Hey GirdleyWorld!
Business ownership opens up some amazing opportunities.
Here are 8 investments that only business owners can make!
Before we dive in — I’m hosting an online lecture on Oct 31st:
How to Interview Overseas Talent
SPOILER: it’s different than onshore hiring processes.
Totally free, done with my colleague Hayden Cohen at Near.
Sign up here! (And if you’re out trick-or-treating, I’ll send you a recording afterward.)
Investing isn’t the same for everyone
Say “investing,” and most people assume you’re talking about the stock market.
And sure, the market is one place to put your money. There’s nothing wrong with that.
But I like to have a little more agency.
Owning multiple businesses means I spend a lot of time thinking about capital allocation. Where will my money go the farthest? Where will I have the best return?
Because owning a business gives you access to investment strategies that other people don’t have.
So here are 8 unconventional ways I’ve seen my business owner friends invest — both through their businesses, and personally. And I’ve watched them make millions.
Here we go!
1. Acquire one of your suppliers
E.g. A grocery chain buys the local milk supplier.
This can be a win-win. Both businesses lock in a good supplier/customer relationship. And by expanding ownership up the supply chain, you can increase efficiency and reduce costs.
It also gives you an advantage over your competition — who might even become your customers.
2. Buy a competing business
E.g. A construction contractor buys another one.
When you buy a competitor, you can finance the purchase through an SBA loan. That gives you control of more business with levered returns, increasing your profits (as long as the acquisition earns more than the cost of your debt — and if it earns less than the debt would cost, don’t buy it!)
Your business grows, you can consolidate departments to increase efficiency… and you have one less competitor in the market!
3. Acquire the real estate your business uses
E.g. Engineering firm buying their office building.
This is a great investment. Lots to love:
- Easy financing (banks love real estate!)
- Get profits out of your company with better tax status
- The property will appreciate
- Stability for your company / you
4. Start a business with synergies
E.g. Own a pool construction co? Start a pool maintenance business!
Sure, “synergy” is overused business jargon. But if you can find a new niche that your existing business feeds into naturally, it can be huge.
Every dollar you invest in your primary business now stretches farther. Your marketing and lead lists work twice as hard.
(You can also share resources like skilled labor and equipment.)
5. Invest in an employee’s startup
E.g. Pool construction company backs their eccentric mechanic’s new pool cleaning machine.
As a business owner, you know which of your teammates have what it takes. You also get inside information on ideas, and you can spot new ventures that might complement your core business.
6. Invest in or start counter-cyclical businesses
E.g. Hyper-seasonal fireworks company owner starts a media company.
Every business has ups and downs. So whatever your “down” cycles are — whether it’s seasonal, economic, or whatever — find businesses that do well in those conditions.
It hedges your lean times and gives you a way to win all year. It also gives you a more stable baseline to take more high-risk/high-reward moonshots.
And ideally, trends in one business can give you advance notice for the other.
• Financial security to take more high-risk/reward shots
• Get advance notice of changes in the market
7. Lend money in your area of expertise
E.g. Food logistics co-owner loans money to farmers.
Lending is not for everybody. But you can decrease the odds of nasty surprises by only lending where you know the market inside and out.
The surface benefit is earning interest from your vendors, competitors, and customers.
But you may also have the resources to help in workout situations. And you may even know borrower situations better than they do (for underwriting).
8. Start a business that is a customer
E.g. Fuel distributor starts gas station chain.
Firstly, you grow your original business by giving them another customer.
But you also get a valuable customer perspective on your original business (though you might get the extra-special treatment).
Your new business also gets a trusted supplier.
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That’s it!
What did I miss? I’d love to hear from you.
Have a great week!
Michael
P.S. Want your brand in front of tens of thousands of businesspeople? Contact clayton@girdley.com to advertise in my newsletters / podcasts.
