Hey Biz-Buyers,

This is where we share some of the best insights, tips, and stories from Main Street and our private biz-buying community.

But before we dive in…

Ready to get intimate?

Not like that, sicko. Do we need to call HR?

Anyway…

Here’s a date to tattoo on your chest: June 24-25, 2024

(Please don’t actually tattoo that.)

But, what you should do is mark it down as the date of our first-ever, hands-on scaling workshop in Austin, Texas (for business owners and CEOs).

The hosts? Codie Sanchez (who you know), and Ayman Al-Abdullah, the former CEO of AppSumo.

The deets? This one’s built by business owners for business owners. Scaling is hard — and it’s harder when you’re not sure where to start. Learn from those who’ve been there so YOU can hit your next goal.

The catch? This is not for everyone. This is only for owners and CEOs with over $1 million in annual revenue. We’ll be screening each application and limiting this to 50 people max.

Learn more and apply here today:

Done? Promise? Good, now let’s get down to business.

Today, in 5 minutes or less:

✔️ Buyer wisdom: Lessons learned from passing on a deal

✔️ (8 NEW) cool things from Main Street

✔️ Some REAL talk before you go…

Buyer wisdom: Lessons learned from passing on a deal

One of the most vulnerable corners of our community:

A Slack channel called “Lessons Learned.”

Think about it. With every experience in life, lessons are learned.

But you can only learn so many lessons as 1 aspiring dealmaker.

When you’re part of a community, you DRASTICALLY expand your surface area for learning.

And in this one, as members work night and day to learn about SMB dealmaking through ACTION…

This channel is where they gather ‘round the digital campfire and open up.

It’s where they lend a hand without asking for anything in return.

Just honest, practical, helpful tales from inside the arena.

And 1 member, Anthony, recently did just that.

He had passed on a deal under LOI for a residential HVAC company, and learned a ton in the process.

Want to know what he shared?

Lesson 1: Client Concentration

”The concentration risk was up to 40% with one client. That number is pretty scary, to think one client could walk away with 40% of revenue. We didn’t figure this out until digging into the contracts. We realized 3 clients could walk away, which would result in a loss of 80% of revenue.”

Lesson 2: Revenue Fluctuation

“The revenue for residential new construction HVAC fluctuates significantly. Given the high-interest environment, residential new builds delayed builds, and this business immediately saw the impact… Seeing a revenue dip can be beneficial from a negotiation perspective, but it’s also a big risk.”

Lesson 3: Labor Risks

“Converting the lowest tier labor category with no license to a licensed technician is a tall order. These are different employees or would require a significant amount of effort to train.”

Lesson 4: Growth Affordability

“Construction pays out in lump sums and would require higher than average working capital to keep the business running smoothly. This gets challenging when you want to grow... When we modeled the costs of our growth strategy with the working capital required on top of sustaining the current business, there wasn’t enough profit.”

Lesson 5: License Viability

“After our SBA 7(a) loan was approved and we were going through the high-level terms, the bank indicated they were not comfortable with us using the seller’s licenses. This significantly impacted the deal and our planned growth strategy into residential preventative maintenance contracts or commercial real estate. This wasn’t a deal breaker with the bank, but they wanted a different business plan.”

Lesson 6: Time Kills All Deals

“The Contrarian Community team and others have said it, but we had to learn it ourselves. Time kills all deals. There was a constant delay in getting information from the seller when we had questions and asked for more information. It really elongated our timeline. Bank approval also took longer than expected, I felt like it was always ‘tomorrow’ that we would hear back from the underwriter.”

Lesson 7: Talk to the Experts

“We got on a call with a business broker focused on HVAC companies. He knew the industry. We pitched him the deal. He had a lot of feedback and confirmed our risk assessment. Live to fight another day. Our best advice = get to industry experts early!”

The bottom line:

“The search continues,” Anthony said.

“We’re definitely more confident after getting a business under LOI and working through all these items. We’re ready to apply the lessons learned on the next business lead.”

(8 NEW) cool things we saw on Main Street...

1. A great thread on why the SBA’s personal guarantee can be “an asymmetric bet”
   
   
2. What are your thoughts on this take: “If you have a W2 job paying you $500k+, you’re generally well-advised to ____” (see the blank)
   
   
3. What the “SMB Attorney” would do if he could go back to 25 and change careers…
   
   
4. If you thought you were gonna go another week without a private equity meme…
   
   
5. What to know about CapEx, from one of our very own community members.
   
   
6. Agree? “Hot take: I think it’s scary how many MBA grads (with very little business experience) are ____” (see the blank)
   
   
7. This is interesting. How a landscape biz’s owner-operator gets paid…
   
   
8. This is too real… A meme about the perks of being a business owner

Some biz buyer REAL TALK before you go…

The following is a lightly edited excerpt from a member’s post in our community’s “Mindset” channel.

One thing I’m dealing with regularly is that the process of buying a business is “stressful.”

It’s a different kind of stress though.

It’s not the stress of survival, of having food and shelter.

It’s the stress of making big changes.

It’s draining and emotional.

This isn’t “just business.”

In every business that I’ve looked at, the business is someone’s baby.

Just like my business. The one in which I did every single task at the beginning.

These “boring businesses” were another person’s vision and dream that were brought forth into reality with a lot of blood, sweat, and tears.

- Jimmy

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