10 Reasons Business Owners Love Black Chips

1. 1

   The “Second Engine” concept

   Most businesses have one primary economic engine: sell the product or service, generate revenue, pay expenses, and retain profit. But that engine can slow down because of seasonality, equipment failure, increased payroll, supply-chain problems, inflation, a recession, a pandemic, or the loss of a major customer. Black Chips technology may be used alongside the operating business to potentially grow a separately allocated pool of capital, subject to market risk. It is not intended to replace operating income or guarantee that investment gains will be available when needed.

   What could change in your business if some of tomorrow’s capital did not have to come from tomorrow’s sales?

2. 2

   Turn investment growth into operational improvements

   Black Chips technology may help connect potential capital growth to specific business objectives. For example, an owner may establish an Equipment Modernization Fund for an upgraded machine that could increase production, reduce waste, and decrease downtime. Potential growth from allocated capital could eventually be directed toward machinery, software, automation, inventory systems, or other improvements.

   Additional capital → Better technology → Greater efficiency → Less waste → Higher productivity → Better margins → Stronger business

3. 3

   The Employee Experience Fund

   Business owners know that the little things matter to employees. A separate pool of capital could be intended for Christmas or year-end bonuses, employee achievement awards, company picnics and barbecues, team outings, birthday recognition, flowers after the birth of a child, assistance during illness, funeral flowers or family support, employee education, and retention incentives.

   What would happen to your culture if taking care of your people did not always have to compete with this month’s operating budget?

4. 4

   The Seasonal Business Stabilizer

   Some companies are seasonal: construction, landscaping, hospitality, tourism, agriculture, certain retailers, entertainment businesses, and others. Rather than pretending seasonality does not exist, a business may deliberately attempt to accumulate capital during stronger periods and potentially grow designated capital separately.

   Your sales may be seasonal. Does all of your capital have to be?

   Market-based strategies can lose money. It is important not to depend on cash reserves that are solely reliant on a variable product.

5. 5

   The “What If 2020 Happened Again?”

   COVID showed businesses that even excellent companies can encounter circumstances management never anticipated. In those circumstances, a business may need to consider resilience, reserves, diversification, liquidity, insurance, credit availability, and potentially an additional capital-growth strategy. Black Chips can be one component of resilience, not the entire solution.

   You cannot predict the next disruption. But you can build a business with more options when disruption arrives.

6. 6

   Capital With a Job

   Black Chips has been used with different companies to accomplish different things, from helping fund a marketing budget for a Hollywood horror movie to paying for a future medical surgery. In a business setting, different funds could be allocated for different uses: a Machine Fund, Technology Fund, Employee Appreciation Fund, Expansion Fund, Opportunity Fund, Future Acquisition Fund, or Owner Retirement Fund.

   Goal → Amount Needed → Time Horizon → Risk Tolerance → Capital Strategy → Measurement

7. 7

   The “Invisible Employee”

   What if you could add another productive component to your company that did not require an office, salary, health insurance, vacation time, or management meetings? Black Chips technology could be an automated tool designed to operate without consuming the owner’s day. A business owner is often too busy to take on more, so the owner’s time can remain focused on running the company while technology handles the process it was designed to perform.

   Black Chips automation does not mean risk-free. Passive does not mean guaranteed, and historical performance does not ensure future returns. Black Chips is a tool intended to accompany good business practices.

8. 8

   Black Chips Doesn’t Replace Your Team

   Your CPA has a job. Your banker has a job. Your attorney has a job. Your financial professionals have a job, and you have a job. As a business owner, building and protecting the company you have worked so hard to create is key. Black Chips Partners is not designed to replace those relationships. We are a technology company introducing another tool.

   Could technology potentially help your company develop an additional source of capital without requiring you to sell another product, hire another employee, open another location, or personally spend more hours working?

   We do not want to replace what you have built.

9. 9

   What Would You Want That Capital to Accomplish?

   Maybe it is upgrading machinery. Maybe it is implementing a new system that reduces waste and improves productivity. Maybe it is helping offset rising supply costs, building capital for future expansion, rewarding the employees who helped build your company, or creating a long-term retirement objective. It may also be about creating another financial resource so that when the unexpected happens, your company has more options than it had yesterday.

   Not as a replacement for your business → Not as a replacement for your professional advisors → Another tool working alongside what you have already built

   What would you want that capital to accomplish?

   Black Chips provides technology intended to pursue growth, while returns and principal remain subject to risk. Businesses should determine how any technology fits alongside their own goals, reserves, and professional guidance.

10. 10

    Build It to Sell It

    If your company had an additional $2 million of capital on its balance sheet, what would you do differently? That question can lead to machinery, technology, employees, expansion, acquisitions, debt reduction, working capital, and ultimately exit planning and valuation. We are not suggesting or promising that any particular technology will produce $2 million. We are simply asking you to think like the CEO of your future company.

    Capital → Improvements → Efficiency → Profitability → Scalability → Enterprise Value

    What would you do with another $2 million? Would you replace aging equipment, automate part of your operation, implement technology that improves productivity, reduce waste, develop another location, acquire a competitor, strengthen your management team, improve employee retention, develop new products, build greater financial reserves, or begin preparing for your eventual exit?

    Your business may be your largest retirement asset. A prospective buyer may evaluate profitability, recurring revenue, operating systems, management depth, customer concentration, intellectual property, growth potential, margins, efficiency, liabilities, financial records, and how dependent the organization remains upon its owner. Do not just build income. Build enterprise value. Additional capital by itself does not necessarily make an operating company more valuable dollar-for-dollar; what management does with that capital can be far more important. Capital invested intelligently into automation, equipment, systems, employees, productivity, and expansion may help create a business that is stronger, more efficient, and potentially more attractive to a future buyer. Black Chips technology is intended to pursue growth, while returns and principal remain subject to risk.

Black Chips Partners provides technology and educational information only. It is not a brokerage, bank, investment adviser, tax adviser, or provider of legal advice. Trading and investing involve risk, including possible loss of principal. Potential outcomes are not guaranteed.