Updated: Jun 25
They say the second time you do something is not as special as the first. Do you agree? Well, I do think there is some truth to that, as my first deal taught me so much, I can tell you that my second deal was special in its own way, as have been the dozens of other deals I’ve done over the past 20+ years. I learn something new and hone my skills each time I do a deal.
Today, I’d like to talk about my 2nd deal and what I learned, namely, the importance of keeping your eyes open at all times, and not letting the (well-intentioned) naysayers stop you from moving up the entrepreneurial ladder.
After My First Deal
Back at my telecom company, we had a managing director, an operations director, and a financial controller. After doing my first deal with the small telecom company, I sat down with my little board of directors, full of the joys of Spring, and excited that we could scale really quickly by picking businesses up for no money down. I’d done one deal, so I was sure I could find loads more if I just got out there. Then I said those fateful words: “In fact, it doesn’t even have to be a telecom company. We could just buy anything.”
At this point, one of the directors shouted:
“Whoa, whoa, Jeremy, calm down, and come back to reality! We really need to focus on growing the telecom. Yes, this is a great little deal, and if we could do one of those every six to nine months, it would be a fantastic second engine on our plane so that we have the organic growth engine and this new acquisitive growth engine. That would be fantastic, but let’s not buy a pub. Let’s stick to what we know and buy telcos.”
I defended my position; I really wanted to buy whatever came along. If I saw a business I could buy for a buck, why wouldn’t I just buy it? Wouldn’t it be incredibly frustrating not to do a deal just because it wasn’t in the telecom sector? We could buy it and we could sell it, or we could buy it and we could use it as a service provider or whatever.
After a long debate, we finally agreed that we could also buy an IT company. Telecom and IT were converging at this time, so there were crossover products like Voice over Internet Protocol (VoIP) and BlackBerry, products that were as much computer as they were telecom. IT and telecom were definitely on a convergent path.
A few weeks later, while we were doing job interviews for an account manager, one interviewee gave me his CV, showing that the last job he’d had was in an IT business that had his family name. I got excited and started to ask him questions about that business. As it turns out, he was running a small IT company from home, just himself and two engineers, doing network support and network installation. They’d been in business a few years, and I was curious as to why was he looking for a job? He explained:
“Well, the problem is it’s quite a small business, so I always pay the engineers first. Then I pay myself when cash flow allows. Sometimes that’s the end of the month, and sometimes it’s a week later.
“Because of the nature of network support, we often end up working funny hours like weekends and evenings. My wife is pregnant, so the room in the house that I call the office she calls the nursery. The hours and the pay situation are worrying her, and when she has the baby, she would very much like some support…and to know that she can buy diapers.”
The Deal Sitting in the Room
I was thinking, “Wow, these things just fall into our lap. Three weeks ago, we said we wanted an IT company, and lo and behold, here is an IT company.” When the interviewee left the room, I turned to my operations director and exclaimed, “Can you believe that? Isn’t that amazing?” And my operations director said, “Yeah, he would make a great account manager.”
I was blown away that he didn’t see the deal sitting in the room with us even though he was in the same meeting. It was then that I realized that the human brain has amazing filtering capabilities. We’re bombarded with billions and billions of things on a daily basis, and we filter everything that doesn’t fit within our frame of interest. My frame of interest, like a dog with a bone, was doing that next deal. How am I going to get another deal? I was absolutely tuned in to Deal-FM and the desire to do the next transaction.
What amazed me was that other people weren’t. Needless to say, we bought his business for $1, ironed out his lumpy cash-flow problems, and gave him a job in our company with regular wages, working hours, and security. And my second deal was done!
Many people come to the Harbour Club in the same situation. Signs pop up and opportunities are available every day, and they’re just not seeing them. They’re not wearing the lenses through which they see deals everywhere, so they’re missing opportunities. We’ll talk more about this in an upcoming blog.
For now, remember not let the naysayers stop you—I found a way to work with my board to do deals—and to always keep your eyes open and your “deal filter” on. Your second deal might not walk in the room like mine did, but if you’re deal filters are always on, you’ll start to spot opportunities for good business deals. If I could do it without the support of a group like the Harbour Club, you can too!
Next time, I will tell you why, in your journey to acquire a business, you don’t want to look for businesses that are for sale. Join me then!