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Investing in other businesses and your Way to FastLane Millions?

Discussion in 'General Entrepreneur Discussion' started by Dubidu, May 9, 2018.

  1. Dubidu
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    Dubidu Bronze Contributor Speedway Pass

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    Haven't seen this covered in other forums: whilst I am pursuing my own ideas I have recently come across people (I know them through work) who did the following:

    1. Bought companies in administration/receivership (i.e. distressed). Two guys invested 300,000 into the business (telecoms) and turned it around. They are now exiting the business and have had offer of circa 16m-18m. It took them over the 6 year time frame the Fast Lane espouses but not much - less than 10 years. The other has bought a Spanish company about to go under (he and his "co-founder" invested 170,000 in total). They are likely to have a multiple of low millions at the very least based on the concept of the company.

    2. Invested in an AIM (Alternative Investment Market - a sub market of the London Stock Exchange) listed company. He was already wealthy (an investment banker). He bought shares in the company for 1m and they are now worth (18 MONTHS later!) 6m.

    It's an open thread/all thoughts welcome but starting point I guess is: does anyone know others who've done this? And how do you go about identifying the right company? The risks are obvious: you make a bad punt and it goes no-where but the upside to something that is not squarely in the FastLane (i.e. starting your own business) yet has the potential to get you there in the same time frame. Look forward to reading everyone's thoughts :)
     
  2. ZCP
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    ZCP Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Many of us invest in multiple businesses. You need to understand you own motivations, areas of interest / expertise, and required ROI. Then you go in search of deals and let others know you are available for those deals. Learn to read P&L's, balance sheets, and how to summarize a business based on sales / margins to figure out not only its value, but its @SteveO value play.
     
  3. NanoDrake
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    NanoDrake Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    Good idea to invest in somewhere you can add a difference, but never ever forget the infamous "circle of competence"...
    can you flip an IT company?

    do you know anything about e commerce?

    ;-)
     
  4. ay47
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    ay47 Contributor Read Millionaire Fastlane

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    Could u elaborate or link to the SteveO value play? I've been evaluating some businesses lately.
     
  5. Dubidu
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    Dubidu Bronze Contributor Speedway Pass

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    Agree and yes I know how to read a balance sheet/P&L etc. So I'll give you the example of the two guys who invested in failing telecoms business for 300,000 and now entertaining offers of 16-18m. One of them is an engineer (no prior telecoms experience) and the other started life in recycling! Proper salt of the earth types. They haven't told me how they identified that particular business but I wonder to what extent it was a combination of instinct/intuition and value? They knew for example, that the business had a couple of corporate clients (multi-national services businesses). They also knew they could trim costs as that is where the business was failing. That is what they did. They bought it before it went completely bust and turned it around by adding value and trimming costs. I suppose I'm more interested in how they managed (not having operated strictly in that sector before) to identify the business in the first place?
     
  6. SteveO
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    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Thanks for the heads up @ZCP . This is a great post.

    The risk would be greatly minimized if you had a strong understanding of the field. You can also be successful with a strong business knowledge. Put the together and the sky is the limit.

    There is NO shortage of mismanaged businesses. The trap is if you think you can operate better than the last person but can't.

    I have witnessed a number of businesses go down the toilet vortex trying to cut existing expenses. I usually focus on injecting money to increase income. Efficiencies come later. Not cuts, but pure process improvements.

    People are cheap by nature. I find that most mismanagement comes from spending cuts.

    Prosperity comes from growing income. If you can make that happen, the sky IS the limit.
     
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  7. Dubidu
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    Dubidu Bronze Contributor Speedway Pass

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    NanoDrake - see my reply to ZCP where I give the example of the two guys who identified a business without having strictly operated in that area before. It's part of my questions/thoughts on this forum! Would welcome your views, as always :)
     
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  8. Dubidu
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    Dubidu Bronze Contributor Speedway Pass

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    Absolutely agree. Using the telecoms guys example: they identified obvious costs (the existing business was paying too much for the infrastructure). They also streamlined staff. They have 'global' presence: UK, US, APAC but operate with less than 20 staff...! Partly the business is cloud based anyway but they certainly were able to identify where costs could be reduced before injecting a lot of cash.
     
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  9. Michael N
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    Michael N Contributor Read Millionaire Fastlane

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    This is actually how I acquired my first step to the fast lane.
    I bought a dying kava bar in tallahassee and flipped it.
    I created a new atmosphere,
    Set up a credo,
    Fired all the staff and only hired people my gut told me too (I turned down lots of people with degrees, and hired people who knew how to talk and create relationships)
    And have slowly started becoming the industry leader.
    I'm actually about to change the name.
    It went from being a bar that brought in $200 a night to $1200 a night
    We now have a second location and a franchise.
    I only spend about ,$37,000 on it too.
    I now have a steady stream on about $3,000 going into my account every month. And since I have managers and an awesome staff who is incredibly loyal and share the same values as me, I'm now able to focus all my energy on my other buisneses I'm starting. I think it's an excellent way (if you do it right) to start off.
    But be ready to put in massive amounts of time in the beginning. It was pretty normal in the beginning stages to put in 80-90 hour weeks
    But now I go in there for a hour or two a day to check on things and hang out.
     
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  10. SteveO
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    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    There are people that are operation experts. They can evaluate businesses they know little about. This is a unique but powerful skill.

    Not to brag but I did it. Purchased a golf course without knowing anything about the business. Increased income from 950k/ year to 1.45m in 2.5 years.
     
  11. SteveO
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    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    The value play referenced applied to apartments. Steve Berges wrote a book about it called the complete guide to buying and selling apartment buildings. There is probable a better book out there for business in general.
     
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  12. ZCP
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    ZCP Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    It is what @SteveO has opened my eyes to ...... it is not necessarily the income / profit that is the value in the deal (although those are nice!)...... it is the simple investment / influx of cash and knowledge and systems that can SUBSTANTIALLY increase the value of a company for a sale exit ....... Steve did it with apartments .... I am trying to open my eyes to that way of thinking with businesses ......
     
  13. ay47
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    ay47 Contributor Read Millionaire Fastlane

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    Thank you. If you could think of a book for evaluating general business, that would be very handy. Would love to know more about the topic. Haven't found a lot on the topic through my own searches.
     
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  14. SteveO
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    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    The concept is simple. Look for a business for sale that is not making money. Evaluate it to see if it can make money. Buy the business with all its assets for pennies on the dollar. Implement the money making part. Sell at max value and repeat.

    The hardest part is understanding the evaluation phase. That may be where you want to focus your learning. The next hardest part is implementation. This you learn with time and effort.
     
  15. Dubidu
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    Dubidu Bronze Contributor Speedway Pass

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    That's phenomenal. Can you elaborate on becoming an operations expert? How did you go about learning this powerful skill?
     
  16. ZCP
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    ZCP Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    And getting your ass handed to you a couple of times!
     
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  17. Dubidu
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    Dubidu Bronze Contributor Speedway Pass

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    Excellent! Can you elaborate starting at the beginning? What made you invest in that particular dying bar? Were you looking to invest? Was it a sector you already operated in? How did you see its potential?
     
  18. SteveO
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    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I'm sitting on a beach in San Diego this week and typing responses on my phone. Will elaborate next week when I get home.
     
  19. ay47
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    ay47 Contributor Read Millionaire Fastlane

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    Understood. I understand some about evaluation through value investing books. The process is somewhat similar. But I can't help but feel this is pure bean counting. It doesn't take into account "potential" of the business.

    I guess the best way is to post a follow along thread when I start my evaluation. See if pp can help me pick it apart.
     
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  20. Dubidu
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    Dubidu Bronze Contributor Speedway Pass

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    I'm very jealous re: beach in SD! Please do elaborate and look forward to hearing more of your thoughts next week :)
     
  21. SteveO
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    Perhaps @Gary can chime in as well. He owns a nightclub that he recently remodeled a section to capture corporate events.

    He can't reply until later though. After he meets me at the beach followed by his massage appointment. Tough life...
     
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  22. Dubidu
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    Dubidu Bronze Contributor Speedway Pass

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    OK SteveO you can stop rubbing it in now...! Enjoy ;-)
     
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  23. Michael N
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    Michael N Contributor Read Millionaire Fastlane

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    I saw the industry as a whole, and the people who owned it, and was displeased. I saw how much potential the product could have, and i knew how to create an atmosphere. i had only been a patron to the bar for about 2-3 months, but i knew i could change everything about the industry. kava bars in general are pretty shitty. people before marketed to losers who wanted to party and do drugs, i marketed to students and young professionals, thus raising the barrier to entry. before you could wear a tank top and sandals to come to the bar, and give off an overall creepy vibe, and you would fit right in. frat kids played fifa and screamed at the t.v.
    now most that come in are young professionals and business professionals (even the mayor came and loved our mission and what we stood for.)
    I got rid of fifa so fast it would make your head spin.
    i saw the culture as a whole, and knew i could make a difference. it all comes down to the fact that the "old shop" had no vision, care, or potential. but if you add some passion, diligence, and a vision (something to attain too) you can go pretty far.
    but you have to recognize potential. if a business is failing, and they're doing everything right, or even most things right, i do not think theirs much you can do for it. its a flop.
    but if a business is lacking that "spunk" you know you can give it to make it stand out, then go full sails ahead.
     
  24. Late Bloomer
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    Late Bloomer Gold Contributor Read Millionaire Fastlane Speedway Pass

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    Growth through acquisition has been a winning strategy for many business people and companies. Warren Buffet, Dan Pena, Art Hamel, and Felix Dennis have all written great material about how they made this work for them. With your experience as a business-savvy attorney, I think it could be very profitable for you to let your clients know you'd be happy to spread the word about people who want to buy businesses or people who want to sell businesses (assuming there's not a securities or business brokerage law that would prevent you from doing so).

    Also, most giant tech companies have made significant growth through acquisitions. Examples include Skype, Minecraft, Hotmail, Beats, NeXT, Android, etc.

    Not sure if you'll see this reply at all, or if you have me on ignore because you dislike an older widower's perspective on your dating thread.
     
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  25. Gary
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    Gary Elevatin' the Celebratin' Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Ahhh, @SteveO, sharing my secrets of a fantastic Wednesday.

    PLUS, I got new tires on my truck. Add it all up, that's a hall-of-fame weekday.

    What Steve is alluding to is that I took some unused land behind my nightclub and created a daytime/early evening business and social events space. Think BLEISURE (business + leisure). Purpose: to capture a different audience in order to greatly increase my income. Additionally, when I go to sell the business, I'll be able to get considerably more rent now that the outdoor space is developed and licensed to serve alcohol.
     

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