Welcome to the 537 new contrarians, and generally cantankerous hominoids who signed up since last week! Excited to have you challenge the status quo with us.
When asked what a recession was, Jamie Dimon responded, “Something that happens every 5-7 years.”
The world around us today feels about exactly opposite to a predictable event.
And yet, we had to know something was coming. An 11 year bull market doesn’t just continue forever. At some point, those cocaine-fueled Robinhood trade parties have to end as the lights flicker back on. Did we expect a world that feels more like a B-list apocalypse movie? I sure didn’t. However, it’s “different this time” is an excuse for many to sit on the sidelines—but not those with eyes to see. This is what you should be paying close attention to, not the newest political firestorm or the next “you should be upset about this or unfollow me” social media post.
More than 60% of businesses closed during the Pandemic have closed forever.
This is a tragedy.
But it is also an opportunity. Look, really look, at what is happening around us and I think you’ll see too.
72,842 of the businesses on Yelp’s platform have permanently closed as of July 10, 2020.
That includes 15,770 restaurants, 12,454 retail businesses, 4,897 in beauty, 2,429 in the bars and nightlife sectors, and 1,930 in the fitness industry.
I like to look at micro-data trends as news sources, as I just can’t get enough of two older white dudes going at each other and missing the world around us entirely. Thus, as we are hanging out in San Diego for a bit, I googled a few areas nearby and saw the same phenomenon. In nearby Chula Vista, 60% of businesses have closed forever.
Even sports (our national pastime) are down across the board, check this out:
- US Open (golf) final round: down 56%
- US Open (tennis) was down 45% and French Open tennis down 57%
- Kentucky Derby: down 43%
- Indy 500: down 32%
- Through five weeks, NFL viewership is down approximately 10%
- NHL Playoffs were down 39% (the Stanley Cup was down 61%).
- NBA finals were down 45%. NBA reddit fan community down 50%.
While I’ve always thought sports were largely the new Roman “panem et circuses,” wherever there’s a trend, there’s an opportunity.
The part that kills me is the lack of common sense applied to the shut downs and what they are doing to in-person businesses. I mean honestly, I was at a restaurant the other night (mask on) and when we got to our tables we weren’t allowed to take them off until we were delivered our “mask receptacle.” Sounds fancy. Oh contraire, it was a paper envelope. So we took our masks off and put them in an envelope? I mean WTF is a paper envelope going to do to prevent Covid is beyond me and ya know, scientists. But whatever.
The point is, we are on a mission here. To question ludicrous things even when it’s not comfortable, and maybe especially when it’s not. I am on a mission to financial freedom and to help our nation’s most important employer and freedom enabler—small businesses.
Think about all these businesses closed, ended, with no transference of their assets. Inside of every business closed there is SOME value. From the machines, to the customer list, to the site, to the signs, to the website… I could go on.
Surprisingly, the majority of small business owners simply shutdown, without selling.
They are beaten down and tired. They have just lost their business baby. They don’t know how to sell and buyers don’t know how or what to buy. Most people would never consider themselves rich enough or in the know enough to buy a business.
But what if you can come in and give them an out, give them some cash, or take care of some of their customers in their time of need?
And what if it is easier than you imagine?
IDEA IN ACTION:
I just got off the phone with a member of Unconventional Acquisitions, who owns a gym. She’s a badass, she’s a minority, she started her business as a side hustle and turned it into multiple locations. She has ALWAYS grown organically. No money raised. No investors. She’s gritty.
Any who, we were talking about how sad it is about all the businesses and her fellow gym owners closing and I was like GIRL – you need to be helping them. She said understandably and probably a little annoyed, as a full time entrepreneur trying to survive, “I have, I’ve bought equipment from them and been there for them.”
To which I replied, “You are missing the boat entirely. The opportunity is in helping them sell by you buying them.” So we hatched up a plan.
More than 7,000 small businesses on Yelp have gone under. Were those businesses worth zero? No. They have client lists, employees, assets, some sales etc. They had value. Just not enough for their owners to keep executing.
But what if you come in fresh, no debt, no overhead, or even with another business and you cross pollinate?
Here’s what I talked through with our gym owner, what she’s executing on, and how you should be doing it too.
Buy a Pandemic Closed Business for $0
Customer Acquisition for $0:
- First, reach out to all of the owners of the businesses in your sector who have closed or are closing.
- Tell them you want to help them recoup some of their costs.
- Why don’t they do a deal where you give the owner 50% of all the revenue from the client, they transfer over to your business for 6 months or even a year of them being a member. (Look at your individual COGS to figure out what you could afford here).
- You could even structure this as a % payout over a multi-year period based on future sales so they have an income for a few years and you get to defer payment.
- Bring in the closed owner to your studio/business to do a final farewell class/evening, or a week of classes and handhold their clients over.
- Help the owner draft up an email/social/marketing etc for all their clients to explain how they didn’t want to leave them without a home, so they found them one.
- Give the owner a lifetime membership to come to your business, welcome them to the family.
- Create an email and marketing sequence that drips on the new customers for a few weeks to close them.
What we just did is acquire all of this business’s customers for nothing. We gave them a home. We gave the dejected owner a win. Hell the owner could even say they sold their business instead of closed it. Those ego blows help.
If you own a business and you aren’t doing this, you are missing thousands, hundreds of thousands, or millions in revenue.
If you don’t own a business, why not be the middle man? Help business owners do these deals and take a percentage
**I wanted to apply this for someone who had no business.**
So I had a UA’er reach out to a local restaurant owner who was going out of business. We asked if they would send their client email list a final goodbye email with a discount code that was good for a year at a restaurant nearby we loved that was staying open. Anytime their clients bought with that code for 25% off, the old owner made some money, and the clients were taken care of. That restaurant owner had a list of 15k clients, he made $2250 in 2 weeks following him sending that code out. Our UA’er has now made $1k off off that email sent, and continues to make $100+ a week from that affiliate code. As for the new restaurant owner – that client list he essentially bought into for $0 has netted him more than $20k. Once he realized that this strategy would be useful, he switched his list over to being a recommendation email list with the “best of” picks by the owner. So that is almost $23k from a business that previously was going to evaporate with $0 worth. The email was very moving, hearing an entrepreneurs story of closing moves us, and it moved their customers to the tune of $20k.
The next idea is a tried and true staple in Silicon Valley, buy a business not for the business but for its employees. This is typically NEVER done in “blue collar” or brick and mortar businesses. And yet, there’s a way to do it that can help transfer over more of what you really want: revenue.
What we did:
Employee Transfer: “Acqui-hire”
- Do the same process with employees of the other gym owners/your sector biz.
- Ask the owner to help with transferring their best employees or contractors AND THEIR ROLODEX OF CLIENTS.
- You give the owner and the employee a % rev share of profits for any of their clients that come over.
- You give them off hours that you currently don’t have filled to do their classes.
- You bring them in to co-teach a class with one of your other instructors.
- By acquiring employees through revenue or profit share you are growing inorganically with ZERO dollars out of pocket.
- Those who don’t work out to offset their costs you don’t keep.
Contrarian crew, if you run a business and you aren’t out there trying to buy up your competitors closing, YOU ARE MISSING A HUGE OPPORTUNITY.
And sadly, so are the closing businesses and their employees, clients and vendors.
GYMS, FINANCIAL ADVISORS, RESTAURANTS, CPG… any business should be doing this. So go get it done. Before someone else does.
If you need help thinking through how to apply this to your business, I’ll help you ideate. I’m on a mission here to create 100,000 small business owners. I hope you become one of them.
IN THAT VEIN: If you want to join Unconventional Acquisitions, learn how to buy businesses creatively like this, without having to be a millionaire, I have a 35% off code that is good for 1 week just for Contrarians. Click here and use code Contrarian35.
Question Everything & Stack Revenue Streams,
Codie
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