Practical steps to buying a business/ investment:

Step 1: Determine your niche Your niche will depend on your skillset but some popular niches are:

• Cash businesses (ATMs, convenience stores, laundromats, etc)
• Restaurants
• Hotel/Hostel
• Online-based (coaching, consulting, newsletter, etc)
• Tech
• Medical

I personally invest in a few verticals for diversity. I don’t like to have all my eggs in one basket, and I would suggest that most people follow this pattern as well.

Step 2: Locate a business that may be for sale

There are millions of businesses for sale each year in the US, and only 1 out of 150 sell per year.

Can you smell the opportunity yet?

You can go to Biz Buy Sell to find a huge list of businesses for sale.

You can also call, email, or show up to a business that looks like it may be “distressed” or struggling and ask if they’ve ever considered selling or taking on an investor.

Seriously, this is how I’ve gotten 4 deals for myself.

Step 3: Analyze the deal

The biggest mistake you want to avoid is overpaying because it can take you longer to get your money back.

However, the risk of the whole business going to zero is extremely rare. Rather, it’s more likely that your growth projections may be a little high which can be disappointing, but it won’t tank your investment.

Most small businesses (under $1m) sell for 2-4x their profits.

Businesses that are doing over $1m tend to sell for 3-5x their profits.

But keep in mind that every deal is different. You may intentionally pay a bit more for a business because you know that it’s going to take off so it’s worth paying more for.

Before you buy/invest in a business make sure you also have:

An operator

You can always run the business yourself, but if you’re looking for a passive investment you will need to hire someone to run it.

Depending on the industry it can be $20k-$80k per year to hire someone, which will affect profits, but I’d rather pay someone than clean toilets 🙂

If you’re just investing in a business, the existing owner will likely continue to be the operator.

A marketing plan

Some businesses already have great branding and marketing so it may just be as easy as copying what they’re doing.

Otherwise, it will be your job to determine opportunities to grow the business with better marketing.

  Plan to add revenue streams

How can you add more revenue to your business without having to invest in marketing?

If you buy a laundromat you may add soap, baskets, stain removers, etc as upsells.

If you buy a hotel you may add a shop, a bar, room service, etc.

Step 4: Negotiate the terms

PAY ATTENTION HERE, because I’m going to give you advice that will save you millions.

NEVER buy a business or invest without looking at the lease (some have caveats that if the owner changes they can increase the rent, which could totally throw off your profits)

Determine how long until you can pull cash out of the business (usually, I give it 6 months at least to see how the business operates and is doing before I start taking money for myself)

Step 5: Determine how you’re going to pay for it

Some options include:

• Creating your own syndicate (get others to give you money to buy the business and you all split as partners)
• Seller financing (look this up)
• Pay for it on your own
• Payment plan (put a certain amount down and pay the rest over the next few years)

I personally have used my own cash and done payment plan options. And I’m currently working on my first syndicate for a larger investment I’m working on.

(It’s a hostel that will do a lot of good in the world- feel free to message me if you want info on this deal).

Step 6: Sign paperwork

You’re going to incur a few thousand at least in fees and attorneys to do the deal, so make sure to budget for that.

Step 7: Follow the business plan  

Step 8. Resell 🙂

There you have it.

Buying and investing in business does require work upfront. But if you hire operators to run it for you, then it becomes a passive investment very quickly.

Which means you just sit back and collect.

That’s called getting your money to work for you.

(Shit… You don’t even have to use your own money for this, so really EVERYONE can do this).

If this excites you…

Expanding beyond just coaching and consulting…

Creating wealth that grows itself…

Then you need to come to the next Wealth 101 Event.

We are teaching you FOUR ways to start investing passively.

Not just private equity-like in this example, but also Crypto, Stocks, and Real Estate.

Why?

• So that you learn how to build a diverse portfolio instead of putting all your eggs in one basket.
• So that you can rest easy knowing that you’re money is working for you…
• So that you can get your time freedom back.

Where we will literally hold your hand through this process and help you create a wealth strategy based on your goals and resources.

We can chat and see if investing is a fit for you based on your situation.

Schedule a call with our team now.

-Jeweliet Tangen

& The Wealth Map Team