Having interviewed well over 500 entrepreneurs in the past year, my belief is that if you are truly serious about becoming successful you should add one more task right at the top of your to-do list: buy a business!

Now, I fully appreciate that your finger is already moving towards the ‘next article’ button. You will quite likely be thinking that you can barely make your own business work, you don’t have any spare capital and even if you did you wouldn’t have the time to take on a new business.

Which is exactly why you need to explore this further.

Buying my first company taught me more about business than anything I had learnt before or since. And at the time, I could barely make my own company work. I had no money and no time.

Here is why I recommend every business owner begins this process.

1. Chicken wire and masking tape.

One of the challenges of being a business owner and trying to figure out how to make the business work, is that when you look around at other people’s businesses, you only ever get to see the shiny veneer on the outside. Everyone else’s business seems to work so seamlessly yet you know that your business is a house of cards that is only ever one poor month or wrong decision away from collapse.

By starting to do due diligence on a few different companies, you get to glimpse behind the curtain into other people’s business. In all but the very rarest of occasions, what you discover is that those businesses are also held together with chicken wire and masking tape. This discovery alone can do wonders for your confidence!!

2. Shareholder value.

You may think that you understand shareholder value. After all, you are likely the majority shareholder in your own company and are certainly looking to get some return for all your work. Yet, my contention is that you never truly understand shareholder value until you start thinking about investing your cold hard cash into someone else’s business.

It’s only when you look at someone else’s business with the objectivity of someone on the outside do you start to realise the distinction between customer value and shareholder value. You will look at their business and ask why on earth they are spending money on a particular outgoing, or why they are still employing someone that seems to add no value.

From the outside looking in, you can often see with a clarity that is lacking to the current owner.

The reality is that most small business owners have to think about, obsess about even, customer value. That is the only way we can get money into the company. Yet often what we are doing is actually making our company less valuable not more.

After noticing this pattern in a few companies, you will look back at your own company with a completely fresh set of eyes and it will allow you to make much better strategic decisions for the value of your business.

3. The last mile.

Making a business work is hard. It takes a lot of time and effort to figure out what your clients want, how you can deliver that and how you can make a profit. Yet, very few people actually make money from owning a business. The money comes when you sell — if you know how to sell it well. Again, most small business owner do not know how to create the shareholder value that would allow them to get the best price. Yet, just by beginning the ‘buying’ process you will start to get a much better sense of how to sell your business later.

More importantly, with your fresh set of eyes and a better understanding of what a business buyer is looking for, it is possible for you to come into a business, make some relatively simple changes and sell it on for a significantly higher price.

One of my mentors, Jeremy Harbour, describes this as the equivalent of coming in to run the last mile of the marathon. You only need to do a fraction of the work and yet there is the opportunity to take it across the finish line and get all the glory.

Buying a business, like anything that is new, may seem intimidating until you start, but I believe it is the most valuable activity that any entrepreneur should undertake. As the astute readers will have noticed, many of those benefits you get will come just from doing the due diligence process. Finding the time to do that is most definitely worth it. If you end up owning a good second business as a result, then so much the better!

Learn about the Secrets to Small, Swift Business Exits from Jeremy Harbour. Join us in an hour-long session on June 17th. Find out more and register here.

Visit the Entrevo Training page to find out more about Callum's work.

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