With Ryan Snow
Dad of 3, Entrepreneur, Author, and Acquirer!
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65 – Acquiring Sweaty Startup Businesses with Ryan Snow
Ryan Snow started his sales career 20 years ago with Cutco. 5-6 years ago, Ryan wrote the Miracle Morning for Sales People. He has now partnered with Cody Sanchez, where they’ve combined their knowledge to run an entrepreneur panel together in California.
Ryan now is helping people acquire small businesses that are already profitable.
If you are a side hustler looking to acquire a small business, then you won’t want to miss this episode!
I would like to add a little excerpt here about my business buying journey. In February 2021, I purchased a business that was earning $200/MRR. I bought it because I believed in the business and wanted to use a service like it, first and foremost. After talking to the founder, I realized she wanted to get out of it, and instead of using them as a service, I thought I would buy it, get trained and then continue to build the business. Truthfully, I did not do the due diligence I should’ve just because I was emotionally involved to the service, but if I do, I would’ve realized it maybe wasn’t for me. The 2 clients were friends with the founder, and when I took over, they backed off their contract. The $200/MRR went down to $0/MRR.
Lesson Learned: Always do your homework before buying a business!
Why Is Now a Good Time To Buy a Business?
The first reason is due to COVID-19 and the pandemic. A lot of businesses cannot handle the emotional and financial stress combined, leaving them to sell the business in order to stay afloat.
The second, and more prominent reason, as Ryan explains, is because of the Baby Boomers. There are a lot of local small businesses that have been in business for 20-25 years, most which are profitable, but the owner either doesn’t even know selling is an option and you have to get in front of them.
There are also a ton of businesses for sale, which favours the buyer. Ryan states, “1 in 11 will sell over the course of 12 months. There are over 2,000,000 for sale in the USA right now”.
You’ve also go the baby boomers retiring at the rate of about 10,000 per day, where about 19% of them own small businesses. Ryan believes we will see this trend for at least the next 5-10 years.
When did you know you wanted to be an entrepreneur?
Yes! Ryan thought he would be an entrepreneur since he was just a baby. When he was young, he and his cousin did lemonade stands and then eventually they even started a landscaping and snow removal business early on in life as well.
Why did you get a job if you knew you wanted to be an entrepreneur since you were a kid?
Many side hustlers and aspiring entrepreneurs ask themselves “Should I get a job if I want to be an entrepreneur?”
Society raises people to get away from the idea of selling, which is a big part of entrepreneurship. A lot of people have a negative connotation about salespeople in general because of that.
Parents, teachers, and other people pushed Ryan into the safety net of employment because of that. Ryan mentions that “When I was growing up, that was the goal. I was the first to graduate college in my family”.
The Gig Economy:
With the way society has shifted in recent years, children growing up are feeling less pressure of going the “corporate” route. There are more and more jobs created, especially in the gig economy, where people are less inclined to take the societal way of life.
The gig economy will blow up and get even bigger now with the whole pandemic. You will see large companies acquiring top talent because they don’t have to just look in the areas that they are situated in geographically. For example, if you are based in Columbus, Ohio, you are not looking to hire people in Austin, Texas typically.
How did you and Hal Elrod get connected and What is the Miracle Morning for Sales People?
Ryan has been doing it for about 10 years now. Ryan was teaching the Miracle Morning for about 7 years after he closed his Cutco office down.
Ryan had connected with Hal Elrod, the creator and author of Miracle Morning through Cutco. At the time, Ryan was a manager and Hal was a top sales person for the brand. Ryan landed on the book launch team with Hal, and helped him get it out there to people. From then on, Ryan was teaching the Miracle Morning to his sales team at the Real Estate office… and the results were amazing!
Everyone’s sales increased and kept increasing. Since the results were so great, Ryan mentioned the idea of creating a “Miracle Morning for Sales People”. Hal and Ryan wrote it together shortly after, and now there 12 books in the series!
The Miracle Morning for Sales People is different than the Miracle Morning because it is looked at through the lens of salespeople. They talk about:
- How it impacts your business
- The energy you bring to each conversation translates to each result
- Control your schedule and manage your time better
- Developing your why
- Dealing with rejection
- Tactics and skills behind lead generation, presenting, closing, and other sales processes.
Do you think all side hustlers or aspiring entrepreneurs should get a job in sales?
Every entrepreneur needs to know how to sell. A key component that a lot of side hustlers miss is the sales part of the business.
You can be the greatest real estate in the world, but if you can’t get someone to want to work with you, then you have a very small business.
Similarly, you can be the best accountant in the world. You can know all the laws, rules and regulations, and even know how to make your clients happy. However, if you do not know how to market yourself and close more business, you will have a very small accounting practice.
How do you sell?
Sales is a huge conversation, and we definitely did not have the time to break down “how to sell” in the episode, but Ryan did give some great advice on how to sell.
There is one piece that transfers across everything, no matter what you are selling. That is:
You are not selling your product or your service. You need to find out from people what their key problem is, what the #1 thing they need to overcome is, and if you have a solution for them, you offer that. If you do not have a solution for them, you say NO for them.
If you’re doing sales properly, you should never be pitching. You are only pitching to people who have already said that they need the solution.
The key to not pitching is asking the right questions and getting the appropriate information from your prospect.
You need to find out:
- What the solution would do for them
- What would that look like in their business
- What happens if you do nothing about it
- What would happen to your business today if we fix it
- What would happen to your business in 5 years in we fix it today
- What would that do for your lifestyle?
- What freedom would it create for you?
- How else would it impact you?
Once you have the answers to these questions, you can show them how you can fix it. And if you can’t fix it, be honest with them and tell them that.
The Power of Selling is just as powerful as The Power of Not Selling
If you do not have the solution for your prospect, do not try and sell them a product or service that they do not need. There is just no point in the end for both parties. If you are honest with them, they are more likely to refer you business as well.
How do you attract new leads?
Ryan takes a content market approach for both warm and cold traffic. Right now, they are working on providing immense value to cold traffic with ads on YouTube, Facebook and other social platforms.
He tracks people in his funnel and eventually does an outreach to the prospect when it seems like a right fit.
Do you have any sales advice for the sweaty start-up side hustles?
Content marketing is time consuming and it is quite difficult for side hustlers to create the amount of content needed to produce a sound content marketing funnel, especially if you are not utilizing freelancers.
Ryan recommends going out to buy a business rather than starting one from the ground.
The sweaty startup industry has the biggest amount of businesses for sale right now! If you start a new company, you’re going to have a spend thousands of dollars on marketing, which you don’t know if that will work.
When you buy someone’s business with a client list, you can go from side hustle to full-time overnight. If you don’t have the money to buy a business, Ryan mentions that with SBA Loans, you can borrow up to 90% of the company’s revenue.
Let’s look at the math!
ABC Landscaping is doing $200,000 in profit annually. Chances are, this company would be around $750,000 to acquire, depending on assets, liabilities and other due diligence.
You would only be required to put down $75,000 to buy a $750,000 company.
How to value businesses?
These businesses typically sell for 2-3x multiple of profit, not revenue. You should also what the owner is taking out of it if they are taking anything out.
You should look at 2-3 history of revenue as well to make sure that the books were not inflated the last year.
The Small Business Loans are usually available through your local bank!
What should you avoid when buying a business?
There is definitely lots you need to avoid, but it is more for every industry specific. You need to do due diligence in your industry!
For sweaty startups, look at companies that have contracts with their clients. If they are “relationship” based, meaning they work with them because they know them, they probably won’t be as loyal to you as they are to the agent.
Someone with contracts year over year, and that shows it to you, will also make you feel more comfortable that those clients will continue to stay with you.
Another red flag is when the majority of a client comes from 1-2 clients. If you have a business that does $100,000 a year, and one client provides $70,000 of that, then be careful. If they leave, then you’ve bought a business based on $100,000, but it is really $30,000 now.
What businesses have you bought, Ryan?
Ryan owns 50% of the digital marketing agency he purchased that he referenced in the podcast.
Buying 50% instead of 100% of the business is another hack that Ryan teaches to his students!
Ryan purchased a company that is already profitable, and all he needs to do is send leads to the business! He is not responsible for operations or any daily tasks, either!
Where do you go to buy a business as a side hustler?
There are a lot of ways to do it! But step 1 is to really get clear on what you want because there are thousands of businesses out there and the last thing you want is to keep looking and never buying.
You should be clear on:
What size business do you want?
Do you want to be an operator or passive?
What kind of service makes sense for you?
If you’d like, you can go through a broker, just like in real estate! Or, you can always go directly to the business owners.
The easiest approach is to find a business broker and tell them exactly what you’re looking for.
Ryan states that you must be careful though, as they are representing the seller first, your second. There really isn’t a buyer agency on the business brokerage side of things.
What are some industries where you see opportunities?
SaaS companies are great, but can sometimes be expensive. It all comes down to you and what you know.
There are also simple businesses like laundromats, that maybe don’t make enough if you just have 1, but if you have multiple, then you could really make money from it.
What is your #1 tip for a side hustler just starting out in their journey?
It starts with clarity on why you are doing it. The most important thing for Ryan is lifestyle. The acquirer is the easiest path to getting the lifestyle and the freedom you want.
When you go the startup route, you will have to wait years before you are profitable and able to run itself. If you are going from W2 to operator, it is a much smoother transition.
Why are you doing what you are doing?
What is your end goal Ryan?
Ryan has 3 kids and his goal is to spend as much time with them as possible, whether it be traveling with them or camping!
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