- I just got out of a meeting with Ryan Kulp.
Ryan Kulp is the founder of FOMO which is a top Shopify app
and also runs Fork Equity.
For those of you that might not know we bought a Shopify
app company called Simple Apps about four months ago.
It was $2,500 and it generates about $400 a month.
In this video we're gonna sit down with the guy I bought
the company from, Ryan Kulp and talk about his investment
strategy and what you should look for in buying new
companies.
Now this might not seem relevant to you right now
but if I was working in a corporate job where I could've
stashed away like $5,000, $6,000 bucks and I saw this video
you're about to see I would never have started a company.
I would've bought a company.
So in this video I wanna go through that strategy.
Three things you should know when buying a company for
under $10,000.
If you've been on the fence about starting a business
this is how you're gonna get into entrepreneurship.
Number one is figure out a budget and an investment thesis.
- At first it's literally just subscribing to information.
If you're not aware of what's going on in the markets then
you can't really make good choices.
So what I like to do is find a company that I think
is interesting, and then I try to find five of their
competitors.
And then I try to do my own analysis of what differentiates
them, who do I think is bigger or better.
Who has raised venture money versus who has bootstrapped
and has like maybe a chip on their shoulder.
Right, so all these things get kind of interesting to
look at and you don't know any of that and you're not
cognizant of those probabilities unless you look at
tons of companies.
- Number two is negotiate a deal.
- We look all the time at acquisition announcements from
Google and big companies, and small companies.
Sometimes they'll say you know cash value, stock value,
but no matter what they say it still may be the case that
there's a 24 month literal payback period where there's
a seller side financing.
And I've done deals like that too.
And of course that takes a lot of trust but it now enables
this buyer to acquire an asset, and it'll own it outright
on day one and then pay it off over time
and that's a really high leverage way to get these
deals done.
And so if you're, if you're listening to this and you have
even $20,000 and you're thinking okay what can I get for
$20,000 you actually might wanna think about it in terms
of what can I get for $80,000.
Because I can pay $20K down and I can maybe pay $5,000
a month or a few grand a month over time.
And even you don't have $5,000 extra a month maybe you have
$1,500 extra a month but the company you're gonna buy for
$80,000 makes $3,000 a month.
Now combine your $1,5000 with $3,000.
As long as you're willing to work for free for eight months
you now can afford an $80,000 business.
That was one of the biggest things, eye openers to me too.
The leverage that you get from upfront cash, deposits,
seller side financing.
Be creative but also being honest and genuine in how you
get the deal done.
You can do a lot with less.
- And three is reinvest all the profits in a team for as
long as possible.
- When you buy an app and just sit on it you may actually
be harming yourself in the long term.
You know yeah you can wait 12 months,
you can afford that and break even.
But that's assuming that your app and the market for your
app exists in a vacuum.
What if your app is about to have it's launch beaten
by a brand new competitor?
I know how developers are.
And they're gonna look at that and if you don't do too much
with it over the next couple months then they might try
to compete with you and you sitting on it saying well I'm
just gonna make my money back and profit from it later
may actually be riskier than spending you know a few hours
a month with a developer and blowing the two or three or
$400 revenue a month on the developer to get to a more
formidable place so that then in a few months you can get
that whole sitting on it and getting your ROI period.
- What are some of your questions after seeing this video?
Let me know down in the comments.
If you found this valuable be sure to share it with a friend
or two.
We're trying to hit 100,000 subs this year
and every share is much appreciated.
And if you need marketing support for your digital agency
check out Experiment27.com.
Thanks.
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