Last week, LoCo Think Tank purchased what is by far its largest asset - the 1989 Ford E350 Ambulance pictured above. It’s a time capsule of sorts, having been built out as a mobile broadcast studio in the early 2000s, and then put into dry storage for over 10 years before a local marijuana fertilizer business owner purchased it during early Covid and got it back on the road - and recorded a few podcasts in it. But the podcast caught traction in traditional channels, and Scotty Real and The Dude Grows team lost interest in the truck and decided it was time to move it along to the next owner. (By the way, check out their website if you want to grow dank nugs, there’s a treasure trove of blogs, videos, and podcast episodes!)
“Tank” weighs in at around 9,000 lbs, and is powered by a 7.3L diesel engine, likely good for ~10-12 mpg, so not a great commuter. But it runs like a top and only has 125K miles on it, all the lights and even the sirens and PA system work, and with some minor updates to the interior (and get rid of that green carpet and those speakers on top) and a vinyl wrap this will be a high-functioning brand building rig that will be able to host mobile podcast conversations for The LoCo Experience, provide strong event support for LoCo Think Tank, and be a beast of a camping rig for the Bears. Or, you could rent it and haul 10 rowdy friends down to Red Rocks and show up in style! LoCo member Mandy Mullen already laid claim to it as a race support vehicle for the Run Windsor Race Series, and my imagination continues to run wild on what fun things Tank can do for us and for others!
With all of these capabilities, Tank has a lot of value for our business, but value isn’t the same as price. And price isn’t the same as cost. This month’s blog is going to zoom in on each of those terms - value and price and cost - and also features an examination of the value of tanks. Some tanks go boom, other tanks go hmmm, and if you’re curious where I’m going with that, continue reading.
My friend Mike sent me the Facebook Marketplace listing several weeks before first contact, and when I finally clicked it, I was smitten. My longer-term dream is to grow LoCo Think Tank geographically, and my thinking is that I could interview well-known local business leaders as a way of introducing the brand to new markets. So, I dropped the seller a quick note to see if they still had it - the ad had been up for over 40 weeks - and got a quick affirmative response. So, we set a time to meet up, and I gave it a good look over and went to start it up - and nothing. Dead batteries. “Bummer, I started it yesterday”, the young man managing the sale shared, but with a jumper box at hand we soon got it running and took it for a quick ride around the neighborhood. I went again later to take a longer look and put it up on the rack with Mike (he’s a mechanic), and after he gave it the thumbs up, I set about to make a deal.
They were asking $9,000 for the truck, but like I said - the ad had been up for 40+ weeks - and it was a white and green ambulance - and it had dead batteries - and I knew it could be purchased for less. So I offered $4,000 - and the seller balked at that low price - but after a little back and forth, and recognizing he didn’t have any other interested buyers - we made a deal closer to my offer than to his asking, and I drove it home. That’s the first observation I’d make, is that value and price are only mildly related, particularly when it comes to non-homogenous products. Nobody except me really wanted that old ambulance, and the value for me was higher than for most - but based on the fact that nobody else wanted it - the price that we negotiated was lower than the value it held for me - and when you find that circumstance, move forward!
One of the reasons I wanted to get a lower price for the truck is that I knew the total costs were going to go up after purchase. I’d have to do some modifications to the interior to make it work for our needs, and a vinyl wrap for a big truck like that will cost a pretty penny, and the costs of fuel and maintenance are likely to be significant. It’s like the classic fixer-upper home - the initial price is low, but the costs are high, and the value is sometimes hard to determine.
One of the vehicle wrap ideas I had was to do an actual tank on the side of the truck - all white up top and then a black tank silhouette on the lower portion - kind of a “made you look” idea, playing on the word Tank in the LoCo Think Tank name - but that idea has already been rejected by my team as being too morbid. “Bad enough it’s an ambulance, but you want it to be a tank too?” - and that’s what got me thinking about this blog.
Growing up on a farm, we made many equipment purchases along the way of building the farm operation. Each one was based on how much value the item would bring. A 140 hp tractor can do ~40% more work in a day than a 100 hp tractor, and so as the farm acreage grows it’s important to upgrade your equipment to keep up. But - you can’t upgrade too fast lest you exceed your capital needs. A 300 hp 4-wheel-drive tractor could do perhaps 3x the work of that first 100 hp tractor, but the farm wasn’t big enough at the time to need that much productivity - or to afford it. The cost of having excess capacity is too high! But the value of having sufficient capacity is easy to understand, and the grain produced by the farm was valued by the mills and feeders and other end-users of the production.
But that analysis breaks down when you start to apply it to actual tanks. They don’t create anything of value, they can’t pull a plow or plant seeds or harvest grain, they only destroy - and so how can we understand the value of a tank?
I found an article that shared details on the number of tanks Russia and Ukraine have lost so far in their war - it’s coming up on a billion dollars - with 5x more losses on the Russian side (because they had far more tanks to begin with, and they are fighting on Ukrainian turf), which will someday be replaced by two or three billion dollars of newer gear - tanks cost more than they used to. So it’s easy to find out the price of tanks. The cost of tanks is even more - they burn a lot of fuel as it turns out, and they don’t give away those giant cannon shells, and the soldiers must be paid. But if your neighboring country has a bunch of tanks, and you don’t; and you’ve got a bunch of resources - that they want…then there is value in a tank! More accurately - much value in many tanks - because maybe then your neighbor will keep their hands off your resources!
The title question of this month’s blog is one we’ve struggled with at LoCo Think Tank over the years as well - what’s the value of a tank? (membership in one of our chapters). There’s a price of course, which varies by chapter type from $249/month up to $1,199/month, and there’s a cost - 4+ hours per month for chapter meetings, plus whatever 1:1 time and other time you spend working ON your business instead of IN your business, but what is the value?
Up to this point, we’ve relied on anecdotal stories that hint at the value. “The year before I became a member of LoCo, my business did $600K in revenues and made $40K net profit, and because we implemented some of the suggestions from my chapter, the next year we did $780K in revenues and made $110K net profit!”. Or, “Because of LoCo, I finally had the confidence to fire a problematic but talented employee - and after I did, our productivity surged and our culture improved significantly, and so did our bottom line!”
New for 2024, however, is an optional add-on for our members - an online business valuation powered by BizEquity.com. LoCo has subscribed to this online business valuation to provide (non-certified) one-time or valuation trend reports for our small business members that gives data-driven insights into business value. Value is ultimately based upon how much value each business is providing to their customers, and how much profit and cash flow the business is able to generate. Soon, we’ll have not only stories, but reports to back them up!
I’m looking forward to stories like - “After 6 years in business, I joined LoCo Think Tank and had a valuation of my business at $440K. One year later, it was $575K, and then the year after that it was $770K! When I get to $1.2MM, I’ll have enough after-tax resources to meet my family’s retirement goals!” Or, “My online valuations gave me a guideline by which to begin offering ownership stakes to my Operations Manager and Sales Manager, and having them as junior partners - and my potential exit plan - has been a huge blessing for all of us!”
To be clear - membership in LoCo Think Tank doesn’t work like magic - our members still have to put in the work to make their business grow and prosper. But making faster and better decisions is what free enterprise is all about, and the power of 10 brains working on your hardest challenges instead of just your own can be a wonder to behold.
So, if you’re reading this and thinking - “Maybe it’s time I checked out LoCo, and investigate “what is the value of a tank?” - or maybe it’s time for you to return to membership, or you have a friend that needs to know the value of a tank! Don’t hesitate, let’s have a conversation. We’ve just added Colin Jones to the team in a Business Development role, and he’d love to get an email out of the blue to get ahead of his sales goals right off the bat! Drop him a line at Colin@LoCoThinkTank.com, and tell him Curt sent you!