0:03
Alright, Let's look at an opportunity here. It could be an investment, it could be a business opportunity. I like to look at it as a tool where I can create some cash flow. So that usually involves me managing in some way.
0:15
So this is just an example that someone asked me to look at the other day.
0:18
And so we were discussing it and I thought I would record my thoughts here.
0:23
So flip over here.
0:25
So this is the, this is the listing, OK. It's a at, Flip a dot com, I guess.
0:29
And the I don't even know how to pronounce this the name of this company but it's into Jeana, maybe.
0:36
And it, you can look it up on Wikipedia. It has an interesting etymology.
0:40
But anyways, um, the company sells these water bottles, their stainless steel water bottles, OK, and as you would imagine, the market is quite flooded on that.
0:50
Now, that's OK, because you can have a niche market, right?
0:54
That's mostly, what you're going to be doing anyways, selling something to a niche market.
0:58
So it's interesting, because this, this product, this stainless steel water bottle, it's being sold to people that are interested in protecting the planet. People who believe in the climate change, and all that stuff.
1:12
So anyways, I don't know that that is a good niche market.
1:16
That's my, off the off the cuff Guess. I haven't done any research, but I'm just gonna look at this almost from a consumer's perspective.
1:24
So I'm looking at a profit margin of 25% that doesn't seem real for water bottles and it's in business for two years and it's only making one thousand dollars a month.
1:36
But, on this listing, there, there is no disclosure of the gross income.
1:41
OK, the, the total revenue, and I would like to know what the total revenue is. I want to know how much money is coming in the door, and then how much I have left from that.
1:50
OK, so I would have to contact the seller. In this case.
1:54
It looks like it's up for bid, like it's an auction.
1:57
So I would like to just avoid.
1:59
I would just recommend avoiding those situations unless you're sophisticated, just because, who you don't know who you're competing with.
2:07
You know, if you have real competition, I don't know what's going on there.
2:12
So it just I would just like to contact the seller and make an offer. If I really wanted this thing, I would not participate in the auction but notice how there's a notation here. It says includes $5000 of inventory that's quite interesting.
2:24
$5000 of wholesale priced, water bottles, stainless steel water bottles and that tells me someone has too much inventory.
2:35
I don't think you need that much or someone's not making enough sales because for one thousand dollars a month net, $5000 worth of inventory with water bottles is probably not a good thing. You got too much inventory, that's my thinking.
2:48
Or whoever's selling this paid paid a lot of money for the inventory to get a low price per item, and couldn't negotiate a better price. Maybe there was no way to do it, or you didn't know what he is doing.
3:00
And now he's stuck with his inventory.
3:02
So, if you want something like this, and there's a price on inventory that's beyond like $50 or something, this, I believe price, this $5000 needs to be excluded from the negotiating of the, of the business price.
3:17
So, don't factor in the $5000 worth of inventory or whatever.
3:24
Just negotiate the price of the business based upon its gross revenue, and it's net profits, OK?
3:32
Once you reach that deal, go ahead and make that deal On the inventory, what I would do, is I would ask for proof Of the cost of acquisition for that inventory, and I would agree to pay for that.
3:44
So, I would just offset the seller's cost on that. He's never going to sell to me and make a profit on the inventory, that's ridiculous, because I'll just go buy it from the suppliers which he's gonna give me a list of the suppliers right. Why would I, why would I pay retail?
3:57
No, or something like that.
3:58
So the, that large amount in a business like this should not be factored into the asking price.
4:05
Um, yeah, so that's what I would look at. The other thing is, I mean, Nitch, what's a niche market in steel water bottles?
4:13
I mean, I think those, those are promotional items.
4:17
OK, you can use this to promote something.
4:19
I don't know that I would try to make a lot of money, with those by themselves, unless I were to go in, buy up 12 of these companies, OK?
4:29
Then maybe, all right, or maybe I'm, maybe I'm making the bottle for a particular purpose, that I know my customer is always going to want branding.
4:38
Like, my customers, it's a cost, a cost for my customer to buy the bottles for me, because he's promoting his business. So, sure, that's great, That's a great customer. Because now he's going to buy them in bulk for me, and it makes it worth my time to have a have a business customer instead of a consumer customer. So, I don't know what they're.
4:56
niche market is here.
4:57
As you can see, I um, I don't like to agree to cookies, the program on the browser that tracks what you do.
5:05
So, I just kinda tolerate the asking here. So that's why that, that's why that says over here.
5:10
But anyways, yeah, just think of this. It's an auction. It's $7000, the gross gross revenue is not disclosed.
5:19
It's only knitting a thousand a month, and it's been around for two years. You would think it could do better than that. I think that profit margin is kinda high, it's overstated.
5:27
But, again, I don't know what the gross income is.
5:29
So, then, then you have the $5000 of inventory that just tells me the person selling it didn't know what he is doing, or, somehow he thinks that's going to influence the asking price, I don't know.
5:41
But I would never make the cost of the inventory part of the deal, unless it's like $50 worth of inventory, then, OK, no problem, but if it's, you know, $5000. And the asking price is $7000.
5:53
Now, No, Just think about that.
5:56
The other thing to consider is, right now, it looks like we may have problems with importing things, So a lot of these products are made in China or Taiwan or Vietnam.
6:06
And they're shipped here.
6:08
So you have to ask yourself, am I going to be able to continue doing that?
6:13
And if I'm not who, what's my alternative? If I have to make it here in the states or in Mexico, can I do that? Can I get a decent price?
6:21
So you still want to, you want to check out, that's why I want to see more, like, I want to see, like, go to the website and see what else is being sold. Maybe there's some other products, but just I'm just for the sake of this conversation, I'm just saying, if you're looking at a business, this, these are the things I would consider.
6:36
So let's say the asking price is $7000. I mean I think that's going to be too high.
6:40
If I'm knitting thousand a month. And I have a very competitive product! I mean, it's very, um, I should say anti competitive because the market is saturated on stainless steel water bottles.
6:51
If it takes me if the asking price is $7000 and it takes seven months of net income to pay it off, no problem, I think that's OK.
6:59
It's just an in this case it's probably a bit risky.
7:03
Here's another way to think about this.
7:05
If it truly is selling stainless steel water bottles, ask yourself, how can I purchase enough water bottles to sell on my e-bay account and make a profit?
7:19
And you're going to find that you don't need to come up with $7000. To get into that situation, I can probably spend a thousand dollars and get decently priced, stainless steel water bottles with, customized, you know, whatever I want on there.
7:32
And I can sell them on my private personal e-bay account or Craigslist or Shopify or something or Amazon store or whatever. And I can make money right now. And if I'm pretty good at it, I can probably make more than a thousand dollars a month and shipping it myself.
7:50
In fact, I'd probably make more money packing, packing it up myself.
7:54
So this is something to think about.
7:56
Can I replicate this operation without getting the operation?
8:02
Yeah, very easily very easily. So. it's not special, OK?
8:07
That's how you want to look at this stuff.
8:09
Um, yeah, I mean, if it were to work and make money, then this would be one of those things where all you have to do is check your e-mail once a day, probably, and make sure all the refunds are getting processed.
8:21
That's a pretty low maintenance type operation. All right? It's almost an investment, all right?
8:25
It's a business, No, and yeah, you do have to participate in, supervise it a little bit, but it could do pretty well, so I would just keep on looking, All right, all right, hope that helps give you some understanding of how to look at these things.