Best businesses to buy; best to start

[original mungerville]

][/sup]

 

 

I used to think marketing was terrible until I met someone who truly understood the role of marketing.  Marketing can do the job of thousands of salesmen if done right.

 

Do you have any good book recommendations on marketing (ie rather than sales?). For example, one that would relate well to starting an investment management business?

[giofranchi]

For example, one that would relate well to starting an investment management business?

 

original mungerville,

are you starting an investment management business? ;)

 

Gio

[oddballstocks]

Looks like the book is "The Secret to Selling Anything" by Harry Browne: http://www.amazon.com/Secret-Selling-Anything-Harry-Browne-ebook/dp/B00M19W20Y/ref=sr_1_1?ie=UTF8&qid=1409593567&sr=8-1&keywords=secret+to+selling+anything

 

On marketing "Scientific Advertising" is excellent, and cheap too: http://www.amazon.com/Scientific-Advertising-Claude-Hopkins/dp/1603866361/ref=sr_1_1?ie=UTF8&qid=1409593605&sr=8-1&keywords=scientific+advertising

 

Other marketing books..I liked Ogilvy On Advertising and am partway through "Breakthrough Advertising" by Eugene Schwartz (the Margin of Safety of the marketing world, there's a Creative Commons pdf version if you Google.)

[oddballstocks]

][/sup]

 

 

I used to think marketing was terrible until I met someone who truly understood the role of marketing.  Marketing can do the job of thousands of salesmen if done right.

 

Do you have any good book recommendations on marketing (ie rather than sales?). For example, one that would relate well to starting an investment management business?

 

I'd highly recommend the sales book I talked about.  You probably have the wrong idea of sales, both sales and marketing are very similar things.

 

There are people out there with needs, both known and unknown (sometimes referred to as latent needs).  People with known needs are some times actively searching for a solution, but most of the time not.

 

So your job is you are to develop these needs and make people aware of them.  When a potential customer becomes aware of their need then you have the ability to present them your product that satisfies their need.  In your case investment management.

 

Here's the thing, I think most investment managers are doing this all wrong.  They're selling performance, if you sell performance you'll struggle to accumulate funds, will always be chasing it, and never will be satisfied.  There is only one Buffett, only one who's at the top of the pile.

 

Instead sell something different.  Sell the value strategy, you pick stocks that aren't as risky so there isn't as much volatility.  The need the client has is for a portion of their portfolio to be in safer stocks, maybe they also buy biotechs.  You have a product (your fund) that satisfies this need.  The buyer might not come out and say that though, that's the key to selling.  You need to investigate and talk to them.  So you're talking to a prospective customer on the phone.  They will drop hints.  They might say "Well I want a fund manager who can really knock the socks off the S&P, but you know my son is going to college in three years and we need this money for that."  They said two things, they said they care about numbers (which all clients will), but they also gave you a hint on the need.  So you play off this "well if your son is going to college in three years I would imagine you wouldn't want to wake up in two years and see that the fund had lost 35% correct?  I would presume that you want to ensure you have enough for tuition plus some growth over the next three years correct?" Etc.  You need to tease out these needs by asking good questions.  Be curious.  Don't push for a sale, you might find a customer isn't a good fit, that's perfectly fine.  Expect a lot of no answers. 

 

This is just an example, but think creatively about what you do and how you do it. 

 

Ahh, here's another great book, "Marketing High-Technology" by Davidow.  The guy was an engineer before heading up HP's marketing in the 80s (which I'm sure you can tell by the title).

 

You can never assault a competitor by going directly at them, unless you have the resources.  You need to stratify the market, even if your product isn't different!  Investment management is a commodity.  If I put a post on here saying I had $1m I needed someone to manage I'd probably have 15-20 great potential managers in a few hours.  It's a commodity, but that doesn't matter, set yourself apart.  You need to figure out that niche.  Maybe you're an expert in Agricultural stocks, or special situations, or stocks in Iowa.  Something, but you need this selling point.  You can re-brand yourself multiple times.  Maybe you're an expert on three things, you have different messaging for the different client groups you're approaching.  You've an expert on Iowa to those who want Iowa exposure, you're an expert on farming for those who want Agricultural exposure, and you're an expert on grain for those who want the commodity exposure.  The thing is this, maybe those three angles are all rolled up in Iowa companies.

 

 

[oddballstocks]

Here's a piece of advice related to almost any business.  Learn sales and marketing.

 

I agree. And thank you for the book tip.

I think you could also hire good sales and marketing people. In my experience you should enjoy the process of selling… If you don’t, because you find it time consuming, time you’d like to devote to other activities, a good enough alternative solution is to hire someone who truly likes selling. ;)

 

Gio

 

In most smaller companies the best sales person is the owner or founder.  They know the products, have a passion for the business and want satisfied customers.  I don't know what selling is like in Italy, but you're trying to match customer needs with products you offer.  That isn't slimy or shady at all.  If someone has a need and you have a solution there is no pressure, the buyer is happy to buy from you.  What you're offering is of greater value to them than the money they give you.  You as the owner want an ongoing relationship.

 

You can hire people to do all these things, and at some point to scale it's necessary.  But in my experience the CEO is always selling to the biggest and most important clients.  Even at multi-billion dollar firms the CEO is at key customer meetings.  The CEO is the spokesperson for the company.  Important accounts need that contact.  Maybe the CEO sitting there doesn't think they're selling, but they are.  They're trying to find if what the company provides can meet a custom need.

[cubsfan]

Here's a piece of advice related to almost any business.  Learn sales and marketing.  I know the attitude on here is to look down at those things, but if a business can't sell it doesn't stay in business long.  Marketing is just a different way to sell.

 

What's the difference between the top fund managers and bottom ones?  It's not performance, sales and marketing.  What's the difference between successful and failed businesses?  Either debt or sales and marketing.

 

I'd highly recommend "How to Sell Anything" by Harry Browne (of Permanent Portfolio fame), and Scientific Advertising.  Two books written in the 60s and 30s that have stood the test of time, they're cheap on Amazon Kindle as well.  I'm working through SPIN selling which is a really good book too if you're doing larger sales.

 

I used to think marketing was terrible until I met someone who truly understood the role of marketing.  Marketing can do the job of thousands of salesmen if done right.

 

Here's a book on selling that is the best I've read:

 

http://www.amazon.com/What-Great-Salespeople-Emotional-Connection/dp/0071769714/ref=sr_1_1?s=books&ie=UTF8&qid=1409594197&sr=1-1&keywords=michael+bosworth

 

I spent 13 years selling enterprise software to the F1000, and another 15 years managing/training software sales people.

The Bosworth book is all about doing what is right for your customer - understanding them, listening to them, shutting your mouth

and stop turning buyer's off.  Selling is not that hard - but like investing, your emotions get in the way. When you finally figure out

that it's all about what your customer needs - and not what you need - then you can become a great salesperson.

Surprisingly, a large number of salespeople never figure that out.

 

This book is especially good with selling complex intangibles (software) - but certainly investment plans would fit the bill as well.

 

Edit: The Spin Selling books are great as well.

 

 

[west]

Looks like the book is "The Secret to Selling Anything" by Harry Browne: http://www.amazon.com/Secret-Selling-Anything-Harry-Browne-ebook/dp/B00M19W20Y/ref=sr_1_1?ie=UTF8&qid=1409593567&sr=8-1&keywords=secret+to+selling+anything

 

Thanks Nate.

[original mungerville]

For example, one that would relate well to starting an investment management business?

 

original mungerville,

are you starting an investment management business? ;)

 

Gio

 

Yes Gio, I am. Its been 14 years in the making, time to start. I imagine I'll only have a few investors to start out with and it will be a long journey, but that's the plan.

 

 

[original mungerville]

I have heard of people reading novels at work (might as well run investment management business from work ) and the benefits given to the city employees are far better compared to what is available in private sector.

 

In general, I have to agree with Al... but I think you might be onto something Shalab!

[original mungerville]

Thanks oddballstocks - I'll give all that some thought!

[Ghost]

Interesting thread.

 

The thing with being a franchisee, is you have to plan to own several.  Friends of the family have done extremely well owning many Deny's Franchise. 

[giofranchi]

In most smaller companies the best sales person is the owner or founder.  They know the products, have a passion for the business and want satisfied customers.  I don't know what selling is like in Italy, but you're trying to match customer needs with products you offer.  That isn't slimy or shady at all.  If someone has a need and you have a solution there is no pressure, the buyer is happy to buy from you.  What you're offering is of greater value to them than the money they give you.  You as the owner want an ongoing relationship.

 

You can hire people to do all these things, and at some point to scale it's necessary.  But in my experience the CEO is always selling to the biggest and most important clients.  Even at multi-billion dollar firms the CEO is at key customer meetings.  The CEO is the spokesperson for the company.  Important accounts need that contact.  Maybe the CEO sitting there doesn't think they're selling, but they are.  They're trying to find if what the company provides can meet a custom need.

 

I agree 100%.

And I am always present at key customer meetings with important (and also less important) clients.

 

But in my business I also have a person who practically does nothing else than talking on the phone and sending e-mails all day long. He also enjoys what he does very much! :)

 

It is that kind of activity I was referring to. Though it certainly is necessary, no doubt about that, I have never felt comfortable doing it myself… I am not saying it wouldn’t be better if I performed that task too. All I am suggesting is, if your own personality doesn’t fit well with some necessary activity, you can find a solution.

 

The true danger imo is the tendency to believe that what we don’t like to do ourselves could therefore be superfluous… If we don’t fall victim to such a wrong and misleading assumption, a solution can be found. A solution that, though maybe not the best and most effective one, might still be good enough.

 

Gio

 

[giofranchi]

Yes Gio, I am. Its been 14 years in the making, time to start. I imagine I'll only have a few investors to start out with and it will be a long journey, but that's the plan.

 

Good luck, my friend! :)

I am sure you will be wildly successful!

 

Gio

[MG2014]

Another release from sageworks showing the least profitable private businesses. The most profitable article was posted earlier.

 

http://www.forbes.com/sites/sageworks/2014/08/31/the-least-profitable-businesses-in-the-u-s/

 

Does anyone know any other sources for similar research? It would be interesting to compare their findings, get a more comprehensive list, etc.

[DCG]

 

Do you have any good book recommendations on marketing (ie rather than sales?). For example, one that would relate well to starting an investment management business?

 

 

 

Ca$hvertising and The New Rules of Marketing & PR are pure gold.

 

 

 

 

[west]

Another release from sageworks showing the least profitable private businesses. The most profitable article was posted earlier.

 

http://www.forbes.com/sites/sageworks/2014/08/31/the-least-profitable-businesses-in-the-u-s/

 

Does anyone know any other sources for similar research? It would be interesting to compare their findings, get a more comprehensive list, etc.

 

Thanks for posting. It's always a good idea to "invert".

 

I do have one issue with the study though.  Net profit margins don't tell us that much without knowing how fast inventory turns over.  They really should have reported return on capital instead.

[original mungerville]

 

Do you have any good book recommendations on marketing (ie rather than sales?). For example, one that would relate well to starting an investment management business?

 

 

 

Ca$hvertising and The New Rules of Marketing & PR are pure gold.

 

 

 

 

 

Thank you DCG - I will look into those.

[original mungerville]

Yes Gio, I am. Its been 14 years in the making, time to start. I imagine I'll only have a few investors to start out with and it will be a long journey, but that's the plan.

 

Good luck, my friend! :)

I am sure you will be wildly successful!

 

Gio

 

Thanks Gio. I hope I will be. It will be a very long road with little payoff almost guaranteed in the early years.

 

Your confidence in me is inspiring though!

 

Cheers,

 

Mungerville

[Junto]

Here's a piece of advice related to almost any business.  Learn sales and marketing.

 

I agree. And thank you for the book tip.

I think you could also hire good sales and marketing people. In my experience you should enjoy the process of selling… If you don’t, because you find it time consuming, time you’d like to devote to other activities, a good enough alternative solution is to hire someone who truly likes selling. ;)

 

Gio

 

In most smaller companies the best sales person is the owner or founder.  They know the products, have a passion for the business and want satisfied customers.  I don't know what selling is like in Italy, but you're trying to match customer needs with products you offer.  That isn't slimy or shady at all.  If someone has a need and you have a solution there is no pressure, the buyer is happy to buy from you.  What you're offering is of greater value to them than the money they give you.  You as the owner want an ongoing relationship.

 

You can hire people to do all these things, and at some point to scale it's necessary.  But in my experience the CEO is always selling to the biggest and most important clients.  Even at multi-billion dollar firms the CEO is at key customer meetings.  The CEO is the spokesperson for the company.  Important accounts need that contact.  Maybe the CEO sitting there doesn't think they're selling, but they are.  They're trying to find if what the company provides can meet a custom need.

 

+1

[Ghost]

Suppose you had a long term goal of buying a business in the next 5 years.  Which social networks in your local community would you want to participate in to have an informational advantage for when a business might come up for sale?  For example the local chamber of commerce.

[premfan]

Business Ideas:

 

1.) Buy land in high traffic area. Wait 3-5 years to increase capital to open highly rated franchise business.

 

2.) Take busted independent hotel. Turn it into a respectable representation of a lower economy brand hotel ( we have done this ). Watch revenues increase 2-3.5x due to being in the franchisors reservation system. The operating leverage is beautiful.

 

3.) Money Management. Other peoples money!!

 

4.)  Downtown busted commercial property. Fix and rent out.

 

Mindset= Don't buy pretty things. Find garbage in great location.  Turn garbage into something respectable. This is the way of high returns in the private world.

If garbage is not cheap, commit to a franchise business. Knowing that one franchise unit is not enough.  You need at least three franchise cash machines to start making some respectable money. 

 

 

 

 

 

[peter1234]

Mindset= Don't buy pretty things. Find garbage in great location.  Turn garbage into something respectable. This is the way of high returns in the private world.

If garbage is not cheap, commit to a franchise business. Knowing that one franchise unit is not enough.  You need at least three franchise cash machines to start making some respectable money.

 

Great insights.

:)

[premfan]

Suppose you had a long term goal of buying a business in the next 5 years.  Which social networks in your local community would you want to participate in to have an informational advantage for when a business might come up for sale?  For example the local chamber of commerce.

 

1.)  narrow down range of business's you want.

 

2.) target market the groups that contain those business's

 

3.)  target market via linkedin, facebook, coc, and meetup.com

 

4.)  act curious and ask questions

 

Same formula for dating women.

 

[Ghost]

Thanks premfan for the response.  So by your replies you wouldn't bother with local organizations? 

 

I have to disagree with the formula for dating women.  Shotgun approach worked better, (date as many as possible) then filter (based on attractiveness).  Plus its more fun. 

 

And speaking of dating, see my book recommendation (give me 5 to post)

 

[Aberhound]

Premfan's idea 2 but slightly different worked for my friend. He started buying in 2009 in Arizona and got 100% bank financing from banks who were suffering from receiver's high billings. His cost was half his competitors across the street so his rates are permanently better. A few simple changes like  paint and furniture and 20 shady canopy parking spots resulted in the value tripling. The bank soon sold a second nearby and now he is building a third.