I started buying my first businesses just before ChatGPT came out.
And it didn’t take long to realize that if I wanted to build generational wealth, I had to make sure all my future acquisitions were not only recession-proof... but also AI-proof.
So ever since then, I’ve followed a simple rule:
”If my Grandma wouldn’t understand it, I’m not buying it.”
Specifically, that means there are four criteria I always look at when buying a business.
Let’s break them down:
- The “Fax Machine Gold-Mine”
I love businesses that are still running their operations like it’s 1980.
You’d be shocked at how many boomer entrepreneurs are still using dot-matrix printers and scratch paper, while only accepting cash and checks as payment.
If they’re doing well, and customers put up with the hassle, then that tells me that the quality of their service must be excellent.
So if you can upgrade their systems, social media, website, ads... you name it, then that’s easy money on the table waiting to be scooped up.
- Old is Gold
The average failure rate of startups under five years old is over 90%.
But for profitable businesses over five years old, that number flips — the odds of continued success are over 90%.
So I always look for businesses that are at least five years old.
Plus, the more “old-fashioned” the industry, the safer the investment... because AI can’t fix pipes, mow lawns, or drill for oil.
- Is the competition weak?
Expanding on the first point…
Modernization can help you quickly become a leader in your local market.
For example: if you buy an auto repair shop, and become the first one in the area to allow people to book their cars for repair online, then congratulations — you’re now the only game in town.
- Slow-burner = stability
I don’t like to see revenue yo-yoing up and down from year to year. I want a predictable stream of income that I can reinvest on a regular basis.
So, I usually go for recession-proof industries like HVAC, laundromats, CPA firms, and car washes
(These are also ripe for modernization most of the time.)
In summary: my AI-proof business strategy is to pick old-fashioned, stable, and easily-understandable businesses... and then modernize it to increase its revenue.
This works because there are lots of boomer business owners out there who are great at their trade... but who don’t understand (or care about) how to grow the business.
If you can step in and fix that, that translates to stable, recurring income in your pocket!
Interested in buying a small, boring business like this for $0 down (or passively investing into a deal)?
Or, if you’re selling your business and want me to help match you with buyers:
And keep an eye out for Thursday’s issue, where I’ll show you all the red flags you should be looking for when buying your first business.
Until then!
— Ben Kelly
