Your First Acquisition
I've been having 3 ish conversations a week about people wanting to buy their first business so I thought I'd put everything I know into one post. This isn't that post (sorry ... time) but it's the closest thing to it at the moment :) This one is going to be a bit colorful ...
Perhaps one day I'll create a course (I have a weird mental block around selling a course).
Here's the thing. The easiest way to go from 0 acquisition to 1 acquisition is to go make an acquisition.
Here's the thing. The easiest way to go from 0 acquisition to 1 acquisition is to go make an acquisition. Seriously, go buy something small, risking only the amount of money you are perfectly happy losing. Might be $5k, might be $50k. Doesn't matter. Just go do it. Give yourself a month and pick the best option on micro acquire. You're going to be some % wrong anyways, quit agonizing over it. If you can't find a suitable SaaS, try to buy an agency. Don't be a prude, you're buying an education here and hopefully some cashflow, but mostly an education.
If you're not a technical person then partner with someone who is. Don't do it alone, partner to spread the initial risk. It's not a big deal to spin up an llc together. Partnering on a business is not like getting married at all. It's much lower stakes but I'll continue with the metaphor anyways. Just put all the shit in writing. Get a "prenup". Also not a big deal to get a "divorce" from this person and buy them out if it doesn't work out, so long as you put a divorce clause in there from the start. And definately do put a divorce clause from the start. It can be as simple as "if either party no longer wishes to participate or stops contributing to the company, the other party can buy them out for the initial investment amount". Boom. Divorce clause. Also I'm not a lawyer, get this checked out and pay someone a silly amount of dough to write it better but it's like 2-3 sentences. Not a big deal.
We bought out 2 previous partners. Was it ideal? No, but XO survived. You can too.
I don't want to hear it. Nope. It's not. I don't want to hear about passive income until your active income makes my girlfriend do a double take. Got it?
It's a tiny deal. Man up and pay cash. 100% up front. This is a $10k deal. Just pay cash. Seriously, I know you love the HBR article on different financing options but put your monacle down and just pay cash.
Do your best to find things that could kill the "company". Make sure customers are real. Talk to 2 of them. Check bank statements. See if they match Stripe. Check that the servers don't crash all the time. Make sure they actually wrote the code and own the asset. Other than that, don't worry about it. You're buying a POS. sorry. Might be a POS with a lot of potential, but it's still a POS. You think you're going to buy a Maserati for $10k? nope. You're buying a turd. You may grow to love this turd. Hell, you might even turn this turd into a Maserati, but it's going to be a butt load of work and you and your partner are going to do it. Or outsource it, idk. But there's going to be a job to do here and someone is going to have to do it.
Taking over the assets
Don't use escrow. Wire half up front. Have them transfer everything (I mean literally everything, like expect to never speak with them again) then wire the other half. Buy the biz from the US or the EU or the UK. Those places have laws for this type of thing if it goes south (yeah it's called fraud). But it won't. It's a tiny ass deal. Stop stressing about stupid shit.
Running the business
Congrats, you bought a biz. Welcome to the club. Also you just bought a job. This is called "Operating". It's actually 90% of the work. This is the real money making activity. Maybe you're good at it, maybe you're not. You'll know soon enough. I'll stop here.
If you sack up and do this in the next 30 days you'll basically be a different person. Kidding, but you'll have acquired your first company, which is pretty neat.
Yeah there's some nuance I flagrantly hand-waived, but like basically just go buy something and stop putsing around.