4 Lessons I Learned Buying My First Business

Buying my business was one of the most significant choices I made in my life. It involved not just financial investment but also huge emotional commitment. Whether you are a seasoned entrepreneur or a first-time buyer, having the right resources and guidance can make all the difference. In this post, I'll share a bit about my experience to help guide you with yours.

1. Representation

When my wife and I bought our first business, our only representation was the vice president of our local bank and boy did that go south fast! We relocated our entire family from Minnesota to Missouri only to learn that the assets belonged to another business partner that we weren’t aware of and the assets were in this other partner‘s name. Had we gone through a broker, this could’ve been avoided.

2. Legal

When it comes to legal documents, such as a noncompete agreement, there are loopholes. After relocating halfway across the country with a young family, we learned through the school of hard knocks that the one signing the contract can just re-open up shop underneath a relatives name. We sat for a couple of months with no work coming in the door while in Missouri burning our cash. There are safeties you can put in place that we did not know about because we didn’t have representation.

3. Employees

I went from no employees to hiring employees within the first year. There are so many obstacles in hiring your first employee, and it can be scary. Especially now with all of the constant changing labor laws. There’s a lot to understand with this stuff and unless you have somebody who can speak to these things to give you a heads up, or point you in the right direction, you can get caught off guard and it can be extremely costly. Had I had representation with experience in this department even just some simple Q&A could’ve gone a long way to prevent unforeseen issues.

4. Insurance

This is a big item that I don’t hear as often as I wish I did when sitting down with a buyer and seller. Insurance. How do you know the company that you are buying has the proper insurance policies in place? This is another one of those things that comes with experience and it’s out of the scope of a business broker but again, knowledge by experience goes a long way and that advice can be invaluable. Even something as simple as having relationships with insurance brokers that are very good in their specific field that can prevent a catastrophe. When I bought my first company, I had a $65,000 loss due to having a small misunderstanding of an error and omissions policy all because I didn’t understand the value in a risk management team.

Final Thoughts

I had no one to help me navigate these murky waters. It wasn't as easy as cutting a check and starting operations. I spent many long hours and endless days constantly breaking and fixing stuff. If you plan to buy a business, go through this step-by-step guide I put together on how to do so. You can also reach out to me for a real one on one conversation here.