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Welcome to another episode (what’s the newsletter version of episode??) of Ally’s Newsletter where we talk about a lot about creativity, non-consensus ideas, learning, and thinking critically.

This is an exploratory and creative space that I’ve carved out for myself to write for the sake of creating (rather than solely consuming) and to facilitate deeper thinking.

I’m deeply grateful that you’ve joined me for the ride - kind of cool to have internet frens that I haven’t met before reading my innermost thoughts - and hope that I am also adding value to you in some way by sharing these posts.

So far we’ve talked about a lot of topics: IRL community-building in a digital world, learning in a durable manner when everything is changing, sick music videos, a secret superfruit that turns out to be a total gut health hack, psychedelic guides, and more.

We’ve covered a lot, and now we’re about to add a totally different topic to the list - small business acquisition.

Buckle up buttercup.

An alternative path to financial freedom

We’ve all heard that 90% of startups fail - it’s not true.

Only 80% fail after the first year, per the Small Business Administration (SBA).

 🫠 

So if 80% of startups fail within just a year, what if I just cut the line and bought a business that’s already been around for a few years?

This is the topic that I’ve been obsessed with lately, because I want to own my own financial freedom and not rely on an employer to see my value and translate that into a salary.

Numbers numbers numbers

1. Baby boomers own 47% of all the businesses out there today (source and source).

2. Roughly 10,000 baby boomers are retiring each day.

3. By 2045, it’s estimated that there will be a $72.6 trillion dollar transfer of wealth from boomers to non-boomers (me & you, probably).

y u no buy real estate?

1. Because the profit margins are very slim. Slimmer than buying the businesses I’m seeing, at least.

2. Because you need a lot of capital to buy a darn property these days. I can’t buy a house for $200,000 but I can buy a business.

What does it take to do this?

This is what I’m researching heavily.

In essence, the type of work needed can be roughly split into three parts: figuring out what kind of business is right for you, buying the business, and growing the business.

The last piece has a long tail end, and it’s the piece that everyone omits.

I see so much clickbait influencer content on this and they make it seem so easy - just figure out how to finance a deal and you’ll have passive income!

While I do buy into this to a certain degree, it’s still owning a whole business at the end of the day.

Example: Let’s say you successfully buy a laundromat (which is a lot of work by itself). You need to understand your competitors, your customers, the changing business landscape, billing, finances, any relevant regulations, hiring, growth, how AI is impacting your industry, etc.

There are many pros and cons to be weighed for sure, and this is something that I think is really interesting. While owning a business is a lot of responsibility, it can also lead to a very high potential upside. Instead of being reliant on trading your time for money, you can own a business where you can automate yourself out of the process and still have it cash flowing. Then, you can use the profit from that business to fund your next one.

I also love the flexibility in how you can structure your life as an owner:

SMB acquirers typically fall into two buckets: owner-manager or owner-investor. I plan to be the latter, because I don’t intend on managing the day-to-day of the business. Owner-investors still need to figure out what value they’ll add to the business in order to grow it, and the difficulty of this greatly varies depending on what type of business you buy.

If you have already acquired a business or know someone who has, please reach out to [email protected]. I’m actively talking to people who’ve already done this before and talking to lawyers and accountants who specialize in SMB acquisitions.

I’ll keep you updated on what I learn and how the process goes.

Photo of the day

also this

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You are the literal best.

Until next time,

✨