Main Street Millionaire - 4 Flashcards
1
Q
What is the initial annual revenue of the pressure-washing business?
A
$70,000
2
Q
What is the total number of leads generated in the first year?
A
500
3
Q
What percentage of leads convert into paid jobs in the first year?
A
35 percent
4
Q
What is the average job price in the first year?
A
$400
5
Q
What is the annual profit of the pressure-washing business after one year?
A
$65,000
6
Q
What pricing strategy should be implemented to increase profits?
A
Add a three-tiered price structure and raise prices by 20 percent
7
Q
What happens to the average order price if prices are raised by 20 percent?
A
Increases from $400 to $480
8
Q
What is the potential increase in average job revenue by offering upsells?
A
Raises by 50 percent from $480 to $720
9
Q
How many jobs per year can be achieved by offering subscription services?
A
Increases from 175 to 263
10
Q
What is the new annual revenue after implementing subscription services?
A
$189,360
11
Q
What is the profit after hiring a full-time technician?
A
$139,360
12
Q
How many jobs can three technicians complete per year?
A
700 jobs
13
Q
What is the annual revenue after expanding the service area and hiring more technicians?
A
$504,000
14
Q
What is the conversion rate after implementing a system that responds to leads within sixty seconds?
A
50 percent
15
Q
How many paid jobs can the business achieve with the new conversion rate?
A
1,000 jobs
16
Q
What percentage of customers read reviews?
A
93 percent
17
Q
What is the impact of having less than 3.5 stars on a business?
A
More than 90 percent will not use the product
18
Q
What is the average cost to hire a video editor for marketing?
A
$1,250 per month
19
Q
How much annual profit is generated after implementing video marketing strategies?
A
$570,800
20
Q
What is the total increase in profits after all the implemented strategies?
A
8X
21
Q
What should be done with prices to avoid losing money due to inflation?
A
Raise prices by 5 to 30 percent
22
Q
What is the benefit of having a luxury or ultra-premium option?
A
It allows charging higher prices
23
Q
What is a key factor for closing more leads in sales?
A
Responding faster
24
Q
What service can help businesses respond to leads within sixty seconds?
A
approachment.com
25
What is the most profitable strategy for existing customers?
Upsell, cross-sell, and affiliate sell
26
Fill in the blank: Recurring revenue is money you don’t have to _______.
chase
27
True or False: It is more profitable to find new customers than to sell to current customers.
False
28
What are some methods to increase sales?
Upsell, cross-sell, affiliate sell, add subscriptions from monthly to annual plans
29
How can small businesses grow through referrals?
Ask happy customers for referrals and offer discounts for their friends
30
What is an effective way to find good employees?
Pay current employees to refer new hires, offering $500 to $5,000 per successful hire
31
What is a common issue small businesses face regarding branding?
Small businesses often lack brand recognition, making word of mouth essential
32
What tool can automate customer reviews?
nicejob.com or similar software tools that request reviews after service
33
What is the significance of customer reviews for businesses?
Reviews are crucial for online visibility and can significantly boost rankings in searches
34
Why is measuring key metrics important in business?
It allows management to track performance and make informed decisions
35
What are some key metrics to track for business success?
* Revenue
* Expenses
* Profit
* Cash flow
* Customer metrics like churn and lifetime value
36
What is the 'Deal Driveway'?
The path that clients take to pay a business, including steps like closing a deal and sending emails
37
What does a high-level scorecard measure?
Output and input metrics
38
What is an output-based scorecard?
Measures things like new users, website traffic, and revenue
39
What does the activity scorecard measure?
Controls metrics like number of calls made and hours worked
40
What is the execution triangle in business management?
What gets measured gets managed; what gets managed gets scheduled; what gets scheduled gets done
41
How should a brief be structured for clarity?
* Problem (What, Severity, Priority)
* Potential Solutions (What, Cost, Time)
* Ask (Help, Cost, Time, Team)
42
What is the 'Warren Buffett method' of management?
Decentralization and hiring key people to make decisions
43
What is the importance of company culture?
A strong culture can enhance employee satisfaction and retention
44
What is the reported happiness level of small-business employees?
95% of small-business employees say their happiness stems from the small-business environment
45
What is an effective strategy for acquiring new customers?
Buying failing businesses to roll into your own
46
What is the 'add-on acquisition' strategy?
Acquiring additional businesses to enhance your existing business
47
What is the key question to ask when facing a problem?
Who can fix it for me?
48
What is the fastest method to acquire new customers according to the text?
Buying businesses.
## Footnote
Merging two companies is harder than buying an individual company.
49
What book did Dan Sullivan write that emphasizes the question 'Who can fix it for me?'
'Who Not How'.
## Footnote
The author suggests adding 'What can I buy that would fix this?' to the mix.
50
How much did Sublime spend annually on rolling joints by hand?
$2 million.
## Footnote
Sublime was a cannabis company with annual revenues of $10 to $20 million.
51
What was the cost of the machines that could roll joints automatically?
$750,000 each.
## Footnote
Two machines were needed to replace manual labor.
52
What is the key to making money and keeping it according to the text?
Focus on a few businesses at the start and diversify later.
## Footnote
The text emphasizes that lack of focus can be detrimental.
53
What does 'He that hunts two rabbits catches neither' imply?
Focus is essential to success.
## Footnote
This quote by Erasmus highlights the dangers of distraction.
54
What is the main ingredient for running a successful business according to Geoffrey Kent?
Time.
## Footnote
He suggests that success is a combination of Time + Focus + Consistency.
55
What do the wealthiest men in the world have in common?
They made their money through platform acquisitions.
## Footnote
Examples include Carlos Slim, Bernard Arnault, and Charles Koch.
56
What is the average millionaire's number of income streams?
Seven to twelve streams of income.
## Footnote
These streams are typically interwoven as threads to a rug.
57
What is a platform business?
A business you can add to with more acquisitions.
## Footnote
This strategy helps in scaling operations effectively.
58
What is the first step to increasing profits in a laundromat according to the text?
Add vending machines.
## Footnote
These can provide additional cash flow with minimal effort.
59
Fill in the blank: The first laundromat had an income of _______.
$67,000 profit.
60
What type of acquisition involves buying a business that complements your existing operations?
Vertical Acquisition.
## Footnote
This can include purchasing a competitor's business.
61
What is a key benefit of seller financing?
It allows you to use future profits to buy a business.
## Footnote
This method helps in managing cash flow.
62
How much profit did Bob's laundromat generate annually?
$300,000.
## Footnote
This profit was added to the acquiring laundromat's income.
63
What is an example of a satellite acquisition?
Buying a delivery fleet for a laundromat.
## Footnote
This adds a new service and increases revenue.
64
What does the text suggest about acquiring real estate?
It can provide additional profits and tax benefits.
## Footnote
Buying your strip mall can help reduce expenses.
65
What is the final income after all suggested acquisitions in the laundromat example?
$1,140,000.
## Footnote
This includes multiple income streams from various acquisitions.
66
What is the suggested approach when considering business growth?
You can grow organically or buy your growth.
## Footnote
Acquisitions can be a faster way to scale a business.
67
What is the sentiment of entrepreneurs after several years in business, according to the text?
They often want to sell their business.
## Footnote
This reflects the challenges faced as businesses grow.
68
What is a common sentiment among Founders in Year 1?
“I love my company. These people are my family and I will run this business forever.”
69
What is a common sentiment among Founders in Year 8?
“I hate my life and my employees hate me. Please buy my business and let me go away for a very long time.”
70
What percentage of small businesses typically sell?
Less than 30 percent.
71
What percentage of small-business owners plan their exits?
Less than 20 percent.
72
What should Founders start with in mind?
The end.
73
What challenge did Sam Parr face as a billionaire founder?
Sleepless nights, worry about what would go wrong next, and little cash because it was all wrapped up in the business.
74
How did Sam Parr respond to HubSpot's offer to purchase his company?
He feigned disinterest.
75
How much did Sam Parr's company sell for?
Tens and tens of millions of dollars.
76
What business model did Mark Vlaskamp implement for his laundromats?
A wash-fold-and-deliver business.
77
What was the annual revenue of Mark's laundromat business?
$3 million a year.
78
What is the key to selling or buying a good business?
A good business can always be sold or bought.
79
What economic factors affect business negotiations?
Rising interest rates, declining sales prices, pandemics.
80
How long can preparing to sell a business take?
Up to a year.
81
What does the valuation of a business depend on?
What people are willing to pay for it.
82
What are the three main ways to get a business valuation?
* Professional valuation
* Based on sales of similar businesses
* Seller's discretion
83
Why do less than 30 percent of businesses sell?
Buyers need certainty about the business's worth and their ability to make payments.
84
What should a seller do to make their business feel like a great deal?
Make them feel like the numbers are so obvious they could review them with a permanent marker.
85
What is a critical preparation step before selling a business?
Remove yourself from the day-to-day work.
86
What is the Cashout Cake?
A metaphorical process for preparing a business for sale.
87
What is the first ingredient of the Cashout Cake?
Simple Finances.
88
What should financials look like for a potential buyer?
Immaculate, showing revenue, expenses, and a steadily improving bottom line.
89
What does SOP stand for?
Standard Operating Procedures.
90
What is the rule of three in SOPs?
Document anything done more than three times or with at least three steps.
91
Why are loyal employees important in a business?
Buyers don’t want to see high turnover.
92
What does it mean for a business to not be run by its owner?
The management team can operate the business independently.
93
What is required by the SBA when a buyer borrows money for acquisitions?
Tax returns and P&L statements.
94
What does having 'eggs in many baskets' refer to?
Pulling in customers through a variety of channels.
95
True or False: Bad economies ruin all business deals.
False.
96
What is the 'add-back' strategy?
A method that can significantly increase the selling price of a business by accounting for benefits and one-time expenses that enhance net income.
## Footnote
Understanding add-backs can lead to tens of thousands more in your pocket when selling a business.
97
What does 'eggs in many baskets' refer to in business?
Pulling in customers through various channels to avoid dependency on a single source.
## Footnote
This includes platforms like Instagram, Amazon, Google, and both paid and organic ads.
98
Why is having a sales team important?
A sales team creates a sales engine that generates predictable, recurring revenue for the business.
## Footnote
Process beats people, and having trained salespeople ensures continuity in revenue generation.
99
What is SDE?
Seller's Discretionary Earnings, calculated as annual profit plus benefits received by the seller from the business.
## Footnote
It's often used for businesses smaller than $3 million.
100
What are add-backs?
Benefits and one-time expenses that can increase a seller's net income, such as owner's salary and personal expenses used for business.
## Footnote
Examples include a truck purchased for business use or health insurance costs.
101
What is the recommended multiple for small businesses when calculating sale price?
Typically two to three times the Seller's Discretionary Earnings (SDE).
## Footnote
Some industries may see multiples as high as 5X SDE.
102
What factors can affect the sale price multiple of a business?
* Industry trends
* Age and condition of equipment
* Income stream protection
* Client relationship management
* Web presence and online ratings
* Profit margins and recurring revenue
## Footnote
Buyers prefer businesses that require less work and have better management teams.
103
True or False: Buyers are primarily interested in a business's cash flow.
True.
## Footnote
Buyers focus on profits rather than the seller's personal sacrifices in building the business.
104
What is seller financing?
A method where the seller allows the buyer to pay for the business over time, potentially leading to a better sale price.
## Footnote
This can also help avoid a large tax hit by spreading gains over multiple years.
105
Why might a business owner feel regret after selling?
They may not like the changes buyers make and wish they had sold for a higher price.
## Footnote
Selling a business can be an emotional experience.
106
What is the main goal of joining an owners' group?
To connect with like-minded individuals who are involved in buying, selling, and building businesses.
## Footnote
This community can provide support and potential business opportunities.
107
What does the R.I.C.H. method stand for?
Research, Invest, Command, Harness.
## Footnote
This method guides individuals in buying, running, and growing a small business.
108
Fill in the blank: The '1 percent' refers to _______.
large corporations that own significant portions of the economy.
## Footnote
Examples include BlackRock, Blackstone, and KKR.
109
What is emphasized as essential for fighting back against corporate dominance?
Ownership of local businesses.
## Footnote
This approach empowers individuals and preserves local economies.
110
What can a good broker provide when selling a business?
* Marketing the business
* Vetting potential buyers
* Document preparation for due diligence
* Advice on improving business value
## Footnote
Brokers typically charge a commission but can save time and effort for the seller.
111
What should business owners do before selling to maximize their profits?
Consult with an accountant to front-load deductions and document add-backs.
## Footnote
This prepares the business for a sale and shows maximum profits.
112
Who are the experts mentioned in the text?
Seven experts with a combined billion dollars in transactions
113
How many in-person events are held each year?
More than twenty in-person events a year
114
How many calls per month are there for one year?
Seven calls a month for one year
115
What is the frequency of expert office hours mentioned?
Twenty expert office hours monthly
116
How long is the annual conference?
Three-day annual conference
117
What class does Wharton offer and what is its cost?
A three-day M&A class for $15,000
118
What does the author hope the reader gained from the book?
More value for thirty dollars spent than from institutions
119
What does the author encourage readers to do to support the movement?
Leave a review on Amazon and Goodreads
120
What feeling does the author want readers to experience?
The otherworldly feeling of standing in front of a store that belongs to you
121
What does the author suggest to readers regarding challenges?
Choose the hard thing, take a chance on yourself
122
True or False: The author apologizes for admiring those who choose the path of ownership.
False
123
Fill in the blank: The author expresses admiration for those who choose the path of _______.
[ownership]
