The First Deal Is the Most Important

What Kind of Business Should I Buy?

If you're thinking about buying a business, this is the question that determines everything. Not how to fund it. Not how to structure it. Not even how to find it.

But what kind of business should you buy?

In this week's episode, Jonathan Jay answers the foundational question every serious dealmaker must get right and explains why choosing the wrong business is the fastest way to sabotage your future success .

Start With the End in Mind

Jonathan opens with a principle borrowed from Stephen Covey: Begin with the end in mind.

Before you even look at sectors or valuations, you need clarity on your outcome. Are you:

• Escaping corporate life?
• Growing your existing business?
• Building a group to sell for seven or eight figures?

Each goal demands a completely different acquisition strategy.

If you want to replace your salary, Jonathan challenges you to aim higher than feels comfortable. If you want to scale your current company, acquisition is the fastest way to move the needle. If you want generational wealth, buy-and-build might be your path.

But the type of business you buy must match the outcome you want.

Why Most First-Time Buyers Aim Too Low

One of the most controversial sections of this episode? Size.

Jonathan argues that most first-time buyers go too small — and pay the price. Businesses making under £100,000 net profit often:

• Depend too heavily on the owner
• Lack proper management accounts
• Have fragile teams
• Leave no room for post-acquisition wobble

Instead, he shares what he looks for:

• At least £1m revenue
• At least £200k net profit
• Stable margins (15–25%+)
• Strong management in place
• Recurring or repeat revenue

The effort required to buy a £200k profit business is not ten times harder than buying a £20k one. But the impact on your life absolutely is.

The Three Core Acquisition Paths

Jonathan breaks down three common strategies:

Escape the Day Job: Buy a business that produces serious income — ideally 10x your salary.

Grow an Existing Business: Acquire competitors, suppliers, complementary businesses, or geographic expansions.

Buy-and-Build: Acquire smaller businesses at lower multiples, combine them, and sell the larger group at a higher multiple.

He explains:

• What fragmented markets are
• Why M&A activity above you matters
• How multiple arbitrage works
• Why strong management becomes critical at scale

And importantly — why one deal can change your life.

The Worst Types of Businesses to Buy

Jonathan doesn't hold back here. Avoid:

• Owner-dependent businesses
• Fad businesses
• Highly volatile or "spiky" profit businesses
• Overleveraged acquisitions
• Companies reliant on family members
• Businesses where relationships walk out the door with the seller

He also explains why buying too small can mean buying yourself a job.

And that's not what this is about.

Funding, Risk and Structure

This episode also covers:

• Why over-leveraging kills deals
• Why working capital matters more than most buyers realise
• Why your first deal is the most important
• Why corporate structure must be set up properly
• Why personal guarantees should be limited and contained

Jonathan's position is clear:

Deal number one sets the foundation for everything that follows.

Get it right, and you build momentum. Get it wrong, and you may never do deal two.

The Big Takeaway

Buying a business isn't just about buying something. It's about buying the right thing.

With:

• The right margins
• The right management
• The right structure
• The right funding
• And the right strategic fit for your long-term goal

Clarity at the beginning prevents regret later.

Listen Now

If you're serious about buying a business in 2026 — or even just thinking about it — this episode gives you the strategic filter you need before you start looking at opportunities.

Listen now and make sure your first deal is the right one.

If you're serious about buying a business – and avoiding the mistakes Jonathan outlines – book a free Clarity Call with one of his team:

👉 dealmakers.co.uk/clarity

You'll get 15 minutes of expert insight to help you decide which next step is right for you – whether that's attending a Deal Club evening, joining the 3-day Foundation Programme, or stepping straight into the Mastermind.

If you enjoyed this episode, please subscribe and leave a review. It helps more future dealmakers discover the show – and succeed in their first business acquisition.