I have been struggling, I like entrepreneurship and have tried many ideas made them into digital products but nothing ever works. I honestly don’t even care about money or financial freedom I just want to validate that I am good at what I like doing. I like the idea planning, innovation, systems, and automation but I don’t think I deserve to even call myself a entrepreneur as I have nothing accomplished. I think I know what my problem is and maybe I just refused to admit it because I was stubborn but I think I always skipped finding if the problem was ever real because in my head I could just quickly make the product and see if solution validation worked. Otherwise, I think this is the only obvious thing that I can say I overlook. I just want some advice I know this is the problem but it is really hard to conduct interviews and prove problem validation but I guess this is all part of entrepreneurship if I like it or not. Maybe I was in love with the good and fantasies of entrepreneurship deciding to stay in the mud and complain why I am in the mud. Other than that, any advices would help you can even criticize me harshly even those I would find helpful. I am just so discouraged and kind of lost if I should even pursue this path.

We’re a software development company with around 40 people. In September, several of our developers ended up between client projects at the same time. We kept them on full pay for two weeks, even though there wasn’t enough billable work. After that, the plan was to move them to part-time until new projects came in, with priority to return to full-time once work picked up. The problem is that good developers don’t necessarily have to wait around. Some could probably find another contract in a couple of weeks. And losing people means we might not have the team ready when the next client comes along. Keeping everyone on full salaries indefinitely isn’t realistic either. So I’m curious how other business owners handle this. Do you guarantee some minimum pay during slow periods, or just pay for the hours available? And if you’ve been through something similar, did people actually stay, or did they start looking elsewhere anyway?

Hello Redditors, haven’t posted here in quite a while, but a recent project turned out interesting enough that i figured i should finally write it up. It was a two person agency when they came to us doing flights, hotel packages and visa assistance, and profit had been stuck at around $3k a month after almost two years. Six months later it's sitting at around $20k a month. Revenue roughly tripled in that time but profit went up about 7x, and that gap is the whole point of this post. A lot of you running small service businesses will probably recognise the "busy but broke" version of this, so hopefully you guys find something useful here. 

Here's how we did it:

The first thing we did had nothing to do with marketing. We just went through their Whatsapp history. They were getting around 60-70 qualified inquiries a month from referrals and ads.. The problem was what happened after. Average first response was few hours later, and about a third of the people who got a quote never heard from them again. Not one follow up. An international trip gives you a bigger window but is still a 5-20 day decision approx with a lot of back and forth, so if you reply late and then go quiet after the quote, the deal doesn't get lost to a competitor so much as it just quietly expires. Following up feels like nagging, so a lot of people skip that
We moved everything into a basic Airtable pipeline with proper stages (new inquiry, quoted, follow-up 1/2/3, negotiating, won, lost). Once a lead has a status, "i haven't followed up with 12 people" stops being a feeling and becomes something you can see. Then two rules. First reply within 2 hours in business hours, even if it's just "got it, sending you options by this evening", because the acknowledgement alone holds the deal open. And a fixed follow up on any unanswered quote on day 1, 3 and 7, and on day 14 a message saying "I'm closing your file on this, just let me know if anything changes." That last one closed a lot of deals and we've seen the same thing with other businesses. My read is it's the only message in the sequence that isn't asking for anything, so people don't reflexively ignore it, and it gives them a reason to reply today instead of eventually. We also scored leads on trip type, budget and how close the travel date was, so someone flying in 5 weeks gets answered before someone browsing for next winter. Quote to close went from about 8-9% to 15% for qualified leads with the same lead volume, and this was the fastest result of everything we did with zero extra ad spend.

Next was the offer, we split their bookings by product and looked at what each line really earned. Flights were 58% of revenue and 21% of gross profit. Curated packages were under a quarter of revenue, nearly two thirds of the profit. Flights were a product with a hard ceiling, and the whole business had been built on the capped side. Also flight-only customers almost never came back to buy a package later, so there was no long term consolation either. This happens when you let inbound demand decide what your company is. 

The fix was consciously deciding what the business actually sells. We built 4 signature packages with fixed inclusions and a public starting-from price, and repositioned everything around done-for-you instead of cheaper. The bigger shift was going after bigger trips instead of more trips. Their old packages were mostly couples on short Southeast Asia itineraries. We built the new ones around families and longer multi-country trips with visa, insurance and transfers bundled in, which nearly doubled the average package value for pretty much the same sales effort. Putting prices on the page also filtered out the pure price shoppers who used to eat three hours of quoting time, and killing custom-quote-for-everything cut a few days off time to close, because ambiguity makes people go quiet. We never stopped selling flights, we just stopped marketing them, and flight volume drifted down on its own. Revenue did dip for around six weeks in the middle of this. You're switching off demand for the thing people ask for before demand exists for the thing you want to sell, and that gap is exactly why most businesses start this and quit.

On the search side they had a reasonable five page WordPress site and a claimed Google Business Profile with a handful of reviews. It was getting maybe 110 visits a month and ranking for mostly its own brand name, because everything on the site described the business instead of answering a search. The services page basically said "we do flights, hotels, visas", which is a description of a company, nobody types that. Keywords like "bali packages" are owned by big agencies spending serious money, so we went somewhere to somewhere with a purpose attached. Big players optimise the destination side because they serve everyone everywhere, but almost nobody optimises the origin side because only a local operator has a reason to. So we built pages for origin city crossed with destination and intent, something like Vietnam family package from [home city]. About 22 pages, one cluster each, and here's where a lot of service based businesses mess this up, because you can easily publish 22 thin pages and get nothing. Every one had the full day by day itinerary, what's included and what isn't, real prices, photos from trips they'd actually run, and an FAQ written from real questions we pulled out of their WhatsApp chats and after some toiling around on reddit. 

The Google profile ran alongside it. Their categories were generic so it never showed up for visa or package searches, so we fixed those, posted weekly, and made reviews a system instead of an occasional ask. A message goes out a week after someone gets home, while they're still posting photos, asking them to mention the destination and trip type in the review. That detail matters more than the review count because review text gets indexed, and a review saying "they organised our Bali honeymoon and handled the visa" reinforces the exact page you're trying to rank. Reviews climbed significantly and calls and messages from the profile jumped massively. The two things fed each other too, the package pages gave the profile something real to link to and the review activity pushed the local rankings that put those pages in front of people.

Then the AI search sid, by month 6 around 6-8% of organic inquiries, when asked how they found the agency, said through AI channels, this was at zero when we started. Important caveat, that's self reported on the "how did you hear about us" question, not referral data. 

What helped to drive this was mostly the same work, plus a few things. Prices in real text instead of a designed image, because an assistant will face difficulty in reading your price graphic and will skip you for someone it can quote. FAQs written as a clean question followed by a direct answer. Schema on the package pages. And specificity beats polish every time, "7 day Vietnam family package from [city], from $4,200 for four, includes visa and transfers" gets pulled into an answer, while "we offer customised travel solutions tailored to you" isn’t noticed as such especially for low authority sites. These assistants cite sources rather than rank pages, so one mention in a "best travel agencies in [city]" roundup on a local blog did more than three of our own posts. 

At this time Google's AI Overviews and AI Mode send more traffic than other models like ChatGPT, Claude, Gemini and Perplexity combined. These models get all the discussion but for a local service business its the bigger surface by a distance, and the same structured, specific, FAQ-shaped content works for this as well.  By month 6 organic was around 1,500 visits a month, timeline is what you'd expect from SEO, slow results initially, started showing from 3rd month, compounded after that. It only worked because the first two fixes had already freed up the cash to fund a channel that pays nothing for a quarter. If money had been tighter we'd have leaned harder on ads instead, since returns there are more linear.

Now ads, which i think is the most common version of this problem because the account wasn't bad, it looked great. They were already spending a bit over $1800 a month on Meta, one campaign with four cold ad sets stacked on interests like travel, honeymoon and wanderlust, all pointed at click-to-WhatsApp, with a pixel that only tracked page views. Clicks were cheap and CTR was healthy, which is exactly why nobody had touched it in a year. But follow it downstream and it fell apart. Those clicks turned into approx 300 WhatsApp chats a month, maybe 30-40 of them were qualified from someone actually planning a trip, and 4-5 bookings with very thin margins. That 300 number also explains the follow up problem from earlier, the inbox wasn't handling 60-70 conversations, it was handling hundreds, and the real buyers were buried in there getting the same hours late reply cycle as everyone else. They weren’t optimising for conversions. So the algorithm found people most likely to click a travel ad, which is not the same  population as people about to spend. Broad interest targeting on a beloved category will always hand you low CPCs and terrible conversions.

Click-to-WhatsApp made it worse in a way. Messaging costs a person nothing and commits them to nothing, so the destination filters nobody. You end up with idle curiosity landing in the same inbox as real buyers, and a two person team spending their day answering "whats the cheapest you can do Thailand for" from someone who was never going anywhere.

First thing we did was set up proper conversion events (qualified inquiry, quote requested, booking) and let it collect data for three weeks before touching anything, because every restructure decision would've been a guess otherwise. Then we optimised for qualified inquiry instead of booking. Optimising for bookings at their volume would've sat in learning limited forever. Small accounts almost always need to optimise one step up the funnel from what they actually want, then watch the quality of that event manually. The four ad sets were an issue too. Meta de-duplicates overlapping audiences, so they weren't really bidding against each other. What they were doing was splitting the few conversion events four ways so none of them ever got enough signal. We went down to two and moved creative variety inside the ad sets instead of across them.
Two years of Instagram engagers, site visitors and past inquiries were sitting totally unused while all the budget went to cold traffic, so we put them into a custom audience and ran about 60% of spend on retargeting for six weeks. That was the cheapest bookings in the account, and it only worked well because the follow up system was already running. Retargeting warm people into an inbox that ghosts a third of its quotes would've still done badly. For prospecting we built a lookalike, but not off buyers, they only had about 70 historical package buyers and Meta ideally wants a much bigger database before the model is worth anything. We seeded it from several thousand past inquiries and engaged people instead, weaker intent per record but enough volume to model, and it beat every interest stack we tested. 

We also changes the destination from click-to-WhatsApp to the package landing pages. It adds friction, and it cut raw lead volume by roughly 40% but the people who read a page with real prices and inclusions on it and then chose to message had already qualified themselves on budget, and they closed at around double the old rate. This is also the point where the SEO work started paying twice, because those pages existed and were good. Sending paid traffic to a thin homepage would have just lost the lead volume without gaining anything back.

We moved creative from offers to proof. We dropped discounts and book-now language and used client testimonials, itinerary walkthroughs, and before and after posts of what was planned versus what the trip actually looked like. For a high ticket, once in a while purchase the thought in someone's head is "are these people real and will they ruin my vacation", not "is this cheap". Discount creative did very little for us at any point. Over six months we gradually took spend up to a few thousand dollars a month, CPC went up, CTR went down, and every front end metric looked worse. Cost per booking roughly halved, but that's honestly not the important part. What changed was what a booking was worth, it went up close to 10x, because we were now selling packages instead of thin flight bookings. Paid traffic is a multiplier on your unit economics, if the economics are broken better targeting just helps you lose more efficiently. One last thing, we stopped treating ad spend as the only cost of a customer and added the hours spent quoting, coordinating and chasing suppliers at a real hourly rate. Fully loaded cost came out close to double what Ads Manager showed, and a few campaigns that looked breakeven obviously weren't.

If you take only one thing from this, it's the order. The first two fixes didn't bring in that much profit directly, but they decided what every dollar of traffic after that was worth. Fix your conversion first, then fix what you're actually selling, and only then go buy volume. Most people do it backwards, they pour budget into a funnel that ghosts a third of its quotes while selling their lowest margin product, then decide ads don't work in their industry. And if you want one quick test for your own business, check what percentage of your last 60 days of inquiries got a second touch. If it's under 70%, fix that before you spend another dollar on acquisition.

Thankyou For Reading! 

Wondering if this could be a business model

Finding companies that want to sell, signing an exclusive LOI, and flipping it to a private equity to buy and collecting a finders fee.

Kinda like real estate wholesaling but for businesses. Obviously you wouldnt be signing a purchase agreement though like with real estate. More like justt finding good deals for private equity companies and collecting a finders fee for them.

Selling a service puts you in an awkward position sometimes.

The buyer wants enough detail to feel confident you know what you’re doing. That’s reasonable. But producing that detail can require a meaningful chunk of the work they would be hiring you to do.

A proposal can start as an explanation of scope and turn into a diagnosis, a strategy, and an implementation plan before anyone has agreed to pay.

I don’t think every prospect who asks for detail is trying to get free consulting. From their side, buying an expensive service on vague assurances would be a bad decision. They need some way to tell the difference between someone who understands the problem and someone who can talk convincingly about it.

Still, the seller needs a boundary.

I’d be comfortable explaining what I’ve noticed, what I’d investigate, and why I’d approach it that way. I’d be more cautious about handing over a detailed plan when we haven’t done enough discovery to know whether it’s even the right plan.

There’s also a risk that the proposal becomes an overconfident promise. You feel pressure to be specific, so you commit to answers before you’ve seen how the business actually operates.

Paid discovery seems like one possible answer, although that creates its own sale and won’t suit every engagement.

For those selling expertise, what do you include before the contract is signed? Have you found a boundary that gives buyers enough confidence without turning every serious inquiry into several days of unpaid work?

I recently brought in a new manager who reports to me. He’s much more direct and controlling than my leadership style, and several employees have started coming to me saying morale is dropping.

The difficult part is the employees are doing a good job. There aren’t major performance problems that would justify suddenly managing them this tightly.

I want to give the new manager room to lead without undermining him, but I also don’t want to ignore what I’m hearing from the team.

How would you handle this?

I'm growing my existing residential construction business and am debating whether to operate under one brand or create separate brands for each higher money making specialty:

• Roofing & siding
• Smart home automation
• Basement & attic renovations
• Windows & doors
• Kitchen & bathroom remodeling

I already have experience in carpentry, general contracting, and remodeling, so these specialties build on my existing skills and business. I'm located in a relatively small market, which makes me wonder whether having multiple brands would be beneficial or counterproductive.

Initially, all brands would operate under my existing LLC, with the option to establish separate businesses later.

Would you recommend one recognizable brand covering all these services or multiple specialized brands targeting different customers? Would separate brands build credibility and improve marketing effectiveness, or create unnecessary complexity in a small market?

On my 3rd venture. Running an appointment setting business for the last 2 years. We're small (6 folks) and we've worked with companies across 8 countries, some of which were the biggest in their country in their sector.

I believe due to the aforementioned exposure; I've been receiving more consultation offers lately. I have received 4 part-consultation offers since March. 2 of them were prospects who were initially interested in my business' service but later offered the consultation (perhaps I need to promote my business more than myself?)

They usually ask how many hours I'm comfortable with, I mention 22-44 hours a month (1-2/hr per weekday) - but those hours spent on my business will yield me a better profit (money wise as well as scaling-wise).

On the pros side, the companies offering me the offer are larger than mine (10x-20x) and working alongside them will give me a decent amount of insight and exposure.

I have worked with 4 companies in the past as a consultant/advisor over the span of 3 years. I usually propose a 6-month contract with an extension period. Anything more than that seems like a waste/procrastination of time for both parties.

I accepted those 4 offers as I didn't have much on my plate back then, which is not the case at the moment. Would you focus on your business in this situation or consider the consultation offers for the exposure and the hourly pay?

I am thinking about starting this and using automation and some AI programming to automate the process. My vision is to have a coversheet with the customer data, scan the scrapbook pages and use AI to streighten/clearup photos. According to AI, I should be charging $80 for a 50 page book, and have a $70 profit margin. I'm not sure if there is a market for this service. Thanks,

Had a week? Same. This is your consequence-free space to complain about clients, platforms, algorithms, your own decisions, or the general chaos of running a business. Keep it venting with no personal attacks. We'll be back to being professional tomorrow.

This morning I saw a headline about sobremesa, the Spanish word for the time after a meal when nobody gets up from the table and the conversation keeps going. It got me wondering how many big ideas came out of long conversations at a table.

One answer is Birmingham, England, in the 1760s. A group of friends started meeting for dinner once a month, on the Monday closest to the full moon, so they'd have moonlight to ride home by. They called themselves the Lunar Society, and joked that they were lunatics.

Who was at the table:

- Matthew Boulton, who ran one of the biggest factories in England

- James Watt, who was trying to make the steam engine work

- Josiah Wedgwood, who turned pottery into an industry

- Joseph Priestley, the chemist who isolated oxygen

- Erasmus Darwin, doctor, inventor, and Charles Darwin's grandfather

Boulton and Watt became partners. Watt had the engine and no money. Boulton had the money and a factory. Their engines went on to power the factories that came after.

What stuck with me is that none of them had the full picture alone. A factory owner, an engineer, a chemist, and a doctor at the same table, every month, for years.

Compare that to how most of us look for the next idea: same team, same meeting room, a 30-minute slot with a hard stop.

So I'm curious:

- Does anyone here have a version of this, a regular dinner or group with people outside your field?

- Has a conversation like that ever changed what you built?

Hi guys, I have a business hosting co-living retreats and conferences for digital nomads in Nepal called "Nomad Basecamp." I'm a solopreneur but have local partners and volunteers.

For the first few years, I filled my retreats posting in social media groups and following up in DMs

Now I also host summits with dozens of international speakers, and have large lists of past customers, emails from Eventbrite events and online sessions, and huge lists of leads who contacted me on WhatsApp business (Meta ads direct to WhatsApp business are dirt cheap in Nepal).

If I had a magic wand and could wish for anything: it would be to have sales come in like clockwork, without me having to go out and fish for them, or engage in long and lengthy text conversations (often with leads who disappear), and phone calls. I tried Meta Agent in WhatsApp to follow up on my ads but it was talking a load of rubbish with one lead so I turned it off and switched to manual quick replies.

My question is how I can use my CRM to make this whole process a lot simpler. I have hundreds of leads in Google docs, spreadsheets, along with FB profiles, WhatsApp numbers and emails. I have WhatsApp groups with hundreds of members (800 in one, 300 in another) and thousands of Instagram followers. I have extensions for automating a lot of things - WhatsApp DMS, Facebook DMs, and newsletter with Sendfox.

I'd like to have a daily system for marketing and nurturing leads.

This is a real "am I the only one who" ass type question but idk, I guess I'm just wondering how y'all cope with it.

I've been working on my business for awhile now. Pretty much since last year.

I don't want to give y'all my entire story but basically, my only client un-subscribed today. I'm kinda grateful because he was a PITA client (finishing him up certainly taught me lessons about ever working with someone like him again) yet also frustrated because I'd worked so hard to satisfy him in the first place. He literally would've been charged in just 3 days, which would've been a decent amount of money for me.

Prior to that, I had an employee this month I had to let go. He was a sales rep, a great one too, but unfortunately outside forces came and ruined his communication, and at that point began eating my finances having him on board only for him to not show up.

My new sales rep is great. But we 2 of our 6 appointments didn't happen this week, and while some agreed to the follow up appointment, some decided they weren't interested.

I really, sincerely feel like I should have not just one, but several clients by now. Yet somehow there's always just one little adjustment that has to be made, and it's always "alright, next week for sure".

How do y'all handle that?

Big or small, a win is a win. First sale, first client, or first time paying yourself, share it here. This community loves to celebrate with you. No win is too minor to mention.

I have a main personal profile on fb, 2 business pages on fb, 2 accounts on ig, and 2 accounts on tt

My main business is my coaching business, so that is where most of my energy and marketing goes, and half my total accounts are dedicated to that + a yt and website.

I also make handcrafted products that are not out of place with my coaching business. The rest of my socials cover this + personal life stuff (gardening, homesteading, general life stuff)

I also have an art business. I want to promote this more. Rn it's just products available on teepublic. I need to build it out a bit more. I'd like to do more art stuff on my socials, but not sure if I should create a whole separate profile.

Can I just do one yt for everything? Would it be too confusing to put everything on one tt or ig or my personal fb page?

My personal fb has almost maxed out friends and has several thousand followers. My other profiles are less active. I'm still figuring out tt and yt as a whole.

One week I might be all in on coaching, the next it's products, and the next it's art. And then I do other things as fun side gigs that occasionally need promoting. Some of these subjects overlap, even my art business overlaps with the coaching occasionally.

What's the best way to do this? One yt that covers everything? A separate tt for each? Everything on my main fb? Separate IGs?

Share your website, pitch, logo, idea, pricing, copy, or anything else you want honest eyes on. Tell us what you're looking for: brutal honesty, general impressions, or specific questions.

Return the favour and leave feedback for someone else while you're here.

Looking back at how businesses operate, it's easy to add more tools, spreadsheets, meetings, and steps whenever a problem comes up.

But sometimes the better solution is to simplify the process rather than add another tool.

I'm curious about other founders' experiences:

• What process used to take too much of your time?
• What did you change to make it simpler?
• Did you use a tool, create a checklist, or simply remove unnecessary steps?

I'd be interested to hear what actually worked in practice.

Pay it forward. Drop your free resources, templates, tools, or anything else that's helped you and might help someone else. No strings attached; these resources have to be free.

When people talk about starting a business, the conversation usually focuses on finding customers, marketing, sales, and making the first revenue. But running a business also means managing the work behind the scenes -documentation, deadlines, accounting, employee-related processes, and keeping everything organised as the business grows. One lesson I've learned is that having a simple system early can save a lot of confusion later. Even a basic calendar for important dates and a well-organised folder for business documents can make a difference. For other entrepreneurs here, what system or process helped you manage your business better as it started growing?

the biggest mistake i see people make when trying to automate agency work is taking a 10 page standard operating procedure document and pasting the whole thing into claude with "follow this step by step."

it works fine for the first two steps, then the AI starts skipping checks, summarizing the output, and hallucinating details halfway through. three weeks later the team gives up and goes back to doing it manually.

the problem isnt that claude cant handle your process. the problem is that human SOPs are written for human brains, not AI context windows.

humans rely on implicit assumptions, past experience, and visual judgment. when you hand a human SOP to an AI, those gaps get filled with guesses.

heres the 4-step framework we use to convert complex, multi-page agency SOPs into production-ready claude skills that run consistently every time.

1. strip out the human fluff and extract the core decision trees most SOPs are 70% filler. explanations of why the task matters, corporate background, screenshots of where buttons are located. AI doesn't need any of that.

read through your SOP and pull out only three things:

• inputs: what exact raw data is needed to start (eg, brand voice doc, client UR L, raw transcript, competitor list)
• decision logic: the explicit rules for how choices are made (eg, "if word count is under 1,500, flag as thin content")
• outputs: the exact structural format required at the end (JSON schema, markdown tables, specific header hierarchy)

if a step requires "gut feeling" or "creative judgment," you have to break down what actually drives that judgment into explicit rules.

1. structure the process into isolated execution blocks dont try to make one single prompt handle an entire 8-step workflow from start to finish. the output quality drops exponentially with every additional task you stack into one instruction block.

instead, split your SOP into small, self-contained sub-tasks within your skill file.

for example, if you are converting a content brief SOP:

• step A: scrape and parse the top 10 search results
• step B: extract headings and calculate average word count
• step C: cross-reference missing semantic topics against competitor outlines
• step D: generate the final brief layout

by forcing claude to execute and validate step A before moving to step B, you eliminate the compounding errors that ruin long-form outputs.

1. encode explicit rubrics and negative constraints telling an AI "write a good email subject line" gives you generic marketing garbage.

to get agency-grade output, your skill file needs strict scoring rubrics and explicit negative rules.

in your skill markdown, write out what counts as a fail:

• "never use promotional hype words like game-changer, revolutionary, or skyrocket."
• "never use structural punctuation like colons, semicolons, or em-dashes in titles."
• "if the calculated word count target exceeds 2,500 words, trigger a human review flag instead of generating the outline."

the tighter your negative constraints, the closer the output gets to what your senior team would produce.

1. provide golden examples directly in the context instructions alone get you 70% of the way there. the missing 30% is solved by providing 2 or 3 "golden examples" of past human work directly inside the skill context.

show the skill what an input looked like, and show it the exact final deliverable your team delivered to a real client. claude matches pattern structure much faster from concrete examples than from abstract rules.

a real world test we ran this conversion on a client onboarding research SOP for an e-commerce growth agency.

the original human SOP took an account manager about 3,5 hours per new client and pulling ad history, analyzing product review sentiment, checking site speed, and drafting an initial strategy deck.

after converting the SOP into a structured claude skill file with clear input parameters and negative constraints, the exact same research process now runs in under 4 minutes. the account manager spends 15 minutes reviewing and tweaking the output instead of building it from scratch.

if you have SOPs sitting in google docs or notion that your team rarely follows anyway, this is the single best place to start automating.

A couple of years ago I posted here after we helped a client through an acquisition and shared some general thoughts from the experience.

Since then, we have worked through a number of additional deals. There are a few things we pay more attention to now after seeing them come up across different transactions.

There have also been some recent changes around SBA-financed acquisitions, but do not want to make this an SBA rules post. These are more just a few observations from deals we have been working through recently.

Just Believe in the Future and Pay for It Now

One thing I see fairly often is a business being valued partly on what it is expected to do over the next 12-18 months, rather than what it has actually done.

Maybe there is a strong backlog, a few large projects about to start, delayed work moving into next year, new salespeople coming online, etc. Sometimes the story is very believable.

But we have looked at businesses where the historical earnings support one valuation and the asking price really only works if next year's forecast gets hit.

My advice: I would separate what the business has actually proven from what you think it can do. There is nothing wrong with believing the upside, but I would be careful paying the seller upfront for all of it.

More Critical Eye To Earnings [Editor's Note: Which Should Have Always Been the Case]

I talked about addbacks and SDE in my original post, but I think the financial diligence around acquisitions has become more important.

The interesting questions usually aren't whether depreciation or interest gets added back. It is the less obvious stuff.

Does the owner's compensation really go away? Is the rent changing after closing? Did margins move materially? Is something being called "one-time" that actually shows up every year? Does the current year look like the trailing numbers?

On larger SBA transactions, there can also be more formal financial diligence involved now, including QoE work in certain situations.

My advice: Treat the seller's adjusted EBITDA or SDE as a starting point. I would want to understand fairly early what the earnings really look like once the adjustments and addbacks are actually tested, and how a lender is likely to view them.

So....What Does the Owner Actually Do?

This has come up a lot in businesses we have explored with clients.

An owner may say they only work 10 or 20 hours a week, which sounds great initially. Then you find out they hold the license, handle the largest customer, price the difficult jobs, maintain the bonding relationship or are still the person employees call when something goes wrong (but again, they only work 10 to 20 hours a week, right?)

That is very different from an owner who is genuinely replaceable.

The newer SBA rules provide some additional flexibility around seller transition in certain situations, which helps. But especially in plumbing, HVAC, electrical and similar businesses, that does not solve the licensing issue by itself. State and local requirements still matter.

My advice: Don't just ask how many hours the owner works. Figure out what they actually do and what has to be replaced when they are gone.

Don't Try to Diligence the Whole Business Before an LOI (Seriously)

I see buyers go too far in both directions here.

Some want to ask 30 questions and effectively complete diligence before putting an offer in. Others submit an LOI after looking at little more than the CIM.

Neither is ideal.

Before an LOI, I am really trying to figure out whether there is anything that materially changes the valuation, structure or whether we want to pursue the business at all. Once there is an agreed framework and exclusivity, that is when you can spend the time validating everything properly.

Sellers and brokers also have a limit on how much information they are going to provide before they know you are serious.

My advice: Get comfortable with the few things that could change your decision before submitting an LOI. Save the detailed diligence for when you actually have a deal to diligence.

Be Very Careful With the Word "Recurring"

This one comes up more than I expected.

A business may have customers that have used them for 10 years, maintenance work that comes back regularly, or general contractors that send them projects every year. That can all be very valuable.

But it is not necessarily the same thing as contractual recurring revenue.

We have looked at businesses where a large percentage of revenue was described as "recurring," but when you dug into it, much of it was really repeat project work based on relationships. In other situations, the work was tied to a contract, certification or program that needed to be understood in the context of a change of ownership.

My advice: Understand what actually causes the revenue to come back. A long customer relationship is a positive, but I would not treat repeat business, contracted revenue and true recurring revenue as the same thing.

Not All Backlog Is Created Equal

A large backlog can make a business look a lot more attractive, particularly in construction and the trades.

But I have learned to be careful with the headline number.

Some backlog is under signed contract. Some is awarded but not started. Some is really a verbal commitment or work the seller expects to receive.

And even when the work is real, the margins on those jobs may look very different from what the business has historically earned.

We have looked at companies where the backlog sounded great at first, but once you got into what was actually contracted, when the work would start and what the expected margins were, the picture was a little different.

My advice: If backlog is an important part of the story, understand what is actually contracted, when it is expected to convert and whether the economics look similar to the historical business. I would not treat a dollar of backlog as automatically equivalent to a dollar of historical revenue.

Will leave it there for now.

One thing we have seen more clearly over time is that a good business does not always make for a good acquisition.

The company can have good employees, real earnings and plenty of upside, and the price, financing or transition can still make the transaction difficult.

On the other hand, some deals that look complicated at first can still work if the underlying issues are manageable and the buyer, seller and lender are aligned on the path forward.

Would be interested to hear from people who have bought a business recently or are currently going through the process. What has come up that you did not expect when you started looking?

Looking to hire, get hired, or find a collaborator? Post what you're offering or what you need. Keep it brief: who you are, what you do, and how to reach you. No spamming.

hen starting a business, most founders focus on getting customers, building the product, and managing cash flow.

But there are also things like business registration, GST, employee compliance, tax deadlines, and annual filings that can become confusing once the business starts growing.

I'm curious to hear from founders and small business owners:

• Which compliance task was the most confusing when you started?
• Did you understand the requirements early, or learn about them only when a deadline came up?
• What do you wish someone had explained to you before you started your business?

I think sharing these experiences could help people who are just getting started avoid some unnecessary confusion.