Alan Pentz
@apentz
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Teaching owners how to build self-managing companies. Started my first business in 2007 & grew it over $20m. Now I’m invested in four others & counting.
Washington, DC
Joined December 2008
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@seanpatward
It doesn’t exist.
Risk free returns are treasuries.
You can get 5.5% for a few more months or 4% for 5 years or whatever it is today.
If you don’t like what they offer, you accept risk & usually get more return. There are about 1 million academic papers outlining those
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One of the major trends that SMB’s need to jump on is “Digital Ops”.
It’s a combination of offshore talent, automation, and AI.
And it’s going to change the world of business:
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Selling a profitable company for less than 10x almost never makes sense.
Do the math: If you sell a $1m net profit company for $5m you will net either:
$3.8m or $3m depending if it’s a stock or asset sale.
Ok $3.8m is nothing to shake a stick at but think about if you could
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"Those deals don't exist anymore," is the frustrated cry of the modern investor. Just 10 years ago the world was our oyster: multifamily real estate, SaaS software, HVAC businesses. They were all cheap! It was a good time to be a buyer...
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Germany's industrial base is in danger.
@DoombergT
showing how natgas sits at teh beating heart of Germany industry:
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@mattyglesias
Put a screen in your window, kick back with a glass of ice water and wait for your dryer cycle to conclude. America
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$10m is the sweet spot of a lifestyle business.
You can make $1.5-$2m a year in profit.
You can afford a couple of really good managers to help run it for you.
And it’s enough to sustain some losses if things go badly.
But it’s small enough to resist someone of the
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Being a business owner is hard.
You have to find and hire the right people.
But you also have to let go of the people who aren’t the right fit.
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Here’s exactly how I grew a company to $25m.
It only took 20 years!
Step one: pick an industry and work in it for 3-4 years as a W-2.
Step two: when that company gets bought start your own
Step three: struggle for 5-7 years while you learn how to run a business
Step four:
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Anyone who’s in business knows that cash is king.
More accurately, cash FLOW is king:
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@JeppsenJonny
Jonny, who cares about the dinner.
Let’s talk about how you eat that and remain alive?
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We hit a revenue black hole at $15m:
- Needed a new team
- Needed new processes
What would you do first in this situation?
1. Implement EOS
2. Training existing people
3. Hire new people
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@huntercoldcalls
@MatznerJon
was telling me he’s so tired of walking on the beach and can’t wait to walk on the thin sidewalk of an impressively built 8 lane highway.
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Successful business people have one thing in common:
They’re lifelong students.
Always learning.
Here’s why being a student maximizes growth and success in business:
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I have an MBA but had no idea how to run a business when I graduated.
I didn’t even know how to get into my business bank account.
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Life as a business owner is not easy.
It demands that you constantly learn new things.
Otherwise, your business will plateau:
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I hear people talk alot about entrepreneurship, but so many would be better starting with “intrapreneurship”.
The best way to build skills is to work for someone else first.
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@TripleNetInvest
DC is pretty screwed. Very few people go to offices there.
We sublet our office in DuPont for 60 cents on the $ & were lucky to get that. Building sold for a 1/3 of its previous value.
The feds can’t get their people back & now we are losing the 2 sports teams to Alexandria.
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Harsh truth: Companies grow faster than people do.
Every time you 2-3x the business, you’ll need to replace 50-75% of the leadership.
It’s brutal but crucial to understand if you are scaling.
So, how do you know when to transition your current leadership?
Read this:
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The skills that got you to $5m won’t get you to $25m.
You have to level up your team and yourself
Very few companies make it past $1m, not to mention $5-10m
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Learning is the most important skill for entrepreneurs.
(execution being a CLOSE second)
I have made a habit of reading every single day — here are a few newsletters that I read regularly to keep myself up to date and sharp:
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Owning a small business isn't just about financial models and strategy - it's about hands-on management.
So what does that mean?
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Mission accomplished at re-convene. I was officially unblocked by
@sweatystartup
. The sun is shining in LA!
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“Build the dream, not the prison”.
This quote is what business ownership is all about.
It’s tragic to me how many business owners are trapped by their own companies though.
Here’s why it happens, and how to break out of it:
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Looking back, I should have fired faster.
Holding on to the wrong team members can inhibit the business more than you realize.
I spent too much time trying to develop people into something they weren’t.
My advice?
Listen to your gut and get rid of the bad apples.
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I was a slacker my entire life.
Now, I own a business that will do $35m in revenue this year.
I was a smart kid, but never one to do well in school.
Here’s how I turned my life around:
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I decided to start running my own business at 34.
Not for the money.
But for independence.
Thank God I decided to do this at 34.
I don't think I would have the stomach for it in my 50s.
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@mhp_guy
@BillAckman
The fact that MIT and BI took this on shows how out of touch they are. I think Bill will get them back in touch or bankrupt. One of the two.
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If you are the owner, the bottleneck is always you.
You either hired, created, or allow the issues causing the bottleneck.
This chart shows what happens when the leader isn’t able to grow faster than the company:
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Business partnerships are a tough subject.
I tend to think they do well when the roles of the partners are clear and there’s a clear exit timeline and strategy.
Open ended partnerships don’t do as well.
Circumstances and people change
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Funny enough, the real reason I started my business was to buy a BlackBerry.
A good one.
I was working in government consulting at the time.
I’d started a new job and they gave me a crappy hand me down phone.
It pissed me off.
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@RobertN24123462
@businessbarista
Execution is way more important than ideas. Most business ideas are obvious and known, it’s only the people who can put together the team and resources to execute that matter. Secrecy usually results in zip.
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@EllliotttB
What’s the panic about? I’m converting Class A CBD office space into pet grooming salons. We are killing it!
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@meetmikehiggins
See you next summer. Nothing like getting a beer at the student union in Madison in August.
But then I’m out. I can’t live thru that winter. Last time I was there it was snowing on Memorial Day I think.
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Very few people can sell like the owner of company.
In most cases s/he needs to be the key sales person until you get to $3-5m in revenue.
Agree or disagree?
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Biz owner at $500-$700,000..
You have two paths:
1/ Focus on processes for 3 months: Increase margin by 5%.
2/ Focus on selling more for 3 months: Increase top line by 25%.
Which one are you choosing?
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I was several years into running my business before I really focused on the numbers.
When I finally hired someone to look to focus on cash and financial projections, it wasn’t good.
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People are going to tell you lots of BS about servant leadership & leaders eat last, etc. in your biz career.
The reality is most employees want leaders who:
-Make decisions
-Deal with poor performers/behavoir
-Set a vision
-Communicate expectations clearly
-Maintain a level of
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@dollarsanddata
@jasonzweigwsj
That’s close to the advice a friend of mine got from the super powerful & corrupt chair of the House Transportation Committee, Bud Schuster.
Never sign anything you can say yes to. Never say yes to anything you can nod to and never nod at anything you don’t have to.
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@SMB_Attorney
I never understood why more airlines don’t just sell overhead space like frontier or RyanAir. Makes so much more sense. Then you can board at the last minute.
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@BillAckman
@MIT
Are there ways to short Ivy Plus schools? How can I express a long community college short elite college viewpoint.
Can Goldman create a CDO that they only mark to market after they’ve hedged out?
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@BobEUnlimited
Just block her and keep posting.
You’re the best macro poster out there so the haters are going to come for you to grift some attention to themselves.
Ok, you and
@dampedspring
are the best macro posters. Anyway, brush it off and keep fighting. The silent majority is with you.
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The more I’ve tried to grow my X followership, the more I’ve grown to hate X.
It’s a tough conundrum. If this is the future of business, I don’t think I want to be part of it.
The content game just gets boring after a while.
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Looking for the next gold rush?
Digital Operations.
Companies need help bringing in automation, AI, & global talent.
I see a big market for companies doing this as a managed service.
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@FinanceLancelot
I’d love to hear how the ruble is going to replace the USD. I think you have no idea what you are talking about.
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Lots of people can bootstrap a company to mid to high $100,000s.
If you’ve worked in an industry and have contacts, you can drum up enough business.
But getting to $1-2m is harder. You have to change.
First by upskilling yourself and then by attracting the right skills:
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$5m in revenue is when I found I could start building a real management team to take things off my shoulders.
At $10m I could really start getting out of the day to day.
I’m sure others can do it earlier but I had trouble affording the talent I needed below $10m.
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@abakermont
It is true that guys tend to “take” the kids on Mothers Day and “spend quality time” with the kids on Fathers Day. Things that make you go hmm..
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@CartoonsHateHer
Oscar Wilde hands down. The only thing worse than having a following on X is not having one.
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I read a quote: “You don’t fall to the top of a moutain, you climb there”.
That one hits home for me.
You can stumble your way to $10k/mo (if you have a skill or service), but to hit the $1M+/year mark, it doesn’t happen by accident.
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@STLChrisH
I’ll respectfully push back here. I’ve just been reflecting on this as I’m writing up my learnings in a newsletter/blog and I stagnated at $10m because I didn’t have the right leaders in the functions of the biz.
It wasn’t about me wearing multiple hats but not having the right
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@PrivatEquityGuy
Sure some do and some don’t. The delta is $50k and means nothing. I know multi millionaires who drive Porsches, high-end teslas, etc.
I don’t understand why there is some virtue in self denial when you are a millionaire and saving $10k. What is the money for then?
I mean no
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@girdley
@CoffeeToro
My rule: invest in anything that involves Americans getting fatter, stupider, or lazier. I might start an ETF strategy around that. My ESG is FSL.
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I run a company that will do $35m this year.
Honestly, it’s not easy to get to this point.
I’ve been punched in the face more times than I can count.
But each low-point came with a lesson learned.
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@JeffreyASachs
Who reads the Brothers Karamozov in a week. Even Alyosha would be proud of that
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@SMB_Attorney
The class I would teach in college: No one is coming to save you 101. 201 is building a multi family investing empire based on Tik Toks.
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@seld_on
@RichardHanania
And they don’t print Yen? Do some research? They basically perfected QE.
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I’ve been doing more investigation of ESOPs as an exit mechanism.
It’s a great way to defer taxes & if you do it right, that tax deferral adds another “turn” of EBITDA. So if the company is valued at 4x, you can realize 5x by not paying taxes.
Here’s one the best ways I’ve
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The only way you can scale your company quickly is to get a great management team in place.
They need to put in great processes and systems but start with the who, then go to the how.
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Hot take: I think it’s scary how many MBA grads (with very little business experience) are buying businesses using SBA debt.
Operational experience is critical for driving success in business — and business experience is not the same as business knowledge.
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@seanpatward
I love the responses about hard money lending and private credit.
These are of course zero risk.
I’m guessing your client is comfortable taking over failing businesses/properties like a mob boss, gutting operations, and then selling for what she can get?
Are these people
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The biggest returns in the future will come from those who can create assets: businesses, income producing real estate, etc. That or crypto monkeys but I don't draw well. There are dangers in this approach...
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Ideas getting some traction. These next few decades won't be easy, but for those with the stamina and aptitude to create assets, the rewards will be significant. If you want to read more, check out my Substack:
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Always prioritize short term pain over long term pain.
It holds true in everyday life, but especially for business owners.
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@mattyglesias
Every bank under $250b in assets will have a run starting Monday. That’s something like 1/3 of banking assets. This is too high profile and the losses too large to let depositors take haircuts
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@codywagee
I think we need to distinguish between traditional searchers and self funded searchers using personally guaranteed SBA debt.
The traditional searchers are going to be more financially educated on average, have investors who will steer clear of bad deals, and can buy much larger
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I like the accountability that owning a business provides.
It shows you every one of your flaws and rubs your face in them.
Most people don’t want that.
I get it.
But if you’re going to own a business, success comes from recognizing those flaws.
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“Overnight success” is such a myth.
There is always a time where you are just working in the dark, often by yourself.
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@mhp_guy
These feel tough if you’re not already in the industry:
-Lots of employment risk (ie I-9 issue)
-Commercial will go with low bidder as long as they are acceptable
-How equipment heavy is it & what’s the replacement cycle?
-How many strip clubs do you have to go to to keep the
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This is THE check list for any business owner. I might add a category for sales but
@brentbeshore
should be required reading for small to medium sized business owners:
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@shawngorham
You guys Mormon or what? All getting up at 5 am and no play makes Johnny a dull boy!
BTW, just spent 3 days in San Sebastián Spain. They go out at 9, drink and eat for 4 hours, and go to bed at 2 & everyone climbs mountains on bikes. To each his own.
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Small businesses stay small for a reason as Brent Beshore says and that reason is the owner.
You aren't making the hard decisions or you aren't learning enough or you aren't investing enough or...
Can't blame anyone else but yourself.
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@ElbridgeColby
This is Steve Jobs 101. When he came back to Apple in 97 they had dozens of products. He cut it back to 4, focused, and saved the company. Focus was the advice he gave Google’s founders as well
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@sweatystartup
I don’t agree. Gossip is a behavior baked into human DNA. It helps people build teams and allies.
You can minimize it by being more transparent but it’s like saying I’m going to outlaw people eating cupcakes.
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