Welcome to our new monthly newsletter. The third Thursday of each month, we send out a couple of current projects and updates related to the goings-on at NewGate Capital, our partner companies and our clients. We realize you are busy, so we promise to keep it brief.
We hope you are enjoying the beginning fall! For those of you fellow Floridians, you’re probably also relieved that the weather has finally dropped into the frigid 70s.With football season in full swing, we thought we would highlight one of our partner companies who has developed some new technology to be used at some upcoming live football games. We’ve also got a great business for sale for any of you who might be interested in turning over a new leaf.As always, please let us know if any of the companies below are of interest to you. We’d be happy to make an intro!
Congratulations to imediaReach!
They have entered into a three year agreement with Florida Citrus Sports for their new product LiveEventTV (http://liveeventtv.com/). The product, which allows attendees at live events to stream television feeds to their mobile devices while at the game, will be in commercial service at the Russell Athletic Bowl on December 29th and the Buffalo Wild Wings Bowl on January 1st.
They are also working on closing deals with the PGA TOUR, MLB, MLS and SEC for use at this year’s SEC Championship game in Atlanta, Georgia on December 5th.
They are having their first Live Event TV Investor Conference on Tuesday, October 27th at 5:30 PM EST at the Orlando Citrus Bowl — and you’re invited!! Hors D’oeuvres and beverages will be served. Guest Speakers include Steve Hogan, CEO of Florida Citrus Sports, and David Saphirstein, immediate past Director of Creative Technology for ESPN.
If you are interested in attending, please RSVP by replying to this email by October 22nd so we can let them know to plan for your attendance. Be sure to include the total number in your party. Following your RSVP, you will be provided with complete conference directions.
Glass, Window and Door Company for Sale
NewGate Capital Partners is representing the sale of a glass, window and door installation and replacement company headquartered in Central Florida. The company has been in business for over 30 years and maintains a loyal client base.
They have received the reader’s choice award within their community for the last 12 years and have received both the highest industry rating from several of their suppliers as well as an A+ rating with the Better Business Bureau.
The company has 25 employees with senior management in place. Sales have been increasing and they are projecting ~$4.5 million by 2015 year end. There is a 12,000 sq. ft. building comprised of office area, show room and warehouse space sitting on approximately 3/4 acre of land — all included in the sale.
Expressions of interest can be directed to Monte Mitchell, Associate at NewGate Capital. Monte can be reached via email at email@example.com or on his cell at (407) 408-9635.
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So you want to be a Florida business owner, master of your own destiny?
Which came first – The Chicken or the Egg–
The age old question in the title might be worth thinking about. Should you do a start-up with an egg or should you buy some chickens? A silly analogy? Maybe not.
Many people dream of starting a venture and becoming a business owner in Florida. I’ve helped several hundred wannabe-entrepreneurs work through this process. Many come in with the egg in hand, delicate, carefully guarded and full of promise. Perhaps they’ve decorated the egg to make it look more attractive and more advanced than other eggs. Convinced that their egg is unique yet they really aren’t quite sure what it will be when it hatches. They rarely consider that it may not hatch at all. After a time of incubation where you’ve kept it warm and looked at it all hours of the night maybe even added a few more colors to it, it hatches.
You have a chick! They are furry, loud and ready to be fed. It was a chicken after all and you are very proud of this new creature, you probably give it a name even though you can’t tell whether it’s male or female (which is very difficult in young chicks). A few days later you realize that you’ll need another egg or have to buy another chicken to mate with yours or your precious egg, after lots of feed and care, will have provided you with 1-chicken dinner and be gone. Your great idea didn’t produce much and you really were never in business.
Of course, you are smarter than that so you had several eggs or a partner who also had an egg that was compatible with your egg, Hmm, more about that another time. The point or question is: did you save time or resources by starting with the egg versus buying some chickens? Both actions will get you to the same place of beocming a business owner in Florida. You thought the egg route would be simpler and cheaper, let’s explore that.
Business ownership: A Going Concern or Start from Scratch
Previously we were discussing, not whether to go into business, but the decision of which method made sense for you. A chicken or egg scenario, do you start from scratch with just an egg? An idea that has yet to hatch but holds great promise or do you purchase some chickens, a going concern that is producing revenue and , hopefully, income.
Under the egg method you must have time: Time to weather the delays of a startup, the lack of customers, employees, revenues and spendable income. In fact the reality is you will most likely go deeper in the debt hole having no personal income for many months if not years. Do you have that kind of staying power (reserves)? Investors, if you can find any, will not allow you to spend their money on your living cost. So for sake of analysis let’s examine which is better, the chicken or the egg.
Your egg has a cost obviously much less than buying a group of chickens, but it does not produce current income. Let’s say you have spent $50k on your egg (idea) so far. Even when it hatches you’ll have to build up your “coup” of chickens letting other eggs hatch not taking income while this process build. You now have another $200k sunk into your business and / or debt from living expenses.
At $250k you could have bought a chicken farm, a revenue producing enterprise. You’d have debt but also income. You’d be buying a proven business because you did your due diligence, and know the stream of revenue the business has been producing. You might have to spend a few dollars for sprucing up the business; perhaps a new marketing campaign but you have INCOME!
But my egg is a fantastic idea. Could be? I hope so. BUT 75% of all new businesses fail by or before year 3 and 85% by year 5, Risky? You bet! Still want to be in business? Good. We’ll discuss alternative ways to make that happen while lowering the risk next.
So if I scared you by telling you before that about the 85% failure rate, you are now being realistic about your chances. I also promised a way to get into being a Florida business owner that is less risky, ready?
I’m writing this to both newbies and serial entrepreneurs; consider a proven concept with a well-established franchise. Of course you already know all about that and have been receiving vast amounts of promotional material from various Franchise development departments. They want you to buy a NEW location. While their concept might be proven, locations seldom are. However, good Franchisors have good methods for picking locations. So what do I have to say that’s different?
I suggest you seek out existing franchises that are either underperforming or the owner (franchisee) just needs or wants to get out. Franchisors know about these folks but will not suggest this upfront as their fees are much less when a transfer is made. In fact at any one time at least 20% of a Franchise portfolio is in transition or the Franchisor is looking to move out a poorly performing location because the owner is just a bad manager or lazy thinking he or she didn’t have to work at the business. This can be the “chicken” way of getting into business as there are good records and you’ll know what you are getting into. Plus, it will have revenues day one! You will most likely get into this existing location around 30% less than if you had started it. Now that’s a better deal. We like to be creative in finding deals for folks.
For you serial business folks with deeper pockets, there are often groups of locations available for many of the same reasons above. You can buy the whole package or pick and choose for a slightly higher price. Either way you get a viable, ongoing group of locations priced based on their current performance not the excellent performance you will get out of them once you apply your smart management talents.
Here are four areas where investing in startups and the private markets is superior to investing in Wall Street:
Investing in a Startup gives you unmatched access to the company and its affairs. You get to see minute details that you could only guess in a public company.
Legal Insider Information
According to Jason Cohen, “They say the only way to consistently make money on Wall Street is to have insider information. Unfortunately it’s not a joke, and although it’s illegal (and people sometimes go to jail for it ), those in the know will tell you it’s the norm.” Remember the Martha Stewart Case anyone? Investing in an startup gives you legal insider information on a level that could send you to jail on Wall Street.
Simply put, arbitraging is buying in one market and selling in another while taking advantage of price differences. For savvy investors, startups present opportunity to buy low and sell high when the company is either acquired by a bigger competitor or it goes public through an IPO – which is simply a process designed for early investors to cash in on their investment.
Present at Creation
A startup is a creative force. At best, it is an innovative engine designed to push the limits of current dogmas. Startups investors are the grease that keeps this creative engine moving and they get to be present at the inception of such creative endeavors. America runs on innovation, startups thrive on innovation and startup investors fund such an innovation.
This article is based on an article first published on 2011 by Joe Alvarez Jr.