Podcast Summary
Business covenant and commercial leases: A strong business covenant can make borrowing cheaper for the landlord, increase the value of their asset, and help secure a commercial lease for a tenant with good financial health, long trading history, and a solid balance sheet. Tenants with bad credit can improve their chances by focusing on profitability and building a strong financial profile.
For a business looking to secure a commercial lease, having a strong business covenant is crucial. A strong covenant can make borrowing cheaper for the landlord and increase the value of their asset. Landlords prioritize tenants with good financial health, long trading history, and a solid balance sheet. Offering a larger deposit, personal guarantee, or even having a bank guarantee can help improve the chances of securing a lease. Connor, who runs a mill prep business, is facing challenges in finding a new commercial kitchen space due to his company's bad credit rating despite having no debt. To improve his credit rating, he should focus on registering profits and building a strong financial profile. Ultimately, selling himself and his business's potential to a landlord can be a valuable strategy in securing a desirable commercial space.
Tenant's business strength: A strong tenant's financial position and profitable business history can lead to lower rents or longer rent-free periods during negotiations with commercial landlords.
The strength of a tenant's business and financial position significantly impacts rent negotiations with commercial landlords. A strong tenant with a good balance sheet and profitable business history can negotiate lower rents or longer rent-free periods. Commercial landlords often prefer to offer rent-free periods instead of reducing rent to maintain the value of the lease. For instance, a 20-year lease with two years rent-free results in a buyer purchasing 18 years of guaranteed income. Local authorities could play a role in addressing the lack of small commercial units by investing in property and renting it to small businesses, but the financial viability of such investments for institutional investors is questionable. Government intervention could help fill this gap and foster new businesses. As a commercial landlord, protecting yourself from tenants requires having a trusted team to handle negotiations and approvals. Connor, for instance, aims to double his revenue and profits in a year and expand his business, but he keeps his future plans a secret. He is currently profitable but not yet at his desired net profit level. He spends most of his time on marketing and oversees the day-to-day operations, which run smoothly. However, he now wants to focus on growing the business. Connor is also a cryptocurrency investor.
Crypto EIS investments: Investing in crypto through an EIS scheme can lead to high returns but involves risks and requires market knowledge. Long-term strategies and understanding personal risk tolerance are essential.
Investing in cryptocurrency through an EIS scheme can lead to significant returns, but it comes with risks and requires a good understanding of the market. The speaker shared his experience of making a large profit from such an investment, but he also acknowledged that more people have lost money in crypto than have made it. He emphasized the importance of long-term investment strategies and understanding one's own skill set and risk tolerance. The speaker also mentioned the potential benefits of compassion in repairing relationships and building friendships, even with former rivals. Overall, the discussion highlighted the importance of careful consideration, understanding, and resilience in both financial investments and interpersonal relationships.
Age in Entrepreneurship: Average age of UK business founders is 46, 35% are over 50, serving a wider age demographic can lead to greater success, don't let age limit you, build bridges instead of being bitter, focus on improvement
Entrepreneurs, contrary to popular belief, are not all young. The average age of a UK business founder is 46 years old, and 35% of businesses are started and run by people over the age of 50. Being open to serving a wider age demographic can lead to greater success and a larger market. Don't let age be a limiting factor in your business. Another key takeaway is the importance of building bridges instead of being bitter. This mindset can lead to increased effectiveness and productivity. Lastly, the quote "Don't be bitter, be better" encapsulates the idea of focusing on improvement rather than dwelling on negativity. Overall, these insights emphasize the importance of adaptability, resilience, and a positive attitude in entrepreneurship.
Customer Retention: Focus on retaining existing customers through personalized communication and engagement for significant growth, rather than solely relying on expensive advertising methods to acquire new customers.
Entrepreneurs and business owners, particularly those in the early stages, should focus on retaining existing customers through personalized communication and engagement, rather than solely relying on acquiring new ones through expensive advertising methods. By implementing simple yet effective strategies like making phone calls to check in with customers and offering special promotions, businesses can increase customer loyalty and retention, leading to significant growth. Connor's challenge of finding new customers and getting a good return on investment from paid ads highlights the importance of this approach. The average customer value for his business is around £1,000, so the cost of £100 per lead from Google or Facebook ads is not sustainable. Instead, Connor should prioritize reaching out to his current customers and re-engaging those who have stopped ordering. This not only helps retain existing business but also provides valuable feedback and insights into the customers' needs and preferences. Overall, entrepreneurs and business owners can learn from Connor's experience and focus on building strong relationships with their customers to drive growth and profitability.
Gross profit maximization in food prep business: Monitor labor and ingredient costs for maximum gross profit, leverage partnerships and CRM for revenue, consider ROI before increasing marketing spend, use a mix of marketing methods for optimal cash flow.
In a food prep business, gross profit is crucial and must be closely monitored. This includes labor and ingredient costs, but excludes expenses like rent and electricity. To maximize profits, it's essential to understand the gross profit of every meal and make it a cultural focus in the business. Additionally, leveraging partnerships with PTs and affiliate programs can generate significant revenue. Utilizing a CRM system can help improve customer engagement and retention through targeted communication. While seasonality may impact marketing spend, it's important to determine the return on investment before increasing ad budgets. Overall, a combination of old-school marketing methods and digital advertising is recommended for optimal cash flow.
SMS marketing effectiveness: SMS marketing can have high open rates and yield returns even for small businesses, despite requiring manual effort. Building real connections is important for business success, and can lead to outstanding returns.
SMS marketing can be an effective and cost-efficient way to reach customers, with high open rates compared to emails. The speaker shares his experience of using SMS marketing for his business, Marsh Farm, and getting good results. He suggests that even if you only have a small customer base, manually sending texts can still yield returns. The speaker also mentions that picking up the phone for consultative sales can be a great way to build connections and close deals. He advises entrepreneurs to consider using Google ads or mailing list companies to get leads for salespeople. The speaker reflects on the importance of building real connections in business, as it was the only way before the internet, and the returns can be outstanding for those who bother to do it today. He also suggests starting with independent gyms for leaflets and member meetups for community building. The speaker encourages focusing on growing one business instead of spreading energy and resources across multiple ventures.
Gross profit importance: Focusing on net profit is important but prioritizing gross profit is crucial for business sustainability. Innovative business models and expanding customer base can help increase gross profits.
While focusing on net profit is important, it's equally crucial to prioritize gross profit as your business grows. The speaker shares his experience of observing several meal prep businesses go out of business due to insufficient cash flow and low gross profits. He suggests considering innovative business models like operating a sandwich round service in industrial areas or partnering with Airbnb-style accommodation providers to reach a larger customer base. The speaker also mentions the potential of meal prep services in the Airbnb market, particularly for construction workers. These ideas could help increase gross profits and ensure the sustainability of the business.
Money management for lottery winners: Lack of financial education and discipline can lead to losing lottery winnings quickly, emphasizing the importance of learning money management fundamentals before attaining significant wealth.
While having a large amount of money quickly can lead to success, it doesn't guarantee business acumen. The speaker suggests that lottery winners often lose their winnings within a short period due to lack of financial education and discipline. Therefore, it's essential to learn the fundamentals of managing money and developing the right mindset before attaining significant wealth. The speaker also encourages listeners to share their thoughts and ideas in the comments section and rate, review, and subscribe to the podcast to help spread the message of business growth. Additionally, if anyone knows someone who can help JB improve his vocabulary, please leave a comment.