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this is the video where I go into what
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the worst business sectors that you
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should invest money in start or grow in
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and I'm doing this from a position of
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experience we're standing in my
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warehouse right now I'm trading
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businesses myself my employer people and
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I've made some mistakes and I've made
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some big wins and I want to sort of wrap
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that up into a video here on YouTube so
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that you know what you should avoid with
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a 10 foot barge pole and here's the
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funny thing about this video because I'm
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actually going to talk about some of the
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sectors that I'm already trading in and
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what I've done to tweak them so that
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they are actually better businesses when
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you can get a good model then you can
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scout that model up and you know that
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you can rinse and repeat it you know
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like the McDonald's model they know it
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works and they go and go again we want
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to find the right models so that we're
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setting ourselves up for profitable
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businesses restaurants one of the worst
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sectors that I've come across and there
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are some unicorns and I actually feel
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like I own one of those unicorns and
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I'll explain that at the end what do I
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mean by Unicorns yes there are a few
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that actually do make money but as a
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rule of thumb I think it's a really
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terrible business sector it's also a
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little fact here is if banks are willing
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to lend to restaurants and Hospitality
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businesses and they're not they don't
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like them because the failure rate is
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absolutely huge you've got low Revenue
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per employee now if you've got sectors
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that are high Revenue per employee just
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usually means they're a lot more
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profitable let me give you a quick
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example you've got a million pounds or a
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million dollars of Revenue and you've
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only got two staff you've got half a
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million pounds worth of Revenue per
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employee there's a good chance you're
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going to be super profitable not so with
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restaurants you could do a million
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pounds worth of turnover at a restaurant
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and you could have 30 40 50 staff why so
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many staff you might say but you can
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have a lot of people just uh in
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part-time hours Friday Saturday Sunday
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everything's going like gangbusters and
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it could be like the Mary Celeste Monday
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to Thursday that's something that you
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don't really want in a business we want
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nice boring predictable cash flow I
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don't like the high capex costs so say
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you're going to set up a restaurant it's
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going to cost you a million quid to set
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the thing up you've got to pay that off
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over a period of time through
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depreciation say your restaurant makes
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between five and ten percent net profit
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out of your profit you've got to pay
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back the loans or the capital that's
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been deployed to set the the restaurant
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up you pay that off over five or ten
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years everything's great now we've paid
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all of our Capital costs off but hey
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loads of competition is opening within
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the sector there's so many restaurants
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and they're gonna steal some of your pie
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even if you're better than them and that
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means you've got fickle customers it's a
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sector where the customers are so fickle
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they want to try what's new in the town
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and that's really hard to build loyalty
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unlike other sectors like an accountant
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you know as long as your accountant is
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doing a really good job they're with you
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for the whole of their lifetime one
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final challenge with this sector is the
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high rates of turnover taxes you've got
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business rates you've got vat insurance
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premium tax and all the other cocktail
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of turnover taxes which means that the
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government are taking more of your
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turnover than you're actually keeping in
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profit but I did tell you that I have a
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restaurant I actually own a big ice
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cream parlor and why does that ice cream
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parlor make money and why does it do
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better than most in the sector well it's
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big enough so if you do really want to
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open a restaurant make sure you've got
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capacity because you haven't got
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capacity you can't leverage the
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management you can't leverage the
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overhead you can't leverage your
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catering team you can't leverage your
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marketing you need to make sure
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preferably you own the the thing that
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you operate off so you haven't got high
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rents and the rents are going up all the
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time and try and find Legacy businesses
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it's better to buy one that's been
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around for 50 100 years so everyone
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knows it and that's what I bought I
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bought 100 year old ice cream parlor
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that's big enough with the overheads
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were really low and very little
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competition because we're the Legacy
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brand in the town and that gives us that
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unicorn status where most are just about
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getting buyer we're getting by and we're
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making profits and we're paying down our
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loans and we can refurbish the place so
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there's my little tips if you are going
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to be in the sector dog walking cupcake
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making and party planning three very me
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too low barrier to entry sectors when
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you're starting a business you want to
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be as high a barrier to entry as
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possible because it protects you against
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competition now those three sectors that
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I spoke about dogwood literally get
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yourself a lead and you're in business
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and that means that you're vulnerable
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people go oh they're making some money
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over there just walking a dog I'll do
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the same and that makes customers not
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want to pay very much because so many
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people can do it you're effectively
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swapping time for money any business
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sector that is swapping time for money
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that cannot be scaled to be a
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commercially profitable Enterprise that
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works without you in it should be
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avoided at all cost yes it's attractive
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because you need no money to start it
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but it's not attractive because no one
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wants to buy the thing when you sell
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you're effectively just building
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yourself a profitable job no one wants
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to buy a profitable job if you want to
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build yourself a profitable job the
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smart thing to do is just go and get a
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job and not have any of the risk of
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self-employment the big top piece of
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advice is be as high barrier to entry as
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possible have that mindset and get rid
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of all that low barrier to entry stuff
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Boutique clothes shops so many people
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have the illustrious idea of opening a
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stupid little shop and what you're going
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to get is stupid little results which I
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don't want for you I I want you to put
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your effort your time and energy in
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something that's not just going to yield
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results retail's really difficult the
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big boys really struggle with it and you
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might think your little shop idea is
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going to really work but look at the
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facts High streets are dying and if you
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want to be a really good retail shop
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you've got to make sure you're in a
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massively High footfall area you want to
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make sure your overheads are really low
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because you're going to be faced with
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this you're going to be holding loads of
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inventory you've probably got no
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experience of what inventory to hold and
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so therefore you're going to sit on lots
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of stock and stock is cash I know
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because I hold 1.6 million pounds worth
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of cash for one of my other businesses
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and holding stock really can cause you
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cash flow problems one way you could
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make Boutique retail work and I still
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don't like it is making sure you're in a
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niche and remember there's riches and
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niches so that could be doing specialist
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clothes for larger people or tall people
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because people would go out of their way
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to find you but then you've got to make
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sure that you're known and you've got to
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have a big off Street marketing off High
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Street marketing campaign to bring
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people to you and you think think of
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your retail shop as a showroom rather
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than a place to do business we're seeing
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cars moving into shopping centers right
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now and using that passing trade to show
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people their cars but they're not
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actually buying the car on the day and
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driving it off from the shopping center
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the retail that's going to work now is
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experience and showroom based where you
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don't actually need the shop to drive
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the revenue it's a really difficult
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business to be in and I would avoid
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doing BT retail at all costs and I speak
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from experience I used to own three
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party shops the rent the rates the staff
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the fickleness of the turnover it was
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one of the most stressful times of my
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life I would avoid at all costs I've
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seen other businesses very difficult to
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make money from some of the worst that
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I've come across that's hotels and the
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comedy factor is I actually own this
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hotel that we're in right now and I only
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bought it a few months ago knowing that
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they are very difficult to make money
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from why well the hugee capital
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intensive you know you need millions of
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pounds to set one of them up then when
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you've set them up you've got customers
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that come and go so you've not got
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regularity of customers well you might
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have some contractors that come
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regularly but it's not like a Danish or
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a score an accountancy practice where
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the customers are very very regular but
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also you need lots of staff and usually
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their hospitality and Leisure staff that
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are low skilled and then you've got to
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train them up to make them highly
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skilled and they're in a Fickle
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Marketplace they could be you know
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traveling or they could be at University
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and that recruitment process is just
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getting harder and harder as people
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don't want to work in these industries
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as much huge capital expenditure very
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difficult to staff now we've got a
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situation where we've got third-party
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booking agents the airbnbs the
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bookings.com that actually own the data
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of your customers and so it's really
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important that if you do want to get
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into this hotel industry you've got to
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have very Deep Pockets which is in a way
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it makes you high barrier to entry which
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is to me a very strong part of business
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and you've got a hugely depreciating
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asset you do these rooms up and then in
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three years time because people don't
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really look after them they're in and
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they're out you have to redo them up all
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the time so there's a constant need for
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more Capital to go in to make you very
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competitive in a highly competitive
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Marketplace there's lots of hotels but
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why do I like the world for inheritance
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tax reasons here in the UK you can pass
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the hotel onto your family inheritance
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tax free they are a trading business
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with commercial property entwined into
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it which for the UK is very tax
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efficient and also I like if you can
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create multiple revenue streams so when
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you've got an asset like this you need
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to sweat it so yes we've got a very
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active Pub bar function area a
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restaurant area we're doing meeting
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rooms and wakes and then we're doing all
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my own seminars here so why have I
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bought this hotel is because I've
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tweaked the model to make sure that we
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sweat the model more therefore we turn
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it into a commercially profit wins price
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and most hotels don't do all that stuff
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and that's why they struggle and they
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just about get by we don't want it to
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just about get by we want you to be
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super successful selling on e-store that
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you don't own you know what I'm talking
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about here Amazon eBay not on the High
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Street Etsy what I primarily don't like
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about this is yes they have a brand that
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people trust and they buy from them and
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that could elevate your revenues quite
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quickly but the main thing I don't like
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is they own the customer not you they
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own the email address and that's one of
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the biggest no-nos in business because
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there's two things I think make a
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business really valuable an effective
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profitable team that run the business so
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it's a commercially profitable
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Enterprise that works without you in it
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but we also understand a database of
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customers is of huge value and I've
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bought custom companies based on
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databases alone the customers that know
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and love and trust a business and I want
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to buy into that but if you're selling
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on Amazon you're selling on eBay or Etsy
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or not on the High Street they own all
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of that and if they decide to Shadow ban
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you or just take your product off their
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website because they can buy it
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themselves and do it cheaper and yes
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they do do that that's the end of your
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business so it's actually better to do a
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bit more of a slowly slowly catchy
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monkey approach and build your own
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customers using content marketing and
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your own e-web store that's why I bought
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party pieces it's a brand that's sort of
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35 years old everyone knows it people
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come to our website direct we get the
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email addresses we own the customers
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we've got the database and we build a
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big wholesale business that's why I've
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got this massive Warehouse literally
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every day 10 to 20 000 pounds worth of
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wholesale businesses going out each day
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which gives me the volumes to do the
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little and often orders as well I am on
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Amazon I am on eBay the problem is I
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feel like I'm just professionally moving
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money around for them you know we've
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employed someone full time to do all of
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our listings Amazon keeps most of the
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money but I am on there because I like
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the awareness and if you are going to be
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on these e-market places that are not
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your own make sure you're building your
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own brand otherwise literally the worst
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of the worst if you're not creating your
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own brand by selling on all these other
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web websites just a disaster game so
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just avoid at all costs build your own
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brand sell on your own website build a
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wholesale business that's the way to
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smash the internet another awful
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business to get yourself involved in is
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these events businesses and they're
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really ego businesses I mean lots of the
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types of businesses that I'm talking
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about today around hospitality and later
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is like oh we own a coffee shop or we
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own a restaurant or all we own a hotel
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well look this one here is another one
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of those oh I've run my own events but
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really you want to be thinking about
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this from a business point of view from
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a profit and loss point of view and I'll
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tell you why events are so tough to make
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money it's you've got to get lots of
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people to buy from you just once and
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that's not good business sense what's
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much better for business is this a
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little bit of money from a lot of people
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a lot of the time what you've got with
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events businesses money once that's it
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it's over you're not building a database
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you might come back in a year's time
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you've got loads of competition you
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don't own the site that the event
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operates out of you've got to hire stuff
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you've got to buy stuff and use it just
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one once now here's the oxymoron to this
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little description that I'm talking
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about we're standing in a location that
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we own this is Marsh farm animal
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Adventure Park and in many ways it's an
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event business but what are we doing
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different what have we done to improve
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the business model for profitability
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well we own the site we sell an event to
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someone then we create another event on
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the site that we own we own the database
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and we've got events happening all the
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time on a site that we own so when we
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invest cash into capital expenditure
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we're getting to reuse that capital
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expenditure we own the Marquee Big Top
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behind me we don't rent this thing so we
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buy it once and we get to use it for
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years and years we get to have the car
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park and do all the infrastructure in
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the car park and we own that thing we're
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not renting out and paying loads of
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money on stuff that we never own and
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there's massive tax advantages of owning
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stuff rather than renting stuff as well
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they're some of the worst businesses
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that I've come across hope you like this
00:12:53
video don't be a massive favor if you do
00:12:55
like it hit the like button subscribe
00:12:57
and hit me in the comments below what
00:12:58
videos would you like house to make next
00:13:00
see you real soon
