Fastest path? Build a new business, RE investing, or buy an existing business?

[Growth & Learn]

Hey all,

Would love to get some thoughts and feedback on this.
My core business is doing well. It's in the information marketing space. I'm trying to figure out where we should reinvest our profits so we can make some big jumps financially.


Not looking to get a 6% return. Trying to really make some big gains. I’m currently on pace to retire in 13-15 years. I'd like to retire in 5 years. So, with all that being said here are my choices….

Choice #1 - Build A 2nd Website In A Similar Subject But Targets A Broader Audience

Pros:

• Also in the information marketing space which I have a lot of experience in. (Albeit much broader audience)
• May be able to leverage existing audience from previous web business.
• Have marketing and entrepreneurial skills that could eventually separate us from the pack in terms of the competition.
• Already have experience in the information marketing model.
• Sizeable audience potential.
• If we can build a fanbase and customer base it could be a 6, 7, or 8 figure business.
• I've seen good returns in my previous business through reinvestments in the business. Hoping this can be the same.

Cons:

• Lots of competition in this market.
• Competition has a big head start.
• Would require a sizeable investment of my time for at least a couple years.
• Have a team together to help me build this but it will cost about $4k per month to pay them to do the work.
• Not 100% sure what the market will respond to in terms of products or offers yet. Just know there is a big market.
• I only have about 20 hours a week right now to personally put into this. This is because the other business takes up a large part of my time.
• My team is talented but not sure I am 100% dialed in on my personal leadership and organization skills to maximize their talent. They are talented but they are just role players. They'll need feedback and guidance. I'm not a horrible manager but definitely not great.

Choice #2 -Take Profits & Invest In Real Estate - Try To Scale That

Pros:

• Fits into my strategy of having my money work for me.
• Power of leverage.
• Proven system that many people have gotten wealthy from.
• Have capital to invest.
• Tax advantages
• Could provide hedge against the ups and downs of my core business.

Cons:

• Outside of my personal residences I have very little experience in real estate.
• Don’t have 40 hours a week to look for deals.
• Not sure of the speed in which I can scale this.
  

Choice #3 -Buy An Existing Business

Pros:

• Already have experience running a profitable web business.
  
  
• I'm a better marketer than most people. So, w/ the right business I can go in and make an impact fairly quickly. I.E. they're probably not doing 20 things in their marketing plan that I have the talent and capability to implement.
• Have capital to invest.
• Could provide market diversity/hedging toward my core business.
• Could skip the startup/pre revenue phase that is usually a pain in the a$$ and get cashflow going from day 1.
• Have the ability to understand the metrics of a web business and can use that to make smart business buying decisions.

Cons:

• Don’t have 40 hours a week to work in this business.
• I will have to build a team to run it. This could be challenging or it could be fun.
• I’m an expert at my core business but with this business I would imagine I’d have to learn a lot.
• Could take me awhile to find the right deal.
• Would probably require more capital upfront than building a new business.
• May require a decent amount of capital to keep running since i’ll need to use a team.
  

Anyway, would love to know the thoughts of experienced entrepreneurs on this forum.
Please only respond if you're a full time entrepreneur.

 

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[GuestUser450]

Maybe a dumb question: why can't you reinvest into your current company?

 

[Growth & Learn]

Maybe a dumb question: why can't you reinvest into your current company?

Great question. I'm currently doing that to the best of my ability. These profits are left over...

 

[GuestUser450]

Great question. I'm currently doing that to the best of my ability. These profits are left over...

Right, but I was referring to a situation where whatever you don't need to live on would go towards growing the business. The fastest path is often to double-down on what's working, since it's a known entity. You can estimate the value of improving on success much more accurately than an unknown venture.

Even if you're bumping the ceiling of your market, I'd wonder what complimentary products and services you could offer to raise the LTV.

 

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[Growth & Learn]

Right, but I was referring to a situation where whatever you don't need to live on would go towards growing the business. The fastest path is often to double-down on what's working, since it's a known entity. You can estimate the value of improving on success much more accurately than an unknown venture.

Even if you're bumping the ceiling of your market, I'd wonder what complimentary products and services you could offer to raise the LTV.

Another excellent point. I've tried to reinvest more aggressively on the core business and sometimes i'm not 100% sure what to do.

The 2nd site would definitely be a cross sell and offer related products.

 

[Yoda]

I've tried to reinvest more aggressively on the core business and sometimes i'm not 100% sure what to do.

This is the real underlying issue.

 

[Growth & Learn]

This is the real underlying issue.

Care to elaborate?

 

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[GuestUser450]

Another excellent point. I've tried to reinvest more aggressively on the core business and sometimes i'm not 100% sure what to do.

Pretend the business you might buy is the one you're running now. How would you value it honestly, and what would you do differently to grow it?

 

[ravenspear]

If by retire in 5 years you mean that you do not want to actively be involved in running a business then I would go with real estate.

Get a portfolio of passive income started which is a more reliable structure for retirement than business income. Rental income is far more stable and you sort of know what you are going to get and can project out better and more reliably into future years.

 

[Yoda]

Care to elaborate?

The reason you're looking for some other avenue is likely because you don't know the value of reinvestment in your own business.

And I mean hard numbers.

If you were certain, without a doubt, you could put a dollar in one month, and get out 2 within 90 days, how many dollars would you put in? And if this stayed true, how long would you do it?​

Anyone in their right mind (at least from this forum) would say "everything" and "forever."

Fact is, I could just about guarantee you this exists for most businesses, especially within the digital information space. The problem is, most people can't find where to actually put those dollars to get those returns.

This uncertainty leads to fear of not knowing, which leads to insecurity, which leads you to looking for the next shiny object.

Until you've maximized your vertical, you probably don't want to move horizontally.

So, what have you done to test the value of reinvestment?

1. Have you tested social media?
2. Other channels?
3. Paid ads?
4. What about content scaling?
5. Marketing/Virality scaling?
6. Other media types (podcast, video, etc.)?
7. List building?
8. Growing by acquisition?

Once your business is 'up-and-running' and you feel like it's doing well, shake the cobwebs out of your brain and start looking for opportunity immediately, but stay within the confines of what you've built. Don't work in it, work on it. Execute a new angle. Get creative.

Here's what I'd do...

Get feedback. Real, direct feedback from buyers (and non-buyers) to see what they liked, loved, and loathed. Push extra hard on the love, fix the the loathe.
Test. Test the vertical with pushing scale in one direction at a time. Example, I've got a largely content site which is slowly ranking, so I threw up a landing page and started testing PPC. The first $100 in ad spend made $241. I pulled the initial $100 and left the profits for the next month. The profits of $141 made over $1,500. Do you think I'm going to test month 3, or jump to RE?
Take a vector. When you find a potential path to scale, don't just go "eh..." Go "BOOM!" F*cking execute like it's the ONLY way you'll survive. Push it to the limit. You want to find out very quickly if it works, and measure everything along the way. Turn potential into profit or poor, but do it fast.
Remove yourself. Stop working in your business. You said it yourself. (My team is talented but not sure I am 100% dialed in on my personal leadership and organization skills to maximize their talent. They are talented but they are just role players. They'll need feedback and guidance. I'm not a horrible manager but definitely not great.) You're not the best manager? Find the best manager, or figure it out. Get this monkey off your back so you have more than 20 hours/week for the 'next' project.​

The day you feel like you've maxed the business, truly, you should only have one of three targets:

1. Permanence
2. Automation
3. Sale

Make it permanent (actively managing). Automate it (passively managing).

Or sell it.

 

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[MTF]

@Yoda - wow, what a great post! Loved all the suggestions, saved it to my Evernote and am about to jot down some actions to take.

@MJ DeMarco, @Yoda's post should be GOLD.

 

[MJ DeMarco]

The reason you're looking for some other avenue is likely because you don't know the value of reinvestment in your own business.

And I mean hard numbers.

If you were certain, without a doubt, you could put a dollar in one month, and get out 2 within 90 days, how many dollars would you put in? And if this stayed true, how long would you do it?​

Anyone in their right mind (at least from this forum) would say "everything" and "forever."

Fact is, I could just about guarantee you this exists for most businesses, especially within the digital information space. The problem is, most people can't find where to actually put those dollars to get those returns.

This uncertainty leads to fear of not knowing, which leads to insecurity, which leads you to looking for the next shiny object.

Until you've maximized your vertical, you probably don't want to move horizontally.

So, what have you done to test the value of reinvestment?

1. Have you tested social media?
2. Other channels?
3. Paid ads?
4. What about content scaling?
5. Marketing/Virality scaling?
6. Other media types (podcast, video, etc.)?
7. List building?
8. Growing by acquisition?

Once your business is 'up-and-running' and you feel like it's doing well, shake the cobwebs out of your brain and start looking for opportunity immediately, but stay within the confines of what you've built. Don't work in it, work on it. Execute a new angle. Get creative.

Here's what I'd do...

Get feedback. Real, direct feedback from buyers (and non-buyers) to see what they liked, loved, and loathed. Push extra hard on the love, fix the the loathe.
Test. Test the vertical with pushing scale in one direction at a time. Example, I've got a largely content site which is slowly ranking, so I threw up a landing page and started testing PPC. The first $100 in ad spend made $241. I pulled the initial $100 and left the profits for the next month. The profits of $141 made over $1,500. Do you think I'm going to test month 3, or jump to RE?
Take a vector. When you find a potential path to scale, don't just go "eh..." Go "BOOM!" F*cking execute like it's the ONLY way you'll survive. Push it to the limit. You want to find out very quickly if it works, and measure everything along the way. Turn potential into profit or poor, but do it fast.
Remove yourself. Stop working in your business. You said it yourself. (My team is talented but not sure I am 100% dialed in on my personal leadership and organization skills to maximize their talent. They are talented but they are just role players. They'll need feedback and guidance. I'm not a horrible manager but definitely not great.) You're not the best manager? Find the best manager, or figure it out. Get this monkey off your back so you have more than 20 hours/week for the 'next' project.​

The day you feel like you've maxed the business, truly, you should only have one of three targets:

1. Permanence
2. Automation
3. Sale

Make it permanent (actively managing). Automate it (passively managing).

Or sell it.

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