Investing in the Heart of America
World changing technology dominates the national news. From VC’s latest rounds, to multibillion dollar exits. But its America’s small businesses that serves as the heart to the American economy. So what does “Investing in the Heart of America” means from Tenth Street Groups standpoint?
#1 Investing in small and medium sized businesses
To put it into perspective, data from the U.S. Small Business Administration shows that 99.9% of businesses in the U.S. are small businesses. This is partly why we say small businesses are the Heart of America. They employee majority of people in small towns to major cities.
Another note is the main ownership demographic of small businesses which are the baby boomer generation. Data shows that out of 33.3 million small businesses, baby boomers own around 13 million. That’s nearly half of the countries small businesses. According to Transamerica Center for Retirement Studies, 10,000 baby boomers will retire everyday for the next 15 years or so, contributing to a major transfer of wealth upwards of $10 trillion just in business assets alone. With this major shift, we feel it is our duty to invest back into the Heart of America where these small businesses function.
#2 Investing in sectors that drive the economy
From a long term investing standpoint, investing in sectors that drive the economy is what we consider a subsidiary to the margin of safety. Knowing for the long term that essential products and services will be needed 100 years from now gives a sense a safety when considering potential acquisitions.
To put it in perspective, small and medium sized businesses make things, i.e., manufacturing. They fix things, i.e., your local plumbing company. They supply and distribute things, i.e., the local paper and packaging supplier and distributor. These are the family owned and founder owned businesses that increase the quality of our everyday life in which keeps the economy alive.
#3 Investing geographically for growth
If you take a look at most large investment firms, they tend to buy large companies in primary markets. These markets consist of large metro areas such as a Miami, FL, a Houston, TX, or a Charlotte, NC for example. They tend to be highly competitive areas amongst investment groups.
As for Tenth Street Group, we love small and midsized companies in secondary and tertiary markets right outside of major metros. These aren’t your well publicized cities and towns. But more often than not you’ll find great small and mid sized businesses with decades of operating history, ran buy 3rd and 4th generation families, ripe for growth.
With small businesses being such a significance to the American economy, they receive significantly less in investor capital. We see this as opportunity. Opportunity to invest while doing good. Doing good meaning employing more people, improving the quality of small and midsized businesses, streamlining processes and bringing efficiency. Small businesses and midsized businesses play an important role in America, and Tenth Street Group plans to continue to invest in the Heart of America.
To learn more about investing with Tenth Street Group, schedule a call with us.