Join Brent Beshore, founder of Permanent Equity, as he shares his journey from a $50K startup to managing nine-figure businesses. He reveals how he once bought a $1M business for nothing and discusses the importance of cash flow in business acquisitions. Brent offers insights on just-in-time learning and the value of stable partnerships. He emphasizes the need for humility in leadership and reflects on the balance between success and failure in investing. Get ready for practical advice and engaging anecdotes about navigating the world of small business.
Brent Beshore emphasizes the importance of selecting stable businesses with strong operations to mitigate risks during market fluctuations.
Effective leadership quality significantly influences the success of acquired businesses, necessitating thorough evaluations of potential CEOs or operators.
The speaker advocates for a conservative investment strategy that prioritizes cash flow optimization and avoids leveraging debt for greater flexibility.
Deep dives
The Journey of Private Equity
The story begins with the speaker sharing their journey in private equity, starting with the purchase of their first business at just 24 years old, which was a military recruitment firm called Media Cross. Initially unaware of the intricacies of acquisitions, the speaker utilized an SBA loan to secure the purchase, demonstrating the power of leveraging available resources effectively. As the speaker progressed, they raised substantial funds, with initial rounds amounting to millions, to continue acquiring businesses in diverse industries. Ultimately, this led to ownership of 16 companies generating impressive revenue figures, showcasing a successful migration from a novice to an experienced private equity investor.
Diversity in Acquired Businesses
The portfolio consists of a wide array of companies that include everything from a children’s clothing brand to a military recruitment firm and construction services. The speaker emphasizes the importance of selecting stable businesses with a strong operational framework, highlighting that they prefer industries that won't face drastic changes over time. For example, while the children’s clothing market may seem volatile, the underlying consumer demand remains consistent. Building lifelong partnerships with these companies allows for collaborative growth while maintaining an understanding of their individual challenges and potential.
The Importance of a Strong Operator
A significant aspect of successful investments lies in finding effective management for the acquired businesses. The speaker illustrates that the quality of the CEO or operator significantly influences the company's success, with good leadership often driving better performance. They employ various personality assessments to thoroughly evaluate potential candidates, aiming to predict their behaviors and alignment with company goals. By prioritizing leadership quality and ensuring compatibility, the speaker ensures that operational strategies are effectively executed, ultimately enhancing business value.
Philosophy on Risks and Returns
The speaker outlines their investment philosophy, which focuses on risk management and cash flow optimization without the use of debt. They suggest that opting out of leveraging debt allows for greater flexibility in navigating market uncertainties, as demonstrated during economic disruptions like the COVID-19 pandemic. By maintaining a strong cash position and prioritizing steady growth over rapid expansion, the speaker argues that businesses can withstand market shifts more effectively. Ultimately, this conservative approach contributes to sustained profitability and allows for reinvestment opportunities that further amplify growth.
The Role of Luck in Success
Throughout the discussion, the speaker acknowledges that early success in investing often hinges on a degree of luck, emphasizing that even the most seasoned investors have benefited from fortuitous circumstances. They highlight that being action-oriented, such as reaching out to potential investors and seizing opportunities, contributes to creating favorable outcomes. This ability to embrace uncertainty while navigating various risks positions investors to capitalize on unprecedented opportunities. Thus, the speaker advocates for a proactive approach combined with calculated risk-taking to foster business potential.
Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd
My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.
