Hey Biz-Buyers,

Welcome to this week’s Boring Business Brief, where we share some of the best insights, tips, and stories from our private biz-buying community.

Before we dive in… It’s a volatile market out there, and 2024 recessionary talk is unfortunately simmering. For those curious about securing their future by taking ownership through business acquisition (or just seeing how buying a cash-flowing biz works in the first place) — next week, Codie is hosting a free, live Masterclass where she’ll break it down.

If you want a taste of what our members are learning on their path to ownership, this is your chance. We have a cap on virtual attendees and over 1k are already signed up so secure your spot here.

Alright, on to this week’s good stuff…

Today, in 5 minutes or less:

✔️ 1 cool thing: How to invest in our “boring biz” VC fund

✔️ In the weeds: How one member is researching car washes

✔️ Buyer tip: What’s the deal with proof of funds?

✔️ 5 links from the week in biz-buying

1 cool thing: How to invest in our “boring biz” VC fund

We talk a lot about owning and investing in small, boring biz’s. Heck, this is a newsletter about exactly that.

But the goal isn’t just to invest in the car washes, laundromats, and cleaning services of the world and educate others on how to do the same. We also want to invest in the startups making a real difference in this space, and we want to do it with some of you, too.

That’s why we launched a venture capital fund called Contrarian Thinking Capital last year. Since then, we’ve partnered with 16 tremendous companies (including Shopgenie, Figure, PostPilot, Beehiiv, and Nuvocargo, to name a few).

Here’s why we’re working on this now:

As owners retire, small biz tech injection will accelerate, and because of our audience, community, and expertise, we’re uniquely positioned to help move the needle.

So here’s what you should know…

Right now, our fund is raising an additional ~$5M to support more builders, and it’d be amazing to see those of you eligible and who can afford it invest before it hits the cap.

You can learn more about our fund’s secret weapons, growing portfolio, the investing process, and the financial risks involved in this blog post.

Then, if you’re interested and qualify as an accredited investor, go to our fund website by clicking the button below and selecting “Invest Now” to start the process.

In the weeds: How one member is doing due diligence on car washes

Recently, one member hadn’t even been looking to acquire car washes.

But the industry has kept coming back to ‘em and they’ve grown more curious, so they began asking some top-notch questions in the community, and we think it’s safe to say the itch was successfully scratched…

Question 1:

Here’s what one member had to offer:

• “For saturation, it depends on what you are including in that bucket. Most self-service sites were built in the 1980s and 1990s with fewer and fewer being built in the early 2000s and so there should be legacy separation of at least a couple of miles between sites.”
  
  
• “The advent of express tunnels changed the game but there is a pretty clear line in the sand of people who only use self-service/touchless, people who only go to expresses, and then floaters that are in between.”
  
  
• “Another indicator would be pricing pressure. Simply put are prices going up or down? Down would signal price competition which is indicative of saturation but this is mostly a concern on the express side as that is where 99% of the new construction is focused right now.”

Question 2:

From the same community member as above:

• “I have a semi-controversial opinion that carwashes w/ real estate are more closely related to either self-storage or multi-family for valuations, which is where the cap rate comes into play…”
  
  
• “That being said, it’s also important to separately arrive at a blue-sky value for the business and real estate. And you can do that a few different ways using EBITDA multiples for the business and cap rates/comps for the real estate.”
  
  
• “It is somewhat possible to achieve more of a passive operation on the physical maintenance of the site, but you should expect to pay a premium for experienced technicians to come in and fix whatever has issues (pumps, switches, HP lines, bill validators, etc).”

... And this, from a facilitator:

• “It’s not uncommon to use a cap rate to value a single-use business/RE like a car wash. We probably see more value in using a cap rate than otherwise. Then the question is what’s a reasonable cap rate, and whether they have done a thorough job of calculating the income?”

What’s the deal with showing brokers proof of funds?

Hey, it makes sense. Brokers and sellers don’t wanna spend time dealing with buyers who aren’t able to… buy.

But is it really necessary for buyers to be asked to show proof of funds before having a convo with a seller or accepting an LOI? One of our members was curious about this…

Here’s what one of our community facilitators (a biz broker themselves) had to say:

• “It’s not uncommon to ask for proof of funds and those proof of funds could likely just be enough to cover a 10-20% cash deposit if the business will likely be SBA funded.”
  
  
• “If you’re going down an SBA route, consider including your credit score as well to show that you should be able to qualify for a loan at least based upon that aspect. Another option is to get SBA pre-approved as that pre-approval will require you to show you’ve got the cash for the required down payment. But again, this isn’t uncommon.”
  
  
• “I’ve also seen situations where the buyer’s CPA produced a letter stating that they had the required down payment in liquid capital.”

And here’s another member’s two cents (but worth a lot more than two cents): “I’ve avoided the proof of funds required 90% of the time by confidently stating my ability to fund or my plan to obtain funds in the initial conversation.”

5 links from the week in small business

📈 3 sets of forward-looking projections to make when evaluating a biz

💳 Yikes: Small businesses are increasingly relying on credit cards

🥹 Sweet story: Why this small biz owner is tearing up... 

🧑‍🏫 Grab bag: A thread on people’s most valuable business lessons

🪄 Quick read: Why hiring a good operator feels like magic

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