It’s interesting, one of the major obstacles apparently standing between many people that I talk to and a few million dollars is the want of a ‘killer business idea’ … or, even ANY reasonable business idea.
But, that problem magically disappears when you wake up one day to find a spare few million in your bank account … people-with-ideas seem to just spring out of the woodwork.
You know how you can never seem to find a cab when you need one? 😉
Well, it’s been nearly a year since I’ve found myself with both a lot of spare change and nothing of substance to occupy me during the daylight hours …
… a little less than one year and I have:
– Three blogs,
– Three Web 2.0 internet businesses under various stages of development
– A Fourth one under negotiation to buy into
– And, just yesterday a new business opportunity was presented to me.
This last one is interesting because it is a ‘bricks and mortar’ business (with an internet sales site as an adjunct):
It’s interesting because a friend of mine is the finance director and has spent the last two years of our time together complaining about the excesses of his boss, the entrepreneur/owner/founder …
… without giving away too much, the guy developed a business around an innovative niche product with a strong brand name that was even featured on Oprah (as one of her ‘favorite products’), resulting in a business generating $2 million to $3 million profit per year in the USA and overseas.
Yet, through excess (taking all the profits out of the business), divorce, and mismanagement this company is now barely breaking even in the face of declining sales. From what I can see, even though the product is no longer unique, the reason for the sales drop is the management of the company rather than product or market issues.
So, I have an indication that the owner of the business will sell for:
– $400k up front cash, plus
– $350k to pay off a personal loan, plus
– $150k to $200k per year for the next four year (sort of a ‘deferred payment’).
By my reckoning, this is $1.55 million …
Now, here is where it gets interesting:
– The business has an excess of money owed to it (accounts receivable) LESS amount owed by it (accounts payable) of about $200k, and
– Inventory worth $800k+
Provided that the receivables can be collected (my friend, the CFO assures me that it can) and that the inventory can be sold close to book value (he assures me it can), I am essentially buying the ‘goodwill’ of the brand-name + suppliers in place + distribution network in place + staff in place for a globally recognized niche brand for a little over $500,000.00
So, there’s two ways to look at this:
– A brand in decline, so the owner is selling out while he can still salvage some value, or
– A ‘vulture’ opportunity to buy a no-worse-than-break-even business + established international brand (endorsed by Oprah, no less!) for only $500k.
What to do? What to do? Hmmmmm ….
I’d love to hear your ideas!