Hi Reader

You drafted the resignation email again this week. In your head, at your desk, somewhere between the 11am status meeting and the third Slack thread that didn't need you. You know the first line by heart now. You've never typed it.

That's not weakness. That's your gut doing the one job it's good at — refusing to let you confuse wanting out with being ready to be in.

Because nobody tells you this: wanting to own a business and being ready to buy one are two different things. The gap between them is where you lose a year, a deposit, or both.

That gap has two trapdoors, and most people fall through one of them. The first: you never decide you're ready, so you never move. The email stays in your head. You tell yourself next quarter — after the bonus, once the kids are older, when the market settles — and five years on you're at the same desk, drafting the same first line. The second one is the opposite, and it's the expensive one. You get tired of waiting, so you bolt. Quit the job, wire the deposit, sign — before a single piece of the real work is done. One trapdoor costs you years. The other can cost you the house.

So let me tell you how not to close that gap. Not by charging ahead alone, with no one at home who's actually signed up for the risk alongside you. Not by letting some internet guru tell you what you “should” be doing by now — he doesn't know your number, your family, or your deal. And not by binging a stack of acquisition podcasts until the momentum in your chest starts to feel like proof. Borrowed conviction isn't a plan. Somebody else's success story isn't the same as having done the work yourself.

Ready isn't a feeling that arrives one morning. It's a ladder. Five rungs, from the desk you're sitting at right now to the LOI you'll eventually sign. You don't need certainty on any rung. You need enough — enough to climb to the next one. Miss a rung and you don't find out at the bottom. You find out in week four of diligence, with your earnest money already gone hard.

Here's the ladder.

Rung one. The people at your table.

Before the money, before the deal, before the broker — the conversation you keep postponing.

The one where you tell the person you share a mortgage with that you want to leave a salary for something with no floor under it. That for the first 18 months, the business pays itself before it pays you. That the steady direct deposit they've planned the household around is about to become a variable.

You are not ready to climb if the people at your table haven't climbed with you. Not “supportive in theory.” Actually in it — eyes open on the pay cut, the reserves you'll burn, the months you'll be distracted and short. A spouse who said “sure, honey” to a fantasy is not the same as a partner who's seen the real number and didn't flinch.

This rung is reassuring once you clear it: have this conversation early and you almost never lose the deal to it later. Skip it and you lose the deal at the worst possible moment — mid-diligence, when you need a teammate and find a surprised bystander at home instead.

Rung two. The number behind the number.

You know the price of the business. Do you know the price of buying it?

Under SBA, you're bringing roughly 10% equity into the deal. That's the number you budgeted for. It's not the number that matters. The number that matters is the one behind it: the reserves you keep after the equity injection, the working capital the business needs before it throws off cash, and the personal guarantee you sign on the loan.

Let's be plain about the guarantee, because softening it does you no favors. On an SBA acquisition loan, you're personally on the hook. For you, that almost certainly means the house is collateral. If the business fails, the bank doesn't just take the business.

Now the reassuring half, because that's the truth too: you don't avoid the guarantee — nobody gets an SBA deal without it — you plan around it. You keep a reserve that isn't in the deal. You size the working capital line so a slow first quarter doesn't become a missed payroll. You know your own floor: the number below which you walk, decided in daylight, before a broker's deadline is pressing on you.

You're ready on this rung when you can say out loud what you're putting at risk, what you're keeping back, and the point at which you stop. If any of those three is fuzzy, that's the work — not the listings.

Rung three. Can you run this one.

Not “can you run a business.” You ran teams, P&Ls, projects. The question is narrower and more direct: can you run this kind of business, with this owner's name peeled off the front of it?

A lot of small businesses are the owner. The relationships, the estimating instinct, the tribal knowledge of which customer pays late and which job loses money — it lives in one head, and that head is leaving 60-90 days after close. Your corporate résumé doesn't transfer to a trades business the way you think it does. Sometimes it transfers beautifully. Sometimes it's the wrong tool entirely.

Ready here doesn't mean you've done the exact job. It means you've been realistic about the distance between what you know and what the seat demands — and you have a real plan to cover the gap. A retained seller with a real transition services agreement that includes real deliverables. A key manager who's staying. A 90-day transition that's written into the deal, not promised over coffee.

Rung four. Enough, not certain — on this deal.

The first three rungs are about you. This one's about the specific business in front of you, and it's the rung where readiness stops being personal and starts being diligence.

I wrote a whole issue on this one — Cold Feet, or a Real Signal? — and the core of it holds: you don't need certainty before you sign an LOI. You need enough, and enough is reachable in about ten minutes of the right questions. Three of them are the most key:

Customer concentration — even masked. One customer over 25% of revenue isn't a customer, it's a relationship the seller built and you don't inherit. Top five over half? Same risk, spread out. A broker who won't share anonymized top-10 data is telling you something. And it’s not a reassuring message.

Owner dependence — the rung-three question, pointed at this deal. How much of the business walks out the door with the seller? What does the owner really do on a day to day and week to week basis. You’ll hear “just spends 10 hours a week on the business” but what does that really mean, and who’s handling the other critical business functions?

Transferability — does the thing that makes this business legal and bankable actually move to you? The license, the key contract, the vendor relationships, the hundreds of stellar reviews. It's never in the CIM. It's killed more first-time deals than every price negotiation combined.

You are ready to write the LOI when you have enough on these — not a clean bill of health, just no unanswered question big enough to sink the deal. Certainty comes later, and it comes expensive. Enough is what gets you to a confident yes or a clean walk.

Rung five. The LOI is a commitment now — read it that way.

Here's what changed, and why the top of this ladder is steeper in 2026 than it was two years ago.

The LOI used to be a polite handshake. What changed isn't the size of the buyer pool — it's bigger than ever. More buyers are chasing every deal than two years ago, and most of them can't actually close. That flood is exactly why sellers tightened up. They've watched a buyer tie up a deal in exclusivity for 60 days and then vanish when the financing fell through — or when a lender who promised the world wouldn't come through at the table. And last year's government shutdown stranded a wave of sellers mid-process, with SBA approvals frozen and deals stuck in limbo. That memory hasn't faded. A seller who's been burned — or watched a peer get burned — protects himself the only way he can: on the deposit.

More brokers are running “first to go hard wins”: whichever buyer flips earnest money from refundable to nonrefundable first gets the deal. On a $4M business, that's $40K–$80K you can't get back, committed before diligence is even finished.

That single fact is what makes this whole ladder non-optional. When the deposit goes hard early, the LOI isn't where you start getting serious — it's where serious has to already be done. Every rung below this one is what lets you commit that money without flinching, and walk from the wrong deal in time to keep it. If you haven't climbed the ladder, you're choosing between two bad outcomes: freeze and lose the deal, or commit and lose the deposit.

Ready is the third option.

The reframe.

Stop asking yourself if you feel ready. The feeling lies in both directions — it'll tell you you're ready when you're broke on rung two, and tell you you're not when you've actually cleared all five.

Ask instead: which rung am I actually on? Family at the table. The number behind the number. Can I run this one. Enough on this deal. Ready for the LOI to mean what it now means. Name the lowest rung you haven't cleared. That's not a reason to quit. That's your next week of work, made specific.

You won't win the back half of 2026 by feeling the most ready. You'll win it by climbing in order, and signing the LOI from the top of the ladder instead of the bottom.

Score yourself.

Five rungs. Be real and honest, one line each:

1. Have the people at my table seen the real number — and not flinched?

2. Can I say out loud what I'm risking, what I'm keeping back, and where I walk?

3. Do I have a real plan for the gap between my résumé and this seat?

4. Do I have enough on customer concentration, owner dependence, and transferability — or just hope?

5. Could I let earnest money go hard on this deal without flinching?

A “no” or a “not sure” on any line is your lowest uncleared rung. That's the work — and it's always cheaper to do now than after the deposit's gone hard.

Stuck on one of them? Hit reply and tell me which rung. I read these.

Stay safe.

Eric Hsu

→ @lawyer4smbs

P.S. Forward this to the friend who's drafted the resignation email in their head a hundred times and never typed it. The fantasy isn't the problem. Not knowing which rung they're stuck on is. Send them the ladder.