🔧 Oil Change Business with Loyal Clientele Making $184k/yr!

Here’s what we have for you today:

Cool Business Idea: 

🚐 Mobile Dog Running

Confusing Corporate Sayings:

“Move the needle”

Professional Translation
“Make a real improvement or to achieve a clear result.“

Corporate Pivot Translation
“Change your email sign off from Thanks to Best Regards, that’ll probably do“

Sam’s Perspective (1st Time Buyer)

🆕 Status Update: We had some time this weekend to unpack all of the flower materials for “Simply Silk Flower Rentals” and our friend that gave us all the materials really did a great job. There are about 20 centerpieces, 3 flower walls, a flower arch and other wedding stuff. Just to put it in perspective, our real flower quote for 10 tables at our wedding was $7000 and the rentals go for about $1200-$1500. Call me crazy, but $7k for flowers is a little nuts. We are taking professional pictures of the flowers, starting a website, and will then try to go after small venues, event spaces, and other online marketing to see if we can get the first bite. Then we are off to the races.

Tyler and I should have a call with the owner of a pest control business sometime this week and I can report out what we learn. Fully absentee owner, which is a good sign and the numbers are really solid. It is out of state for us though so that might present some challenges, but hopefully we can talk through it to mitigate some risk.

Tyler’s Perspective (Experienced Buyer)

🚨 Tip of the Week: It’s natural to ride the rollercoaster that comes with the process of buying a small business. I’m certainly guilty of it no matter how hard I try not to. This week was certainly a low part of the ride, as we learned that a promising lead (a brick and mortar franchise) we were interested in was not feasible due to requirements from the franchisor. The franchisor required an owner-operator, which is not something we are looking to do. The franchisor also didn’t allow bank financing and had a transfer fee (that, as I was told,“always is paid by the buyer”). As a general principle, I’ve heard that franchises are lucrative, but I believe we will run into this same issue with a majority of franchises. There may be opportunities for minority investments in franchises in the future, but for now, it’s on to the next one. 

💰 Deals < $500k 💰

Business Name: Oil Change Service Business
Revenue: $552,851
Asking Price: $495,000
Profit: $184,104 (Profit Margin = 33.3%)
Location: Broward County, Florida
Established: 1999

✅ Pros:

• Strong Client Base: This business has a loyal customer base, ensuring consistent revenue.

• Established Reputation: Known for high-quality service, attracting repeat business.

⚠️ Cons:

• Limited Service Offering: Currently only offers oil changes, which restricts customer options.

📈 Growth Opportunities:

• Expand Service Range: Adding services like brake and tire repairs could increase revenue.

• Local Partnerships: Form partnerships with local car dealerships for referral business.

💰💰 Deals $500k - $2m 💰💰

Business Name: Cleaning and Maintenance Franchise
Revenue: $886,000
Asking Price: $595,000
Profit: $240,000 (Profit Margin = 27.1%)
Location: Albany, GA
Established: 2011

✅ Pros:

• Recurring Revenue Model: Over 1,000 repeat customers ensure steady income.

• Reputable Brand: High customer satisfaction with a 4.5 Google rating.

⚠️ Cons:

• Franchise Limitations: Requires adherence to franchisor’s system and guidelines.

📈 Growth Opportunities:

• Expand Service Area: Increase market presence in outlying regions.

• Seasonal Services: Add seasonal services to diversify offerings and attract new customers.

💰💰💰 Deals $2m-$10m 💰💰💰

Business Name: Mobile Dumpster Compacting & Waste Management Franchise
Revenue: $2.83M
Asking Price: $3,915,000
Profit: $921,000 (Profit Margin = 32.5%)
Location: Texas and Oklahoma territories
Established: 2020

✅ Pros:

• High Recurring Revenue: Over 91% of revenue is recurring, providing financial stability.

• Unique Market Niche: Operates in an underserved market, reducing competition.

⚠️ Cons:

• High Initial Investment: Significant upfront cost could limit buyer pool.

📈 Growth Opportunities:

• Expand Territory Services: Opportunity to add more territories and services.

• Customer Education: Increase customer awareness about cost and environmental savings.

**If today is your first day reading, go to Chapter Recaps to get up to speed!

The Lean Startup: Ch. 10 Part 1

Welcome back, I hope your weekend was as eventful as mine! Raise your hand  if you woke up at 4 am, realized there was a time change, see it’s actually 3 am and then didn’t get to go back to sleep.

Today we are going to start our discussion on Growing and 2 of the 3 engines of growth. Eric discussed 2 startups that reached out for help. 

1. A business developing a marketplace to help traders of collectibles connect with one another.

2. A business that sells data software to enterprise customers.

How are these two businesses even remotely comparable you may ask… neither company was growing. Both of their early growth had flatlined and they couldn’t understand why! They were both utilizing the same engineer of growth.

The engine of growth is the mechanism that startups use to achieve sustainable growth. Sustainable growth is characterized by one simple rule:

“New customers come from the actions of past customers.”

There are 4 main ways past customers drive sustainable growth:

1. Word of Mouth 

2. As a side effect of product usage 

3. Through funded advertising 

4. Through repeat purchase or use

These are the sources of sustainable growth power feedback loops that Eric has termed engines of growth. The faster the loop turns, the faster the company grows.

Engines of growth are designed to give startups a relatively small set of metrics in which to focus their energies. Startups don’t starve, they drown. The engines of growth framework helps them stay focused on the metrics that matter.

The Sticky engine of growth, and no I’m not talking about the 100s of pieces of gum you stuck under your desk in middle school. But you know what they say, one man’s trash is another man’s treasure, and that treasure was minty… the sticky engine of growth depends on high customer retention rates. The companies using this engine of growth must track their attrition rate very carefully. If you get more customers than you lose your product will grow (duh). The focus of this type of engine of growth should be improving customer retention, over the idea of investing more into sales and marketing.

The Viral engine of growth uses customers to do the lion’s share of marketing. They depend on person-to-person transmission as necessary consequences of normal product use. The feedback loop can be quantified by using math (Yay!), specifically something called a viral coefficient. The higher the coefficient the faster the product will spread. The viral engine must focus on increasing the viral coefficient more than anything else! For companies that actively use money to fuel their expansion, their engine of growth is much different… come back on Thursday to find the last engine of growth discussed!

Read more at corppivot.com!