🏢 Seismic Distribution Biz - $760k/yr

Welcome Back to The Corporate Pivot!

If your boss’s favorite motivational poster is 'Hang in there!' with a sloth, it’s time to climb out of the corporate jungle. The Corporate Pivot will help you swap cheesy office decor for real business ownership. Read on to get advice from real entrepreneurs and explore businesses waiting for you.

Confusing Corporate Saying of the Day:

“We’ve moved to an open desk concept”

Professional Translation: “We wanted to promote collaboration between teams!”
Corporate Pivot Translation: “Nothing says team spirit like fighting over the seat next to the window 🥊”

Here’s what we have for you today:

Sam’s Perspective (1st Time Buyer)

🆕 Status Update: We’re still waiting to hear back from the event rental company via email. Honestly, nothing is worse than dealing with a broker who doesn’t have things automated just to get financials. That’s why our off-market leads will include a blanket NDA, giving buyers instant access to all relevant information without the back-and-forth.

Next weekend, we’re picking up the flowers for the flower rental business, which got me thinking about some of the expenses. We have around 18 centerpieces, a flower arch, and a few additional items like bouquets. For transportation, we’re considering using a U-Haul, which would cost about $150 per trip.

When running a business like this, you need to account for more than just the cost of the flowers. The main recurring expenses will be transportation and insurance—especially liability insurance with the venue. Here’s a rough breakdown:

• U-Haul Transportation: $250 per trip within 100 miles

• Liability Insurance: $500 per year

• Property Insurance for Flowers: $500 per year

• Auto Insurance (for U-Haul use): Potentially $500 per year

• Advertising/Marketing Spend: $500 to $2,000 depending on the season and demand

Revenue Projections:

• Starting out, we can charge around $1,250 per event, which is extremely competitive considering real flowers often cost $6,000+ for weddings.

• As we get more reviews and build our reputation, we can bump that to $1,500-$2,500 per event, depending on the complexity and size of the arrangements.

Now let’s talk big picture:

• Conservative Estimate (10 events per year):

  • Revenue: 10 x $1,250 = $12,500

  • After costs, with U-Haul, insurance, and marketing, you might net around $5,000-$7,000.

• Medium Estimate (20 events per year):

  • Revenue: 20 x $1,750 (average) = $35,000

  • With recurring costs and marketing, net profits could land around $20,000-$25,000.

• Aggressive Estimate (40 events per year):

  • Revenue: 40 x $2,250 (average) = $90,000

  • After expenses, you could be looking at $60,000-$70,000 in profit.

Even with just 10-20 events per year, we’re looking at something that can provide solid supplemental income. And if we push for 40+ events, it could turn into a legitimate full-time venture. The beauty of this model is that once the initial flower investment is made, your recurring costs are mainly transportation, insurance, and marketing. The margins can be pretty strong, especially as we start increasing our rates with more positive feedback and reputation growth.

This could scale easily, and with time, we could even consider expanding our offerings—adding custom arrangements, themed packages, or partnering with venues to become their preferred flower vendor.

We’ll keep tweaking the numbers as we go, but it’s already shaping up to be a profitable little venture.

📚 Cool Business Idea: Crepes in New Orleans

I visited New Orleans this week and, of course, hit all the must-see spots like Bourbon Street and the French Market. As we walked through the market, we saw the usual suspects—vegetable stands, some jewelry here and there—but one spot stood out with a pretty big line. It was a crepe stand.

Now, when I think of crepes, I immediately think of Talladega Nights and Ricky Bobby saying, “a really thin pancake with a mess of jam on it.” But these were different—savory crepes, almost like sandwiches, which I thought was a cool twist. We got a BLT crepe, and here’s where things got interesting: they didn’t list any prices. You know what that means—it’s going to be expensive. But I underestimated just how expensive. It was $18.

Of course, my brain goes into full nerd mode, like it always does, and I’m doing the math in my head. In the 30 minutes we were there, they probably sold about 15 crepes. If they sell around 150 crepes a day on the low end, that’s some serious money. The cost to make one of these crepes had to be around $2-$4 tops. Even if they only sell 50 on a bad day and 150 on a good day, they’re making a solid profit—basically on what’s essentially a deli sandwich wrapped in a crepe.

Sure, they probably have some decent costs to rent the space in the market, but it can’t be that high.

Let’s break down the numbers based on operating 5 days a week (around 260 days a year):

• Low Estimate: Selling 50 crepes a day at $18 each = $900/day. Over 260 days, that’s $234,000/year in revenue.

• Medium Estimate: Selling 100 crepes a day at $18 each = $1,800/day, or $468,000/year.

• High Estimate: Selling 150 crepes a day at $18 each = $2,700/day, or $702,000/year.

With food costs around $2-$4 per crepe, your profit margins could easily be in the 70% range after accounting for overhead and labor. Even on the low end, this business could pull in solid profits if managed well.

The takeaway? If you can find something cheap to make, put a unique spin on it, and sell it in a high-traffic area, you can turn a simple stand into a money-making machine. Who would've thought?

Tyler’s Perspective (Multiple Businesses Owned)

🚨 Tip of the Week: One of the most important aspects to due diligence is getting an understanding of how the “cash flow” or “seller’s discretionary earnings” figures are calculated. On a recent lead I was looking at, the asking multiple seemed reasonable based on the “cash flow,” so I inquired and got some information. Turns out, the net income (which is what we really care about, both for purposes of a future sale, and for going in expectations of time commitments) was significantly lower, and the “seller add-back’s” were sizeable. You might be thinking that anything included in the “seller add-back’s” should either be easily applied to the net income, or assumed/understood going into diligence, but that was not the case (e.g., Seller’s salary was included as an add-back, however, Seller’s role in the business was unclear, so realistically this would need to be an additional manager salary and not included in a net income figure). 

💰 Deals < $500k

Business Name: HVAC Distribution Supplier
Revenue: $1,687,906
Asking Price: $450,000
Profit: $407,585 (Profit Multiple = 1.1)
Location: Las Vegas, NV
Established: N/A

✅ Pros:

• Strong Client Base: Well-established relationships with large homebuilders and contractors.

• Turnkey Operations: Full-time employees and necessary equipment are included, facilitating a smooth transition.

⚠️ Cons:

• Limited Market Expansion: Primarily focused on a local market, reducing opportunities for immediate geographic expansion.

📈 Growth Opportunities:

• E-commerce Expansion: Build on the newly launched retail website to drive additional sales.

• Geographic Expansion: Expand the distribution network to other states or regions.

💰💰 Deals $500k - $2m

Business Name: Accounting Firm
Revenue: $915,000
Asking Price: $999,500
Profit: $505,000 (Profit Multiple = 2.0)
Location: Athens, GA
Established: 1980

✅ Pros:

• High Profit Margin: Exceptional cash flow and profitability.

• Established Reputation: Over four decades of strong community presence and loyal clients.

⚠️ Cons:

• Concentration Risk: Significant revenue comes from a small pool of clients, posing risks if one departs.

📈 Growth Opportunities:

• Business Client Focus: Increase the business clientele to balance revenue streams.

• Service Diversification: Expand into advisory and financial planning services for additional revenue.

💰💰💰Deals $2m-$10m

Business Name: Seismic Product Distributor
Revenue: $3,600,000
Asking Price: $2,200,000
Profit: $760,000 (Profit Multiple = 2.9)
Location: Connecticut
Established: 2004

✅ Pros:

• Rapid Growth: Sales surged 164% between 2023 and 2024, indicating strong demand.

• Niche Market: Specializes in seismic and wind restraint products, with minimal local competition.

⚠️ Cons:

• Specialized Expertise Required: Buyers will need familiarity with seismic regulations and restraint systems.

📈 Growth Opportunities:

• National Expansion: The business model could be scaled nationwide, leveraging building codes in all states.

• New Market Penetration: Opportunity to expand into foreign markets following international building code standards.

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

The Lean Startup: Ch. 9 Part 1

Happy Monday and the start of Chapter 9 and we are going to talk about batch sizes, specifically how smaller batch sizes can be more efficient. You know what they say, size doesn’t matter, it’s what’s in your heart that does. 

Eric talks about an example from a book called Lean Thinking, by James Womack and Daniel Jones, and no not that famously under performing QB for the New York GIANTS. They talk about stuffing newsletters into envelopes with the assistance of their 2 young children. They decided to compete against their kids, as any sane father would, to see who could finish the envelopes first. James and Daniel decided to do one envelope at a time, their kids decided to be “more efficient” and do each step repeatedly and then move to the next (i.e fold all the papers in step one, put each paper in each envelope step two, put all the stamps in step three). 

Who do you think finished first? It was James and Daniel, and no it’s not because they are grown men competing against small children. The one envelope at a time approach is a faster way of getting the job done even though it seems inefficient. This approach is called “single-piece flow” in lean manufacturing, it works because of the surprising power of small batches. When we do work that proceeds in stages, a “batch size” refers to how much work moves from one stage to the  next at a time. The envelope example has a batch size of 1, hence being called a single-piece flow.

“It seems more efficient to repeat the same task over and over, in part because we expect that we will get better at this simple task the more we do. Ultimately, in process-oriented work like this, individual performance is not nearly as important as the overall performance of the system.”

Even if the amount of time spent on each process was exactly the same, the small batch production method would be superior. Can you guess why? Limited rework is required, with small batches, if there are any mistakes, the cost of fixing those mistakes is far lower than if you do large batches and have to scrap a bunch of product because the mistake was only identified after you were onto the next step of production. 

The Lean Manufacturers discovered the benefits to small batches decades ago in Post-WW2 Japan… with you guessed it TOYOTA. They couldn’t compete with the huge American factories that used the latest mass production techniques. Those factories used ever-larger batch sizes, by running at peak speed, they could drive the cost per unit down. Toyota took a different approach, opposed to using large specific machines, they would use smaller general purpose machines that could produce a wide variety of parts in small batches. By focusing on “changeover time,” Toyota was able to produce entire automobiles by using small batches through the process. Their changeover time went from hours to less than ten minutes! By using smaller batches Toyota was able to produce a much greater diversity of products, seave smaller, more fragmented markets, & identify quality problems much sooner.

“Toyota discovered that small batches made their factories more efficient. In contrast, in the Lean Startup the goal is not to produce more stuff efficiently. It is to – as quickly as possible – learn how to build a sustainable business.”

Read more at corppivot.com!

Hope you enjoy this week's insights and happy deal hunting! Remember, if you find these updates helpful, share this newsletter with a friend!

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