Matthew R. Meehan and Luigi Rosabianca are the founders of Shield Advisory Group, a consulting firm that specializes in helping small businesses grow. Meehan has over two decades of experience on Wall Street, and Rosabianca, nicknamed “The Professor,” has a diverse educational background in architecture, law, and political science and is a strategy expert.
Together, they offer a personalized approach to helping small and medium-sized businesses grow and scale for success through tailored solutions such as funding, accounting, payroll services, consulting, acquisitions, and more.
In this interview, Meehan and Rosabianca discuss the benefits of buying a business over starting one from scratch and offer valuable insights for those considering this route, including the importance of due diligence and having a clear plan. With approximately 2.5 million small businesses available for sale, buying an existing business can provide a ready-made opportunity to be a business owner and potentially earn immediate income streams, rather than facing the trial-and-error period and potential failure of starting a new business.
Q: Why should I buy a business instead of starting my own?
The simple answer: Time and Money. 60% of new businesses fail within the first year. A whopping 96% fail within ten years. It can take a few years to turn a profit, and if (or when) you can pay yourself, it will likely be a median salary ($46-$58 annually) for working over 50 hours per week. Meanwhile, there are approximately 2.5 million small businesses available for sale. Why? Because 10,000 Baby Boomers are retiring each day. 19% of them own a small business, and 78% of these businesses are profitable. (This actually makes them the most profitable age group of small business/franchise owners.) By our calculations, that means every day, approximately 1,400 opportunities to purchase a profitable business are added to the market. When you buy an existing business, you skip the trial-and-error period and can potentially earn immediate income streams.
Q: Isn’t it a red flag if someone is trying to sell their business? If it’s successful, why would they want to give that up?
It’s not always a red flag. Many of the people selling are Baby Boomers that have poured years of energy and passion into their businesses and are ready to retire. What happens if they don’t have a family member to pass the legacy onto? They need somebody to step in. By selling, they get an extra cushion in retirement nest egg, and you get a ready-made opportunity to be a business owner.
Q: I’ve never owned a business before; where would I even start looking?
Knowing where to look feels like a big hurdle, but once you get started, you’ll soon realize there are potential deals all around you. This book outlines the importance of establishing the type of business you want to buy first and what you want to look for in a seller. From there, it’s all about tapping into your own network and using online resources. One of our bonus materials is 50 Places to Find a Deal to help get the process started.
Q: How can I tell the difference between a good deal and a dud?
It all comes down to doing proper due diligence. When you’re buying a company, you assume ownership of everything. EVERYTHING. That might include profits, valuable contracts, and inventory. That might also include back taxes, outdated equipment, and terrible profit margins. You should never take anything at face value, which is why you must perform your due diligence to confirm that what you’re paying for is what you’re getting. You may discover they’re in better shape than you thought. Or you might find it’s a sinking ship. Understanding how to value the business and what red flags to look out for are both topics we talk about. It’s a significant investment, so if there was ever a time to cross all your t’s and dot all your i’s, this is it.
Q: Buying a business sounds expensive; how do I come up with the money for it?
It’s a myth that you must either be a Rockefeller or go into serious debt to buy a business. On the contrary, there are ways you can buy a business with zero dollars of your own money. (And yes, it’s completely legal, it just requires a bit of outside-the-box thinking.) There is a surprisingly long list of ways to secure funding – and none of them are “more right” than others. (Though, if we’re being honest, some of them are complete garbage, so we don’t talk about those.) Ultimately, the route you decide on will depend on factors like the type of business, the amount you need to borrow, credit history, collateral, etc.
Q: What advice do you have regarding that ownership transition?
The transition of ownership can already be a perilous tightrope. Most experts agree that there are better tactics than going in guns blazing on day one and implementing huge, sweeping changes. You will want to use this time to get to know the team, learn the systems that are already in place, understand the finances, and, most importantly – set goals. The first 90 days are critical.
Q: Buying a business is a big investment; how can I make sure I get a good return on it? What can I do to grow and scale so it’s successful?
It starts with completing thorough due diligence, so you know exactly what you’re getting into. And from there, it’s about building your brand, building good relationships with your customers and employees, learning when and how to successfully outsource, being aware of unexpected costs you might encounter, and what you can do in times of plenty to prepare when things get tight. We walk you through all these steps in the Third Round of the book; we don’t only want to help you buy the business – we want to help you make it a success.
Q: How long does the whole process take? How soon can I start earning income from it?
There’s no one-size-fits-all answer to this question, but on average, you can expect it to take anywhere from 6 – 12 months. That might seem like a long time (and it is), but remember, this is a big undertaking. Of course, you want to start earning income as quickly as possible, and once the paperwork is finalized and the business is yours, any money coming in is yours as well. But rushing through this process will only end in regret. It should take as long as it takes. In conclusion, buying a business can be a viable and potentially more successful option for those looking to enter the world of entrepreneurship. Matthew Meehan and Luigi Rosabianca of Shield Advisory Group have shared valuable insights and practical advice for those considering this route, including the advantages of buying a business over starting one from scratch, the importance of due diligence, and the key factors to consider when evaluating potential acquisition targets. If you are interested in learning more about buying a business or seeking support in growing your company, be sure to check out Shield Advisory Group’s website and follow them on social media, where they regularly share valuable tips and resources for small business owners. You can find them on Instagram at @ShieldAdvisoryGroup and their website shieldadvisorygroup.com.