoes. If that's all you got, they are better off finding someone with the right experience and a million dollars to pay, aren't they?

So what else can you do to take their fear away?

How can you make it so that selling to you is the best alternative?

I'll share how I've done it. So I also run marketing agency. I have several boomer clients. Two want me to be the guy they sell to.

Why?

Three reasons:

1. I've been showing up in their office monthly for years. I know the employees. I know the business. I know how it all works. IF I buy it, they know it will be a smooth transition.

2. I'm their marketing guy. They know I can grow this business because that is what I've been doing for the last X years. I listen to their phone calls. I coach their sales people. I know their numbers as good or better than they do. If they finance their purchase to me, it will feel less risky than some others because I will grow the thing. They know this.

3. I asked about their plans for retirement. It was an easy way for me to open the discussion about positioning the company for sale... And then casually mention I might be interested in it. Someday. That led to them wanting to talk numbers and structure. So I already have a rough framework for the deals. One guy will be retiring in 2 yrs. All I need to do is save up X dollars by then for the down payment. He'll finance 50% of the purchase.

I'm sharing this with you because you have a great idea. And even if this business owner doesn't sell to you, you can and probably will find one that will. Hopefully more than one.

But you have to get inside the mind of a business owning boomer if you are going to pull this off.

I hope this helps.
Sorry for the delay in replying to you! I've only just noticed your post.

Thanks for your feedback. This is actually what I was looking for - someone to really put themself in the shoes of the seller and help me with what their objections are likely to be.
 

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