The Single Step That Made a Huge Difference – Ben’s Business Story
Published 6:04 pm 8 Feb 2020
Investing in an existing business can open up a world of possibilities for you. In this article, DG Institute founder Dominique Grubisa shares a business success story from one of her students.
In the world of business, a single decision can completely transform your fortunes.
Sometimes that decision will result in you missing an opportunity. Other times, a single decision can lead to you standing at the helm of a successful business.
That’s what Ben Trotter discovered when he made the biggest decision of his business life.
And because of that decision, he’s now the co-owner of a company that’s on the rise.
This is his story. Find out what you can learn about investing in an existing business from him.
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The Chance Question That Created a New Opportunity
It all started with one of Ben’s regular visits to a fabrication company called ST Fab. He regularly dropped in to get work done by the company, so he was a familiar face.
Still, it shocked him when they asked the question:
Would you like to buy a 50% share in the business?
Ben’s mind immediately raced towards figuring out the benefits of buying an existing business. But almost right after those thoughts entered his head, another one followed.
However, another solution soon presented itself. And his decision to take that solution changed Ben’s business life forever.
Bringing the Partner On Board
At the time, Ben’s boss worked from China and had been looking for a fabrication business in Australia. This seemed like the perfect opportunity to bring to him.
Now, Ben had a partnership in place, which meant he was ready to make an offer. The final agreement gave Ben and his partner a 50% stake in the business for $50,000.
With the money side of things sorted out, Ben got to work on the operational side.
Building on the Existing Framework
The immediate question Ben had was how to grow an existing business.
The good news is that this is a lot easier than trying to build a business from scratch. Because of his previous dealings with ST Fab, ben already understood how the company operated. He knew how it treated clients and had a good understanding of the processes.
Investing in an existing business also meant that there was already a framework in place. That meant there was no need for a drastic overhaul. Instead, Ben could get down to the job of creating increased business efficiency.
He focused on making every existing process as lean as possible, which he refers to as a “clean up”. He operates on the idea that every square foot of the factory has the ability to generate revenue.
His job is to ensure that each square foot generates the maximum possible revenue.
Operating under that philosophy, he started making operational changes.
The End Result
Ben was extremely successful in his efforts to grow business at ST Fab. He and his partner still have their 50% ownership stake in the business. In fact, they’re now looking into the possibility of acquiring similar businesses to accelerate the company’s growth.
Perhaps most impressively, the business is in a much stronger position than ever before. As Ben puts it:
“The valuations that I’ve had for this business in its current form are probably five to seven-fold what we paid for it.”
Translated into cash, that means Ben’s turned a $50,000 investment into between $250,000 and $350,000.
Now, Ben has part-ownership of a thriving business that’s on an upward trajectory. By investing in an existing business, he’s avoided all of the headaches that so many entrepreneurs experience.
He’s simply built on something that already exists to create something even greater.
The Lessons That You Can Learn
Throughout this entire process, Ben worked with DG Institute to ensure everything went smoothly. That meant he had access to plenty of advice and educational materials as he made his transition into becoming a new business owner.
Now, he’s able to pay that forward and offer his own lessons for people who are thinking about investing in an existing business.
Lesson #1 – Alignment is Key When it Comes to Business Partners
Not everybody who considers investing in an existing business will want, or need, to bring a business partner on board.
However, those that do need to ensure that they’re completely aligned with the person that they’re partnering with. As Ben explains:
“Finding partners that you are aligned with is very difficult. I was very fortunate with <my partner> because we had that alignment on the goals that we wanted to achieve out of this.”
If you and your partner aren’t perfectly aligned right now, you may run into issues later on. Each of you may have different ideas for the direction of the business, which can result in fractures forming.
If you’re going to work with somebody, make sure that you agree on the direction you want to take.
Lesson #2 – Take Advantage of Existing Processes
If you’re going to get rid of every process that the business has, you may as well start from scratch.
The key thing to remember here is that even a struggling business has some good processes. And even those that aren’t ideal often only need a little tweaking. At the very least, they act as the blueprint for the processes that you’ll put in place.
When speaking about his investment, Ben says:
“It’s an established business. It has existing systems in place. It has existing processes. And while they need work and they need some improvement…You have an existing system, you have existing plant and equipment, and it works.”
When you’re investing in an existing business, you’re not looking for something that you have to completely overhaul. You’re looking for something that has a structure already and simply needs a little tweaking.
Lesson #3 – Have a Future Plan for the Business
When it comes to the future, Ben can tell you exactly where ST Fab’s heading:
“Our primary motivation is business takeovers and acquisitions because there’s going to be an enormous amount of current business owners retiring in the coming years.”
He intends to buy more businesses within his niche to help him to grow the current business.
The important takeaway here is that you need to have a future plan for the company before you buy it.
Perhaps you aim to stick with it for the long haul, as Ben is doing with ST Fab. Maybe you wish to make some changes, turn the business around, and sell it for a profit later.
Whatever the goal may be, you need to define it. That way, every change you make in the business will be in the service of that ultimate goal.
Are You Ready to Invest?
Perhaps you have an entrepreneurial urge and you’re itching to run your own business. If so, we’d recommend that you hold off on starting your own company.
Look into investing in an existing business instead.
There are many benefits of buying an existing business, as Ben discovered. You get access to an existing infrastructure and it costs far less to build from existing foundations.
Purchasing a business is a big decision. If you’re looking to learn how to takeover and turnaround businesses for profit then register now for our Exclusive Webinar Briefing.
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