Want to exit the rat race in 2022?
Buy a Business for $50k.
Turn it into a $1M a year profit machine.
Let me show you how π
Buy a Business for $50k.
Turn it into a $1M a year profit machine.
Let me show you how π
1/ First we're going to find a business to buy.
They're are many business brokers out there, but we're going to use BizBuySell to find ours.
Thousands of businesses to look through so let's filter for service businesses.
They're are many business brokers out there, but we're going to use BizBuySell to find ours.
Thousands of businesses to look through so let's filter for service businesses.
2/ Here we find a landscaping company in Florida. Year round landscaping. In business for 25 years.
Key stats:
Asking Price: $1M
Revenue: $2.8M
Profit: $440k
We contact the broker, send a letter of intent to buy at full asking price.
Key stats:
Asking Price: $1M
Revenue: $2.8M
Profit: $440k
We contact the broker, send a letter of intent to buy at full asking price.
3/ Now we start the due diligence.
This is where we will find out all we can about the business.
There are many resources available to assist you.
But, Buy then Build is a great book that will get you started.
amazon.com/Buy-Then-Buildβ¦
This is where we will find out all we can about the business.
There are many resources available to assist you.
But, Buy then Build is a great book that will get you started.
amazon.com/Buy-Then-Buildβ¦
4/ Some questions we will ask:
Are the clients contracted or one off?
What is the organizational structure?
Are there any pending lawsuits?
How large is the service area?
How old are the assets? Will they need to be replaced soon?
Are the clients contracted or one off?
What is the organizational structure?
Are there any pending lawsuits?
How large is the service area?
How old are the assets? Will they need to be replaced soon?
5/ We also want to check bank records.
Look at yearly and quarterly financial trends.
See all the contracts.
There's tons more here but you get the picture.
Look at yearly and quarterly financial trends.
See all the contracts.
There's tons more here but you get the picture.
6/ We finish due diligence & are happy. Now for financing.
We will be using the SBA to fund this acquisition.
The SBA gives very generous terms and is a great vehicle for funding business acquisitions.
We will be using the SBA to fund this acquisition.
The SBA gives very generous terms and is a great vehicle for funding business acquisitions.
8/ We also ask the seller to contribute to the deal by offering us debt.
The seller agrees to 5% of the deal ($50k) and we accept.
Now to the banks.
The seller agrees to 5% of the deal ($50k) and we accept.
Now to the banks.
9/ We find a bank willing to work with us and we agree to the following terms:
90% Loan to Value ($900k of $1M asking price)
5.5% APR
10 Year Term
Monthly Loan Payment: ~$10K
The bank loans 90%. The seller 5%. And we put in 5%.
$50k total investment.
90% Loan to Value ($900k of $1M asking price)
5.5% APR
10 Year Term
Monthly Loan Payment: ~$10K
The bank loans 90%. The seller 5%. And we put in 5%.
$50k total investment.
10/ Now that everything is agreed upon, it is time to close.
We meet with the broker and seller to sign paperwork.
We sign.
The broker even buys you some champagne.
Congratulations! You are the proud new owner of a landscaping business.
We meet with the broker and seller to sign paperwork.
We sign.
The broker even buys you some champagne.
Congratulations! You are the proud new owner of a landscaping business.
11/ Now it's time to operate the business.
Don't expect the seller to stay on long, they have their money. It is on you now.
We improve technology. Flatten the org structure and cut some of the fat in the business.
After 6 months, we have the business running how we want.
Don't expect the seller to stay on long, they have their money. It is on you now.
We improve technology. Flatten the org structure and cut some of the fat in the business.
After 6 months, we have the business running how we want.
12/ Now we grow.
We buy up smaller landscaping companies in the area at great terms.
Many are small and likely won't be sold because they are jobs; not businesses.
We acquire as many as we can handle.
@SqueegeeGod has a great playbook for this:
We buy up smaller landscaping companies in the area at great terms.
Many are small and likely won't be sold because they are jobs; not businesses.
We acquire as many as we can handle.
@SqueegeeGod has a great playbook for this:
https://twitter.com/Codie_Sanchez/status/1471119661949505537
13/ After 4 years and many acquisitions our business looks like this:
$5M Revenue
20% Margins
$1M Profit.
A bit of sweat and grit and you are taking home $1M per year from a business you invested $50k.
Not bad.
$5M Revenue
20% Margins
$1M Profit.
A bit of sweat and grit and you are taking home $1M per year from a business you invested $50k.
Not bad.
14/ Please note that this is a very simplified framework for this type of transaction and of course your mileage may vary.
Also note that the landscaping company is just an example and this could be done with many different types of businesses.
Also note that the landscaping company is just an example and this could be done with many different types of businesses.
15/ TL;DR:
Invest $50k
Buy business for $1M
Improve operations thru tech
Grow via acquisition
Cash flow $1M per year
Invest $50k
Buy business for $1M
Improve operations thru tech
Grow via acquisition
Cash flow $1M per year
16/ Some people to follow who BUILD, follow these people:
@JoeCassandra
@Codie_Sanchez
@StrongpointRich
@landforce
@SMB_Attorney
@SamtLeslie
@laughridge
@JoeCassandra
@Codie_Sanchez
@StrongpointRich
@landforce
@SMB_Attorney
@SamtLeslie
@laughridge
17/ Bonus:
@SMB_Attorney published a great thread on biz acquisitions that you should definitely read if you found this interesting.
@SMB_Attorney published a great thread on biz acquisitions that you should definitely read if you found this interesting.
https://twitter.com/SMB_Attorney/status/1429661639553392643
If you enjoyed anything here, it would be great if you could share with some more of the Twitter community.
Just retweet the first tweet.
Just retweet the first tweet.
https://twitter.com/chrisxmunn/status/1474373912498638848?s=20
I'm Chris.
I send my community 2-3 threads a week similar to these.
Come along for the ride.
π @chrisxmunn π
I send my community 2-3 threads a week similar to these.
Come along for the ride.
π @chrisxmunn π
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