Three Businesses That Might Never Fail

That means a recession is.

Well, many economists believe the spike in prices are. Consumer prices are now at a 40 year high. There's now talk of government debt defaults across the world. The future is looking dark. Layoffs are happening all across the country. And as businesses continue to shut down, it's just going to get harder. But these businesses that we're going to talk to you about are recession proof. These are businesses that you're going to want to learn how to buy. We're going to tell you how you get funding for them and how you can get an extra 170k for while the world gets a little harder. Warning. I'm going to give you no excuses for you to take care of you and yours and earn even in this market, even in the worst recession we've seen in our lifetimes. I know everybody's out there talking doom and gloom and about how scary it is and they're right in a lot of instances. But I can promise you one thing. Things are about to get a little bit lighter. And you, my friend, are going to want to see the end of this video. Just you wait. Ready? Laundromats. Now, how do we decide which business is best? I brought the expert here. Do you know this guy? You might recognize him from YouTube. Basically, we're going to rank every single business on three things. The three most important things cost to get into the business. Profit that you can make in the business and how much time you have to spend on it. Let's break down Laundromats first. Sure. How much does it cost to get into the Laundromat game? You could just use this one as an example.

It was $85,000 for the laundromat with the equipment, all the associated real estate. I had to put $15,000 down. So that's like a 17% down payment.

How much do you make on this business a month? Let's go revenue and then profit.

It's about 7,000 ish right now in revenue. Profits, 3 to $4,000 a month all included.

And what's included in that? It's laundry plus a couple things.

Laundry? My vending machine. Income's included. My arcade machine, my coin pusher, my snack machine and two rentals upstairs.

How much cash did you have to have in order to start this business with the extra things that you added on or did you just do seller financing?

Seller financing was most of it. The vending machines and snack machines has maybe an extra 3,000 dol. It wasn't much.

How much time did it take? You to start this thing and then how much time does it take you now to run it?

In between the negotiation phase and me being out here practically every day for the rehab, probably 50 to 100 hours. Then the first year I was spending two, three, four hours a week here at the business. We went on set up processes, I dropped down to an hour a week. Now I'm at 30, 45 minutes max per week.

So this is what we call long term games. So it's going to take a bunch of time for you to find the deal up front. It's going to take time for you to close the deal. You going to take time for you to get the business up and running. But if you play long term games as a long term person, then eventually you can have a little bit of that passive income everybody talks about. If you had to rank this business 1, 2, 10, but you can't use 7, what are we ranking this business?

This is probably a five or six. Out of all the ones that I've.

Been involved with a good for maybe a new to business. Sir, did I look familiar? All right, let's talk about what sucks. What are the cons of laundromats?

Well, I would say the biggest one is you have to own a laundromat.

Mine would be costs. Even though 15k or 85k might not be a lot to us, to a brand newbie, it's not a couple hundred bucks.

There is the risk of someone down the road starting up a laundromat because they watch some guy on YouTube or TikTok.

Another con I would say is if you rent the building, you got to make sure you have a long lease because these things actually cost a lot of money to set up with the city and infrastructure and plumbing. And so you can't just have a two or three or even five year lease. Not to mention there's these things and sometimes they break and they ain't cheap. So. So factor that into your model. But otherwise I think I'm with you. I think I rank a laundromat business right about a five or six. And for a newbie I rate it like an eight or nine. You ready? Okay, now we're at the second business, as you can tell, vending machines. Brandon, let's talk about this business. Costs, profit, time. How much did this business cost you to start?

So this machine here was $600. This machine was free because it came with a laundromat. My snack vendor that's Inside cost me $800.

That's about what you can get for a used machine now, they cost a lot more if they' new. Somewhere in the range of 1500 to 3K. Sound about right. You can see all these examples here. You can be all into this business with something like a thousand bucks to a couple thousand bucks. That's your cost. You also need the cost for a site. Now, you own this place, you get to put it for free. I have a friend that puts in a bunch of them for free by providing a service. What do you think it would cost? What would you charge somebody to put this in?

If I was to charge somebody, I would probably want 35, $50 a month or maybe 10 to 20% of the net revenue.

And then you have the cost of the inventory.

My inventory is pretty much 35% of what I put in the mach. So every drink that we sell for 75 cents, it cost me 25 to 30 cents to do.

Now what about the profit? How much money do we make on these bad boys?

Every month I do between $1,000, $1,100 gross, not net. My net's between 600 and $700. The time commitment now is really low because I outsource it. I don't fill these machines anymore. If you see me fill a machine, it's only for social media. I have somebody, I pay $20 every week, every other week to fill these machines.

We have Nayax machines on ours. So you can basically use backend software like this to track all of your inventory. What's going on with the business? Are you up are see if the machines are broken. You've got a little bit more low cost here, probably higher profit. Any reason why you haven't upgraded those?

Just a lot of my customers I deal with, they don't use cards. I've had a lot of people go out of my way that say that they don't use cards.

So what is the exact profit margin on this business?

So on the vending machines, I average about a 60% profit margin.

I give you a dollar, you get back 60 cents in profit. All right? That's how that works. So we've got costs, we've got profits. How about time you hit on this a little bit when you first started, how much time did it take to start this business?

When I first started, every week I spent about 30 minutes to the local grocery store or Sam's Club getting my goods. And then I come down here. It takes me 15 to 20 minutes. All in all, maybe an hour, hour, 15 minutes every week that I want to do the vending machine thing, a great starter business.

I prefer Costco to Sam's Club. Like if anybody wants to sponsor us on either of these videos, I might allow it from you too. If you had to rank this business 1 to 10, you can't use 7. What is it?

I would say this is a 3 or 4. It's easy to get into, but your time is going to limit how much money you make. And if you want to make a lot of money, you have to hire more and more people.

Logistics game, also hard to package and sell. Never going to be super efficient. A lot of people don't realize the stuff that we talk about sounds easy. They think we're talking about cartoons. But what they don't realize is there are levels to this game, man. And you take a level like this and you keep stacking up. Should we jump to the next business? Yeah. Now we're on to business number three, car washes. Give us the breakdown really quickly how much you bought this business for, how.

Much money it makes.675 for the car washes I'm hoping for about $250,000 gross. About 35, 40% of its net. We should be declaring maybe 80 to $100,000.

And the cool thing is he's seller financing over a 20 year term. This business on a scale from 1 to 10, you can't use 7.

For me this is probably a solid 8. If you were a large established investor, it's probably going to be less. Considering how much cash I have out of pocket and how much it's making me on a monthly basis, it's probably near the best of my spectrum.

What pros do you like? Why car washes?

It's a higher scale business compared to my laundromat. I've got nicer customers. My customers tend to have a decent bit of money. Generally they've been very easy to work with.

2. I like scalability. You can do a lot more revenue with a car wash on average than you can a laundromat without having to add a lot of non automated processes. What's your number? 3.

It's been the option of buying real estate with it. Most of the car wash I run into. Real estate is a very viable option if you're in a larger city. Acquiring a laundromat with the real estate is practically impossible to do.

It's such a good point. Especially even in these small markets. This piece of land for 645 is a great bet long term. Add on services have great margin. So everybody needs Towels. Everybody needs soap for this. Everybody needs air freshers or a lot of people do. I buy them for pennies on the dollar in bulk and then get a 50 to 150 margin. Okay, what else do you like about this?

It's also very easy to cut costs from the onset. When we analyze the business, there were a lot of costs. Time sinks and money sinks. The change machines were almost constantly broke down here and a person was employed six hours a day to make change with people. I fixed that with one $600 part and we essentially did away with that whole segment. Finding ways to save money was a very easy play for me on this car wash as well as every car wash I've looked at so far.

Tell me about what you do with the water usage too. A few tweaks.

One of the things that we did, we analyzed water usage compared to more efficient operators and we found that they were running all their machines at higher pressure, lower water consumption. So we made modifications to the workings of all of our systems. Here we decreased our water usage by 35%. And as far as the car wash goes, our costs. Debt service is number one. Water usage is number two.

The last pro that I love is a word called roll ups. And no, I don't mean these kind. What I mean when I say roll ups is that big private equity firms like Mr. Car Wash come in and buy car washes in bulk for huge multiple expansion. For instance, we bought bought a bunch of car washes for 4 to 8x profit, which is typically the range. I like to buy these. That means I get all my money back if I don't change anything in four to eight years. Typically I try to change a few things and get all my money back in two to three years. And then we can turn around and sell them in this market for anywhere from 10 to even 24 times profit. That's pretty wild. Last thing I'll say, value adds subscriptions. Companies love reoccurring revenue. It's like a dirty little word that we all just roll around in. I love adding things like subscriptions to my business. Now, I don't want to rely on subscription to a car wash service because often that's the first thing that gets cut in recession. But not always because there's a bunch of people like yours truly, don't watch this mom. That like have 472 subscriptions and forget to close out any of them. Last but certainly not least time. Do you see any employees here? Samuel, do you want to pan around? That's a no I like high margin, low people, businesses. But the truth about any businesses, there are always cons, there's always a downside. And people in the comments love to tell me about why these businesses suck. I will tell you, there are some of them. One of the cons that I think is the biggest here is what we talked about in the beginning. Ship breaks. You're putting a ton of water, a ton of pressure, a ton of air through these machines and they're getting heavy usage, which is how we make this. What other cons do you have?

You have to have people you could trust and you have to build policies and procedures to make sure that people can't steal money. We have credit card readers, we've got cameras all over the place. We've got a lot of systems and processes in place to see if people steal. And we have had theft here.

Third con, in my opinion, is that when things go wrong, you might be the call. Unless you have a really good operator. Some of the tough stuff about car washing is you need to be on site. It's not a little Internet business that you can sit back in the Bahamas and do there. This is a real business.

In real life, you have to deal sometimes with caustic chemicals. You have to have plans and policies and procedures in place to fix those things. And sometimes you're going to be here at 2 o' clock in the morning while your plumber's accidentally blowing the line, while he's re sleeving a copper line.

Not that that's ever happened.

Not that that's ever.

Of course, we want businesses that have the highest ROI for our time, but it's also okay for you to be here in the thick of it. You don't want to be the guy in the stands. You want to be the man in the arena. All right. One of the last cons I'd say for this business is that you need to understand real estate, you need to understand industry regulations, and you need to have some insider access to things we talked about in the beginning, like how much water is going to cost, how much electricity is going to cost. Those things vary. And so your pricing model, if you don't understand how your charges could change on your electric bill or water usage could. Could it actually put you out of.

Business in some cases, if you don't understand your expense ratios, where you fall in line with industry averages, then you're going to kill yourself. I like looking at what averages are and I want to be 10 or 20% above what the average is. The problem is A lot of people operate 20, 10, 20, even 30% below the industry averages in a car wash or a laundromat or whatever business it is. And if you do that, it'll kill you. You throw in some debt, it will murder you. So you have to understand where those numbers are. You have to be a competent operator.

And lastly, maybe sometimes you even have to wash some cars. Risk. How much cash can you make in them and how much risk are they going to have? Car wash. Here's the thing about car washes. I think with car washes you can make 5k 10k a month plus highest cash business. Probably also highest risk business. Laundromats also are a fun business. You can make 5k 10k. I think you can even get up into middle tens of thousands of dollars a month. With one laundromat maybe you could get to 100k, but I have to be in a killer laundromat. You can make more money. It's a little bit less risk, it's a little bit less cash down. That's the second business. Laundromats vending machines. They basically cost a couple hundred bucks to start. Maybe they cost a couple thousands of dollars if you're going to buy new machines. The downside, you can probably only make a couple hundred bucks to maybe a thousand bucks a month per vending machine. Total profit to you. So this one's your entry level drug to businesses. The least risk, the least amount of cash. You can start here, then maybe buy your laundromat, your car wash, et cetera. That's how I think about fail safe businesses. The good thing about all of these is everybody's going to always need clean clothes, they're always going to need clean cars, we're always going to have a sweet tooth.