Mr. Unstoppable is in the clothing biz. He comes to our May Roundtable meeting with his tail between his legs.
“My bookkeeper screwed up and, uh, forgot to categorize $126,000 of expenses. I woke up one day last month and found out we had no cash.”
He’s feeling the squeeze this last few weeks. “I was thinking, maybe I can sell a piece of my company to an investor and get out from under this.”
His own sales were soft in April. Overall, his sales have doubled in the last 3 years despite an ugly divorce and a turbulent market.
His competitors are all flat or declining. He’s been a little distracted lately.
I speak up. “I had a bookkeeping screw-up myself a couple years ago, $300K. I fired my accountant AND my bookkeeper. Anybody else in the room had that happen?”
Roundtable 2 is full and has a waiting list. The room is packed, and half the hands in the room go up. Nobody in the meeting thinks this is a particularly big deal. A day in the life of an entrepreneur. Mr. Unstoppable says, “OK, then do you have any ideas about how to approach potential investors?”
I say, “People sell businesses for the same kinds of erratic reasons they sell cars and houses. Seldom is it entirely logical. Maybe they’re just tired of what they’re doing. Maybe there’s some giant stress in their life and they want out from under it. Maybe they’re moving or their relationships are changing.”
I continue: “If I were looking for a sweet deal on buying a business right now, I’d be looking for a guy exactly like you. A guy who’s been thrown off his game by a bookkeeping mistake or an ex-wife. Dude, you’ve got a bulls-eye on your head right now. Somebody could take advantage of you real easy.”
He stops and thinks for a second. “You know, you’re right. I’ve got a competitor who approached me six months ago. He wanted me to buy him out. But I’ve been ignoring him because I don’t have the cash to do it.”
Mr. J across the room nearly leaps out of his seat. “Do an LBO!”
“Huh?”
“Leveraged Buy Out.”
“But I don’t have any money. What’s a Leveraged Buy Out?”
“You don’t need much,” Mr. J explains. “You use the profits from the business you’re buying to pay the guy over time. He’s just trying to get out from under it – exactly like you were thinking of doing.”
“How many other competitors do you have?”
“A bunch,” he says.
“Maybe you can buy ‘em all,” I say. “Remember that book “Blue Ocean Strategy” from a few years ago? It was all about growth and innovation and creating new markets where they didn’t exist before. Well right now the name of the game is “Red Ocean Strategy.” Everything’s shrinking and there’s blood in the water everywhere. You can buy people left and right.”
One of the other Roundtable members did this two years ago in the Postal industry. Everyone else was gasping for breath. He kept a level head, enhanced his services, raised his prices and started buying out companies. He went from Regular Guy to Kingpin in 12 months flat. No exaggeration.
“How do I do a Leveraged Buyout?” Mr. Unstoppable asks.
Tom Hoobyar and Mr. J say, “Talk to us after the meeting. We’ve both done this, it’s not that big of a deal. Right now you can acquire companies with little or no cash, same way you used to be able to buy houses with no money down.”
“But wait a minute, I still owe some of my vendors money from this cash problem. What do I do about that?”
I say, “I bet your vendors would much rather have you than some new guy owning your company.” Everyone nods in hearty agreement. Tom Hoobyar explains to him the exact conversation he needs to have with them. He can have that conversation on a fishing trip and get out of this tight spot in 3-6 months without a negative impact to his operations.
No doubt those vendors would love Mr. Unstoppable to own another company or two. More potential biz for them.
I ask, “What have you been doing about this guy who wants you to buy him out?”
“I haven’t been returning his phone calls for six months.”
“PERFECT! He’s been chasing you, so you’ve got prime positioning.”
Mr. Unstoppable’s eyes are spinning like peas in a whistle. He’s got the biggest smile on his face I’ve seen in years.
The last time I saw him grin like that was in 2008. He was telling all the Roundtable Members the story of when he drove to another state to spy on his competitor who was interviewing potential employees on a college campus. This guy had set up interviews for college grads and Mr. Unstoppable had gotten wind of it.
The competitor was not likely to recognize Mr. Unstoppable – the guy hadn’t ever seen him in person – but just in case, Mr. Unstoppable grew a beard. He sat by the doorway of that room in the student union and eavesdropped on every interview. Gleaned all kinds of juicy tidbits.
We did high-fives and whooped for awhile. Mr. Unstoppable spent the next day and a half scribbling notes for his new World Domination Strategy. He came in thinking he wanted to sell his business and left with a plan to become a conglomerate.
The next hot seat was Mr. ZigZag.
“Right now we’re making parts for $1.00 in China and selling them for $20.00. We just opened a new office, just hired a bunch of new girls to process orders. We’re selling in Europe at profit margins that are just sick. Our sales have grown from $100,000 per month to $300,000 per month in the last six months and it’s a SWEET deal.
“And one thing I know about Sweet Deals is, they always come to an end.
“So I need you guys to help me figure out what’s next. What do you think I should do?”
You’ll hear about Mr. ZigZag in the next installment of the Roundtable Chronicles…
Perry Marshall
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About the Author
Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.
He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.
9 Comments on “The Roundtable Chronicles for May 27, 2011”
Ahhh, the absolute power of the group mastermind. It’s amazing what happens when such synergy is developed between business owners.
Great share Perry.
Hi Mr Perry Marshall,
Your well crafted missives drop through my mail so regularly, that after 3 years I,m writing to you. Who ever said perseverance does not pay off.
Now please do not be offended but your mails tend to end up sandwiched between people that want me to perform like a sexual Tiger and people that want me to compete with elephants in the endowments department, so I have to be carefull not to bulk delete your words of wisdom.
I will get to the point, you are clearly a natural, gifted and talented writer and communicator ( please send my $10 to……) but you are a little one dimensional.
Sure I know money is important, we all need to earn our daily bread, but there is a lot of stuff going down right now that would benifit from your publicised observations, so, radical I know, but…..
How about directing just a little bit of your talent towards these little problems?
Remember the advice about building a house upon sand?
Well I have nothing against earning or even accumalating money, but it would be nice to have a world in which we can spend it, I,m sure you would agree…..
Just a thought.
Kind Regards,
Terrence Aubrey
You might try http://www.perrymarshall.com/spirituality or http://www.coffeehousetheology.com or http://www.cosmicfingerprints.com – all dealing with problems of a more permanent sort.
Terrence- Regarding Your “Bottom Line”…I couldn’t agree MORE…and the way I look at it is–I give of My Self & My Time/Skills/Financial Resourses to make as Good & Safe & Happy & Wholesome a Community as I can…BOTH For & On Behalf of Our Soldiers’ & Their Families–As a small thanks For ALL THEY’VE DONE On My Behalf.
Semper fi
-Mary
It will be time for me to buy a business pretty soon. A leveraged buyout seems like the way to go. I’m gonna check it out online, find some people who have done it in forums and ask them to guide me through the process and give them a cut for their expertise.
I agree with you wholeheartedly Robin, Mr. Marshall did just play a part in the transformation of my reality.
And to think, I almost deleted the email because it was so short and so unlike Perry. But I opened it, and here I am. ‘Preciate you Perry.
Ah–The Actual & proverbial “Roundtable”…
“Where The Rubber Meets The Road”…IF…
You Know What I Mean.
For All The Comments That People Feel Free To Toss Out On Your OTHER “In My Opinion” Posted Letters & Response Forums…
HERE IS A REAL EXAMPLE of WHAT YOU OFFER–LIVE–TO Those Willing To…
1. Pay For IT AND…
2. SHOW UP At The Designated Times Places AND…
3. SPEAK UP About Their Business Dilemmas AND…
Just How Many of Your Readers&Writers Have Posted Comments To THIS “Meaty/Meety” Letter ??… 1.
The other day (May 26, 2011) some “Pulse Point” comments were posted to Your “2 ways people cripple their own success” Letter…
“…When I started learning about the many topics involved in internet marketing, a lot of it didn’t make much sense. I went through courses that didn’t yet apply to where I was at with my online activities at the time. I used some things and saved others for later.
But cumulatively, all that learning is present in everything I now know how to do. 80/20 is a great way to think of the process of continually learning…”
AND…
“…But what about learning from ones own experiences? Can you write a newsletter on that and how to do that best? You obviously figured out how to do that as well. Or is the answer to that question also to buy more of your products?…”
LIVING & LEARNING IS A LIFELONG PROCESS–
OR…You WILL Find…
IN THE EVER-CHANGING! WORLD IN WHICH WE ALL MUST LIVE & MAKE A LIVING…
THAT IF You Think That…You’re A “Graduate”–
AND NOW KNOW ENOUGH…
AND DON’T HAVE TO KEEP LEARNING “New Stuff”…
THEN…You Will Find That–IN NEXT TO “NO TIME”…
Kids…NOT EVEN BORN YET…WILL BE…
Passing You…Bye-Bye–BABY !!
The Lessons and Text Books and Diagrams and Maps and Illustrations and Lectures and Lab Projects and Problems To Solve and Equations To Balance and Measurements To Make and Reports To Write and Columns of Numbers To Sum UP…etc. etc. etc. …
NOBODY EVER LEAVES “ALL THIS STUFF” BEHIND…
BECAUSE–When You “Leave School” And Go OUT–
INTO THE REAL WORLD 2 MAKE & EARN A LIVING…
“ALL THIS STUFF” IS WHAT THE WORLD RUNS ON–
Sweetie !!
Furthermore…
Working in “Relative” Isolation…
OR With Just 1 Other Person…
ARE–THE MOST TIME-HONORED WAYS TO…
get stuck in mono- or bi-polar disordered & rundown ruts
DO REACH OUT TO OTHERS WHO–Clearly–
UNDERSTAND MOST–IN THIS CONTEXT–
Business Problems…
AND–WHO ALSO HAVE LONG & SUCCESSFUL TRACK RECORDS of FIGURING OUT SOLUTIONS TO BUSINESS PROBLEMS–
AND–WHOSE “HEADS” ARE STILL IN THE GAME…
THIS IS THE BEST PERSON–ORGANIZATION–TO “TRIANGULATE” WITH…
‘cuz as You KNOW…
There’s NO SHORTAGE of “business advisers” out there who can define “the problems”…in graphic and even entertaining manners…
but beyond THAT–
They Have NO REAL Advice To Offer–YOU–
For YOUR PROBLEM(S)…But By Collecting “Your” Fee-For-Service…THEIR Financial Problems Are Solved.
Think About IT–
“Newsletters” Can NOT Listen To YOUR STORY…
And After You’ve “mastered” The BASICS–
Your “Professional Life” Will Give You ENOUGH Opportunity To Keep Your BASIC SKILLS–
NOT ONLY Regularly Exercised…But–
Continuously Polished–as well…
So By The proverbial Grad School Stage of “The Game”…
Where “Business Playas” MUST Work & COMPETE…
SEASONED COACHES IN YOUR CORNER–
Can’t Hurt–AND WILL–
I Have NO DOUBT–
Prove To Be…”Worth Their Weight In Gold”…
2U
You Should Thank Your “Lucky Stars” That Such A Team of Proven & Involved Coaches Are…Just A Click Away…AND–
At YOUR Service.
ME ??
Why…YES…I Do…As a matter of fact…
Have an idea that I’ve been kicking around in my head & “On Paper” for a while…that I think The Team of Business Coaches & Docs Available Thru Planet Perry ARE Just The Ones To Help Me Bring My “baby” idea to–Delivery.
Hope To Be Seein’ Y’all Soon–Dudes !!
Perry,
How much will it cost to learn the rest of “Mr. J’s” name?
Great Post,
Quantella Owens
Only Roundtable members are privy to that information.
Hi Perry,
Great post, and it gave me some ideas for my business endeavors as well. As Kiyosaki would say, you changed my reality!
Thanks for making me see new opportunities!
Robin
The Netherlands