Insights from an SMB Bankruptcy

Today we have a #TBThursday to our Private Market Labs Insights conversation with Hunter Durham:

Hunter talked through his #smb acquisitions process, where things started to go poorly for him, and lessons learned from a story of bankruptcy. Here are 5 key takeaways:

1) It's important to balance operational insights with speed: Hunter found that rapidly acquiring businesses limited his grasp of their inner workings. While he was able to capitalize on fast-moving opportunities, that speed came meant missing key operational insights

2) Strong operations are the foundation of impact: Hunter learned the hard way that good intentions aren’t enough. He wanted to make an impact but failed to focus on the fundamentals of running a business. He advises that operational success should come first.

3) High debt is risky: Hunter touched on a lesson from Brent Beshore - while a high debt approach can maximize speed, upside, and searcher choice, it also brings risk and financial complications, particularly when applied to small and medium-sized businesses.

4) Pre-search self-assessment is crucial: personal factors matter in business acquisition. Hunter suggests asking questions ranging from your willingness to manage a team to assessing if the culture of a prospective business aligns with your own values and interests. As someone who was interested in building an impact outside of the businesses he was operating, rather than considering his businesses’ performance the measure of impact, Hunter’s company had happy employees but struggled to adjust to exogenous shocks.

5) Diverse business models require diverse strategies: Hunter admitted that his expertise in one field didn’t necessarily equip him for success in another. Knowing your limits and acquiring businesses in areas of strong ability or competence can save you from unexpected pitfalls.

Check out the full conversation here: https://www.youtube.com/watch?v=Ya2k_PrrMqY