- Why you need to spend at least six months on the ground at any business you buy.
- Why building an effective leadership team will eventually allow you to step away.
- Why it’s impossible to lead a company remotely.
- Why it’s important to find a trustworthy GM
As more baby-boomer business owners approach retirement each day, their businesses need to be passed to someone – and the majority of these businesses don’t have effective succession plans in place. That fact alone means that 25 million jobs are threatened.
The Small Business Administration is working to help solve this problem, providing loans at incredibly favorable rates to help interested buyers purchase these businesses. As a result, Acquisition Entrepreneurship has become one of the best ways to build wealth in the United States right now.
However, there are some entrepreneurs who are solely looking for passive investment opportunities and when it comes to business acquisitions, this isn’t a great mindset.
While Acquira does provide passive investment opportunities for those interested, people who are looking to buy a business themselves need to put in a certain amount of work to ensure the company’s success.
Still, the hope is that by putting in that work – namely, systematizing the company and installing a leadership team – the acquisition entrepreneur will be able to step out of the day-to-day operations and enjoy more time doing what they love. The most important thing is to understand exactly what is required and how long it will take to become an absentee owner.
And that, dear reader, is why we put this article together.
Can You Work Remotely As A Business Buyer?
The COVID-19 pandemic caused a lot of changes in the world. One of the biggest is that people became accustomed to working remotely. While this paradigm shift has provided new opportunities to many people, it isn’t a practical lifestyle for business buyers – especially in the home services sector where Acquira concentrates the lion’s share of its attention.
“In home services, you have your materials and things usually stored at the office or the warehouse. So you need somebody to monitor it,” explains Quinn Huffman, Director of Operations at Acquira. “These businesses are often 30 years, 40 years, 50 years old. All of this work has always been done in-house. So it's not really a remote industry.”
When it comes to buying a business, this is hands-on work that requires attention for at least the first six months, and it could possibly take a year, according to Brian Stroh, Acquira ACE Integrator.
“You don't know anything about the employees, the history, anything other than what you've read,” Brian says. “You just took it on. And now your question is ‘how little time can I spend here?’ So to me, you better plan on a year or at least six months. You're going to be there day in and day out because you need to get your fingerprints on this business.”If you’re looking to work remotely, or you want to become an absentee owner of a business that runs itself, just realize that this takes time. Acquira’s ACE Framework was designed to help get businesses and business owners to this point.
Buying Out Of State
Being location agnostic is an excellent way to ensure that you’re seeing as many businesses as possible, but any Acquisition Entrepreneur who is considering buying in a different state needs to be aware of the ramifications of this type of deal.
Quinn works on Acquira’s Investment Committee where he helps AEs work through potential deals they’ve found. The Investment Committee is often compared to the show Shark Tank, where AEs will present the research and data they’ve collected on a business and Acquira’s team of experts will try to poke holes in the deal. The question of buying out of state comes up frequently on these calls, according to Quinn.
“People fill out their investment thesis, find a business, and it's like a four-hour plane ride away,” he explains. “They’ll say ‘I'll just go there Wednesday through Friday and the rest of the time I'll stay at home.’ And I always say to them they can't do that in the first six months of owning a business. When you do that, if the people that work there don't see you there every day, then you're not taken seriously and things aren’t going to change. What you're doing is you're just looking for some passive income and these businesses aren't necessarily passive in the first year of owning them.”
When it comes to buying a business, you need to be very hands-on. You can’t be a part-time operator, even if it’s in a different state. We’ve seen some Acquisition Entrepreneurs opt to spend weekdays on-site, and return home to their families, while others have opted to move their whole family while the AE worked to grow the business. Whatever you decide, just make sure that it works for your family.
Who Do You Trust To Manage Your Investment?
One of the most effective ways to step away from managing your business is to install someone who can do it for you. But that begs the question: how do you find someone you can trust?
After all, some Acquisition Entrepreneurs invest hundreds of thousands of dollars of their own capital into buying a business. Would you want a stranger managing that investment? After all, it's not like having an advisor manage stocks and bonds, where you can check the market daily.
“What do you know about what's happening on a day to day if you're not there?” Brian says. “It may be that you can start to transition to a general manager in the first six months, but you're going to be turning over so many rocks and ensuring that the right people are in the right seats, it often takes longer”
It’s important to learn the nuances of the business’ so that you know how it works, and understand the nuances of the operations and the personal dynamics within the company. Otherwise, you’re just hoping whoever ends up managing the business is doing the right thing.
“I think that comes as a shock to some people because they think they can just hire somebody and manage that person to run the business,” Quinn agrees. “The reality is that you’re going to spend at least the first three months getting to know the business. The first six months you're trying to understand the business well enough so that you can put the proper people in place to run that business and you could focus on the big picture and the future of that company.”
What Does It Take To Step Away From The Day-To-Day?
After working with many Acquisition Entrepreneurs, Acquira identified that many of them eventually wanted to step away from the daily operations of their businesses. This is part of what prompted us to develop our ACE Framework.
The goal of ACE is to implement the necessary systems and introduce an effective leadership team so that the AE can effectively become an absentee owner, all the while increasing the value of the business.
Brian is an ACE Integrator at these businesses, working closely with the new owners to ensure that the companies can get to the point where they’re operating under their own steam.
“The number one thing we work toward is getting a functional leadership team in place, because the overwhelming majority of these businesses [that you vet] are going to be owner-operated,” he explains of the process. “This concept of an effective leadership team, which works as a group of department heads that manages the business collectively, you just don't see that in these small businesses.”
When you take ownership of an existing business, the learning curve is often quite steep and the one person who knows how the business operates from stem to stern is typically the founder. And that’s the one person who is definitely leaving.
“You're going to have to put together a whole succession plan of what it looks like when that person walks out of there,” explains Brain. “Creating that leadership team and getting it to function, it's going to take at least six months because you're empowering these people in a way that they've probably never been empowered before.”
To step away from daily operations takes a lot of time, hard work, and dedication. But there is a light at the end of the tunnel. As long as you’re prepared to do what it takes, you should be able to start enjoying more free time between six months and a year of acquiring the business. But that shouldn’t scare you away, Brian says.
“It's an exciting time, and you're going to want to be involved in it,” he explains. “This is where everything's going to start as far as how this business progresses. And if you're not involved in it, you're missing an opportunity.”
If you’re interested in starting your acquisition journey, Acquira’s Accelerator Program is designed to help AEs find and close on a business in half the time and at half the cost as it would take them to do it on their own. If you’d like to learn more simply fill out the form on this page.
If you already own a business, the ACE Framework is the perfect resource for those who want to grow their company before selling it, or even those who just want to improve their efficiencies. If you’d like to learn more, schedule a call with Brian today.
- You should expect to spend six months to a year working on your business.
- You can’t be a part-time operator.
- Developing the systems and people necessary to step away takes time and hard work.
- Acquira’s ACE Framework can help with this process.
Acquira is a business acquisition in a box service. We help entrepreneurs buy businesses and we invest in them and their chosen businesses. We are here to help ensure that each business we work with is posed to make the biggest positive impact possible for its owners, employees, and community.