In the world of real estate it’s been said that if you want to assure yourself the opportunity to pay retail, then build a building from scratch—don’t buy used and don’t rehab or renovate.

In the world of business, I’ve come to recognize, after some forty startup businesses and eight rehabs that the rules are probably no different. If you want to assure yourself spending the maximum amount, build from scratch — do a start-up!

If you have some capital—not a lot of capital, but some capital—then don’t build from the bottom up, buy something used or buy something capable of being renovated.

A business that has a successful business model, even though, for whatever reason, it’s not necessarily scalable by the current owner, becomes your stock in trade. For every business that reaches that level, there are 6 businesses which have failed and 3 businesses which are simply treading water.

To identify the characteristics of a successful business model premised not on a particular business but on the business of business, the following rules apply:

1. Identify a business with a successful business model.
2. Focus on those businesses with a successful business model you have the means of acquiring.
3. Acquire the business incentivizing the existing management (owners or not).
4. Focus on leveraging the primary attributes of the business and diminishing or eliminating non primary activities.
5. Maintain corporate oversight, but let the business managers operate the business itself.

There is nobody who can explain a successful model to consistently leverage a business. However, based on where I am today, the preceding reflects my current thinking.

Original writing date: May 16, 2008

This entry was posted on Wednesday, July 2nd, 2008 at 7:32 am and is filed under Business, Business Rules, Dynetech, Fragments, Larry Pino, Life. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.