Jeff, you should run those CGR’s for 10 years of investing v 7 years for a business (I’m assuming that you can’t start / buy THE business while yo are still in the military, from a practical perspective) … let us know what this analysis tells you?

@ Diane – Great comments re the business; Jeff should read VERY carefully, if he intends to pursue this business opp. any further …

You and I know the value of your staying in the military for 3 more years. The rest should assume that as a given. The retirement benefits are too great to chuck.

Not sure what else you did besides fly (obviously lead people) that is marketable to aeronautical companies, but that may be secondary again, too. Seems if you can fulfill your life’s purpose running this business and trying to make it excel all the competition, then you should do this on your military retirement. Kids should get scholarships (that’s their job – getting good grades, right?) and wife can find something that brings value to the family as well (perhaps run the books – is she qualified for any of the jobs in such a business now? It’s not always a good idea to put your eggs all in one basket, but with the military retirement, this is not quite that. You both might be better off if she got a separate career going that added more cash than simply saving on an employee who had a job more than a career (i.e., she should find something with promotion potential/more cash). Granted health insurance is not an issue for you much with the military retirement, but even that might be good for the family post-retirement to supplement the CHAMPUS or whatever it’s called now.

Then, again. The market is down all around. The business records for the “great deal” still read good, but those are starting to tank as well.

I agree with Adrian that stocks are likely to go up quicker than a business in value (e.g. check the price of about 10 stocks in varying industries and estimate how quickly they would GROW if they reached the value they were a year ago in just the same amount of time. Much more UP% than what went down.) Still, if your life’s purpose is served by the business, evaluate this particular offering but also keep looking for others. You will learn from your mistakes and by asking questions.

If you can, get permission to contact their customers and do a survey to see how apt these customers are to continue doing this business. If you can’t get this, try to guess who the customers are. If you have not yet down a SWOT analysis of this market – identifying threats particularly – then you need to stop and ask yourself what you’re doing. You may have already done this in your head or the back of a napkin, but you do need to scribble it down somewhere and do some market research.

You need to minimally look at this business as a business and figure out who its competitors are, what the barriers to entry into it are (which you should know, but are basically what is to keep someone else from doing a competitive business and going after your customers), opportunities for reducing costs (e.g., do the customers pay for both directions? have you got package-courier deals lined up at the airports you fly out of most? can you set up some back-haul business to fill empty flights home?)

I don’t know how much information the owner will release to you, but this is definitely a time to read between the lines and look for what is not said, then ask questions. The price can only come down while you wait.

Conversely, take Adrian’s approach of 7 yrs to cost it; if that’s the case, what’s the true estimate of the annual income? What would that do to you and the business if that is all it turned in a year starting the day you bought it? Are there any environmental concerns? If renting, maybe not a problem, but if you end up owning a piece of property, these could be major considering the fuel issues. Local and state regulations will also come into play on environmental issues. Do you know what those are yet?

I like short posts. I have the same problem as you in making them however. This one (yours above) was not short, just shorter than your normal ones.

Small problem:

1. If you divert ALL of your MM201 energy, $600k Net Worth, and future savings towards real-estate + stock investing, then Michael Masterson says that you can get to your $10 mill. Number by your 10 year Date.

2. But, if you wait 5 years to start a business, then you only have 5 years to CGR it to $10 Mill. … a MUCH harder task (CGR is 130+% IF we assume a $150k starting net worth by then)

And, trying to ‘hybrid’ by investing in stocks/RE now with the idea of ‘cashing out’ in 5 years to start the business is too risky, assuming that I read your timing issues correctly?

One ‘compromise’ is to assume an RE/Stock road to your Number but start a part-time business now (package up your ideas and sell via the Internet?).

But, if you truly want the Bricks’n'Mortar (Planes’n'Blacktop?) business then I think you should give that some further thought and share your plans with the ‘team’ … let’s see what some hot-seating can do to help?!

And further more, Why shouldn’t I?

What about the Entrepreneurial spirit?

What about staying involved in flying?

Why not build a team?

Why not do something fun?

Why not lead and develop leaders?

Wait a minute, that’s my life purpose….maybe I can fulfill my LP in my own fun and exciting business venture….even better.

As far as comparing it to shorting oil, I’m not sure. There is probably some inverse relationship to the price of oil and the profit margin. But I don’t believe the viability of the business will be solely tied to the price of fuel. That’s just one of several variables in my book.

I think the benefits of point to point, no hassle travel that has a measure of flexibility to it will be the draw that brings business in the door. That service will likely cost a slight premium to airline travel.

I think the customers are those who put a premium value on their time.

If that’s shorting oil, then count me in.

In the mean time I asked for 10 years of financial information (they’ve been in business since 1992) rather than just the last three (which I received initially). So far, the lack of response from the broker on this one has me a bit suspect.

I like the idea of owning it an letting others run it, but I have a desire to be actively involved in making changes. This particular Air Charter business needs to be redirected a bit to meet my desires and purpose.

@Adrian – I do plan to retire from the military at some point. I’m just not eligible to do so for another three years. After that point I can leave with pension in hand if I so choose.

Hopefully the Air Taxi/Charter idea would be my post military job.

I do know of cases where the existing owner is getting elderly, and is frankly sick of the day-to-day mundane-ness of operating the business and just “wants out”.

But many UK companies have bought what look like great businesses in the US and frankly have got burnt, e.g. Stagecoach trying to get into US buses. So I fear there are some great salesmen in the States! (Or very stupid business-assessors in the UK).

In the past, business purchasers would expect to pay 7 years profits for a business, while this one is available for 4 years profits.

Further, if the current owners took the advice of both “Rich Dad Poor Dad” and “The E-Myth demystified” they’d get in managers to run the business for them and then take off on their yacht, i.e. the business appears intrinsically profitable, so why not just go off and keep banking the profits, if working day-to-day in the business is getting you down (also the philosophy of “the 4 hour work week”).

You don’t own a business to work in it yourself – you own it to give employment to people who want a job, and who are not entrepreneurial themselves.

So you can imagine that they could set things up to get that 750k price by holidaying around the world while the 4 years are passing.

Personally, unless they gave me some other convincing reason, I’d say they’d seen a fall-off in business because of the credit crunch, and don’t expect it to be making 200k a year over the next 4 years.

So if they can hand it on to someone else, the 750k is guaranteed and in their hands without waiting any time, and the purchaser has to deal with winding it down because of the recession – mothballing aircraft and making staff redundant.

There are so many negative people who post on investment websites, who spend all their time saying “That’s no good” or “There must be a catch” but I’m not of that personality type.

But I would think that in a time of tightening belts, an upmarket business like this one would probably have to prepare to contract.

Indeed, if it’s “Phil Town true-value” is 7 years profits, then the anticipated profits would be $750k/7 years = $100k per annum – but in a way that’s just playing with numbers to try to make my point another way.

It would be interesting to watch that whole sector of the economy and see how journalists and share prices show what’s happening.

Sorry to be so gloomy, but maybe it could get you to closely monitor the sector while you’re prevented from entering it, so that you could consider getting in when someone else has slimmed it down and are themselves tired of the pressure, just in time for the up-turn!