Seven lessons learned from buying businesses

The biggest lesson I’ve learned is to not become too emotionally attached to a business. I started the first drive-through café in the Hawkes Bay and ran it for 10 years before finally admitting it wasn’t working. During that timeframe I was so emotionally attached to the business that I didn’t admit to myself that it wasn’t financially viable. It took me a decade to admit the business model didn’t work.

In early 2022 I bought my most recent business – The Armoury – which hires out machinery to the construction industry. And this was the first time in 15 years that I used professionals from the outset before buying it. I told my Kiwibank Commercial Manager, Garth Duncan, that I was looking for a business to buy. When this one came across his desk, he referred me to the business broker who had listed it for sale. I was interested in it, so I showed the information memorandum to my accountant and lawyer to ask for their feedback on the business. By involving my banker, accountant and lawyer from the get-go meant the process went so much smoother than my previous experiences. In the past I had avoided those experts to not incur the cost, but it can save you a lot of money in the long run.

I’ve learnt that you’ve got to have cash flow and it’s a killer if you don’t have cash at the start, which is the most crucial time. I own quite a lot of property – both residential and commercial - which are great for capital gains but not cash flow. When I bought The Armoury, I was looking for great cash flow and it had it. I didn’t have any experience in this particular industry, but when I involved my accountant and lawyer, everyone agreed that this was a very good business – it had a good asset base and cash flow. And so far, this business has exceeded my expectations.

There are a lot of businesses for sale that aren’t listed online. The Armoury was an off-market listing that I found out about through my banker. Keep your options open when you’re looking for opportunities and you could hear about great businesses through your circle of experts.

If you have staff, look after them well. They’re the face of your business. Recognise what they do well, thank them, reward them. Sometimes we’ll drop off lunch to our staff, so they know they’re appreciated.

Over my career I've purchased a childcare centre, a restaurant/bar and started a café. I still have the childcare centre, but I sold the restaurant and closed down the café. Each business has taught me valuable lessons and how to deal with pressure.

Finding a healthy work/life balance is key. You've still got to have a life outside of the business. If you’re the owner, it can easily become all-consuming. I was a solo dad with three primary school-aged kids and one pre-schooler back in 2007 when I first purchased the childcare centre. My kids and I would be out the door at 6.30am each morning to get the centre ready for opening. We did this for a couple of years. It was tough, yet rewarding, but not sustainable long term. I am now married and own The Armoury with my wife, Tash, and we balance our lives together. We have seven kids between us, five of whom have left home and two still in high school.