Hey there, Reader,

When I told you yesterday about buying Velocity Generator, I shared the story of how it happened.

Today, we're talking about money.

Because there's a pretty big difference between knowing how to run a business and knowing what it costs to own one.

And I'm discovering that difference firsthand.

Four years on the inside. Still some financial surprises.

For four years, I'd worked alongside Gwen as her chief marketing and operations officer (CMO/COO).

I knew Velocity Generator's members, how the program operated and what went into delivering the experience.

That familiarity was a huge advantage when the opportunity to buy the business came along.

But it also meant I had to be careful about what I thought I knew.

Knowing how a program works isn't the same as knowing its complete financial picture.

I hadn't been responsible for every expense, every commission agreement, or every financial decision. But as the new owner, those things would immediately become my responsibility.

Buying the business was only the first expense.

Gwen and I agreed on a fixed purchase price, paid over two years.

That structure made the acquisition possible without requiring me to come up with the entire amount on October 1.

But it didn't mean the business would immediately start putting money in my pocket.

There are ongoing expenses to cover.

There's the cost of delivering the member experience.

And there's the purchase payment itself.

All of those have to be accounted for before I can decide what the business is actually earning me.

Which brings me to something I think more business owners need to talk about…

The bills arrived before the money did.

A business can make financial sense on paper and still create some uncomfortable moments in your bank account.

Especially during a transition.

Buying Velocity Generator didn’t mean clients would instantly throw their credit cards at my face. Switching billing is a process.

You can't simply move customers' stored credit card information from one business to another.

Subscriptions had to be canceled on Gwen’s side, and clients needed to set up their new subscriptions on my end.

There was a gap between when the business became mine and payments started hitting my account.

Meanwhile, the expenses didn't wait.

Our October Quarterly Tune-Up happened just days after the ownership change.

That's a two-day planning experience for members, and I wasn't about to cut corners on it because the timing was inconvenient.

I had client care support to pay for. Member gifts to purchase. Software to cover.

Those costs weren’t optional, and they were due whether or not every subscription had completed its transition.

That's cash flow: whether the money you need is available when you need it.

$397 a month isn't what I take home.

Velocity Generator is $397 per month.

So it's tempting to look at the number of members, multiply by $397, and think you've calculated what the business makes.

You haven't.

You've calculated gross membership revenue.

From there, you still need to account for expenses, processor fees, staff compensation, any applicable commissions, and the acquisition payments.

And then there's another question: What about the work I'm doing?

When I worked for Gwen, I was paid to help run her business.

Now I own the business.

That doesn't magically make my time free.

If I spend hours delivering member support, reviewing weekly plans, leading sessions, and making strategic decisions, that's real work.

A business that only looks profitable because its owner isn't accounting for her own labor deserves a closer look.

I'm not saying every owner needs to pay herself a particular amount from day one.

But we all need to be clear about what the numbers actually represent.

Would I make the same decision again?

I still believe it was a good decision for me.

But I'm not going to pretend that two weeks of ownership are enough to prove the financial model.

I have a fixed acquisition cost.

I have a membership with an established history and real value to its members. The average member sticks around 18 months, but a few have stayed for three to five years.

I have a clearer picture of the operating expenses than I did when the opportunity first came up.

And I have financial questions I'm still working through as the transition settles.

That's not quite the tidy success story people sometimes expect when someone announces an acquisition.

But it's the truth.

And it's a reminder of something I teach all the time:

A good decision isn't a guarantee.

It's one where you understand what you're choosing, what information you have, what you still need to learn, and what you're willing to take responsibility for.

I'm learning a lot about that last part.

Tomorrow, I'll tell you about the operational side of the transition.

Because buying an established business doesn't mean all its existing systems, tools, and processes can simply be handed over.

As it turns out, there's quite a bit that happens between “Congratulations, you're the new owner!” and actually operating the business under new ownership.

In your corner,

Tonya

P.S. What else do you want to know about buying an existing business? Hit reply and ask me. I'm sharing the questions and answers as I go, and yours might be the one someone else is wondering about, too.

This email was written by Tonya Kubo (not AI). If you're receiving it, it means you have signed up for one of my offers in the vast expanse of the internet. Some links here are affiliate links, meaning I might make money if you use them to make a purchase.