Business Buyer Diaries: the Reality Before, During, and After
<p>Welcome to the Business Buyer Diaries. My name is Nathan Platter, I’m a full-time employee, and I bought a business! I did everything right from finding the deal, handling due diligence on 63 different opportunities, and ultimately buying a profitable gym, and boy was I in for a surprise as a new owner! I chronicle everything in real time, including the biggest wins to the stressful nights at 2am. I’m sharing my journey without sugarcoating anything, so you don’t repeat the same mistakes I do.</p>
<p>Join the Business Buyers Club! <br>
https://businessbuyersclub.com/memberships <br>
Enter code 070499</p>
<p>Learn Due Diligence for yourself! <br>
https://dealacademy.app.clientclub.net/courses/offers/75e59f69-9746-4b94-a6cd-562bcc9347d1 <br>
Enter code</p>
<p>SanterMedia, my goto Gym Marketing Agency <br>
https://go.santermedia.com/nathan <br>
Tell them Nathan sent you!</p>
Business Buyer Diaries: the Reality Before, During, and After
359. Helped an interested buyer evaluate another opportunity for sale
Shifting gears, let's unpack the allure and realities of so-called "boring businesses," often overshadowed by glamorous entrepreneurial success stories. I explore why asset-based ventures, like owning rental properties or equipment, offer a stability that many fast-paced businesses lack. Learn from my insights on networking and leveraging others' experiences to steer clear of common pitfalls. Resilience and continuous learning in entrepreneurship aren't just buzzwords—they are survival tactics. This episode promises a candid exploration of the mental challenges that entrepreneurs face and offers a road map for staying motivated amidst adversity.
Hey, good morning, happy Saturday. Well, today I'm kind of in a bad mood. I'm just looking at yesterday's recording. If there's nothing more that I can do, then I've done all that I can and that's enough. And today I'm just kind of grabby about the position I'm in, and so I just want to acknowledge like emotions can go sideways day after day after day.
Speaker 1:My wife and I mentioned like hey, hey, we should go over our home budget. I'm like cool, spend less. She's like cool, let's like go over the details. And I don't want to go over the details because I know I spend money on nothing other than food and gas and insurance and utilities. And like yesterday she come like hey, look at this great sale from the library. I spent 50 cents on a handful of books, or 50 cents per book on a lot of books. Like cool, that's eight dollars down the tubes when we could have gotten those books for free from the library.
Speaker 1:And so I'm thinking that's not what I'm saying, and so I just have a really bad attitude when it comes to spending money, especially right now. Um, I forgot to turn off auto pay on the business credit card and so our $6,000 credit card got fully paid off, which is great because we're not accruing interest, but then the checking account goes to like negative 1,000. But then we get the bi-weekly or the twice a week remittance for a couple thousand or for like 2,000. And so, like we're back in the green, but like I'm just now very averse and like I cringe when it comes to spending money right now, and so that's something that I just am not a fan of. So, courtney, my wife, she's really good, she's very good at not spending money on stuff, but something that she likes to do is, if something's on sale or it's at a massive discount, she likes to buy it. And so my, when I'm in a bad mood, I say, well, great, if there's a pile of dirt for sale, only 90% off, it's only $5. Are you still going to spend $5 on a pile of dirt when we don't need dirt? And it's a terrible. That's an example of trying to be right and not listening to what she's doing behind the scenes And's a it's an example intended to belittle what she does, and so that's something I need to work on.
Speaker 1:But yeah, I'm just not like, and also like the insurance came to like hey, your once a year insurance payments are due and in my head it's like cool, the gym's around for another two months. I don't want to pay a year of insurance, but they don't have a way to pay for a monthly installment. So now I pay a one-year insurance bill that I'm only going to need active for two months, and so I'm crabby about that and I'm glad to have insurance, I'm glad to have that coverage, but that's like two grand, three grand out the window that I'm not going to materialize on. So I'm trying to battle those negative thoughts. And that's three minutes of me trying to say like I just I feel like money is going out the door every single day, and then when money comes in, I assume that's normal because we have memberships on subscription, and so I think I'm just ready to get closure at the end of this um, whether it's personal bankruptcy, whether it's personal bankruptcy, chapter 7 or chapter 11, to just cut the bleeding and to not have to deal with the mental strain, the emotional strain, the financial strain, and to just be done with it.
Speaker 1:The members that are still here are good, but we're 90 members short of break even, and then we are an additional 20 members away from me paying myself, and so like we're at 250 members, we need to be at 360 members and like I'm trying to calculate too, like how long do I do? I keep running this gaslighting thing, because I feel like I'm gaslighting people and I don't like doing that. But I can't just come up and say, yep, this is the last challenge we're done, because then corporate's going to throw a fit about you're showing allegiance to your members, you're not showing allegiance to corporate. Well, I mean, I owe allegiance to both. At the end of the day, like it's my house that's on the line, my cars that are on the line, like my, my livelihood that's on the line, I'll be loyal as far as I'm able to. And then, at the end of the day, like I need to put my business ahead of corporate. I need to put my business ahead of the members and, yeah, I that's gonna rub some people the wrong way. Sorry, it rubs you the wrong way. So, anyhow, corporate's going to be here. Let's see what is it. It's like October 5th. So, yay, happy, one year of owning the business. It's officially one year and a day since we bought the place. Corporate's going to be here in a month to do like a round table franchisee thing. So I'll be there for that and all the other franchisees will be there as much as they can be, but nobody's making money, like there's nobody in the system who is profitable. There's one that I know of everyone else is breaking even and folks that are making money are working a lot of hours to to pay themselves something and yeah, it's just rough overall. And so all that to say, just an interesting time to own a business.
Speaker 1:I caught up with someone yesterday who's like hey, there's two, I'm gonna ask you about buying a gym. I said, cool, let's talk about it. And so, like two minutes before the call, he sends me a link to a biz buy, sell listing for two competitor gyms. So I go oh, here we go. So it's not about the industry, it's about this particular acquisition. And so we hopped on the phone and said, okay, that they're asking for $400,000, cashflow is one 30. And when they say cashflow, that's really what the sellers benefits. So if the seller owns a brand new Lexus and it's a $1,000 a month lease, that's hidden inside of the cash flow. So we know it's small business accounting, but I'm not saying that to the buyer. I said, all right, well, let's work this out. So at a $400,000 purchase price, let's assume like you'll get some bank financing, some seller financing You'll probably be at a $4,000 a month business payment. That's going to be after the cash flow. So at a $130 profit. Let's reduce that down by $50,000 a year for your SBA payment. So now it's down to $130.
Speaker 1:This particular competitor is a franchise. So we looked up their FTD. It lists the LLC. Cool, we now look at the LLC. We find the owner. We now have the owner. We now look them up on Facebook. Now that we see them on Facebook, we just make a judgment call on does this person work in the business or on the business?
Speaker 1:The owner definitely looks like a CrossFit lady who works out. It's all about protein and push-ups and sit-ups and marathons. Okay, she probably works the business and of her two locations she probably works 60 hours a week. So that's an assumption we're gonna make Our $80,000 cash flow. She has some seller discretionary benefits. Probably her cell phone, probably her car, probably some meals, probably some clothes, probably home internet, all sorts of things that's going to be stuffed inside the $80,000 remaining. Let's reduce that down to, let's just say, $20,000 less. So $80,000 now becomes $60,000.
Speaker 1:She's now paying herself $60,000 a year to work 60 hours a week, based on her social media posts and all the stuff that she's posting out there, and ask this guy like hey, you work in a different field. He's, he's an engineer. Um, so I asked him like hey, what do you make? Straight up, tell me. And so he's like, oh, I make eighty thousand a year. All right, all right, cool. I don't know what your work schedule is, but buying this, this business, you have a chance at making $60,000 a year working this schedule, plus you'll have payroll, plus you'll have rent, plus you'll have membership sales, plus you'll have retention, plus you'll have social community events, plus the parties. And so those aren't financial costs, but those are time and emotional costs. Not to scare you off, but how does that sound? It's like, oh, I don't know, 80 to 60. I could probably make that a little bit better. So, yeah, you definitely could.
Speaker 1:After this gal owning these two gyms for nine years, based on company LLC records, this is the best case scenario after a nine-year tenure. It's probably gonna be a little worse than that. So let's pretend you make $40,000. You take a $20,000 pay cut because people will leave because they like the owner, they don't know you, they don't necessarily buy into you, so you'll probably lose some members Day one.
Speaker 1:If you're making $40,000, is that okay? Like, well, no, like I'd rather do something else. All right, probably not for you. Then I'm not going to tell you what to do. I'd recommend not diving into this. For what it's worth my business. When I bought it, I was in the top five. Now we're probably in like the top 10 for revenue. But after a year of ownership absentee ownership I'm $126,000 in the red. I've made a couple of mistakes mistakes so we probably would have been like one hundred and fifteen thousand dollars in the red If I managed and owned the place. I would not have a manager, so I'd be fifty five thousand dollars in the red For my gym. Personally, we're doing more revenue and more expenses, but I would highly recommend not buying this gym.
Speaker 1:And then we walked through. Okay, here. Here's the podcast, here's the episodes. So all that to say. I don't know how people get out. I don't know how people diversify their investments right now.
Speaker 1:So there's so many people saying buy a business, buy a laundromat. The catchphrase nowadays is buy a boring business. I bought a boring ATM route and now I make $90,000 a year profit and only work 10 hours a week. Okay, sounds good, bro. Um, you're talking about your wins and your six for six on your business acquisition side of things. That is not real. That is not normal. Either you are hiding, either these gurus are hiding everything that they've done, or they are just extremely lucky when 80% of businesses close within five years. Either these gurus have the magic touch or they're not telling about all their failures, and the folks that have failures usually have a way to rebound really nicely. The only person that's making money in my franchise system her husband makes over a million dollars a year from the business that he owns, and so if the gal has a tough month, she now has a cushion of someone making a million bucks a year, and if they only live off 200 grand a year, they have an $800,000 cushion. So it's a long episode.
Speaker 1:My whole point network and talk to people when you want to pursue something, both as a competitor as well as in the system, and don't just assume that's going to go smoothly. You have to assume all of the negatives, because those are just as likely as all of the positives. Statistically, everything going wrong is just as likely as everything going right. So if you're going to be gambling like sports betting, you have to assume everything's going to go wrong, just like everything's's everything going right. So if you're going to be gambling like sports betting, you have to assume everything's going to go wrong, just like everything's going to go right. So talk to people and figure out what does everything going wrong look like Members quitting. Your lease expires in six months. You have a banned Facebook ads account so you can't advertise on social media. You got to assume and you got to network and ask and so at the end of the call, guy's not going to buy this pair of competitor studios.
Speaker 1:I think it's a good idea. He's done some great stuff with Airbnb and Turo and like if I could do this over again, something that I would do is have more assets in the business. The downside to a gym of a $500,000 purchase price, I have about $30,000 in like physical assets TVs, weights, used gym equipment, old laptops. I have a 400,000, 470,000 or yeah, I have like a $400,000 gap. If I bought a house and tried to Airbnb it and in the last change you can't Airbnb it, you now have a house that you can sell. You'll probably get most of your money back Houses don't drop 90%. They're going to be pretty reliable, so that's something that I would do.
Speaker 1:Personally, I want to be in asset based businesses, such as buying a giant tractor and renting it out, buying land, renting it out to hunters, buying dumpsters and renting them out to junkyards. I heard of someone once who, like bought rail cars and rented them to like BNSF, like the rail companies. So you like those. Anyhow, I'm trying to get myself out of a rut mentally. Just got to the studio, so time to go in.
Speaker 1:We're doing an instructor only challenge, so we have the members competing for the thousand dollars and then we also have instructors competing for a side bet that they have. So it'd be like 300, $400. And so we're just doing a lot of really good stuff and lessons are hard, but you learn from them. So we're gonna have a good day. Really good stuff and lessons are hard, but you learn from them, so we're gonna have a good day. I'm going to go in with a smile on my face, we're gonna have a good workout or test in and then we're going to go start the day best we can. That's where we're at. That's where we're going. Let's rock and roll.
