The 7 Levels of Scale: Acquiring Businesses for Growth

Hey Business Lunch listeners.

Welcome to Today's episode.

And on today's episode, Ryan and Roland cover the next step in the seven levels of scale. If you haven't listened to the episodes on the first five, definitely go back and listen to those so that you're all caught up. And if you want to take a free assessment and get a downloadable workbook on how you can move from level to level, go to getscalable.com download. That's getscalable.com download. Thanks again for joining us at the table. We're going to get into today's episode of Business Lunch right after this. How much more successful would you be if you had lunch with insanely successful entrepreneurs who shared their biggest secret on how they think and achieve success? Well, now you can hear 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 business Lunch listeners. If you want to scale your business, you have to know what's working and what's broken. And to date, Ryan and roland have started 13 companies from scratch. They've funded a dozen more and directly advised hundreds of CEOs and entrepreneurs on how to grow and scale their companies. And over the years, they've identified the eight key domains that allow a business to scale to eight figures and beyond. And they use those eight areas to help entrepreneurs and CEOs find their current strengths and weaknesses and understand the constraints that are getting in the way of them scaling. So if you want a quick and accurate look at what areas you can improve to scale your business faster, go and take our scalability assessment. It's an assessment that'll show you exactly where you need to focus to scale your business and achieve even your loftiest goals. In just five minutes, you'll know your exact scale constraints and you'll get instant, actionable steps on how to improve your business. So go to businesslunchpodcast.comScore to take the free assessment one more time. It's businesslunchpodcast.comScore.

About a year ago, my friend asked me if I'd ever thought about how.

Big my company would be if I had never, ever lost a customer. And that's a pretty crazy thing to think about. Of course, 100% customer retention is, as far as we know, impossible. But after that conversation, I really started thinking about how to increase customer retention. And after all, the more customers that you keep, the more money you do make. And it's generally 100% profit. So as most of you know, one of the most proven ways to increase retention is to communicate with your customers, which is why I've really been focusing on making our email newsletters great. And if you're interested in doing the same thing, I'd like to recommend you to our partners, the newsletter pros. They've done a ton of research on how email newsletters can make a big impact on customer retention, and they'll share it with you for free. Just text retention R e T E N T I o n retention to 208-269-9911. That's 208-269-9911 and get your free retention guide. Hey, everybody. Welcome to Business Lunch. I am Roland Fraser and my wonderful eye candy co host there is Ryan Deiss. How you doing today, Ryan?

I'm doing great. I feel bad for all the people just listening on the podcast who don't get to see the eye candy. Unfortunately, we are also on YouTube, so. Yeah, so we got that going for us. We got that going for us. So I think we're still talking that we're talking seven levels. Is that correct, Roland?

We are. And today I believe we are on Level 6, which is one of my favorites. Talking about acquisitions, do you want to do a quick recap of the of the other five?

Yeah, absolutely. So just kind of, if you're a new listener, new viewer. What we have been talking about over the last few episodes is this overarching framework that we created called the seven levels of scale. Everybody wants to grow, everybody wants to scale, but nobody's really put forth a specific step by step. This is kind of the order of operations that scale happens in. And so we wanted to do that, right, because oftentimes we've seen people get things out of order, right? They'll try to over systemize and bureaucratize a business when they still need to make, you know, money or they're still trying to pursue growth at the expense of system. So we wanted to create the step by step, and that's what we did. And so those seven levels are. Level one is you need to sell and serve 10 customers. That's it, right? You, you don't have a business, you don't have anything until you have sold and served 10. So that is level one. Once you've sold and served 10 and they're happy about it, you e into level two. At level two, the goal is to build your growth. Flywheel. This is when you get out of the launch hamster wheel. This is when you're no longer dependent upon Merely the one off referral. This is when you have a just consistent, predictable, repeatable source of new customers. That is what Level 2 is all about. That's what a growth flywheel is all about. Once you have that, you jump from level two to level three. Level three, you need to upgrade your business's operating system. At this point, the operating system is probably you. You're doing everything we need to get you out of the center of the business, build those systems and processes around you so that you're no longer that bottleneck to growth and scale. Once that is in place, and we've got a very specific process that we teach for how to install business operating systems. But once you have that operating system in place, you then are what we call a scalable business. You are now able to scale and that's when you go from level three to level four. At level four, your goal there is to double your take home pay, right? To double your bankable profit. So now we're going to shift into how do we accelerate our profits. Once you've done that, then level five is to build your board here. Need some support around you, supportive mentors, peers, strategics, maybe even the occasional influencer. But you got to have a board that is there to support you and your goals as it relates to the company. Once you have that, you go from level five to level six, which is to complete an expansion acquisition. So we'll talk about that. And then of course level seven, our favorite level of all. That is when you hit your number, right? The number that you set, you hit your number and that's when you can begin building wealth as an entrepreneurial investor. So those are the seven levels of scale. And what we've been doing the last couple episodes is just talking through each one, devoting an episode to each one. And this episode is level six, which is completing an expansion acquisition which last I checked, Roland, you know a thing or two about how many acquisitions have you been involved in over your career?

We're pushing over a thousand at this point. So it's been, I've been a long career though.

So yeah, those of you who don't know, Roland's pushing 90, so started back in the Truman administration I believe now.

Anti aging stuff going on, some experiments went out to area, you know, 50, I can't say. And you know, so some cool things happened.

Then there was that deal with Satan that you made that was also.

Boy, you know, you talk about negotiating that guy.

No, in all seriousness, you've been able to. All deals with Satan aside You've done so many deals for obviously the businesses that we've been involved in, we've done, you know, a fair number of them. But in a previous life you were an attorney, so your background is on the legal side. So you got to see behind the scenes of a lot of these deals, how they're structured, how they're negotiated, the deals that go well, the deals that don't go well. Also, I know been an entrepreneur even before then and saw deals happen. And so you've been in the trenches more than just about anybody else I've ever met. So we're going to talk about this, but just know if this is kind of your first time listening to us, if you've never heard, if this is the first episode, you're in for a treat. You should go back and listen to some other episodes because if this idea of acquiring businesses and assets and things like that appeals to you, we're going to touch on it here. But I think it's safe to say that you've talked about it a time or two before on this podcast. Is that accurate?

We have indeed, yeah. And interviewed quite a few people who've done those kinds of deals, both traditional mergers and acquisition deals and also no money out of pocket deals and also consulting for equity. So we've got lots of different categories of how you can, how you can do these. And I'm, I'm just about, I've got one I haven't added to the list yet, but I'm at 219 different ways to do that now. So we're about to cross into 220. So it's like it's, there's no limit, it's only your creativity. And as new situations arise, then of course we share them on the podcast. So good to subscribe so you don't miss out on any of that.

Yeah. So make sure you subscribe also. Shameless plug. We do almost, not every month, but at least every other month you run a five day challenge called the Epic Challenge that is all about kind of the, the, the nitty gritty of, of what we're going to talk about here. And that's it. Get epicchallenge.com yeah, so if this appeals to you, we're going through that. That'll be a good next step, but kind of, I guess, first question I have and I know we've gotten this question from our clients, we're talking about scale and specifically scaling your business. And a lot of people say, like I could see acquiring a business to get into Business I could see down the road maybe doing certain acquisitions, but like really having this as an, as a level, like this being one of those critical, essential stages. I know. It's even something that I questioned when we were working through this. So why do you believe that? Acquisition. Right. And this concept of expansion. Acquisition. So not acquisition just to get into business, but acquisition for people who are already in business. Why is it such a critical aspect of scale?

Yeah, so it's not. And it's not just my belief. The nice thing is, is that the data supports it. McKinsey did a study of about 800 of their fastest growing clients. And McKinsey is one of the top, top, top consulting firms on the planet. And what they found was that mergers and acquisitions was the fastest way to grow a company consistently and that it absolutely needed to be part of the growth strategy of all of their clients. And so that's pretty cool that that like the data supports that and it makes sense because if you want to double the size of your business literally overnight, you can simply go out and acquire another business of an equal size, which, that's the simple way to look at it. What I think a lot of people miss out on though, is that if you're thinking about why do you want to grow? Like, why do you want to grow and how do you want to grow? Well, I want to grow to achieve my goals. Okay, great. What can help you make that happen? Well, the easy thing that most of us would know about if we went to any kind of business school would be what they call a horizontal acquisition, meaning that you acquire your competitors because obviously view inquirer people who are doing the same thing that you do, providing the same product or service to the same audience, then that's a direct competitor and you'll reduce the amount of competitors and you'll increase your market share. So if I want to increase my market share, I like to look at acquisitions as what goals do I want to achieve? I want to increase my market share, acquire a competitor that could be a direct, indirect, could be a substitute or replacement product. It doesn't have to be like the exact product or service to the exact audience. It could be a replacement or substitute product to the same audience, or it could be the same product you provide, but to a different audience. So there's a lot of combinations to mix and match right off the bat in talking about how can I acquire competitors? And that's going to get you market share, which is cool. But maybe you want to acquire to solve a challenge that you face which is currently constraining your growth. The most common one of those would be, I need more leads. I need more customers. Well, if I need more customers, I definitely need more leads. So you can buy the customers directly by acquiring the competitor, but you can also acquire the media that already exists, where somebody's already aggregated the attention and eyeballs of your ideal customer.

Like, I'd love for you to pause, like, give an example, because we're marketers. Like, I mean, for most people, they would know me as a marketer, you know, first, that's. I've been playing a marketer on TV now for a couple of decades, right? So, so people are gonna be like, oh, you know, I'm sure you know, Roland and, you know, Roland Frazier, Ryan Dice, you know Richard Lynn. These guys own digitalmarketer.com they don't need. So why would we ever need or want. We're good at this marketing stuff. We can go generate more leads and customers. And yet we've gone the acquisition route. So can you give some of the examples of how we. And maybe even some of the businesses that we've been less directly involved in so everybody understands what they mean by that?

Yeah, absolutely. I think that it's also like, if you're, if people would ask themselves, well, why would digital marketer need more ways to get leads? I mean, we're always looking for more leads, right? So we're, we're. And we're not constrained. Like, we look across channels. We look at TikTok and YouTube and Facebook and Instagram. We look at Google, we look at, so that's platform channel, but we also look at organic, like, organic versus paid. Even on those channels, there's SEO, there's social, organic, there's paid. So we're, you know, we're looking everywhere. So one of the places, though, that is one of the richest veins of customers is that if we can identify, as we teach at Digital Marketer, our ideal customer, our avatar, then we go out and find somebody that's already gathered a whole bunch of those people, and we acquire that. Well, if we can acquire that asset for less than it would cost us to acquire all those customers individually, we just made a great deal. So if we think about Maybe it costs US$10 to acquire a customer, and, and we want to acquire a thousand customers, that's $10,000. Let's. Right. And if we could go and acquire a group that's got 50,000 or 250,000, like one of the acquisitions that we was at 250,000 member group that was our exact perfect customer and we acquired it for fifteen hundred dollars. Right. That's a pretty good, that's a pretty good deal. And particularly in light of everything that's happening, happening with privacy. Facebook. I know. Digital Marketer just released an article on all the changes in Facebook that are happening this month. All of the targeting options that are going away, all the changes that Apple is doing. And now you can sign up. Apple is literally saying we will put a fake email in there for you. Right. So that people can't capture your data. It's getting harder and harder. Google continues to stay the execution of the third party cookie, but it's going to happen. They're going to be forced to do it. And so as all of that happens and all the rules get more tighter and tighter and tighter about what you can do, if you can just go out and get a handful or a whole bunch full of your ideal customers by acquiring some media like a Facebook group, a LinkedIn group, a podcast, anybody that's already aggregated those people that are your perfect people, then that's a really smart thing to do. That's why we would do it. Like our other businesses, we've recently acquired about, I think we've, I think we're about 12 dog lover groups that are on Facebook for our, one of our companies that sells products to pet owners. So we're acquiring groups of German shepherd owners and dachshund owners and so on and so forth. So by breed and then like one of those groups is generating about 100 sales a day, right? That's pretty great. Like, so we pay almost nothing for that group and now it's generating 100 sales a day and it's a place where we can continue to build relationships and rapport and we have that audience that then we can offer to other people as part of the deals that we do. So that's, that's like a really great way to do it. Our real estate business, we went and acquired the second largest group of real estate agents online. And that added at the time about 50 or 60,000 real estate agents. And our businesses make money by acquiring new real estate agents. So like that's a dead on customer for us. And we've grown that group to close to 100,000. Now like that's, that is a fantastic way for us to get leads. So we're doing this very regularly. We've acquired podcasts, we've acquired Facebook groups, LinkedIn groups all across the board. Lots of websites that we've acquired, products that We've acquired, like, anything that's already got our customers attached to it.

Yeah, I know. Last year, the Hustle was acquired by. Which is a newsletter. It's an email newsletter. It was acquired by HubSpot. Why? Because HubSpot didn't really have an email newsletter. They've got lots of organic, but they didn't have a really strong email play. The Hustle had a very popular podcast that I'm guessing HubSpot realized that those are some of our customers. We can, we can buy the asset for less than it would cost us to build the media or buy advertising on the media to acquire the same number of customers. And what's great is you own it, it's better connected. You can actually see a higher conversion rate because it's. It's not just advertising on another channel. And what I love about this idea, because you're right, everybody thinks about acquisition for the sake of just expanding our market share, which is an aspect of scale. Because we're talking about, why should somebody. Why is level six such important level. But it's this thing that we're talking about here that I think is going to be most applicable, the acquisition of media. In a world where media is getting more expensive to advertise. Because if you think about it historically, if you wanted to get attention, you either had to buy it or you had to earn it. So you had to buy advertising or you had to do some kind of pr. What now would be like maybe content marketing, SEO to earn it. And all of those different channels are getting more expensive, more complicated, more crowded. And so a faster play in more cases, in a lot of cases, a more economical way to get that same media to simply acquire the media. And historically, media companies don't sell for super high valuations. They don't make as much money. So I think there's a really phenomenal arbitrage play here to build up brands and to acquire the. The media that you would traditionally advertise on. We've been saying it for years. We did an entire conference on it. Last I checked back in 2016, nobody was listening to us then. 2050. Yeah, you're right. 20. Nobody was really listening to us then. And now all of a sudden, we're seeing the big SaaS companies, the big E comm companies out there doing what we were talking about doing.

You're also seeing this like, like for business lunch. So for everybody that's watching, watching or listening, we are in the process of reducing advertising slots because this is an asset that we've built ourselves. And so we want a better user experience for you, and we don't want it to be cluttered with ads. So we've got advertisers who've built their entire business based on the ability to advertise on this podcast. And that will be going away for them. And I think that just as you're seeing with a lot of the A list stars and things like that, more and more creators are determining that they should have some sort of ownership in the things that they are promoting. So if you see the Rock and Reese Witherspoon and George Clooney and Kylie Jenner, right, All of these A list actors and celebrities who are saying, well, rather than me being a spokesperson for your thing, I want to own your thing, I think you'll see more and more media owners thinking that way too, which means that ad inventory is going to decrease, which means that the more of that media that you own directly, the better. Now, the good news, as Ryan said, is that the prices for these things, particularly micromedia and mid media, as opposed to mega media, right? Like the prices for that small micro media, they're like, basically.

Can you define that, Roland? Micromedia. What's an example of micromedia? That's like, yeah, to me, that's like Facebook group.

That's going to be Facebook groups. Podcasts that are. That are under say 100,000 views per month, that kind of thing where you don't have a huge audience. Huge audience things, they tend to be their own business and they're valued around 5x on EBITDA right now. I think you typically see those going for. So, so like, let's say something's generating, somebody's already got something and they're selling ads and it's generating $300,000 a year. If it's a bigger thing, you're going to pay a million and a half dollars for that. But if it's a smaller one, and let's say it's under a hundred thousand downloads a month on a podcast, or it's. It's under a hundred thousand dollars a year in revenue. Because the people who are running the Facebook group or the LinkedIn group or the Instagram channel or YouTube channel have not done anything to really significantly monetize by selling products or services, then those are typically going to be acquirable at one year's profit and the profit is going to be next to nothing. They probably started that thing as a passion project, which is great because they were into it and they built a great following and people are Loyal and engaged. And so those are typically acquirable for next to nothing, as we know from our own experience.

Right, Yep. So the. So I would look to acquire, to increase market share. I would look to acquire, to increase media exposure, awareness, basically get more leads and sales. Yeah.

Then some of the.

What are some other reasons?

Yeah, so the others would be I need infrastructure. Like I don't. I've got a business that's growing, but I can't find the talent and teams fast enough to support the growth that I'm experiencing. Great problem to have, but also scary problem to have because we've acquired lots of businesses and poured on the marketing and then the wheels fall off the business, customer service suffers and that can be very brand damaging to you. And then ultimately why did you grow? Because you can't support the growth. So there's a whole concept called aqua hiring to go out and acquire assets or divisions or entire companies simply to acquire the talent that they've got. And as we see the great resignation with millions of people leaving their jobs and going for other things, I think it's going to be harder and harder and harder for us to retain the great talent that we want. So if we can find teams that are already working, and we did that when we needed a software dev team, none of us knew how to build software. So we're like, let's go acquire software company that's already got a dev team or let's acquire an inbound sales company that's already got a sales team. Those can be critical. Or we're always looking for operators. So if we can acquire a business that has a great operator already attached to it, and then that person runs the thing that we acquired, plus our company that didn't have an operator at the head of it, then that solves that challenge. So that's a really, really good reason to acquire and quite applicable right now in these times in particular. Right?

Yeah. So walk me through the process. Right. Let's say that I bought into this and I'm thinking, okay, I want to get into this acquisition game. I want you to walk me through the process. But before that, because I think still a point of belief that people might be thinking is I can't afford it. Like there's no way I can, I can afford to do it. And so I will say, number one, there's a reason this is at level six and not necessarily level one or two. Right. So there's an assumption that you do have a bit more profitability. You've got, you've Got some cash flow, you've got some history there. Also you're going to be able to plug this in and hopefully ROI it almost immediately, if not within the first kind of 60 or 90 days. But even if I'm still struggling a little bit there, could you speak to number one, what type of investment does it look to acquire? And I know it's wide across the board, but what, what are somebody look to spend? And then just walk me through the process because I think once people get okay with, maybe this is something I could do, they'll be open to the process.

Yeah, I think that it doesn't really like traditionally it's going to require you to go and probably come up with 20 to 40% down. And so if you're buying a million dollar asset or business, then you're going to come up with somewhere between 200 and $400,000 to do that. And then you're going to get financing with personal guarantees from a bank or a credit union or maybe you're going to go to, if you're in the United States, the sba, the Small Business association or their similar organizations in other countries. And so that's a, that's a very traditional deal, but there's a lot of creative deals that you can do as well. So the truth is that, that you can start here and then go back to level one. So you can, and then go to one because you can acquire whether you've got cash or not. And so one of my favorite challenges is to acquire businesses with no money out of pocket. That's what we teach@the getepicchallenge.com site. And, and so it's basically just identifying the categories of companies that you are interested in acquiring and then identifying the specific potential candidates there and then reaching out to them and having a conversation with the owners about the possibility of an investment. An investment can mean cash in the traditional deals, but an investment is generally any thing where you're providing capital to a company. And if you look up the definition of capital, it's basically, it can include cash, but it's really resources or things of value. So that can be your intellectual property, your sweat equity, your operational skills, it can be money from other people. And then one of the things that I did quite a bit of in the 80s was that was the era of leverage buyouts. And so what I thought was really cool about leverage buyouts is that there were companies that were buying other companies and paying for them just with the assets and income from the company they acquired. And so that's a very cool strategy that you can apply as well. And so how would that work today?

Can you give me an example of like. Or a case, you know, hypothetical even?

Yeah, yeah. I mean just, just straight out, straight out case study is looking at. And we've, we've had hundreds and hundreds of people do deals like this. But one of my favorites is the largest deal that's happened so far was a service provider company that was an insurance service type company. And they were interested in acquiring agencies to expand their business. So they're looking at how can I acquire a team of people to expand the business? And they found an agency that was marketing in their area of expertise. And so they approached them and that company was doing about $20 million in profit in Ebitda and they acquired that company using no money out of pocket. So that was an $88 million. It's 88 or 89, I forget, million acquisition that was done without any money out of pocket because they basically were able to fold that company into their company and say, hey, here's the direction that we're looking at going, we want to bring you in. And they, they were able to do it with a combination of stock and some other things, you know, strategies that we use. Like that's a big deal. A small deal is we just acquired a CRM off of Flippa in one of our programs that was listed for $8,000. We acquired it for 5,000 DOL and we simply pre sold to 10 people that were interested a $500 lifetime membership. And so we got in the money to complete the acquisition. All cash, no money out of our pockets. And then you own a CRM and you've got 10 customers that are great, who love it, but they funded the acquisition of the company and then there's everything in between.

Yeah, and I love that it's an important distinction because when somebody hears no money out of pocket, that can sound like some kind of scammy late night infomercial real estate kind of thing. That's not what we're talking about. It's not what you're talking about?

No.

You're saying you as the entrepreneur, don't necessarily need to bring your own money to it. Money capital can come from a lot of different sources. It could be that you're bringing your own talents. I know we've acquired companies because they just knew that if, if their company was in our portfolio and if we were doing our respective voodoo to it, that it'd be worth more.

Right.

So we didn't bring money to the table because we brought ourselves. Now, even if you're not somebody who can do that kind of thing, you don't have the brand, the network. What you described is a great one. Pre sales. We've. I've known people. We have a mutual friend who did an acquisition and he pre sold sponsorship to this kind of. It was an event type type program. He pre sold sponsorship and that covered what was effectively the down payment. And I think he brought in another outside passive investor to cover the rest of the. So by putting this deal together, his company received the full benefit of the asset. Didn't have to come out of pocket at all. So sometimes you got to put in a little. But I think a lot of people see this as this binary thing where they're either going to look for just an awful crappy business that somebody's willing to give it to them because it's just so toxic. Right. Or they got to come completely out of pocket, write a big check, go into all kinds of debt, take on lots of personal guarantee. And the reality is, is that most of the deals that get done are not in those extremes. Most of the deals that. Not just from in our world, but they get done, they're more creative and so looking for those things.

Yeah, I think it's an important distinction between no money down and no money out of pocket. And so the reason I stress no money out of pocket so much versus no money down is no money down typically means that the seller is not going to get anything at closing. And those are very, very hard deals to do because most sellers who have a profitable company want some cash at closing. Now, they might not want it all, they might not need it all. There are situations where they want to defer it for tax reasons and other things like that. But there's going to typically have to be something at the closing that the seller is going to be able to put in their pocket. So no money down deals are usually very, very small and not as quality a company as other deals. Right. No money out of pocket simply means that there will be very often, almost always as a matter of fact, cash going to the seller at closing and significant cash, but it's not coming from you because we've identified other places, 219 of them, that you can go and draw from without having to use your cash, without having to use your personal credit to do it, and without having to go through a bank. Like banks aren't one of my strategies. I don't use banks. So banks and credit unions and Those things, they're harder. The deal terms are tough. They put these restrictive covenants in that constrain your ability to move and do things. And typically they want personal guarantees, which I just don't want to give.

Yeah, happy to sell to somebody who's using a bank. But yeah, on the, on the buy side, the goal is to get more creative. And look, we're all entrepreneurs here. If there's one thing that we should all be comfortable with, it's about being a little bit creative, being a little bit scrappier. So just to kind of like, I guess, tie this, tie this up, level six, kind of, once you're past level three and you are scalable, right. You have increased your bankable profit, you've built this board around you, these things and then, and now you're beginning to look for expansion, acquisition opportunities. These things are all kind of happening in and around the same time. And this is where having a good solid board of advisors can be incredibly helpful. Because when you talked about the steps, right, it's identify the need. Right. A good kind of board of advisors is going to say, hey, what's holding you back? You don't realize it, but you got a people problem.

Hey, business lunch listeners, we're going to get right back to the show, but Roland wanted me to invite you to a brand new training that he's doing on acquiring businesses with no money out of pocket. It's something that he's talked quite a bit about on the show, but he's doing a free training where he's going to walk through the entire process.

So if you want to get access.

To that, go to businesslunchpodcast.com epic that's businesslunchpodcast.com epic and you can get signed up.

You're trying to throw more marketing at this. You got a people problem. You got to get different people in. And if you can't hire them, then I know this business over here that they got a product problem. Like they got great talent, great people, they can't get the product built. And you got this. So with your powers combined, this is where building your network, having advisors, other entrepreneurs that you're talking to, people who are looking at, thinking in terms of deals and in terms of assets and in terms of acquisition, not just in build, build, build, that's the mindset, that's the mentality that you need in, that's going to maybe serve you well in the early days, although you mentioned it, Roland, plenty of people acquire a business and then go through the seven levels and really six happens as almost step one. But it's gonna come from the identification of the need, the identification of the industries and the possible opportunities, help and support with negotiating. This is one of those areas. There's a reason it falls after the building of an advisory board. Because this is something the first go round. It's not something we'd necessarily recommend. Just doing all by yourself and seeing if it works out. It's fine if you do, but boy, we're talking about some big numbers here with lots of zeros.

Hey business lunch listeners.

I've been running my own business since I was 17 and I found that nothing slows down entrepreneurs more than this one pesky question. And that's what do I do next? And left unanswered, you find yourself stuck far below your potential, jumping from one shiny object to the next, perpetually wondering why other businesses are growing and yours is stuck. So that's why Scalable has put together the seven levels of scale framework. We'll give you the shortest path possible to go from a struggling startup to a high profit, high impact, exitable business. That'll give you the wealth and freedom you deserve. So stop wondering what to do next and take our free 3 minute assessment today at getscalable.com download and you can download a free guide to show you what level of scale you're currently at and how you can scale quickly and profitably to the next.

So any other kind of tips, things Roland, that we should mention before we close this out?

Yeah, I think that the other challenge that a lot of people face when they're thinking about acquisitions is that they just say I need to get something. And they don't really take the time to set their acquisition criteria. When you're looking at a level of private equity firms and family offices and investment bankers and things like that there, and even corporate acquisition teams, they all have acquisition criteria. So you want to think carefully about what is it that I'm looking for. So maybe it is, maybe it's I'm looking to solve a lead problem or a team problem or innovation problem or whatever. And different types of acquisitions can satisfy that. But even more specifically, I think thinking about what's the strategic value of this to my business beyond that, is this a company that's a leader in its, in its area? Does the culture of this group of people that might be coming along with this mesh with our culture? Is it something that's going to, that that's going to have systems that are compliant with our systems is like that Is it going to be a really hard thing, or is it important to us that they can plug and play and they're using some of the same tools and systems that we're using? I think a lot of those kinds of things are important. And then even terms of performance, what is the level of sales and profitability and growth velocity that this company or asset that we're acquiring needs to have for us, to have it move the needle for us? Because if you go out there looking for anything, you'll find it, but it might not be a fit. And one of the biggest challenges post closing is this thing we call integration. And integration is when we're bringing these assets into the mothership, when we're bringing them together, whether as a merger or as an acquisition that might be tucked into the company we've got. So it's important that you do think about acquisition criteria as a filter so that as you start to build deal flow, you won't just close every deal that comes along. Because particularly when you learn, when you master no money out of pocket, anything is possible. Right. You can acquire. We've had people that acquired 16 companies within a week or two of going through our program on how to do it. And then it's like, well, wait a minute, how are you going to run 16 companies that are a pet store and a e commerce site and a SaaS and none of them are related to each other? That's hard. So, so that's. I think that's a big, important tip to think about too.

And it's also not just a filtering mechanism in terms of making sure you don't buy the wrong company, do the wrong acquisition. I've also seen people in our, in our community and in our world saying, I just can't find any deals. Right. And it's amazing how often we'll say, well, what's your acquisition criteria like? Oh, well, I'm kind of looking for a business that's a bit like mine, but it's like the answer is they don't have one. And just like when you decide that you're going to buy a particular car, we've all had this. I'm thinking about buying this new car. You start seeing them all over the place. Right, Right. I think that's like, what is it? The reticular activation system, I think, is what that's called it. Google it. It is really a thing. I didn't just make that up.

It's a.

It's a thing. And so when you decide ahead of time, and this isn't like some woo woo law of attraction kind of thing. This is just when you decide ahead of time what you're looking at. What was just noise becomes signal, right? What was just this thing that was out there in the general ether. You now see it in a crowd because that's what you were looking for, right? You were looking for Waldo and there's Waldo. And so, so much of the process, if you feel like you've been stifled in the past, or if you're worried that you might make a bad deal, something that everybody can do right now is to begin to build out that acquisition criteria. You can inform it over time, perfect it, talk to other people. This is where, again, mentors can be very helpful. But that is something I think if you're looking for one action item, whether you're at level, you know, two or level five or level six, I think that's something that everybody could do.

Yep. Love it. I think that covers that for today. So that's level six in the seven steps. Next time we will do level seven. And if you're enjoying the podcast, definitely subscribe so you don't miss out. Particularly when we're doing series like this. You want to get noticed so that you know not to miss Level 3 or Level 5 or Level 7 without having to go back and listen. And also if you enjoy this, we'd love for you to give us a five star review. Just whatever podcast platform you're on, click the review, tell them what you like about it, and that would always be very appreciated. And we love hearing that kind of feedback means quite a bit to us as well. So that's it for today. We'll see you next time. And we will be covering level seven. Ryan, you want to give a peek at level seven? What's level seven?

Level seven is the best. Level seven is when you're hitting your number, you're living what you refer to as what we call your Level 7 life, and you are at maximum peak option. You can exit or not exit. You can do the work that you love doing, but we got to know what it looks like so that we know when you get there. You don't want to always be resetting the goalposts. We're not celebrating. So, yeah, that's what we'll talk about next time is what does it look like to hit level 7 for you? How do you set those goals and then what do you do once you hit it so that you continue to stay, to just stay inspired and motivated?

All right, we'll see you then. Thanks.

Guys.

You'Ve been listening to Business Lunch with Roland Fraser.

If you're enjoying the show, let us know by subscribing and leaving a review. And for more information, go to businesslunchpodcast.com thank you for listening. Foreign.

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