Before we jump in:
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What business should you start right now?
I get this question a lot:
"If you had to start all over again right now what business would you start? What sector would it be in? What sectors would you avoid? How about real estate?"
I’ll tell you what I wouldn’t go into – and that' tech. It's mature. The competition is very strong. There are so many options that price is becoming a race to the bottom for smaller players right now.
I also would avoid a new product. I wouldn't do AI or crypto.
With these areas, you are spending tons of money trying to educate a market because nobody knows how to use these things except for a few exceptions and the top 1% of products and services. It's not ideal and very high risk.
Traditional retail is also brutal.
Online retail has boomed over the last 15-20 years. Now you are competing with China and all goods are turning into commodities. It's another race to the bottom.
Online content and trying to become an influencer and build a brand around that is also a tough business for those starting out right now.
Everyone wants to be an Instagram influencer or a YouTuber and it's getting harder to carve out your niche.
The competition is mind-boggling and everyone has entered this race.
The market isn’t going to grow forever.
The people in this business need to figure out how to build real companies that will be sustainable and enduring when their views go down. This is what I've tried to do.
The opportunity in services:
IMO, America is still a service economy right now.
Services are thriving and specifically for service businesses I would target those where customers sign on for scheduled service over and over again.
So I'd want to find something that has a subscription model attached where a customer is going to utilize your service weekly or bi weekly or monthly for as long as you can keep them on board.
I think pest control is a great business.
2+ years ago I invested in a pest control business and it's one of the fastest growing in my portfolio. They're doing millions in revenue per year and growing quickly with very little churn.
It's relatively simple to scale and easy to train employees.
Customers often stay with you for 10+ years so you can do creative things to get new customers in the door knowing they are very valuable in the long run.
Same with lawn care and lawn treatment. I love the home service businesses that are not just one time hit and runs.
A note on seasonal businesses:
I also love businesses that are seasonal because you can plan ahead and rewrite your business in the off season to improve leaps and bounds based off the things you learned during the last peak season.
In my first seasonal business (student storage) we were able to analyze our market and find improvements every year and focus on them during the off-season.
It was a common theme at Storage Squad that they pay us the big bucks for our work in October and November when nothing is happening and we aren’t servicing any customers.
That's when the real advances to our marketing, operations, hiring, and logistics etc were made.
Services that lead to real estate:
I also love businesses with the opportunity to lead into specialized real estate.
To me, real estate should be the end goal of most entrepreneurs because of the massive tax advantages and passive income that comes along with it.
However the real estate most people invest in is so competitive there are no deals left.
If you are buying rental houses on Zillow you are competing with 100+ other buyers in any given neighborhood.
Everybody wants to own rental properties or buy and flips because its the sexy thing to do right now.
The TV shows on HGTV glorify this and make it look easy. I hate that.
If you are going to get into real estate and think you can just go on Zillow and find a good rental property you are sadly mistaken.
If its on Zillow you are probably too late.
You have to find a competitive advantage. Cleaning up tax liens or estates. Buying foreclosures. Doing your own repairs and remodels. You have to find additional ways to add value or its very hard to thrive.
You could also start a business that leads into real estate in a niche market where you aren’t competing with a lot of other players. That is where the real value can be gained.
We did this at RE Cost Seg and that business has grown dramatically in 3 years.
Millions in annual revenue, 40 employees, and with 100% bonus depreciation potentially coming back, I think it will have a great decade ahead.
Other examples of this would be warehousers or distributors because it leads into warehouse and commercial assets.
Or maybe a vacation rental management company that leads into vacation home assets.
It was my experience in the student storage industry that led me to buy self storage assets. It was the perfect gateway for me.
Why you should pursue the trades:
But honestly, the number one business would be the trades.
As of right now, more kids should want to be electricians, plumbers, or HVAC techs.
These industries are so far behind everything else when it comes to tech, customer service, marketing and sales that implementing these things I talk about on this newsletter would put you leaps and bounds ahead of so many folks in the industry.
In each of these sectors, in good markets, you can easily make 6 figures/year or multiple 6 figures as an employee if you work for a medium sized operation.
If you are the owner of a plumbing company, an HVAC installation and repair company, a decking company, a pool instillation business, a flooring business, a window or roofing company, etc you can do very well.
A lot of these owners can build small teams of 3-5 people, and earn well over $200K/year even in tertiary markets.
The top of the food chain here can make $500K-1M annually in bigger cities.
If you're searching for a business to go after, I recommend looking at my list of 200+ ideas.
This is what I'd go after if I were starting over from scratch today.
I'd make a goal to pick one of these ideas and get to $100K in income for myself in year one and $200K+ of income in years 2/3.
I'd try to build a small team, keep growing revenue annually, save as much as possible and start buying real estate just as I did before.
I still think this is a phenomenal path for anyone just getting started in this game.
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I'm an investor in an insurance brokerage called Titan Risk. They're focused on helping SMBs get insurance policies including general liability, errors and omissions, cyber insurance, directors and officers liability and more.
The insurance guru at Titan, Jon, has helped over 1,500 clients get policies throughout his career.
He's offering 5 free consulting calls to review your current insurance and risk management program.
Just respond to this email if you'd like an introduction.
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A few tweets from this week.
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Want to estimate how much you could save in taxes by doing a cost seg study and taking bonus depreciation?
Try this calculator where you can share your details to learn how much you can save/defer.
Note: I'm an investor in RE Cost Seg which created this tool.
Onward and upward,
Nick Huber
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