🆕 Yacht Cleaning Business Making $193k🛳

What's Going On!

Another week down, another week closer to buying a business. Do you constantly find yourself looking into higher-paying jobs or strategizing how to climb the corporate ladder faster? You're willing to put in the work, but quickly realize there has to be a faster way to reclaim your time. That's where we come in. We're here to open up the world of buying businesses as the ultimate escape route.

We're talking to you, high achievers—the ones who will excel at anything you put your mind to. Join us on the journey to escaping the 9-5 grind and reaping the rewards of your hard work. Let's make the corporate pivot together and turn your ambitions into reality.

Here’s what we have for you today:

Sam’s Perspective (1st Time Buyer)

🆕 Status Update: Growth Phase.

The Corporate Pivot website is up and running, and so is our Discord community. Our newsletters are here for you every Monday and Thursday at 9am. We also have an Instagram and will be reaching out to those interested in reclaiming their time. Please share this newsletter with anyone who might find the content useful. Help us help you, a true handshake agreement.

SIDE NOTE: Tyler and I are on the verge of finding the first business that fits our metrics. Having someone to hold you accountable is extremely important. I highly recommend surrounding yourself with others who share the same mindset and goals. If you're reading this and hanging out with us, then you're already on the right path!

📚 Lessons Learned: Understanding DSCR (Debt Service Coverage Ratio)

When you’re in the process of buying a business, understanding the financial metrics that lenders use to evaluate loan applications is crucial. One of the key metrics is the Debt Service Coverage Ratio (DSCR).

DSCR is a financial ratio that measures a company’s ability to service its debt with its operating income. It is calculated by dividing the business’s net operating income (NOI) by its total debt service (including principal and interest payments). For example, if a business has a net operating income of $100,000 and its annual debt service is $80,000, the DSCR would be 1.25. A DSCR of 1.25 means that the business generates 25% more income than is required to cover its debt payments.

Lenders use DSCR to assess the risk of lending money to a business. A higher DSCR indicates that the business has a stronger ability to cover its debt obligations, making it a safer bet for lenders. Generally, a DSCR of 1.2 or higher is considered acceptable, but this can vary depending on the lender and industry. It’s like impressing your gym trainer with those extra reps – they know you can handle more.

Understanding DSCR can help you evaluate whether a business is financially stable and capable of handling its debt. It also prepares you to meet lender requirements when applying for a business loan. To make this easier, check out our Business Buyer Calculator. This tool will help you quickly calculate the DSCR for any business you’re considering, allowing you to make more informed decisions and improve your chances of securing financing.

Think of DSCR as your financial health check-up for a business. Just like a doctor checks your vital signs to ensure you’re in good health, calculating the DSCR helps you ensure the business can handle its debt and remain financially healthy. After all, nobody wants to buy a business that’s one hiccup away from a financial heart attack.

Tyler’s Perspective (Multiple Businesses Owned)

🚨 Tip of the Week: Analysis paralysis is real. Once you’ve narrowed down the industries you are interested in, you of course will need to do your due diligence. But digging into deals for too long (and possibly looking for problems that aren’t all that material) is a slippery slope. I’ve found that having mentors and trusted advisors that I can discuss deals with (after I’ve done my part and ran due diligence) is paramount to give you the added confidence to move forward with a deal. 

💰 Deals < $500k

Business Name: Yacht Services
Revenue: $414,208
Asking Price: $395,000
Profit: $193,112 (Profit Multiple = 2.04)
Location: Martin County, FL (Relocatable)
Established: 1997

✅ Pros

• Flexible Work Hours: Owner only works 20-25 hours per week.

• Regular Clientele: 75% of business is regular boat washing.

⚠️ Cons

• Seasonal Fluctuations: Service demand varies throughout the year.

📈 Growth Opportunities

• Expand Services: Introduce new maintenance and detailing services.

• Increase Client Base: Target additional boat owners and expand service area.

💰💰 Deals $500k - $2m

Business Name: Snow Removal and Asphalt Maintenance Company
Revenue: $434,274
Asking Price: $675,000
Profit: $685,000 (Profit Multiple = 0.98)
Location: Matanuska-Susitna, Alaska
Established: N/A

✅ Pros

• Strong Reputation: Known for quality and timely service.

• Commercial Contracts: Stable income from contracted clients.

⚠️ Cons

• Seasonal Business: Primarily operates during winter months.

📈 Growth Opportunities

• Expand Service Area: Increase geographical coverage for snow removal.

• Add New Services: Introduce additional asphalt maintenance services.

💰💰💰Deals $2m-$10m

Business Name: Custom Cabinetry Manufacturing and Installation
Revenue: $3,420,617
Asking Price: $2,000,000
Profit: $1,112,178 (Profit Multiple = 1.80)
Location: Riverside County, California
Established: 2008

✅ Pros

• High Margins: Best quality machinery and expert staff boost profits.

• Growing Sales: Rapidly increasing sales volume.

⚠️ Cons

• Licensing Required: Needs Contractor C-6 or B license.

📈 Growth Opportunities

• Expand Production: Increase manufacturing capacity to meet growing demand.

• Market Expansion: Target new markets within and beyond Coachella Valley.

The Lean Startup: Ch. 3 Part 3

Three parts?!? Can you believe it? That's how long this chapter is, or how slow of a reader I am… but at least I can read! We will be going through the launch of their product, their interactions with customers and ultimately the strategy pivot of IMVU.

If you are anything like me (or Eric) you would preserve that their strategy for an add-on to an IM service was a great strategy. Why would you want to introduce pain into the consumer to have to download and add a new IM network… well, you are wrong. Eric spoke about the biggest fear of building something nobody wanted, when IMVU launched nothing happened. Their fears weren’t realized because nobody used the product! 

“... our value proposition was so far off that customers weren’t getting far enough into the experience to find out how bad our design choices were.”

Customers weren’t even downloading their product.

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!

Looking to sell your business?