My favorite parts of this thread:
Question for my readers - Would you want to start an online business one day? Let me know if you do! Maybe we can work together one day.
ā Agreed.
Often times I get asked the question by followers: āIf the business owner could grow the business, why would they sell it to you? Why wouldnāt they grow it?ā
By the time an owner wants to retire and sell the business, they are rarely in āgrowth modeā. Picture this. A business owner spent the first 10 years of their career working extremely hard. They worked weekends, missed their kidsā baseball games to grow their company. Now, 20 years later, they own a few properties, their kids are all grown up and they have enough money in their bank account to live a comfortable life.
Increasing their business size again would be a headache.
They would need to hire more employees, and potentially take on more risk than they want to.
But, if you ask them how to grow the business, they have a pretty good idea!
Iām going to publish the list of questions we ask owners during diligence soon and share it with you all. Reply āYESā if you want to receive it.
First off, you should read one of my top 10 favorite books on investing, The Dhando Investor.
Here is the summary of the book:
Great returns in investing do not require high risk. You can make low risk bets, with extremely high returns. That is Dhando Investing.
In this tweet, James shares some guidance on how you can invest a little, roll up your sleeves to grow the business and sell it for a high return on your money (low risk, for a high reward).
š Cool Business for Sale (off-market)
This week I spoke with the owner of a swimming pool lesson business. For confidentiality, letās call him John.
I grew up a competitive swimmer, but Iāve never heard of a swim school. Itās pretty cool.
Industry details: The US Swim School Association has ~500 members, so Iād estimate there are 650-1000 swim schools in the US.
It seems like there are three types of school owners: own your own building/pool, lease someoneās pool/building, or rent space in a pool for a few hours a day.
John owns an indoor pool, 25x50 ft. His swim school has been around for 40 years (itās based in a cute coastal north of Los Angeles).
He has a full-time manager who has worked for him for 10 years, which means John can be largely absentee and go on vacation for a month at a time (this is awesome).
They average 600 lessons a week, for people of all ages (3 months and up). The business makes $600,000+ of revenue per year, and John takes home $300,000. Saturday is their busiest day, and get this, theyāre closed on Sundays.
How would you grow this? Open on Sundays! Get involved in the local community, and do a little bit of marketing.
Skills needed for an owner (according to John): Great with people, a good heart, good understanding of cash management, ability to manage people. John will teach you the rest.
This is a great business to own for someone looking for a nice lifestyle. Swim schools are a good stable long-term business.
How I would buy this if I were you: You should be able to pay around 3x yearly cash flow ($900k). I would put down 7% ($63k), ask the owner to put 5% on full standby and use SBA debt.
For $60-90k you should be able to ensure a nice life for yourself on the coast of California.
Want an intro to John? Reply to this email with: a description of your background, why youāre interested, and why youāre good for the role. Please also tell me if you have $60-90k or how you plan to pay for the business. I want to make sure we donāt waste Johnās time.
Have a friend with a business that wants to sell? Reply to this email to let drop me a tip. Or reach-out to : contact@enduring.ventures
Reply to let me know if you liked Tweet 1, 2 or 3 most. Also let me know if you want to see more deals like this.
~ Sieva
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