Gen Y PI's, Please Tell Us Your Story.

[RedPanda]

Hats Off to all you good people who have the burning desire and the passion to "do something" and get out of the rat race. Good on you. Reading your stories, I know I'm looking at potential multi-millionaires in a decades time.

Jo, scary stuff that cabramatta incident. I went to Cabramatta once to just see what I have heard and yes I did found it very different to any other suburb of Sydney. You do get a feeling that you are not in Australia. But, that's cultural diversity.

 

[Piston Broke]

Well done to all you Gen Y's here.
It's always easy to pick pick on "lazy young punks", but as these great posts attest, there are many Gen Y's out there with a long term view, and well on their way.
And there's nothing wrong with a few "comforts" now an then.
You can live modestly with comforts, and not like a peasant.

Wish you all the best.

 

[Piston Broke]

I'm 26
The biggest achievement to though is my business I bought it 4 years ago for 50k it was an auto electrical business then with 1 employee and now I have 12 employees and is more of a labour hire / mechanical company than an auto elecetrical workshop I have 4 people on labour hire one as a soil tester. the business would turn over close to 2 million a year and is starting to become a real hassle to run. I would estimate the business as been worth 800k maybe??

Well done on growing the biz.
What it's worth is generally derived from net profit rather than turnover.
Small private biz is anywhere from 1-3 PE, more if there is clear potential for growth. But in this climate it may be hard to sell at a good price.
Maybe take a different approach to your biz and let others take more responsibility for their job, leaving your role to check up on them to see that it's done (from 15yrs experience). This is much easier said then done, it would have to be a gradual process, but can have great results.

 

[Belu]

Piston what do you mean by PE please?

I agree Kingchevy - very nice work on the business mate!

 

[Piston Broke]

sorry, Price/Earnings Ratio

 

[Belu]

how can something sell for 1-3 times a ratio though?

say you have a business that has just come out of its first major growth stage and is only 5 years old, has a $2.5m turnover, has about 12-14 employees and a $833k (a third of rev) profit.

How would you roughly price that?

Cheers

 

[Piston Broke]

Earnings meaning net profit btw.
I don't want to go to far off topic here, but it depends on many factors.
How much "expertise" is required in running the business.
Intellectual properties (IP) etc etc
Another factor is the risk that employees may go out on their own (which owners always underestimate, and buyers overestimate) for a service business.
I've actually seen this last item kill a few good bizs.
maybe you can start are new thread on buying a biz. I'm sure there a lot of ppl experienced here.

 

[brickbuybrick]

Hey josko. if you need money ring stgeorge. i got a 30k personal loan approved over the phone within 24 hours. all i needed to show them was 2 current pay slips. They didn't seem to mind that at the time i was earning $320 take home per week as an apprentice.
Still on Cabramatta. If you want cheap ip in Sydney it has to be a consideration.
Rent for 2bed units is pushing 200pw and only heading upwards and with prices around 150k the yeilds looking good at nearly 7%. The area has trains and a predominant asian community that will continue to grow. And if you say cabramatta quietly and quickly it can sound like Turramurra when friends ask were you bought.

 

[josko]

Hey josko. if you need money ring stgeorge. i got a 30k personal loan approved over the phone within 24 hours. all i needed to show them was 2 current pay slips. They didn't seem to mind that at the time i was earning $320 take home per week as an apprentice.
Still on Cabramatta. If you want cheap ip in Sydney it has to be a consideration.
Rent for 2bed units is pushing 200pw and only heading upwards and with prices around 150k the yeilds looking good at nearly 7%. The area has trains and a predominant asian community that will continue to grow. And if you say cabramatta quietly and quickly it can sound like Turramurra when friends ask were you bought.

Good one bbb, Turramurra.. LOL!
You are right, though - returns seem good in Cabramatta. This brings us back to the old Growth V's Cashflow area. In the end though, buying is better than not buyiing and if Cashflow is King, and affordability is an issue - suburbs like Cabramatta are the areas to invest in.

Thanks for the tip on St George. Unfortunately/fortunately (?) I'm self-employed. They'd also take one look at my debt servicability and run a mile.


Piston,

Interesting what you say about valuing a business.
Have you expertise in this area?

My husband has a small professional service business. I have often wondered how we are going to put a price on it when he leaves.

Regards JO'

 

[Piston Broke]

Hi Josko, not sure how much "expertise", I just been around small businesses all my life. Did a little formal studies, but read study & analyze lots.
What i know is that some people buy businesses to work in them, and some as an investment.
The more you have to "work" the business, the less PE($) you can expect.
Good paying jobs are still out there, so many wont want the extra headache for a few bucks more. And in uncertain times, not many want to risk flying solo.
So I would suggest you make a list of potential buyer types, using some creativity, and then working out a plan to make your business very appealing to them. eg.
Why would a competitor want to buy your biz?
Supplier? Customer? Employee?
Generally the closer they are to your business, the more likely they will be able to see sinergy and thus more value in it.