Fate. That is the word that my father uses to describe his path to becoming a business owner. The genesis of my father’s entrepreneurship is somewhat unique compared to most of the publicized stories we read about these days. He didn’t get started in the proverbial garage by inventing the next great thing, he wasn’t unhappy with his job nor was he the type that always dreamt of being his own boss.
The business ownership opportunity presented itself while my parents and I were on vacation in Iowa visiting my father’s family. My uncle asked him to consider partnering to purchase an oil and fuel distribution business from two retiring local business owners. Apparently my uncle felt he couldn’t do it alone and he needed a trusted operating and capital partner. At the time we were living in Denver, Colorado; I was four years old, my parents just purchased their second home, they both had good jobs and were involved in the local church and community. We were living a commendable and comfortable middle class life. So what motivated my parents to even consider this opportunity / risk located 800 miles away? Their answer: Family and Quality of Life. My mom wanted to be able to spend more time with me at home, they viewed the rural Iowa setting as a better place to raise a family and the cost of living was much lower than in the Denver metro. Further inspiration was the targeted business showed an earnings history that could equate to a step up in income for my parents.
The sellers of my father’s eventual business had reached a stalemate: they both had reached retirement age and couldn’t find an interested or qualified buyer. They had failed at their attempt to pass the business on to the next generation; when the only qualified son quit after the first month realizing the business wasn’t a fit for him. As is common with a lot of businesses, the business was over reliant on the two owners, reducing the pool of potential buyers and their monetization options. As a result, and thankfully for my father, the sellers were forced to be flexible and consider any new suitors and structures to make a transaction work. It was the perfect opportunity for my father who had limited capital and viewed this as a great opportunity. He saw a well-established business, a long history of profits, a local market leader, and opportunities for growth and value enhancement.
According to my father, there wasn’t much negotiating involved between the parties regarding the price. It was an asset intense business and price was simply determined by summing the fair market value of the real estate, equipment, and cost of inventory on hand. The Sellers’ flexibility was realized when bank financing fell through and the sellers were willing to finance a majority of the purchase price over 7 years. So based on a verbal understanding with the sellers, my parents took a leap of faith and quit their jobs, put their home on the market, packed up their belongings in a Ryder truck and took off on the 800 mile trek. What my father found out when they arrived would make most of us nauseous and in my father’s words realize “how naïve he was” regarding purchasing a business. But we’ll have to save that for the next post.
Stay tuned, as I will continue to share my Dad’s story, and the unforeseen impact it has had on my personal and professional life.