• The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success
  1. Join 40,000+ entrepreneurs
    who are kicking butt and
    winning their dream life.

    Unscripted™ Entrepreneurship:
    A Business That Pays More Than Money, It Pays Time.

    "Fastlane" is an entrepreneur discussion forum based on The Unscripted Entrepreneurial Framework (TUNEF) outlined in the two best-selling books by MJ DeMarco (The Millionaire Fastlane and UNSCRIPTED™). From multimillionaires to digital nomads, the forum features real entrepreneurs creating real businesses.

    Download (Unscripted) Download (Millionaire Fastlane)  Register
    Registering for the forum removes this block!

FORUM SEARCH

Get answers about starting a business from real entrepreneurs. Powered by Google.

Investing in other businesses and your Way to FastLane Millions?

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

  1. Dubidu
    Offline

    Dubidu Contributor

    Messages:
    48
    Likes Received:
    54
    Joined:
    Apr 2, 2018
    Location:
    UK
    Rep Bank:
    $272
    That sounds a bit more "obvious" in a way - you realised you had land at the back of your existing business that could be up for grabs and found a solution to make use of that. I suppose my thread is more how one would go about acquiring a business/stake in a business where there doesn't seem to be existing knowledge: SteveO's example of the golf club and his operational knowledge which turned it around for him (and obviously the two examples I gave at the start of this thread). This in turn results in you joining the FastLane in a non-traditional FastLane way: i.e. you didn't set up the business but rather identified the opportunity to flip one and the skills THAT involves. Hope that makes sense!

    Really interesting to hear your story though so thank you for sharing :)
     
    vinylawesome likes this.
  2. SteveO
    Offline

    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    3,268
    Likes Received:
    12,037
    Joined:
    Jul 24, 2007
    Rep Bank:
    $83,705
    Being able to read balance sheets, profit and loss statements, and other financials is important... for fine tuning and evaluating. If they are not your numbers, they are likely only worthy of the fireplace. Numbers are ALWAYS manipulated for the benefit of the person presenting them.

    So, not only are they important to read, they are important to understand for transparency. You need to be able to forecast your own operations. Most people err significantly in the direction of a perfect world. We don't live in one. Expenses occur...

    This is all best learned through experience. How do you get this? Practice. Buy a small business. Implement your plan. Learn....

    Commercial properties are businesses. They are backed by the real estate. But the money making part is a business. I like the business being backed by assets. But those assets can be a liability if you cannot operate them properly.

    I have done drawn out cap rate rants in the past. The explanation of why I don't use them does not mean that they are not important tools for evaluation. They show the math!!!! It shows where the gains come from. Without it, you cannot see the actual opportunities for making money. Do you want to make 6% or 200% annually? Learn the math and look at the concepts.

    I have gone into a lot of detail in the past on this forum only to have the information fade off into oblivion. It is not what most people here are looking for. There are plenty of places to find it. Do a search on cap rates here or on google.

    Learning them does not give you strategies though. That is the first step. Strategies come afterward. I learned all that was needed through books. I have also stated those titles 30 times here.

    I hate to say this but so many people focus on cashflow here and do not care about other strategies unless it relates to amazon. So I have become a dinosaur on this site.

    But even those that do real estate here don't seem interested in the message. Cashflow is small potatoes. It has its place but there are other strategies as well.
     
    Last edited: May 13, 2018
  3. Dubidu
    Offline

    Dubidu Contributor

    Messages:
    48
    Likes Received:
    54
    Joined:
    Apr 2, 2018
    Location:
    UK
    Rep Bank:
    $272
    Thanks SteveO; I hope you had a good break in San Diego! I can read a balance sheet and commercial real estate I have already explored (agree with all you've said and will look at your other posts re cap rates). I'm interested in hearing more about your golf course purchase because as you said you didn't know much about it - what made you choose that business? How did you identify it? What was 'wrong' with it? What operational skill/strategies did you apply to start to turn it around? Did you get someone else on board to help?
     
  4. SteveO
    Offline

    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    3,268
    Likes Received:
    12,037
    Joined:
    Jul 24, 2007
    Rep Bank:
    $83,705
    I'm not an expert at business evaluation. The expertise really lies in commercial property. There is a lot of crossover in the evaluation.

    We were interested in the golf course as a retirement strategy. Our plan was to relax and play golf. I told a broker that I was interested in a course that was making cashflow. That is not what he brought us though.

    There is a long post on this here: GOLD! - Margaritaville (I've Bought A Golf-Course!)

    We did not do a perfect job in our evaluation. Pump stations, irrigation, equipment costs were a bigger challenge than our plan called for. But, we attacked those problems with all our effort.

    We did not put money into nice little things at first. The entire focus was on making the course playable with the best fairways and greens in the city. That has happened and more play has come our way as a result.

    My wife and I did this on our own. We have both worked our asses off. Not the relaxing retirement we wanted.

    We did get someone on board to help though. Our director of golf and course superintendent came to us from a competing golf course. They asked to be part of what we were doing. We were happy to hire them. They get decent salaries and bonuses on the income.

    It was still the same process as I talked about. Increase NOI which increases the value.

    One local course went out of business recently. Our biggest competitor is losing money and directly targeting us in their advertising and pricing. It is not working for them. We are gaining play while they continue to drop.
     
  5. SteveO
    Offline

    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    3,268
    Likes Received:
    12,037
    Joined:
    Jul 24, 2007
    Rep Bank:
    $83,705
    I wish I had more information on business evaluation. @JScott could chime in with his expertise if he has time. @biophase has a lot of experience with evaluating online businesses.

    For me it is the ability to see where something is at and be able to determine where it can go. Your posts have a couple of great examples.

    When I was finding commercial/apartment deals, there was a team in place. They knew our goals were to fix, increase rents, improve tenant base, SELL and move on. I had two full time rehabbers and two office managers that understood the businesses. I had a part time accountant that aided the office managers.

    None of these participants in my business saw the financials that I worked with. I kept information on numbers regarding purchase and sale to myself. They kept all the operational numbers.

    As a team we would assess the product that I would find. I understood that business to the point that usually a visual inspection of rents, renters, location, and condition would give me everything that I needed to put together a plan and determine what the property was worth to me. There was a due diligence process applied. I cared very little about the present and very much about the future.

    I did not always finish the rehabs or re-tenanting. Frequently, the buyers could see what I started and feel that they could finish. I left a little meat on the bone so the buyer could make some money as well. But, I took plenty of profit.

    The plans for apartments were always similar. I had a blueprint, location, and general plan for each place.
     
  6. ZCP
    Offline

    ZCP Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    1,709
    Likes Received:
    4,813
    Joined:
    Oct 22, 2010
    Gender:
    Male
    Location:
    Woodstock, GA
    Rep Bank:
    $16,830
    Best way to learn is to jump in..... ask @Greg R

    He has probably learned more in the last week running a business than in the last year talking about business.

    Not sure how? Bird dog / find available deals. Then hit up someone on the forum and see if they will mentor you through.

    Now, less talk, more deal finding!
     
  7. JScott
    Offline

    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

    Messages:
    3,565
    Likes Received:
    5,004
    Joined:
    Aug 24, 2007
    Rep Bank:
    $36,617
    Most of my business investments are passive investments (angel investment where I'm not actively engaged in the business). So, I'm definitely not an expert on buying businesses. That said, ultimately, the value of a business boils down to its NOI (net operating income). You increase NOI by increasing revenue and/or decreasing expenses.

    Increasing revenue is pretty straightforward -- you sell more product (improved marketing, sales, distribution). Decreasing expenses is more nuanced -- you can reduce COGS (cost of goods sold) or improve management to reduce operational expenses.

    A typical business will be valued at between 3 and 10 times NOI, depending on the industry, the maturity of the business, the growth potential, etc. So, for every dollar you can increase NOI, you can increase the value of the business by $3 to $10. That's where your money is made by purchasing and overhauling a business.

    That's the three paragraph overview...happy to answer questions (if I can), but to go into all the details would require several books... :)
     
    Last edited: May 13, 2018
  8. SteveO
    Offline

    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    3,268
    Likes Received:
    12,037
    Joined:
    Jul 24, 2007
    Rep Bank:
    $83,705
    !!!!!
     
    Greg R likes this.
  9. SteveO
    Offline

    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    3,268
    Likes Received:
    12,037
    Joined:
    Jul 24, 2007
    Rep Bank:
    $83,705
    My assumption is that you are doing a lot of analysis here.
     
    vinylawesome and Greg R like this.
  10. Dubidu
    Offline

    Dubidu Contributor

    Messages:
    48
    Likes Received:
    54
    Joined:
    Apr 2, 2018
    Location:
    UK
    Rep Bank:
    $272
    Really valuable info SteveO; appreciate you taking the time to set all this out. Thank you.
     
    SteveO likes this.
  11. Dubidu
    Offline

    Dubidu Contributor

    Messages:
    48
    Likes Received:
    54
    Joined:
    Apr 2, 2018
    Location:
    UK
    Rep Bank:
    $272
    On it ZCP :) One question though: I'm a Brit and I don't understand the vernacular "Bird dog"? What does it mean??
     
    Greg R likes this.
  12. SteveO
    Offline

    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    3,268
    Likes Received:
    12,037
    Joined:
    Jul 24, 2007
    Rep Bank:
    $83,705
    Opportunity is OPPORTUNITY. You see what others have not. You implement something that others have not. It does NOT matter whether it is obvious or not. This business and land was purchased based on the existing operations. The fact that @Gary saw that there was more opportunity was the key!
     
    Explorer and Dubidu like this.
  13. Dubidu
    Offline

    Dubidu Contributor

    Messages:
    48
    Likes Received:
    54
    Joined:
    Apr 2, 2018
    Location:
    UK
    Rep Bank:
    $272
    Thank you! I don't think I'm at the angel investing stage - my idea (the one I'm working on myself) is to improve a core product used by pretty much everyone! The potential is huge and provided I can get it done and no-one else comes to market first (which is what happened with my initial idea) I should be in the Fast Lane/home and dry.

    However, having worked with a number of clients I just found a common theme that I simply hadn't considered: that of being in the slow lane (i.e. having a job already) but investing in a business you know has potential which increases your wealth exponentially and moves you by default almost to the Fast Lane. I wanted to explore that with others on this thread. The difficulty I have noted is that with clients it's not always appropriate to ask dumb questions like: how did you identify the business in the first place? Here I'm hoping no-one is judging me too harshly for the same question... :)
     
    SteveO likes this.
  14. ZCP
    Offline

    ZCP Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    1,709
    Likes Received:
    4,813
    Joined:
    Oct 22, 2010
    Gender:
    Male
    Location:
    Woodstock, GA
    Rep Bank:
    $16,830
    I used Google and found this....
    A real estate investing term that refers to someone who spends their time trying to locate properties with substantial investment potential. Usually, the intent is to find properties that are distressed and selling at a discount that can be repaired or remodeled and sold for a sizable profit.

    What deals or business opportunities have you found since my last post?
     
    Get Right and SteveO like this.
  15. SteveO
    Offline

    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    3,268
    Likes Received:
    12,037
    Joined:
    Jul 24, 2007
    Rep Bank:
    $83,705
    Many real estate investors employ bird dogs to locate properties for them. In the single family home market, it is a very tedious task. Bird dogs do this for a fee as they don't typically have the funds to take down the deal.
     
  16. Dubidu
    Offline

    Dubidu Contributor

    Messages:
    48
    Likes Received:
    54
    Joined:
    Apr 2, 2018
    Location:
    UK
    Rep Bank:
    $272
    Ah - OK. We have the equivalent here but their fees for sourcing properties eat into any eventual profit margin. Since our last discussion I have found two businesses of interest:

    1. One is a cloud based (so technically it is a technology based venture - see my reservations below) but the fundamentals are sound. The original company couldn't make it work (I have to dig deeper as to why operationally it went into 'distressed' mode) before seeing if I can make it work.

    2. Another undervalued (Buffett style) rather than distressed. If e.g. for illustration: I invest $1 now I'm pretty sure it will be worth $3 guaranteed minimum shortly given its sector (and it's not tech as that tends to suffer from hyper-valuation in my view; I don't understand the revenue model of e.g. Instagram etc. other than it is a influencer aka advertiser model). The $1 has potential to be worth $6 rather than $3 so the upside will be worth it.

    I'm definitely not a "hypothesise on the Forum and not take any action" type; I'm consistently taking action and applying principles learnt (to all areas of my life) but I don't assume I know *everything* and love the Forum to sense-check and hopefully contribute value and learn from some masters! The one thing I have recognised is that I don't have a circle of excellence yet (my friends don't have the mind-set I do) so the Forum is turning into one for me! Thank you for taking the time to reply; it's been really valuable for me already in the short time since I've joined :)
     
  17. JScott
    Offline

    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

    Messages:
    3,565
    Likes Received:
    5,004
    Joined:
    Aug 24, 2007
    Rep Bank:
    $36,617
    Given that, I think you should liquidate everything you own, borrow as much as you can, and invest every single penny...

    You don't get 3x GUARANTEED minimums very often!
     
    NanoDrake and IGP like this.
  18. Dubidu
    Offline

    Dubidu Contributor

    Messages:
    48
    Likes Received:
    54
    Joined:
    Apr 2, 2018
    Location:
    UK
    Rep Bank:
    $272
    Ha :) - I've been looking at this company for a while. I think its undervalued and the sector is one I understand unlike say tech where I don't understand the hyper-valuation based on what seems to be no-revenue model. The output of this co. affects/used by a large part of the population. They have a solid pedigree of management and it wouldn't surprise me if they IPO in a few years. I wouldn't bet the farm on it nor can I invest enough to guarantee millions in return like my initial example in the thread did but all the metrics check out - worth the risk in other words...
     
  19. JScott
    Offline

    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

    Messages:
    3,565
    Likes Received:
    5,004
    Joined:
    Aug 24, 2007
    Rep Bank:
    $36,617
    I do a lot of analysis, but by far the most important aspect of any investment for me is the team. If the team has a track record of success, I'm a lot less anal about analyzing every detail of the product.

    There was a thread over the past month or so about "idea vs execution," and I came down very hard on the side of execution. For me, I'd rather have a bad idea and a great team than a great team and an average team (not discounting the fact that a great team would be unlikely to pursue a bad idea).

    My most recent investment was in a team that sold their last company about two years ago (I invested in that one, but not as much as I wish I had! :) ) -- because I knew the team well and they had a history of execution success, my entire due diligence took about an hour. Literally, it was a phone call with one of the founders and I agreed to invest.
     
  20. Cruze
    Offline

    Cruze Contributor

    Messages:
    31
    Likes Received:
    21
    Joined:
    Sep 6, 2016
    Gender:
    Male
    Rep Bank:
    $141
    AWESOME thread, really interesting! Thanks very much to @SteveO for his interesting posts.

    Fix, add value & flipp the business again is a great "fastlane strategy" and a very much hedgefonds & investment and private equity companys do this (for example "AURELIUS from germany").

    I like this strategy but you need a lot of money to buy a disstressed company.
     
    SteveO likes this.
  21. SteveO
    Offline

    SteveO Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    3,268
    Likes Received:
    12,037
    Joined:
    Jul 24, 2007
    Rep Bank:
    $83,705
    This is true. But there are options here as well.

    If you have a track record, you can likely get money from investors. More opportunities come up during downturns. People can get pretty motivated when they are worried about losing their businesses. Seller financing comes into play.

    The strategy that I really like is to do whatever it takes to put money together. The original poster here has earning potential and is likely a good candidate for what she is trying to do.
     
  22. Get Right
    Offline

    Get Right Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    1,011
    Likes Received:
    3,790
    Joined:
    Jul 16, 2013
    Gender:
    Male
    Location:
    Sunny Florida
    Rep Bank:
    $24,614
    So, I happen to be buying another business right now. You know how it came to be? I heard (from a friend) that the owner was b!tching about it. He didn't like the hours and the low income. What he doesn't see is that his customer service is atrocious....the worst I have ever seen in a functioning business.

    And that's where I come in. I "see" the problem. So I made him an offer. An offer that would allow him to avoid those hours and low income to pursue whatever he wants....because I know there is a deal there.

    Money - I don't want to take any of my money away from my fastlane business to buy this thing. I don't want to mess with banks either. So I asked for seller financing with an attractive interest rate that will give the owner "mailbox money". He wanted a downpayment. So I called a friend that likes this industry. Told him I have a deal and he knows my track record. He agreed to put up the downpayment for a small percentage. No money from me is involved at this point.

    Experience - I don't have any in this business but guess what? I have a friend that is a genius at this...and he is temporarily out of work. Deal made...now I don't have to run the day-to-day.

    Growth - I called another friend who works in another industry. I asked him what he thought about adding his specialty to this existing business. He loved it, and it will triple the income. I gave him a small share also.

    Exit plan - When I get this business fixed, the friends listed above will "see" the value. I fully expect them to buy me out at that point.

    So I am buying a business with no money or industry experience. All because I "saw" something nobody else did. Once you get the mindset right you can see these things pretty easily.
     
    NanoDrake, GSF, topherea and 14 others like this.
  23. jon.a
    Offline

    jon.a Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

    Messages:
    4,239
    Likes Received:
    13,211
    Joined:
    Sep 29, 2012
    Gender:
    Male
    Location:
    Near San Diego
    Rep Bank:
    $74,894
    Featured post!

     
  24. Cruze
    Offline

    Cruze Contributor

    Messages:
    31
    Likes Received:
    21
    Joined:
    Sep 6, 2016
    Gender:
    Male
    Rep Bank:
    $141
    Congrats @Get Right ! Nice to read. Are your own active in the daily business?
     
    Get Right likes this.
  25. Get Right
    Offline

    Get Right Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    1,011
    Likes Received:
    3,790
    Joined:
    Jul 16, 2013
    Gender:
    Male
    Location:
    Sunny Florida
    Rep Bank:
    $24,614
    I expect to spend a decent amount of effort for the first year or so but not at the detriment of my fastlane business. I would estimate 30 hours/week on my fastlane and 20 hours/week on the new project. I happen to enjoy my business(s) so it's not really like working.
     

Share This Page