The Complete Outline
For Buying, Fixing And
Selling A Business
On the following pages, you will find a methodical plan to create wealth by
acquiring, building and then monetizing one or more small companies. At the end
of this training course, you will know more than 99% of all small business owners
about prosperity in commerce. The steps are broken into manageable tasks,
allowing you a simple process toward accomplishing your goals.
KC Truby Lonesome Cowboy Publishing Inc.
760-207-6385
2/5/14
The systematic process for creating capital gains and long term
monthly income by developing Mergers & Acquisitions skills
The outline & instructions below are the exact series of steps my wife and I take to find,
bid, buy, fix, delegate to a manager and then sell (or keep for monthly income) 21 small
distressed companies over 4 decades. In 2012, we left accounting to start buying two to four
companies a year as we find this type of work more rewarding and profitable.
Who should read this outline?
First, you are someone looking for a proven method of creating current income as well as long-term
wealth while maintaining a reasonable risk ratio. This might include…
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The unemployed person that just cannot find a meaningful job so want to make your own
Young and enthusiastic college kids who don’t want to go to work for someone else
The born entrepreneur who wants a systematic plan to convert their personality into wealth,
Current business owner looking for a way to build multiple income streams
People who sold or killed their last company and want to start again
The house flipper who wants to take their skill into a longer term and more predictable direction
However, the ultimate wealth creation centers on ‘rolling up’ your competitors, an ideal
business model for the established business. This works for anyone, buy one company, fix it and
then start buying the local competition until you have built a powerhouse company.
Second, you are not afraid of being your own boss. You are willing to take some risk to accomplish the
American dream but are not foolish about risking everything on an assumption that may be in error.
That means you want to know how to judge your acquisitions well enough to reduce endangering your
financial health.
Third, you are a maniac for learning. This includes collaborating with others who are smarter or more
successful then you are. I get more clarity in a one-hour lunch with an old millionaire then I can get
from 10 books. Caution – do not take advice from people who are not successful entrepreneurs.
Forth, you must be prudent with money. If you spend $1.10 for every dollar you make, you will fail in
business.
Fifth: you are willing to get things done. That does not mean working 100 hours a week, it means you
can see what action will have the biggest impact in your business and make sure it gets done, now.
Who should NOT bother with this outline?
If you are looking to raise $10,000,000 in venture capital for a high tech invention or new web site, with
the plan of selling out to Google for a Billion, you are not our audience. If you are looking for a ‘get rich’
quick scheme to flip a business in 30 days for millions in profit – I cannot help you. The shortest amount
of time we engage in any project is one year. It is also important to us to help as many people keep
their jobs as possible in our acquisitions. We do not believe in slash and burn just to make a quick buck.
What will your outcome be if you engage in buying fixing and selling?
Your outcomes are totally up to you with a little measure of luck mixed in. One of my best moments
was the time I heard Richard Branson say luck had more to do with his wealth than anything else he did.
However, I can share with you my personal experience. Between the ages of 32 & 52, I did very well in
several businesses with annual income in the $500,000 to $1,000,000 range. Then in 2004 with the help
of tort lawyers and a divorce, I found myself starting over. In 2006, I fell for the siren song of Internet
riches and wasted the next 6 years trying to ‘drive traffic.’ That was like watching a drunk monkey chase
a football on a rocky mountainside.
It was the fear of being old and broke at 58 that drove me to the decision to take what I had written
down over my decades in business and get back to basics before I ended up retiring in a run down,
double wide in the middle of the desert.
I decided it made a lot more sense and was much more likely to succeed if I focused on the basics of
‘selling products or services people wanted for less than it cost to deliver them.’ In 2007, I married an
accountant and started another accounting firm with her.
The accounting firm introduced us to hundreds of struggling business owners and led us into buying
distressed companies and fixing them. Our acquisitions were selling products or services that people
wanted to buy; their only problem was an inept owner that could not get out of their own way.
I had done some deals over my years as a sideline to my accounting related companies but now it was
time to go full force. So in 2012 we sold our accounting firm and started buying 2 to 4 distressed
companies a year. Most of these acquisitions required very little money up front.
Our long-term goal is to create a dependable lifetime income of $25,000 a month plus have one million
in cash on hand by the age of 65. We are within 80% of that goal after only 2 years but we still have a
long ways to go. As they say in the software business, all the problems are in the last 20%.
We currently do better than the $25,000 a month, but I am realistic enough to know that some of our
companies will not survive the 25 years I hope to live after retirement. Therefore, our work has evolved
into creating five long-term revenue streams with the expectation that three will not survive me. For
my wife and me, fixing small companies is developing into a successful strategy for creating a
sustainable lifetime income after suffering major setbacks in my late 50’s.
Although I can make no promises about your personal success, in this outline I have provided the steps
to business success that I developed over 44 years in business. I believe that if you follow this outline,
keep learning and constantly question your assumptions you will enjoy prosperity as well.
KC Truby
The Lonesome Cowboy
PS In this outline, you will find several mentions of our $27 a month Buy–Fix & Sell club. If you like the
direction we are going in this outline, I invite you to join on a month to month basis. Each week you’ll
hear stories of how we or our other members are making this happen today. Then you will find the
backup research and processes for the weekly teleconference on a private web page we set up for you.
How to use this outline
In this business model we use the main categories headlined in blue to find and buy (or at least control)
small companies. Most small operations underutilize their assets by failing to generate the maximum
amount of profits, possible. This creates an opportunity for you in buying and fixing those firms.
Once we have a business, in place, we use the categories in green to fix that business. These green
outline topics eventually become the operations manual and business plan for our acquisitions. We
create a ‘virtual’ three ring binder with all our processes for growing the acquisition so that our entire
staff may participate in the creation of our systems. The virtual platform also allows our staff to access
the ‘how to’ of completing the daily functions of the business.
The roll up categories are headlined in red and are dedicated to buying our competitors once we have
an operating business in a category and have decided it is time to expand our revenue by ‘roll up’
acquisitions.
Critical points to remember
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In some cases, we keep the company we buy and fix as a long-term income stream for our
retirement. If we don’t see the product or service being in demand 25 years from now, we sell the
company between one and five years of ownership, at capital gains tax rates.
You do not need to know all 200+ steps in this outline. You may very well find yourself enjoying six
and seven figure capital gains from just the 20 to 40 chapters that are most important to you.
For Linnea and I, small means companies with sales in the $500,000 to $2,000,000 range or net
operating profit over $100,000. That is our minimum company size for going into a category (health
care, software, training etc.) If we drop below those levels, we seem to get involved with too many
people who love their drama. The bigger the business, the easier it is to buy them.
Once we are in a category, we have no minimums for roll ups. Many times, we can buy very small
competitors for ‘walk-away’ money and simply bring their customers and staff into our operation.
The big idea is to buy a company, fix it and then roll up the competitors to create a larger and easier
to sell operation that will sell for higher multiples.
After our first acquisition in a specific type of business, we look at the competitors in the market area.
Generally, we can find 20% to 40% of the competitors in any category are willing to ‘walk away’ from
their failing business for very little cash up front. On roll up acquisitions, we have no minimum size
requirements as were looking for relationship assets (clients, staff, vendors & referral sources) that we
can absorb and utilize more efficiently. We do not want book value assets like software, web sites and
office equipment. Of course, this rule of thumb is flexible if we are buying manufacturing or retail firms.
Our goal is to buy the first company at 2 to 3x annual earnings and pay for it over 5 to 7 years. It is
critical to keep payments at 1/3 of cash flow. Then we buy small broken competitors for 1 to 1.5x
earnings but most have very low earnings so we generally get the next company cheap.
Over time (1 to 5 years) we will buy (roll up) enough small companies to…
 Get the total aggregate sales up to 5 – 10 million so we are of interest to ‘real’ buyers
 Create a brand or position that makes the company desirable to larger buyers
 Standardize the company operations by flow-charting all processes
 Reduce overhead by outsourcing all non-customer centric tasks (bookkeeping, web, and payroll)
 Install managers who can take care of the day-to-day operations.
 Build relationships with potential buyers – we don’t wait until 8 PM Saturday night to start
looking for a date.
This outline is a 1 to 5 year plan
Some companies are so easy that you can run through these 200+ steps in 12 months; others may take
up to five years before they are ready to exit. Of course, the best part of owning a company is that it
generates monthly income while you are building it.
We are giving you our outline as a gift.
We hope that once you see the process broken down to manageable steps you may want to join our $27
Buy-Fix & Sell club to hear about people engaged in buying businesses today. Members of our club may
also drill down to the detailed instruction sets associated with each step in the outline. I posted some
more details on the last page of this outline.
Will you have to do all 200+ steps?
You should truly understand about 20% of this list, the other 180+ items are just good things to know or
things you can review when the situation arises. It is a fallacy to believe you must know everything
before you start. We call that ‘paralysis by analysis.’ I personally am not knowledgeable on many of
these 200+ items yet I have been trading companies for 4 decades. My Swim coach in High School told
me “The only way to learn how to dive is to jump off the board and learn on your way down.” So get
started and learn as you go.
The outline:
The questions we should all ask before starting or buying a business
1. Are you sure you want to own your own business
2. Why owning a business is the fastest route to creating a multi-million dollar net worth
a. Business ownership may solve your retirement income problems – how it worked for me
b. Why anyone can become rich owning a business
3. Should you Buy an existing business or start a new one
a. Should a startup buy an existing business to operate as a launch platform
b. What requires the least amount of capital starting or buying
4. The reason we like to buy an existing business, fix it and then convert to cap gains or income stream
5. Why buying a business is far easier then we think, even a bigger one.
6. Should you flip your new business for fast cash or keep it for lifetime income
7. Creating a ‘buyers profile’ why this will save you time in dealing with sellers and brokers
8. The 3 categories of work that you will need to get done, what do you want to do
9. What do you have to get done to own and run a successful business
10. Why business fails and how you can prevent the common problems before you start
11. If you’re in business and want to grow should you ‘roll up’ your competitors
12. What assets will you really need; cash, hutzpah, a 135 IQ or a rich uncle.
13. 2 words that assure your success if you own a business ‘human engineering’
14. The different business models and which one we personally like best
15. How much time will an acquisition take, and do I have to quit my day job?
16. If I go into business – how will I get back out.
a. Why most companies end with a whimper
b. Can you sell out at a high multiple in a short time
c. Will your employees buy the company
d. Start developing a list of potential buyers
Looking for the right business to buy, since starting from scratch is a last resort
17. Establishing your search criteria - define the business you want to buy
a. When to go off your criteria and move on a good deal that fell into your lap
b. What kind of business do you want to own.
c. If you buy, what type of company fits your needs?
18. How big of a company, should you buy?
19. Why the 'hard times' business is your best acquisition for a nothing down deal
20. Why 96% of all businesses owners would be better off if you bought them out
21. I look for good deals, and then once I’m in a category I work to buy the competitors
22. If you are in business now is it wise to focus on what you have or buy another company
23. Basics for financing a deal – so that you use as little of your own money as possible
24. The search for the good business (nothing is ever perfect)
a. The search plan - how we find deals that fit our pre-written parameters
b. Finding the business that is not listed for sale but would be perfect for you
25. Working with business brokers
a. Creating a buyers profile for the broker
b. Understanding the brokers needs so they are more cooperative with you
26. Working with accountants to find companies going under or stuck & tired
27. Working with bankers, lawyers, leasing agents, advertising salesmen and business coaches
28. Attending SCORE meetings and other business events
29. Creating deal flow, how to have over 100 sources bringing deals back to you
30. Managing the deal flow / and keeping all the details straight.
31. Qualifying the seller, are they really for sale or just playing
32. When to WALK AWAY from a deal. We walk away from 98 out of 100 we look at.
Valuing the business – you don’t pay the asking price, you pay what it is worth to you
33. The initial contact with a company you want to consider
34. Valuing the business - most owners are emotionally tied to a number with little fact behind it
a. Your interview with the owners
b. The questions you must know the answers to before you go further
35. Can sales be increased dramatically in this business
a. Increase the number of new clients
b. Increase average sale per customer
c. Increase the frequency of customer purchases
36. What is this business worth to me
37. Go over the accounting line by line and truly understand the cost structure including hidden cost
a. What would I have done with this company if I owned it last year
b. What will I do with it next year – and what will the company be worth when I’m done
38. Due diligence - the 109 questions to look at before you start negotiations
39. Financial analysis - you must get the QuickBooks back up, and what to look for.
40. Ratios and comp’s how you will use them to show the owner the real value of the business
41. Business appraisers - when should you get a second opinion and who should you hire
42. Develop your plan to turn the business around before you buy it
a. Determine your cash needs in the first 120 days - plan on where it is coming from
b. Where is the company bleeding cash and how to stop
c. The 80/20 rule in real life
Buying the business or at least getting control without using your own money
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Negotiating the sales price and details of who will do what work
How to 'tie-up' a business, take over management and 'earn out' your percentage on the 'lift'
Using the 'earn out' to reduce your up-front cost
Getting control of a business without buying it
a. Get a valuation now, and capture 50% of the growth after you take control
b. The big problem – how do you get the owner to change how they do things.
No money down does not mean the owner does not walk away with some cash
11 ways to buy a business with none of your own money
How to get trade creditors to settle for 20 cents on the dollar without filing Chapter 11
Buying a broke business and negotiating the accounts payable to 20 cents on the dollar
Building your case for the value of the business so the owner agrees to your offer
When to turn to the SBA and why they are a good resource for you
No matter what the owner says, they will carry back a good chunk of the sales price
Using venture capitalist and angle investors - how to get money without giving up control
The purchase agreement and where lawyers come into the picture
Letter of intent and why you need 30 days before you close the deal
First two to six months, absorbing the company and turning it profitable by fixing production and
finance problems.
57. The absorption plan – taking over the company from day one
a. Have a written plan Establish a check list of tasks to complete - and get it done in days or
weeks not months
b. Assign tasks with deadlines to be completed
c. Set up an accountability system with daily meetings of management
d. Get EVERYONE in the company on board to save their jobs - they will become your allies
58. The five mistakes all business owners make and how to fix them
a. Why the current owner does not 'pull the trigger' and take these hard steps themselves
59. You can wait to grow sales, but cut cost and get in the black NOW
60. Sign every check the first two months and get mad about wasted expenses
61. Spend the first two weeks listening - then take drastic action
a. Remember time is your worst enemy –
b. do everything possible today or you have no tomorrow
62. Have every problem and question brought to your attention - fix or kill the cause of the problem
63. If possible can you close the facilities and operate virtual or in shared space
a. The virtual back office set up we use
64. Creating measurement systems so you can stay on top of the business operations
a. System to track sales leads
b. System to track expenses
c. System to track customers and purchases
d. NOW, you are ahead of 96% of the businesses.
65. Building a management team so you don’t have to work at your acquisition full time
a. Who will run the business you, wife, brother your intern, the assistant manager?
b. When to hire a manager to take over your acquisition and how to pay them
c. what do you pay them - do they get any ownership
66. Setting up interns to become your future managers
67. Creating an operations manual on 'how we do it here' and why it is critical if you want to sell
a. What sucks up management time - can you just stop doing it
b. or kill the task completely by engineering the problem out of your life once and for all
c. Start your staff on flow-charting how they do important tasks ask 'how can it be improved?'
68. Up to 50% of the overhead in a business drives little or no profit to the bottom line –
a. Isolate those expenses that do not contribute to profit
b. start killing it without killing sales or reducing the good leads in your pipeline
69. What does the company do that works - what are customers buying that drives the most net
a. Ride with the best sales person and hear what customers tell them (don't talk)
b. Ask the best sales person what other products customers buy that you might be able to sell
c. The before during and after questions that may lead to future line extensions of JV deals
70. Look for underutilized assets that can be liquidated
71. Look for assets that can be sold and leased back to improve cash flow
72. Create cash flow scenarios from best to worse case and share them with your staff
a. Sales will be 10% to 20% worse and cost will run 10% to 20% more then you expect
73. What business out there has a vested interest in your acquisition being a success
a. Can you bring in joint venture partners who will sell your customers their products
74. How do you leverage that knowledge into an ally that will help you survive and prosper
75. How to have these answers in place before you buy the business
76. Lay out a compensation plan that cuts pay but provides way to make it back (and more) in bonus
77. Outsource every task that is not directly impactful on the customers experience (saves mgt. time)
The fastest way to increase sales by 25% in the first year without spending money on advertising
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Who are the top 20% of the customer base, what else would they buy if you talked to them
JV, The vested interest referral
Referrals & endorsements from current and past clients
Resurrecting old clients & customers
Client contact and client retention to create a habit of buying
Isolate why clients leave with your exit survey
Customer interviews to determine satisfaction over the year
Increasing prices
Convert your sales team to incentive pay (reduce the base and increase the commissions)
The smartest use of the owners’ time if you want to build a long-term turnkey / cash cow business
87. Why time management is far easier then we believe – you only have 3 jobs as a business owner
88. Focus on finding people who can help you
a. better and bigger clients and
b. finding joint venture partners
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c. finding people with money that are looking for an opportunity
d. your next manager / your next best employee
Training vendors and staff on your vision of what you want to do for them in exchange for help
Creating systems / setting up contractors and implementing technology
Review your dashboards to track your success.
Find a buyer for this company
Keep everyone focused on what works now – put 80% of your energy into growing that
Continually learning more about your business – how we use auto research
Creating a turnkey business that will generate income for the rest of your life
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What is a turnkey business and how do I know when I have the one I want
Strategic Planning Before we start building a real business we take 8 steps:
The Strategic Plan and market analysis - What we sell.
Budget and cash flow plan to determine economic viability & 2nd opinion
Explanation of how we created and mange this operations manual
Strategic decisions in your marketing plan to get new customers and sell old customers, more.
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How do customers see your business
Create Dramatic Solution (following Billy Mays)
Unique selling proposition and ad copy ideas work sheets
customer profile and niche market research
SWOT analysis of competition & mkt. interest
Competitor advertising (review weekly for ideas)
Geography plan to minimize travel
Pricing plan and competitive analysis
Risk Reversal concepts
Drop sale products and services
Installment or subscription services
List of products my clients use, before, during and after they buy from me
Should I start these companies, buy existing ones or JV with other vendors
Installing and managing your Finance Systems
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Why financial controls are the easiest fix in any business
Finance This task can be outsourced cheaper and easier than creating internally
Bookkeeping to include Budgets & Forecast
Accounting and Tax Planning
Loan packaging & Credit lines
Collections & Contracts
Expense reduction (done daily, in house by CEO)
KPI critical performance indicators / Five minute books
Staffing / HR systems
Technology updates for internal operations (we recommend Cloud solutions)
Building sales organically starts with a lead management process
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Lead Management / Process for tracking, following up and distributing sales leads
Past Ad Samples with ROI (keep records)
Whale List (Your best 20 or 50 big prospects 25k+)
Generating Raw Sales Leads to grow your new business
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Raw Lead Testing process for new advertising ideas
Ad Planning and putting events on calendar
Direct Mail campaigns / List Rental / Prospective buyers
Spam Email as a lead generator
Telemarketing (cold call sales calls)
Web sites as lead generators
Key Words
Pay Per Click / Ad words
Landing or Squeeze page mini-sites
Upgrade Web Site Creation & Maintenance
Craigslist / EBay / Amazon others
Social Media / Forums Articles and Blogs
Broadcast Emails to our house list
Search Engine Optimization
Group Memberships in other peoples clubs
Publicity in local media
Seminar Promotion / & delivery
Joint ventures with people who sell to the same customers as we do
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Sponsorship at other peoples events / Speaking at business groups
Referrals from Competitors / as a JV revenue sharing
National distribution i.e. franchise, associations etc.
Building a Sales systems
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Inbound inquiries by phone
Inbound inquiries by all other media
Inbound inquiries from referral sources
Hiring & Managing sales people / Training sales people
Compensation plans
Standardizing our sales process so we can hire a sales team
a. Record your sales ‘pitch’ (have your best people do the same) so others can repeat it
b. Initiate a measurement system to determine the number of ‘closes’ each person gets done
Teleconference sales presentation
Repeat & Up sell of current customers /
Risk reversal plans
Case studies of your successes to review with your sales team
Retention & Up Sell systems
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25% of revenue is lost in new client acquisition - let's keep our old ones on board
What other products does this client buy, can we sell them
A process for increasing the average sale in dollars.
PRODUCTION: S I P O C delivery of services systems
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Production
SIPOC / what clients see and don’t see Delegated
IT and technology plan for Paperless Overnight Service Done
Suppliers
Input
Process
Outputs & Deliverable
Customer deliverable / experience / training
Requirements & Product improvements plan implementation
Product Description and Improvement Systems
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New Product Ideas from sales staff
New Product Ideas from customers
Product innovation tracking
Roll up your competitors a methodical process
170. Why the roll up is a 400 year tradition in rapid growth
171. Your plan to find potential acquisitions
172. How to approach the targeted companies
173. The distressed business as your best acquisition
174. How we buy distressed companies for ‘walk away’ money
Exit strategies
175. The business plan for exit. What are the options for selling or keeping it as a cash cow
a. Who will find value in my technology, client base, employees, processes or cash flow
b. How am I going to romance those people for the 2 years prior to my exit point
c. How do I build that list of potential buyers
176. What things you need I place before you can sell out at a high price
a. Manager in place
b. High profits, trending up, and very little locked in overhead
c. Increasing sales year to year
d. Management systems and written processes in place
e. Measurement systems that prove your claims on the business viability
f. Tax returns that tie into your accounting software
g. Almost no hidden income to reduce taxes in the 3 years prior to sale
177. Maximizing profits at the time of sale - why it is important to drive cash to the bottom line
178. Finding buyers up to a year or more before you are ready to sell.
179. Finding the financing in order to help you close the deal
180. Converting your manager into your buyer - succession strategies that reduce your financial risk
181. Do you sell for 'nothing down?' You can often times sell faster and for more money
182. How to 'foreclose' on a previously sold business before it gets into trouble
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Why securing your 'paper' with other assets will protect you in the ‘nothing down’ sale
Selling out or converting to a long term (no work for you) cash cow annuity
Tax strategies and asset protection
185. The difference between capital gains and earned income
186. Why EVERY business owner needs a detailed asset protection plan in place TODAY
187. Tax implications of taking your payments over time or in stock if you are merging UP.
188. One simple trick that will move $25,000 of your acquisition to 100% immediate tax deduction
189. Using 1031 exchange to keep rolling up your profits for bigger and bigger deals
190. Can I transfer my business to my children
191. How do I structure a transfer to my key manager
192. Setting up a defined benefits pension as a method for hiding your excess cash flow from
creditors, predators and competitors. (Predators of course include the government.)
Over the next few years, you will learn more about business then 99% of the people who currently own
a company. This will position you to grow your current business as well as buy out others.
The Buy Fix Sell Club
For $27 a month, we invite you to join KC Truby on a live training call each week. We will review a ‘real
life’ acquisition or management event that you or another member has sent in. Sign up at
http://kctruby.com/join-the-club.html
After the weekly teleconference, we post the recording to a private and secret web page. This allows
you to access and share the training at any time. You will find all supporting documentation,
recommended news articles or books that relate to the question and management checklist relating to
the problem on your secret page.
If you find yourself with a problem or opportunity and we have not yet posted an instruction set around
your question, feel free to email KC Truby and he will answer within 72 hours. kctruby@msn.com
The elite club
Some of our $27 members will decide they want to join a mastermind of people in the buying, fixing and
selling business. The value in the mastermind is the ability to meet one-to-one with others who are
actually getting it done. We meet in Las Vegas 2 to 3 times a year to review each other’s deals and
review marketing, production and financing options. Mastermind members may review deals with KC
Truby by phone directly and tap into his contact list.
The elite group is only available by invitation and to people who have been participating members of our
$27 club for four months. If you have an interest, you may attend one of our Las Vegas meetings to
take, a closer look at what we are doing together and how it may benefit you.
If you wish to attend one of our Las Vegas meetings – please email me at kctruby@msn.com
Thank you
KC Truby
The Lonesome Cowboy