How to Spot a Good Deal Recap

Tue, 03 Nov 2015 15:11:52 -0500
abce, umbcentrs

Rob Baruch, UMBC alumni and longtime supporter of ABCE, spoke to the UMBC community about how to identify and make good deals.

Throughout this very interactive discussion, many questions came up and branched off into different discussions. This summary is the general idea of what happened but if you want more details listen to the audio file below.

Rob started this Workshop by introducing himself. He graduated with a computer science and math degree from UMBC and when he entered the working world he had an unclear career path. However, he was able to catch the “computer wave” and start a business while computers and the industry were being developed. He grew his company and then retired at 33 years old, only to start another company and retire again at 39. Since then he keeps busy by mentoring entrepreneurs.

He then dived into what a deal is and what makes it a good one.

There are two things that make a deal; metrics and time. A metric in a deal is very important because it allows you to measure and compare certain aspects of a deal. Without metrics it’s hard to compare and make decisions. Time is important to make sure the deal is still relevant. For example, Google was offered $1 billion in the 1990s and they didn’t take it. Was this a good deal? At the time one might probably say yes, since 1 billion dollars is a substantial amount of money. But twenty years later we can see that it wouldn't have been a good deal, since Google is now worth $400 billion.

Some other important factors someone must consider/have when making a deal are below:

Analytical- When making a deal you want to make sure you are analytical and know all aspects that could affect a deal. For example, if someone offers to sell you 100 bananas for $5,000 would you take the deal? Probably not because you know that 100 bananas are worth around $100. But if you did not know the market value of bananas, and considered bananas your favorite food, they might be worth $5,000 to you.

Emotion- It’s important to keep your emotions in check when making a deal with friends and family. How do you communicate with someone you don’t want to make a deal with and not ruin a relationship? This is something important to think about.

Critical- When making a deal remember to be critical and think about why you are making it. If you are making a deal with a new partner or investor you want to ask yourself, why are you doing this, what can they offer you? You want to think about what leverage you have and what you can and cannot offer.

Savvy- When you first start a business you have a limited number of assets. Make sure the deals you make are savvy and creative, with low risk and high opportunity. For example, you are starting a new business and need some where to work. Instead of renting a whole building for yourself maybe contact ABCE and see if they will let you work full time in the entreSpace for a significantly lower price. That is a deal you want to make.