Posted by Wayne-NC on July 23, 2008 at 09:44:36:
He has done that to many here. I have discovered that just a few “key words” will usually set him off on a negative tirade. I’ve had my exchanges in the past and now choose to ignore even thought it is somewhat difficult at times. He (or she) is good at sucking you back in to a black hole where no real information is exchanged. At the level it becomes pointless to continue.
In this tough market - is this a new idea - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 18, 2008 at 11:11:19:
First let me say, I am NOT selling anything. I don’t have anything to sell at this time and this is just a thought I have.
I have been posting on and off on this board for years. I have been investing in real estate and other properties for years.
But my main line of business has come from buying and selling businesses. Many for little to no money down.
Making money in this real estate market is now tough and getting tougher. I find buying businesses is much more fun and exciting for several reasons but the best one is you get an immediate cash flow.
I was wondering if I put together a course if there would be any interest and what are some potential questions a person who has never purchased a business and flipping a business would have.
Is this a good idea or not?
Re: In this tough market - is this a new idea - Posted by David (OH)
Posted by David (OH) on July 23, 2008 at 22:41:52:
I like your idea of writing a course. There’s really not much out there on this subject. A few years ago, I hired a coaching company called Action International. They were very helpful in providing a template for getting a business to run without you. The whole goal was to get your current business to function without you (like e-myth), and then to buy other businesses that lacked the structure. Get them running smooth and sell for cash or keep for cashflow. Neat model. I went to their 3 day event and also bought the DVDs. Let me know if you want to chat more about it.
My background…real estate for the last 6 years. I have partners and staff now. I work 10-15 hrs/wk in it. Got my auto dealers license. Am in the process of e-mything that biz. My next venture will be buy & fix existing business. There’s way more potential for equity than starting from scratch like I did with real estate and cars.
Cheers,
David
Re: In this tough market - is this a new idea - Posted by Kristine-CA
Posted by Kristine-CA on July 19, 2008 at 15:57:52:
I’d be interested in learning about securing good deals on businesses
and flipping them. Almost every small business deal that my friends
and families are involved in involve owner financing (restaurants, small
hotels, plumbing services, etc.)
Seems that getting a good deal on the seller financing on established
small businesses and then letting someone else take the deal would
work. But if it means “rehabbing the business,” as in increasing
profits, reducing expenses, or restructuring the business, then that
wouldn’t be a flip per se.
Please keep me posted if you decide to offer a course or seminar.
Thanks, Kristine
Re: In this tough market - is this a new idea - Posted by ken in sc
Posted by ken in sc on July 19, 2008 at 15:31:32:
I just wanted to chime in and say “Good Idea, I’m interested”.
On this board or off, I would be very interested in learning more and participating in this discussion. I recently sold a business, and yes I financed most of it…so far it has worked well for both parties. I can see where the creative mind could add much value to these transactions.
Ken
ok so here’s step one - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 19, 2008 at 10:29:22:
Please leave your questions or comments this is my opinion only and I hope that others will have insights as to how they do it and what they do.
Step One - Know yourself
Before you start your investigation into buying any business you must first know what you bring to the table and what your strengths and weaknesses are in the transaction.
Very few people have everything in abundance in terms of money, assets, credit worthiness, knowledge in the industry, years of experience and â?? well you get the point.
Just because you may lack money, or credit, or experience or all of these things doesnâ??t mean you cannot buy a business. It only means you need to bring people in on your team who have these things.
And Iâ??ll go into building teams later, but the first thing I want to say is when starting out in buying businesses is to understand that you donâ??t have to be a one man band. Correctly assess your strengths and fill in your weaknesses with your partners or employees.
When I talk to a client or potential partner the first thing I usually hear from them is what they lack, they either donâ??t have enough money for the down payments or they donâ??t have experience in a certain area and
Iâ??ve said this probably a thousand times in my life and Iâ??m going to say it here and this is it;
â??Just because you donâ??t have something (i.e. money, credit, experience) doesnâ??t mean you canâ??t get a deal done. When you lack something you need to complete a deal find someone who has what you lack and bring them in on the deal. Whatever you lack, get a partner who has what you lack.â??
I know Iâ??m being very repetitive, but I want it to sink deep into your belief system because how you approach a deal and if the deal succeeds or fails will largely depend on if you believe you have to be all and do all yourself or if you believe that you can delegate, partner, and build upon what you already have or donâ??t have.
So the first thing you are going to want to do is put together a resume and a financial statement. When creating these things do not be judgmental, but be very impartial and cold about the facts. Do not pad your resume or financial statement, because there is no need to do these things. As basic, as this may seem, itâ??s what gets most beginning investors in trouble, because they want people to see them as more than they are.
But itâ??s better to be known for your honesty and integrity rather than be embarrassed in the middle of closing a deal that you do not have something that you claimed you did and be known for fudging the truth.
Once you have completed your resume and financial statements you will know where you stand as to your lifetime of work and professional achievements and investments. Do not let this make you overly happy or sad. Itâ??s just the facts.
On the next part I will explain beginning the deal flow process. You can read a lot of books at the book store about this. Some are good, most are outdated and too conservative for a deal maker. And most of the books will teach you how to buy a job and not be a deal maker which makes them useful for information , but not anything I would use as a bible for deal makers.
Re: In this tough market - is this a new idea - Posted by Brian_Wa
Posted by Brian_Wa on July 19, 2008 at 10:01:56:
If you can’t make money doing something (residential real estate) that you’ve been doing for a long time, what makes you think you can do better on something even more foreign? Commercial real estate is a different kind of beast and one mistake can cost you unimaginable pain. If you are making tons and tons of money in residential real estate and look for more challenges, that’s one thing. But if you can’t cut it in your field of expertise and start looking for something else, then you need to re-evaluate. I don’t think it is a wise idea for you to change course. That’s typical mistakes that many people make.
Brian
Re: In this tough market - is this a new idea - Posted by Tim
Posted by Tim on July 19, 2008 at 06:37:58:
I’m interested, & am in fact looking at possibilities right now. Real estate has been pretty good to me, but I think a biz could help to smooth out cash flow. I have owned/operated both a plumbing & a general contracting biz in the past so I have a general idea about service biz. Not a clue as far as any other type of biz goes, would like to learn more.
Re: In this tough market - is this a new idea - Posted by Fred
Posted by Fred on July 18, 2008 at 20:03:24:
Steven,
Excellent idea. I know of two gurus from the 80s that dealt with this subject. Art Hamel and Gordon Bizar. Their courses are still available on their websites.
Re: In this tough market - is this a new idea - Posted by Ken-Orlando
Posted by Ken-Orlando on July 18, 2008 at 19:17:35:
That is certainly a subject that I would like to read. Especially how to evaluate the worth of a business, where to find value that others may have missed, turnarounds, and what businesses work best in the different Economic Cycles.
Please let me know when your book comes out.
new idea - Posted by JT-IN
Posted by JT-IN on July 18, 2008 at 16:44:51:
Steve:
That is a great idea… Not sure where you would start, possibly all the way back at the point of explaining the power of cash flow and to use it effectively. Time value of money, etc… We assume that folks in this business get-it, but many really don’t.
I have owned a dozen or so businesses and have done well with spotting some under value or under managed businesses and dropping sales to the bottom line with elementary changes… Many biz owners really do not have the discipline to be in biz for themselves… they have part of the circle but not the whole circle.
The problem with businesses today is the employee market. How in the world do you find dependable employees that you can count on… I would be interested in hearing you feedback on this aspect of how you deal with business acquisitions.
Let’s face it, the wealthiest cat in the land does exactly this… of course he is buying hige cashflows and usually keeping the same management in place, no doubt with enhanced tools and the Buffet philosophy.
I would be interested in hearing what type of businesses you have bought and the experiences you have had in turn around or enhancement… Interesting.
Thanks for the post. Looking forward to more on this.
JT-IN
Re: In this tough market - is this a new idea - Posted by Virgil Horner
Posted by Virgil Horner on July 18, 2008 at 14:29:32:
I think this is a great idea, this is certainly information that I’d enjoy.
Re: In this tough market - is this a new idea - Posted by phil fernandez
Posted by phil fernandez on July 18, 2008 at 13:34:45:
Hmmm.
I’ve got a good friend that invests both in real estate and restaurants, which is a business. He likes investing in real estate better. What he does tell me is that when restaurants are sold most of the financing is in the form of owner financing because banks are very scared to lend money on restaurants. And with good reason. I read somewhere that the life span of a new restaurant is something like 2 years. But that fact also opens up a huge opportunity to play with owner financing and paper and to get real creative. The flexibility of paper is unlimited, see the cash flow forum here. So you may be on to something. Who knows for sure.
Re: In this tough market - is this a new idea - Posted by Killer Joe
Posted by Killer Joe on July 18, 2008 at 11:55:10:
Steven,
I think it could be a good idea. My wife and I sold a business in 2006 and were amazed at the lack of knowledge not only on the part of potential buyers, but the significant lack of knowing the fundimentals of selling a business by the ‘broker’ that listed our business. This guy was so clueless as to make him worthless.
I have a feeling that unless this thread gets a lot of traction here it will be disposed of. I don’t have any time right now other than the few minutes it takes to make this response, so feel free to email me if you want a further dialog on this off board.
If the thread remains viable, I will be happy to add what I can. Since, theoretically, the majority of investors on this site believe they have a real business, this topic should be of some value here.
Much success,
KJ
Re: In this tough market - is this a new idea - Posted by FBN
Posted by FBN on July 25, 2008 at 20:29:14:
Sounds interesting. Do they have a website?
Yes put me on your mailing list too please! - Posted by IB (NJ)
Posted by IB (NJ) on July 19, 2008 at 16:51:20:
Business Buyer vs Deal Maker - Posted by Steven St
Posted by Steven St on July 19, 2008 at 10:59:25:
I want to explain what I consider to be the difference between a deal maker and a business buyer.
To me they are two totally different people.
The Business Buyer - A typical business buyer is a person who has worked in a particular field for 5,10,15 years or more, has bought his home and has equity, has other assets, great credit, and is looking to buy a business in his field of expertise.
The business buyer typically ends up leaving his comfortable 120k, 40 hour a week job to buy a business making 120k working 80 hours a week and hoping that he’ll potentially make more improving the business.
Most books in book stores are tailored toward the business buyer. I am not a business buyer. I am a deal marker.
The Deal Maker - The successful deal maker usually has a team made up of a top notch accountant and attorney, financial partners with deep pockets, maybe one or two very experienced people in a particular field to act as managers or officers of a company and a wide and deep slate of advisers and agents working on their behalf.
The deal maker isn’t looking to replace his 40 hour a week job for an 80 hour a week job. The deal maker is looking for a profitable deal.
Warren Buffet and Donald Trump are deal makers. Warren Buffet looks at thousands of companies and isn’t an expert or have years of experience with any one company, but he puts together strong financial and management controls so he doesn’t have to work 80 hours for every company he buys.
True deal makers do not look for companies to run they look for companies they can own and make a profit.
Now many business brokers and books will tell you that “absentee owners” never make as much as hands on owners. And in some cases they are right. But deal makers are not looking to buy one business and make a killing. True deal makers are looking to get the greatest return on their investment and move on to the next deal.
Outside of Rich Dad, Poor Dad, Buffet Books or Trump’s collection most business buying books are for business buyers. What I’m commenting on here is not how to be a business buyer.
But this is just my opinion, I look forward to hearing others opinion on this topic.
Re: In this tough market - is this a new idea - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 19, 2008 at 11:20:30:
Wow,
I hate to say this but what you wrote goes against everything that I know or believe in.
What you’re saying, if I’m reading it correctly, is that if you’re unsuccessful in one thing, why try something different and be unsuccessful at that too.
I believe that if you’re unsuccessful at one thing you SHOULD try something different, either in that area or in a different area. As long as you learn from your mistakes and improve you will succeed. Just because you failed at one thing doesn’t mean you will fail at something else.
If I were to take your advice, I would have stopped after my first business deal and my first real estate deal that both turned out incredibly bad.
Not all people are cut out to be attorneys, but just because you can’t be a great attorney doesn’t mean you can’t be a great accountant. Not all people will hit a home run in real estate but it doesn’t mean you can’t make a nice profit buying a business.
Any investment you enter into can cause you unimaginable pain if you make a mistake. Some of the smallest deals has cause the greatest headaches down the road.
Two, I have made money in real estate and in businesses. I am definitely not turning to something else just because I couldn’t do it in one thing. They are different animals but they are not so different that they can not be learned by people on this board.
So, while I appreciate your opinion, I have to respectfully disagree with your conclusion.
Re: new idea - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 19, 2008 at 09:24:05:
JT
Yeah, you made a lot of good points. Where to start is problem. I understand a lot of people on this board have been through at least once. So, explaining how the deal flow works would be redundant to some people, but to others it basic foundational information that can’t be overlooked.
I think I’ll start with how I find, analyze, negotiate, finance and put together a deal and answer questions along the way. And people can ask questions or add what they have done along the way.
Because the real estate market is getting tougher this may be a great way for a lot of us to have different sources of cash flow other than real estate.