Buy, Borrow, or Steal: How to start a business without a big idea.
music selection: “Nas Ne Dagoniat” — t.A.T.u.
Buy An Existing Business
Laura Dobbins (“the laundromat lady”) found herself with instructions from her boss to book a plane ticket, hotel, and more. Keep your receipts and we will reimburse you. She discovered should couldn’t float a $400 plane ticket. It was a wake up call for her and her husband. They paid down debt and saved 100,000 dollars. Then there was the second “a-ha” moment. They realized they had options and decided to “choose themselves”. They researched business ideas and eventually decided to buy a laundromat.
They negotiated a price a little over 100k. They further negotiated 50k down and the rest over time. Essentially, the seller acted as a private bank. The put some money into brightening the place up and providing free Wi-Fi. The first year, the laundromat cleared 50k. And they opened another location.
Laura offers some tips:
#1 – Learn everything you can about the industry you are entering.
There was a lot to learn about the laundromat business such as “turns per day” and “water bill analysis”. She and the husband learned by:
- Talking to other business owners in the industry.
- Reading trade magazines.
- Going to conferences.
- Speaking with business brokers in the industry.
#2 – Ask the owner why they are selling.
In Laura and Randy’s case, the owner had other businesses and was spread too thin and couldn’t give the laundromat sufficient attention to make it a best in class business. They got to buy a distressed business at a great price! You need to ask why they are selling because there could be a reason that leads to the death of the business such as a larger competitor opening up nearby. Four reasons that are common and lead to great deals:
DEATH – The owner has died and the next of kin needs to unload the business.
DISEASE – The owner is ill and wants to retire and focus on health.
DIVORCE – The owners are divorcing and need to split an asset on the cheap.
DEBT – The owner has incurred debts outside the business that need to be satisfied.
#3 – Run every single number.
Laura and Randy were in an agreement to buy a laundromat and had the money in escrow. The owner noted the facility the laundromat was located in had a change to how management was charging for water. A quick check of the numbers revealed the laundromat would be a money loser. They backed out of the deal. For just about any business, you can Google “Due diligence [industry]” and get a good check list to work from.
Open a Franchise
This is the story of Ashley Morris and Jason Smylie. The two attended UNLV together and frequently ate a sandwich shop called Capriotti’s. They liked it so much they broke a lease to moved closer to the storefront. After graduating, they quickly grew tired of their “good corporate jobs” and decided to go into business together as Capriotti’s franchisees. They quickly expended to three locations and wanted to open more. The corporate partner however felt the market was already saturated and had no interest in expanding to new states.
Ashley and Jason made a bold proposal: Let us buy you out. They gathered a group of investors and bought the corporation. Within a few years, they had 50 stores. Today, Capriotti has 106 locations in 15 states and is still growing.
More on Franchising
Franchising can be a great opportunity. But it isn’t cheap. Opening a major chain sub shop like Jimmy John’s or Subway will run you between 200k to 500k. Jim Del Vicchio had a different idea. After 13 years of climbing the corporate ladder, Jim found himself out of work when his company shut down. Rather than dive back into corporate life, he did a thorough search for franchising opportunities. He found College Hunks Hauling Junk (CHHJ). The business has 50 plus franchises and is growing rapidly.
Unlike a sub shop the only real capital requirement for a moving and junk hauling business is a truck. You can get started much cheaper! Jim broke even his first year and was off to the races thereafter. Jim offers some advice about starting a franchise”
#1 – Find out what HQ provides.
You want to know what you are getting for your franchise fee. Sometimes, you are paying for just a name. Other times, you get leads, logistical support, customer support and more. The corporate call center for CHHJ proved invaluable.
#2 – Work on the business – not in the business.
You won’t make much money if you are working as a staff member. You need to spend almost all your time chasing down sales and revenue. Your day should be entirely about generating profit.
#3 – Get creative about finding customers.
The corporate brand name can be a lot of help. But it is essential to remember you are running the business and not the corporate partner. Jim got creative and got himself in front of real estate agents, apartment managers, assisted-living centers, and more. It paid off.
Steal a business
Take John McIntyre. He spent some time after college chasing the “next thing”. He traveled extensively and in 2012 decided he was going to find a way to make money online so he could become a permanent traveler. He learned about copywriting and dedicated himself to the art. He read lots of copy and practiced writing his own. He took courses and read books.
He eventually put out his own shingle and found some paying customers. Soon he was getting plenty of business by word of mouth. He noticed early on that lots of his clients were asking him to write “auto-responder” copy. That’s the email that you get when you sign up for an online “freebie”. Lots of companies offer a free gift in exchange for your email address. They then send you several additional emails that work progressively to convert you to a paying customer.
John decided to become “the auto-responder guy”. Within six months he had enough business to move to Thailand as a base and become a permanent traveler.
My point? Like this business idea? STEAL it! No one is stopping you from copying John or hundreds of other people who have struck out on their own. Examine them. Learn what they are doing right and what you can do better. And then get out there and kill it!
Devour your prey raptors!
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