🌀 Your vehicle = your net worth

I got an email notification this week that my Cybertruck reservation is ready to be built. I put the reservation in a couple years ago and the time has finally come to get it built. Then I got busy and forgot about ordering it. It’s just another truck.

Once I started flying my own aircraft 8 years ago, land bound vehicles started losing their appeal. Airplanes are time machines. You get places fast 4x times faster. You bend time to your will. Your departure time is… whenever the fuck you want. It is freeeeedom.

You may be thinking, what the hell does this have to do with business?

I have been thinking about opportunity vehicles. These vehicles determine your net worth. And the right vehicle can get you where you want to go faster.

If you are like me, you do a lot of daydreaming about different business models. Entrepreneurs are the worst at seeing other businesses and dreaming of a better, easier, more profitable business. But some are and some aren’t.

Businesses are opportunity vehicles to building wealth. But not all of these opportunity vehicles are built equally.

Some businesses have the ability to soar and some can only creep. Some are faster and more capable of producing wealth. Some are dead ends.

To determine whether a business is a good opportunity vehicle I like to ask these questions. Does it scale fast? Is it capital intensive? Is it complex? What is the average ticket value? What is the revenue per employee? What is the serviceable market?

And if you really start looking at these things, some businesses start to fade like Joe Biden’s cognizance.

Shiny Object Syndrome is probably the number #1 fault of any entrepreneur. We can’t help but get bored with our business and start dreaming of that silver bullet… but sometimes we have the silver bullet in our back pocket, but fail to chamber it and pull the trigger.

Warren Buffett says, “invest in what you know.” And your business is what you know. There is a chance you are in a business that is hard to scale. And if you are, you want to make sure you trade up and not sideways.

For instance, we recently flew out for a vacation. We packed light and when we arrived at our AirBnb we rented a stroller, a crib, toys, etc. They drove out to our home and dropped this crap off and charged us a daily rental fee of $75 a week for the stroller, $10 for the toys, and $40 for the crib. Then they came back and picked their crap up, washed it, and stored it for the next guy. $125 and two trips out to our house.

Now, let’s compare two opportunity vehicles.

The baby shit deliverer VERSUS an HVAC guy.

What is the average ticket value for an HVAC guy vs the BSD(baby shit deliverer)? It is significant. $125 for two trips vs $300+ for 1 trip.

What is the revenue per employee. Figure 20 stops for the baby shit deliverer at half the $125 for $62.50 x 20 = $1250 a day and 7 stops for the HVAC guy at $2100. The revenue for the HVAC guy is almost twice as much.

What about the serviceable market? Everybody needs an HVAC guy, but not everybody needs baby shit deliverer… maybe 25% of the serviceable market needs baby shit that doesn’t bring their own or have a baby.

Which is more scalable?  A hidden cost of the baby shit deliverer is storage. Can you imagine how much storage you would need to service 1000’s of customers? An HVAC guy can operate out of a modest shop with parking for vehicles.

Which one is more complex? An HVAC business is considerably more complex with specialized knowledge, but at scale I might argue they are about the same in complexity. The baby shit deliverer is gonna need a robust inventory system to keep up with all the baby shit, systems to clean it, find it, deliver it, return it etc. And the same with an HVAC company.

Recurring revenue? The HVAC company definitely has the upper hand here with service contracts, relationships, commercial clients… although the BSD could also develop relationships with resorts and property management companies.

Which business is worth more? The HVAC company wins hands down on this one. Private Equity is buying HVAC companies like hotcakes from a greasy diner and paying stupid money for them.

See what I mean about choosing your vehicle? If your objective is to build wealth. It helps to evaluate the opportunity vehicle.

A good way to determine if your business is scalable is to see if Private Equity is buying your type business. If they are then you probably have a good opportunity vehicle and just need to focus on scaling it.

And if you are like me, when you are on vacation you stare at baby toys and think about opportunity vehicles.

~Blue

P.S. what is your opportunity vehicle?