Trigger warning...  â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â[view in browser](=)â â â I don't know about you, but I like to actually make money. Remember you donât want to just own a business, you want that business to cashflow. This week we discuss how not to confuse the two. BUT FIRST You beautiful human you, youâre 1 of 205,392 subscribers (and youâre our favorite, but donât tell the others). We passed that 200k mark this week, and we just wanted to say thank you. Thank you for being a Contrarian. We see you. To celebrate, weâre going to offer our first ever Black Friday deal. Andâas our favorite Contrarianâyou get first dibs, and [access to our Cashflow community]() for hundreds less than what weâll be offering to the general public. As an added bonus, we are throwing in our brand new Investor Operating System courseâfor 100% free. This is only available to the first 100 people that join Cashflow, and this course is NOT available to purchase on its own. Our Black Friday Deal wonât be cheaper, or better than this offer, so if youâre ready to create your first $10,000+ in passive income (like Nick did buying his first business), now is the time. Eeekkk makes me tingle reading it. â PS â [If you join Cashflow]() and you donât think itâll help get you to first $10k in passive income, simply email me within 7 days and weâll give you a full refund, no questions asked. Over 1,700+ people love it, [so I think you will too.]()â --------------------------------------------------------------- Today in 10 minutes or less, youâll get: - A framework to hold close during tough times
- 3 businesses you should never invest in (or at least I wouldnât)
- The world is getting hairy, but picking up talent might be easier than you think --------------------------------------------------------------- MENTAL MODEL Weâre All Renters It is all rented. This life isnât a given. Nothing is. Weâre just a world of renters on borrowed time, redecorating like we own the place. We spin our wheels trying to play for keeps, but lifeâs just a fish you gotta throwback. It keeps swimming and we⦠we donât. Thatâs the thing about living. Itâs real close to dying. All the time. Thereâs no denying it. But man do we like to deny, deny, deny. We struggle for control... playing stupid games to win stupid prizes. Ainât that funny. Life has a sense of humor. Its lips curl up thinking, âHow quaint you humans and your 10-year plans.â Thereâs no getting out alive. So you better make sure you live. For when youâre old, and the world has become small, and your body constrained, all you have is memories. At least for a while, before those pass away like leaves in the wind. May one of your many graves be in the heads of those around you. *I found this above snippet I had written to myself in 2015. I was 29 years old and worried about the impact Iâd have on the world. It felt like maybe I wouldnât have much of one. For some reason, this helped. The idea that at the end of the day, no one will remember your name. Could that be sad? Maybe. But itâs also freedom. Every bully, every mistake, will pass like a grain of sand. So, I suppose, live while you can. Even though we strive for ownership. Never cling too tightly to that which you canât take with you. --------------------------------------------------------------- THE ANTI-INVESTMENTS Businesses That Will Never Get My Money â I canât wait for all the responses we are going to get on this bad boy. âYOU DONâT UNDERSTAND⦠MY X BUSINESS IS BETTER.â Ok, ok, Iâm sure within this list there are gems too. But when investing, Iâm obsessed with one thing: probabilities. What is the likelihood that my money leaving my hands comes back with more money as friends? That is the only game we play. So letâs talk about some sh*t businesses, shall we? â
#1 ATM Routes Yaâll know we love vending machines. We even showcased [Quinnâs 6-step process]() for getting started! BUT - not all âvendingâ machines are created equal. Far from it. ATMs being one of them. Why would I never invest in ATMs? Letâs count the ways. Margins The margins are incredibly small. I mean very very small. I mean not even 6 inches on average. Weâre talking 1-3%. You can usually keep the majority of the surcharge percentage for a machine, but thatâs still not enough. Let me tell you why. A surcharge is when you charge someone $3.00 for using your ATM. You get 100% of that. However, most ATMs do 3-6 transactions per day, so thatâs about $540 a month if we assume you do 6 transactions every single day. The average withdrawal at an ATM is $80-100. Add that math up and you donât even have enough to pay someone to run your routes. Payback Period The average payback period on ATMs is long. Iâve looked at multiple funds in the space that donât start paying you until after 4 years. Individual ATMs wonât hit breakeven usually until after 7 in reality. That is because the average revenue per machine per year is around $1,500-$5,000 (REV - not profit). Future of Cash Hereâs a squishy one. Will cash continue to be important in the next few decades? Maybe not at the rate this fed is printing dollars. Itâs an open question. If the overall use of cash decreases, you are at a big risk since there is no asset/collateral to sell. â So ya, unless youâre giving me a spot in a cannabis store where they donât take credit cards or in front of a massive grouping of bars that never have enough card swipes and charge a cash cover, Iâm out. #2 Amazon FBA Is it just me or does every kind of scammy Instagrammer have a, âHey girl, lemme set up your Amazon FBA store for you for like a quick $5-$20k?â What is it with that? Anyway, Amazon FBA is when you let Amazon pick, pack, and ship your orders. You sell it, they ship it. You store your products in Amazon's fulfillment centers, and they pick, pack, ship, and provide customer service for these products. You leverage their massive scale and logistics, which is not a terrible idea. But let me tell you why Iâd never do this business. Platform risk Amazon controls everything. The biggest feature is the biggest bug. What happens when Amazon decides your product is a scam because a competitor puts up a bunch of fake reviews? That happens. Theyâre notorious for that. I know a seller that was doing $1.5M in sales, had his account banned for fake negative reviews, and couldnât get it back for 90 days by which point heâd gone out of business. Or Amazon actually gets all your data on how incredible your niche is and duplicates your product with a cheaper version of their own. No thanks. Me-too products The barriers to entry to this game are lower than FTXâs actual balance sheet assets. Competition is everywhere. Thanks to all those internet gurus slanging Amazon courses pushing private label selling, Amazon is already flooded with me-too sellers. Then, of course, we have the Chinese. Am I allowed to say that? [Chinese sellers]() outnumber US sellers on [Amazon.com](. Their speed at copycatting products is almost as impressive as their lack of interest in two words: âintellectual property.â Amazon sets your price They use an army of bots who scrape other websites for pricing information. If they see your products as too high, they may shadow ban your account which is a sales killer. So if you want to sell higher on your own website or elsewhere, itâs a no. Even if you sell your own branded products on Amazon, it doesnât mean that you get to set your own prices. Amazon info on the black market This is wild. Amazon has had issues with employees selling companiesâ data in other countries. This is basically the cheat sheet for low-cost copycats to come in and recreate your business. Below is a real sheet off the black market. â
#3 Retail Stores Itâs every lady's dream to start a little boutique with all their favorite things, have friends come in, and sell as many âlive, laugh, loveâ graphic tees as your little heart desires. And itâs not just ladies. Many a gent wants to own that store with a bourbon bar and clothes that are actually âcool manâ. The problem? Those are 9 times out of 10 terrible businesses. Scars arenât healed I walked into a shopping mall on the outskirts of San Diego. Despite the flashing lights and sale signs, I canât help but notice the scars found on just about every mall Iâve been in. The flagship store, formerly a 200,000-square-foot Dillardâs, is empty and dark. The future in retail may continue to be online, except in high-traffic âexperienceâ based areas. â You buy product upfront (no float) When you go to buy the retail supplies to sell in your store, you pay upfront. They then need to ship those items to you which you need to stock and likely hold for a period. Leftover inventory? Too bad. Order new fall styles in summer even though you canât sell them for 60-90 days. Oh well. High rent for high traffic The cash flow realities of a high overhead retail business model like specialty retail are not to be understated. Mont wonât ever tell you how much they really make. A lot of these mom-and-pop stores are funded by people with big pockets as a defective side project, or to bolster a brand's online e-commerce business. You live and die by sales per square foot, but in order to get enough volume, you have to pay rent thatâs equivalent. Tough Financials: The high turnover of inventory necessary to keep customers coming back gives me more issues than Iâm willing to deal with. What do I stock? When? How do I insure my lower-pay employees arenât stealing? How come no one will give me a loan to start this business? Those are all fair questions. Your largest problem wonât be your gross margin, aka what % you make on each item you buy and then sell. Itâll be your net profit. Getting enough volume to handle your fixed costs. Buy local, but stick to the products, not the business. Bonus Businesses I Also Love to Hate: - Restaurants: Spoilage, failure rate, the fickleness of customers, staffing
- Gyms: The bigger you get the worse the customer experience, hard to scale
- Dry cleaners: Toxic issues, hard to staff, remediation can kill your business Am I missing any? Did I call your baby ugly? Sorry. Kinda. Question everything and protect your pennies, Codie & Contrarian Team Written by Codie Sanchez, Edited by Rananda Rich and the Contrarian Crew â --------------------------------------------------------------- CONTRARIAN EXTRAS Layoffs Not Looking Pretty The world is looking hairy. Weâve been talking about the oncoming recession for some time, including the [biz Iâd do in a recession](=) and [how to weather the storm](=). Just a reminder, there is always opportunity in every market. For instance, weâve seen 120,000 layoffs in the tech industry in 2022 so far, about 1% of the total employee base of 12 million. Thatâs a tragedy, but itâs also an opportunity to hire those 120,000 talented humans. I sure am. â
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â[ð²Do Better]()â --------------------------------------------------------------- âDisclaimer â This is the âBe an adultâ section. Everything mentioned above isnât advice, just a recount of what I did. That said: This article is presented for informational purposes only. The opinions stated here are not intended to recommend any investment or provide tax advice. Neither are they an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Codie Ventures, LLC or its affiliates. All material presented in this newsletter is not to be regarded as investment advice, but for general informational purposes only. Day trading and investing do involve risk, so caution must always be utilized. We cannot guarantee profits or freedom from loss. You assume the entire cost and risk. You are solely responsible for making your own investment decisions. We recommend consulting with a registered investment advisor, broker-dealer, and/or financial advisor. If you choose to invest with or without seeking advice from such an advisor or entity, then any consequences resulting from your investments are your sole responsibility. By reading/sharing this newsletter or consuming our content on our other channels, you are indicating your consent and agreement to our disclaimer. â â [Twitter]( [Website]( [Instagram]( [LinkedIn]() Make us sad and [Unsubscribe]( from all communications| [Update your profile]( | 113 Cherry St #92768, Seattle, WA 98104-2205 WANT MORE CONTRARIAN? - ð« Join [a community]( ð« for cashflowing, freethinking millionaires.
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