David C. Barnett
speaker
164 appearances
1 recordings
1 series
first heard Nov 2024
last heard Nov 2024
David C. Barnett’s voice in public audio — every appearance, attributed to the second.
Trend
recordings per month · last 12 monthsNo recordings in the last 12 months.Older appearances are listed below; set an alert to hear about the next one.
Appearances
So it's going to be less work on his part to show them the performance of the business because they're going to immediately benchmark his numbers with their own business performance. If you own a plumbing business and you look at another plumbing business, you're going to cut through those financials and results so much more quickly than someone who doesn't know anything about plumbing.
And so the best ones are going to get gobbled up in this fashion. When you're an outsider, you don't know what you don't know. And listen, I talked about the crazy story of the bookkeeping business. Let me tell you this one. So this guy leaves a C-suite business at a major corporation, decides that he wants to get into a business that cannot be delivered by Amazon or done by AI.
We've heard this kind of thing from people before. So he decides to get into flood and fire disaster restoration because he figures there's always got to be hands on the job site and people have to do the work. He finds a flood and fire disaster restoration company and the seller says, we do work for over 40 different insurance companies. Sounds great, right?
You got diversification of customer base, right? He does the deal, buys the business and never once understands or learns about these third party administrators. Do you know what a TPA is in the flood and fire restoration industry?
So the insurance companies, because they don't want to get into the weeds of administrating the claims, hire these third party companies who basically represent them. So these 40 some odd insurance companies were actually only represented by three TPAs. So there was a shadow customer concentration.
Und als er das Unternehmen übernommen hat, hat einer dieser TPAs entschieden, ihn nicht mehr zu senden. Und er hat im Grunde 15 Kunden übernommen. Jesus. Aus diesen 40. Und ich sage den Leuten, es ist das, was du wirklich nicht weißt. Was dich lebendig verletzen wird. Absolut. Und das ist der Risiko, in etwas zu kommen, was du nicht weißt, richtig?
Nun, sagen wir mal, du hättest wirklich gedacht, dass die Flut- und Feuerrestauration-Industrie die richtige für dich war und du wolltest ein Unternehmen in dieser Industrie kaufen und du hättest nie in dieser Industrie gewesen.
Mein Nummer eins Tipp für Leute, der oft von Leuten, die ich es gebe, übertragen wird, ist, wenn du eine Industrie lernen willst, der beste Weg, die Industrie zu lernen, ist, in der Industrie zu arbeiten. So go get a job as a salesperson or something. Absolutely. Or as an administrator in the office.
You don't have to work there long to understand what the business is like and what the good things and the bad things are. And so the other thing about that industry is that a lot of the time you're running a bank because you got to pay for
Materials and labor and all kinds of stuff and wait for a long time before you start to get checks from the customers ultimately who are the insurance companies. And there's a lot of businesses like that. And again, another problem that I run into is people who don't understand certain basic elements of business like operating capital, which I just alluded to.
And they'll look at a business's cash flow, they'll apply a certain multiplier to it, and they'll figure that's what the business is worth, not realizing... that that is what the value of the cash flow is. And the money you give to the seller is just part of your investment in a lot of these deals.
You also have to invest money in your own entity by providing sometimes operating capital, depending on how you structure the deal, whether it's a share purchase or an asset purchase or what have you. And so people will
essentially overpay for businesses all the time by the amount of operating capital they have to put into their own entity because they don't stop and look at it as an overall project and ask the important question, how much is being invested in total for this cash flow I'm acquiring? And I run into this as well with things like franchise resales, where the
The franchisor may require that certain things get done in the transaction. Like they may require that certain updates to the look and feel of a location are updated or there may be fees associated with the franchise transfer or the buyer may have to pay additional training fees and all this kind of stuff.
And just like I said before about the operating capital, if you end up having to write a franchise or a bunch of checks or a contractor who's going to change the signage at a location or what have you, Das ist alles Teil deiner Investition. Und wenn du den Geldfluss anschaust, dann fragst du dich, was ich bezahlen soll, um diesen Geldfluss zu bekommen. Das ist das, was ich kaufe.
Und leider für viele Verkäufer wird es wirklich aus der Menge kommen, die in ihrem Konto geschrieben wird. Aber das sind die Dinge, die Verkäufer immer verlieren.
Von den Leuten, mit denen ich gearbeitet habe?
So the people that I work with who hire us to actually help analyze businesses, I'm happy to say that over half of them don't end up doing those deals because we show them how the deal sucks. And I would love to see somebody not do a bad deal and live to fight another day kind of thing. Absolutely. For the people who actually do successfully do deals,
Not everyone gets back to me or anything like that. But I do have a coaching program for people that want to buy businesses. And the people there who buy businesses, I follow up with them because I want to do postmortem calls a year after they do the transaction. And one of the questions I ask them is, would you consider the seller to be your friend?
So you buy a business from someone, you go through a training and transition period, any misrepresentation, lie, distraction, etc. during the selling process will become known to you at some point after the deal has been done. Und ich denke, dass das der größte Influencer-Faktor sein wird, ob du jemanden als deinen Freund bezeichnest oder nicht. Absolut.
Showing 61–80 of 164 · page 4 of 9
← Previous
Next →