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Exiting the Slowlane by Buying a Business

A detailed account of a Fastlane process...

Bones81

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I'm 38, single, and have no dependents and have worked in credit risk in various banks since I graduated college. I've got to the point where I'm completely burned out with the job and am tired of being another small cog in the big corporate wheel. After reading TML twice and Unscripted , the most appealing fastlane to me presently would be to buy a business. This is appealing to me because (a) it would be an established business with a long history of proven profitability (i.e. not a start-up) and (b) I have the money to skip ahead and buy something that's already established and works versus having to build it step-by-step over a longer period of time (thus getting to the fastlane faster).

I'm just about done reading the HBR Guide to Buying a Small Business and have found it to be pretty useful to this point. I have come up with a preliminary set of requirements for a business by combining the CENTS requirements as well as some guidelines from the HBR book. Moving forward, here are the decisions I need to make:

1. Where do I want to live? - I currently live in Houston. I don't mind it but all the things I really like doing (e.g. skiing, hiking, being in the mountains) I can't do here. I think I would be happier living in a place like Denver, Colorado Springs or Salt Lake City where all these things would be in my backyard. Denver is presently the most appealing but I need to spend more time researching other cities as well. Initially, my search for businesses will include Houston in addition to cities near the mountains. If I move, I plan to live very cheaply while searching for an acquisition and running it the first year or so.

2. How much am I willing to spend on a business? My net worth is currently ~$1mm consisting of $20k in cash, $790k in stocks ($550k in retirement accounts / $240k in after-tax brokerage accounts) and ~$190k in home equity. I don't think I want to put all my eggs in the acquisition basket, perhaps just the $240k in the brokerage accounts and the $190k in home equity should I decide to sell my house. That would give me ~$430k of equity I could put down; assuming equity is 35% of the acquisition funding (the rest would be bank debt and seller financing), this would allow me to purchase a business with a total sale price of ~$1.22mm. I could purchase a larger business should I decide to raise additional equity outside of my own, but I don't know if I want to deal with partners / investors. I guess if the right opportunity presented itself, I would consider it.

3. What type of business? I'm generally agnostic to this as long as it fulfills the CENTS requirements and other criteria I've come up with. Ideally it is one where the present owner is looking to retire and is willing to stick around for a few months after so that I could learn the business. Would also like one that has good management already in place, both to satisfy the time commandment and to have people on board that know the business and would ensure a smooth transition. I realize I may have to spend more for a business with management in place versus one where the owner is the primary manager.

4. What do I do with my house? - Presently have ~$190k of equity in a house worth ~$400k. I could sell and use the cash from it as equity in the business acquisition. Alternatively, if I decide not to risk so much of my own equity in the acquisition, I could refi from my 15 year mortgage into a 30 and rent out the house. If I did this, I think it would generate ~$1k a month. My neighborhood is undergoing to redevelopment, so there is decent potential that the house can appreciate nicely over the next few years. I'm leaning towards selling the house; it's the higher risk move but the business will generate a higher ROI than the house.

5. When do I leave my job? - Job pays $15k / month plus I get a bonus of ~$50k (~$35k after-tax) at the end of January. Ideally, I would leave when I get the bonus in January. This would give me a few months to find a business and move along in the acquisition process while still cashing a good paycheck. However, leaving sooner allows me to dedicate myself full time to an acquisition and gets me to the fastlane quicker. If work stays relatively quiet, I can work on the acquisition at my job, however, with people quitting and the bank restructuring my group, I have the feeling I may hit my FTE before now and January.

For now I'm continuing to read on the process and things to look for / avoid while reaching out to various business brokers to get on their email lists to get prospects. I've also started working on a spreadsheet with both qualitative and quantitative metrics so I can start filtering businesses as I find them.

Would love to get any advice on where to live, types of businesses to consider, and from people who have been down this path before.
 
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Johnny boy

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Sell the house and rent a place in Colorado that you will thoroughly enjoy

Spend your time doing the fun activities you really enjoy and explore your passions

Don’t buy expensive things, just spend your time being happy doing the things you love

If you want, find a thing to do that’s related to your fun activities that’ll bring in some cash.

Take the next year or two as a time to be happy, do what you love, get in great shape, develop some skills, etc.

Enjoy an insane amount of happiness for about a year or two.

Once the market crashes and everything that’s worth 1 million is now being sold for 150-300k, use your savings to scoop up opportunities left and right. Real estate would be perfect.

You’ll come out of things with another million or two and you will have spent your time being happy. That is exactly what I would do.

Or...
You could hop into a inflated market with cash and little experience and get eaten alive, blow your money, hate the learning curve, and lose a ton of equity when the market crashes and your business you bought is worth much less.
 

AppMan

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When do I leave my job? - Job pays $15k / month plus I get a bonus of ~$50k (~$35k after-tax) at the end of January.
So you are making 15k / month and you want to buy exisiting business ?
If your target price is 1.1 m most like the income will produce to you is about 10k - 15k .
And there is no fast lane business for 1.1 m , you are basically buying a job for yourself unless your plan to keep buying more businesses.
I myself trying to buy exisiting business but most of them are expensive.
 

Grinder20

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Sell the house and rent a place in Colorado that you will thoroughly enjoy

Spend your time doing the fun activities you really enjoy and explore your passions

Don’t buy expensive things, just spend your time being happy doing the things you love

If you want, find a thing to do that’s related to your fun activities that’ll bring in some cash.

Take the next year or two as a time to be happy, do what you love, get in great shape, develop some skills, etc.

Enjoy an insane amount of happiness for about a year or two.

Once the market crashes and everything that’s worth 1 million is now being sold for 150-300k, use your savings to scoop up opportunities left and right. Real estate would be perfect.

You’ll come out of things with another million or two and you will have spent your time being happy. That is exactly what I would do.

Or...
You could hop into a inflated market with cash and little experience and get eaten alive, blow your money, hate the learning curve, and lose a ton of equity when the market crashes and your business you bought is worth much less.
Hey @Bones81,

What @Johnny boy said, let me add, if you decide to sell your house now instead of holding out until January for the company bonus (however, if you're done, you're done, I get it--no amount of money is worth, but you also have to be strategic and level-headed), then be prepared to sell it more aggressively. It takes at least a month or more to prep a house to get ready to sell (assuming you haven't done anything) and we're quickly approaching crunch time of Labor Day where families will either decide to move or stay put for another year because they need to get their kids enrolled in schools and need to time to wind down and get established. (This based off last year's market and my own experience as we listed in September - November, took off the market and relisted in mid-March and sold shortly thereafter for a lot more then we would have during the late fall/early winter. Again, my experience).

Let me also point out, a lot of business usually sell after the 1st of the year, so you will have a lot more choices, but possibly pay more. Whatever you do stay away from the restaurant and bar industry, unless you want to live there.

My wife and I did exactly what Johnny Boy described, sold our house, moved into an apartment, and sold the business in anticipation of the market crashing again. However, we really don't know when that's going to happen, so at this point we're all guessing.

Lastly, Denver is great, but very expensive, as is Salt Lake City. I'm sure there are other less expensive areas outside of these 2 cities with a solid economy?
 
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Grinder20

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I'm 38, single, and have no dependents and have worked in credit risk in various banks since I graduated college. I've got to the point where I'm completely burned out with the job and am tired of being another small cog in the big corporate wheel. After reading TML twice and Unscripted , the most appealing fastlane to me presently would be to buy a business. This is appealing to me because (a) it would be an established business with a long history of proven profitability (i.e. not a start-up) and (b) I have the money to skip ahead and buy something that's already established and works versus having to build it step-by-step over a longer period of time (thus getting to the fastlane faster).

I'm just about done reading the HBR Guide to Buying a Small Business and have found it to be pretty useful to this point. I have come up with a preliminary set of requirements for a business by combining the CENTS requirements as well as some guidelines from the HBR book. Moving forward, here are the decisions I need to make:

1. Where do I want to live? - I currently live in Houston. I don't mind it but all the things I really like doing (e.g. skiing, hiking, being in the mountains) I can't do here. I think I would be happier living in a place like Denver, Colorado Springs or Salt Lake City where all these things would be in my backyard. Denver is presently the most appealing but I need to spend more time researching other cities as well. Initially, my search for businesses will include Houston in addition to cities near the mountains. If I move, I plan to live very cheaply while searching for an acquisition and running it the first year or so.

2. How much am I willing to spend on a business? My net worth is currently ~$1mm consisting of $20k in cash, $790k in stocks ($550k in retirement accounts / $240k in after-tax brokerage accounts) and ~$190k in home equity. I don't think I want to put all my eggs in the acquisition basket, perhaps just the $240k in the brokerage accounts and the $190k in home equity should I decide to sell my house. That would give me ~$430k of equity I could put down; assuming equity is 35% of the acquisition funding (the rest would be bank debt and seller financing), this would allow me to purchase a business with a total sale price of ~$1.22mm. I could purchase a larger business should I decide to raise additional equity outside of my own, but I don't know if I want to deal with partners / investors. I guess if the right opportunity presented itself, I would consider it.

3. What type of business? I'm generally agnostic to this as long as it fulfills the CENTS requirements and other criteria I've come up with. Ideally it is one where the present owner is looking to retire and is willing to stick around for a few months after so that I could learn the business. Would also like one that has good management already in place, both to satisfy the time commandment and to have people on board that know the business and would ensure a smooth transition. I realize I may have to spend more for a business with management in place versus one where the owner is the primary manager.

4. What do I do with my house? - Presently have ~$190k of equity in a house worth ~$400k. I could sell and use the cash from it as equity in the business acquisition. Alternatively, if I decide not to risk so much of my own equity in the acquisition, I could refi from my 15 year mortgage into a 30 and rent out the house. If I did this, I think it would generate ~$1k a month. My neighborhood is undergoing to redevelopment, so there is decent potential that the house can appreciate nicely over the next few years. I'm leaning towards selling the house; it's the higher risk move but the business will generate a higher ROI than the house.

5. When do I leave my job? - Job pays $15k / month plus I get a bonus of ~$50k (~$35k after-tax) at the end of January. Ideally, I would leave when I get the bonus in January. This would give me a few months to find a business and move along in the acquisition process while still cashing a good paycheck. However, leaving sooner allows me to dedicate myself full time to an acquisition and gets me to the fastlane quicker. If work stays relatively quiet, I can work on the acquisition at my job, however, with people quitting and the bank restructuring my group, I have the feeling I may hit my FTE before now and January.

For now I'm continuing to read on the process and things to look for / avoid while reaching out to various business brokers to get on their email lists to get prospects. I've also started working on a spreadsheet with both qualitative and quantitative metrics so I can start filtering businesses as I find them.

Would love to get any advice on where to live, types of businesses to consider, and from people who have been down this path before.
@Bones81, I was thinking more about your situation and a good one mind you, single, cash flush, and have life experience. Go to Denver and live it up! With your background and contacts, my recommendation is to start a business brokerage. I realize this may not be 100% fastlane, however, the per transaction can be outstanding. Take home is typically 10% per deal. Do the math on just an average $3 million dollar local company. With baby boomers selling and retiring it's the perfect storm.

Just something to think about.
 

Walter Hay

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Rabby

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Another thought when looking at businesses to buy... they can be a lot like fixer-uppers. Not in the bad way. What I mean is you might see an obvious problem that does not seem like a problem to the seller. They never bothered with a web site. They sell the widgets but not the widget dispensers. It takes them too long to pack up a shipment. Stuff that annoys customers, and that you have the energy and acumen to fix.
 

SteveO

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And there is no fast lane business for 1.1 m
Well, using a bit of leverage, you could purchase a commercial property that is setup on a NNN lease to the tenants. 10% cash-on-cash would make about $110K per year with minimal work. Purchase a 4M property with 25% down. Make sure the leases have a 3% increase each year. This will increase the value and income each year.

The value is increasing based on the $4M valuation and should stay well ahead of inflation.

Then you will have lots of time to bootstrap another business for yourself.

All real estate has a learning curve though. There will be a fair amount of upfront work to figure it all out.
 

Bones81

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Appreciate all the feedback so far. Something interesting things have happened in the past week.

1. With all the restructuring going on at work, my boss sat me down last week and said that there wasn't going to be a spot on his team going forward. However, I could move over to a new team doing basically the same thing at the same rate. Eventually though, there would probably be pressure to relocate to where the rest of that team is located (Dallas). After a lot of reflection (which has honestly been going on for months) I told him I wasn't interested in going over to a new team and asked how much longer I could stay in my existing role before it wound down. The good news is that they want me to stick around through the end of January; this allows me to collect my bonus plus get a severance payment (16 weeks of pay), so all in all, pretty much a win-win for me.

2. I've been looking a businesses for sale, found a salon and spa that's a bit interesting. Does several million a year in revenue and is very high-end, but the owner is 100% absentee (lives in another part of the country). As expected, the staff is overpaid and underworked. It's not losing money but it could definitely use someone to go in there and trim the fat and drive sales. I've done some conservative projections on it and while it would be a full time job for me, I believe it could generate $525k-$725k free and clear to me after a few years. At that point, if the culture, marketing and cost controls were in place, I could either hire a manager (likely from within) or sell at that point. So while not immediately fastlane (I would be buying a self a job, at least initially) it could be a step in the right direction in that eventually, I'd be making significantly more money with less time expended for it. Very early stages of initial due diligence, so still a lot of research and questions to be answered.

In the meantime, I need to decide what to do with the house. At this point I'm leaning towards selling; I don't it would bring in enough in rent to justify it and I'd prefer to have the additional liquidity from selling it.

While I'm doing acquisition research, there's an 11-week ski instructor course in Canada I'm looking at that starts at the end of January. Would be a nice little post-career treat for myself to get outdoors and be exercising everyday.
 
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Bones81

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So update, leaving the job in February with a severance package. Fighting the urge to completely check-out mentally between now and then has been hard. I decided to reward myself with a 7 week ski program in British Columbia that starts in mid-February. Will be nice to be outside and exercising everyday to detox from the corporate wage slave lifestyle.

In the meantime, I've decided to sell the house. Currently have some repair work being done in order to get it ready to sell and need to do some spring cleaning. Should have it listed on the market within a month or so. Once the house is sold and the skiing is done, I'm looking to relocate to the Denver or Colorado Springs area.

Assuming the house sells between now and when I get back from skiing, I'll have about $400k in capital to deploy into a business. Have read several books on the subject so far which include the HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company and Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game. Next step is to start doing industry research to identify industries that are both interesting to me and match up with my skill set. Having worked in finance my whole career, I have a strong understanding of accounting, financial statement analysis, capital structures etc. but have no experience in sales, marketing etc. Hopefully a few types of businesses will jump out at me while I'm researching and I can take it from there.
 

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I would ask you what your core competencies are.

If they're financially related I would honestly look at finding a partner who would fit the bill in terms of product/marketing/sales to ensure you can execute on whatever business you are going to buy.

In that book Richard discusses enduringly profitable businesses. Jump on BizBuySell and review the companies on there and seek out manufacturing, service, or "staple" companies in industries that you can apply your competencies.

You would have a value add opportunity if you can find something you know you can improve with the competencies you have. Can't manage/market? ensure there are employees that can and apply your skills to improve the bottom line and remove bottlenecks since you say you've worked in finance your whole life.

And as with all real estate, you're entering the worst season to sell your house - if you can hold onto it try and sell it at the start of the summer to maximize your price point.
 

NMdad

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Plunking down $100k, $500k, $1MM on a business without having run a business before sounds super risky.

You might want to read this thread: GOLD! - From 0 To $240,000 Per Year PROFIT In 18 Months

Also, like mentioned in that thread, consider your criteria for a business: do you want to actively manage it, be on site, etc.? Like @Envision said, consider your core competencies while shopping for a business to buy & run.

You've got savings & will have severance, so you've got a bit of runway to learn the ropes of any business you acquire, while still being able to pay your expenses.
 

Bones81

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I would ask you what your core competencies are.

If they're financially related I would honestly look at finding a partner who would fit the bill in terms of product/marketing/sales to ensure you can execute on whatever business you are going to buy.

In that book Richard discusses enduringly profitable businesses. Jump on BizBuySell and review the companies on there and seek out manufacturing, service, or "staple" companies in industries that you can apply your competencies.

You would have a value add opportunity if you can find something you know you can improve with the competencies you have. Can't manage/market? ensure there are employees that can and apply your skills to improve the bottom line and remove bottlenecks since you say you've worked in finance your whole life.

And as with all real estate, you're entering the worst season to sell your house - if you can hold onto it try and sell it at the start of the summer to maximize your price point.

I think initially my competencies are going to be on the cost management / operational efficiencies side of things. I have seen a lot of businesses for sale where the owner is actually turning down business either because they don't have the manpower for it or they are simply making enough money to be happy to don't want to bother with it. If I follow the HBR route of the enduringly profitable business that has these kinds of opportunities, then it should be low hanging fruit relatively speaking. Whatever I buy, I'll make sure the business is already strong where I am weak skill-wise.

I'm in no rush to sell the house, I'm going to be selling it myself, so I'll list it in the next few weeks and see how the market is. If it's slow, then I can look to rent / Airbnb while I'm in Canada and put it back on the market in the spring.


Plunking down $100k, $500k, $1MM on a business without having run a business before sounds super risky.

You might want to read this thread: GOLD! - From 0 To $240,000 Per Year PROFIT In 18 Months

Also, like mentioned in that thread, consider your criteria for a business: do you want to actively manage it, be on site, etc.? Like @Envision said, consider your core competencies while shopping for a business to buy & run.

You've got savings & will have severance, so you've got a bit of runway to learn the ropes of any business you acquire, while still being able to pay your expenses.

There will definitely be some risk but I'm not putting all of my eggs in one basket. I'm also not going to over-lever the company with debt or get into something that is completely out of my element. I want something that already has a well established product or service with good employees and management already in place. I like to think of it as switching pilots when the aircraft is already at cruise altitude rather than having to do the take off yourself.

Initially I'm going to be actively onsite and managing it while I get my arms around it and look for ways to grow and increase profitability. I'm 38 right now, so if I can find something that satisfies the CENTS criteria and grow it significantly over the next 5 to 7 years and then sell, it should be a pretty significant monetary event. If things go well and I can become less active or onsite in the later years, then I might look to move up to the mountains and come down into town when needed.

I'll definitely checkout that thread.
 

NMdad

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I like to think of it as switching pilots when the aircraft is already at cruise altitude rather than having to do the take off yourself.
Given that analogy, do you feel comfortable sitting in the pilot's seat? Like, have you flown a glider or a single-engine plane before you sit behind the controls of a 737? That's the point I'm making about the risk of acquiring a large business without having run a smaller one first.

Not to say it's not possible, it just increases your risk.
 
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foodiepersecond

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Does several million a year in revenue and is very high-end, but the owner is 100% absentee (lives in another part of the country). As expected, the staff is overpaid and underworked.
I hope the business is legit and not a front for another "fastlane" business model. I'm curious what particular services are the bread maker for the salon. Any new services you would add/subtract from their current line up? Also which area is the business in?
 

Bones81

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Given that analogy, do you feel comfortable sitting in the pilot's seat? Like, have you flown a glider or a single-engine plane before you sit behind the controls of a 737? That's the point I'm making about the risk of acquiring a large business without having run a smaller one first.

Not to say it's not possible, it just increases your risk.

If I wind up pulling the trigger on a business, I will be. I will have done enough research prior to submitting an LOI to be fairly confident it is something I can manage. The due diligence process is where I'll really learn about it as I continue to go through the books and understand the relationships with customers, suppliers, etc. If I don't think I'm up to task, or I can't retain key employees or managers who can cover those areas, I can walk away and look for something that's a better fit.

I hope the business is legit and not a front for another "fastlane" business model. I'm curious what particular services are the bread maker for the salon. Any new services you would add/subtract from their current line up? Also which area is the business in?

The main bread and butter for the salon were the various hair treatments for women (cuts, coloring, etc.). They also did decent on selling physical haircare products as well. Additionally, it had a medi-spa (facepeels etc.), men's barbershop, and a nail salon. It was a big space, 12k sq ft.

What was appealing about it was there were obvious ways to both increase revenues and cut costs. The business has simply just been neglected by an absentee owner. It had several hundred positive google reviews but really weren't marketing that much. You could spend a bit on advertising and promotions as well as have employees follow-up with previous customers to schedule new appointments in order to grow revenues. On the cost side, there were way too many front-desk employees and everyone (including the stylists) were on an hourly rate (no commissions). If you restructured that in-line with most other salons and went to to more commission heavy system, that would also lead to a growth in revenues as the stylists would be more active in trying to book more appointments and selling more physical products to the customer. Once you got expenses in order and assuming you could grow at 5%-10% a year, it would be generating EBITDA well over $500k per year. From there, you could look to acquire/open additional locations or maybe even look to franchise it to others.

I don't know if it's still on the market or not, I still have a lot of research to do on acquisitions and industries in general before I look to pull the trigger on something. I also don't want to go with a turnaround for my first attempt. While there may be more upside and value to unlock with one, there's more execution risk. I'd rather my first go be something that's already running smoothly.
 

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So before one buys a business, one actually needs to know what they're looking for (duh). One of the books I've read recommends coming up with a defined target statement after analyzing your strengths and weaknesses as an owner, available capital, and other limiters (e.g. I want a manufacturing company with no ecommerce presence that generates $x amount of EBITDA per year).

Size-wise, I know I could buy something in the range of $400k-$2mm depending on how much I decide to lever up the company. In reality, I probably don't want to exceed $750k-$1mm as this would imply 45%-60% debt funding. Ultimately, it will come down to what level of debt the company can comfortably support. I definitely don't want to take on too much debt and be over-levered as a new owner. An $800k acquisition at a 3x multiple would imply EBITDA of ~$267k per year.

So today, in order to get an idea of what types of businesses suit both my personal interests and my skill set, I ordered the 2019 Business Reference Guide. It provides rules of thumb & pricing info on 600+ types of businesses. From what I understand, it's a go-to source of info that brokers use when pricing and gather other info on various industries.

Looking forward to diving into it and seeing what types of businesses/industries are interesting to me.
 
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What type of business? I'm generally agnostic
You should not , it is very importnant to love what you are doing , because you will doing all the day , for example , do you love to be in dry cleaning shop 10 hours a day ? if not dont buy that business
 

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View attachment 28509

Finally came in yesterday, now 750 pages of businesses to comb through.
I have read about business pricing , in general the challege is how accurate the info the seller is giving to you , sometimes it is hard to verify it , the basic pricing and evaluating is not hard , but the hard part if the partcular business really worth X or Y.
 
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Lucky Lu

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As johnny boy said, live it up for a year and don´t rush until you have the perfect opportunity in front of you. You don´t want a job, you want a company that can grow sky high.
Best of luck
 

csalvato

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1. Where do I want to live? - I currently live in Houston. I don't mind it but all the things I really like doing (e.g. skiing, hiking, being in the mountains) I can't do here. I think I would be happier living in a place like Denver, Colorado Springs or Salt Lake City where all these things would be in my backyard. Denver is presently the most appealing but I need to spend more time researching other cities as well. Initially, my search for businesses will include Houston in addition to cities near the mountains. If I move, I plan to live very cheaply while searching for an acquisition and running it the first year or so.

You're getting a lot of help with the other considerations in this thread, so I won't touch on them (and also my experience in buying a business is limited). I will share some of my thoughts on these city choices though, since I've lived, worked and played in all three for at least 3 years each.

I'm going to try and keep it objective (though some subjectivity will naturally creep in here), and break it down by a few different key categories that are important to mostly everyone, and you, specifically.

Climate
All three cities have very similar climates. All three cities:

  1. Get a great amount of sun, so SAD isn't an issue here
  2. Experience all four seasons in turn.
  3. Have an undeserved bad reputation for being "cold". The winters are not bad at all in any city, and are way more mild than the northeast of the US. The cities tend to not retain snow for very long – it mostly stays up in the mountains.
  4. Experience radical weather shifts (e.g. 70º one day, 22º the next). The Colorado cities tend to get this worse than SLC. It's a double edged sword. You can be in jeans and a t-shirt setting up Christmas decorations and then have a white Christmas. I personally love it, but many people hate it.
  5. Are very, very dry. Expect your skin and lips to dry up, particularly during season changes (particularly Summer -> Fall and Fall -> Winter). Be prepared to moisturize + use chap stick daily.
One thing I love about Colorado Springs is that we get rainbows nearly every day in the summer.

Because of where Salt Lake City is situated, however, it gets into something called an "inversion" which will be bad if you suffer from allergies or athsma: Salt Lake City and Winter Inversions – How Do They Affect You?

Mountain Accessibility
It's by far easiest to access the mountains from SLC. Big Cottonwood and Little Cottonwood canyon are <30 minutes from most parts of the city, and have world class skiing with (arguably) the best snow in the world. If you're into skiing and snowboarding, the snow in UT is way better than CO, IMO (and the snow in CO is pretty damned good). This is because the Great Salt Lake absorbs a lot of moisture from the atmosphere so the snow is dry, powdery and incredible. If you want to change things up from those resorts, you're only 45 minutes from Park City, which has a ton of it's own resorts.

Denver has a reputation for being close to the mountains, but is not at all. Even for hiking, you'll need to drive 30+ minutes without traffic (normally 60-90+ minutes now, because Denver is growing rapidly in population). And then, the mountains you are accessing are huge tourist traps. Because of the way the Denver-accessible mountains are priced, the resorts are consistently packed with tourists and locals alike.

Colorado Springs is a middle ground. There are very accessible hiking trails (anywhere from 5-20 minutes from where you live in the city). Skiing/Snowboarding will still require a 60+ minute drive. The closest Mountain is very local-centric, and not crowded (Monarch Mountain), and you're about 120 minutes from the big resorts to which Denverites tend to go.

Sidenote: if you're interested in hiking 14'ers, you will want to be in Colorado over Utah; there are 52 in the state of CO that are super accessible. That's just not the same in UT.

Culture
All three are very "active" cities, with people who are in good shape and like to go outdoors. If that's the bar you're shooting for, you can't miss with any of these cities.

Denver has a great singles culture. Lots of bars, clubs, breweries and places to get out and socialize. Lots of young people, co-working places and trendy re-claimed industrial areas. Generally speaking, Denver feels very "trendy" these days, without being pretentious. As a single guy, it was one of my favorite places to hang out, and in the years since, it only seems to have become even more cool and fun. Being married with kids now, I actually avoid Denver – just don't feel much of a draw, and it doesn't seem worth the drive to me.

Colorado Springs is an awesome place to have a family; not so great to be single. There's a cool downtown area, but it's much smaller than Denver's. There's a cool tri-mountain-town feel with Downtown Colorado Springs + Old Colorado City + Manitou Springs; but, again, not awesome for a single guy to go out and find a mate/partner/casual thing. Couple that with a strong military presence, I did not enjoy being single here, and used to drive up to Denver to have a good time at that point in my life. If you are very involved in Christian faith, though, there's an extremely strong Christian scene in Colorado, particularly in Colorado Springs. Not my thing, but I know it's a draw for a lot of people.

Salt Lake City is its own beast. The food scene is incredible because a lot of LDS (aka Mormon) converts will move to SLC from their mother country and open incredible and authentic restaurants. For example, the best Indian food I've had was in SLC (and that includes me living in the UK for 3.5 years, where they supposedly have the best Indian food in the world, ironically). By the same token, the LDS culture is so strong, I had a hard time making friends around there. The government's hold on things like alcohol wore on me, too – many of people I know who live there feel the same. You can get a break from this by going to Park City, but I found it still didn't make up for it, for me, anyway. If you happen to be LDS, then I am sure SLC is incredible, but it wasn't for me, and I wouldn't raise my family there.

Attractions
I find it very hard to think of "things to do" in Denver when people come in. Maybe I haven't spent enough time up there recently, but I wind up just telling people to visit Boulder (about 30 mins away), or driving up to Estes Park (about 60 mins away), or walking around Red Rocks Amphitheater (which gets boring after about 30 mins, imo). Overall, aside from going out to bars/restaurants or a sporting event, I don't think there's a lot to do with people in Denver.

Colorado Springs has an incredible amount of every-day attractions that draw people from all over the world. Garden of the Gods, Manitou Springs, Old Colorado City, the Pike's Peak Highway, the Royal Gorge, Gold Camp Road, Seven Falls, Red Rocks Open Space, the Broadmoor (the only 5-star, 5-diamond hotel in the West, IIRC), North Cheyenne Canyon, the Airforce Academy, and more. I'm never at a loss of things to do on weekends or with visitors.

Double Rainbow over Garden of the Gods (took this with my kids on a random quick drive through one weekend)
UNADJUSTEDNONRAW_thumb_34e.jpg


Salt Lake City has some attractions, though I feel like it's fewer than Colorado Springs. There's a quick drive to Park City; you can go to Antelope Island (which is like a very mini Yellowstone), tour the Temple, and go to the best farmer's market in the country (IMO, anyway). Beyond those things, I always struggled to find things to do in SLC, but I know other people who have had different experiences.

Cost of Living
To keep it brief, SLC and Denver are similar in cost of living; though I believe Denver is growing a bit faster and the real estate is also appreciating faster. Colorado Springs is definitely the cheapest of the three, and still experiencing rapid real estate growth. If cost of living was the only consideration, then COS is definitely the winner here; but there's more to the decision than that.

Hope this helps you pick the city that's best for you!
 
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Bones81

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Sorry I missed this; I'm still around.

I took the advice of some you here and have spent the past 2 years travelling and having some fun. I wound up meeting my wife and following her all over the world during the pandemic. We recently got married and are in the process of applying for a green card and hope to settle in Salt Lake City later this year or early next.

Now that I know where I'll finally be putting down roots, I've started thinking about business acquisition again. I've spent the past 2 years trading in the financial markets while I've been travelling. While I've done alright at it, it certainly hasn't been a fastlane for me. I believe acquiring and growing an existing business would be a more stable and less volatile way to build wealth and I could still trade on the side.

To that end, I've started the preliminary steps of pursuing an acquisition. Before I really deep dive into industry and business analysis, I need to take stock of my own strengths and weaknesses in order to figure out what will be a good fit for my personality and skillset.
 

Bones81

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I found a generic personal strengths and weaknesses template and have started my analysis below:

Strengths
What advantages do you have that others don't have (for example, skills, certifications, education, or connections)?
• Finance degree, passed level 1 of the CFA, previously held Series 79 & 63
• 10+ years in banking: analyzing financial statements, knowledge of accounting, have worked on large M&A deals, knowledge of capital markets, preparing financial projections
• Have traded in financial markets for the past 2 years, and have become more comfortable evaluating, taking, and managing risk.
• Have a decent amount of capital to invest and provide liquidity to the business than the average buyer might.

What do you do better than anyone else?
• I have a better understanding of accounting and finance than Average Joe, but that’s about it. I feel I have more of a CFO skillset rather than a CEO's. I should be able to structure a deal on more favorable terms than others can. Outside my finance knowledge, I don't feel I have what Naval Ravikant refers to as "Specific Knowledge" in anything else.

What personal resources can you access?
• Have former colleagues I could ask for advice. Could potentially tap them for equity or loans if needed.

What do other people (and your boss, in particular) see as your strengths?
• When I was still motivated in my banking career, I was known as the guy that would burn the midnight oil and do whatever it took to meet crazy deadlines.

Which of your achievements are you most proud of?
• I had a good career in banking before I became completely disenfranchised by it.

What values do you believe in that others fail to exhibit?
• Integrity, reliability, honesty

Are you part of a network that no one else is involved in? If so, what connections do you have with influential people?
• No, other than former colleagues I’ve noted above.

Weaknesses
What tasks do you usually avoid because you don't feel confident doing them?
• Having necessary but difficult conversations. Don't like confrontations. Don't have a phobia of speaking to large crowds but am naturally introverted. Would rather send an email than have a phone call.

What will the people around you see as your weaknesses?
• Lacks confidence and assertiveness
• No industry experience outside of banking
• Have never managed more than a handful of employees

Are you completely confident in your education and skills training? If not, where are you weakest?
• Am comfortable with my financial knowledge and ability to analyze costs relative to peers, prepare financial projections etc., but have no sales and marketing experience. Don't have experience leading large teams.

What are your negative work habits (for example, are you often late, are you disorganized, do you have a short temper, or are you poor at handling stress)?
• Am not a morning person. Would rather roll in mid-morning and leave later in the evening versus being up early.
• Can lose motivation and focus from time to time
• Easily distracted, hard to put down phone and focus sometimes

Do you have personality traits that hold you back in your field? For instance, if you have to conduct meetings on a regular basis, a fear of public speaking would be a major weakness.
• I'm an introvert. While I have no problems having regular conversations with people, I'm not a rah-rah motivational speaker.
• Tend to have a fixed mindset rather than a growth mindset.
• More pessimist than optimist, can lose motivation
 
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backz

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Quick 2 elements I just want to break down a bit here.

1) The financial aspect
2) The lifestyle aspect based on your last post

1) Financial
In the current climate even with rate rises you can get away with way more leverage than just your equity being 35% depending on what makes sense for you.

SBA wants 10% if you know how to talk, 20% if you don't. So $450k down becomes $2.25M - $4.5M.

If you don't use the SBA and instead find a good local business with a more aged owner you can leverage your cash in the same way and have the lender hold some, the bank come up with some and your capital is leveraged in between. For example, 40% of the purchase being bank debt where they might want to see 20% of that being your money. Then the rest as a vendor take back. So $1.8M debt + your $450k + $3.375M VTB.

If you can get something for 2.5-3.5x unlevered free cashflow that puts you somewhere between $642k - $2.25M cashflow annually. So you would be able to fit the second piece in which is lifestyle.

2) Negative Work Habits + Your Weaknesses
They are significant if you aren't willing to work on them. When your money is tied up in a deal and you have bank debt - you don't want to have an unmotivating day and not show up. But if you leverage somewhere between the above range, you can get a more experienced manager/operator in that you oversee which leaves you with some freedom.

That said, you should still account for a few months up to a year to be hands-on learning all the ins and outs so if that manager fails, you don't end up belly up.

The alternative to all this is look into something more passive revenue driven where your leverage numbers are about in-line and just keep the job while you build it more.

Something like a niche site, content site or similar. It's much harder to find good scenario ones (meaning people retiring from it vs just selling to invest somewhere else - in most of those arbitrage cases the business was NOT well taken care of for a while).

But 25-40% down with a lender backing is about normal, but so are 3-4x valuations meaning your $450k will get you $281k - $600k cashflow. Enough to still be able to bring someone in to help with operating/growing.

That was a big brain dump, but if you can - stick where you know best and stick within the habits you have. Don't expect just because you have 3x more cash coming in you'll be motivated to change those habits - you won't. Also at low leverage (meaning low profit/revenue), don't expect a good management team to be in place and stay in place. Even at +$5M revenue we rarely find decent management, the ones we do find need a equity + bonuses to stick.

Last bit - people's direction towards real estate may be a better fit TBH. Lower leverage, lower cashflow, but less direct hands-on work.
 
Last edited:

AppMan

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I found a generic personal strengths and weaknesses template and have started my analysis below:

Strengths
What advantages do you have that others don't have (for example, skills, certifications, education, or connections)?
• Finance degree, passed level 1 of the CFA, previously held Series 79 & 63
• 10+ years in banking: analyzing financial statements, knowledge of accounting, have worked on large M&A deals, knowledge of capital markets, preparing financial projections
• Have traded in financial markets for the past 2 years, and have become more comfortable evaluating, taking, and managing risk.
• Have a decent amount of capital to invest and provide liquidity to the business than the average buyer might.

What do you do better than anyone else?
• I have a better understanding of accounting and finance than Average Joe, but that’s about it. I feel I have more of a CFO skillset rather than a CEO's. I should be able to structure a deal on more favorable terms than others can. Outside my finance knowledge, I don't feel I have what Naval Ravikant refers to as "Specific Knowledge" in anything else.

What personal resources can you access?
• Have former colleagues I could ask for advice. Could potentially tap them for equity or loans if needed.

What do other people (and your boss, in particular) see as your strengths?
• When I was still motivated in my banking career, I was known as the guy that would burn the midnight oil and do whatever it took to meet crazy deadlines.

Which of your achievements are you most proud of?
• I had a good career in banking before I became completely disenfranchised by it.

What values do you believe in that others fail to exhibit?
• Integrity, reliability, honesty

Are you part of a network that no one else is involved in? If so, what connections do you have with influential people?
• No, other than former colleagues I’ve noted above.

Weaknesses
What tasks do you usually avoid because you don't feel confident doing them?
• Having necessary but difficult conversations. Don't like confrontations. Don't have a phobia of speaking to large crowds but am naturally introverted. Would rather send an email than have a phone call.

What will the people around you see as your weaknesses?
• Lacks confidence and assertiveness
• No industry experience outside of banking
• Have never managed more than a handful of employees

Are you completely confident in your education and skills training? If not, where are you weakest?
• Am comfortable with my financial knowledge and ability to analyze costs relative to peers, prepare financial projections etc., but have no sales and marketing experience. Don't have experience leading large teams.

What are your negative work habits (for example, are you often late, are you disorganized, do you have a short temper, or are you poor at handling stress)?
• Am not a morning person. Would rather roll in mid-morning and leave later in the evening versus being up early.
• Can lose motivation and focus from time to time
• Easily distracted, hard to put down phone and focus sometimes

Do you have personality traits that hold you back in your field? For instance, if you have to conduct meetings on a regular basis, a fear of public speaking would be a major weakness.
• I'm an introvert. While I have no problems having regular conversations with people, I'm not a rah-rah motivational speaker.
• Tend to have a fixed mindset rather than a growth mindset.
• More pessimist than optimist, can lose motivation
Sound like real estate is good option for you since it doesnt require talking skills like might a restaurant owner need.
buy 12 + multi family duplex, and since you are good in finance you should be good about securing money and check cashflow.
 

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