Podcast Summary
Investing in small businesses: a worthwhile endeavor: Despite time constraints, one can still invest in small businesses by asking questions and finding the right people to help. Flight Fund, open for investment on Cedars, encourages listeners to take the first step towards growth.
No matter your background or resources, you can take that first step towards investing in businesses, even if they seem small or "boring." The speaker, who launched a private equity fund called Flight Fund, shares his personal experience of realizing the similarities between large and small deals and taking the leap to invest in a laundromat deal despite his time constraints. He emphasizes the importance of asking questions and finding the right people to help you learn. Flight Fund is now open for investment on Cedars, and the speaker encourages listeners to take that first step towards investing and growth.
Starting a small business: Learn the ropes and understand operations: Find a partner with expertise to navigate business challenges, and understand the unique aspects of each deal.
Starting a small business, like a laundromat, can be a viable and low-risk investment opportunity, even for those who have never done a deal before. The speaker shared his personal experience of learning the ropes by finding a business that needed an operator, and partnering with someone who knew how to run it. He emphasized that while learning the deal-making process is important, understanding the day-to-day operations of the business is equally crucial. Old business owners, who have run their businesses for decades, may be open to selling due to fatigue or other reasons, and these businesses can provide a solid source of income. It's essential to remember that every business has its unique challenges, and the key to success lies in finding a partner who can help them navigate these challenges. The speaker also highlighted that the perception of a good deal can vary greatly, and it's essential to understand the context and nuances of each situation.
Learning from Gateway Drug Businesses: Navigating business deals is more important than industry-specific knowledge, gain insights from experts through networking and online resources.
Buying and selling small businesses can be a lucrative and transformative experience, even if you don't have prior expertise in the industry. According to the speaker, businesses can serve as "gateway drug businesses," providing valuable lessons that can lead to new opportunities. While some knowledge of the industry is helpful, it's not essential. The key is understanding the deal and being able to access reliable information. The speaker recommends networking and utilizing online resources to gain insights from industry experts. In essence, the ability to navigate business deals is more important than industry-specific knowledge.
Creative deal structuring for small business purchases: Small businesses can be bought with little capital using seller financing, and sellers and buyers can negotiate mutually beneficial deals
Buying small businesses with little to no upfront capital is possible through creative deal structuring. Many small businesses sell with some form of seller financing, allowing the seller to be paid over time and defer taxes. This was common in real estate before online platforms normalized transactions. Deal making in buying and selling small businesses doesn't have to be a zero-sum game, and sellers and buyers can negotiate mutually beneficial deals. The key is understanding the art of the possible and constructing deals to maximize value for both parties.
Understanding deal structures and motivated sellers: Successful business negotiations involve identifying motivated sellers and understanding their unique motivations to enable them to move on to their next adventure, rather than trying to change their minds.
Successful business negotiations require a deep understanding of deal structures and the ability to identify motivated sellers. The speaker emphasizes that learning the language of deals, particularly in the context of equity and ownership, is crucial for individuals, especially those looking to buy businesses. Moreover, the speaker challenges the traditional notion of sales, arguing that it's more about identifying people who are already predisposed to want what you're offering. To be successful in buying businesses, one must be able to understand a seller's motivations and enable them to move on to their next adventure. The key to being a great salesperson, in this context, is not about changing people's minds but rather about discovering their true feelings and providing a solution that aligns with their goals.
Understanding the financials and growth plans when buying a business: When buying a business, it's vital to assess financials and growth plans. Potential buyers should ask why the seller is the right choice and how they plan to grow. For those starting a business, turning expenses into assets can lead to profitable opportunities.
When considering buying a business, particularly for those starting out, it's crucial to understand the financials and ensure the business can be successful for both parties involved. Curly emphasized the importance of asking potential buyers why they are the right choice and how they plan to grow the business. For those looking to leave their current job and start their own business, Cody suggested using one's existing expenses as an opportunity to turn them into assets. For instance, if one is in the content business and spends money on ad purchasing or video production, they could consider buying a business that provides those services, transforming expenses into income. Cody shared his personal experience of buying a podcast and video production company for a small investment, which ended up generating significant revenue. Overall, the conversation highlighted the importance of financial understanding, curiosity, and utilizing one's unique advantages when buying a business.
Collaborating with existing businesses for stake acquisition: Identify potential partners, assess their financials, and propose mutually beneficial deals to acquire a stake in existing businesses for a less risky and potentially more efficient entrepreneurial approach.
Identifying opportunities to collaborate and acquire a stake in existing businesses within your network can be a more efficient and less risky approach to entrepreneurship than starting from scratch. This strategy, often referred to as a "sweat equity" or "revenue equity" deal, involves providing value to an existing business and negotiating a percentage of ownership in return. To successfully execute this approach, it's essential to understand the target business's financials, your contribution's significance to their revenue, and the potential for long-term collaboration. For instance, a young content creator with limited resources could approach a studio production company, assess their revenue, and propose a mutually beneficial partnership. By offering a steady stream of clients, the creator could potentially acquire a stake in the business, ensuring a long-term investment in their entrepreneurial journey.
Tailor your approach to your audience's needs and desires: Understanding your audience's needs and aligning with them can help build strong connections and increase chances of success in sales.
Understanding your audience, or avatar, is crucial in closing deals. When engaging with a potential client, consider what they are looking for and how you can provide a solution as the answer to their needs. For instance, if the client is an anxious seller, position yourself as a reassuring and trustworthy buyer. Similarly, if the client is a father figure, present yourself as a supportive and intelligent son. By aligning with your audience's needs and desires, you can build a strong connection and increase your chances of success. In essence, tailoring your approach to your audience's avatar will help you stand out from the competition and ultimately close more deals.
