Chris Allchin Shares How to Buy a Business to Grow Your Wealth

Building wealth is often seen as a long-term game of saving, investing, and managing risks. However, one key strategy is becoming increasingly popular. It’s a strategy that conglomerates have used for years, but it’s trickling its way down to the larger entrepreneurial crowd —buying an existing business. Chris Allchin, a serial entrepreneur, who has built his wealth primarily through partnerships and acquisitions revealed his unique approach to acquiring businesses.

The Case for Buying Over Starting

While starting a business from scratch might seem appealing to some, Chris argues that it is often more costly and time-consuming than buying an existing one. He highlights that purchasing a business with established systems, staff, and cash flow can be more efficient, allowing the new owner to focus on scaling rather than starting from square one.

Chris explains, “When you buy a business that’s done all of that, you get all the bells, whistles, systems, people, staff, you get the whole thing.” Starting a business, by contrast, often involves significant time and financial investment before seeing a return. “When you start a business, you have to find money to hire staff, start marketing, and there’s some time before you get a return on your investment,” Chris adds. “It’s going to cost you more to start up. You just don’t realize it yet.”

He emphasizes the importance of cash flow as a tool for making smart decisions: “Cash flow equals choice,” he says, pointing out that buying an established business provides the capital flexibility to put management in place and market effectively.

One of the key advantages of buying an existing business is the current market trend. As Chris points out, many businesses are being sold because the owners are retiring and their children are not interested in taking over. “There’s literally a tsunami of businesses coming on the market,” he explains. “These people that own these businesses, their kids don’t want the business. They’d rather be Instagram famous.”

This presents a unique opportunity for savvy investors. With so many businesses for sale, especially small to mid-sized operations, it’s a prime time for acquisition.

Tips for Buying a Business the Right Way

If you’ve read this far, it seems like you’re headed the route of buying your way to business freedom. With that in mind, here are several things that Chris Allchin believes can lead you to success.

1. Avoid Brokers

“Don’t use a broker,” Chris advises. While brokers may seem like a good option to help with the transaction, Chris argues that they often make the process transactional rather than relationship-focused. “Brokers are deal-killers. They won’t let you have a direct conversation with the seller. You need to be in contact with the seller to understand the driving reasons and why they want to sell.”

Building rapport with the seller can provide valuable insights, enabling you to craft a deal that works for both parties. “You need to understand the seller’s motivations and create a win situation for both of you,” Chris notes. This deeper connection can result in more favorable terms for both the buyer and the seller.

2. Ask the Right Questions

Chris highlights the importance of asking direct questions to uncover potential deals. He shares a story about buying a chicken shop for a fraction of its original cost: “I bought a chicken shop for no money down, not a cent. I just asked the question.” The shop had been abandoned by the previous owner due to internal issues, and Chris saw an opportunity to make an offer. “You can ask questions and structure deals that benefit both parties,” Chris advises. In this case, Chris negotiated a payment plan that allowed him to purchase the shop for only $40,000, well below its value, and later sold it for a significant profit.

3. Offer a Win-Win Deal

For Chris, the key to successful business acquisition lies in creating a win-win situation for both the buyer and the seller. He shares a deal where he offered more than the asking price for a business but with more favorable terms. “What if I gave you $1.8 million?” he asked the sellers of a pizza business, even though they were asking for $1.6 million. However, he proposed paying off the business over four years, allowing the seller to transition into a new chapter of life while still receiving a good return. “It’s got to be a win,” Chris emphasizes. “You can’t just think about yourself. It’s about creating a deal that works for both sides.” By offering a win-win scenario, both the buyer and the seller can leave the table satisfied.

Looking to the Future

Chris is a firm believer in the power of mergers and acquisitions, especially for small business owners looking to scale quickly. Rather than taking years to build a business from the ground up, acquiring an existing business can fast-track your growth. As he puts it, “You can work on all these little details in your business and take 5 to 10 years to get to where you want to be, or you can just acquire it.”

If you’re interested in learning more about mergers and acquisitions, you can learn more by following Chris on LinkedIn or visiting his website here.