The Pitfalls Of Acquisition (And How To Avoid Them)
The Pitfalls Of Acquisition (And How To Avoid Them)
When talking about classic games, most people will trot out Pac-Man or Space Invaders. Both are solid choices. However, no list of the classics would be complete without the Atari 2600 game Pitfall. Second only to Pac-Man on the console in units sold, Pitfall was groundbreaking at the time. It was the first game to break the 20-minute barrier, an absolute eternity in 1982. This may be hard for people today to believe, given that this picture accurately depicts the action.
This is not a 7-year-old’s drawing
Pitfall Harry had to avoid all sorts of problems on his way to the gold but all of the dangers were known, so it could be done. Similarly, the first step to avoid the pitfalls in business derail you, is to know about as many of them as possible so you can be prepared.
The Hidden Pitfalls Of Acquisition
When you do things on your own, the only way to discover how something works is to make mistakes. It is part of the learning process. This is a very expensive and time-consuming way to do things, however. Buying a business has unique challenges that are not obvious.
First, almost everyone starts in the sub-10 million dollar market. This is because they are limited in their financing options and infrastructure to handle anything bigger than that. One of the reasons that boring businesses are a great place to start, is because you can get your arms around them. This is one of the things that make them so attractive.
The flip side of the coin is that a ton of people are looking for the same thing that you are. This makes it difficult to find good deals.
Second, once you find a deal that fits your criteria, it is hard to know if it is a home run or a dud. Mistakes in this game are very expensive. That is why I urge people to find a mentor in the beginning, someone who can guide you through the path and show you all of the hidden pitfalls.
You Win 4 Times (At Least) With A Mentor
The most common view of a mentor is an old gray bearded professor helping a young impetuous youth through tough times. Yes, this is one type of mentor. There is another way to look at it that is much simpler in business. To qualify as a mentor for you, someone has to have accomplished what you are trying to do. They only need to be a couple of steps ahead. This greatly expands the number of people who can help you if you take on this mindset.
When you embrace this idea of mentorship, you win at least 4 times:
1. You add a quality person to your life.
2. You compress time frames to your goal.
3. You learn the skill of how to mentor others by observation.
4. You gain the ability to turn others into force multipliers and change the world.
Few things can help you get to where you want to go faster than connecting with someone who knows exactly how to get there. If you were on a remote island, wouldn’t it make sense to find a guide who lived there to show you around? Your only other choice is to wander, trying to avoid the crocodiles and scorpions that spring up unexpectedly. A good guide knows how to avoid those parts of the island.
Is Buying A Business Right For You?
I can tell you from experience that you want to make sure you are playing the right game before you begin. It can be very frustrating to spend a lot of time and money, only to realize what you are doing is not a good fit for your experience or temperament. It makes no sense to escape the 9 to 5 only to find yourself in a situation that is either the same (or worse). Buying a business is not for everyone. I put together some pros and cons of “buying versus building” in a video that you can watch here:
