The Musings of a Younger Brother

Hey Hannah, younger brother here.

You've spent a lot of time teaching me the turnings of the world, and upon your consideration to buy a small business, I think I finally have something to impart on you.

Below I am going to outline the lessons I've learned over the past 2½ years in hopes that it will lead you to or away from entrepreneurship. Specifically buying a small business from a baby boomer (just as the modern folk tales and New York Times articles speak of).

So without further ado, The Musings of an entrepreneurial, know-it-all, and enthusiastic younger brother:

1. It is so hard

Not the opening you thought you'd get? Were you expecting a rah-rah speech that would enthrall you and make you feel like the world was your oyster?

No. Entrepreneurship is tough. It is just you vs. the world.

You have to figure out how the business works, direct people who have been doing it longer than you, manage people, sell to customers, and then, once you get the hang of it, change everything to fit your vision.

The world is not easy, it is not rooting for you, and it does not care if you succeed or fail. It is your job to bend the world to your will: deciding what you can change and what you must adapt to, and ultimately making the best of it.

We were blessed to grow up in a community with many successful people and successful entrepreneurs. The lie we are sold is that because they have succeeded, and their lives are full and complete now, it was always that way.

It was not.

The beginning is terrible, and it was for all of these successful people as well.

It was terrible for me. I felt over my skis. I didn't know anything and had this feeling that I was an imposter who didn't belong.

But for all that…

2. It is not that hard

When it comes to technical expertise, buying a small business is so easy.

There are so many business owners that do not know what the F*** they are doing. I've often told anyone that will listen, "There are a lot of idiots out there making a lot of money. My goal is to be one of those idiots." Sadly, you, Hannah, are not an idiot. At best, you will only ever achieve half of this quote.

I feel like people who are scared of a technical company will do a couple hours of research, not fully understand something, and think, "Wow, this is so complicated. I will never get it." But what you don't understand is you will be spending at least 40 hours a week thinking about and learning about the company and industry you are in. Things that seem difficult after a one-hour briefing seem elementary after 120 hours of thinking about them.

If you buy a waving inflatable tube man company, by the end of the second week you will know more about inflatable tube men than 99.9999% of humanity.

Most purchase agreements for a small business have a 30-day period where the old owner agrees to stay on and teach you the ropes. By the third week, you will be trying to negotiate his release so you don't have to listen to him babble.

You will still call him (or her; while we're at it, maybe God is a woman) every once in a while to figure out the password to the one account. But you will already start to see things your way and chafe at how someone else does them.

There may be some outliers (don't buy a rocket science company… unless it is going for a really attractive multiple). But in large part, the technical knowledge in small businesses is not that hard.

3. No one gives a s***

Owning a business was also the first time in my life that no one was invested in, or cared about, my success. We all went to school, played on sports teams, and got a job. In each of these situations, we had a teacher, coach, or boss who wanted to see us succeed and would help us get there.

No one is going to watch you fire the owner's son, rewrite the software of the business, and stave off bankruptcy, and no one is going to tell you, "You did a good job."

You have to make your peace with that.

4. You will declare yourself the smartest person on earth one day and then question why the f*** you bought a business the next

Part 1: I'm a genius

The highs are high. As of writing this, we just hit our 6th consecutive highest revenue month, with 40% more revenue than we had with the same number of people at the same time last year. Certain changes that I made are working. I am in a groove of finding problems within the business, solving them, and seeing improvements. Oh, and the biggest part: I have a consistent crew.

Why doesn't everyone just buy a business and improve it? This s*** is so easy, and I am a genius.

Part 2: I'm such an idiot

The lows are low. I remember the first time I got a royalty invoice. I was working late at the warehouse, checking all the emails I had missed for the day, when I opened it. It was 6 months' worth because my franchisor always sends them late.

It was $28,000.

I think at the time I had maybe $35,000 in the bank and payroll due later that week. It is hard to fully describe how f***ed I felt. There is a certain shooting pain and panic that grips you when you stare down the barrel of utter failure. The fight-or-flight response, except there is no wolf to fight, except the wolf within.

Everything worked out. I pushed out some payment terms on vendors and got through it.

And it's likely you'll have a moment like that too. It may not be as bad, but suddenly all the plans that you thought you made start collapsing around you, and it feels like there is nothing you can do. But just like with me, it'll be OK, and you have the benefit of getting to call me 😊

5. You don't have as much control

I bought the business as a single 26-year-old with nothing to lose and a willingness to go bankrupt. I had a 7-year plan for what my life was going to be.

The realization of what I had done didn't occur to me until I got a girlfriend who said, "I don't want to live in Dallas next year."

Suddenly I became painfully aware that I was tied to Dallas in a way that would make a dreadlocked mushroom shaman from Portland's head spin.

As you know, we broke up for different reasons, but the fact that I can't leave Dallas was not something I considered going into it. I think this can be mitigated by buying a fully remote business or by completely removing yourself from the business.

6. You have more control

I know exactly what you're thinking, Hannah: "What the hell are you talking about? You just told me about true terror and the fear of bankruptcy. What part of liquidating all of your assets is stable? I'm completely riled up to fight the wolf inside me, J. Reilly."

I get what you're saying, and I cannot tell you how much I made this year or what I am going to make next year. So if your entire goal was to pin down your earnings… yeah, that's tough.

But think about how a company is organized and understand who really carries the most risk. If we lost 50% of our revenue tomorrow, I would have a terrible year, and I'd have to make some cutthroat and grueling decisions…

But I wouldn't be fired.

In fact, I would not lose my livelihood during the entire free fall down to 1 truck. Before I lost my job, I would've fired 7 different people by then.

The security that you feel like you are trading away is really just perceived, and you have far more control over your own life.

7. There has never been a better time in the history of the world to be a small business owner (AI soapbox)

This is where you hear blah blah blah, artificial intelligence this, artificial intelligence that. I don't think people are fully conceptualizing this for small businesses.

You can research best practices for any problem troubling your business and implement them by the afternoon.

SEO isn't good? "Hey Claude, we need to optimize our SEO."

Spending too much on software? "Claude, we need to recreate this CRM."

Or better yet: "Hey Claude, my CRM doesn't do these three things. Can you fix that?"

For the last 30 years or so (idk when software came out), we have lived in a world where people create processes to utilize the efficiencies of software. Suddenly, code is so cheap that we can create software to fit our processes and the way we want to do things.

A website and ordering system that would have cost me at least 20 grand a year ago was a morning session with Claude. You have the ability to move so quickly and attempt ideas that historically would have been expensive gambles.

8. Everyone has really good ideas (you won't implement any of them)

Running a small business is the ultimate game of opportunity cost and time optimization. You do not have the time or manpower to do everything really well.

I run a seven-person knife sharpening company. We also repair immersion blenders for customers.

When I first started, I wanted to know where every single part was. I wanted to know how everything worked. I wanted to make sure that every customer was kept up to date on the status of their machine.

Of our $2 million of revenue over the next year, how much do you think will come from Robot Coupe (immersion blender) repairs? I would be shocked if it came in above $5K.

You will have to let go of doing some things well in order to really move the needle on the things that matter. My time is better spent on the consumer user interface, knife sharpening training, and managing my guys.

The way I see it, every day I want to get 1% better as a company, which means taking one thing we do and improving it. What that is changes every day: some days it's SEO, some days it's our internal software, and some days it's improving our sharpening method and training the guys. Whatever it is, I'm working on the business rather than in the business.

9. All of the stuff you learned in business school is correct (but implementing it feels scary)

Raise prices. You'll be frightened to do it, but you can do it more than you think you can.

When revenue goes up, cash goes down.

You should fire bad customers.

Know the hourly margin you need to make with your truck, and turn away unprofitable business.

There are a lot more things, and I should probably go into detail on them, but in the interest of not bogging this post down with textbook information, I will skip that and come back to it in a blog post at a later date.

OK, before I start this next paragraph, let me say that this article is really just for my sister, and if you aren't my sister, this is an invasion of privacy. Specifically if you are my mother. You need to stop reading right now. I am going to know if you keep reading. So stop.

Is she gone? Thank goddess, because she would be so pissed at me if she read the next one.

10. You will start to think like a *whispers* "Republican"

I know what you're thinking: that won't be me. I was raised by two headstrong liberals. My father is an artist, for God's sake.

The sad truth is that small business ownership puts you at a crossroads of what you want the world to be like (idealistic) and how the world actually is. You will have to be an employer. Every dollar that you pay people is a dollar directly out of your pocket.

Then comes along your first bad employee. Let's call him Derpy.

Derpy doesn't care about your business. Derpy barely cares about anything. Except, of course, getting high and listening to Dark Side of the Moon while watching The Wizard of Oz, because the two of them weirdly sync up.

Derpy doesn't do what you would do in virtually any scenario. He does the bare minimum of his job expectations and finds a way to underachieve expectations while following his job description to a T.

You have to fire Derpy. You know it. Everyone you talk to recommends it. And yet, poor Derpy. Plus, you'll have to pay unemployment. Do you know how many times Derpy can watch the Dark Side of Oz before his unemployment runs out?

Derpy definitely doesn't. He can barely count to 10 if you aren't coaching him through those tricky teen numbers.

And just like that, suddenly the labor laws favoring the employee don't quite make as much sense as they used to when you were an employee.

Then comes a small business lobbying group. They tell you all the things they stand for, and they are directly aligned with the problems that you try and solve every single day. That one regulation from 1832 that makes no sense and causes you 30 hours of work each week. This tax that only affects you and 4 other people. Etc.

So you think about it and ultimately decide to give them money, and then you forget about it until election season rolls around. Then you get interested, and you look up who the group supports, and wouldn't you know it if it isn't the last person you wanted to be supporting.

Of course, you will always have the same values you were born with. You believe in gay rights, pro-choice, and *insert current hot-button issue*, but s***, Hannah, none of that seems to matter if I have to pay Derpy another goddamn cent to do nothing.

11. There are added benefits that offset the lack of healthcare

I think a lot of people get caught up on the idea that they will lose the benefits if they aren't an employee anymore. And you will. But there are also a lot of unforeseen benefits that no one talks about.

TAXES.

You are able to write off many personal items that are also used for business purposes. My personal car is a good example. I use it a lot for work, but I also use it when I'm going to watch fake horse girl competitions on the weekends.

Additionally, step-ups in asset value when you purchase the company allow you to write off amortization, which is a totally made-up expense that doesn't actually affect anything.

The result is you are taxed on an income after many expenses, while employees have to pay for things with after-tax dollars. Essentially, you pay less taxes than everyone else, but that won't stop you from complaining about it and feeling like you should pay less taxes.

Totally a conclusion

This article didn't have a conclusion. This was supposed to be an article that I sent to Hannah and said, "Boom, that's everything I know."

But I made the mistake of sending the article to both of my sisters, at which point my type B, lives-in-the-clouds Australian sister (Livy) said, "Well, you have to post that."

GOD DAMMIT.

OK, so now I dressed the article up nicer and took out some of the cursing. All so that some dickhead who's a commercial real estate associate can read it and provide his two cents: "I just don't know why he had to say he was for gay marriage. It was such a good article before that."

Well, guess what, buddy? I'll tell you the same thing Livy told me back when I was 14 and she was mad at me: "You were a mistake!!!!" Just like my parents didn't mean to have me (#JurassicParkBaby #LifeFindsAWay), this article didn't mean to have you.

Anyway, now I pull it all together into some kind of grand lesson about how this all taught me a great deal about life, liberty, and the pursuit of happiness. And it did, and your entrepreneurial journey will do the same in its own way.

Hope you enjoyed reading this as much as I enjoyed telling my sister how the world works. (She won't listen.)

OK, I have a real conclusion: a lasting thought I want to impart on my sister.

Real conclusion: Comparison is the enemy of happiness

This one could apply to a ton of different things, but essentially running a business is a lot like chess. There is always someone who is doing better than you, but on the flip side, there is always someone who is worse off than you.

If you want to feel like a genius, play someone who sucks at chess. If you want to feel like a moron, play a grandmaster, or better yet, an AI algorithm.

The human chemicals for satisfaction are the same for a founder that just sold his company for a gazillion dollars as they are for one of those weird horse girls who just won a competition where they ride around on the fake horses and act like they trained them. I don't really know how that sport works, but I assume the girl that became world champion did a ton of work to get to that point.

What was I talking about? Oh yes, the point is, the laugh that a college kid without a cent to his name has with his friends at the bar is no worse than the laugh that Mark Zuckerberg has with his friends while they stand on top of billions of dollars in their evil genius vault.

I think we want to inflate the enjoyment that people get as they earn more money, but it just doesn't work that way.

Also, in the event that someone reading this is looking for someone in the environmental and sustainability field to hire, it just so happens that Hannah is available for work for the first time in her adult life. She is one of the most capable and effective people in my life, and she would be an incredible addition to any company. I would rather her buy a small business, but I don't always get what I want. Here's her LinkedIn.