Buying a Business With 50K

How I got here…

21: Graduated Vanderbilt in 3 years Magna Cum Laude, and took a fancy consulting job.
23 yrs old: Left my fancy consulting job to start a business (a gym).
24 yrs old: Opened 5 gym locations.
26 yrs old: Closed down 6th gym. Lost everything.
26 yrs old: Got back to launching gyms (launched 33). Then, lost everything for a 2nd time.
26 yrs old: In desperation, started licensing model as a hail mary. It worked.
27 yrs old: "Gym Launch" does $3M profit the next 6 months. Then $17M profit next 12 months.
28 yrs old: Started Prestige Labs. $20M the first year.
29 yrs old: Launched ALAN, a software company for agencies to work leads for customers. Scaled to $1.7mmo within 6 months.
31 yrs old: Sold 75% of UseAlan to a strategic buyer in an all stock deal.
31 yrs old: Sold 66% of Gym Launch & Prestige Labs at $46.2M valuation in all-cash deal to American Pacific Group. (you can google it)
32 yrs old: Started making free content showing how we grow companies to make real business education accessible to everyone (and) to attract business owners to invest or scale their businesses.

Today: Our portfolio now does $200M/yr between 10 companies. The largest doing $100M/yr the smallest doing $5M per year. Our ownership varies between 20% and 100% ownership of the companies. Many of them we invested in early and helped grow (which is how we make our money - not youtube videos).

To all the gladiators in the arena, we’re all in the middle of writing our own stories. The worse the monsters, the more epic the story.

You either get an epic outcome or an epic story. Both mean you win.

Keep crushing. May your desires be greater than your obstacles.

Never quit,

Alex

*FULL DISCLOSURE*
I make content to make money - just - on a longer time horizon than most. I want to build trust with business owners so we can find the best ones and help them scale. And if they’re awesome, write them a check and go all the way as partners.

[justiceanderson]

Alex please cover this more! The people need this. Show us how to buy them, and grow them quickly. 😀

[lordofthegains]

Fatal flaw is getting someone to sell you a business that makes 250k a year ...with owner financing. Why would they sell something that makes roughly a million dollars every 4 years and take on risk from someone with now 2 loans and only sitting on 50k in liquid lol

[xpndofficial]

Would love to see more content related on this topic. I appreciate what you’re doing for us Alex!

[edpasternak]

I'm doing this right now. It's definitely not as clear cut as Alex describes. There are balloon payments that you have to include in your business plan, cull dates to keep track of, closing costs, and so on...
Oh and the lawyer fee I'm paying for the initial contract is $5k

[fbulderin]

On paper, it's that simple. In reality, well, that's another story.

[garrethaines]

I would probably have a hard time getting 3/4 owner financing since I have no experience owning or operating a business

[arvinkhanian]

Yes. You could even get a highly experienced board in exchange for shares, and roll up companies with seller financing and debt. You could even use top 5 accounting firms and lawyers with success fee, for the due diligence.

[stupidemperor]

Well business must be operated. Just buying it wouldn't solve anything if not get things worse

[Rafael-Bravo]

That would be you getting a loan (from the bank), by you putting 25% down, and that loan would be the downpayment for a bigger loan (the seller financed one)

[Huwix]

What actually happens is the seller says fk off I want all the money on closing, no seller financing

[AK-hihm]

why would someone sell a business netting them $250k/year for 700k

[thehoov]

No business owner is going to wear that seller finance loan risk.

[bestduihelp]

SBA loans only allow up to 5% owner financing. You’re also not making $250k because there’s now debt to service. Oh yea and SBA is gunna want you to put your house and other assets as collateral in case you fail.

[tinaperez]

ALEX TEAM: JUST FYI - THE THUMBNAIL MAKES HIM LOOK LIKE MICKEY MOUSE. 😂👍

[RadicalSelfImprovement]

Noone would sell you a business that does that well, for that little.

[kelechinobi]

Very risky. The only way you get a business at 2.5 multiple is if the basis is SDE, meaning that “profit” includes depreciation, amortisation and non-recurring expenses.

You can’t create money so regardless of how clever you’ve been with the accounting end of the day you’re owing 600k. If you’re repaying over 5 years you’ll be paying out about 140k annually on top of depreciation etc.

[thelayman]

Whereas how can we identify such businesses is US ss well ss outside and how to evaluate

[socman]

I have absolutely no idea what you're talking about, mate. But yep, I'll buy it.

[DavidRider]

If he puts his head in the middle of the frame he turns into money making mickey mouse

[sinnexz]

ya.. but you have to pay your loan and the seller now... and that will eat a big chunk of biz income, plus overheads, you are left with 60k per year with extra headaches... congrats!