🤝 Where the Magic Happens as a Biz Buyer

Biz Buyers,

If you’re new here, welcome to Main Street Minute — where we share some of the best tips, tools, and ideas from inside our Main Street acquisitions community.

Whether you’re curious or serious about buying an SMB, you’re in the right place. But first...

Have you had a chance to read Main Street Millionaire yet?

Got 60 seconds? Leave a review on Amazon. Seems small, but makes a GIANT impact.

Alright, let’s get right down to business.

For Goodness' Sake, Know Why You’re Doing It

In SMB acquisitions…

• It’s not about WHERE you start
• It’s about WHY you start and WHO you surround yourself with when you do

Take Brian, who recently joined the Contrarian Community with his wife Chelsea. Check out this resume:

• Worked in agriculture his whole life.
• Manages a feed yard with 35,000+ heads.
• Increased profit margin monthly in a volatile market and during the pandemic.

“Ranching isn’t the most profitable business, but it’s a necessary one and we do it because we love it,” as Brian put it.

Ask Brian why he’s working become an owner, and here’s what he’ll tell you:

“My goal is to be able to buy a small business so we can diversify, continue ranching, and feed America, which is what we love to do.”

When Brian introduced himself to the group, a bunch of other members welcomed him in, including…

• An 8-figure startup CEO
• A former Army Operations Specialist and current Sr. Project Data Manager
• An owner of a dog grooming & boarding business
• A Deputy Sheriff (who — no big deal — started multiple successful service businesses while being a full-time W-2)

At the end of the day, the power of our people isn’t just in deals closed or businesses built, it’s in how they do it. Together, supporting each other. Across industries, states, perspectives, skill sets, and each with a unique WHY.

Welcome to the Contrarian Community, Brian and Chelsea. You’re in good company.

8 Ways to Protect Your Downside

You can never remove risk entirely. All you can do with it is:

• Take it
• Mitigate it

But the best deal is a bad deal avoided. So here are 8 quick tips on mitigating risks in dealmaking + spotting a deal you should avoid…

1. Simplicity = Green Flag

Dealmaking can get incredibly complex. Smart buyers:

• Ask simple questions.
• Find simple answers.
• Don’t give into the temptation to over-complicate.

Smart buyers know:

• Hope is not a business strategy
• You pay for current profits, not potentials
• Growth is a potential, not a guarantee

We go by numbers, not feelings.

2. The Employee Exodus

A unique risk in acquisitions:

Key employees walking out the door — taking clients, knowledge, and revenue with them.

Some buyers learn too late that the entire value of a biz can walk out with the staff. Smart buyers price in human risk.

Get an understanding of key employees & the intangible value they add. Then set in place incentives to keep around those people you need. Here are a few ways to structure that:

3. Equipment Failure

In asset-heavy businesses, outdated equipment isn't just an expense. It's an existential threat.

Every piece of machinery has a replacement date. Ignore at your peril. Manage this risk by:

• Factoring equipment conditions into the purchase price
• Having backup suppliers ready
• Building replacement reserves
• Mapping out upgrade cycles

The tech cliff isn’t a matter of if but when. Plan for it.

4. Customer Concentration

A deadly trap?

When 1 client represents 15%+ of revenue. That's not a business, that’s a hostage situation. And you’re the hostage.

Imagine you’ve just bought a biz that served the same client for 20+ years. A new CEO joins the client company.

1 meeting. 1 decision. For whatever reason, you’re gone.

A business with 1 big client can be a great foundation — but it’s only stable if you’re building on it, not leaning on it.

5. The Working Capital Trap

Many buyers will see profits but look past the liquid cash needed to operate and grow.

Working capital needs can sink you. Always keep these in mind:

• Growth requirements
• Payroll obligations
• Inventory costs

Most buyers forget: Growth and operations can eat cash faster than profit feeds it.

6. Regulation Risk

Every business faces regulatory risk. One legal change can set back years work.

I’ve seen entire niche industries crumble because owners didn’t see a legislative storm coming.

The best protection for smart buyers:

Where you can, don’t put all your eggs in one basket.

Diversify your revenue stream with satellites. And keep your strategy ahead of compliance.

One signature shouldn’t be able to end your business.

7. The Systems Nightmare

A common red flag in boomer biz’s:

You take over operations, just to realize everything was in the old owner’s head. No systems, no manuals… just chaos.

Sure, the financials look great, but if the whole operation falls apart the second the owner retires to Florida? Congrats, you just bought a dumpster fire with decent margins.

A business with excellent financials but no SOPs can make you regret your buy. Smart buyers price in systems.

If the business can’t run without the previous owner, that’s a discount tag on the purchase price.

(Let this be a warning to anyone out there trying to sell a business…)

8. The Life-Fit Trap

The worst rookie mistake in business-buying?

Forgetting that you actually have to live with the thing you buy.

Sure, that septic tank cleaning company might cash-flow nicely, but if you’re the one scrubbing sh*t and quickly realize it’s not for you… Well, good luck.

Smart buyers know the drill. 5 things to outline before your search:

• What do you obsess over?
• What size of business is right for you?
• How much can you realistically afford?
• How much does the business need to pay you to sleep at night?
• Where you uniquely have the best likelihood to succeed?

The wrong business won’t just cost you money. It will own you, not the other way around.

Get familiar with deal financing

• Enroll in our Seller Financing Navigator course
  
  
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Actually learn how to buy a business

• Enroll in our Main Street Accelerator course
  
  
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• Learn to source, evaluate, and negotiate for businesses like a pro

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• Join the all-access Contrarian Community
  
  
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