Hello and welcome to Business Buying Strategies, the number one podcast for
people interested in buying a business without risking any of their own cash.
Now, after a decade of helping deal makers to acquire a business successfully,
there's no one better place than Jonathan Jay to guide you through the process.
And in all that time, he has seen just about every mistake it's possible to make.
So in this episode, he has Jonathan talking us through the rookie
mistakes first time deal makers make.
And how to make sure you avoid them yourself.
the first is you get all your information.
From the internet and I think that anyone who's been on the internet
more than six minutes knows that, so much on the internet just isn't true
fake news as we hear all the time.
Now, the problem with internet information is you don't know
who's giving you the information.
So I see information about business buying from people who've bought
literally one business, one.
There's one guy out there at the moment, one business
. And he bought it three months ago, and now he's teaching other people how to do it.
Uh, that's just the craziest thing.
You've gotta be very cautious and very careful about where
you get your information.
But the other challenge with learning information from the internet is that
there's going to be conflicting advice.
You may have discovered this already.
And the way I my analogy for this conflicting advice is that let's say
you are going to cook a meal and you start with a Gordon Ramsey recipe.
You know, the celebrity chef, you start with a Gordon Ramsey.
Recipe and you do the first few parts, part one, part two, part three,
following the Gordon Ramsay recipe.
But then you get distracted and you realize you've got a Jamie
Oliver Cookbook with the same type of meal in the Jamie Oliver.
So you forget Gordon Ramsay.
You move over to the Jamie Oliver Cookbook and do the next part
of the recipe following the Jamie Oliver approach right now.
Even if we just stopped there and we didn't go to some other celebrity chefs.
And we just mixed up two approaches.
Do you think that's gonna come out as a good meal?
Probably not.
And that is the challenge when you get your information from the internet.
It's a video here, a podcast there, a blog there, and it's this mishmash
of of information what you need.
Is a linear process.
You need a step-by-step system.
Uh, and those of you who know me from other webinars, you know
that I teach a 21 step system.
Uh, and this is where you don't have to go out and piece it all together by yourself
because that's, to be fair, is hard work.
As long as hard work that doesn't really work.
But when you've got a linear system, you start here, you go
here, you do this, you do this.
Then it clears up.
All that misinformation.
So the internet is a great way of getting inspiration.
It's certainly not a great way of having a business buying system.
Now, some of you have been around me for a while have, uh, believed
that the only way to generate deal flow is to send out letters.
And I meet people at my public events who tell me that they've sent out letters.
And I said, how did that go?
And they said, well, not well.
I said, well, I guess that's why you're here, right?
And they say, yeah, that's exactly why I wanna spend a couple of days
with you, or three days with you, or whatever it is, because I tried to
do it by myself and it didn't work.
Now sending letters was brilliant five years ago.
Uh, now we can combine it with other methods.
In fact, I teach people seven different ways of of finding businesses to buy.
And, uh, six of those don't cost, uh, anything whatsoever.
But if you've tried sending letters, please would you stop?
And I tell you the reason why.
It's not only you're probably sending the wrong letter to the
wrong people in the wrong way.
That's.
Quite an important part of it, but if you don't know what to do in terms of
actually getting the deal done, then you are raising the hopes of sellers who
are then going to be disappointed that you were just kind of dabbling at it a
little bit and just seeing what happened.
But you don't know how to get a deal done.
There is a big difference between deal sourcing and getting deals done.
Now I'm on LinkedIn and I look at LinkedIn every day.
Uh, maybe I'm connected.
If I'm not connected with you on LinkedIn, send, find me on LinkedIn,
send me a connection request.
And I post most days as well, by the way.
But I see a lot of people talking about deal sourcing.
They're all talking about deal sourcing.
Deal sourcing is the easy part.
Doing the deal is the hard part, right?
It, it's, I don't know.
What's it like?
It's like climbing a mountain.
And saying, oh, we're gonna do the first couple of steps, right?
But the first couple of steps they're easy is it's when you've done the,
the a thousand steps, it starts to get a little bit more difficult.
The deal flow bit, the easy part is what everyone talks about,
but not many people get past.
It is just the tip of the iceberg.
So please, if you're sending letters, stop, do it properly.
Now the third mistake that people make is they dunno how to value
the business as a result of not knowing how to value and hope.
You're writing these things down, by the way, as a result of not knowing how to
value the business, they overpay for the business and potentially over-leverage.
Lemme tell you why those two mistakes are real bad ones.
First of all, when you overpay, you are always going to be playing catch up.
You've paid too much and I saw someone recently not.
Someone on Mastermind, someone I haven't worked with, but he was telling me about
this because I do some public events and people come up and they talk to
me about things that they've, they've done typically that haven't worked.
And they, and he said that he ended up realizing that he'd paid six times
the profit of something for a business that really was only worth two, two and
a half, maybe at a pinch three times.
So I said, why didn't you know?
He said and this is one of my points later.
It is partly the due diligence, but I just didn't understand.
How to value the business.
The other challenge, which is point number two, was the overleveraging.
Overleveraging is where you borrow too much money to buy the business,
and as a result, all you are doing is paying back the bank or the lender.
You're not making any money yourself.
You get a dip in trading, you can't pay back the lender and
the business ends up folding.
So this valuation piece is really, really important.
And we could spend.
An entire day, an entire weekend talking about how to value a business.
Because if you don't get this bit right, nothing else matters.
And I've seen new business buyers skimp over that and say,
I'll worry about that later.
No, you need to worry about it now.
Now, number four is you believe what you read about distress businesses.
Let me tell you what you might read about when it comes to distress businesses.
You buy the business for nothing, for a pound.
And you don't do any due diligence.
This is, this is the advice.
This is not from me, by the way.
This is advice out there.
You don't do any due diligence because who cares?
You've only bought it for a pound.
Your risk is a pound.
You then do financial engineering.
Sounds a bit dodgy to me, but to make the business profitable, and then
one day you sell it for a fortune.
If only it was that easy.
Oh my goodness, we'd all be doing it right now.
The thing is, you might not pay any money for the business, but you will
pay in time, stress, sleepless nights.
And the chances are you have to put money in to rescue the business.
Unless you've got spare cash, which you're prepared to risk, it's not gonna work.
And by the way, no lender will ever lend on a business that's distressed.
Why would they lend to a business with the chances of getting
their money back are very low.
Indeed.
Now I've got an alternative for you.
I'm not gonna give you problems here and I give you solutions.
The alternative is you buy businesses that make money.
I know.
So it is a earth shattering revelation.
But buy a business that makes money.
'cause isn't that why you are doing it?
You are not buying a business.
To be a hero and to prove that the old owner, the previous owner, didn't
know what they're doing and you are far cleverer than them, which
is, the message buying distress businesses and turning them around.
That's really what the message is.
I don't want you to feel, you have to be a genius at business.
Just be someone who buys a business that makes money the day before
you buy it so that it makes money the day after you buy it.
It really is as simple as that.
Please ignore distress businesses.
So one of my deal club evenings in London on Tuesday, I was
talking to, uh, two guys.
Who have bought 11 businesses between them, which is absolutely magnificent.
And I was having this exact conversation with them and they said, oh yeah.
We got our fingers burnt on this.
If you want to have a painful experience in business buying, if you
wanna have a painful experience, buy businesses that are distressed, that
don't make any money, rather than buying businesses that make money.
I can see some of you sending me questions.
I'll get to those later on.
Okay.
Uh, number five is you don't have any credibility with the seller.
You don't have any credibility with the seller whatsoever.
You've never bought a business before.
You've got no background in business.
You don't own a business, you've got no business experience.
Why is someone gonna sell their business to you?
It's a really good question.
Interestingly, if you know how to deal with it and you know how to, what we call
position yourself prior to interacting with the owner, that is not a problem.
It comes down to what you say and the way you say it.
What we found very helpful is to have what we call a credibility website, which
the seller sees before they contact you.
So by the time they contact you, they know who you are.
They clearly like what you are saying and what you are about.
Otherwise they wouldn't contact you and you don't have any of those
awkward questions around, what's your.
Business history and you know, what's your experience and
uh, and those sorts of things.
Now, what the credibility website also does is that it gets over that
hurdle of, to put it in its bluntest terms, how much money do you have?
Which is what sellers are.
Sellers are curious as to whether you can pull this deal off.
Can you, have you either got the cash or can you get the funding?
Yeah, they don't mind whether it's cash or funding, because as long as
they get what they want, they're happy.
But this credibility issue is prevalent with brand new buyers
who've never bought a business before.
But I can tell you that it's never stopped any of my Mastermind clients because we
have a way of dealing with this, partly the credibility website, but partly what
you're saying and what you are doing.
Now a big mistake that I see new business buyers make that's very, very expensive,
uh, is you make it up as you go along just by watching another YouTube video.
This is like learning how to fly a plane.
By watching YouTube would, would you go up in a light aircraft after watching
some YouTube videos on how to fly?
Let me ask that question a different way.
Would you want to be the passenger in that light aircraft with a pilot
who's just watched some YouTube videos?
Of course you wouldn't.
It's dangerous.
You're gonna get yourself killed.
That's exactly the same as using YouTube.
Remember with all that conflicting advice as your guide.
Now, I appreciate so many of you were saying before we got started
that you watch me on YouTube.
That's brilliant.
I thank you for that.
YouTube is like my modern.
Day business card.
It's my way of saying, Hey, this is me.
This is what I do, and if I can help you get in touch.
So it's the modern version of a business card.
The stuff that I put on YouTube, you will notice if you watch enough videos,
starts to feel quite samey, right?
You're starting to hear the same message again and again and again.
Because I'm not giving you the good stuff, I'm only giving you the tip of the iceberg
stuff, the good stuff, you know, to.
Put it bluntly is what people pay for.
And I'm not gonna put what people pay for onto YouTube because it wouldn't
be fair on the people who pays for it.
So please do not use YouTube as your mentor.
YouTube is not a mentor.
Now the next very important point is you dunno how to avoid personal guarantees.
Let me tell you what a personal guarantee is.
A personal guarantee is if the company doesn't pay, you are going to pay.
So let's say you borrowed money from a lender and you sign a personal guarantee,
something happens to the business, the business can't pay, misses a payment.
Or the business closes, then the lender will come after you.
Now, if you don't have the cash to be able to write the check and say,
here's your money, then they can actually start bankruptcy proceedings
to take possession of your assets, which might well include your house.
Okay, so that is the downside of a personal guarantee, and there's
typically two or three things that are personally guaranteed.
A lender might ask you for personal guarantees and the
seller might ask you for personal guarantees if there is a deferred.
Element.
You've got to know how to do this without personal guarantees, and if there is
a personal guarantee to limit your exposure to the smallest amount possible
to make it comfortable for you so that you don't have a big problem later on.
Look, no one knows what's around the corner.
I mean, no one knew that COVID was around the corner, right?
No.
No one knew that it was gonna be a pandemic that closed
businesses all around the world.
Now you can't predict the future, so you can be very, very confident
about a business right now.
In six months time, it might be something that turns into a problem.
Now that's just life, and we want to avoid that.
We wanna buy the right businesses in the right way to avoid that situation,
what you don't wanna do is compound the problem with a personal guarantee.
I've got some lovely phrases and you know, I, I can I looked at the attendees
list and I can see quite a few of my mastermind clients are on here today.
You will know that I've got these beautiful phrases and techniques for
avoiding the personal guarantees, but you've got to do this if you
go and sign personal guarantees.
I met someone recently.
At our public.
Deal club event in Manchester on Monday night.
Who, who told me about a 300,000 pound personal guarantee.
And I said, if only you'd been with me earlier.
If only you'd been with me earlier, I'd have shown you how
to, uh, how to avoid this now.
Um, actually at one of those deal club events, the one in Manchester
on Monday uh, someone said, Jonathan you teach people how to buy business
without using any of your own cash.
That's brilliant.
But I can't find a lawyer.
Who will let me pay later?
I said, so where did you get these lawyers from?
Where did you speak to these people?
He said, Google.
I Googled.
Mergers and acquisitions lawyers, I said, well, it makes sense that you
would do it, but do you think it makes sense to the lawyer that a complete
stranger phones them up and says, I'm buying a business, but I don't wanna
pay you until I've done the deal?
That doesn't make any sense.
I said, you are absolutely right if you do it that way.
If you find your lawyer on Google, you will not get that
deferred deal on the fees.
He said, well, how do you do it?
I said, because if I introduce you to a lawyer.
It is gonna be someone who knows that, number one, you've invested
in your education with me.
So you are serious.
You are not just a random person off the internet, okay?
You know, a random person calling their office.
Uh, and secondly, uh, they are prepared to defer their fees because that
is the deal that I have with them.
So you are leveraging my contact and my relationship with
that lawyer to your benefit.
Now, someone very smartly at that event then said, well, what happens
if the deal doesn't complete, the lawyer effectively doesn't get paid?
I say, yeah, but look at it like this.
One of the lawyers that I introduced my mastermind clients to has over the last.
A couple of years.
This is just one of, I, I have, I have three different law firms that
I introduced people to, but there's one particular has done 200 deals.
Now outta those 200 deals, there would've been another five or six that
didn't complete, that they didn't get paid on, but they got paid on 200.
So they make, it's a little like an insurance company, you know?
They pay out on claims, but there's lots of, um, insurance being
paid where there are no claims.
So it is the same sort of thing here.
So they are willing to mitigate or risk that fact that
sometimes people don't pay them.
But this is only because they're my team, they're my deal team.
So utilizing my deal team gets you over that problem.
Now here is something that does irritate me, and I did wonder whether I was
gonna call this webinar Jonathan's rant because this one makes me annoyed.
I meet people who want to make hundreds of thousands a year.
Sometimes people say, I wanna make millions a year from business acquisition.
I say, okay, you need to put your money where your mouth is.
If you're gonna do that, then you need to invest in doing it properly and they
won't spend 10 K. 10 Ks are sort of.
A, a gold mastermind level but they won't spend 10 K on getting it right.
So hang on, hang on.
Lemme just get this right.
So you want to make how much?
Oh, at least half a million a year, right?
You wanna make half a million a year, but you're not willing
to spend 10 k on getting it.
Okay.
That's like saying I want to win the marathon, but I'm not prepared to put the
effort and the time and some cost into training and eating properly and getting
the personal trainer to get it right.
It does not make any sense to me.
I could talk about this for a long time.
You'll be very pleased to know.
I'm not gonna talk about it for a long time, but I just think that
sometimes people have gotta get their head on straight with this.
If you want the big reward.
Don't expect everyone to give you all the knowledge and the skills for nothing.
It doesn't work that way.
Now, what some people do when they're new to buying a business is that
they skimp on the due diligence.
They think they don't need due diligence.
They can just buy.
I mean, there is one person on the internet who actually tells
people not to do due diligence.
Can you believe that?
I mean, , if you're gonna give people one bad piece of advice, that's the winner.
Okay?
If you cut corners on due diligence, you will buy businesses that
will come back to bite you, okay?
You cannot skimp on due diligence.
Three types of due diligence.
F-D-D-C-D-D-L-D-D, financial due diligence.
Commercial due diligence, legal due diligence.
Alright?
You've gotta get each of those right.
And the conclusion of the due diligence will actually help
you negotiate a better deal.
The chances of what you sign in heads of terms, and the actual
completed sale and purchase agreement being the same are quite slim.
The due diligence gives you the negotiating power to improve the
price and terms in your favor, so you do the due diligence to make sure
you're not buying something awful.
But you also use it as a negotiating tool, so don't skimp on due diligence.
The next thing, which, um, no one talks about this, everyone
talks about buying businesses.
I mean, it's like the new rock and roll.
By the way, 2026 is the 10th year.
I've been running groups for business buyers 10 years since 20 16, 10 years, and
uh, I've worked with hundreds and hundreds of people to help them buy businesses.
We've got over a thousand case studies and testimonials.
But here's one thing that the gurus on Instagram in front of their Lamborghinis
and fast cars, they don't tell you buying a business is the easy part.
The harder part, integrating it with another business and that
first 100 days of ownership.
Now, when I work with people, I teach 'em how to buy a business.
Of course I do, but I also teach them what to do after they bought the
business, what to do to buy business number two, how to put business
number one and number two together.
They're number three, number four, number five, and then sell the group.
The buying the business is the easy part, and then there are people who
believe they can do it all by themselves.
Oh my goodness.
They say, oh, I don't need any help.
I can do it all by myself.
Jonathan, thank you very much.
I've enjoyed your free webinar, but I can do it all by myself.
I have never, ever seen anyone do it successfully by themselves.
Now I've seen people mess it up by themselves.
Um, someone message me on LinkedIn.
I recognized his name because it was quite an unusual name.
Quite a memorable name.
And he said, hi, Jonathan, how are you?
And I said, I remember you.
I met you at one of my live training events a couple of years ago.
And he said, yep, that's right.
How do you remember?
I said, well, I recognize your name, how's it going?
And he said I went out, I believed that I didn't need your help
and I could do it all by myself.
And I. Found a business owner who wants to sell.
I got some bank funding and I did the deal.
I said well done.
And he said, yeah, well, maybe not so much.
Well done.
It was badly done.
It all went wrong.
I over-leveraged.
Remember one of the mistakes from earlier, I borrowed too much.
I didn't do proper due diligence.
I tried to do it all by myself.
And as a result, I I'm losing my house.
And I said, well, how are you losing your house?
And he said, I signed personal guarantees and I didn't really
understand what I was signing.
Uh, but I always thought it was gonna be okay anyway, and I lost everything.
And yeah, you don't wanna rub it in.
Uh, he was actually asking me if I could help him, and I, I put him in touch
with someone that I think could help him a little bit too late probably.
But if you think you can do it all by yourself, you are taking a shortcut.
I'll give you an example.
At my deal club event on Tuesday night in London, I had a young youngish guy
sitting on the aisle, halfway down.
And, uh, he said, I'm in the process of buying a business
domiciliary care business.
And I said, who's doing your financial due diligence?
And he said, I'm doing it myself.
I said, are you an accountant?
He went, no.
I said, okay.
So you're doing the financial due diligence yourself.
Why, why, why, why, why?
He said, but to save some money.
Right force economy, but okay.
And then he said, and this, this is, I, I said, how big's the business?
And he said, it makes 40,000 pounds profit a year.
I said, stop right there.
That is way, way too small.
Do not buy a business that makes you less than 100,000
pounds net cash in your pocket.
Don't do it.
Do not do it.
It is not worth it.
You might as well go for the larger business and have the bigger win.
It takes the same amount of time, the same amount of effort.
In some ways actually easier than going for the small business.
That is basically a job creation.
And then.
Mistake number 12 is, you troll broker sites and wonder what to
do when they ask for a statement.
The worst place to look for a business to buy is on a broker
site for your first deal.
Later on, it's a good source of deals, but at the beginning you
unfortunately as a new business buyer, don't have that credibility with them.
, And they're gonna ask you for what's called proof of funds.
You may have discovered this if you tried to do it yourself.
They're gonna ask you for a bank statement.
Why?
Because they like cash buyers.
And quite frankly, if you are not a cash buyer, then you might as
well go away unless you've got credibility in a track record.
Which is why business brokers are great after you've done your
first deal and you are proven.
But up to that point, have no credibility with a business broker.
So always go off market and mistake number 13 , is you spend all your time listening
to my podcast and I thank you for that and watching my YouTube, and I appreciate
that, but you don't do anything.
The I don't understand why.
Why do people watch something, which clearly they're interested
in, but they don't do anything.
But I'll tell you why.
It's fear.
It's fear of making a mistake, fear of getting it wrong.
And I get that and I understand that.
And why I do these webinars, or one of the reasons why I do these
webinars is to take away the fear, is to help you realize that.
You can do this.
Now.
Most people need the right level of support to do it, but you can do this.
You can make this happen.
So I've got some options for you.
There are four options.
And one of these will be right for you, and I'd like to invite
you to book a call with one of my team to find out which is right.
The first is my deal club evenings.
I do them in Manchester and I do them in London.
They're two and a half, three hours, come along, 49 pounds.
Come and spend the evening with me.
We have 20, 30 people who are also interested in buying a business.
Some of my experienced clients are there, come and meet us,
spend with the evening with us.
It's a lot of fun.
So look on the dealmakers website for that.
We have a three day live foundation call.
We've got one coming up in October, three days live.
Spend three days with me.
I've got some guest experts, uh, coming in to speak to you as well.
And that's, uh, 5 9 9 plus the VAT for three days.
Includes all your meals, uh, includes two dinners.
We look after you for the three days, and then we've got our 12 month
mastermind program, which is expensive.
Which is expensive.
Now if you look at that and you go, oh my goodness, 10,000
pounds, uh, that's expensive.
Then come to the Deal Club with a foundation course first to check
me out and spend some time with me.
The 10,000 pound Mastermind is worth every penny.
If it's gonna help you avoid making mistakes that, uh, mean that you could
lose your house or lose the deal.
And then we've got VI, p, and Diamond.
Probably not right for you just yet.
Maybe one or two.
You already know me and you.
Ready to go for VIP or Diamond, and that's between 15 and 25K.
So if you're meeting me for the first time today, I suggest coming to one of our deal
club evenings, uh, coming to our three day live foundation course and using those
as a way of getting more comfortable with business acquisition, learning more and
discovering whether this is right for you.
If you go to dealmakers.co uk slash clarity.
You'll be able to book a 15 minute call with one of my team.
Now, it's not a sales call, it's a let's find out what it
is that you want to achieve.
Let's find out is what it is that you want to do and what is right for you.
Is it to come to a deal club event near you?
Is it to come to spend three days at the foundation course
or are you ready for Mastermind?
If you're ready for Mastermind, when we go through the options
for Mastermind with you as well.
So dealmakers.co.uk/clarity if you're here for a reason.
You want to buy a business, you're serious about doing it.
Spend an evening with me, spend three days with me or spend Mastermind with
me and you will discover everything that you need to know to make this successful.