did any of you guys ever make 100% ROI?

[Tranker]

This blogger I heard about in a business forum talks about how to buy something by getting 100% ROI investing in a website, and have the asset pay for what you would've spent cash out of pocket into.

Foreverjobless.com

Thinking about doing it with my school tuition. Instead of paying $30,000 a year invest $30,000, get 100% ROI, and have that pay for school. Have that 30k pay for 2-3 years of school, and then be able to sell it and get 30k or more (if I manage to bring up the value of it). Heck even if I get 50% ROI instead of a 100% this sounds like a really cool idea.

My money is currently doing 2-4% in the bank anyway, and I'd probably learn a ton from investing and managing a business. Kinda risky, but I'm seriously thinking about it.

[Ted S]

Just think about what your proposing.... if making 50 or 100% of your money in a year was as simple as deciding to take a little risk the stock market would be all but gone, companies devoid of employees. The reality is that if you manage to breakeven on your first year you've done amazingly well and getting 2-3x back in a short duration? Well, it has happened a few times but it's by no means practical to bank on.

Let's break this down a bit to see just how far 30k actually gets you...

Assuming you have low personal overhead, namely by living at home with your parents. You'll still probably want a car, gas for it, auto insurance, health insurance, a cell phone, some food, entertainment, etc. If you can keep that all under $1000 a month you've got an amazingly low burn rate but you've still taken 12k out of the equation leaving 18k to build your business. You'll need a server of some sort, an internet connection, domain, computer, probably some software, registration fees, licenses and of course any building costs. Doesn't leave much for buying inventory, marketing or sales to actually have a business or a customer.

2-4% earnings isn't spectacular but if your goal is school it beats the heck out of a 100% risk.

Thus the big question... why do it?

The simple answer is because you want too.

Building a business does mean you'll learn a lot, advance your skills, for the simple fact that you can afford a risk when you're young and unattached, for the boost to your career [people pay for skilled people] and then for the potential you could make a few bucks. You do not build a business with the assumption you will double your money anymore than you walk to a casino and assume you can beat the house.

[Tranker]

Just think about what your proposing.... if making 50 or 100% of your money in a year was as simple as deciding to take a little risk the stock market would be all but gone, companies devoid of employees. The reality is that if you manage to breakeven on your first year you've done amazingly well and getting 2-3x back in a short duration? Well, it has happened a few times but it's by no means practical to bank on.

Let's break this down a bit to see just how far 30k actually gets you...

Assuming you have low personal overhead, namely by living at home with your parents. You'll still probably want a car, gas for it, auto insurance, health insurance, a cell phone, some food, entertainment, etc. If you can keep that all under $1000 a month you've got an amazingly low burn rate but you've still taken 12k out of the equation leaving 18k to build your business. You'll need a server of some sort, an internet connection, domain, computer, probably some software, registration fees, licenses and of course any building costs. Doesn't leave much for buying inventory, marketing or sales to actually have a business or a customer.

2-4% earnings isn't spectacular but if your goal is school it beats the heck out of a 100% risk.

Thus the big question... why do it?

The simple answer is because you want too.

Building a business does mean you'll learn a lot, advance your skills, for the simple fact that you can afford a risk when you're young and unattached, for the boost to your career [people pay for skilled people] and then for the potential you could make a few bucks. You do not build a business with the assumption you will double your money anymore than you walk to a casino and assume you can beat the house.

Thanks for the breakdown Ted! I see the logic in what you are saying. A few corrections:

The idea is not to get 200%-300% ROI a year..but to get ~%100, which means that by buying a business that cashflows with 30k means it could take care of 2-3 years of tuition year after year, and have the principal when you are done. Not doing something like that means you LOSE $90,000 at the end of 3 years.

Also, I think I will going for something like the story I linked to buying an existing business (online business preferably), with existing customers and infrastructure. So the break down of what 30k will get you starting a business is different if you already buy a business that makes 30k/yr.

Investing in a stock market vs investing in a business is very different in my opinion. I think the stock market is much riskier than buying and running a business, especially when starting out. Since my goal is to be a successful entrepreneur this is a no brainer for me, because I am interested in business and like it!

So I guess my assumptions are:

- Investing money in business is better than paying it to the university.
- I am confident I will be successful in business.
- It is possible to get 100% ROI investing in business. (this probably has a lot to do with the price you buy the business for, and how much work is involved).

[Ted S]

Thanks for responding back! This is a great discussion to have and I hope others jump in too as I am certainly not the only opinion out there that you should hear.

The idea is not to get 200%-300% ROI a year..but to get ~%100

Yes, I get that... And it's an ambitious goal to put it mildly.

I've got a couple degrees, 10 years of digital experience, and I'd honestly tell you that if you can pull a 100% return [over base] on a 30k investment in your first year of business you should not bother with school. Repeat it 5 times, go on CNN and sell books.

Also, I think I will going for something like the story I linked to buying an existing business (online business preferably), with existing customers and infrastructure. So the break down of what 30k will get you starting a business is different if you already buy a business that makes 30k/yr.

Buying something gives you a jump start at the risk of getting someone else's mess but you don't spend 30k and make 30k in profit off the bat. You spend 30k for a business that may bring in 5-10k net, or nets nothing but grosses a lot leaving room to optimize. Then you work to build that up to be bigger or more efficient [the two basic levers to net returns] over the course of time. How much time depends on how good you are and how good of a pick you made.

And of course you still have to eat, pay for that car, etc so you have to factor in all that to your profits too.

Investing in a stock market vs investing in a business is very different in my opinion. I think the stock market is much riskier than buying and running a business, especially when starting out. Since my goal is to be a successful entrepreneur this is a no brainer for me, because I am interested in business and like it!

Huh? We've had one of the worst markets in all of history recently and even then we're talking about less than 40% losses [34% for the NYSE in 2008]. Last year if you had bought the NYSE you'd have made 5.5%. When you buy a business your risk is 100% and not over a year, you can lose it in an hour.

Now I'm not advocating sitting in the stock market but since we're talking risk, it's far easier to control when you have access to near immediate liquidity than when you've bought a business, are moving along and discover eBay just decided to enter your market this morning or the lawsuit you ignored wasn't a joke.

- Investing money in business is better than paying it to the university.

I think it depends on what you want in life [you'd have a hard time becoming a doctor buying a web startup] but certainly being young means you can tolerate extreme risk so if you have have a passion, give it a try. 30k is nothing in the grand scheme of life.

- I am confident I will be successful in business.

Great attitude. But don't underestimate the learning curve. Not because you can't get past it, you can. But because it will cost you time and money to learn which brings us to the last, and most important point you've raised.

- It is possible to get 100% ROI investing in business. (this probably has a lot to do with the price you buy the business for, and how much work is involved).

Possible, yes, but again, if it was this everyone would be doing it. Set reasonable goals and make life work off hitting those, not the sky.

[loanuniverse]

So I guess my assumptions are:

- Investing money in business is better than paying it to the university.
- I am confident I will be successful in business.
- It is possible to get 100% ROI investing in business. (this probably has a lot to do with the price you buy the business for, and how much work is involved).

I think the discussion is purely academic, because any online business that can provide cash flow equal to $30,000 a year with a relatively minor amount of work will not sell for $30,000. And if you are buying an online business based on its “potential” to produce that cash flow for $30,000., then I have some domain names that I want to sell you.

There are a lot of ways you can make $30,000 online, but you will need to either dedicate a substantial amount of time, or you will need to invest a lot money and risk losing some of it in the process. For $30,000 a year with those risks, I might as well sell my skills/labor and get a job.

Because of the above, I think your assumptions are flawed.

[Sagewing]

I think you need to get a broader understanding of how business, especially internet business, works before making your assumptions. The website you referenced is based on the experience of one person who jumped into the online poker world at just the right time and made some money. He also had a PR triumph which probably helped him out a lot.

I doubt he made all that much money, though, because people who have really made money rarely operate blogs talking about how to make money.

So, if you have a plan to jump into a niche business that is a bit fuzzy when it comes to the law, then get some incredible PR for free, you can do pretty well. But, the author of the website/blog doesn't seem that credible to me

If you were consult some other sources of business knowledge you might get a more balanced view of how things work, and maybe you'd revise your assumptions, which I will address here:

- Investing money in business is better than paying it to the university.

This can't really be stated as a 'fact', and is a very questionable assumption.

Statistically, money invested in education has about the best return on anything you can possibly do. Getting higher education consistently increases lifetime earnings. Also, the statistics on business investment prove the reverse - small businesses and investors can get eaten alive and it's an extremely risky practice. Huge amounts of people lose their investments, and depending on which statistics you choose to believe, a large percentage of businesses fail.

Paying a university for a sensibly chosen degree path is a great investment, both financially and personally.

- I am confident I will be successful in business.

Great! How confident are you? Are you confident that you can learn the ropes, work your ass off, make mistakes, learn lessons, continue working your ass off, and eventually make it big? I bet you can!

But are you so confident that you think you can skip all the above stuff and simply succeed in business on the first try with no experience or training? That's pretty confident

- It is possible to get 100% ROI investing in business. (this probably has a lot to do with the price you buy the business for, and how much work is involved).

It is possible to get much more than 100% ROI investing in business. It is also possible to get 100% loss. This isn't really a meaningful assumption because you could easily just say, "It's possible to go to Vegas with 10k and come home with enough to pay for your whole education". But, that's not much of a plan, is it?

The one thing that is missing from your statements is an answer to this question: "Why would YOU succeed with this plan that most people find to be unrealistic?". Maybe there is an answer - are you brilliant, well connected, have a killer product, or just the luckiest person on earth? I

[Billy Murphy]

This blogger I heard about in a business forum talks about how to buy something by getting 100% ROI investing in a website, and have the asset pay for what you would've spent cash out of pocket into.

Foreverjobless.com

Thinking about doing it with my school tuition. Instead of paying $30,000 a year invest $30,000, get 100% ROI, and have that pay for school. Have that 30k pay for 2-3 years of school, and then be able to sell it and get 30k or more (if I manage to bring up the value of it). Heck even if I get 50% ROI instead of a 100% this sounds like a really cool idea.

My money is currently doing 2-4% in the bank anyway, and I'd probably learn a ton from investing and managing a business. Kinda risky, but I'm seriously thinking about it.

I am the owner of Forever Jobless.

I would not recommend doing this.

In the example from the post, my friend K was an experienced investor, and we both had other money and other businesses making us money. I'd never recommend betting everything before you acquire some knowledge first. Knowledge will be the most important thing you can acquire at this stage in the game for you, moreso than money.

The main points I was trying to get across were that great deals are possible, and even sometimes easier to get because others will stay on the sidelines due to thinking something's off if they are too low to be considered "legit", and the fact that if you can correctly calculate EV, it makes things a lot easier.

[Billy Murphy]

I think the discussion is purely academic, because any online business that can provide cash flow equal to $30,000 a year with a relatively minor amount of work will not sell for $30,000.

Yes they will. They are not "easy" to find, but they are out there. I have bought several at 1x or less myself in the last 18 months.

They are "riskier" than other deals, but they are very +EV.

[Sagewing]

If you bought a business a such a great valuation without having do add value to it, you must have some kind of secret source of technique for finding such businesses. Any details, or just Cinderella stories?