Ever wondered how to be a successful Entrepreneur without starting at the bottom? Join Nick Bradley (Host of the UK’s #1 business podcast, entrepreneur, investor, and 24 Successful Exits) and Eric Partaker in discovering a sneak peek into the world of acquisition entrepreneurs. Apply these tips and reach your full potential!
KEY POINTS
Follow Your Own Path – Don’t let the people around you influence you into what they perceive as the safe option. If your goal is to get a job, get a job! If you strive to start your own company and work for yourself, do it! Do your own thing and let them watch you succeed.
Why Build Your Empire When You Can Buy It? – Consider becoming an acquisitions entrepreneur. Buy an existing profitable business instead of starting your own.
The Secret to Life is Flowing Not Forcing – Just because other high performers adopt certain habits does not mean you need to! Work out what is important to you, only then should you start to think about which habits and routines are going to enrich your life. Ask yourself, what puts you in your flow state? What gives you the energy and focus to be able to perform at your best?
Is Your Business Failing? – Three common reasons for business failure include leadership teams running out of ideas, bad cash management and lack of adaptability.
80/20 Principle – In business 20% of our efforts produce 80% of the result. Equally 20% of your life choices account for 80% of where you are in life.
Take a stand – Decide that you’re not going to fade into the crowd anymore. That you’re going to change your life and achieve your goals.
How Adaptable Is Your Identity? – The mindset of a successful person scaling up their business is vastly different to the start-up mindset. Learning how to evolve quickly to make that transition will determine how successful the business will be.
Optimize Your Health – View eating as intake of energy. Higher energy levels mean you can do more and be more. Ditch the nightly red wine and steak dinners and opt for something that will make you feel and perform at your best.
TRANSCRIPT
Eric Partaker:
I was so out of kilter, my cup of ambition and perceived success was so full, but my cup of kind of helping anyone else other than myself was empty. And I realized that the only way that I’m going to feel any level of fulfillment, is I need to then change everything. You can have a seven figure lifestyle business if you’re clever, if it’s about having a decent income and then just traveling the world with your family, then just have a lifestyle business with eight people and automation. Scale up is a very different beast and therefore you have to have a bigger vision and you want to make maybe bigger impact, to want to then take the journey and make that choice.
Eric Partaker:
Hi, everyone and welcome to another episode of The 2% where we have amazing conversations with peak performers, from all walks of life, for what purpose? To help you decode excellence, to help you close that gap between your current and your best self. And today, I’m super excited to have a friend of mine on the show named Nick Bradley, and welcome to the show, Nick, great to have you.
Nick Bradley:
Hey, Eric it’s awesome man. I’m high energy. It’s a Friday when we’re recording this. Let’s do it. Let’s have some fun.
Eric Partaker:
Now, I know you’re going to be explaining a little bit about yourself, but just to fill everyone in who’s listening, Nick is one of the most accomplished people that I know, renowned entrepreneur, investor, author, speaker, I think you’ve exited on what 24 businesses now?
Nick Bradley:
24 businesses over a span of about 15 years. It’s a life dedicated to the mergers and acquisitions pretty much.
Eric Partaker:
Yeah, and a total value. We’re talking in the billions, right?
Nick Bradley:
I say it’s about 5.2 billion. But you know, there’s a couple in there that I’ve forgotten to add.
Eric Partaker:
Right, okay.
Nick Bradley:
There are some big ones in there, so in that 5.2, there are three quite significant 10 bigger as in over a billion dollar exits.
Eric Partaker:
Yeah. So, point being, if you’re listening right now, you’re going to really get a lot of value out of today, because this is a conversation with someone who knows what it takes to scale a business, has done it not just once or twice, but as you just heard 24 times. And not for small change to the tune of five billion and missing some numbers, as Nick said, as well. And mastery happens repetitiously over time through consistency and as Nick just said, 15 years. And that’s a good segue to another obvious passion of Nick’s which is helping empowering business leaders and investors to really reach their full potential with their businesses. Nick also has a podcast of his own, the Scaling Up your Business Podcast has reached number one right?
Nick Bradley:
Number one in the UK, number 17 in the US, and I think number six in the Ukraine or something?
Eric Partaker:
Oh, yeah we got to get the Ukraine in there of course.
Nick Bradley:
130 countries, but who’s counting?
Eric Partaker:
So yeah I’m really excited to have you here. And there’s another element to Nick, which is quite fascinating for me, because if you’ve been listening to the show, you know that I’m obsessed with the intersection of peak performance leadership and entrepreneurship. And Nick is a genuine peak performer. He’s competed in 67 marathons, 24 ultra marathons. Is that right?
Nick Bradley:
That’s correct. Yeah.
Eric Partaker:
Yeah. So this is somebody who doesn’t just talk a game on the work front, he’s lived on the work front, he lives it on the health front and last but not least, you’re also a family man. Right, Nick?
Nick Bradley:
I am. Yeah, I’ve got two young daughters who are now nine and six, Arabella and Matilda. A lovely wife, a 12 year old Labrador and a brand new, I think 12 week old Labrador? They’ll get the puppy. Family and my values around that are probably my strongest why. And we can talk around those different things. Everything I do is around legacy and impact and inspiration and living the right standards for them. And that’s what drives a lot of what I do.
Eric Partaker:
Yeah. So yeah, quite frankly, is such a perfect guest for the show, Nick, because one of the things that I always talk about with people, is the need to realize our full potential by balancing three domains in particular and operate at our best on the health front, on the wealth front and on the relationship front. And yeah, really excited. Let’s dive in because you’re definitely overachieving on all dimensions. And yeah, awesome. So let’s bring it down now.
Nick Bradley:
I’m happy man. I’ve been down a lot.
Eric Partaker:
Yeah.
Nick Bradley:
It’s all good.
Eric Partaker:
That’s important, because you weren’t born this way of course. And George Bernard Shaw, we create ourselves. And so you’ve created that, but I’m sure it hasn’t been without struggle. So can you bring it back down to earth maybe for us, and talk about how you started? And maybe some of those kind of struggles that people can relate to early days?
Nick Bradley:
Yeah, I’ll talk about it in sort of themes if you like, because otherwise, the podcast isn’t that long, right?
Eric Partaker:
Yeah.
Nick Bradley:
But there are certain things that have happened at certain stages, which are like milestones or points of reflection now, when I look at them. Because they were bits where, the way I describe it, in my own mind certainly is, I came to the fork in the road and I had a choice of directions. And there’s been at least three of those, which have then defined a lot of what I’ve done. First one was when I was very young, so my dad left our family when I was two years of age. It was just a marriage breakup, but that my mom into a spiral. And she then got married a number of times after that.
Nick Bradley:
And it was just a very unstable, difficult time. And of course, when you’re sort of seven or eight years, they say a lot of how you are now, is formed through the environment you’re in. First thing first I ate a lot, I put on a lot of weight. I just ate junk food, like you wouldn’t believe. No one really helped me with that and I don’t suggest that they necessarily should have, but I was pretty young and I didn’t know and I was just eating lollies and ice cream. I’m now 75 kilograms, I was like 125 kilograms as a nine year old. So 50 kilos more says.
Nick Bradley:
And there is obviously all of this links back into the running and all that. But what was fascinating about that is I got bullied really badly, I ended up in the hospital after a trip up to Queensland, and no one was really around to give me any guidance and advice. And I had to learn. First I made the decision after that, that I needed to lose the weight. I wasn’t happy with myself, the bullying and all that. It was all to do with being this fattest kid in school. And I just started to study as literally a 10 year old how to do exercise more effectively, how to eat more effectively. I just went and got books in the library, back then there wasn’t the internet. And I remember I lost all the weight. And what was interesting about that is that, that was over about a two or three year period. So when I went into my teens, I went from the sort of outcast fat kid to being quite athletic and representing my school in some pretty high level sports, rowing and basketball being the main ones.
Nick Bradley:
And then that took me into an interesting place, I became obsessed with physicality. And the journey of transformation at that age also taught me about the link between the physical self and the mental self. And again, I look back now I can see it at the time you think, you might as a teenager even think like that. But I realized that I could change anything if I put my mind to it. And so I then started my first business in my late teens. So it was a gym business, a fitness business, it was a personal training studio, in the late 80s in South Australia, where let’s be frank, personal training, no one knew what that was then.
Nick Bradley:
I was like one of the first in Australia to do it. And I had a very successful business before I was 20. I had three staff, was running private training in a studio outside of a gym. I was doing about 35-40 hours a week. The business was turning over good money. And I thought everything was great. But this is the funny thing. Sometimes you get ahead of yourself, and then you sabotage it. Again, I didn’t know this at the time. But as the business was getting successful, I remember that a lot of my programming from my family was entrepreneurship equals bad, it equals pain, you need to get a job. My grandfather was a very strong character, one of my most inspirational people in my life at the time.
Nick Bradley:
And he was like, “Get a job, get a job, get a job.” For reasons I can explain. So I sabotaged this business that I started, I sold it for 3000 Australian dollars, which is about the price of a Starbucks coffee these days. And I got in my car, literally, I packed my car by this little Ford Laser thing. And I just left. I ran away from my hometown. And two things happen there. One was I had to leave because if I stayed in their environment, I would have ended up a lot like my family and not that, they’re great people but they had less ambition than what I was starting to form. And the other thing is I was embarrassed by what had happened with the business and how I just literally killed it and I thought I now need to go somewhere else and reinvent myself again.
Nick Bradley:
And I look back now, it’s the best decision, hard decision because I’ve never been back. I’ve been back to see family but I never went back in the same way. But that was then the pathway into a whole range of other things. So I’ll pause there because, there’s a lot in that tiny story that sort of 10 to 15 years story that forms what happens next and who I am today.
Eric Partaker:
Yeah, and I’d love to go back if you could to the bullying. And then you not being treated well by those around you. How intense was that for you? And what do you think gave you the power to actually have that agency, that sense of control to okay, I’m going to do something about it. Was it a particular moment in your mind? Or, was there a turning point? Can you break that down a little bit more?
Nick Bradley:
Yeah, it was in the space of a number of months, but literally just a number of months. And I was in year four of school. So they’re going to sit us, but probably about eight or nine, when it was really hitting hard. Eight, nine ,10, that sort of age. And I remember, this is full on every recess time, and every lunchtime at school, I would lock myself into the toilet, to the boys toilets and just sit there.
Eric Partaker:
Geez,
Nick Bradley:
I did that for months. And it coincided with a transition where I’d left one school and went to a new school and I went to that new school as the new boy, and didn’t know anyone there. And I went in sort of halfway through the year or so the last term. And so I was the new kid, I was the fattest kid, no friends, and locking myself in the toilet. So that was happening. And then we went on this trip up to Queensland, up to the Gold Coast, and I was up there with my grandfather and my mom and just some other family members. And I remember, there was a pool, swimming pool. And there was some kids there a little bit older than me, they would have been not quite teenagers or maybe early teenagers when I was three or four years younger.
Nick Bradley:
And they started teasing me. And for the first time, I thought I’m going to stand up to myself, and they called me from the pool around to this garden area where there was no one around and literally kick the living out of me.
Eric Partaker:
Wow, okay geez.
Nick Bradley:
And I ended up in hospital. But it was at that point, after that, I said, that’s it. No help. I made a decision that that is it. And I didn’t realize the power of the decision at that point, but after that, I decided I’m not going to be the victim anymore. And that’s probably what I was beforehand, I’m now going to do something about this.
Eric Partaker:
Amazing, thank you for sharing that. It shows you how life is nonlinear. And you made a reference, when you first started to speak about this about, there’s choices we have in life and those are those nonlinear moments when we decide to go right, when we could have gone left, or vice versa. And that relates to the whole 80/20 principle. So 20% of our effort for 80% of the result, there’s probably 20% of your life choices that account for 80% of where you are in life.
Eric Partaker:
And I’d love to just do a segue now and apply that to a totally different topic now. So the scaling of a business. There’s lots of things that you can focus on when scaling a business. And I know you have a very comprehensive set of framework and tools in you’re scaling up business academy, which is amazing. But if you were to 80/20, even your own frameworks and tools, what are the 20% of things that a business should focus on that from a scale point of view, you think yield 80% of the results?
Nick Bradley:
Yeah and it’s probably worth talking a little bit about some definitions for people here as well, because this is a belief I have and this hasn’t necessarily come from me reading a book, and then taking it. I think any business can go through a period of growth. But quite often you find particularly the journey from startup into a more of a scale up part of the entrepreneurial journey or the business journey, people don’t understand how or why that’s happening. Not to a level of what I would call precision that is required.
Nick Bradley:
And I start with that, because people ask me and say, what’s the difference between growth and scale? Because those two words are used interchangeably without any real understanding. And I say, anyone can grow for a period of time. But when you’re in a scale position, when you’re in a scale part of the journey, it’s a level of predictability that is absolutely understood. And the reason it’s understood is because you have the right people in the right seats, the right processes, the right metrics, the business operates like a machine.
Nick Bradley:
So to your question about what are the 20% to get to the 80%? The first foundational point of that is understanding the drivers that are going to get you to the end game, the result of what you’re trying to build, that’s different for every business. But ultimately, you’ve got to have the A and B to understand it. And then it’s about being as efficient and effective in those choices, in between those two points, which are going to get you that result. Now what most business people do, and we’ll talk about identity, because it’s super critical, is they go from startup, they go into scale up, they think the person that they were at startup, is the same person that’s going to be successful in scale up. And there is a massive difference between the two, both in terms of mindset and skill set.
Nick Bradley:
And I’ll finish on this success in that journey is very much first and foremost, how the leader needs to evolve and appreciates what that is. And if they can get that quickly and make the transition, that tends to determine how successful business will be through that part.
Eric Partaker:
Amazing. Some of the key highlights that I get from there is, from an 80/20 point of view, is really acknowledging and doing something about what are the people required for the business? What are their systems, their processes, so people in systems say,-
Nick Bradley:
Starts with the leader first, and this is something which will resonate perfectly with what you’re about Eric. Because unless that [inaudible 00:16:16] works, the rest don’t matter.
Eric Partaker:
Yeah. And then on the leader bit, so you talked about, two things in particular. So mindset and skill set to cross that chasm, say from founder to CEO. What if we, what if somebody says, “Hang on, I don’t want to subscribe to the need to go on that path.” Just to clarify, does everyone even need to? Did you have to do that journey?
Nick Bradley:
Of course not. It’s funny when people come to me, and it’s a great point. Because they go, “Now I want to scale I want to scale.” And the first thing I go is, “Do you want to grow or do you want to scale, let’s get not semantics, but let’s just be clear.” And then I say, “Are you sure?” And then they kind of have this look of like, “What do you mean? You’re the scale up guy, and I’m here to scale. And now you’re telling me or asking me whether I want to do it?” And I say, “Yeah.”
Nick Bradley:
And the reason is this, you’re about to walk into the desert, with hardly any water. And you’re going to have to trudge through that, there’s a little bit like an ultra marathon. And you have to be gritty resilient, you’re going to have your best day and your worst day on the same day, blah, blah, blah. All for what? And then that’s where people go, “I will deny.” And this is the thing, you can have a seven figure lifestyle business if you’re clever. If it’s about having a decent income, and then just traveling the world with your family, then just have a lifestyle business with eight people and automation. Scale up is a very different beast, and therefore you have to have a bigger vision, and you want to make maybe bigger impact, to want to then take the journey and make that choice.
Eric Partaker:
Yeah, excellent point. And you’re right, this does come up in my work as well with entrepreneurs and leaders and when I’m having that similar discussion, I really open up the possibility that you actually don’t need to do that journey with just one simple question. I ask, “In your mind, is Richard Branson successful?” And everyone says unanimously, “Yeah.” So you wouldn’t mind having his success? Would you? No, not at all. But yeah, he’s never been the CEO of his businesses, he knows to step aside and put in that professional management. So I just wanted to clarify that for listeners, because it’s a real option, and it’s a successful option.
Nick Bradley:
In the area that I focus a lot of my time now, which is buying businesses and then building out an empire of multiple businesses in terms of ownership. I’m not the owner operator of anything. I choose to get operational at certain points in time as you would as well, where your skill set fits a situation. Plus, you might love it. But I’m an owner investor, and to be an owner investor means I can still sit across the strategy. But this is where we’re going and this is the choices we’re going to make to get there. But I don’t have to run the operation.
Eric Partaker:
Yeah, exactly.
Nick Bradley:
And to be honest, don’t even put me there. Because I’m great at fixing things, I’m great at seeing the 30,000 foot view, but get me into the weeds and then something’s going to probably break.
Eric Partaker:
Yeah. And you mentioned acquisition. That’s definitely a subject I want to get into later because it’s yet another way to grow and or scale through acquisition. Before we go there though, so let’s just go back to the leader who does want to cross that chasm. I, he or she wants to go from founder to CEO and they do want to acquire the mindset and the skill set to do that. So starting with the mindset from your point of view, and maybe if you have a story to illustrate either with yourself or with someone else, but yeah, what is the key thing that needs to happen 80/20 wise, within mindset?
Nick Bradley:
Yeah, and I’ll talk about my own personal story here, because I think it’s an important, I think it will help a few people actually. I got to a pretty serious position in private equity. As I said, I was known as a guy who would go into companies that were failing, and then I would turn them around on behalf of the investment firm. And I did that for a number of private equity firms in the UK and the US. It’s a fun environment at first, it’s very lucrative, the money you can make is just crazy. And as a young guy mucking around the place, it was cool.
Nick Bradley:
But then after a while, you start to see the dark side of that, and it can become quite toxic. Firstly, it can become very addictive just because of the money and things like that, depending on what your values are. Secondly, you can get caught up in the culture which is still very much about power, winning at all costs, doesn’t matter what decision you make, as long as there’s another extra few zeros on the end of that decision. So for me, personally, that took me almost to a breakdown, pretty damn close physically.
Nick Bradley:
Because I remember one night doing a deal a lot of things that happened leading up to this deal, but I remember, I went to bed one night, and I woke up at three in the morning, having cracked all the teeth in the right side of my jaw. And it was, even now when I think about it, I didn’t know what happened. It was like I’ve been punched man. And I remember going to the dentist the next morning, the doctor first actually and then the dentist. And yeah, she said, “You just cracked all your teeth.” You’ve gone to bed and there’s been something happening, And I knew what that was, it was a build up of a lot of stress. And it’s just culminated in this physical event seriously.
Nick Bradley:
And so, for me, it was a little bit like the fat kid locked in the toilet cubicle. I was like, “Wow, that’s it, right?” And then I had this epiphany of like, man, how have I been showing up for my family for last few years? Because I hadn’t been present, I can’t remember it. So to your question, how did I change that? So I called up someone, a friend who I had a lot of respect for, for the success that they had, but not just the success that looked at from the outside, but they were just really happy and comfortable and balanced and just chilled out and I was like, how do you do that? Because I wasn’t like that.
Nick Bradley:
And then I went on my own exploration around thought patterns and beliefs, I ended up doing a lot of stuff with Tony Robbins, I went to a number of his events, I went to pretty much all of them. But that journey of self discovery gave me the most amazing gift, which was this, which was I was so out of kilter, my cup of ambition and perceived success was so full, but my cup of helping anyone else other than myself was empty. So I look like this, off balance kind of scales, and I realized that the only way that I’m going to feel any level of fulfillment is I need to then change everything.
Nick Bradley:
So I ended up making a decision at that point to quit everything I’d done on private equity, the seven figure salary everything, that’s when I decided to do the podcast. And that’s when I decided to make a bigger difference in the world, still have a great business, still help people, but do it on my terms in a way that’s going to help that. So I want to talk about mindset, I think you’ve got to long story, but I think it’s interesting to people to understand it, you have to understand how your mind works, how your emotional state works. And sometimes you need some help to do that.
Nick Bradley:
Once you start to work out the things that are really important to you, that’s when you need to start to think about the habits and routines which are going to enrich that, which lots of top performers have and I have and those sort of things. And I’m always working on that side of things. And as I work more on that side of things, the other stuff becomes significantly easier. And it’s the same in business, in my opinion. And that’s what I’ve mentioned beforehand about the leader and why that’s such a critical component of business scale up.
Eric Partaker:
And from a mindset point of view, for you, what have been the key habits, like the keystone habits in your life?
Nick Bradley:
Yeah, so mine are, this is quite interesting because they’re a little bit more elongated than the usual thing that people say like, “I’m going to get up in the morning, I’m going to do this.” I do meditate every day, but it’s pretty brief. And I’m exploring that avenue more. I’m trying to do some transcendental stuff for the first time. I find it very difficult, which partly reminds me that I should do more of it. So there’s that for me running and there has been 100% my meditation state or the way of getting me super clear, or quite often I’ll solve any problem I’ve got on a long run. And I think the reason I started to get into these ultra marathons and things like that, I still do a very long run on a Sunday, like as a religion. I’m out for hours. And it’s the best thing.
Nick Bradley:
It recharges my whole week. I come back, I’m better in every aspect of my life. So I’ve got that. And then the other thing that I found, which has been really interesting is that I’m really into kind of things like it’s called bio hacking. But it’s just understanding how different foods, nutrients, hydration, all those sort of things affect how you then show up and perform. And when I was in the private equity world, it was lots of red wine and steak dinners. Good fun, right? And I still have a glass of wine now. And then but my eating is fixated on my energy levels. And then that means that I can do more and be more. And so there’s some of the things that I introduced, once I went through this sort of second or third transition that I mentioned.
Eric Partaker:
Yeah, it’s very interesting what you said about problem solving and being in that flow state. And perhaps accessing your highest level of creativity, because in one sense, scaling or growing a business is nothing more than a series of lining up the problems to be fixed, and then fixing them in the correct order or in a directionally correct order. Could you just really relate to the whole thing about, for me, it’s when I go for a walk, so I’ll be on a long walk and as a perfect example, was I think about the job specification, the other day of adding a new potential member to the team. And it started with a blank sheet and then by the time the walk was done, because I had this little Google Doc on my phone, as an idea came up, I added as a bullet, I got back home, and suddenly I had a page and a half role of responsibility, bullets for this new description.
Eric Partaker:
So I think that’s just like a real gem for people listening to latch on to is that, ask yourself, what puts you in your flow state? How can you maybe double that up with something that is another positive habit somewhere, like with-
Nick Bradley:
One thing I’ll add to this, because I went through, when I started to be a little bit more aware, and self aware overall of certain things, I started trying lots of different perceived performance habits that you read other people do. And then just because it’s probably my nature of being a little bit obsessive about things, I thought, now to make it perfect, I need to do all of it. And I had this kind of list of 25 habits and then of course, it became a tick box exercise every day, as opposed to the feeling. So now I only do three or four things. But the three of all things I’m very attuned to what they’re providing. So it’s how I feel after doing them, not directly. But sometimes it culminates over time, but they’re the things that give me the focus, the energy to be able to do the other stuff that I’m doing now.
Eric Partaker:
Awesome, fantastic. And then on the skill set side of things. If you want to be scaling your business, what’s the 80/20 there? What’s the 20% of things to focus on for an 80% benefit?
Nick Bradley:
Yeah. I love the way you’re framing the 80/20 too. I think a lot of people don’t think of it like that, and I use a system which is again from Tony Robbins called RPM, which is the result first followed by the way you do it, and then the action. Because a lot of people, they focus on the things they’re doing versus the results and actually, you can get the result by doing usually quite a lot less than the things you’re doing. My how I run everything through that thinking.
Nick Bradley:
So to your question around scale up, you’ve got two main things, or two main categories of scale up. You’ve got the organic side of things, and you’ve got the strategic. And organic is what most people, if you do the 80/20 thing, most people are spending 80% of their time on the organic and maybe 20% on the strategic when it should be the other way around. Now, there are different stages of the business where that becomes more personal, but what I’m talking about here is a lot of people think, I’ve got to spend more money on marketing, or I’ve got to hire the best sales person I can or I’ve got to do these sorts of things. I’ve got to spend lots of money on Facebook ads, whatever that is, that’s organic. That’s you looking at one to one results, I’m going to do this, I’m going to get this, I’m going to do this, I’m going to do that. That’s how most people start their businesses.
Nick Bradley:
What you soon learned, though is that, that’s quite expensive. It takes quite a lot of time. And the quickest way is to try and leverage and I love the word leverage. So if you flip that on its head, strategic scale up is partnerships, joint ventures, acquisitions, it’s the things that you can collaborate resources, skill set, the things that you haven’t got, you do it through a not a how but a who. Then you can get exponential growth. So one of the people who mentored me, Jay Abraham, he talks about this in a very granular way and that his referral system is like 93 different things you can do. But the point of it is you don’t have to do 93 things. But the point of it is any one of those things is going to get you more exponential growth than maybe being fixated on one marketing tactic, which is what a lot of people do.
Nick Bradley:
So I look at it like this, first and foremost, if you’ve got a business that’s going to scale up, look at the strategic scale first and then look at the organics or flip it on its head, who’s got the audience that I’m trying to get to? Is there a business down the road? Is my competitor not doing very well? Could I buy them? What would happen if I bought my competitor and they’ve got exactly the same number of customers as me, when I just double my business overnight?
Nick Bradley:
Yeah, and this is the sort of thinking that people don’t do but if they could start to do that, they might get to the end game, whatever the end game is, quicker and usually that’s freedom wealth impact in some way, then that’s the sort of thing I encourage people to start thinking just a little bit differently around.
Eric Partaker:
Nice. And so if you had put that into a newspaper headline in terms of the skill set focus, what would it be?
Nick Bradley:
Oh, God, I used to work in magazines for years. I was always like, write the cover line, and then find the story. Oh, God, your testing I want this to be really good now.
Eric Partaker:
I’m giving you material for your marketing later.
Nick Bradley:
Wow, it is. I often say something like why build your empire when you can buy it?
Eric Partaker:
Okay. Let’s pull on that thread. So I know, acquisition is something that you are particularly passionate about, especially right now, I don’t think a lot of people really think in those terms. They think, as you just said organically or if they do think strategically, they think oh my gosh, but acquire a business? That’s something that the elite do, that’s something that only a company that Warren Buffett has ownership does. You know what I mean, right? It’s not something that the everyday person does. So can you debunk that for us and show us how we could be a little bit more confident about stepping into the acquisition space.
Nick Bradley:
Yeah, I’ll simplify. But just a little bit of context. So I focus really on three things, buying businesses, scaling them and selling them. And the reason I focus on that is my highest value is freedom and I’m all about trying to get to or get people and myself to the end result as efficiently as possible, which I think fits nicely with everything we’ve spoken about up to this. So one of the things that’s interesting about acquisitions right now, is that you’ve got the dimension, you’ve got two things going on at a macro level happening everywhere. You’ve got a huge transition in generational, again talking about in terms of the baby boomers leaving the workforce.
Nick Bradley:
So by 2030, all of the boomers so to speak, will have reached 65 years of age. And for those who don’t know what the boomers are, I’m sure most of you have heard of it. It’s basically the big birth rate increase that happened after the Second World War, where obviously all the men came back and there was lots of babies nine months later. And there was a huge jump, if you like in population levels. Now as that generation reaches retirement age, there’s a crazy number of entrepreneurs within that as you would appreciate. And the stat at the moment is 10,000 people per day in the North America in the United States are retiring.
Eric Partaker:
Wow.
Nick Bradley:
Everyday, that’s right. And it’s like, just think about that for a second. And there’s another really interesting stat that in 2019, there were 2.3 million small businesses listed. Now small businesses are defined as under 10 million in revenue. So that’s still reasonably big for depending on people’s aspirations. So there were 2.3 million were listed and only one in 12 sold. So that stat is crazy. And then you think, what happened to those businesses? They got closed down. And they got closed down because a lot of people don’t have succession plans, they don’t have a natural place to hand the business over.
Nick Bradley:
So the reason I say that is if you think about the opportunity, now we’re not talking about tech startups in Palo Alto, we’re talking about profitable small businesses still generating in the millions of revenue and therefore in the hundreds of 1000s, if not low millions in profit, that are getting closed down. Right, crazy.
Eric Partaker:
Yeah.
Nick Bradley:
So the opportunity, there’s two things here, there’s two opportunities. You can be what I call acquisitions entrepreneur. So you can enter the world of entrepreneurship instead of starting a business but buying a profitable existing one. And you can use some very interesting financial mechanics, so that you don’t have to turn up on day one with a checkbook with hundreds of thousands or millions. I’m about to do a deal. So I’ll share the numbers, I want to talk about the sector, small business. So the business is doing 1.2 million at the moment in top line revenue, doing just around about 400k in net profit.
Nick Bradley:
Now, I’m going to buy that business through some various things will hopefully but it’s still in negotiation stage, the amount of capital that I’m putting into that deal is $35,000 of my money. I’m paying for the business of just over one 1.1 million, but I’m only putting $35,000 in.
Eric Partaker:
Wow.
Nick Bradley:
So just to stop there for a second, how am I doing that? Well, I’m using some asset finance against the assets in the business and then I’m doing something called seller financing, which means I’m going to pay the seller of that business back over three years, actually three and a half years on this deal. From the profits of the business that I’m going to acquire and people are probably going, “What’s he talking about?” Think of it like you’ve got a house, if you buy a house, you’ve probably got a mortgage, you get to live in that house for sometimes 25, 30 years, still paying it off. But you get the enjoyment of that house.
Eric Partaker:
Mm-hmm (affirmative).
Nick Bradley:
Exactly the same. I own the business but I’m paying the seller off over three or four years, but I still own the business, I still get all the rest of the profit. That’s mine. And so that’s how that’s the opportunity for people, whether you are, you’ve got an existing business and you want to bolt other businesses to it, or whether you want to become an entrepreneur, through acquisitions.
Eric Partaker:
And to be clear for people listening that in that example, you weren’t leveraging assets from your decade and a half of experience in other businesses, or something, everything was being done within that one transaction, right?
Nick Bradley:
The only thing I will say is I’ve done this for 15-20 years. So I do have experience of it but what’s fascinating right now is people can do this. One thing I will say is it’s better if you have at least some domain expertise in something, let’s say you’re leaving the world of corporate and you’ve been in marketing for years, that’s probably the best role actually. And you’re thinking, I don’t want to go and work for someone ever again, the pandemics hit, bodies job security going to be like now in the future, I now want to be an entrepreneur but I don’t want to start a business.
Nick Bradley:
If you buy a car wash in Texas, or we looked some landscaping businesses in West Palm Beach, you can go in there, and a lot of these businesses have even got websites, Eric. It’s crazy, really what’s going on. And so you can go in there and get the deal done. So there’s a little bit of you need to learn how to do that. But then if you apply your marketing expertise in the scale up part of that, you can add value to a business pretty damn quickly, that’s already profitable.
Eric Partaker:
That’s amazing and in this situation where the business profits aren’t there for whatever reason to then pay off to seller, what happens then?
Nick Bradley:
If something goes wrong, let’s say for example, you’re not very good and that happens. Then you get the business back, you have it as a debenture, or something like that. So you can structure that into the deal. But if you go back to the very beginning, a lot of people get confused, because the thinking, “Hold on.” but that’s too risky. Go back to my point that one in 12 businesses sell. The owner of the business was going to close it down anyway, they were going to asset stripping or do something. So then giving you a chance at a decent valuation, and then getting the business back in if it doesn’t work out, they’re just in the same position. So why would they not entertain something which is more lucrative particularly if you can convince them, that you’re a safe pair of hands etc. And you could even incentivize them with some bonuses as you take the scale up, there’s lots of different ways of convincing and influencing that decision on behalf of the owner.
Eric Partaker:
And how much of your confidence in an acquisition like that, would you say is linked to your general belief that you can successfully apply the scale up fundamentals and marketing basics to that business? Versus you feel like you’re very much an expert in exactly what that business does?
Nick Bradley:
Yeah, if someone’s getting into this for the first time, I often say buy a business that you have some expertise in. And there’s a number of reasons for that. In the US right now, there’s a thing called SBA loans. SBA loans have been around for a while, but they’ve just done a massive incentive on when you start to pay back that loan. And if you structure it right, you can buy a business where you only have to put 10% of the price of the business in as your own collateral, but you might be able to leverage that out as well. The reason I say that is if you’re looking at these sort of businesses, there are many different ways of structuring it, so it’s going to be advantageous for you.
Eric Partaker:
Yeah. The one thing in particular I like with your framework is your, the six peaks of value creation. Can you just take us through at a high level what those peaks are, and maybe an example.
Nick Bradley:
Yeah, I’ll take you through. In summary, they are the way when I was in private equity, they were the six categories or characteristics that we would look for, when we’re evaluating a business that was as valuable as it possibly could be. And this is how we would either look at a business that needed to be turned around. So that was my thing is I said, or it was an investment that we were going to make. So the first one is focused around purpose. So clear strategic purpose, customer driven purpose, understanding why the business exists, where it’s going. And you’d be surprised how it sounds like of course every business knows that.
Nick Bradley:
When you go through transition or you go through any struggles, quite often the founder back to leadership that gets that. And getting to that clarity of purpose, again, it can really ignite the rest of the business, so that’s the first thing to focus on. The second thing we look at is we look at the overall profit, but from the perspective of how profitable is the business now, how profitable can it be, or does it have a pathway to profit. Some sort of tech businesses that are pre profit, they still need to but they need to understand how they’re going to create value by giving some form of shareholder return. So we look at that lens.
Nick Bradley:
Then we look at the proposition. So the proposition being, do you understand who you’re serving? Very clear idea of your target audience? And do you understand the problem? And do you have a remarkable solution which is still relevant to solving that problem. And the reason I say still relevant, is because a lot of, the world’s so quick these days, particularly with digital and all sorts of other things going on, that sometimes that relevance can change within six to 12 months, as we’ve seen with the pandemic. Then we’re getting into predictability.
Nick Bradley:
So how predictable is the sales and marketing engine? So do you have a predictable flow of the right customers driving some form of recurring revenue? Then we look at the quality of capability. So capability organizational structure, culture, and values. So it’s all around the people component. And then the last one really is process, are the processes back to my point around clockwork, all running like a machine? Are they clearly defined across the core areas? So that if I’m going to buy this business, I know that it’s just going to run really well.
Eric Partaker:
Nice. So let’s take that framework. And you have the luxury of choosing any company in the world that you could go in and so obviously, we’re looking to see here you picked the company-
Nick Bradley:
Good question.
Eric Partaker:
Yeah, you see. A company you think you could scale better, you’re going to be given the keys. You tell us the company, you get the keys and then where would you be focusing in terms of that framework to accelerate scale?
Nick Bradley:
What’s great about this question is I’m not going to say Apple or Amazon. Because they’ve run pretty damn well. And what I’m trying to think of, do you know what I probably would have bought? Had I got in there early, Blockbuster.
Eric Partaker:
Nice.
Nick Bradley:
Because again, hindsight, is a wonderful thing. But one of the things people don’t know about me is I had the opportunity a long time ago to invest in love film, which was then sold to Amazon to be Amazon Prime, and I said, no, because I was an idiot. But that was mail order DVDs. And something like Blockbuster, I think is an interesting one, because there was a point in time where you could have got that business for hardly anything. And it still would have probably had a good enough brand at that point of time to be able to transition into what Netflix and things have become.
Eric Partaker:
Mm-hmm (affirmative).
Nick Bradley:
So that’s what I would have taken back. But now if I think about, if I look out into the world now, I’m always interested in as I said, good profitable businesses that are under leveraged, undervalued. It’s never something that you’re going to just see, if I mentioned a brand that you’re going to know about it. It’s like, literally, I’m looking at similar four chains of landscaping businesses in Florida. I’m looking for window cleaning and solar energy companies in California. I’m looking for brands like that, that are just generating cash, like you wouldn’t believe, the owner is distressed in other words, they just want out, they’re tired, they’re 70. They’ve been there for 35 years. And I’ve got foundational pieces fundamentals that I can then grow.
Nick Bradley:
So that’s where I play, you’ll never hear of the stuff I work on. But the reason is, I’m also flying behind, going below where all the other investors are. I’m playing where other private equity firms and things won’t play, because I want to group companies together. It’s got to roll up and then I want to create something of scale and value that I can then sell into mid market private equity. And you can buy a business or a group of businesses for say three times profit, but I can sell them for six, eight, 10 times profit. And that’s where you get significant scale around wealth creation.
Eric Partaker:
Awesome. So somebody listening right now is saying to themselves, I have a business that I want to scale, we’re going to fast forward and pretend that their business has failed in a year now, they’ve their whole scale mission gone done. If you’re a betting man, what would you say is the reason that they fail? What’s the common reason?
Nick Bradley:
Okay, there’s normally three things. And I’m going to keep going back to the main one. There is usually the founder or the leadership team has just run out of ideas. And that often comes from a mindset issue, but it also comes from being, from external to internal focus. Every time I come into a failing business, if there is usually, “We don’t know what to do, we’ve got no idea what’s going on.” And they’re panicking. So it’s an emotional state. So that’s the first thing.
Nick Bradley:
The second thing is bad cash management. The pandemic’s been a really interesting thing. There’s been lots of people who have come to me, and they’re like, “Oh, Nick we’ve only got weeks left.” And I’m like, “What was your runway?” “We had six weeks of cash.” And I’m like, I say, “Have six months of cash.” Minimum three months of cash. But that’s the second thing. And being really focused, when I look at systems in a business, I look at systems around attraction, I look at systems around conversion, I look at systems around operational areas with delivery and then I look at the uni economics as a system. And that area is not usually a superpower of a lot of creative entrepreneurs.
Nick Bradley:
And then the third one is, the point I made before about product market fit. I can’t get across enough that five years ago, you might have had an idea and you would have years, like three or four years before that would start to have to be transitioned. You can come up with an idea that works right now but in six months time, it’s not. So unless you’ve got the agility to be able to change and that’s where digital comes in so powerfully these days, even if you’ve got service based businesses, you’ve got to be able to react much more quickly. So cash, reaction, mindset, those areas are the things that are either going to bring your business down, but equally they’re the same things that will bring your business up.
Eric Partaker:
Nick, absolutely amazing. Really, really appreciate you joining today. If anybody who’s listening who’s interested in scaling a business that they want to learn more from you, how do they do that?
Nick Bradley:
I often say, Eric that everything’s in the podcasts, everything. So Scale Up Your Business is the podcast and everything I’ve learned from years of doing this stuff, I just talk about it twice a week, it’s two episodes a week. The first one’s me just rambling. Second one’s usually an amazing interview, so that’s all cool. And then they can reach out to me anyway. I’m on Clubhouse a lot as we talked about [inaudible 00:47:52] and get me there or my business website is suyb.global, so it’s scaleupyourbusiness.global suyb.global. So go there and you can reach out and get in touch.
Eric Partaker:
Awesome. That’s Nick Bradley, everyone. Nick, thanks again, really appreciate it. And yeah, thanks for being on The 2%.
Nick Bradley:
Fantastic questions I enjoyed that immensely Eric, so thank you for having me on-
