5 Business Fundamentals That Helped Me Turn a Company Near Bankruptcy Into One Generating $160 Million in Sales
Grow Your Business, Not Your Inbox
I'm not looking to impress anyone with the cutting-edge technological complexity of my company. Despite only being 34 years old, I believe in the old-fashioned virtues of understandable businesses that simply turn a solid profit.
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Understandable businesses like carpet manufacturer Marquis Industries Inc., which posted a pre-tax profit of $2.2 million on sales of $21.9 million in this year's second quarter.
Or Vintage Stock Inc., a Midwestern discount retailer of new and used movies, music, video games and printed materials, which recorded second-quarter sales of more than $19.2 million and pre-tax income of approximately $750,000 from nearly 60 retail locations in the nation's heartland.
It is ultimately my investments in these types of profitable, stable and growing businesses that are the life blood of Live Ventures and the key to my success as the CEO. It is a time-proven strategy that has been employed by Warren Buffett and other leading investors worldwide.
When I took over Live Ventures, formerly known as LiveDeal Inc., in 2011, it was nearly bankrupt and just days away from being delisted from Nasdaq. Fast forward to now and we're working with a run rate of $160 million in sales, $125 million in assets and more than 1,300 jobs nationwide.
However, there are a few key lessons that I've learned throughout this journey to success that I'd like to share with as many people as humanly possible. The most important thing I want to share is the simple fact that there is no such thing as a silver bullet when it comes to going from broke to millionaire or from failure to success. Anyone who tells you differently is lying.
At the end of the day, it is the utilization of solid business fundamentals that will make your journey to greatness far less volatile than it needs to be. Here are the main ones that helped me along the way:
1. Prepare for negotiations like your career depends on it, because it does.
A complete review and thorough analysis of the other party is critical to the success of any negotiation. Information is power in this process. You need to know everything you possibly can about the people with whom you're negotiating. Research them, review their website, past employment, social networks, press releases, press coverage, etc. The more you know about them, the greater your edge.
2. Be sincere, be honest and never lie.
Being honest is critical to getting what you want out of a business deal. Most people can see when you're sincere. Developing a reputation for being honest will most certainly pay big dividends in the long run.
3. "The first person to make an offer loses" is the biggest myth in negotiation strategy.
By being the first person to say a number that you think is outside the range of acceptance, you end up making the other side work harder to prove to you that their offer price is fair. By putting them in that spot, you control the negotiation and they now have the burden of proving to you that their position is worthy of your consideration.
4. Use every dollar you have in the most effective and efficient way possible.
Nothing I've done would be possible without being meticulous about how every dollar is deployed. If you want to bring your company to scale, you must carefully calculate returns on investment, risk factors and cost benefits and weigh those against other opportunities that you may have. In our case, we focus on buying high quality companies run by excellent management teams. By far the most important factor in making a decision with acquisitions is its management team and historical financials. When it comes to finance, your past will tell me your future. It's as simple as that. If a company is consistently profitable and growing its business, it's likely a good candidate for acquisition. Show me the last five years and I can predict what the next five years will look like.
The most important thing to take away from this point is to be annoyingly meticulous about how you invest the capital you have in your possession. Every dollar needs a name and each investment should have some sort of history of being successful prior to your involvement.
5. When it comes to management and hiring, hire slow and fire fast.
We're always on the lookout for great people who can add value and aren't just working with us for the paycheck. Passion is the most important quality we look for, and we rarely look at resumes during interviews. This is exactly what your mindset should be. Try to gauge the level of passion a candidate has. A nice glossy resume without passion is valueless to you unless you're hiring them to write resumes.