My Business Is the Best Investment I’ve Ever Made | 344

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Transcript

SPEAKER_00 0:00

Welcome back to the Business of Beers Podcast, your daily dose of strategies, tools, and tips to help you build an eight-figure business. Today's episode is a clip from one of my YouTube lives. If you'd like to hear the whole thing, there's a link below in the description. Cheers. Alright.

SPEAKER_01 0:17

Then the next big jump is this like 10 to 20 million dollars in revenue. So now we're we're we're at 20 plus locations, right? You've probably got um you've probably got three or so districts um 3DMs. Like you've definitely got a strong back office. Uh and at this point, you know, your your one of your main functions or really things you're you're thinking about is is like I'm gonna say capital, fancy way, but money. Like it's really you've got a lot of money coming in, right? Hopefully you at this point you've got pretty strong margins. I mean, you're you're you're probably gonna be making a million dollars a year or more. I mean, you should be able to make 10% at minimum in a lot of these businesses. So, you know, you're you're kind of in this this range and you have a lot of big decisions to make, right? Uh, as the owner of like, how are you gonna allocate capital back into the business? Are you gonna continue to build new stores? Are you going to reinvest in the stores you have? Are you going to start trying to buy real estate? Are you going to uh possibly look to sell, right, and get into something completely different? Like, this is the phase that like I think that the money gets way more serious and the decision gets you know way more impactful. And like for for you as the owner, this is really what you're gonna start to think about. And you're gonna think about and and change the way you view the business as a um as like a job to an investment vehicle. So think think think about it like think about it like this. Like if today you said, hey, I got you know a hundred thousand dollars um to like invest, and you decided to put that into the stock stocks, like you would get a 10% return, right? So you maybe would make $10,000 a year cash flow, right? At a certain point, you know, you you put it in the stock market because you believe like it's you know uh passive, it's just gonna grow without you, like it doesn't have anything to do. When you're small and maybe you're doing less than a million dollars in revenue, to put $100,000 back in your business, it it it you have a job, right? You your business is a job at that point. And so it's like it feels really risky for you to go ahead and put a bunch of money back into the business with an unclear path of how you're gonna get it out. And so uh you you're kind of afraid to put money back into the business, and it feels like uh not like an investment at all, but it really feels like like an expense and something that you're not sure. But but once once the business gets to you know this this higher level, you're doing, you know, you're in this 10 to 20 million plus per year, like you've got very good systems, right? You've got you've got great people. You you couldn't to get to this point without really great people in your organization. And you've clearly betted on yourself enough times to get to this point that you know what to do, and you and you and you're gonna be probably okay, right? And so now like you have the ability, or for me at least, this is like the way I see it, that I can put um, I don't know, I just put $200,000 of cash to open up a new store, right? Um doesn't include the real estate, it was it was a vacant building that we were able to go and like renovate and do all these things. You know, I expect that store to produce a hundred and fifty to two hundred thousand dollars a a year return, right? And so from a math perspective, right, that gets me like a 75 to 100% return. So like when I think about like in investing money, I used to think, oh, I'm gonna pull it out, I'll put it in the stock market, I'll buy real estate, I'll get like a you know, 9% return and 10% return, whatever it is. But really, if if you're if you can get your business to the point of having this confidence that you have a money machine, right, that you can put like $200,000 into a new location, and even if you even if you made only a hundred like a hundred thousand dollars back that year, you just got a 50% return on your money, right? Let alone if you put if you put 200 $200,000 in, you can get $200k back and you're at 100% return. So like the the the your entire mindset and and everything changes when you you can truly feel that your business becomes an investment vehicle that you that you control. Like every day you wake up and you decide how this thing's gonna be uh driven and what investments you you're gonna make. And I mean, I've made the mistake of investing into too many other people's deals along the way. This is something this is like one of the biggest mistakes I've made. And like, honestly, like I've lost more money doing this than other like anytime I put money in my own business, I've lost more money putting it into other people's businesses. Like, I mean, I don't know if I want to go down a tangent, but like, you know, I I have I have I have $250,000 in a real estate uh development deal right now in Florida that looks like it went to zero. And it's in it's whatever, foreclosure and and whatever. Lawyers are like digging into it. We have another deal where I had more money than that, that the guy committed, it was a giant Ponzi scheme. And it was somebody I knew and thought I trusted, and whatever. Uh totally gone. He's like in jail right now, and like he he it was like $30 million that he had uh basically wiped, wiped away from from people. And so like all the biggest mistakes that I've made have been putting money into other people's deals versus I think of man, if I took that money and I put it into buying more stores, even if I had to quote overpay for a multiple, like it a, it wouldn't have been lost. I would have had a store that would have been like producing some sound of money, and it has some sort of terminal value to it, or at least it should, right? At some point. So I I would just, I mean, I talk to owners all the time too, and they're they're they're they're they're talking to me about putting money in other things. And it's like instead, I'm like, don't do that, don't do that. Put it back in your business. Figure out what you need to do to make it so it feels like this thing is a money machine. Otherwise, like, I don't know, that the richest people in the world, this is what this is how they do it, right? Uh, I mean, I know guys worth 200 million bucks, like net worth, private jets, all this stuff. Like, I know them like personally. They follow this exact plan. It was reinvesting back into their own business, betting on themselves day after day after day. And that sounds easy. It sounds easy for me to say that. And you may think right now, oh, that sounds like great. Yeah, of course I could do that. But it's like those opportunities when they come to you aren't shiny, right? They're they're turds. Like they're stores that are losing money. There are a group of stores that are making zero dollars of profit, five stores that you could buy for like pennies on the dollar, but they are all losing money. They have no team in place, they have no systems in place, right? And it is gonna cost you maybe, maybe it's whatever, maybe it's $500,000 to get these things going. And you don't have like they're not profitable. Like I bought stores like this, right? This is like many of the stores that I bought of the 36 that I owned, were in very similar conditions to this, where they were turds that we had to polish. Now they're not turds anymore, but um that was the idea though. It's like they were unprofitable, losing money stores that required uh tons and tons of money to be put back into the stores to get them up to the standard they had to be. And so like that's that's really the challenge is these deals that you get aren't aren't great. They aren't shiny, like, or they feel like a great deal, but but they're gonna have a lot of work associated with them. And that's when it comes back to your systems. So like you as the owner and you have to have strong systems. You have to have the ability to be able to go in there and like turn these things around. Otherwise, you aren't gonna trust yourself and you're not gonna do the deal. Even I think about something myself years ago. Uh it was like, let me think, it was 20, I want to say it was 2017. It was like a few years, maybe it was 2018. It was a few years after I kind of like got in and bought my first store, I had an opportunity to to reopen five closed shops in our in our market. And I did I did everything for them. I found them, we got the leases, we got the the the franchise order's approval, we got like uh everything teed up, ready to go. And at the end of the day, I uh I backed out of it. And I was like, I got too like scared that that we just couldn't make money there. Like they were all opening for zero, it require a ton of money of added cash, it would have been pretty much all the money I had at that point, and uh and then all the and and plus debt. And so anyway, I didn't do it. Then another franchisee in the market, um, because it was all teed up, you know, he he basically did it and took it, and you know, those stores are crushing it right now. Like he's doing a great job. And you know, I missed out on that. And that those stores are probably producing uh you know eight million dollars or more of revenue for him today, and and you know, profitable stores and doing well. And anyway, I I think back to that of like that's the kind of deal that I passed on. And maybe I wasn't bet ready back then, maybe they would have wrecked me, maybe you know, maybe everything happens for a reason, right? But uh I I think about that all the time of like, if I just had pulled that trigger, like I don't know, I wouldn't further along. So um just think through that as as you go, right? Think through this like capital allocations and your buy box, and what would it, what would it have to look like.