Should I buy a Small Business?
Title: Exploring the World of Small Business Acquisition: A Conversation
- Exploring the Concept of Credit Stacking
Understanding the Process of Buying a Business
- ROI and Revenue Analysis in Business Acquisition
- The Role of Investors in Business Acquisition
- Understanding the Concept of REITs and Syndicates
- The Intricacies of Commercial Loans
- Potential Risks in the Current Interest Environment
- Understanding RESPA Guidelines and Commercial Banking Products
- Exploring the Concept of Business Listings
- The Process of Buying a Laundromat Business
- The Importance of Exit Strategy in Business
- The Importance of Understanding Numbers in Business
- The Beauty of Buying an Existing Business
- The Reality of Running a Business: It's Not Passive
- The Power of Family in Business
- The Nostalgia and Joy of Small Business Ownership
- The Learning Experience of Running a Business
- The Option of Starting Your Own Business
- The Impending Wave of Retiring Business Owners
- The Art of Running a Business
- Exploring Various Business Opportunities
- The Importance of Trust and Delegation in Business
- The Future of Small Businesses
Link to video https://youtu.be/fwrRqeVnNO8
Link to this blog Link to this podcast
In today’s digital age, one might be tempted to chase flashy tech startups or trendy online ventures. However, there's a largely untapped market brimming with potential: buying small, local businesses. These myriad opportunities range from mundane to unexpected, and for somebody willing to adopt these businesses, the learning experience and potential for success are immense.
**A Diverse Array of Opportunities**
By diving into the world of small businesses for sale, you quickly realize the depth and breadth of opportunities available. You encounter businesses from laundromats and pool services to fitness centers and restaurants. These turnkey businesses have already established a presence in the market and generated a stream of revenue. For a novice entrepreneur, such a business can serve as an invaluable platform to gain experience and start building a cash flow.
Consider, for instance, the acquisition of a laundromat. As a low-labor business, it presents a unique segue for someone interested in entrepreneurship. Despite being a largely hands-on endeavor, the prospects are attractive, particularly when you consider the structure of these businesses. With minimal staff and low overhead costs, these operations can generate substantial profits.
**Becoming a Guardian of Local Businesses**
By acquiring and maintaining these small businesses, the new generation of entrepreneurs not only contributes to their personal success but also plays a pivotal role in supporting the local economy and community. Across the world, countless small businesses face closure as the older generation of owners retire. The ripple effects of such closures on local communities and economies can be significant.
This is where the role of the new entrepreneur becomes crucial. Rather than allowing local businesses to shutter, these entrepreneurs can step in, running and enabling the business to thrive. This comes with the added benefits of job creation and fostering community ties.
Serial entrepreneurs, members of the military transitioning to civilian life, or anyone considering a switch to business ownership may find this market strategically ideal given their skills and experiences.
**Leveraging Support and Resources**
While stepping into business ownership might seem daunting, the good news is there's a wealth of resources and support available. Ranging from legal advice to accounting and administrative support, a first-time business owner can readily access the necessary assistance to navigate this new terrain.
Additionally, various programs, grants, and resources are available specifically for veterans, offering great opportunities for support in making this transition.
**Do Your Homework**
While the prospect of owning a business is exciting, it's essential to do your homework before making a commitment. Understanding the numbers, knowing the market, and having an exit strategy in hand are fundamental aspects of a successful business venture.
Whether you're buying a franchise or a family-owned local business, ensure you understand the terms, the commitment, and the business specifics. It's important to know what you're walking into – understand the financials, the customer base, and the business operations.
**In Conclusion**
The prospect of adopting a local, small business brings with it immense potential and rewards. Whether you're a seasoned entrepreneur exploring new ventures or you're on the threshold of your first business journey, the small business marketplace offers unmatched opportunities for growth and success. By stepping into this role, you not only contribute to your success but also prop up local economies and communities, creating a ripple effect of progress and prosperity.
Exploring Small Business Opportunities: Buying vs. Starting a Business
In this video, the hosts deeply explore the concept of buying existing small businesses as an alternative to starting one from scratch. They emphasize the surge of small businesses up for sale due to the retirement of a generation of owners, stating that this could be a massive opportunity for a new generation of entrepreneurs. They also discuss the advantages and potential risks involved in buying an existing business, stressing the importance of due diligence and proper budgeting. The conversation covers a broad range of businesses, from laundromats to restaurants to even cannabis delivery services. The hosts emphasize the need for a team, including attorneys and accountants, when venturing into buying a business
00:00 Introduction and Discussion on Business Ideas
00:05 Exploring the Concept of Credit Stacking
01:07 Understanding the Process of Buying a Business
01:43 ROI and Revenue Analysis in Business Acquisition
02:19 The Role of Investors in Business Acquisition
02:33 Understanding the Concept of REITs and Syndicates
03:16 The Intricacies of Commercial Loans
04:11 Potential Risks in the Current Interest Environment
04:35 Understanding RESPA Guidelines and Commercial Banking Products
07:46 Exploring the Concept of Business Listings
11:44 The Process of Buying a Laundromat Business
14:03 The Importance of Exit Strategy in Business
17:31 The Importance of Understanding Numbers in Business
18:50 The Beauty of Buying an Existing Business
19:11 Breaking Down the Numbers: Buying a Business
20:40 The Potential of Small Businesses: From Laundromats to Repair Shops
21:35 The Reality of Running a Business: It's Not Passive
21:55 The Power of Family in Business
22:22 The Nostalgia and Joy of Small Business Ownership
23:30 The Learning Experience of Running a Business
24:41 The Option of Starting Your Own Business
25:17 The Impending Wave of Retiring Business Owners
30:03 The Art of Running a Business
33:53 The Resurgence of Small Businesses
34:03 Exploring Various Business Opportunities
34:30 The Importance of Trust and Delegation in Business
35:25 The Future of Small Businesses
36:26 Closing Remarks and Future Discussions
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Transcript:
Introduction and Discussion on Business Ideas
I'm curious what you meant by the business part wasn't quite tracking what you meant by that. But talk about that. We could talk about I don't know. I guess we can go from there.
Exploring the Concept of Credit Stacking
Yeah, so this whole idea, I spent a lot of time on TikTok, right? Like, when my kids are at the gym or what have you,
and I got into this idea through a video. I was watching a lady named I can't remember her name, but she talked about credit stacking and how you could create an LLC and then get business credit through there. Obviously, the first couple of ones you have to personally guarantee because they're not going to give you any money.
Having an LLC or corporation is basically just another layer of protection, but you can also use it as a financial tool not to. Not to hide taxes, but to use the loophole, the legal loopholes that the IRS has. So this thing is you bought, you get five credit cards and you get up to 250, 000 in credit cards and that becomes a down payment for business, right?
So now you're totally a hundred percent funded. The only problem is you have to make sure that, there are calculations to figure out your ROI, but let's say that we're going to buy a laundry business and it's a million dollars.
Understanding the Process of Buying a Business
There was a company for sale in the Bay area. They had six or seven laundromats throughout the peninsula and they were selling it for like a million bucks.
I'm like, Oh, is that let's look into it. And I was talking to Wayne about it. How can we get the cash? How can we get the cash? Cause you talked to a banker. For them to fund it, you're going to need 20, 25, 30%. Down for them to fund a loan on that unless the seller is willing to finance that which typically's 50-50 these days, right when you're looking at buying a business But you buy a business, and let's say that the ROI.
ROI and Revenue Analysis in Business Acquisition
Let's say that the Total revenue for the year is 400, 000. So the ROI Generally speaking is about two and a half Right. Two and a half years to return your total investment of a million dollars. You can spread that out over five years, 10 years, 16 years, and lower that payback, but then the Delta is your income.
And like this guy was saying, he was making like 160, 000 a year just to do that. Just to. But again, I didn't look into it. And so the whole idea behind credit stacking or capital stacking is that the alternative to that is getting investors.
The Role of Investors in Business Acquisition
So like Patrick, you give me 50, 000, Wayne, you give me 50, 000.
I put in 50, 000 and then we have five partners and then we have to develop a Martin management company. It's the same thing as a REIT or syndicate when you're buying apartments.
Understanding the Concept of REITs and Syndicates
Yeah, it's like a private, basically like a private offering, right? Raising money for, it is a private fund, it's not public, it's not nothing like that.
Typically some things are regulating that though. You gotta be a, it's called an accredited investor. If you're trying to do it, totally would, totally buy the book so to speak. But just so I'm clear on what you're talking about with the credit stack, it's basically you're opening lines of credit or credit cards or what have you.
Lines of credit sound like a business line of credit. LLCs, right? So that you open up enough to purchase whatever business that you're looking to buy. That's that's basically the short version, right? So from my little world, I look at apartments, right? Yeah. From duplex all the way up to 30, 40 units.
I'm looking at buying a couple and it's the same, it's the same formulas.
The Intricacies of Commercial Loans
But after you get past four units per sale, let's say by a fiveplex now, it's a commercial property So it becomes a business of banking lent loan. Totally different thing. You can go to SBA. You can go to VA SBA you can But all of those require a personal guarantee that you take over that business.
And if that business flops because of you, then you owe the bank that million dollars or whatever it is you buy. Oh so if you go to purchase an investment property of more than four units, it's, I think I heard you right. So if you get to five units above the apartment complex, whatever that's not, your typical residential, not even residential, I guess it's not considered a commercial loan.
It's like a completely different bucket, right? When you deal with the financing with your lender. And this is not even what you're dealing with probably strictly with banks now. Typically those loans are a five-year balloon payment. You have to refinance after five years, three years, or 10 years, depending on the bank, and who you work with.
Potential Risks in the Current Interest Environment
So this is what this has reminded me of some of the issues we're hearing. What could be coming up over the next year to two years is those types of loans having to refinance into a very different interest environment, right? Which could lead to opportunities for some and disastrous for others. Is that right?
Yeah. So going back to qualifying the four units and last. Five units plus.
Understanding RESPA Guidelines and Commercial Banking Products
So anything under four units is governed under RESPA guidelines. RESPA is real estate, blah, blah, blah. It's for the consumer. It's more consumer-friendly. Consumer protections are there. Those are the Fannie Mae, and Freddie Mac-type loans.
There are alternative loans to that. After five units, when it's five units or more, it becomes a commercial banking product when you loan and sometimes loans require those lenders will require like 40 percent or 30 percent down payment, which is why you have a REIT. or a syndicate. Now, syndicates and REITs, are two different, they're basically the same thing.
The only major difference is you have tax advantages with syndication versus you don't on a REIT because a REIT's more of an I in my brain, it's more of a mutual fund versus buying stock. You're buying stock, then you, and you lose it, you get to, you have to pay taxes if you profit or you get to use that as a write-off, right?
Also, I think, and this is something I really would love to learn more about, I need to learn more about because it's a goal of mine to just get smarter on this so that the hope is to, is to do something here in that space. I think that probably the, I would imagine that one of the bigger differences as well, on top of what you said is, and I don't know if this is true, but I believe this is true, is that when they read, you have to get that registered.
That's what you need, Probably way more capitalization. I would imagine to list a REIT that's, it's a, it's a privately. Oh, I see. I see. You're saying you're describing a private REIT versus a syndicate, which are both private there. Yeah, they're not traded on the stock exchange or anything.
There are certain private, like if you started it, you would have to have it regulated through the FTC, you would have to have it. Recorded, etc. If it's just five of us going in, we have a private agreement, we have a lawyer draw that up, what the legal agreement is, how it's going to be accounted for, what the exit strategy is, if a partner doesn't produce, what the expectations are of each partner, right?
And it's, you can run it like a small business or small market. That's a syndicate, what you just described. And then a REIT is something where it's more hands-off. One person manages it, or one group manages it. You're just a you're just an investor in it, a passive investor. Passive, yeah. And if you're a passive investor, you don't get the tax.
You, you get some tax advantages, right? I see. I see. Yeah. Because it's just, you're well, I don't know if you would, maybe you do. I don't like a public REIT if you're just collecting passive income unless there's, I suppose there might be some kind of special kind of REITs out there, but most REITs like there's a, a self-storage REIT, an industrial REIT, a residential, whatever.
And it goes on and on. It's just income to the investor. As far as I can understand it, it's just, so it's taxed as such. Not much tax benefit to the passive investor holding shares who just receive income every month or every quarter. But not my expertise, there might be, I'm guessing there probably is some way to set it up.
So there are some tax benefits, to get on the private side. Be interesting. I need to dive into this more. I think we have to go do a report. I'm going to, you have to do a five-page essay. Maybe I'll just ask chat GPT to tell me what it does. You can also do a video too. Hey, YouTube, tell me. Yeah.
You tell me this is what I was looking at, right?
Exploring the Concept of Business Listings
It was a 1. 2 sale pending already, which, is good for them. 74 inventory. I don't know what that is, but rent. And then you have to look at it, right? You have to look at all this stuff. And then within it, you have a valuation report.
You can ask to sell the agent to give you more information. That's where you get a prospectus because this is an investment. You have to go through the books. You have to ask for the last couple of years of W2 or the tax returns. You want to look at their accounting. A lot of this stuff, a lot of this stuff is done under the books, right?
Under the table. But here, like SBA financing is available. So they already pre-approved the business for 25 percent cash down. That's where we go back to the whole cash stack or the credit stacking. Yeah. You need the, you would need the credit stacking to get the 25 percent down. And then have the SBA finance the rest.
And then the personal guarantee to the other thing. So let's say you buy this thing, you're in the whole $1.2 million and this guy's a total liar. There's no, the only recourse you have is a lawsuit. You have to go back and sue the seller and say, Hey, you lied to me.
This is not worth $1.2 million. Here's the, here's what I found after running it for six months. It's only worth like $200,000 based on this, and I'm gonna sue you for a million dollars plus. Corp B's, blah, blah, blah. Would biz, excuse me, would bizbuysell. com, would they're like, I'm getting, are they like a broker, a business broker, do you think?
It's like a, Or like a Craigslist. It's like a loop net. It's for businesses. But, yeah. The only reason I bring it up is I wonder if they would be if you could sue them too hey man, this was something you offered. This is listed by Anjay Singh, who's a California business broker.
Okay. So that person would be, I would think party to, they'd have to like, Hey, let me see the receipts. I would imagine seats to make sure this is a deal I can sell. So he has a real estate license, just like me. He could be a broker. He could be an agent. I'm a broker. If I took this as a listing, I would say, okay, we could put this on all the different channels because there's a bunch of them out there.
Biz by sell is one of the very few many of them out there. Would you need a real estate license to do this though? Cause he's not, are they selling the property, or, the lease is coming with this, I would imagine. So that'd be a different thing, right? Cause your lease is all-inclusive. So this is the whole thing.
You buy the business, you buy the goodwill, you buy the assets and you buy the property or got it. And it's all-inclusive. So if I bought this, I would also take over the lease. So that the landlord would have to go look at my financial statement and say, yeah, I get it. That's, that was my question.
So the way I'm reading this, there's no real estate. Okay. There it is. Real estate leased. Okay. And to do that. Yeah, you'd have to have, you're not assuming the lease. I guess you'd have to have the new, landlord over, I would have to also sign off on this. Is that what you're saying?
Absolutely. So it's a lot more complicated than buying a house, even though buying a house is complicated. The mortgage industry has made it far more. Because of RESPA guidelines, protection, consumer protection, all that stuff with this, it's more okay, if I'm going to rent this to you, I'm a landlord, and I want to see you have not only 1.
2 million, but you also have five years in reserves to be able to pay me in case. It goes belly up and then you have to get insurance. You have to show that you have insurance for that. And when you lease commercial buildings, it's called triple net. That means you get the wall, you lease the walls and the land, and that's it.
If you want electricity, you want water, you want air conditioning, you take care of all of that. You have to buy the water heaters. You have to take care of the air conditioning. If the air conditioning goes out, it's commercial air conditioning. You have to call your HVAC guy and the tenant is responsible for that.
And despite all of that, this is still pretty legitimate, as far as buying a business goes, a laundromat in San Francisco, I'd imagine it's you're going to make that money. I would imagine. I don't know. There's a bunch of them down there in LA. Look at that. Two employees for that kind of cash flow.
I think that's pretty awesome. I don't know. Yeah. So here's another one, right?
The Process of Buying a Laundromat Business
And Wayne, who we'll have on the show in a few weeks just bought a pool business, but we're talking about buying a laundromat. Number one is because it's low labor. Yeah. That's what I mean. You can get these in exchange for the coin-op for cards.
So it's all digital. You put in your credit card, your ATM, whatever you pay for so many credits and you put it next to the machine and it takes care of it. And then there are companies out there that will manage and maintain the appliances for you. And each one of those things, they're not like a standard.
Washing machine, right? They're industrial-grade. They're higher capacity. So they're a lot more. They're like five, 10, 000 each. And that's what you're really paying for. And of course, they have, capital assets, capitalized assets. So over five years, you get to depreciate it and all that other stuff.
It's a great opportunity for people to do this. And that's why I'm so Like this is great. Number one, low labor, right? I can have, if I buy five of them, I can buy five of them. I can have one guy go around and make sure that the soap is done. I can make, or still, I can make sure that I have a janitorial service coming in clean.
I have, and you can run it 24 hours and you can do value stuff too. Like I just saw something where they bought a laundromat. I was up in the mountains somewhere like in Sonora or like Reading or something. And they put in a little Dog washing center. Nice. Dude, that is so freaking awesome. So that's just extra money.
And while you're washing your clothes, you can wash your dog. Hey, it's a great idea. Not totally. We already piping in water and all that stuff anyway. But there goes a lot into buying this, right? It goes a lot. There's a whole lot more to it. It gets me curious about these types of Seemingly low maintenance, pretty low compared to other businesses that you could buy.
It's a pretty, Oh, this is good right here. Pretty low-maintenance businesses you could buy. Let me say that again. This business is pretty low maintenance compared to other businesses. That's, if you're going to buy one, I just wonder why people would sell them. It just seems like it's pretty passive.
You get a couple of people to run these things for you. Just like the way you said, why sell it? Yeah, people come into different situations and either move or leave the country or leverage money to do the other thing I guess that's the answer but they seem like just good simple Businesses that are in the right place, and at the receipts are the receipts in the cash flow is a cash flow.
And that's just, it's curious to me when people sell simple businesses like this that don't require a lot of upkeep, a lot of employees, a lot of inventory, all those things. It's a lot of times it's retirement. So a lot of what we're going to be talking about.
The Importance of Exit Strategy in Business
And the other thing that I want to talk about with Wayne and other small businesses is what's your exit strategy, right?
He just, Wayne bought a pool service company and he manages it every day. The partners that owned it before they were older are done, they're still semi-active, but they're not day-to-day anymore. Yeah. But Wayne took it over because he got out of corporate America and he's screwed that I'm done being told what to do and having to travel all the time.
I see my kids growing up, I want to do this and This, my intention is to take this business, scale it out so that I can grow, and then build something that I can turn around and sell off eventually for a lot more money than what I paid. And then also we're going to do stuff like this where we take in people and Like a car washes, like self coin up car washes and stuff like that.
And really it's, we're going to pay more per time that we have somebody fixing something, but it's a vendor, it's a contractor, it's just like every time my laundry, my dryer breaks, cause my kids don't take the lint out of the dryer and it overheats the thermal couple. And it's a 10-cent fricking piece.
It cost me 250 because I have one. Dr. Appliance guy came over and he said, what's wrong with it? I go, it's a thermocouple. I know exactly what you need to do. It's a thermocouple. There's the lint. He goes, yep, I know how to do it. He's done in five minutes and you pay 250 bucks because he knows how to fix it in five minutes.
But at the end of the day, it's better than me having to call my guy who's Oh, I'm working by the hour. It's going to take me to the next. It's 300 bucks. And then he's off-putting around for the rest of the day. So I want to get like a college kid who goes around, fills up all the laundry, and the vending machines, and makes sure everything's working.
And then, report back to me and say, Hey, this needs to be done. Or just he liaises with the vendors and says that, and then at the end of the day, I pay him. Yeah. And. Yeah, I think going back to your point about, Hey, a lot of people retiring we talked about this briefly before, and there's so much more to talk about here with this whole generation of business owners, small business owners running boring little businesses like this that are getting out.
And it's not, I think what's important to know here is this, some people get attracted to these, not get rich quick, but very simple solutions. They think that will. Automatically create this lifestyle that they can support like the guy is selling it. A guy or gal is selling this because there is work to do there's still you were still a bit.
There are still things you have to do in this business. It's probably not much compared to other ones, but it's not like it's a completely, what's the word? Passive investment that you're buying, right? Like you still have to know what you're doing somewhat. But neither is buying and selling stocks.
Totally. If you're a day trader, you have to spend two, or three hours researching, and then you spend an hour doing your trading. And then that's why I hire you. That's why a lot of people lose money doing that. Cause you're just not disciplined in that approach. And I think it's simple.
Many people think it's simple. I guess my point here is. This is an awesome opportunity, things like this for so many people, and it's still worth having a team of people or coaching some mentoring, making sure you got some pieces of support, and doing all this because it can be daunting.
I think if you've ever done anything like this to evaluate what works, and what doesn't work and, and make the jump to dive in and do this and like, why not? These businesses are all over the place. They're all over the country. I can only imagine what it looks like in almost every other major city across the United States.
Gotta be similar. Yeah. It's got to be similar guys. And if you're watching this, you're like, Oh, I'm going to totally do it. Look, I got to tell you straight up, it's just like buying a fix and flip or spying on an Airbnb for a house. It's just like buying homes and apartments for rentals.
The Importance of Understanding Numbers in Business
It's the same business mindset.
You have to understand the numbers before you get in there. You better have a lawyer. You better have an accountant, better have a team behind you to understand. everything because getting in is the most dangerous part, but you also have to have the five-year, 10-year, 15-year, and exit strategy. What's going to happen on these, those milestones, because how am I going to get out of this?
I want to retire in a few years or I want to go for a year or I want to go travel for six months. How do I make sure that this isn't going to be a problem? This allows you to level up and get to a certain consistency. Income, that's 14, 000 a month, right? That's, that's legit right there.
That's legit. And now obviously this, these numbers are, they don't include, they don't include debt service. So you got to take that into consideration too. Yeah. Professional fees are 2, 000. That's you talking to your accountant and that's you talking to your lawyers, making sure everything's done.
License and permits, I doubt it's 19 a month or a year or less per month. Okay. So there's no debt service here, right? I don't see it. No. So you got to take that 1 million or 750, 000. And put a loan on it and you're paying, you're going to, you're not going to get 5%. You're probably going to be paying seven or 8%.
Yeah.
The Beauty of Buying an Existing Business
But, and the beauty with something like this, though, is you already have a, it's already built. So you're not spending, but not only are you spending money on, not only are you not spending money on just service and debt, you're also not having to spend on. maRketing building a funnel all those things that require that are required by somebody building a business from scratch, right?
So that's pretty awesome that those numbers are, those work. Yeah.
Breaking Down the Numbers: Buying a Business
So let's just say it's a million dollars, right? And then you go 25 percent down. And you're really at, let's just be conservative at 8%, your monthly nut is 6, 000. That's for the first and the second. Is that how you have it laid out?
Or is it just the first? It's actually property taxes. I don't, let me see real quick. Did that pay taxes? No that's just probably income taxes. So you're paying rent. Your rent is 12, 699 a month. So right away, your landlord's making more money than you. Yeah. But that's the cost of doing business in California.
I'm not saying do this in California. I'm saying the numbers the way they are and what you were just showing, if you did a, if you got to finance your down payment, even, I think the numbers still work out in your favor. It's tight, but I don't know. Maybe that's not, maybe that might not be a smart way to do it, but just like you were talking about, if you do that debt stacking, not debt stacking, credit stacking, to get your down. Payment in I think it still works, right? What do you think? My experience with my properties, when I have commercial properties, is that it's interest only. It's not as bad as you think it is. Oh, it's actually like 500 less a month. And I would take out, I wouldn't look at the property taxes and insurance, right?
Because your rent is 12, 999. And the truth is, you're leasing this too. So next year it's going to go up 5 percent and the next year it's going to go up 5 percent and the next year it's going to go up 5%. So you have to keep that in mind. There's a story here that's, or this is just not even a story.
The Potential of Small Businesses: From Laundromats to Repair Shops
This is a small example of all these boring, simple little businesses out there that are going to be getting sold by a whole generation of retiring business owners, small business owners and Yeah, this is just laundromats. I'm sure you start brainstorming all these other businesses.
We can come up with a ton of other ones from repair shops to small, local logistic suppliers it just keeps going on and on. Yeah. This one's in Campbell, California, right down the street from me. 380, 000 cashflow 19. Interesting. Yeah. And that's old-style laundry. So, guys, I'm not saying to buy laundromats, right?
If you're listening to this, absolutely figure out what makes sense to you, right? Wayne wanted to do pull service. It made sense to him. It's he's enjoying it. He's enjoying the learning. He's enjoying the strategy and all that.
The Reality of Running a Business: It's Not Passive
That's not, it's not going to be passive. This is not passive. This is not a passive investment.
This is your working into your business and you're constantly going to be there every day. So if you live in Campbell or around there, know that you have to go there every day, even though you have a college student going there every day to fill everything up, you want to make sure everything's done right.
And just keep an eye on it because this is your money. This is your business.
The Power of Family in Business
Yeah, even if, think about a tight family that's where it works, get a couple of brothers, sisters, siblings, or whatever family that's willing to work together. They can go after things like this in their community and share that, share the load.
Obviously, it takes some understanding, I think it's a commitment around, who's doing what, so it doesn't work for a lot of families, but some, some folks that could work great for. Hang on a second.
I remember a couple years back, we went to Long Barn. I used to have a cabin up in Long Barn, which is Sonora, Twain Heart.
The Nostalgia and Joy of Small Business Ownership
I grew up going there and then we took over the cabin from the family and we'd go up there every once in a while and hang out and every year as a kid we'd go up there and then we'd go get pizza at Moon pizza or that we'd go to the rock and have dinner at the rock and then we'd go and play mini golf and there's this little schlocky miniature golf place, right?
And it was fun. It was just schlocky. It was horribly maintained. That's the word. I think I haven't heard before. I might use it. I like schlocky. Yeah. And then I grew up doing that. It was fun. So I, and then years later I come back and I see the same Couple running it day in, day out. And then a couple of years later they sold it cause they were tired.
And I was so happy that they sold it to this young couple. And now this young couple is the next generation taking care of the schlocky fun, and it's just and it's just, it's just something fun is memorable, but they get to have a lifestyle they work. Four months, five months out of the year, the rest of the time they're off skiing, hanging out, and having a good time.
They're not going to be bazillionaires, but at the same time, it doesn't matter. They're enjoying their life. And they're there every day, sunup to sundown, they're working it. I'm sure that they're going to hire kids to help out eventually and whatever, it's just nice to see that.
And. When I brought my kids there, it was very nostalgic and we had fun and it was just, yeah, it was fun. So I'm not saying you're going to have fun operating a coin-op, but there are opportunities all over the place. Yeah.
The Learning Experience of Running a Business
Just, I'm trying to think, I'm thinking of just a learning experience alone and my first business, you've mentioned a pool service my first legitimate business, if you will, we were self-employed, me and, one of mine.
We, we we ran a small pool service that we bought from a really good dude now in Southern California. And we didn't know anything about what we were doing. I'm not gonna speak for him. I'll speak for myself. I didn't know anything about running a business, about being self-employed, about taxes, about the legalities of such accounting, balancing the book's billing, and it was a really expensive lesson.
And it was lessons that were absolute. I am just invaluable because they've served me for the rest of my life as I've leveled up my experience, it had to start somewhere. And that was a huge learning experience. So I didn't go to a business college, so to speak, but however, that, that was my tuition was paid and tell you that much, and I'm sure he would probably agree with that and doing something like this even if it didn't work out.
Those numbers didn't work out completely. The experience you would gain would set somebody up so much for the next business. And looking at what I, what we saw, it's hard to see how those, as long as you get the financing, and you're willing to put the work in. It's hard to see how those wouldn't work out.
So I knew I wholeheartedly agreed.
The Option of Starting Your Own Business
And there's always the option of starting up your own business, right? You could start up a coin-off. What does that look like? You're going to be buying 30, 40, 50 dryers and washers. And how much of those costs a piece, five or 10 grand a piece. How are you going to get the financing for that?
Do you have a condo you have? Experience. How are you going to, how are you going to convince a bank to help you out with that? So there are tons of options for you to do that. If you're in corporate America or you're out of the military and you're a veteran, you're starting to twiddle your thumbs, trying to figure out what to do, and you don't want to work for somebody starting a business or buying a business might be your option, right?
Absolutely.
The Impending Wave of Retiring Business Owners
And the reason why we're talking about it, you mentioned a few times already is because there's going to be a huge amount of people my age and older retiring in the next 10, 20 years, and some of them are just shuttering their doors or just done. I talked to a guy who ran a multimillion-dollar plumbing company one day and he is He just shut it down like two years before.
I'm like, wow, what is it? You can just sell, you can even just sell the assets that you have in your yard. He's yeah, that's worth about a million dollars. I go, what are you doing with it? I'm just going to throw it away. I'm like, dude, what? I'm like, go talk to these people. And I can't tell you that I want to represent you in this cause I.
I am not the person to represent you in this, right? I have a couple of people that I've worked with before and I refer them business because it is such a niche understanding of what you're looking out for, right? It's like for me, I know how to buy a house. I know what to look out for. I know how to look for foundation damage.
I know how to look for termite damage. Yeah, I know how right, and still I'm human. I'm not gonna catch everything. It's the same thing you need to know the same every little detail about presenting a Business. Yeah, and again if you're gonna buy a restaurant or a tour company, that's not hands-off not even a little bit, but compared to again, compared to starting your own it's just a very different come from, and very different experience to go from scratch to buying something that's running where you can.
You should be able to open up the books and see, if is this legitimately, cash-flowing, and if this will work. That's a completely different experience altogether. Mini golf and laser tag business. For those of you into that. Turf installation business. So there's so many. It just goes on and on.
Like my mechanic wants to retire and he had a number and he's I had this guy. He, we were like three days away from closing, and then his wife came in and said, nope, we're not going to do it. So understand that these businesses, they either sell really quick or they're overpriced or there's something not right with it.
And they'll just sit on more on the market on stuff like this for. Eons, they don't sell. And I remember seeing something that was like 1 in 8 businesses actually sell. No kidding. Yeah. It could be different now because, I haven't looked at that, this stuff in a long time. But Turnkey Mexican Restaurant, Great Pool Route, Borrego Springs, State of the Art Can Oh, there you go.
Dude. Hey, Cannabis Business for Sale. Now, why is this being sold? So much opportunity, right? And these are either so buyer beware, like yesterday I went to a listing agreement, a listing meeting with a lady over here and she ran a daycare and she's, she lists, she had listed it seven times with seven different agents since 2017.
So I sit down with her. I'm like, after the, what, why'd you call me? Blah, blah, blah. Why haven't you sold it? Oh, I have offers on it. I go, why aren't you, why aren't you, why aren't you selling it? She's I got an offer for 2. 3. I'm like, oh, really? Yeah, but they wanted me to carry back the note and I didn't want that.
It's whoa. That's how, when you have a when you have a daycare center, that's a house, that's real estate property, you have to be flexible on that. I don't want anything to do with that. I'm like, but you had an offer for 2. 3. Yeah. And she goes off on this tirade of this and that.
And I started asking her questions. I started poking holes in her story and I'm like you know what? Let me do some research. Gracefully backed away. And to me, that person is pie in the sky, completely out in the universe. overpriced expectations. And she's I have so many real estate agents telling me that I have offers and I can list your home.
I'm like, okay you know what? I don't, let me go do some research. So I'm like, I don't want anything to do with it. So buyer beware, right? Copy at mtor it's absolutely something you have to do when you're buying it. It's like when you research a company for stocks, stock trading, right?
You want to know what. Where on the quadrant this company is, are they doing healthy? Are they in recession? Are they cyclical? Should I wait? You know that kind of stuff. Is it a new CEO? Publicly traded companies have to be up and up in certain reporting, right? These companies, they don't, they can lie to you.
Yeah, and we look at the diversity of stuff here. It just goes on and on. Excuse me. Yeah. See, I would never buy a contractor company that you could just restart HVAC. There are so many HVAC companies out there and a lot of them don't know what they're doing.
The Art of Running a Business
As you said, learning business is, it's not just a science.
It's not just a degree. It's an art form because everything has a different touch to it. Your client says it is going to be different. The way you report is different. The way you charge is different. The way you, and there's so many moving parts. And that's why I don't, I would never get into this. I have a friend who sold selling businesses like this.
Just something I don't want to do. This is another layer of stuff that I have to learn. Yeah. And it'd be a ton to learn for sure. However, I am actually very excited to, for what's possible here for a new generation of entrepreneurs who are willing to take some risk and get the experience of buying.
Running and owning these small businesses, that really need somebody to carry it on like the economy needs it. The communities need it. These are businesses that are in communities that employ people who help run what's going on in these, in our small towns and small communities that make up the larger whole.
And so huge opportunity. I was reading an article. What first turned me onto this was what was going on in Japan, which is. They're having the same problem with steroids. Now they don't have the same population numbers, but the percentages are even higher meaning, the number of small businesses.
that are unable to find somebody to run it or sell it to. So there's just closing because they're an aging population with the what's the word? The demographics are just so bad, right? And so it was just incredible. The story that was getting painted over there when it comes to the small business community and finding somebody to run these things and so they're not finding them.
So they're closing. Guess what? Those communities, those cities are impacted when that happens. Yep. And here the story I think is a little different. We still have the same problem in that you have a whole generation. We talked about it already. I keep hammering it down and it's okay, we need, I want you to find those who want to take on this risk and do this.
And so I think you talked about early, like the veteran community, you're talking about. Soldiers, sailors, airmen, coasties even the Marines spaces, that's right, doggies in there. Whatever they may be there's a lot of support. There's a lot of grants. There's a lot of mentorship.
There's a lot of resources out there to help. It's somebody who wants to bring their enthusiasm there what's the word I want to use? Energy and youth. Energy and youth too. Take on the exciting journey of owning a small business, which can be brutal. And it's an incredible experience that for the right folks, man, anything is possible here.
Look at this from pizza, the physical therapy. So I think if you have a passion or there's something you're interested in, there's a business built around that, right? There's probably a business built around that. So you don't have to start from scratch and there's nothing to say that you can't still go on and build something from scratch.
However, why not, learn how to. do it from a business that's already profitable, right? And you have opportunities to buy franchises like this right here is a franchise. See, it's a franchise. Franchises are great ways to have somebody hold your hand to learn how to run a business.
Their system. The problem is, it's like buying a condominium versus a house. You have very certain restrictions that you can and cannot do. You have to run it their way. You have to And I'm not saying it's a bad thing, because, look at McDonald's, right? They're the king of But another thing that we're seeing is larger big box retail companies they're not recession proof and they're cycling out.
So you're going to see big, huge department stores, best buys go the way of Circuit City because they'll come back, right? But there's no real need to have 150, 000 square feet of computers and appliances and none of that because you can get all that stuff online now. There's like a Lowe's and Home Depot's will always be around because people always need to buy stuff for fixing their houses.
But, do you really need to have 150, 000 square feet to go look at a computer? No, you can go to the Apple store, you can go to the computers, the little tiny computer store to do that.
The Resurgence of Small Businesses
I think we're going to see a resurgence of these companies, small businesses come back and become more powerful.
Yeah, agree. Agreed. So I think huge opportunities for the right folks.
Exploring Various Business Opportunities
Look at that. Farmers, you can go cashflow 360. Wow. If that was the equipment rental business, it's just, yeah, that's Rim forest
right on. So I keep looking into this. I'm like, Oh, going down my little rabbit hole, but it's fun to look right. You could spend a day, or two days just goofing around. And I don't know if I would start my own. I would probably start my own cannabis delivery service.
And here's the thing, right? The one thing, it took me 10 years to figure out.
The Importance of Trust and Delegation in Business
I've been doing real estate for 20 years. It took me 10 years of struggling with how to run my business in real estate. And the biggest lesson I learned is you can't do everything. You have to trust in other people.
Not just lawyers, financial advisors, and real estate, but vendors, people who can help you get things done. You should not be an on-site business owner because then the business owns you. That's right.
That's not at all right. Hey, let's go build a sailboat. Mufflers and Cadillac converters. There you go. I hear there's a problem with those in some cities. Heh. Yeah. My son got his snagged. Oh, really? Oh yeah.
Wow. Window tent PPF and wrap shop. Wow. Million dollars. Holy cow. I don't know about that one. I don't know about that one, man. I know there are a few spots in LA where you can just cruise down the street and pull over and they'll handle your tenting for you. That's crazy. All right.
The Future of Small Businesses
So I'm glad we got to talk about this today because it was it's nice to show.
It's nice to and I said, talk about stuff that's outside of our normal realm because, business life, learning how to live within your means, and talking about all these different things that can get overwhelming, but that's what we're here to do is talk to people and learn about different professions.
So I think when Wayne jumps on, I'm really excited to talk to him about what we're doing. And then. We're going to talk to JP next week, hopefully, and talk to him about his adventures after he left the military and what he's doing as a small business owner. So I'm excited to see all this stuff.
Yeah. Same here. Like I said, specifically this opportunity, that's going to be, I think we're going to start seeing more and more news articles, whether it's in print or in podcast form or in, video form talking about this looming issue of. That generation of business owners who are retiring, trying to figure it out and who to sell their business to because they don't have an error, so to speak.
So yeah, I'm glad we're talking about it. Yep.
Closing Remarks and Future Discussions
Watch. I bet we'll start seeing those things pop up now in our consciousness out here. Anywho, right on. All right guys. Any questions, give us a call. If you have ideas or you want to be on the show, let us know. I'd love to interview you. Heck yeah.
Till next time, Go Army, Beat Navy.
Yay! We'll see you out there. Couldn't keep a straight face for that one. Alright. See
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