How To Become a Profitable Entrepreneur The Smart Way:
Our Favorite Strategy for Avoiding the Risk of a Startup, and Purchasing an
Instantly Profitable Business with Little to No Money Out of Your Pocket.
Our “6-Year Millionaire” Strategy Example (Video and Text below) Will Teach You The Exact 3 Steps That Thousands Of Entrepreneurs Have Used To Become Successful And Profitable Business Owners.
We are going to dive deeper into the details of this strategy and more! Got questions? We’ll also answer all of them in our upcoming FREE Workshops. Click below to join
If you prefer text instead of video, or need further instructions,
then continue reading below.
Locate a business for sale with a motivated seller and consistent cash flow of $200,000 per year after management’s wages are paid.
This can be just about any business type including:
- Independent or franchise business
- Fast food restaurant
- Distribution company
- Manufacturing plant
- Service provider
- And more….
You will buy this company for a multiple of 3 to 5 times the cash flow
- This means you multiply the annual cash flow of the business by somewhere between 3 and 5, and this is the price you should purchase the business at.
- This would make the purchase price between $600,000 and $1,000,000
- Note: We’ll use $800,000 as an example to be safe, but keep in mind that you could get it for even less.
- You should be able to obtain Small Business Administration (SBA) guaranteed loan in the amount of 75% of the purchase price.
- A good bank will also give you an additional SBA Express Line of Credit of $50,000 – $100,000 for working capital.
- The remainder will be financed by the seller in the form of a promissory note
Cash Flow during Seller Note (1st 3 Years)
Cash Flow after Seller Note is paid off
Please note that in a company of that size you should also be inheriting a management salary in the range of $70,000 – $150,000 per year
So you do not need to rely only on the excess cash of the business to live on
How does that become 1 Million Dollars?
Remember…it’s not magic. It’s Math
- You simply manage the business, as well as the seller did in the past
- The business continues to provide $200,000 in cash flow
- You make your financing payments with cash to spare
- When you have paid off the seller note, you can choose to use that excess cash to accelerate your bank payments on the SBA loan and have it paid off in less than 6 years, or ride it out and have it paid of in 7 years.
- You will then own the business free and clear and have a net worth of ONE MILLION DOLLARS
- You can sell the business for one million dollars (cash flow of $200,000 times a multiple of 5 = $1,000,000)
- Or you can keep it, hire someone to run it, and relax with the annual profits as distributions
What happens if the business grows even just slightly?
- If over those six years, you are able to increase the revenues and the cash flow of the business by only 4% to 5% per year
- The business will now have a cash flow of $250,000 to $280,000
- Using the same multiple as we used previously, the value of the business is now $1,250,000 or more ($250,000 x 5 = $1,250,000)
Again, you have the option of . . .
- Selling your business for a large amount of cash
- Keep the business, hire a good manager and continue to collect a very nice paycheck each week for simply overseeing management and monitoring critical numbers
Personal Income Example
- Management Salary
- $100,000 per Year
- Excess cash in the business
- Subtract funds needed for working capital, expansion….etc
- Available cash for additional “bonus” distribution to owner
- Total Income to Owner: $120,000 per year
WHILE ALSO PAYING DOWN THE DEBT AND INCREASING NET WORTH!
This is a tried and true model at the Institute for Business Acquisitions.
Our founder has been following this exact strategy for over 30 years to accumulate a very significant net worth, while having plenty of time to enjoy life along the way.
Best of all, you can do this with very little cash out of your pocket!
This may sound far-fetched, but deals like this are accomplished everyday
You simply need the skills, know-how and desire!
If you consider 1 Million “rich”, then this process is absolutely a “How to Get Rich” strategy, but it is not necessarily a “Get Rich Quick” process. I consider it a “Get Rich Safe, Get Rich Smart” strategy.
If this interests you, and you think you have the skills and experience to manage a business, but still have some questions… click the link below on this page to join one of our FREE workshops, where we dive deeper into the strategy and answer all of your questions.
Thank You and Enjoy!
Did you know that only 2% of Americans are financially secure at age 65? That’s right, 98% of the people will be dependent on the government or their families to live out their retirement years. One third of all American families have zero money set aside for retirement.
We want you to be a part of the 2% who have a financially secure future. I hope the information above has been helpful.
We hope to see you at the Workshop
If you have any questions