Welcome back to another episode of Before You Buy or Sell a Business. Today, I talk with Erik Fike as he shares his experience of buying a business while still working in his current role. He discusses how he found the right business, the challenges he faced during the transaction, and the lessons he learned along the way. Erik provides valuable insights into the due diligence process, the importance of finding the right lender, and the need for mentorship and guidance in the acquisition process. He also highlights the significance of having experience in running a company and the motivation behind his decision to pursue business ownership. Key Takeaways: Finding the right business: Erik emphasizes the importance of defining specific criteria for the type of business you want to buy, such as remote operation, B2B services, and revenue margins. Negotiating the LOI: Erik shares his experience of going through multiple revisions of the LOI with the seller, ensuring that all key aspects of the deal were addressed and agreed upon. The challenges of bank financing: Erik discusses the difficulties he faced in securing bank financing and the importance of finding a lender who understands the business and can provide the necessary support. The value of working capital: Erik highlights the importance of having sufficient working capital to navigate unexpected challenges and maintain stability in the business. Lessons learned: Erik advises considering forgivable seller notes to mitigate risks and protect against potential contract pauses or cancellations. Notable Quotes: "You really should have a mentor. I definitely have, and I also recommend peer groups for that same kind of thing. It's been great too." - Erik Fike "The best-case scenario with a bunch of recurring revenue is awesome. This is not one of those businesses. This is a big project-based business." - Erik Fike Erik Fike's LinkedIn IN THIS EPISODE 00:00:00:00 | Introduction, Erik Fike's Background 00:04:02:10 | Emerging ETA Space & Social Media 00:17:37:01 | LOI, 9 Revisions, and Addressing Key Issues Upfront 00:20:11:13 | Experienced Lender vs Unexperienced Lender 00:27:06:20 | Unexpected budgetary issue in California affecting contracts 00:31:03:08 | Seller Note Forgiveness and Customer concentration 00:36:04:12 | Stability and Experience with Project-based Revenue 00:38:05:04 | Erik Fike Answers: Do You Have a Mentor? 00:39:30:02 | Erik Fike Answers: What Motivates You? ______________________________________________________________________ If you have questions for Jared, visit JaredWJohnson.com DISCLAIMER: The views and opinions expressed in this program are my own and/or those of my guests. They do not necessarily reflect the views or positions of my employer.
