Many online entrepreneurs and private business owners run their companies with profitability in mind. In this article, we will be discussing how to build a legacy of multigenerational wealth
But how much, exactly, does one need to profit in order for them to call their business a success?
Much recently, I have had the opportunity to discuss what generational wealth really means with none other than Carl Allen, an incredible entrepreneur and mentor who has spent the last 28 years helping businesses grow globally.
According to him, people – in general – do not want to own a business. In the same way, they don’t want to work for a company or do anything that would result in them feeling stressed, overwhelmed, or cause them discomfort and inconvenience.
People want to live an easy life. We dislike working hard, but we want the rewards that come from it. The same goes for business ownership.
In Carl’s words, “what we want are the benefits that translate from business ownership – to secure consistent cashflow, fuel our personal ego and pride, and to let our families experience a better life.
It is the outcomes of a successful business that we’re after – we want the monetary and psychological rewards, “the high” of running a profitable company.
However, this type of motivation has its limits. When you are doing business for the wrong reasons, you will eventually reach your breaking point – you will eventually burn out.
Therefore, it is important for business owners to determine what it is that propels them to act. What motivates them? What do they yearn to achieve by the end of their journey?
According to Carl Allen, more than just earning a profit large enough to live life comfortably, what really matters is what you leave behind. Something that’s larger than you; something that goes beyond the span of a single human life.
Carl Allen’s Take On Generational Wealth
What would happen if business owners went the extra mile and accumulated more wealth than they could ever spend in one lifetime?
They pass it on – to their kin, business partners, successors, or whomever they may hold dear in life.
Building your generational wealth means leaving behind a legacy. It means building something that is much bigger than yourself that even when you are long gone, what is left behind will linger for a very long time.
By making a mark and leaving a legacy in the world of business, you immortalize your existence. You make history – much like every other great man that has come to pass.
Still, acquiring generational wealth almost seems like an impossible feat – doesn’t it? It sounds impossible to accumulate such a massive amount of wealth in one lifetime, right?
Carl Allen begs to differ.
There is a way to get your hands on money that will last for generations – legally.
What Is Business Acquisition?
Simply put, a business acquisition happens when an existing business decides to buy the rights to own, operate, and profit off another business. According to Allen, it is a “faster, cheaper, and less risky way to scale your business” and it is a method that may potentially “quadruple your income” when you know how to play your cards right.
Does it work? YES.
Is it risky? YES.
Will it be worth it? CAN BE.
It all boils down to WHY you want to do it and how well you know the ins and outs of your business.
Carl adds that in order for a business acquisition to be a success, you need to have a clear picture of what you are trying to achieve with your business. Acknowledging where you are now and knowing where you want to be is a key aspect to this otherwise risky financial move.
The bottom line is that business owners need to have their “purpose dialled in” if they want this to work.
Normally, an entrepreneur can scale his business through organic means. This refers to generating more qualified leads, increasing and/or improving their products and services, and getting more traffic to their online website.
But here’s where reality strikes: Only 1% of businesses get to 7 figures.
With most businesses having a profit margin of 10% or less, focusing on products and services alone may never get you to where you want to be – especially when you have warmed up to the idea of leaving behind your very own legacy. You could pass the million-pound mark at some point – but it may not even be in your lifetime.
When you are racing against time, it’s not enough to work hard – you also have to work smart.
Business acquisition is simply the most viable way to significantly scale a business in a short period of time.
Then again, according to Carl Allen, you don’t just buy any business. There are three reasons that you may do so:
Top Three Reasons You’ll Buy A Business
1. The Business Is A Competitor
Heavy market competition is a big hindrance to scaling a business. Going head-to-head with competitive companies can hurt the budget. Aside from the fact that your business’s client base is divided, you also need to spend a ton on marketing to try and get new customers as well as retain existing ones.
Best solution? Buy your competitor. That way, you don’t have to worry about the other party competing with you. You reap the profits either way.
2. Buy Into Your Supply Chain
Another reason that might get you to acquire another company, according to Allen, is a necessity. If that company is necessary to your own company’s growth and supply, you may want to consider absorbing that business.
An estimated 30% of your cost base goes to suppliers. If you can become your own supplier, you circulate your own finances. Not only do you profit from the acquired business’s other clients, but you also get to save/profit an extra 30% by paying yourself for the supplies you use for your other business.
3. Buy In A Sector Or Niche That Is Complementary To Your Existing Business – For Cross-Selling, Deal Synergies, Better Economies Of Scale
Even if it’s not a company that doubles as your supply chain, you may also opt to acquire businesses that complement yours. This will inevitably lead to “compounding the value of your business and consequently, your personal net worth.
For example, a marketing company can acquire businesses that produce marketing tools and software. This way, their marketing business can market the software to their clients, and the software company can also market their marketing services to its respective customers. Again, compounding the value and profitability of both businesses.
Whether the business acquisition is for your company or not, that is still for you to decide. There are many factors that should be considered when acquiring another business; it’s a massive spend with equally massive risks, after all. You also have to consider the “due diligence” involved – which by the way, is where a great accounting team comes in.
If you want to hear the discussion I’ve had with Carl Allen in greater detail, check out our full interview in my YouTube channel, Annette Fergs TV.
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