Whenever a friend of mine asks me for a good small business to start, I always suggest Chrome extensions.
Why?
Distribution
You have a huge customer base built in - there are 2.5 Billion Chrome users (compare that to 113 Million iPhone owners).
Competition
The competition is relatively low. For example, there are nearly 2 million iPhone apps, YET there are only 185,000 Chrome extensions.
So there are 20x more users, and 10x less competitors than iPhone apps.
Sticky
People rarely uninstall them. I have a bunch of Chrome extensions on my computers and I’ve rarely removed them.
If someone has a cool Chrome Extension they want to build, reach-out and let me know!
I’m going to admit something embarrassing to you.
When I started my last business, I had no idea how to read a Balance Sheet and Income Statement. Yes, I learned about it in basic accounting but had no real reason to truly understand what it meant.
When I bought my first business I was taking a huge risk.
I was personally guaranteeing the loan, so if the business failed the bank would come for my savings. That’s scary.
We received the company financials, and I had to watch a Youtube video describing each line to me. It was helpful, but you still don’t fully grasp the things that may surprise you later about the business (my advice, study the financials but also HIRE ADVISORS).
The financials tell a story. Some parts of the financials may try to “hide” the warts of the business. But if you have seen a lot of financials, then you start to identify things that don’t make sense.
If you aren’t reading basic financials, and investing in stocks → It’s a bad idea 🚩🚩🚩🚩
Yes, I did that too for years. But you, my reader, you’re better than that.
So how do you start learning financials?
It’s complicated. And can be dry. So don’t be too hard on yourself. Plan to learn the same thing over and over again using different resources until something sticks.
Here’s the TLDR on each statement:
Balance Sheet → a snapshot of the business's health in a specific moment.
Key questions to answer here: How much debt does the business have? When is it due? How much available cash does the business have? Are there a lot of assets (ex: heavy equipment or trucks) that the business owns?
Income Statements → the business's active performance for a given time period.
Key questions this answers: How much revenue does the business create? What are the business's primary costs? Is it employees? Is it physical equipment or something else entirely? How profitable is the business (remember revenue is not equal profits!)? The more profitable the business is ( as a percentage of revenue), generally, the healthier it is.
Cashflow Statement → how cash moves in or out of the business.
Key questions this answers: where is the company spending cash it produces? Capital expenditures? Acquisitions? Investments?
I went to dinner with a friend in Miami once who did this little trick. It stuck with me forever.
When we walked up to the restaurant, he said the hostess’ name and greeted her like a friend. The restaurant was fully booked with a waitlist, but she found us a seat within 5 minutes. It was incredible.
I asked him later if they were close friends. He said no, he met her once and showed me a notepad on his phone where he writes down the names of all the people he meets. It’s a system that helps him get into restaurants, clubs and warms him up to potential business partners.
Does it seem sleazy? a little.
Do people love to hear their own name? Absolutely.
Does it work? yes.
🔑 What I’m reading this week
📫 Newsletter - World Builders. Nathan Baugh writes about my favorite element in business → storytelling. Everything from creating an enemy for your brand to crafting a good hook. It’s really good (you can check it out here).
📜 Book - The Wright Brothers Biography. I didn’t realize how many individual inventions they had to create in order to “fly”. First, they had to invent a glider that worked. Then they introduced power. Yes, they custom-built an engine with a propeller for the plane. Incredibly inspiring story. It’s free to read if you use Libby.
📫 Newsletter - Mindset. Brian Feroldi shares his thoughts on investing, and self-improvement. I shared his thoughtful tweet above on how to read financials. If you liked it, you can check-out his newsletter here.
One of the most important parts of buying a business is doing the proper “Due Diligence” (DD). This step happens after you sign a letter of intent (LOI) and before you sign a purchase agreement and wire them money. DD allows you to get comfortable with the business culture, and its financials.
If you identify a red flag you don’t like during DD, ask more questions and be prepared to back out.
Buying the wrong business will set you back years. So don’t fall in love with the business! Try to remain objective and be ready to “pass” if something doesn’t feel right. There are plenty of fish in the sea, and it’s always better to wait to find the right business.
If you’re thinking of buying a business make sure you get a copy of my free Due Diligence list and my Letter of Intent Template.
All you need to do is ⭐️invite 1 friend⭐️ to this newsletter (using this referral program). You will immediately get a link to the Due Diligence Template.
👉 Join the referral program. You’ll get cool free gifts for referring your friends.
Reply to let me know if you liked Tweet 1, 2 or 3 most. Also, you can check out last week’s newsletter here.
Have a fantastic week,
~ Sieva
