Friday, November 1, 2024

A great Interview with the Host of Profit Answer Man Rocky Lalvani and we talk about Buying VS Starting A Small Business

 

In this episode of The Profit Answer Man, David C. Barnett, a seasoned expert in buying and selling small businesses shares his insights into the world of business acquisition versus starting a new business. We dive into what makes a business "sell-ready" and explore how preparing your business for sale can improve not only its value but also its profitability and enjoyment. If you're considering growth, David offers invaluable advice on leveraging acquisitions as a path to expansion.

Wednesday, October 30, 2024

Proven Investment Strategies for Entrepreneurs

 


***New Video Alert!

I’ve met hundreds of successful business owners over the years, and we sometimes talk about their investments.

This week, I show you where they invest their money and why.

Also- why the personal finance advice you get online likely would be very bad advice for you if you own a business or intend to buy one.

You’ll see in today’s video: https://youtu.be/GlqCelWVNb0 


Cheers


See you over on YouTube

David C Barnett


Monday, October 28, 2024

Live 2024 Financial Planning for Biz Owners with guest Jennifer R. Lee

 


Financial Planning for Biz Owners

New Livestream guest-> Jennifer R. Lee Author, Founder of Modern-Wealth

I’m happy to have Jennifer R. Lee join me on a live broadcast.

Jennifer R. Lee is a Florida Financial Planner.

She works mainly with women going through divorce who are or are leaving entrepreneurs.

We’ll be discussing all things financial planning, how she addresses this very specific client group and the particular concerns you might have if you’re doing well in business and may be planning or afraid of a divorce!!

Be sure to join live so that you can ask questions, replay will be available.

Set yourself a reminder on YouTube here: https://youtube.com/live/guYBRNP0Gf4 

We’ll be going live Monday October 28, 2024 at 12 Noon Eastern Time and 1PM Atlantic Time.

See you there!

David C Barnett


Saturday, October 26, 2024

The Mini Storage Mess: A Cautionary Tale

I share a story about my attempt to develop a mini-storage facility that reveals critical insights into the complexities of real estate development, particularly regarding zoning regulations and municipal oversight.  https://www.youtube.com/watch?v=9wrVubshfiY


Overview of the Mini Storage Mess

Background and Opportunity About six years ago, I was approached with an intriguing opportunity: a piece of industrial-zoned land in Riverview, New Brunswick, that was in short supply in a growing community. The zoning bylaws permitted mini-storage as a viable use for the property. Wanting to mitigate financial risk, I assembled a group of nine investors, forming a corporation and collectively investing in the land. They raised a total of $40,000, enough to purchase the land outright, which eliminated the burden of debt and mortgage payments.

Planning and Building After securing the land, my team worked with a builder experienced in commercial construction. The builder proposed a plan for a steel storage building that would yield an attractive 18% return on investment, financing the project with a 60% loan-to-value mortgage from a credit union, contingent on each shareholder signing a $5,000 personal guarantee. However, this arrangement allowed for individual liability without joint responsibility for the total loan amount.

The Twist: After the builder secured the steel structure at a favorable price, they went to city hall to obtain the necessary building permit. To their surprise, the local planning department stated that, despite the zoning allowance, any construction on industrial land required approval from the Planning Commission. This regulation was part of a broader industrial development plan that had not been disclosed during their initial inquiries.

Municipal Requirements At the Planning Commission meeting, my team and I faced a slew of additional requirements, including:

  • Installing a privacy fence

  • Paving the surrounding area

  • Adding curbs to the driveway

  • Planting trees and shrubs in the front yard

These unexpected mandates would increase the project's costs by approximately $60,000, reducing the projected return on investment from 18% to a mere 4%, which was lower than the interest rate for the loan. The partners decided against moving forward, feeling that the bank would profit more than they would from the project.

Lessons Learned The team listed the land for sale and decided to compensate the builder for his efforts, though they had no obligation to do so since they lacked a building permit. Fortunately, because they had purchased the land outright, they could hold onto it without financial strain while waiting for a buyer.

Eventually, after a year and a half, the land was sold, and they were able to distribute a return of 83 cents on the dollar to their investors. Barnett emphasized the importance of being aware of municipal regulations and the unpredictable nature of local government, which can dramatically impact real estate development.

Key Takeaways

  1. Research Zoning and Regulations Thoroughly: Always verify local regulations and potential requirements beyond what is initially presented.

  2. Partnership with Municipal Officials: Real estate developers are essentially in partnership with local government officials, whose decisions can significantly influence project feasibility.

  3. Equity over Debt: In this case, an all-equity deal proved advantageous, allowing the investors to wait out market fluctuations without the pressure of mortgage payments.

  4. Contingency Planning: Always prepare for the unexpected and understand that plans can change due to factors beyond your control, including bureaucratic processes.

  5. Respect for Industry Professionals: Barnett expressed admiration for successful real estate developers, acknowledging the complexities and risks inherent in the business.

This story serves as a cautionary tale for aspiring real estate investors and developers, highlighting the importance of thorough research, adaptability, and respect for the regulatory environment in which they operate.

Make sure to subscribe to our email list so you never miss a new video, and explore our other resources like courses and books to help you grow and transition your business seamlessly. https://www.DavidCBarnettList.com


Wednesday, October 23, 2024

90 Day to Deal Express Small Business Acquisition 6 Key Takeaways

 


***New Video Alert!

Yes, you can buy a business quickly.

In this week’s episode, I dive into a case study of someone who did just that and add my commentary about the lessons learned.

Buckle up for this ride: https://youtu.be/uN8pZ5cCcic 


Cheers


See you over on YouTube

David C Barnett


Monday, October 21, 2024

LIVE Mandi Ellefson- Build an Operations Manager

 


Build an Operations Manager

New Livestream guest-> Mani Ellefson, the Hands-off CEO Leader, podcast host and author.

I’m happy to have Mandi join me on a live broadcast.

She’s built a business out of helping entrepreneurs get out of the day to day of operations and truly be free to work ‘on’ their businesses.

She hosts a podcast on the topic and is the author of The Hands-Off CEO which is a great book.

Tune in and as we’ll be discussing how to develop or hire an operations manager in your business.

This is a ‘must see event’ for anyone who doesn’t want to be doing this job themselves 50 hours a day forever while they’re in business.

Be sure to join live so that you can ask questions, replay will be available.

Set yourself a reminder on YouTube here: https://youtube.com/live/LxAp_KsUW68 

We’ll be going live Monday October 21, 2024 at 12 Noon Eastern Time and 1 PM Atlantic Time.

See you there!

David C Barnett


Saturday, October 19, 2024

David Barnett's Journey into Real Estate Investment

 My experience as a real estate investor offers valuable lessons for anyone looking to get into property investing. My story began in 2004, influenced by books like Rich Dad's Cashflow Quadrants, which sparked my interest in leveraging assets. At that time, I was making over $100,000 a year working for Yellow Pages, and I decided to use his success to invest in real estate, preparing to eventually leave his job.


By 2004, I paid off the mortgage on my home and leveraged a home equity line of credit to buy two triplexes. Over the years, I expanded his portfolio, purchasing more properties, learning the ins and outs of being a landlord, and dealing with tenant management, maintenance, and unexpected costs. One of my earliest mistakes, which I call “buyer fever,” involved underestimating the true operating expenses of one building because he hadn’t considered the higher electricity rates for common areas and hot water, which drastically reduced the cash flow.

As a landlord, I initially made the mistake of subsidizing my real estate business with my own labor, performing maintenance and property management tasks myself, which consumed valuable time. Eventually, after the birth of my children, I outsourced this work to property managers. This gave me a clearer understanding of the true profitability of my properties, revealing that the actual cash flow was not as lucrative as it seemed once all expenses were properly accounted for.

By 2009, I began selling my buildings, driven by rising property values and lower interest rates. However, I learned a harsh lesson about liquidity risk when selling one property and I believed I had $50,000 in equity, only to walk away with around $31,000 after accounting for realtor fees, legal costs, and mortgage penalties.

I eventually exited real estate completely by 2011, realizing that the modest cash flow wasn’t worth the financial and personal risk involved. The highly leveraged investments, combined with low cash returns, made real estate less appealing. This experience pushed me toward smaller business investments and loans, which I found to be more profitable and manageable, with fewer hassles and better returns.

Looking forward, I believe that real estate could become attractive again when interest rates rise, property values drop, and better equity positions can be established. My advice is that in any future real estate ventures, I would aim for a much stronger equity position—putting down 50% or more—and ensuring proper management systems are in place from the start.

My journey highlights key points:

  • Understand all expenses thoroughly before investing, including utility costs and property management fees.

  • Avoid subsidizing cash flow with personal labor—outsource and get a clear picture of the true profitability of a property.

  • Be mindful of liquidity risk when selling properties, as equity can quickly diminish through various fees.

  • Leverage is powerful, but it’s important to calculate risk versus reward, especially when returns are minimal.

This six-year experience taught me that while real estate can be profitable, it’s critical to enter with a strong equity position and a clear understanding of cash flow, liquidity, and time investment.

Make sure to subscribe to our email list so you never miss a new video, and explore our other resources like courses and books to help you grow and transition your business seamlessly. https://www.DavidCBarnettList.com