Lots of people dream about creating a business… but what about buying one?
When it comes to startups, there are plenty of downsides:
- Tons of work — long hours, high stress, and starting from zero
- Low pay: Many founders are on the ramen noodles diet in the early years
- 80% rate of failure (all that hard work for nothing)
This is why Jonathan has bought 29 companies.
In this post, you’ll learn:
- How the hell Jonathan has bought 29 companies
- Jonathan’s philosophy on hiring — and why he DOESN’T go after traditional “A” players
- Why adjusting pricing is the QUICKEST way to 2x your business
The company had a few customers and was making about $3,000 per month. Jonathan brought the company for $250,000 (paid over 30 months) and began to make small tweaks, starting with pricing.
When acquiring a company, Jonathan will only focus on companies he knows he can improve. He looks for 5 main elements:
- Revenues flat or going up slowly — never trending down
- SaaS products
- Not doing any marketing (or doing very little marketing)
I’ve learned to focus on similar high-leverage items — and ignore the rest — while building my 8-figure business Sumo.
- Reposition the company: You can buy a company and reposition it within the market. For example, imagine you purchase a SaaS company selling their product for a one-off fee. You could change the pricing to be a monthly subscription and grow the company through recurring revenue.
- Spend money: By spending money smartly, you could 10x the company by hiring an epic team or investing in proven marketing strategies. More users = more money = you can sell the business for more than you paid.
- Add value: Create more value within the company with additional features, products, or services. One of my favorite ways to grow a business is launching new complementary products that already have a proven market need
It’s possible for you to use these ideas to grow your business too. Don’t let the wantrepreneur mindset pull you off track.
|BONUS: 7 marketing tools I’ve used to grow multiple 7+ figure businesses|
When you’re buying a business, you need a great team.
But most companies hire crap employees… even if they say they’re A players!
Avoid them completely!
Instead of obsessing over hiring the people who work at Google or Facebook, look for market inefficiencies in the hiring world.
Jonathan thinks of hiring like a quadrant to take advantage of weaknesses in the market.
On the y-axis you have highly skilled workers and underdeveloped talent. On the x-asis you have great teammates and bad teammates.
Jonathan eliminates three sections of the quadrant:
- Bottom left: You don’t want to hire the people who are awful coworkers and don’t have the skills.
- Upper left: People who are highly skilled and bad teammates might seem like a good hire at first because of their skillset… but they poison a team. As Jonathan says, they’re better consultants or temporary hires to fix a major business problem (and then get the f out)
- Upper right: Because they’re damn expensive, Jonathan knows he’ll never get these people. 🏦👋😢
This leaves great teammates with underdeveloped talent.
“I hire them every single time,” Jonathan explained.
For example, when Jonathan hired his right-hand woman, Teri, she’d just returned from the Peace Corps.
Teri didn’t know:
- How to use an iPhone
- What Twitter was
- “Correct” business practices
But Jonathan loved her attitude and thought he could teach her how to be successful in business.
She’s ROCKED it. Today, she’s Jonathan’s director of operations. 🚀
Great teammates who don’t have the talent yet are diamonds in the rough:
- They have great attitudes so they can learn quickly
- They’re fun to be around
- They make other team members happy
Focus on market inefficiencies to hire teammates other people undervalue.
Sumo, we’ve changed pricing 7 times in a few years.
We started 100% free. Then, we played around with a bunch of different variations until we hit the pricing point that’s just right (for now).
These pricing changes were a big part of our journey to become an 8-figure company.
|Want more ways to 2x (or more) your business?|
Most entrepreneurs totally mess up their pricing.
- Take a random guess
- Look at their competitors
- Throw a number against a wall
If you do this, you’re potentially leaving tons of money on the table.
Changing price is the easiest win for a young company to GROW.
When Jonathan acquired one company, the product was being sold for a one-off fee of $5.
Through pricing experiments, Jonathan managed to increase the pricing to $9 a month before sign-ups fell off.
Money in the BANK. 💰💰💰
Once you’ve found the right pricing structure, you can also start to invest more in marketing to increase revenue.
This means you could test a bunch of marketing tactics:
When you find a marketing channel that works, go all-in. And squeeze all you can from the channel using the Content Multiplication formula!
Here are 5 key lessons from Jonathan buying 29 businesses…
- You don’t have to start a business — buying a business is a LEGIT way to be successful.
- There are 3 key ways to make money in a business: Repositioning the business, restructuring the finances, and create additional value.
- Great teammates who have underdeveloped talent are diamonds in the rough.
- The best way to 2x your revenue quickly is to increase your pricing.
- You should ALWAYS be speaking with your customers to understand their needs.
Want more lessons from Jonathan Siegel — the entrepreneur who’s bought 29 freakin’ companies?
Check out the full episode below.