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This business coaching lesson explains what your need to know about financing a business.

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Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Principles for Negotiating Financing: 4. Bring no emotion.
  • Notable Quotable: "Investors should remember that excitement and expenses are their enemies." - Warren Buffett
  • Lesson Nugget: It is best to purchase from people when they are fearful about their product so you can get the best price possible.
  • Lesson Nugget: Look at rapport, needs, and benefits as a combination to unlock a call to action from the buyer. Skipping any one of these steps can be detrimental to your negotiation.
  • Definition Magician: Dream 100 - Choose 100 ideal and likely buyers and contact them regularly to build a relationship.
  • Notable Quotable: "Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful." - Warren Buffett

[THEME SONG] -And the fourth principle I want to make sure we share is, again, bring no emotion. Warren Buffett says, he says investors should remember that excitement and expenses are their enemies. Remember, excitement-- excitement-- let's put this down here. Again, no emotion. He says what? Excitement and what? Excitement and? He says excitement-- again, excitement and expenses are your enemy. These two guys are your enemy. But when most people buy a new business, what they do is they go out and buy a ton of stuff. They want to put new, they want to decorate. They'll buy the liquor store. Hey, let's put in all-new fixtures, let's put in all-new decor, let's put in all-new signage, let's put it all-new. And they just keep putting in all-new. And then they say we're excited, we're just excited to buy this business. We want to spruce it up, we want to-- Well, that's your enemy. What Warren Buffett talks about is he buys a business so low, he just goes in there and buys it, and then just runs it. He doesn't want to change the business model or do a massive change. You just want to understand that excitement and expenses are your enemy and I'm going to read the entirety of the quote. He says "investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful." What he's saying, listen-- if you're going to buy something, be greedy when the other person-- whoa-- be greedy when the other person is fearful. So again, if this person is greedy-- it's that intersection. If the person you're buying from is fearful-- their fear's at an all-time high-- this is when you want to come in there and buy that thing right there. But you don't want to be buying a business when, you know, the person is saying, hey, I'm pretty greedy. I'm going to sell this at a huge price. And you're like, well, if I don't buy it, I might miss out on the opportunity. You don't want to have that kind of fear like that you're going to miss out on the deal if you don't buy now. You want to make sure that you're the greedy one when someone else is fearful. That's how you want to handle it. Makes sense? -It does. -Now what questions do you have specifically on how we're going to finance one of the businesses that you're working on or potentially? Or what other questions do you have about these concepts? -Well, I'm very familiar with the greedy-fearful concept because I do dabble in equities for my retirement and I'm all in on that. If you're looking long-term, 2009 was a godsend. CLAY CLARK: That's your deal. And with real estate, when I bought the house, 2006. And 2008 was a godsend for me to buy it and 2011 because I waited till it when you can see these things. So that part is good. We talk about negotiation and financing, these are the things-- I guess, the negotiating lines, how to talk to people, would probably be it. Because I'm, kind of a, rough around the edges kind of person. I'm like an A equals B plus C type of guy. CLAY CLARK: Yeah. Well, let me walk you through this. This might be something that can help you. Rapport plus needs plus benefits equals the call to action that you want. But if you skip over rapport-- you can look at as a formula like A plus B. And I love that you're direct and you're candid, and frankly, a lot of Thrivers are. A lot of people who are out there getting stuff done, we are alphas, we're driven, we're getting stuff done. MAN: The word is intense. -Intense. MAN: [LAUGHS]. -But if you're skipping over rapport just to get down to the brass tax, you're going to pay, a lot of times, two times more for a business than if someone likes you. So we want to make sure we take the time to build the rapport, that's part of that relationship. And I work with people who invest in businesses all the time, and I'm telling you, a lot of people who've invested in the things I've done and people that I've seen invest in their businesses, they invest because they genuinely like the person they're investing in. They invest because it makes sense logically but they genuinely like the person. And think about this. If I'm going to sell you my business, my baby, right? I have to like you to have any sort of grace because my bias is to say no, I don't want to work with you and just keep on running my business. My bias is to not want to work with you. So what you want to do is go in there and specifically-- homework for you-- go in there, tell this person, tell this lady, tell these people, I want to make a win-win with you. I just like to take you out for coffee, just take 15 minutes and get to know you, and really find out what your goals are. MAN: So would you suggest making a Dream 100 of businesses or business owners? CLAY CLARK: Absolutely. And for those who aren't familiar with the Dream 100, it's making a list of 100 ideal and likely scenarios, or buyers or sellers, in this case. Make a list of 100 ideal and likely sellers. And that's pulled from chapter eight and chapter nine of The Ultimate Sales Machine by Chet Holmes. But the thing is that you're going to want to go in there and make-- I mean, I make a hundred businesses I'm pursuing.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Lesson Nugget: Building rapport allows you to establish trust with your customer so they are more willing to open up and tell you what their real needs are.
  • Principles For Negotiating Financing: 1. Establish the win-win 2. Never buy anything personally if possible 3. Bring as little cash to the table as possible 4. Bring no emotion

-Make a list of 100 businesses that you want to buy. You can find businesses that are for sale. You can get in touch with a business broker. And find a list of businesses that are for sale. But I would go out of my way to begin courting them. And I'm telling you when you meet the lady or you meet the guy, and the guy's telling you, hey, I'm going through a rough patch. And I want to sell my company. And my kids are in college. And I just kind of want to exit it right now because of my health or because I want to move. I want to move across the country. My wife and I want to downsize. We want to cash out. Whatever the reason is, you get to know him. Once you have that connection point, now, they're willing to share with you their big, big needs. Then you can talk about win-win and benefits. And then you can close the deal. But if you just go in there going, hey, I'm here. I want to buy your business. They're going to be like, hey, piss off buddy. You know what I mean? They're just not going to want to work with you unless you go in with that grace and kind of that joy. And so I would even go as far as to say that you might even have to act a part to get the role you want here of a business owner, you know or to buy this business. You might even have to add a little extra Joel Osteen to your regimen. Just to kind of get that motion. Because you want to be kind and compassionate with these folks, so that they want to work with you. But, again, the rules here as we're going to negotiate the financing with someone who's selling their own business is one, you want to set up that win-win. Two, you want to go in there. Make sure you never ever buy it personally. Never ever, ever, ever, ever, never ever, never ever, never. Cool? Third, little cash in the purchase. C is put as little amount of cash as you can put in the purchase as possible. Why? Because you're gonna get sued, you're going to have problems. You need a cushion. And then the final, final thought, kind of the capstone thought is there's three ways that you can ask this owner to work with you on the financing. One, is you say, owner carry. Again, hey, I'm going to pay you just like I'd pay the bank. But instead of paying the bank, I'm going to pay you. So the bank, I have to pay what 5% interest to the bank or 7% interest? So if I buy the business from you for $100,000, I'll end up paying you $107,000. You're making money. You're making extra money on the deal. OK. Second, revenue share. You don't tell 'em you don't have a lot of cash up front. But you might say, I'm not comfortable with putting a whole lot of cash up front in this deal. What I can do is I'll share revenue with you, top-line. -Where can you see examples? Or find examples of revenue share deals? -There is a restaurant in Tulsa. I can't say the name of it because we're on Thrive. But I think Marshall went there with you last night. Kind of an Irish theme place. That actually is a revenue share deal. The third is the whole, hey, I'll put a little more cash down. You know your business is $100,000 I really just want to put down $5,000 But I'll put in $10,000 if you can over extend the length a little bit. You know, so instead of doing a seven-year loan, if we can do a 15-year loan? Therefore, I'll have some lower payments. That's another option as well. Cool? MAN: That is cool. -My friend, I appreciate you for coming to Tulsa. I realize that you're probably coming here for tourism and sight seeing. And to do a sod farm tour in Bixby. But-- -Tornado chasing. -Tornado chasing. And I want to see Cushing. -Oh yeah. Yeah. Cushing is the crossroads of America. -I understand that. CLAY: It's where the gas lines all-- MAN: I know. CLAY: You know. I don't know if the Thrivers know this. Cushing is where the big gas lines all across the world all intersect. They all come together right here in the middle of America. -Yeah. Oil repository of the world. -Would you say that Cushing might be the center of the universe? -I would say, yes. -Awesome. Hey, thank you for being here, my friend. Take care.

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