This tiny frog is extremely rare, as it can only be found in the rainforests of Colombia.
It’s beautiful and extremely dangerous. That yellow skin is full of enough venom to kill multiple humans 💀
But experienced biologists know where to find these, how to handle them safely, and how to remove their venom.
Their venom is built up by eating specific bugs found in the rainforest. Once captured, they switch to feeding on normal fruit flies, which eventually dilutes the venom.
From there, they can breed poison-free frogs.
Why am I telling you about this little yellow frog?
Buying a "zero money down business" is exactly the same.
Internet gurus love to talk about buying a business with zero money down
What they don’t say is these “great opportunities” are like walking into the forest to capture a Golden Poison Dart Frog.
They are hard to find and extremely dangerous if you don’t know what you’re doing.
So let’s walk through a real deal that’s happening with one of the members inside 8-Figure Franchisee
James is a multi-unit operator of a national franchise. He runs one of the top locations in the country.
There’s another franchisee in his market who wants out. They are doing about $600k in revenue and $80k in cash flow.
The seller has $300k in SBA debt from the initial build-out (new ones cost ~$400k)
Normally you value businesses based on a multiple of profit. A single store like this one is probably worth 3X profit.
So 3 X $80k profit = $240k …. but he owes $300k which is a problem.
James brought this deal to one of our weekly calls. We talked through a series of questions to make sure this isn’t a Golden Poison Dart Deal…
1/ Would you open this same site as a new location?
2/ Does that $80k profit include paying a manager?
3/ What’s the potential sales & cash flow of this store?
4/ How close is this one to your other locations?
5/ How much additional cash will you need immediately for Capex?
The worst thing you can do is buy a deal just because you’re hungry for a deal.
However, this one checked all the boxes so James went back to the seller with an offer:
“$0 down and I’ll take over your debt payments”
The debt payments were $3.5k per month. The business was making $6.6k/month (with a manager in place)
James figured if nothing changes, he’ll cash flow $3.1k per month ($6.6k current - $3.5k debt = $3.1k)
Then he’d run his proven playbook with the goal of getting to $10k/month (after debt service)
He’s working with this local bank and the SBA to get the loan transferred to him.
But this deal could’ve been poisonous ….
The location could’ve been in a terrible spot, destined to fail.
The current revenue could be the maximum for that location
The seller (and maybe spouse and kids) could’ve been full-time, unpaid employees who would need to be replaced with $100k+ of wages, eliminating all the profit
The location could’ve been very far from his other locations, eliminating any synergies.
If the debt payment was crushing, it would choke the business.
Yes, zero-down deals do exist. Last week another 8-Figure member brought a very similar deal to review.
But you have to know which questions to ask so you don’t find yourself face-to-face with a tiny killer frog.
Cheers!
Brian