Mergers and Acquisitions: The 3 Best Businesses to Buy When Getting Started

How much more successful would you be if you had lunch with insanely successful entrepreneurs who shared their biggest secrets on how they think and achieve success? Well, now you can here successful entrepreneurs reveal their step by step strategies and other fascinating stories. So grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Deiss.

Hey everybody, Roland Frazier here talking about the easiest types of business to buy, the five easiest types of businesses to buy, and a little bit on how to find them, how to do it. The first category would be if you're looking for more leads, there's no better way to acquire leads than to acquire a business that already has aggregated the attention and eyeballs of your ideal customer. So to acquire media, all you need to do to identify these types of companies to acquire would be to say, who's already got the customers that I would like to have, who's already gone through the trouble and effort to get a bunch of them together. Now, that might have happened in a company, but it also might have happened with just an asset. So the types of businesses that we're looking for here or the types of assets would be anything that it could be like a whole business that already has the customers that you want that is a form of media. But more than that, it's likely to be a podcast. Somebody that's got a podcast that's about exactly what your customers are interested in. So maybe your ideal customer is an E commerce customer. So an E commerce podcast would have a whole bunch of people that were interested in E commerce that were listening to that. And therefore, if you acquire that, then you've got media access to this pool of customers that you would like to send to your other business. Right. Another thing would be potentially a Facebook group. We buy a lot of Facebook groups in the for our dog business, we'll buy specific types of breed owner groups like a German shepherd owner group or a dachshund owner group. For our real estate business, we'll buy a pod, a Facebook group that has already got a whole bunch of real estate agents in it because we're looking to have more real estate agents in our brokerage. So we're just looking for the exact aggregated list of our ideal customer that exists in the form of podcast, a social media group, a YouTube channel, an existing business. It could be a trade show, it could even be websites that already rank in SEO for our what we're looking for. So let's say that you googled bottled water and that there were a couple of top sites that came up for that and you sell bottled water, then you might think about just acquiring that website or the business that owns it and then you would have it. So that's why it's really easy to find media and it's really cool once you get it because now, especially with all the stuff that's going on with the death of the third party cookie, with the changes to operating systems and that Apple has done with privacy and access with changes, Facebook with gdpr, with all of the rules and privacy that are coming in all the states here in the United States, it's really just going to be hard to get your word out to the exact targeted audience that you want. And, and if you already own the media, they call that first party data. It's also known as your list. You're expanding your list by acquiring groups of your ideal customer that you can then market your marketing messages to. So that's basically why we like that they're easy to find and the benefit is really, really big. The second category of company or asset that we'd like to buy and remember you can buy the whole company or you can buy assets would be one that would give us the team and resources that we would like to have for our business. So it's hard to do things from scratch. Like let's say that you want to start an inside sales team, but you don't have a salesforce. You've never been a salesperson. You don't know anything about how to find them, how to recruit them, how to vet them, how to qualify them, how to compensate them, all of those things. But somebody else has already done it. There are companies that already have the salesforce that you would like to have. When we were looking to launch software development, none of us had ever done any software development team management. We hadn't gone out and found software developers and qualified them and you know, to be sure that they're the right people or know how to monitor them, to know if the stuff that they were cranking out was coming at the right time, speed, or if it was effective or if it was going to be outdated. None of that. Like we would be terrible starting from scratch. So rather than start the software dev team from scratch, we just went out and found a company that we were already paying for their software product and we bought that, we acquired that and then we had a software team that could crank out software products. So whatever it is you're looking for, this is also sometimes referred to as an acqui hire. So that's acquisition plus hire. So an acqui hire, where you say, hey, we need a person or more particularly, a team that will do certain things for us. Maybe you need a media buying team, maybe you need a marketing team, maybe you need a salesforce, maybe you need a dev team, maybe you need a good team of operators. Whatever it is that you need, that team has already been formed somewhere, and there's a good one somewhere that you might be able to go out and identify and hire. So when you're thinking about, how do I find these, you're thinking about, well, who already has that I already have in my network that I'm already working with, who already has the team that I would like to have? Then could I acquire that company? Or is that team part of a product group or a profit center? And I could acquire the profit center or the product that's in the product group and get the team that I want. That is really, really a great strategy for doing that. Now, there might also be resources that you want. So you can also apply this to. Let's say that you've been trying to put SOPs, standard operating procedures in your business for years, and you've always meant to do it, but you're always busy and the whirlwind of what's going on is stopping you from doing that. What could you do that would allow you to acquire somebody's business or assets that have already created all these standard operating procedures that you want? We run big events. We've got thousands of standard operating procedures for doing that. So when we sold our event to a bigger company, they got all of our operating procedures, which not only can they use for our event, but they happen to own 300 and some other events, so they can take that and use those assets, that resource of those standard operating procedures there. And it could be the same with other resources. Maybe they have already got something else that you want. So I would just say, like if you're making a wish list and you say, you know, if I could wave a magic wand and have teams and resources, what would they be? And then you make that list of those teams and resources, and then you say, well, who do I know that already has those? And you start approaching them about an acquisition. And again, this could be a whole company, or it could simply be a single asset, a single product, a single service, a single profit center. The next one would be products and services. So how can I acquire, why would I want to acquire other products and services? Well, the typical reason is that you're going to want to increase your average order value. So Your average order value is how much are customers buying when they come and do their first transaction or when they do each transaction with me. And one of the easiest things that you can do to get a larger average order value is, is to say something like McDonald's says. McDonald's says, would you like fries with that? That's called an upsell, right? So McDonald's says, you've come in and you ordered a burger, and the burger is 29 cents. Would you like the. I don't know how much burgers are at McDonald's, but let's say it's. Let's say it's 69 cents. How about that? So we buy the burger for 69 cents, and then they say, would you like fries with that? And the fries are $1.10. And now we say, yes, of course we like French fries because they're basically salt on a stick that you get, that you guys have. And we love it, right? It's all about the salt and the vehicle for Sal. But anyway, so that's an upsell. If you go in and you order something and you're going to pay one price, and then somebody says, would you like something with that? That's a really great way to increase your average order value. And then after that, they probably say, how about a Coke? Right? And the Coke is another $1.50. And so now you've gone from $0.69 to four or five dollars. And both of the things, the French fries and particularly the Coke have a ridiculously high profit margin. So you've also increased your profit margin because the food cost on a burger is much higher than the food cost on French fries is much higher than the cost of the syrup and the water that makes up Coca Cola. So when you're thinking about how can I solve the problem of getting a higher average order value? Which also answers the problem of how can I increase sales? Which hopefully, if you're profitable, also solves the problem of how can I have more profit? Well, the way to do that is to go out and say, what are the products and services that already exist that my current customers are already buying? They're already buying. That's why it's easy. Because if they're already buying it, you don't really have to work hard to sell it. It's a. It's a logical upsell, meaning it's something that's. That's nicer or cross sell to a different kind of product.

So.

So how do you find those? Well, you think about what products or services Are my current customers buying before they buy my product? What products and services are they buying when and while they are buying my product? And then once they have my product, what additional products and services are they likely to buy? Either because they've got a specific need that has the need for other products or services in addition to mine, and they're buying our product or service to satisfy that need, but they'll also buy some others, or because the product or service that I buy then creates the need for additional products to help them either consume it, to help them use it, to help them get the most from it, or because it's gotten them a step farther along in what they want to do. So that's really, to me, and there's all kinds of things like cross sells, upsells, down sells. What if they can't afford the thing we've got? Can we acquire a product or service that will be less expensive than ours? So that's a downsell. What if they buy the thing that we sell and they want to buy something else that's more expensive? That's an upsell. What if they want to buy a completely different thing with the product that we've got because it's something else that they're likely to use too? That's a cross sell, right? So all of those things are things we want to look at and we just want to start identifying. And you can ask your customers the easiest way to find them out. Like if you don't already know, say, hey, do a poll. What other products or services did you buy immediately before you bought our product? What other products or services did you buy while you were buying our product or shortly before or thereafter? And what other products or services did you typically buy within 30 to 60 days of buying our product? If you get people that respond there, that'll give you new categories of products and services that you would like to acquire that you can then add on to the offerings that you've already got, which will increase your average order value, it will increase your sales, and hopefully if you're profitable, will also increase your profit. Now, the extra added bonus benefit of this, if you want the advanced version, is think about what are the products or services that will increase your average order value that have the most profit margin and go and acquire those. And keep in mind you can acquire a product or a service or a company that provides a product or service. You don't always have to buy the whole company. Or maybe the product or service that you want to acquire is one of several products or services that a bigger company has so you don't have to acquire the whole company. You just need that thing that you can use as an upsell down, sell, cross sell, et cetera. So that's really how we go about looking at products or services. I hope that's been helpful. I'm Roland Frazier. That is the easiest ways to acquire a business.

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Thank you for listening.

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