🧐 What I Learned Last Week
Week ending Friday April 8, 2022
What I Learned Last Week curates the most interesting content relating to business acquisitions, operations, entrepreneurship, finance, and more. WILLW is a publication of The Business Inquirer.
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📰 Articles
Andy VandenBerg is an entrepreneur who accomplished a lot in 2021. Of particular note - he started and sold a home cleaning business. In this blog post, he talks about the lessons he learned from this experience. I like that he has a contrarian take and thinks you should build a business instead of buying one. There are a lot of good takeaways from the full post.
Build before you buy:
With the current market environment, I’m a believer of building vs. buying when you’re looking at low-capex intensive businesses. Purchase multiples are high right now in the SMB world and for businesses requiring low start-up capital, the potential return on starting a business can be significant. Not to mention, it’s a lower risk way to test whether you want to run this business for the foreseeable future. How many people sign personal guarantees and get SBA loans only to realize they don’t love the business, but have to be involved for 5+ years?
If you’re searching for a business in a certain industry, why not start something in that space. You’ll get a better sense for the business and become better at diligence, buying and operating that business. Most importantly, sellers will look favorably on a buyer who is willing to roll up their sleeves in the industry! Not to mention, there’s a chance if you build something with enough scale, you won’t need to buy a business.
6 Life Lessons from Starting & Selling a Home Services Business
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I recently came across David LaMore and his Maverick newsletter. If you’re just getting started and looking for a primer on Search and the EtA space, this is a great read.
The term “search fund” was pioneered by Irv Grousbeck, then Harvard Business School Professor, in 1984, where newly minted MBAs would be allowed to search for, acquire, manage, and grow a business as the primary leader. In the past two decades, search funds and ETA more broadly have become a popular avenue for aspiring entrepreneurs, with there being only 20 first-time search funds in total as of 1996 and over 400 by 2020.
If you’re a Bostonian (like me), you’ll recognize the last name Grousbeck. Wyc Grousbeck is the majority owner of the Boston Celtics. I was not aware that his father Irv invented the term “search fund”.
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A bit off-topic but Benedict Evans has an interesting article looking at the unbundling of online advertising.
Amazon’s ad business is bigger than YouTube and more profitable than AWS. Shein is the biggest fast-fashion retailer in the US, with no stores. US pay TV subscribers have fallen by a third. Where do ad budgets go, where does rent go, and how many brands will there be?
TV, merchant media and the unbundling of advertising
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Ashay’s Newsletter talks about the most common patterns that he sees entrepreneurs use to start enterprise software companies. It’s a short, easy read that I would recommend for anyone interested in enterprise software.
After surveying the wide landscape of business software from seed to public equities over the past few years, I’d like to lay out common heuristics or patterns I’ve seen entrepreneurs use to start their businesses. It’s important to note that these are really just jumping off points. The best companies usually take a first principles or unique approach to their market. Also, if you haven’t read it yet, it is worth going through Avichal’s post from a couple years back. He has a broader lens, and I focus my attention to business-facing software.
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Empire Flippers released the Amazon FBA State of the Industry Report for 2022. This is what a bull market looks like.
Amazon FBA State of the Industry Report 2022
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Axial has a couple of articles I thought were interesting.
Far From Risky: SaaS as a Safe Haven for LMM Investors
The Trick to Selling your Business: Think Like an Investor
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I recently came across fatFIRE subreddit. It’s an online community of people who accumulate wealth to retire early. One particular post caught my eye from an individual who is successfully building a holdco. Long post but a great read.
Updated Data: 46yo with 4 kids in LCOL Midwest. NW of 15-25m depending on how you look at it, up from 11m a year ago.
Business Update
As catch up, in 2019 we decided to create a holding company with the intent to buy one business a year and build a portfolio of companies. As of a year ago, we had three companies in the portfolio, and a team of three (President, Marketing Director, and CFO) along with my wife and I. Here's an update on how things are going...
An Entrepreneurial FATFire Update (One Year Later)
🧵 Twitter
There are many reasons businesses come up for sale. Feels like this should be pinned to my wall…
Good reminder to always be optimizing your pricing strategy…
Great thread on some things to be mindful of when searching for an acquisition…
This is the way…
Vertical integration is a business value multiplier…
🤔 Thoughts, Events, Other
🛠 Tools & Resources
These are tools & resources that I personally use or have used. They may contain affiliate links so I’ll get a few pesos if you sign-up.
Cerebro Capital - Cerebro has a network of 1,500+ lenders who can provide debt financing for your acquisition, refi, etc. $500k minimum.
X5 Deals - Proprietary deal sourcing. They do the outreach and send you relevant, actionable deals directly into your inbox.
Curators - Proprietary deal sourcing. You need targets that fit your investment criteria, and Curators delivers week after week - we even update your personalized database on a daily basis with new information on best-fit targets.
BizNexus - Proprietary deal flow, deal aggregator, and exit prep.
PrivSource - Deal aggregator for lower and middle-market listings.
Calendly - Leading scheduling platform to easily schedule meetings without the back and forth. I’ve been using it for several years now. Free 14-day trial.
ProjectionHub - Access to 50+ CPA-developed financial projection templates. 25% discount using code “duedilio” at checkout.
Logology - Best automated logo & brand identity tool I’ve come across.
DeepBench - Access a cutting-edge expert network. $200 discount.
OpenPhone - The best business phone solution that I have found. $20 credit.
Eloquens - Knowledge marketplace. I’ve bought a few guides and templates here.
Deal Flow Scout - Peer-to-peer deal flow exchange. Free, open, transparent.
Deal Sourcing Guide - A directory I put together of online marketplaces, brokers, DFY deal flow, and more.
That’s all for this issue of What I Learned Last Week!
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Important Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. This newsletter may link to other websites and certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, it has not been independently verified. The Business Inquirer makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. References to any companies, securities, listings, investments, or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any business, tax, or investment decisions. Content in this newsletter speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.