WHO ARE YOU TAKING ADVICE FROM?

I had a thought this week about advice.

We get a lot of it.

If you’re thinking about selling a business, everyone seems to have a view on what it’s worth, when you should sell, what you should accept and what you should hold out for.

If you’re buying a business, it’s similar. You’ll have people telling you the price is too high, the risk is too great, the industry is changing, you should wait for something better, or that they would never pay that multiple.

And sometimes they might be right. But one thing I’ve been starting to think about more and more is who should we take advice from. Have they ever actually done what they’re advising? Have they ever lived and executed?

Have they ever bought a business with their own money?

Not advised on an acquisition. Not analysed one. Actually signed the contract, transferred the money and woken up the next morning knowing that whatever happened from there was their problem.

Have they ever owned a business and wondered whether there was going to be enough money in the account to make payroll?

Have they played cash flow Tetris? Chased a debtor because a supplier is due Thursday, a BAS payment is sitting there and the landlord is expecting to be paid.

Have they ever personally guaranteed the debt?

Have they ever sold a business they spent years building?

I ask this because lately I’ve been exploring the dynamics of mentorship vs advice and I think experience absolutely changes the way you look at risk.

There are plenty of things in business that make perfect sense on a spreadsheet and feel very different when it’s your money.

Buying a business is a great example.

Someone can analyse the numbers and tell you all the reasons not to buy it. And there will always be reasons not to buy a business. There is no acquisition without risk.

But someone who has actually bought businesses understands the other side of that equation as well. At some point you have to make a decision with incomplete information. You have to decide which risks you can live with, which ones you can mitigate and which ones should genuinely make you walk away.

That’s very different from simply identifying risk.

The same applies when you sell.

It’s easy for someone on the outside to tell an owner to reject an offer and hold out for another $500,000. It’s a different decision when you understand what another six or twelve months of ownership actually looks like.

That’s why I’m interested in where advice comes from.

Not because someone needs to have lived your exact experience to have something useful to say. Of course they don’t.

But I do think you should understand the lens through which they’re giving you advice.

There’s technical knowledge, and then there’s the knowledge you get from having been in the trenches.

From having not made payroll.

From having got it wrong.

From buying something and discovering that the first six months looked nothing like the model.

From having a great year and thinking you’d cracked it, followed by a year that reminded you very quickly that you hadn’t.

From eventually selling and looking back at all the things you would do differently.

Those experiences change the way you think about business.

They certainly change the way you think about buying and selling one.

So whether you’re considering an acquisition, thinking about selling, or just making a big decision in your business, perhaps there’s one more question worth asking the person whose advice you’re relying on.

Have you ever actually been on my side of the table?