Jeremy Harbour
Hi, my name’s Jeremy Harbour. I run a experiential learning program called the Harbour Club where we teach people how to acquire and sell companies using no capital up front and without borrowing money. Now, quite often these are distressed companies and or particularly motivated sellers, so we run through a whole range of tactics on how to find them, how to turn them around, and then how to sell them again. One of the things I’m just going to share with you today is a tactic using bad paying customers. So this could be your own customers or it could be somebody else’s customers. Very simply put, a business is deemed to be insolvent if it’s unable to meet its debts when they fall due. Now this is a really important definition of insolvency is the legal definition of insolvency. A lot of people think about the accounting definition of insolvency, which is when your liabilities exceed your assets.
Jeremy Harbour
But in the UK for example, we have an Insolvency Act. It was drawn up in 1986 and section one, two, three of the insolvency act says you’re insolvent if you’re unable to meet your debts when they fall due. Now, if you think about that, there’s a whole range of businesses that are technically insolvent on that basis. In fact, I know many of the businesses that I’ve run over the years, we’ve certainly not always been able to meet our debts when they fall due. A really important thing to note is that if you’re unable to meet your debts when they fall due and you’re therefore trading insolvently and trading whilst insolvent is not allowed, it’s illegal. So a lot of these businesses are actually breaching their duty as a director of the company. So it really is quite serious when people can’t pay their bills. So if you have a company that’s not paying their bills to you, they’re actually a possible acquisition target.
Jeremy Harbour
Moreover, when you’re out networking with people and you’re talking to people, maybe you don’t want to find out if they’re in trouble or how you can help them, but maybe you want to get into their bad customer list. Maybe you want to find out who’s not paid their bills. Now obviously that will give you a lead, that will give you the name of a company that’s unable to meet its debts when they fall due. One of the keys really is how you then approach those. If you come on my Harbour Club training course, we’ll show you a really cool method for getting in touch with those entrepreneurs in a way that will engage with them and they’ll have a proper conversation with you.
Jeremy Harbour
If you ask any entrepreneur how business is, it’s always their record week, isn’t it? So by using our tactics, you will have an honest conversation with them where they’ll be able to share all the things that are really going on in their business and then take that towards doing a deal, which will be a benefit to both of you, but where you can end up buying the company using no capital and no borrowing and then sell it for six or seven figures only a few months later. So learn to love your bad customers. Thank you very much.
Jeremy Harbour
Hi, my name’s Jeremy Harbour. I’m going to talk today about growing your business by acquisition. I had an epiphany a few years ago when effectively I grew my business by years worth of sales in an afternoon and it didn’t cost me any money and I didn’t have to take any risks with sales and marketing type techniques. But before I get into that, if we go back to the start, growing up I was always quite entrepreneurial. In fact, I started a business when I was 14 years old and I left school when I was 15 to go and pursue that business. In fact, I went spectacularly bust when I was 19 which is a great lesson in humility. I think everyone needs a good kick in the nuts when they’re a bit young and cocky. So it was a really useful experience and actually it’s really helped me in later life to be able to empathize with businesses that are in trouble because I know exactly what it feels like to be in their shoes.
Jeremy Harbour
So basically I was running businesses like this. I was always a firm believer that if you want it to be successful, you had to start a business and you had to work really hard and I did sacrifice everything. I put in the blood, the sweat and the years into growing my businesses at the expense of almost everything else in my life. It was great fun. It’s a rite of passage. I think everyone should start a business and have that experience. But one of the things I realized, I was growing a telecoms company at the time and we’d grown very quickly, organically, so I think in our first year we did a few hundred thousand. The next year we doubled that. The year after that we doubled it again. An interesting thing happened. We obviously appeared on the radar of quite a few of our competitors.
Jeremy Harbour
Now our competitors were looking at buying us out because obviously they could add our revenue to their business, but they didn’t have to take all of our costs. So they could get rid of our office and our staff and everything else and just add the profitable revenue, which meant that they would get a much, much bigger upside from buying our business than they would … Than we would get from our own business. So I basically spend every week having meetings with these various different telecoms company bosses who are trying to pitch me and that’s the only way to describe it really, pitch me on why I should sell to them and how I should do a deal. The reason it was a pitch was because there wasn’t going to be any money upfront. All of these deal structures were quite creative. They were all targeting things that I needed and wanted and that would help fulfill other needs. But ultimately all the jam was tomorrow. So there wasn’t going to be anything upfront.
Jeremy Harbour
Now, fortunately, I had quite a few of these meetings. I think too many people are negative on the phone when people ring up and don’t have meetings. But I think I always took the view that it’s part of my business education to meet as many people as possible and talk about what it is they’re looking to do. Sure enough, after a while what happened was instead of me having two or three opportunities to choose from, I ended up with sort of 15 opportunities. Then it made me start to think about everything a little bit differently. The thought process I had was pretty much, well, at the time I didn’t have any money at all, so maybe I could buy a business, maybe I could use the same type of strategy they were doing in order to grow my telecoms company.
Jeremy Harbour
So I decided to just go out there and start talking about wanting to find a business. Now a really interesting thing happens, when you go out and start telling people what you want, lots of little signposts pop up that weren’t there before. In fact, all the same conversations you used to have suddenly with this new pair of spectacles on, there’s new opportunities. It didn’t take long before I started to get opportunities to talk to other telecoms companies about the possibility of buying them. I got a few slaps around the face from not being able to come up with any cash. But sooner or later I found a 13 year old telecoms company that was based in the UK. It had some great customers. Nintendo was one of its customers. I was able to structure a deal with him because he had particular motivations that I was able to satisfy.
Jeremy Harbour
I was able to structure a deal with him where I bought the business for no cash up front whatsoever. also I didn’t have any borrowing. I didn’t borrow money from the bank. I didn’t borrow money from the guy that was selling me the business. I didn’t have to take on investors capital to complete this deal. like I say, I effectively grew the business by years worth of revenue in an afternoon. I had an epiphany. I don’t need to start a business and work really hard. I don’t need to put all the blood, sweat and years in that I’ve been putting in before. I can just do … I don’t have to run the marathon. I can just do the last 10 yards and I still get the trophy. That was a really important epiphany for me and it suddenly made me realize that maybe I had been doing it wrong all these years, or not wrong, but just not the right way.
Jeremy Harbour
The funny thing was now when I started looking back at all the books and all the things that I read before with this new idea that you can just run the last 10 yards in the marathon and still get the trophy, I realized that everybody that I thought was telling me to start a business and work really hard, they’d all made their money doing deals. In fact, all of the dragons on Dragon’s Den bought or sold businesses as the way that they accelerated their success and their wealth. So it was almost like, well, it was a complete paradigm shift. I completely changed the way that I looked at business. It was around about this time I basically, having had that epiphany, I went on a little bit of a rampage and I ended up buying lots and lots of businesses and in the space of 18 months I had built up sort of mini empire of businesses turning over about 13 and a half million pounds a year on a sort of monthly run rate.
Jeremy Harbour
We had about 135 staff all based around the [inaudible 00:08:23] area in the U K. Yeah, I became extremely, extremely busy doing all of that. I bought a seminar company. It was one of the businesses I bought and this seminar company taught people various business skills and business techniques and out of the back of that I kind of thought, well, how would I teach people what I do? It was actually at one of their seminars. I started to write a little script down of how I would do a training course. One of the first things I realized is actually to learn how to buy a business, you really need to buy a business because it’s an experiential thing. So I titled this course the Harbour Club and I wrote down all the things that would make it interesting for the participant. So how would they source deals? How would they effectively continuously source deals? Because they’re not where you think they are. They’re not with accountants or insolvency practitioners or people like that. How would they get to have a meeting with these people?
Jeremy Harbour
Because if you ask the average entrepreneur, how is business, generally it’s their best month ever, isn’t it? So you need to be able to have an honest conversation with the entrepreneur about how things are going and what it is. They then needed to understand the no money down deal structures that you can use because there’s lots of different ones. In fact, on the Harbour Club course, we have six core no money down strategies. There’s actually kind of seven or eight altogether, but there’s six core no money down strategies that we worked through, which shows things like how I was able to buy an air conditioning company for a pound where we met them at 9:00 in the morning and at 5:00 PM the same day we’re being introduced to the staff as the new owner and then go on and sell that later for six figures.
Jeremy Harbour
How we bought a furniture manufacturer for a pound 100% and again, we’re able to turn that around and sell that on in a very short space of time and a whole load of other stuff. So a call center business. We bought a gym and spa. It was a health club, 15,000 square foot health club that costs 3.2 million to fit out just a few years before that we were able to buy lock, stock and barrel. Actually the way the deal was structured, we ended up 25,000 pounds in front after the deal was completed. So there’s some really, really interesting techniques that we’ve stuck in there and everything is backed up with real case studies. Not only do we use the real case studies with the real company names, but we also give you the documents that we used when we completed those deals. So all of the contracts and spreadsheets and questionnaires and things like that that we’ve had to do, I had to do.
Jeremy Harbour
Now people often ask, how would you buy a business for no money? My facetious answer is you need to start with no money and try and buy a business a bit like I did with that first telecoms company because necessity is the mother of invention. So I bundled all of that into this course called the Harbour Club to give people the complete package on how to do things. The Harbour Club’s been running very successfully since 2009. The references and things that people give us for it are always incredibly flattering and very, very positive. But actually quite a few people just want to come along to learn how to grow their business by acquisition so they’re not so interested in all the turnaround techniques and the insolvency tactics and the exit side of it. Really in the beginning, what they’re looking to do is what I did in the first place, which is to grow that company by years worth of revenue in an afternoon.
Jeremy Harbour
Now in order to grow by acquisition, actually one of the most important things is how you find motivated sellers because these people aren’t always in distress, but they are motivated. So you need a consistent tactic that will get you those people. Now they’re not with insolvency practitioners, they’re not with accountants, they’re not with business brokers. So where do you find businesses that actually aren’t really for sale that you can then put these deals together with? The next thing is then how you have the meeting with them so that you can have a proper conversation about getting a deal done. Then we go into the sort of legal protection, how you protect yourself from not getting yourself into trouble. You wouldn’t like to buy a company that’s potentially insolvent and then it destroy the business that you have already. Now it’s very simple not to get into trouble like that, but as long as you know how.
Jeremy Harbour
Then the next thing is the deal structuring. So how do you actually put a deal together where you’re not borrowing money and you’re not paying anything upfront for the business. So we go through all the systems you need to do that. Then how do you reduce all your upfront costs in doing the deal? So we show you how you do it without any legal fees, without any accounting fees, without any cost of due diligence. We have a really smart system for taking all the due diligence costs out of doing the deal. We tell you exactly how I bought businesses, how I found them, how we got the deal done, the whole thing. Then if you feel that you want to take everything a step further, you can come on one of my Harbour Club courses where we’d fill in all the gaps in terms of how you do the financial engineering, the seven steps to fixing a company’s cashflow.
Jeremy Harbour
For example, we bought an air conditioning company that hadn’t paid its payroll for two months. It was 10,000 pounds overdrawn. We were able to fix that within about six weeks. So all the payroll was caught up and it constantly had cash in the bank. We bought another business that was 85,000 pounds overdrawn. Payroll was due in a week and the overdraft was personally guaranteed by the owners. So the deal we did there was if we could get you off the personal guarantee and we can pay the payroll, could we have the company, to which they said yes. Then we used a really clever tactic, which meant we didn’t have to put any money in ourselves, but we managed to get the overdraft back to zero, get the bank guarantee canceled. We were also able to get the payroll met on time and ended up with the company, which we were later able to sell for six figures.
Jeremy Harbour
So that’s one of the case studies that we use in the course. So if you’d like to find out more, have a look at it and see how that works. Then maybe I’ll see you on a Harbor Club one day in the future. Thank you for listening.
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