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How To Mitigate Risk When Buying a Business

Chelsea Wood is the Managing Director of Acquisition Lab, a do-it-with-you advisory service helping acquisition entrepreneurs become business owners. She is a Certified Merger & Acquisition Advisor (CM&AA) and an Industrial-Organizational (IO) Psychologist focused on maximizing organizational success through human capital.

Chelsea is also the Chief of Staff at Buy Then Build and the Owner of Insightsify. She holds a Green Belt, Six Sigma Certification, a BA in psychology focusing on business administration and organizational communication, and an MA in industrial and organizational psychology.

Here’s a glimpse of what you’ll learn:

[04:14] Chelsea Wood talks about Acquisition Lab and what it does
[05:47] Why people need help purchasing a business
[08:00] The value of partnering with the Lab while buying a business
[12:06] The Lab’s criteria for vetting its clients
[15:48] How much time it takes to acquire a business
[18:44] Common mistakes people make in the process of buying a business
[23:26] Chelsea explains the Lab’s ideal client profile
[28:24] The Lab’s buyer preparation track

In this episode…

Many people want to become entrepreneurs, but is there an alternative to starting one from scratch? Sometimes it makes sense to acquire and claim an existing one as your own. So where and how should you begin the process?

As a seasoned acquisition specialist, Chelsea Wood says there’s no right way to buy a business, and the process can be complicated. There is a lot of contradictory advice and varying perspectives when purchasing an existing business, so it’s crucial to partner with an expert familiar with the most suitable approach. Chelsea shares how she helps and supports entrepreneurs in each phase of the acquisition process to mitigate their risk.

In this episode of the Quiet Light Podcast, Joe Valley sits down with Chelsea Wood, Managing Director of Acquisition Lab, to discuss recommendations for successfully buying a business. Chelsea explains why people need help buying a business, the Lab’s criteria for vetting its clients, the time it takes to acquire a business, and the mistakes people can make along the way.

Resources mentioned in this episode:

Sponsor for this episode

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Episode Transcript

Intro 0:07

Hi, folks, it’s the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals.

Pat Yates 0:32

Hello, everyone, and welcome back to the Quiet Light Podcast. I’m here today with Joe Valley. How are you, Joe?

Joe Valley 0:37

I’m here I’m alive. I’m doing well, how you doing Pat?

Pat Yates 0:40

Great. We had a great segment today talking with Chelsea about the Acquisition Lab and how they can help you buy a business and be able to take it forward, whether it’s your next career or something you’re adding to your current business, you talked about somebody that’s really, really smart, even slows people down in certain situations, when they get so excited about this. It’s so amazing to hear how they help people get into businesses, and especially even how to take the first six to nine months and be smart about how their growth is just amazing conversation really, really smart lady.

Joe Valley 1:08

Yeah, folks, it all stems from Walker Deibel’s book Buy Then Build, and then he built the Acquisition Lab. And Chelsea runs it for him, I think she’s got some ownership as well, if she doesn’t, she should, by the end of this podcast, Walker’s probably going to send Pat nine email threatening us for saying that she needs to be a partner. But I think she is because she runs the lab, and she does it incredibly well. And the benefits of it is that, there is a structure that helps people go through each phase of buying a business in a cohort with, I think, 17 to 22 to 23 people each quarter, and it keeps you energized and focused and not making mistakes or giving up. And that’s the key thing. They’ve had 80 successful people with close transactions. They’ve got several 100 People in the lab, they’ve got 12 counselors or not counselors, they’ve got 12 advisors from different segments of the industry that are advising on different topics, from attorneys to entrepreneurs that have built businesses with lots of different businesses involved. They’ve got lenders, they’ve got everybody that you need in order to get all of your ducks in a row to buy a business and do it properly. And mitigate risk, which is the key because you do it once Pat and you fail, what happens kind of hard to do it the next time, right?

Pat Yates 2:33

That cost you a lot of money. And also probably along the way, if you make mistakes, you’re gonna pay the money that you would normally go in and do something like this anyway, if you make mistakes, I think it’s so important to get the value of perfect information around you to understand these processes, whether you’re exiting or buying. And just to also talk a little more about what you said, Walker is such an amazing guy, he’s so smart. Don’t say that.

Joe Valley 2:56

He’s gonna clip that, and then he’s going to send it to us. And it’s going to play every time we talked to him.

Pat Yates 3:02

I think you would even say it’s Buy Then Build us a second best-selling book in Quite Light history. Right? So I mean, he’s got that for him. It’s an exciting part of this. I mean, the fact that he can help you be able to do those things and take them forwards. Amazing. Obviously, Walker’s a huge asset, and having someone like her on his team is absolutely amazing. I think she lines out a lot of things people should really think about, if they’re thinking about changing careers or buying businesses. It’s amazing. So I know that everyone’s anxious to hear about it. So let’s get right to it.

Joe Valley 3:30

Chelsea, welcome to the Quiet Light Podcast. How are you?

Chelsea Wood 3:32

Wonderful. Thanks for having me.

Joe Valley 3:34

Well, Pat, and I know you through Walker Deibel, who, of course, is a member of the team and prolific author, writer, and movie director, or producer or something along those lines. He’s as we said, A man that doesn’t really know what he wants to do with his life. So he’s just doing everything, which in many ways,

Chelsea Wood 3:55

It’s an interesting.

Joe Valley 3:56

Yeah, it does. But you run the Acquisition Lab for him. And as I said to Pat earlier, he works for you, as far as I’m concerned. When it comes to the Acquisition Lab, you run it, you tell him what to do, which is a great setup. But for those that don’t know what the Acquisition Lab is, and you personally, can you give us a little background?

Chelsea Wood 4:14

Yeah, so we designed the Acquisition Lab to model like startup accelerators, right, think Y Combinator. But we did it so that it could support people instead of starting a business buying an existing business. And so there’s an education component, there is a hand-holding component with a group of advisors. Walker was very adamant that it not be the Walker Deibel Show. And so we have a team I think we have 12 advisors now, that help they give diverse experience diverse perspectives. We always say in the lab, there’s no right way to buy a business and so giving our members access to different perspectives and sometimes even competing advice, right, like they’re both good options. It’s just you have to decide what’s best for you. And so it’s a very, very strong community highly vetted, it’s one of the things that we take great pride in is that I won’t take someone’s money if I don’t think I can actually help them buy a business. And so as a result, we have had just north of 80 closings since October of 2020. We have about 450 members a little north of that, I think. And so I’m just very grateful for our members and being able to support them. And they continue supporting each other. I feel very blessed to have created the lab.

Joe Valley 5:33

For those listening, that have bought businesses through Quite Light and whatnot. Why does somebody need help? This is just such a loaded question is, Why does anybody need help buying a business?

Chelsea Wood 5:47

I don’t know. It’s so simple. Well, not everybody does need help, right? Some people buy businesses just using YouTube videos and books. And that’s totally fine. Right? The lab was created for people that doesn’t work for them, right? They want a community, they want guidance, they want a coach, they want somebody to kind of like, get them through the process, give them feedback, help be a thought partner for them. And so most of the people that join the lab are looking for the community aspect and structure, accountability and confidence, I guess, right being around all those people, seeing people close, it’s the social proof that our brains need to take a leap in something. And I think the lab does that. And it’s kind of so part of my background. So I’m an industrial organizational psychologist. So you’ll hear me say IO psychology. That’s what it mean. And so back in my early days of my career, I would do career coaching for people and helping them craft a resume. And at the end of getting that resume, you would have such confidence, right in your ability to get this job you’re applying to. And the lab does the same thing, right? It gives them confidence that they can actually execute, we go through a similar process, actually, that I used to go through with our members kind of helping them to find who they are as a buyer, what company they should be buying, what role they should be playing. We look at partnerships to make sure the partnerships are balanced, and if not what they need to be looking for in the entities that they’re acquiring. And so not everybody needs the lab, right? If you’re a lone wolf, and you want to do it on your own more power to you, we’ve gotten lots of emails from those folks, they can walk or for writing this book, by thanking us for posting videos on YouTube. For those that want to community and a group of people to kind of be a thought partner that those are the people that join the Lab.

Pat Yates 7:00

Chelsea, when I think about this a little bit, it’s like, we have a saying a Quite Light. A lot of times we better this around that you don’t know what you don’t know. And I think your business is probably really linked to that, that people that don’t come into the Acquisition Lab can be successful if they know the 8020 of getting through a transaction. But don’t you feel like you guys can add value in directions that most people wouldn’t think about? Even if it’s a small thing to help someone along? Is that kind of the philosophy that you take getting forward in the Acquisition Lab?

Chelsea Wood 8:00

Yeah. So I think I personally, obviously, like you can’t call my baby ugly kind of thing. Like I think the lab can provide value to anyone, whether you’ve done one or 10 transactions, right? Because every transaction is different. There isn’t a right way. I can’t give you a checklist or roadmap but thing to do in every transaction, because they’re also very different. And so what the lab does is it gives you a place to go where you’re like, what is this thing that I need to now deal with? How do I handle that and trust that someone there has been through it and can kind of coach you through it. And know that that feedback is quality? I think a lot of people will rely on Twitter, they’ll rely on like we have a free Facebook group with 9000 people in it or something 8000 people in it. And there are people giving advice there left and right. I can’t speak right towards the value of that. Can I get you through in a pinch? Possibly? Could it get you in a bigger pinch? It’s totally possible. I’ve tried to correct Miss Information as much as I can. But the Lab just gives you, you just don’t know what’s going to come up. The craziest shit comes up in every deal. Right? And it’s not a textbook thing. You can’t go look up in the M&A guide and see how to handle it. You really need to talk through it.

Joe Valley 9:18

Wouldn’t it be wonderful if you could just look it up, go, okay. They’re lying about whatever it is, trying to renegotiate for no good reason, just because they think they’re supposed to. It’d be nice. I love the fact that you’ve got 12 different advisors with different perspectives and views and sometimes competing views. And then you’ve got all of the people who have completed purchases that might be piping in with scenarios and maybe they have the same issue and then they solved it a certain way and it’s can throw their hat in the ring as well. That’s brilliant.

Chelsea Wood 9:52

Well, it just kind of helps you figure out what’s right for you. Right we talk about branding and how important branding is and understanding who you are as a buyer. and it goes for the same thing. Like when you listen to advice like somebody that’s a completely different human than you might be balls to the wall negotiator, right? Like they go hard and they get what they want and blah, blah like that. If that’s not you, then their approach isn’t gonna work for you. Right? And this approach works for anyone. Some people say,

Joe Valley 10:22

Actually, I have a friend that was from New York and his business partner negotiated deals just that way. And they were buying I don’t know if it was like piece of real estate with a convenience store or something, a house, whatever it is business-related thing. And they were at the closing table, and I think the guy made up at the closing table with Jerry sitting right beside him. Did you get the tank removed from the yard? And he was like, what are you talking about the tank is like, there’s a propane tank, blah, blah, blah, this $15,000 to have that removed? You didn’t do that deal’s off. And then they renegotiated on the spot guys took $15,000 off on the spot. There was no tank in the yard, he made it up completely at the closing table. That’s the wrong person to do business with. They wouldn’t be allowed in the Lab, I assume?

Chelsea Wood 11:13

No, that’s so funny about why I love the lab and why maybe I’m not the person to take it to $10 million, or something. Because like those types of humans, I will not let into the lab like I do all of our strategy calls, sales calls, whatever you want to call them for that reason. And I’ll push back on a call and how somebody handles my pushback tells me a lot about whether or not I want to talk to them ever again in my life. And I’ve had quite a few calls where I’m like, have you heard of insert someone else’s program? And they’re like, are you telling me to go by a competing program? Or like yes, I am.

Joe Valley 11:47

Enjoy it.

Pat Yates 11:49

Chelsea, I have a question for you. To go back to something you said early. You said you vet people really well. So I’ve twofold question that. Number one, what is that criteria? Because people may not understand what kind of qualifications they need to get involved. And the second part is, if that’s the case, how was Walker’s still involved?

Chelsea Wood 12:06

I can’t get rid of him. No, I am so very grateful that I met Walker, and that I’ve had this opportunity. I could never do anything close to this without him. And yeah, I’m very grateful for him vetting though, for the Lab members. So some of it’s just got, right, like how they handled it. But like if I’d have somebody come on the call, like hard and go, why should I pick you over Cody Sanchez. And I’m like, maybe you shouldn’t, like, I don’t want that kind of energy on a daily basis in my life. And I sure as hell don’t want to subject my other members to it. But the big main criteria that I’m looking for on those calls is like the first thing is like is the person actually going to find value in what we provide? We’ve only had three refunds out of 450 people, two of which I own completely one, I did that very well. Two, I didn’t vet very well. One was like this beautiful human. And I just don’t know what went wrong. He was an older gentleman, and he just got really mad that we were on Zoom calls. I don’t know what he thought was gonna happen. And I think he called me a charlatan, and I felt really bad. So I obviously did not vet that very well. And then another one was just not a good fit for the community. And then the other one was impostor syndrome. Honestly, he should have stayed, I could have gotten through it. But he just was scared, I get that. We vet so heavily because I don’t want to take someone’s money if they can’t actually execute on buying a business. And so that means that they have a strong business background. Or that they have a clear value proposition with how they plan on adding value to a company, it doesn’t mean that you’re an executive, right doesn’t mean that you’ve been a vice president or that you’ve owned a business, if you’re a digital marketer, and you plan on buying a business. And that’s cool, right? If you’re a product manager, and you have a clear line of growth on buying a business, that’s fine, too. The second thing is, I want to make sure that they’re going to add value. And part of that too, is this is probably the main reason I exclude people from being in the lab is can you actually achieve what you’re trying to achieve based off of your funds, your strategies? Like the number one thing that I boil, every call down to is like, do you need to draw money out of this business? And if so, how much? Right? Like how much if this is replacing an income for you how much is necessary in order for you to sustain living and then we talked through the numbers of the deal size, they’re targeting the number of people that still believe that STE is how much they can take home blows my mind? Like, well, how are you buying the business? Are you paying cash? They’re like, No, I’m gonna do net debt. I’m like, Oh, how much leverage like 90% I’m like, how are you paying them back? Do we understand how debt works? Right, and just making sure that they don’t buy a business and then end up screwed? Because they can’t pay themselves anything because they bought a really small business thinking they weren’t going to pay themselves 250,000 but in essence, they could clear 40 after you know, trying to grow the business. So that’s probably the largest reason I don’t let people in. And the last thing is I just want to talk to you again, if I never want to talk to you again, which is a rarity, then you’re probably an asshole. And I don’t want to deal with you on a daily basis.

Joe Valley 15:12

I liked that policy. Yeah, one of the things that you said earlier was it provides structure for people, which I think is brilliant, right? I think, first, if they pay for it, and their structure, they paid for it. So they’re going to work a little harder and commit to it and stick with that structure and go through. And then obviously, there’s a process and they learn certain things, not everything all at once. But you said you had about 80 close transactions? So far? I’m curious, do you keep track of, or have a ballpark idea of how long it takes somebody once they start to when they actually buy business? What the average is.

Chelsea Wood 15:48

So of the closings, it’s about eight to 10 months from when they joined, if it’s under about a million STE or EBITA. Once it goes over a million and EBITA, it’ll stretch out, right? Because there’s just fewer deals available that are of substance. And so not to say we don’t still have people searching, right, that are past that threshold. But just looking at our closings, typically they close eight to 10 months, we have some that are doing it faster. We’ve had some I think our fastest was actually three months, which is crazy. They but they came with deal in hand. Yeah. Right. And it actually worked out, which is very unusual.

Joe Valley 16:27

Yeah, I think eight to 10 months makes sense. And I think that’s why having supporting structure is really, really critical. Because if somebody says, I’m going to buy an online business, and I’m just going to start looking at Quiet Light listings, well, first of all, they’re going to be competing with three other buyers every time because we’ve had an average of three offers on every business for the last one year to date, I did a podcast with Pat, yesterday, we looked at the year to date numbers. And second, it’s just so easy to get, disappointed and give up that you don’t have that community around you when you’re just doing it on your own. And then you’re gonna lean on Pat, who actually technically represents the seller, not the buyer. And he’s gonna say, well, for due diligence, go to the partner page, look at the due diligence firms. But there’s no more support than that. Of course, we’ll provide attorneys and whatnot. But that’s it. I love the community aspect of what you’re doing. I think it makes a huge difference for people.

Chelsea Wood 17:20

I think so. And I think that sometimes it’s hard to get out of our own heads. So like I do most of the one on one stuff with our members, if they’re just in a, I don’t say crisis, because nothing’s life or death, right. But like, where they just feel like they’re either failing or they’re not getting the results they’re looking for a lot of times, they’ll jump on my calendar, or my couch, as they call it, and kind of talk through whatever they’re struggling with. And so I think that when you’re alone in your search, and you don’t have anybody to talk to about it, it has a higher likelihood of you giving up, right? Because any friction point causes our brains to shift back to where our comfort is, right? Like I just had a call with a prospect. And she was saying, like, I don’t have anyone to talk to you about this, I talk to strangers. And so I really appreciate that you’ve just given me your time. And I’m like, It’s fine. I mean, I could talk all day about this stuff, I get excited about it. But I get excited about it because I love the idea of supporting our communities and allowing our communities to continue to grow and thrive with the small businesses that have existed. But I also really liked the idea of helping people not make mistakes, like I know a lot of helping a family member who is bought a business. And before I did all of this, and is struggling now, with the partnership aspect of it.

Joe Valley 18:38

What are some of those mistakes that people make?

Chelsea Wood 18:44

I think number one, and every lender that I know, please close your ears is that they project for growth their first year, right, like projecting for growth your first year is just especially at like crazy growth 10 15% when the business historically has never grown over four, right, is just challenging. But from a change management perspective. Anytime you introduce change into a system and that’s what a business is. It’s a system, it’s gonna cause disruption, right. And with disruption comes a drop of productivity. And so I think buying a business and operating on a forecast, which we all know the value of forecasts, but operating out of forecast that’s projecting growth is just setting yourself up for failure or not failure, but pain. ear muffs back off for our lenders, your lenders love to see growth in the first year. And so your business plans are important. But it’s also important to manage your expectations.

Joe Valley 19:45

So for your business plan for the lender, project growth, don’t plan for that financially for yourself. Correct?

Chelsea Wood 19:53

Correct. I would actually like your primary goal is just to sustain historical performance, because most deals at least in my experience a hit that kind of like a rocky point during the transaction historically, before closing where it’s like, maybe it didn’t decline. But it certainly wasn’t growing because the seller lost focus, right. And they started focusing on the transition. And so your goal is just to get that stability back. And then hopefully poised for growth. We’ve had members that have grown tremendously the first year, so don’t get me wrong, it’s possible. I just think it’s dangerous to plan for it.

Joe Valley 20:23

When I sold my business. It was long time ago, 2010. There was a recurring revenue, and it was sold in November, I’m like, look, man, people are gonna go crazy. And first quarter, that’s when they use my products and whatnot, to do the buildup the recurring revenue. I said, don’t do anything new for six months, just sit back and watch and listen. So don’t break this. It’s not in need of fixing don’t break it. And unfortunately, so that November by June, he calls me and says, Joe, would you consider reinvesting in the business? I’m like, oh, no, what happened. And he just completely overspent he tripled to the advertising costs a January 1, it didn’t pay off. So I think, not breaking it is really, really important if it doesn’t need to be fixed. And I think that most people come in and put their own touch and spin on the business just like you would in a house, you’re gonna go paint rooms and things of that nature. I think it’s really, really important to sit back and operate it, but don’t make any dramatic changes in the first few months. What do you think of that?

Chelsea Wood 21:27

100%? Yeah, I think the other big mistake, and this is where like Walker and I will openly debate in front of Lab members, and they can decide what is right. But like, I think telling an employee base that nothing is going to change is the stupidest thing a seller or a buyer could do. Really tell me why. Because you’re creating a psychological contract with your workforce that nothing’s going to change when you have every intention of changing things. Right? talk them through like, I’m not going to change anything right now. Right? Right now I’m just going to learn the business. And then I’m going to leverage you guys and your experience, and I’m going to understand what you think needs to change. And then we’re going to do it together. Because you wouldn’t buy a business and not change it.

Joe Valley 22:08

That’s interesting. I would imagine that Walker’s point is don’t upset the applecart. We don’t want employees that are transferring with the sale to jump ship because they’re fearful that there’s going to be a lot of change. What you’re saying is, there’s going to be change, but not yet. And then the change that’s going to happen we’ll do together so we can utilize your expertise.

Chelsea Wood 22:28

Engage your workforce, and they’ll stay with you. They already know change is gonna happen. Now you’re just a liar.

Joe Valley 22:35

This is going to be a clip that you can use, you’re going to pull this down and share it with Walker on it. I think, Pat, would you agree with me, Chelsea seems a whole lot smarter than Walker does.

Pat Yates 22:47

I don’t think there’s any question about that. That’s not a high bar to jump over, unfortunately. But I think she definitely has, Chelsea you make some really good points. Because the one thing about this kind of situation is it feels like there’s almost a continuing education once people get in there. Buying a business is one thing, but understanding how to wait that six months and be patient, like you all talked about, most people don’t think about that. Because they buy it they want to run and they want to go and they want to implement their thoughts. So is there a perfect type of entrepreneur or person that comes into the Acquisition Lab, is it someone that’s never been an e-commerce? So they don’t have predetermined ideas? What’s a perfect client for you to guide them through this process?

Chelsea Wood 23:26

Good question. I mean, our members are all over the place. They’re buying every type of business, every size of business, every location you could imagine, right? We have online distribution, manufacturing service, like anything you can imagine. And I don’t think that there is a specific type of person other than someone that wants to buy business and wants to mitigate risk. Because that’s really what the Lab is going to do. Right? As long as you’re open to feedback. Hell, you don’t even have to implement the feedback. Right? Just listen to the diverse perspectives and figure out what the best path forward is for you. Like we always say our job, and our role is never to say you should or shouldn’t buy a business, we will never tell you that full disclosure I have said at once. What we will say is, here’s our concern, right, here’s what we see. And then you can do what you want. I have had conversations where members go and do whatever the hell they want. And then afterwards, I’m like, I’m so sorry. But it’s like it’s everybody can choose what the hell they want. That’s the fun thing of life, right? It’s a game of chance.

Pat Yates 24:36

Are there certain skills that you want them to come in with, let’s say for instance, you want them to understand how to read a p&l. Let’s just say like, I’ll give you a great example. My wife is retiring this year. She’s never really truly run a business even though she’s been around it is that the kind of person that you can guide along in the process is even better and more fruitful because they don’t have predetermined notions on where they’re going. Is that a positive or is that a negative?

Chelsea Wood 24:58

I’m gonna give the best consulting answer that I’ve ever given in my career, it depends. It really isn’t like we can help her figure out what her value is right to a business. And the same way that we can help. Like, we have a member who is probably like, if I was drawing like an avatar of our ideal client, it would not be him. Right? He has three degrees from Ivy League schools, right? He’s been leading a major, multimillion, like we’re talking hundreds of millions of dollars’ worth of a business. Right. But he joined the Lab, and got tremendous value out of it and told us it was far because the practical nature of it, right, it’s the hand holding, it’s the fact that like, we haven’t made the intensive, self-paced, the fact that we don’t say here, let me teach you about due diligence, here’s a lecture, the fact that it’s all customized and meet you where you are, and gives you what you need when you need it. Like, anybody can benefit from it. And there’s no people that are better or worse, the big thing is like, you have to have the money. And that’s the biggest hurdle for most people, you have to have the money to put into a business or have investors that are willing to back you, I won’t accept anybody in the program that says I’ll be looking for investors, because I don’t feel confident that that’s the best use of their money at the stage of where they’re at. Because in order to actually get someone to write you a check, is a far cry from having somebody say, oh, yeah, I’ll back you. Like, bring me a deal. Like, I’ll be interested, right, like, actually getting people to be able to take that leap to get the funds is probably one of the biggest hurdles that people will face that don’t have the money. They’ll have a bunch of people telling them, they’ll give them money, but no one will actually give them the money. And so I think that the number one criteria is you have a way to fund the deal. We won’t work with anyone that wants to use seller financing only. We have members who do deals like that, but it’s because the deal structure, like the risks of the deal warranted that structure, right? That wasn’t the primary strategy. We won’t work with anyone. I had a guy one time on a call God willing, if you’re watching this, I’m not making this insulting. But he said, I want to buy a business. I want to be making $100,000 in free cash flow in three months’ time, I think. And I said, okay, awesome. How much do you have to fund this? It’s like $30,000, I’m like, when you figure out how to turn $30,000 into $1.2 million, I will back you. I want to jump on that train, right? Like, there has to be a basis of logic, like you have to be able to actually achieve this. I don’t care about your background really like we have a woman in our current cohort who is reentering the workforce, right, she was offered 10 years raising her family, her and her husband are buying a business for her to focus on. That’s fine.

Joe Valley 28:07

Interesting. You mentioned the word intensive there, can you dive a little bit into the structure that people are going to be learning how to buy a business and what they learn? And is it self-paced? Is it structured, what is it all about?

Chelsea Wood 28:24

So we have a hybrid model. So it’s a four-week intensive, it runs two tracks. They are live workshops that are Walker’s instructions, simulcast in the first half. And then it’s led by a technical adviser and the second path over zoom. Those are all we call it the buyer preparation track. So it’s figuring out who you are, what role you should be playing in the organizations that you’re buying, what your type of business you should be buying what your target statement is, what your value is, as a buyer, how to communicate that to the market. We do a workshop with a lender so that you have a safe place to ask questions before actually being in a position where it could potentially jeopardize your brand. Our members get pre-approved, we have a letting partners that can do that for you. And then the last session is really just an Ask Me Anything with Walker. And so he does a kickoff call on the very beginning, and he does a closing Q&A session with all of our members. That’s the track one. And that happens typically on Wednesdays from four to six Central. And then on Thursdays we drop pre-recorded content. So we got a lot of pushback. We originally launched the Lab with an eight-week programming. And we got feedback that that was too slow. And I didn’t want to make the whole program self-paced like everybody wanted because I know humans and humans don’t do things when they’re self-paced. And so I didn’t want to allow the buyer preparation track to be self-paced because I didn’t trust that people would do it. And I truly believe that’s why I felt so comfortable throwing my career away as everyone told me I was doing when I came to build the Lab. Because I think if you anchor in that you really can’t go wrong. Like if that is your Northstar, you should be golden and so we I have a second track that is pre-recorded that I felt like everybody wants when they joined the Lab. So the likelihood of them doing it is high. And that’s how to get deal flow, how to evaluate listings once they start flowing across your plate using a very structured framework, right? We found that our members were diving into financial analysis too quickly on deals that made zero sense and they’d spend for weeks like this isn’t even a good deal for you, what are you doing. And so now we forced them into this little checklist. And this little calculator will say, if it looks good, then evaluate the listing. And that really dives into the business and is the business the right one for you. And then if it is at the end of the full evaluation, then you do the financial analysis, which is the third week. And so that’s like your financial analysis is through your forecasts, breakeven analysis, scenario, planning tools, that kind of stuff. We teach all that through a case study, as an IO psychologist, I wanted to ensure that people were actually learning, it wasn’t just a bunch of videos. And so we built a case study. But based off of a Quiet Light listing, I scrubbed and changed to protect the anonymity and confidentiality, but it’s an amazing way for people to learn, right, it’s a very robust listing, it will help them teach them when they’re missing other things from other listings. And so giving them a chance to learn from one of the best listings and run through our entire process, as a group is one of the most valuable parts of the Lab, I think. I would love to do monthly case studies, honestly, but they’re kind of a pain in the ass.

Joe Valley 31:24

How many people are in these cohorts.

Chelsea Wood 31:28

I never go larger than 23 seats. And I say seats because I don’t charge double for partners, because we really want partners to go through the program together. And so 17 is like my sweet spot, but you’ll never see it go larger than 23 seats.

Joe Valley 31:42

And so these 17 to 23, people are all going through it together and they get to know each other a little bit better. And do they have a tendency to talk to and rely on each other more than the rest of the group that was in other cohorts?

Chelsea Wood 31:57

Yes, but only for a short period of time. Because once you finish the intensive, you move into the larger community. And then I start to see relationships being built, because they meet each other on the office, our calls, and they start to get entwined in each other’s deals. And so like when somebody will post their, when I say hey, congratulations, so and so closed. When they’re thinking people, I’m like, how the hell do you know that guy, because they’re from such different cohorts. But as people start to build relationships, and then I also, because we have gotten so many members, I built a directory so that our members could find local, like, who’s in your area that you could start to actually meet face to face with. And so we’re also now seeing them start to build relationships locally, which I think is amazing.

Joe Valley 32:40

That’s brilliant. That’s brilliant, I look back to when I bought a business site, I sold my business in 2010. I thought, Damn, I’m smart. I can do this, I’m gonna buy one now. Right. And I rushed and I bought something that I didn’t understand, which was a content site, went through due diligence on my own. And then 31 days after I bought, I got hit by Google algorithm update, and all those fake links that were in the business driving traffic to page one, got dropped to page 23456. And I lost quarter million bucks in about nine months. So this is why I love the buying education services of things like a Lab, I just, I know that If I said to my wife, hey, honey, I want to buy a business. She’s gonna be like, no, no, look what happened last time you did it. And this is somebody who is an owner of Quiet Light brokerage has been doing this now for a decade, I would still be very fearful of the buying. And then I’d have to say, no, no, we’re gonna connect with Chelsea, we’re gonna go through the Lab, we’re gonna do it together. Because we’re partners, and we’re going to do it right. I think, for the audience that’s thinking about buying, I think, for the most part, you only get one chance to do it, right. If you screw it up, it’s going to be a lot harder to convince investors to give you money or to talk to your spouse about taking a home equity line and investing or whatever it might be. So you kind of got to get it right the first time. And I think it’s a worthwhile investment to spend some money learning how to do it right. Any thoughts on that?

Chelsea Wood 34:15

Yes. And I think you’re absolutely right. But also one thing I love about the Lab that is different than other speakers on the topic is like we are not glamorizing buying a business. It is an absolute shit show. But it’s your shit show. Right? And so you get to decide how to handle the challenges, but there will be challenges. And I always say like, you could do a million dollars of due diligence on a million-dollar deal. You still will not catch everything. You just can’t. It’s just not the way it works. There are things that won’t show up in due diligence because it’s a cyclical thing, right? Are there things that you’ll miss? And that’s okay, I just saw a video of an athlete actually. And God loved him. I don’t remember his name because I don’t do sports but…

Joe Valley 34:57

Joe Valley.

Chelsea Wood 34:58

It was Joe Valley. But a reporter had asked him if he viewed the entire season as a failure, because they didn’t win the championship. And his response was so beautiful. And saying no, my entire, like an entire career is aiming at progression. Right? And I’ve won championships every year is it going to be a championship and this is same thing with buying businesses, you will make mistakes, right? It’s just going to happen. The key is that you have done everything you can in your power to hedge the risk as much as you possibly can. And also, why if somebody has $100,000, that’s their life savings, they’re gonna try to buy a business, I wouldn’t work with them. Like you should not buy a business with no cushion. That’s a warning unless you actually if you think about postcodes liquidity, right? Because there are like we had one member buy a business, and he never made an SBA payment from the business. He had to pay it out of pocket, every time because he bought a business, he was the only one to buy in a certain industry that none of our members are buying. And because it’s high risk, and it was very narrow margins, inflation, got him the interest rate hikes, got him in talent got him, right. And so like, but thankfully, he had enough of his own liquidity to pay the payments and sell the business and get out from under it. But like, this is a big choice. It can have catastrophic results, right? Nobody should be hiding that nobody should be acting, like go out and buy a business as a way to make easy money. It’s not easy money. Like another person I was talking to was talking about buying a window-washing company. And they’re like, why don’t you just buy a window washing company? That seems simple. Do you want to be on there doing window washing, if you don’t want to do the work you’re buying, that’s a pretty risky business to buy. Because if everybody quits…

Joe Valley 36:45

I got to say, I love the fact that you don’t glamorize buying a business. I’ve seen the other ads for your competitors. And it’s all just so easy, and you can do it with no money down. And it’s bullshit, bullshit. Bullshit, I can’t stand it. Because nobody is going to come to Quiet Light and buy one of these businesses with no money down. People have worked their whole life to build these businesses, and they’re not going to sell it somebody without getting something for it upfront some skin in the game. At the same time, we all know that if you’re buying a business versus starting a business, you’re likely to be much more successful. But still, you don’t glamorize it. I love that about the Lab. So good on you. Good job. How do people learn more about the lab? Where did they go? I know it’s not just the lab, its acquisitionlab.com? When are the next cohorts? Those types of things? How can they learn more?

Chelsea Wood 37:44

So acquisitionlab.com. If you want to dig even deeper, go to our Frequently Asked Questions. I put, I want to say 30 of my most frequent questions and all the answers. So it’s pretty robust. If you’re interested in applying, click the Apply Now button. That application just helps me honestly understand how best to structure the call with you to make sure that you get the most out of your time, and that I can figure out if it’s a fit for the Lab or not. You can learn more about kind of Walker and his approach through our YouTube channel. We’re constantly uploading content to that. buythenbuild.com, for information about the book, we also have a MasterClass that does not overlap with the Lab. It’s really a foundational course that I built to support his book. So it’s just additional depth to the concepts in the book. But it’s not like a accelerator right for execution, the way that the Lab is.

Joe Valley 38:43

Excellent. I love it. Folks, if you’re thinking about buying a business, don’t do it on your own. Check out the Lab at Acquisitionlab.com. And certainly go on Buy, Buy Then Build, as we’ve talked about for several years now on the podcast. Walker is a good friend. He is very successful here at Quite Light as an advisor and doing some great things with Chelsea in the lab as well. So don’t risk your life savings on buying a business without the support that you need. As Chelsea said it can be a bit of a shit show. So be careful, be wise and don’t make same mistakes I did. Chelsea, thank you so much for coming on the podcast. Appreciate it.

Chelsea Wood 39:20

Thank you for having me. It was pleasure.

Outro 39:23

Today’s podcast was produced by Rise25 and the Quiet Light content team. If you have a suggestion for a future podcast, subject or guest, email us at [email protected]. Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.