In a recent interview on my podcast “What’s it Worth,” Della Kirkman shared an inspiring story about how she went from waiting tables, to earning her CPA designation, to owning and selling multiple businesses.
Della is now a business acquisition coach for women. Her story was inspiring and taught listeners how to bootstrap their way to success. By following Della’s example, those who feel stuck in their current job or station in life, can find multiple businesses to buy through seller notes and trades.
When Della became a single mother, she had to find a job quickly. She started serving at a popular breakfast restaurant. Della worked diligently and became a four-star waiter. But, she knew that there was a bigger and better future within reach.
Once her daughter was in kindergarten, Della started looking at other opportunities to grow. She saw jobs that required a CPA designation, figured that she was good at test taking and took the plunge. Della was not kidding when she said that she was a good test taker. She excelled at every section of the CPA exam, passed on her first attempts and found a job with a small CPA firm.
Della was doing simple work at the CPA firm to start, but eventually gained enough experience and confidence to float the idea of buying the practice from an aging owner. The owner and a partner eventually accepted an offer to purchase the practice through seller financing.
Seller financing is a great way to purchase a business — especially when you already work for the company. With a seller’s note, the buyer usually puts 10-20% down, and the rest of the purchase price is funded through profits of the business over the next few years. Because the seller has a vested interest in the future profits of the company, this method of buying a business keeps the seller engaged to ensure that client and employee relationships transfer to the buyer.
Seller financing also helps buyers who have limited capital buy businesses without cash up front or a bank loan. Even though most sellers would like a pile of cash at closing, sometimes sellers have other qualitative priorities. Those priorities include the right buyer, at the right price, at the right terms. In most cases, sellers like for the buyer to be a current employee so the seller can have greater comfort that the business, customers and employees will be treated well.
With little cash in hand and limited credit available, Della got a fairy tale deal.
For her first businesses, Della bought herself a job. If a buyer does not have a lot of capital, buying a job is a good place to start for an initial acquisition.
Eventually, Della bought her partner out and then sold the practice. When she sold, Della received 90% of the sale price at closing and had a 10% seller note with the buyer. When the tables were turned, Della was able to get a great deal with wonderful terms.
Della ran her CPA practice during the day and owned a pizza pub that she worked at night. She bought the pub from an aging owner who was struggling with upkeep. The owner did not want to sell at first, so Della bought the real estate. Owning commercial real estate and leasing the property back to the business or tenant has potential tax advantages and adds a source of passive income. This is a crucial part of building a strong business asset portfolio.
After a couple of years, the owner was ready to sell, and the logical choice was to look to Della as the buyer.
When Della wanted to sell the pub, she did the deal on trade with one of her employees — a privacy fence referral in exchange for the bar. Della did not receive the privacy fence on trade. She actually found a $10,000 third-party deal for the fence company owner. The fencing company then turned around and paid Della the cash from the fence deal to buy the pub. As part of the transaction, Della retained ownership of the real estate and liquor license. Now, she has assets that pays her every month in perpetuity.
Trades are another great way to get a deal done when you have limited cash. Della was so creative when it came to deal making. It all comes down to what people want. She entered business ownership with little cash down and exited with more cash and long-term income opportunity than she started with.
With no experience in deal making and limited cash on hand, Della was able to buy a CPA firm, sell the CPA firm, buy a pizza pub, sell the pizza pub, acquire real estate and create long-term wealth. Her journey was not easy, but Della’s story proves that anyone at any station in life can buy a company and be a business owner.
Jamar Cobb-Dennard is a business broker and attorney. To learn more about buying and selling businesses, contact Jamar at jamar@jamarcobbdennard.com.
