9 Trillion Gallons of Water (And How Buying A Business Provides Shelter From The Storm)

The World Meteorological Organization has a list of names for hurricanes that rotate every six years.  I guess this is so that the people in charge can spend their time preparing instead of arguing over semantics.  In 2017, Harvey was next up on the naming list.  The category 4 hurricane wrecked Louisiana and Texas.  It dumped 9 trillion gallons of water onto the earth.  Yes, you read that correctly.  It was a disaster.

There is a saying that every cloud has a silver lining and there is one very cool story that emerged out of the chaos.  A young couple was stranded in their home like a ton of other people that day.  Annie and Greg Smith were more concerned than most, however, because they were expecting a baby soon.  Very soon.  In fact, Annie went into labor during the storm.  The Smiths did not know what to do and started to prepare for a home birth.

Thankfully, a friend checked in on them and found out what was happening.  The rest of the neighborhood quickly got involved, creating a human chain that helped Annie get to a working vehicle.  She got to the hospital safely.  Tragedy was avoided because the Smiths had a strong network of friends surrounding them.  You can’t predict when a storm will come, but you can take steps like strengthening your ties with your neighbors to prepare in advance.  

The same is true for business.  It is always better to prepare in advance for trouble.

The Financial Storm Is Already Here

It doesn’t matter which side of the aisle is in power, the government will always say “Everything is fine.”  The economic types require that certain things have to happen before they will say the “R” word (Recession).  The financial advisors only care about the stock market.  If it is up, that means things are great!  The reality is, that the only thing that really matters is how people feel about the future.  That is what really influences economic behavior.  Under that lens, things are not looking good.

There is a lot of anxiety out there right now.  It is as if people are waiting for “something” to happen, even though nobody really knows what that “something” is.  On top of that, people know that inflation is making everything more expensive.  Whatever the pundits are saying, most people think that the economy is at best super wobbly.  There is no time to wait.  The time to prepare a shelter is now.

Boring Boomer Businesses = Shelter

A ton of people are retiring right now and are being forced to close their doors because they can’t find buyers for their businesses.  This is something I have been talking about for quite some time now, so you probably already know this.  But do you know why boomer businesses are so attractive to acquire?  It is because so many of them fit perfectly into my MRR model:  Moat, Recurring, Recession Resistant.  If you can find the right one for your portfolio, you don’t have to worry very much about what the economy is doing.

A big reason for why Boomer businesses fit the model is because they were generally started before the world flattened out with the internet.  Just like the United States is protected by two big oceans, Boomer businesses are shielded by the fact that they usually center around servicing a geographic area.  

Unlike Wi-Fi money, where you are competing with literally the entire world, geographic-centered businesses such as waste management, remediation, and auto repair only have to worry about local competitors.  Given that Boomer businesses have been around for a long time, they are entrenched in the local markets and have survived multiple downturns.  They have proven to be recession-resistant historically and are a strong hedge against volatility.  You don’t have to guess how they will handle hard times because most boring Boomer businesses have already done it at least once.

You Build A Shelter One Step At A Time

Whenever I begin the process to buy a business I take a deep breath and remind myself to be humble.  Even though I have a ton of experience, there is always something new to learn.  The environment I’m working in constantly changes.  This means that new patterns have emerged, economic conditions are different, and new funding options may have arisen.  This is why step one of the process of adding to my financial shelter by buying a business is to survey the “deal landscape”.

 The first time you try to do this, it can be a bit intimidating.  Just like anything else, the more you do it the easier it gets.  To help you start to get your arms around the process I have put together a video with the exact steps I use to acquire a business.  I break down some of the jargon like SDE, FFE, and EBITDA you will need to know when evaluating a deal.  You can watch it here: 

Not everybody has to deal with 9 trillion gallons of water, but we all must deal with the financial storms when they come.  Owning a boring business is a great way to begin to build a shelter that will help protect you from uncertainty.  The time to start building is now.

Have a great rest of your week!

 As always, if you want to compress time frames and have me coach you on every part of the process, book a time to chat with me here: Calendar

Ben, I Want to learn more…

If you feel that you are constantly working "in" the business instead of "on" the business and feel that your goal of financial freedom has led you to a prison of your own design.

You are not alone, I used to be there as well.

I have 5 companies and counting and work less than 20 hours a week on them - COMBINED.

It is not rocket science and I can help you do the same for your business.

Choose a time on my Calendar and we will get to it.

Onward,

Ben

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