In order to buy a SMB, you need to see hundreds of candidates. How do you do that?
Like in Sales, you have two main prospecting avenues:
Search-funders and SMB buyers with sales experience are starting on second base.
Thread on how sales abilities improve your success odds in acquisition entrepreneurship:
In order to buy a SMB, you need to see hundreds of candidates. How do you do that?
Like in Sales, you have two main prospecting avenues:
2. Outbound - Find and contact owners of SMBs that fit your criteria to see if / when they want to sell.
Outbound is grunt work, i.e. "Dialing for dollars." Because of this (not in spite of it), outbound has advantages:
Higher-volume deal flow → better odds of a successful acquisition. Remember, it only takes one.
- Less competition.
Educated people shy away from grunt work. Your willingness to sweat will be rewarded with buried treasure (off-market deals).
B) LinkedIn - Example:
https://t.co/55wtXs25CR
How to Find SMB Acquisition Targets Using LinkedIn:https://t.co/rZqbNgNEQp
— Joel Blake \U0001f3ed (@joelrandyblake) September 15, 2020
https://t.co/bMKJKDpYpd
Salespeople do outbound and inbound prospecting every day.
These skills translate directly to your hunt for SMB acquisition targets.
Not sure how I'm just discovering this resource...
— Joel Blake \U0001f3ed (@joelrandyblake) October 14, 2020
If you're in the market for a Manufacturing business, feast your eyes:https://t.co/d1X9vpL73o pic.twitter.com/wLoVi8Z42p
There's an adage in Sales: "People buy from people." In other words, no one makes decisions based on a spreadsheet.
Successful transactions require a human touch. Applied to SMB acquisition: "People sell to people."
You've spent the last 30-40 years owning and operating your business.
That's longer than you take care of your kids! (Well, it used to be...)
Point being, the business is their baby.
What does that tell you?
Selling their SMB isn't just about the money.
It's about legacy and leaving their "baby" in good hands.
As an acquirer, you have to communicate your value and intentions to the SMB owner.
Build a deep enough relationship, and you will have zero competition at the offer stage.
The best Sales deals are won before any numbers are revealed.
Same goes for SMB buying, and the negotiation skills required in both fields have many parallels.
Your job is to figure out how painful the problem is, and how to solve it better than your competitors.
In Sales, this process is often called Discovery or Needs Analysis.
For example:
- How involved would the seller like to be post-close (and for how long)?
- What ideas does the seller have for improving the business?
In both Sales and SMB buying, information alone can determine winners and losers.
Every experienced Salesperson has been burned.
Customers renege on commitments, or over-forecast.
A "behind the curtain" influencer kills your deal in the 11th hour.
The list goes on...
Diligencing a business requires vigilant skepticism.
You have to assume that the seller's numbers are BS, and there are more skeletons in the closet than revealed.
As in Sales, the best approach is a split personality:
Paranoid skeptic vs. Delusional optimist
You have to *believe* that every deal will close, while *knowing* that the odds are stacked against you.
Deal size and complexity often drive how much documentation is required.
(Manufacturing example: Selling missile fins to Military is different than selling soap dispensers to Hospitality.)
Although it might feel like the last 10% of the process, Sales experience tells me:
Any transaction has a 50% chance of dying on documentation.
Combine that with the odds of disagreement on Terms & Conditions, and you should assume that no deal is done until the ink dries.
Quid-pro-quo hypotheticals are a useful tool:
"You say you want X. I'll draw up a proposal that includes X, plus benefits Y and Z. Now picture yourself reading that proposal: What else is missing?"
You've leveraged your Sales abilities to close a successful SMB acquisition. Congrats!
Now you get to live up to your promises regarding employees, customers, suppliers, and company operations.
But if you don't understand the nuts and bolts of realizing that future in your SMB...
You should err on the side of caution with your commitments.
Only offer what you can implement.
Over-promising and under-delivering earns you a poor reputation and burns bridges that you need for sustained success.
Sales abilities improve your success odds at every stage of a SMB acquisition:
- Deal sourcing
- Courting the seller
- Crafting a winning offer
- Diligence / documentation
- SMB operation
