ADVICE: Before buying a business, work in it for a month at no pay

Amid the current economic marketing volatility, there are conversations of mergers and acquisitions across all industries. But, how do you know when is the right time to buy or sell a business?

In this interview, Jada Perfect shares her experiences of buying and selling businesses since the age of 19, the lessons she learned along the way, and how this has shaped her approach to business and management today.

  • Having built, grown and sold various businesses, can you share your decision-making process that helps you determine whether to hold on to or sell a business? What are the signs you’re looking for?

When it comes to business I try not to become emotionally attached (hard I know). A business is a hobby if it’s not making you money and the real reality is that you didn’t start and make so many sacrifices for something you just enjoy doing. When I start a business or buy a business my end goal is always to sell it. As human beings we get bored and we all have a cycle of being motivated and engaged in things we do, it’s the same with business.

With all of my businesses I get involved with others in the industry this keeps me in the loop with what’s really going on and trends in the market place.

Deciding to keep a business after 3-6 years, I would need to see opportunity and results within the business pivoting and moving back in to the growth stage of the business life cycle. This has happened multiple times in my husband’s pizza shop that he has had for 18 years. The business has a loyal customer base and has continued to change and pivot through many timelines.

I know it’s time to sell off a business when it hits peak numbers and I believe this is as far as I can take it, I start losing passion and my creative flare isn’t ignited, the industry shifts and pivots in a way that I don’t believe we can financially benefit from or plain and simply I need a new challenge.Keep everything within the business black and white so when the time comes to sell or hold on to the business the numbers can’t lie.

  • What has been the most transformational business management mistake you’ve made? How has it impacted the way you operate today?

Trying to do everything myself and thinking that if I don’t do it then it will not get done properly.

This left me over worked and frustrated. As small business owners we start out from the ground up wearing every hat possible in the business. However, as the business grows it’s really important to understand that your time is more valuable than entering receipts, replying to multiple emails or sitting on social media all day.

You can be utilising that time to pitch sales, build networks or close deals bringing more money back in to the business. There are many tasks that can be delegated to someone else in your growing team who would be able to do it more efficiently or with more care than you. Being the business owner and the person driving the business I’ve learnt with many failures and a lot of persistence that delegating to others is one of the most valuable actions you can take within your business to grow.

Today I focus on employing team members who have complimenting strengths to me or can do things better than I can so we are able to bring more skills and worth to the business while learning from each other. Letting go of the reigns and delegating tasks to other team members has impacted my business positively and given me the opportunity to focus on growing the business long term.

  • How difficult was it to purchase your first business at 19 years old? Did you get any support?

I had my first job at McDonald’s when I was 14 and since then I have always been responsible saving my money. When I left McDonald’s and moved on to my second part time job at Coles Supermarket I was still saving my funds. When an opportunity presented itself for a business, property or anything else I wanted to be financially prepared and that’s exactly what happened.

My mum was selling one of her businesses and I bought it from her so I had a lot of support. The truth is I probably wouldn’t have purchased it at 19 if I hadn’t been working in the business for two years prior and new all the ins, outs, staff, financials and could run the business myself.

We went through all the usual processes of selling a business – contracts, legal paperwork and settlement amount – even though it was my mum. I encourage anyone who knows they want to have a business in the future to start financially planning now and get the people around you who can advise and share their expertise or knowledge with you.

  • What’s your advice to other entrepreneurs tossing up between starting their own business or purchasing an existing business?

Know your own strengths and make sure you know what you can bring to the business. Plan, forecast and research everything you can within the industry and market, ask others and note down thoughts, feelings and goals so everything can be seen as black and white. The numbers can’t lie but your emotions can sway decisions so to prevent this keep it clear and simple.

If you are starting up a business be prepare for two years to make no money and have back up funds to keep you afloat, show up on bad days and always have a business card in your closest pocket to hand out at every opportunity. If you are buying an existing business go and work in the business for a month for free. Get a feel for every aspect of the business from daily running through to customers, service or product provided, processes, procedures and most of all financials. Ask the owner as many questions as possible as well as the customers and the staff. If anything isn’t adding up after a month you will know if it’s the right buy or not.

Any business takes hard work, dedication and there will be many challenges so keep your mind strong and have a plan for best and worst case scenarios.

  • What are the major watch-outs entrepreneurs need to be aware of when considering purchasing a business?

The harsh reality is everyone wants the highest price they can get for their business even if it’s not performing. Check the financials over with your accountant, make sure the stock adds up to what they are making in gross sales, get ready to get your hands dirty and be prepared to let go of their current team (if they don’t take the change well). Go and work in the business for a month before you sign on the dotted line and finalise any funds being given. 

My best advice is don’t forget as a business owner you are part of the team so ensure you are paying yourself a wage.  Anything after your wage is counted as profit and this is the real value of the business when you are selling or looking to expand.

About the expert

Jada Perfect is the owner and founder of The Boss LadyBoss Lady Events and Boss Lady Media.

With a Master’s in Business and over 10 years’ experience owning multiple businesses, she now coaches and educates others about personal branding and business through one to one coaching and educational workshops. Jada was a Finalist for Sydney Young Entrepreneur 2019, Small Business Champion in 2020 and was lucky enough to spend last year as a Raise Mentor working with high school students. She hosts networking events for ladies in business to gain confidence, connections and enjoy fabulous days out while being pushed out of their comfort zone. It is her passion to help entrepreneurs navigate the often unpredictable world of being their own boss by showing them how to level up their business in a supportive, warm and honest environment.