Adventures with Lyrical: Buying a Business (REPOST)

Tmac · Dec 31, 2012

Lyrical_sl said:
Not even just a little bit, I wish women were more like men. No homo (keep the breasts and vagina). I'm just saying that with a wife and daughter, I don't understand their line of reasoning most of the time.

I'm not saying retail won't work, I just think that the next time I do a business, it will be another boring service company with very little competition.

I'm the youngest male in a house full of women, so color me pink and call me Ken Barbie. I'm a storehouse of secrets! Anyways...

Your next business will be more of the same "boring" analytical work, because that's what you enjoy. Most people in this forum are powergamers, because that's the play style we enjoy, but not everyone here carries that passion into the real world. And then again some do. A lot of us here seem to enjoy the same theorycrafting irl that we enjoy in our games. Trying to get the most bang for your buck, trying to run your business with the most efficiency possible, spending money only where return is promised, working on your business and not just in it. I mean, how many of us would've been any good at raiding if we spent all our time farming ore, killing badies, and running across the map with zero time spent figuring out which robe made our character spit mad fire?

But yeah...shopping... My mom enjoys going into a store to touch everything, smell the smells, and achieve general sensory overload. When I go into a store, I already know what I want, what I like, and I'm analyzing every shelf as soon as I walk in. I only shop at JCrew because it looks good, feels good, and everything fits me perfectly. I never have to waste time trying on clothes. It's the only store I've ever been in where I can drop $300 in 20 minutes and hover between going back for more or gauging my eyes out. I blame my...sisters? Anyways, that's about as close to shopping catharsis as I get, but I'm sure women experience about 10x that...every...single...day.

So, between the two, there are business opportunities out there for everyone. Whether they enjoy the min/maxing aspects of their business or front room customer service, to each their own.

----

I guess I should also point out that if there wasn't a JCrew outlet nearby where I can get 70% off, I wouldn't hesitate buying clothes online. I don't have to touch them in the store, I already know the feel good.

Word · Dec 31, 2012

Lyrical,

From my understanding, you still have debt from the initial loan you took to buy your business some years ago.

What's the rationale behind not paying it off immediately to avoid paying interest on it. Is reinvesting in your company going to make you more then paying off your debt?

Shonuff · Dec 31, 2012

Word_sl said:
Lyrical,

From my understanding, you still have debt from the initial loan you took to buy your business some years ago.

What's the rationale behind not paying it off immediately to avoid paying interest on it. Is reinvesting in your company going to make you more then paying off your debt?

I'm about half paid off. Given that I'm a c-corp, I pay 50% taxes over 50k. If I keep the debt, I'm getting writedowns on goodwill, depreciation and amortization. I'm probably going to flip back to a lower tax rate business structure later on. In other words, I don't want to make 250k and pay half to the federal government. Because of the way the tax laws are written, I'm kind of getting ass raped as a c-corp. An s-corp would be better.

I actually woke up this morning thinking about the same thing you posted. When you are an owner, this is the type of stuff that keeps you up at night.

As I understand it, it's a major PITA to flip from a c-corp to an s-corp, given that I had to tap my 401k to get the down.

Thanks for the question, it's a good reminder I need to get this fixed.

Izuldan_sl · Dec 31, 2012

Word_sl said:
Lyrical,

From my understanding, you still have debt from the initial loan you took to buy your business some years ago.

What's the rationale behind not paying it off immediately to avoid paying interest on it. Is reinvesting in your company going to make you more then paying off your debt?

Word, Lyrical may provide you with a different answer, but I'll talk to you about businesses in general.

Debt isn't a bad thing when it comes to business. Part of the strategy is knowing how to use it, because you can offset your gross profits by allocating your debt properly, since it can be written off. You usually want to amortize your debt so you use little of it when you start out, when business is slow, and more later on, when you are making more money. Unless your interest rate is egregiously high (and there is no reason to believe it should be, given current rates, unless you are doing something stupid like putting it on credit cards), 1) the tax savings will help offset the money you lose on interest payments, especially as you become more profitable andmost importantly(imo) 2) it frees up capital to allow you to build your business. Cash is king in business, and being liquid makes your business more agile, and able to respond quickly to both setbacks and opportunities.

Izuldan_sl · Dec 31, 2012

Also Lyrical, why did you choose a C-corp? Was it your choice or did someone recommend that to you? When I first started out, my accountant had recommended me to form a S-corp, because we were going to be small market cap, and I honestly didn't understand everything he was explaining to me, but he made it seem like a S-corp was a better route to go for small businesses, and C-corp for larger ones. Just wondering if you were told differently, or maybe you yourself saw things differently.

Cad · Dec 31, 2012

The major thing between C and S corps is the number of investors/owners you can have. I think the number is very high (100?) so a business like lyrical's should be an s-corp without question. Right now, the income on the business is being taxed and then he has to pay personal income tax on whatever he draws as well, so its being double-taxed. With an S-Corp you get pass through taxation so it would only be taxed once.

Whoever set that up as a C-Corp was retarded.

Jalynfane · Dec 31, 2012

I had a commercial produced, but now I am wondering if it is pointless to only have it play on TV a few times until I can afford to have it shown often, or to save money and try to bombard with it later. The issue being that since the company is only a year old and capital is dwindling. Anyone have experience with launching commercials?

opiate82 · Dec 31, 2012

Jalynfane_sl said:
I had a commercial produced, but now I am wondering if it is pointless to only have it play on TV a few times until I can afford to have it shown often, or to save money and try to bombard with it later. The issue being that since the company is only a year old and capital is dwindling. Anyone have experience with launching commercials?

We have very little market penetration in my area so there isn't a lot of money to do TV advertising. We have stopped on tv and have focused on print, online search and local store marketing initiatives. Basically because we cannot bombard our customers with TV adds, our message gets drowned out by the big national chains. I am also doing some radio, this worked out nice because I worked out deal to trade product for airtime so it is costing me a fraction of the actual price.

Izuldan_sl · Dec 31, 2012

Jalynfane_sl said:
I had a commercial produced, but now I am wondering if it is pointless to only have it play on TV a few times until I can afford to have it shown often, or to save money and try to bombard with it later. The issue being that since the company is only a year old and capital is dwindling. Anyone have experience with launching commercials?

I had commercials my first few years of operation. The key thing imo is knowing your demographic, who your customer base is going to be, and then targeting the proper channels at the proper time. Just as an example, if your commercial product was say a cleaning product used by housewives, then you want to keep your ads on those channels mainly viewed by women between the ages of 25-45 (just as an example).....that might be stuff like E channel, OWN, Lifestyle, etc...or even more specifically, which shows are they watching? Real Housewives of Orange County? The Bachelor? American Idol? The company airing your commercial, somebody like Time Warner Cable for example, should be able to break down all the demos for you. Next you have to decide how much you want to spend, because obviously prime time is going to be much more expensive than late night, and also different channels cost different amounts of money based on viewership.

Beyond that, one of the most important concepts of advertising is imprinting. It's only going to be remember based on repetitive viewing, or if you are lucky, a reallllyyyy catchy ad. So in answer to your question, I would recommend holding off until you can afford to show it more often in an abbreviated time frame. Again, you can see what your cable provider or ad maker recommends as far as number of viewings per month, etc.

Shonuff · Jan 1, 2013

OK, on the c-corp structure, because I flipped my 401k to the business without any tax penalty (usually over 50%), the government makes you go to a c-corp. I didn't have a choice, all of my investments were in my 401k (because my employer matched). I'm not the type to ask family for anything. It was the only way I could have afforded the down on the business. What I'd love to do is roll my retirement money back out into a personal fund, switch to an s corp, but I may ended up having a tax liability on the original rollout.

As far as commercials go, I've looked at TV, and even worked with them to draw up a flight. We've decided we are going to own the morning news. If I go with TV, if you get up in the morning to watch TV, you'll see us. It was something like 15 spots a week, every other week. The strategy here is that they don't miss you if you miss a week. In my local market, I can do that for 1k a month. When you start moving to night time broadcasts, is when it starts getting real expensive. With a limited budget, it's probably better to own a day part, rather than get thrown on TV all day willy nilly, or being shown at a time when your target customer isn't watching.

Shonuff · Jan 1, 2013

Izuldan_sl said:
I had commercials my first few years of operation. The key thing imo is knowing your demographic, who your customer base is going to be, and then targeting the proper channels at the proper time. Just as an example, if your commercial product was say a cleaning product used by housewives, then you want to keep your ads on those channels mainly viewed by women between the ages of 25-45 (just as an example).....that might be stuff like E channel, OWN, Lifestyle, etc...or even more specifically, which shows are they watching? Real Housewives of Orange County? The Bachelor? American Idol? The company airing your commercial, somebody like Time Warner Cable for example, should be able to break down all the demos for you. Next you have to decide how much you want to spend, because obviously prime time is going to be much more expensive than late night, and also different channels cost different amounts of money based on viewership.

Beyond that, one of the most important concepts of advertising is imprinting. It's only going to be remember based on repetitive viewing, or if you are lucky, a reallllyyyy catchy ad. So in answer to your question, I would recommend holding off until you can afford to show it more often in an abbreviated time frame. Again, you can see what your cable provider or ad maker recommends as far as number of viewings per month, etc.

Listen to this man. One reason I'm not on TV right now is that I want to go after the higher demo listeners on some of the radio stations. I'll max out my budget on radio before I move to TV.

Shonuff · Jan 2, 2013

Holy crap. In the two months that we moved our trucks, we've saved $2,500 a month. It moves us closer to our operations, and it puts us closer to 80k people that we've been ignoring (so more work). It's a win-win. Also, these are our slower months, it's just going to get better as we get busier. I forecasted we'd only save 1k a month.

This is literally 30k a year added to the bottom line, bare minimum!

Tmac · Jan 4, 2013

Lyrical_sl said:
Holy crap. In the two months that we moved our trucks, we've saved $2,500 a month. It moves us closer to our operations, and it puts us closer to 80k people that we've been ignoring (so more work). It's a win-win. Also, these are our slower months, it's just going to get better as we get busier. I forecasted we'd only save 1k a month.

Did I miss you talking about moving your trucks (who/what/when/where/why)? Is that gas savings!?

Shonuff · Jan 4, 2013

Tmac47_sl said:
Did I miss you talking about moving your trucks (who/what/when/where/why)? Is that gas savings!?

Long story short, an ex-employee was fired for meth use, he retaliated by breaking in to the trucks and stealing 4k in equipment. This forced us to move to a secured lot, that is closer to our service area, and we are saving big time for it. So this turned out to be a good thing, as it was insured. I toyed with the idea of moving, but didn't think I'd save so much at the pump.

Tmac · Jan 4, 2013

Lyrical_sl said:
Long story short, an ex-employee was fired for meth use, he retaliated by breaking in to the trucks and stealing 4k in equipment. This forced us to move to a secured lot, that is closer to our service area, and we are saving big time for it. So this turned out to be a good thing, as it was insured. I toyed with the idea of moving, but didn't think I'd save so much at the pump.

Oh! When I read that story I was assuming you were talking about an office, not a parking lot. Ha...

Shonuff · Jan 8, 2013

I'm not real proud of the results radio is giving. I changed my ad to 60 seconds, and put in some horror movie music to get people's attention. Call volume is up, but it's coming from repeat and referral, phone books, billboards and Internet. They say it takes time to get people to respond to radio (>30 days). I'll continue to measure it and if it doesn't bring the calls, I'll try something else. I'm not married to it if it doesn't bring results. I might try the local news (TV commercials).

Marketing is a necessity, but it should have measurable results. They say that radio is the hardest thing to track. All I know is my call volume is better than its been in months. We've specifically started asking people if they've heard is on radio, and we get a "maybe." Supposedly, radio is so subliminal that people don't remember it well, compared to other advertising media.

Corndog · Jan 9, 2013

I know there are a few companies I have never seen in print or tv commercials that are definitely in my memory from radio. I know I've also pondered a radio ad, where I would rarely think about a print ad or commercial. I find it easy to think about a radio commercial while driving.

Also everyone I know just tivos through commercials at this point. Just it's most likely just my younger generation.

Blazin · Jan 9, 2013

I agree with tchuand904 some very valid points. Lyrical you need to implement these changes.

BrutulTM · Jan 9, 2013

You need a jingle for the radio or some sort of earworm inducing way of putting out your phone number. There are commercials that I heard on the radio 10 years ago that I can still sing off the top of my head.

Dial one eight hundred five eight eight, two three hundred, EMPIRE.

I don't even know WTF empire is but I know their phone number.

Shonuff · Jan 9, 2013

Corndog_sl said:
I know there are a few companies I have never seen in print or tv commercials that are definitely in my memory from radio. I know I've also pondered a radio ad, where I would rarely think about a print ad or commercial. I find it easy to think about a radio commercial while driving.

Also everyone I know just tivos through commercials at this point. Just it's most likely just my younger generation.

The funny thing is, newspaper is by far my cheapest way to generate closed deals. I'm paying $10 per closed deal in the local service directory of the newspaper, versus 40-80 for customers from other sources. The important thing to remember is, you aren't marketing to yourself, you are marketing to your customers. I don't pay attention to billboards, but most of my customers have seen our billboards. I don't use print yellow pages, but 1/3 of my customers still use them.

At this point, I'll stay the course with radio and give it some time to soak in. We've been doing it for only five days. They say it takes 30 days to get results. I was on radio before, but only had 12 commercials a month, versus 27 a weekday now. I was hoping to see an immediate lift, like I did with billboard.

Adventures with Lyrical: Buying a Business (REPOST)

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