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Why SMBs are a Superior Investment Vehicle.

Feb 12, 2022

Right now more than ever we are seeing asset prices inflate like crazy throughout the world. 


The stock market is at near all-time highs and looking dangerously top-heavy, real estate has not seen a market state like this since 2008 (and we all know what happened after that) and even low-yield bonds are going crazy, and don't even get me started on crypto. 


Some people are calling this an everything bubble, which is great if you invested 5 years ago, however, if you are holding cash and trying to break into the market, it is now harder than any time in history. 


These are just some of the reasons I believe SMEs are simply THE best investment vehicle if you are trying to achieve financial freedom. 


Let me explain why: 


There is always going to be demand for a good business, I don’t care if we are in a recession or the market is booming, if you have a quality good or service that is in high demand, you will be in business. 


The nice part is that you can scale up or down your involvement in the business, for example, if you invest in a public company it is completely hands-off and you have no say, compare that if you are the sole investor in a small mom and pop business and you can hold the majority of the decision making power. 


At the end of the day, you can tailor it to your interests and desired involvement. 


The second reason I believe SMEs are a superior investment vehicle is the sheer upside potential, real estate is great, but there is only so much value that slapping a new coat of paint and re-carpeting will bring when it comes to increasing cash flow and ROI. 


Compare that with a small business and you can come in and “renovate” that business with new systems and processes, sales, marketing, price negotiation, and very quickly see your investment double, triple, or even quadruple in a short period of time. 


Of course, it comes down to your skills in business but that is also part of the fun, you get to build your business, personal, and life skills in the process. Name another investment that can offer that! 


It's a bankable asset, which means that it is nearly as good as having money in the bank. You can walk into your local financial institution and if you have a solid, profitable business you will have no problem borrowing money against the business. Compare that to trying to get a loan for a startup idea you have and it's night and day. 


It works the same way if you are looking to buy an existing business, banks look a lot more favorably at existing, ongoing concern businesses and you can use the power of leverage (good debt as Robert Kiyosaki would call it) to finance yourself into a revenue-producing asset. 


Believe me, I have seen over 100 times from our clients that successfully pulling this off can change your life overnight. 


Finally, the last reason I love SMEs is what I call the multiplier effect, businesses are valued by a multiple of their yearly net profit. Typically 3-5x. 


That means if you buy a business and then increase its bottom line, you can reap 3-5 dollars for every dollar of added profits when it comes time to sell. 


Alternatively, you can merge multiple small businesses together and arbitrage the value since larger businesses are valued at higher multiples than smaller businesses. 


This strategy is known as a roll-up and we just completed one with a client where we acquired 16 businesses in under 6 months and generated over $200,000,000 in value. 


Over the last 3 years, we have helped 100+ clients not only invest, but outright acquire their own business. We are looking to work with a small number of additional clients in 2022. 


I put together a free training program where you can learn more and see if you are cut out to pursue an opportunity like this. 

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