How do operators stay resilient? At any point, one (or more) of the below will come up:

• Rent increases

• Rising cost of goods

• Contracted consumer spending

• Higher labor costs

But, most businesses perform above the absolute floor they need to perform at in order to turn a profit.

So, what does this mean? When one of the above occurs, it comes down to the basics: maintain profitability, even if at a lower revenue or margin level. Find cost savings elsewhere, boost revenue through new initiatives, do what it takes & work within the wiggle room.

If you can sustain profitable locations, you sustain – and that flexibility is the ultimate power.

In 2023, 18% of NYC’s leasing volume was signed by concepts you’ve never heard of – or what insiders call “first-timers”. That’s over 455,000 square footage belonging to new concepts launching.

So, what’s coming?

Will it be expansion of a category we already know? Consider the rise of nascent categories, like sauna / bath houses and kids-centric bookable classes.

Will it be new concepts entirely? We might start to see more membership clubs with niche focuses or wellness centers democratizing therapies.

Only time will tell, but one thing is true: brick-and-mortar is expanding and experiences are growing.

What does a brick-and-mortar need growth capital for? 9/10 times, for financing a new location.

The good news: When a business signs a lease, developers often provide “Tenant Improvement” or “Tenant Allowance” to brick-and-mortars – it’s a term that simply means, we’ll help you build out the location by financing part of it.

The not-so-good news: While a useful instrument, it rarely covers the entire buildout – this rings especially true as interest rates rise and developers pull back on the instrument altogether. Said differently, at a time when businesses need the capital the most, it’s least available.

Where else are businesses to go? Banks? (Interest rates!)

There’s a clear gap – and a clear need – where a network of private investors can play: providing buildout capital to brick-and-mortars.

And that’s just where Bonside plays.

We recently broke down the brick-and-mortar ecosystem, listing “community B&M” as one of three key players.

Community is a word thrown around so often that, in most instances, it’s just a buzzword. But in brick-and-mortar, it’s the secret sauce made up of a few key ingredients:

• Philanthropy – think: SoulCycle charity rides totaling $2.5M in annual donations

• Cultural Immersion – think: Chopt’s locally sourced salad ingredients by location

• Ownership – think: 24/7 climbing gyms for members

With their physical footprint, brick-and-mortars have the unique ability to authentically foster community. In turn, it enables a strong business model with a repeatable customer base, and revenue, at it’s core – a defining element of every Bonside business.

Every brick-and-mortar thinks about: utilization, capacity, rent, and more – both at a location level, and at a company level.

This focus is such a defining characteristic of brick-and-mortar that we’d argue it unites them in a way that they’ll never be united with their CPG counterparts of the same industry.

And when Retail Dive commented on EBITDA –

“[EBITDA] is also sometimes used to compare the performance of a group of similar companies within an industry.”

We asked: is industry the right distinction?

Operationally speaking, we believe it’s less about what you serve and more about how you serve.

As it turns out, a spa manager and a restaurant owner might just have more in common than a spa manager and a skincare brand founder.

Typically, when you make a private investment with upside potential, returns are realized when a business sells. But – when will it sell? Will it even sell? What if it doesn’t sell?

With Bonside’s Repeatable Revenue Agreement, you couldn’t be more in control of receiving a monthly payout.

For every $1 a business generates, you receive a payout. Want to ensure you receive a payout next month? Visit the business you backed. Better yet, tell your friends to do the same. It’s that easy to guarantee a monthly payout.

In today’s state of the world, we know:

• Stock market returns are unpredictable

• Real estate investments face constantly changing rates

• Valuations fluctuate with trends

In this sea of change, Bonside remains a steady anchor.

• Our returns are calculated

• Our underwriting is consistent

• Our focus on revenue creates resiliency

At Bonside, we’re calculated, consistent and resilient – for investors and business owners alike.

At Bonside, we often talk about upside in growth. The faster a business grows, the faster investors are repaid.

Broadly speaking, company growth can take many forms and can sometimes be ambiguous. However, for brick-and-mortar, it comes down to 3 fundamental levers:

1. Utilization – more customers visiting an existing location

2. Capacity – expansions to an existing location

3. Footprint – more locations

There is power in the predictability of this growth, and that’s why we built the RRA with these levers in mind.

In today’s state of the world, most banking or financing institutions have pared back their lending to businesses¹. As part of this, the brick-and-mortar industry has less access to capital than before.

However, consumer demand at brick-and-mortars continue to rise: across the Bonside portfolio, there has been 42%+ growth YTD in revenue.

To us, this presents a clear window of opportunity to back stable and scaling businesses. Especially if it’s via the ultimate alignment of success: revenue.

The beauty of investing in scaling, multi-unit concepts is that once you’re bought in, you’re following the growth of a repeatable playbook. Let’s take a closer look:

A business opens their first two locations successfully, and you buy in to help finance the third.

It’s a hit! And you think – I want to buy into another deal just like this.

Well, why not the same deal? Let’s buy in again to finance their fourth location.

The Repeatable Revenue Agreement is designed just for that: to repeat. No matter how large the business gets, it’s never a bad time to buy-in.

The beauty of a Bonside monthly payout is that it reflects a story. It isn’t the same every month, it instead moves with the rhythm of business.

Big store opening?
Celebrity sighting?
Holiday promotions?

You’ll find it in your monthly payout.

Each monthly payout is comprised of real moments that happened in the past month, creating far more connectivity than a fixed payout stream.

The beauty of a Bonside monthly payout is that it grounds you in the physical world around you. It isn’t the same every month, it instead gives you a reason to cheer your investments on.

We often see two universes of non-dilutive, monthly repayment financing:

1. The Merchant Cash Advance – typically 6 to 12 months repayment

2. The Term Loan – typically 7 to 10 years repayment

While MCAs are a quick way to receive financing, requiring full repayment in under a year leaves little time to deploy and see a return on the capital. So while great for inventory orders, not so great for store build–outs.

Term loans, on the other hand, provide ample time for repayment. But that comes at a price tag: collateral and personal guarantee requirements in the event that something unpredictable happens in the next 10 years.

At Bonside, our Repeatable Revenue Agreements (RRAs) sit in the middle with a 3 to 5 year repayment timeline, providing sufficient time to invest and see the returns of a build-out, while keeping repayment in a window of greater predictability.

Last week, we shared what makes the RRA unique, and ultimately attributed that to the distinctive nature of brick-and-mortars. This week, we unpack that.

People often talk about hockey stick growth, and investing at the start of that trajectory to see meaningful payoff. With the clear risk being: what if it never takes off? Day 0 investing is a different game.

At Bonside, we talk about step functions, and investing at an inflection point – which doesn’t require the full risk of investing at day 0 in order to see a payoff.

Illustrative. The slope is the ramp up of new location, the flat line is steady state.

Brick-and-mortars uniquely follow a step function as their growth curve due to capacity constraints. To unlock new revenue, you have to unlock more capacity, which means opening new doors.

With our RRAs tailor-made to brick-and-mortar, we invest at inflection points: when businesses are stable and ready to unlock the next “step” in their capacity. The more “steps” unlocked, the higher the monthly payouts, the faster businesses and investors complete their paybacks.

With the Repeatable Revenue Agreement, investors buy into revenue generating businesses and receive monthly payouts until a fixed return is met. Our vehicle structures the monthly payouts as a percentage of revenue – rather than a fixed number – implying there’s also an opportunity for upside.

It’s a rare combination of:

1. Backing a business

2. Receiving monthly payouts

3. Realizing upside

Generally you’re exposed to 2 of 3:

• Real Estate? Not a business.

• Equity? No monthly payouts.

• Bonds? No upside.

The RRA is the first of its kind because it’s rooted in the unique nature of multi-unit brick-and-mortar. What makes it unique? We’ll unpack that next, check back soon.

Opening a new brick-and-mortar location unlocks a high volume of revenue – anywhere from $250K to $4M+ – per year. It’s why build-outs are a worthwhile investment.

But today’s financing options aren’t intuitive for financing a build-out:

• Debt is difficult to access, requiring personal guarantees and collateral

• Equity is quite expensive, especially for a build-out

• Cash flows are limited, particularly in the early days

So what is intuitive?

Ideally something that:

1. Accounts for the seasonality of your business

2. Requires a low payback relative to the revenue you’ll generate

3. Credits you for existing location

It’s why at Bonside we introduced the Repeatable Revenue Agreement (RRA), where you repay a fixed multiple of borrowed capital via a monthly percentage of sales until you hit that multiple.

It’s a model designed specifically to mirror brick-and-mortar growth, and the future of build-out financing.

Curious how it compares to the cost of other capital sources? Check out our 3 part series ”The True Cost of Capital”.

In the past year, people have started to think and talk about passive income more than ever before. But that’s all most people have done… think and talk.

Is anyone actually collecting it? Well, it’s not that easy:

• Want rental income? Buy property.

• Want business income? Acquire one.

• Want royalties? Produce something.

There’s generally a pretty heavy upfront investment involved, requiring you to be financially equipped, well-informed, and networked. That’s a lot of effort.

At Bonside, we understood this – and it’s why we chose to make the Repeatable Revenue Agreement available to accredited investors looking to get started with as little as $15k.

Buy in to brick-and-mortars you can see, feel and visit, and collect monthly payouts for 3-5 years. It’s that simple.

With everyone marketing “small business friendly” capital differently, it’s hard to parse out how friendly it really is.

In Part 1, we covered the importance of considering MOIC (Multiple on Invested Capital) or the actual dollars owed. In Part 2, we discussed measuring the time to repay. This week in Part 3, our finale to the series, we’re tying it all together.

Generally speaking, the longer the duration of the loan, the higher the MOIC. However, that doesn’t always mean choosing the shortest payback / lowest MOIC.

Before Bonside, the trade-off was:

• More capital, longer duration, personal guarantees, difficult to access

• Less capital, shorter duration, no guarantees, easy to access

At Bonside, we’re focused on the middle ground for businesses generating $2m+ in revenues: the right amount of capital, medium duration, no guarantees. To defend this, we partner exclusively with the top performers in brick-and-mortar, and run a tight diligence process.

If you’ve been searching for the right option to finance your build-outs, grow your team and expand your offerings – welcome to Bonside.

With everyone marketing “small business friendly” capital differently, it’s hard to parse out how friendly it really is.

In Part 1, we covered the importance of considering MOIC (Multiple on Invested Capital) or the actual dollars owed. This week in Part 2, we’re discussing measuring the time to repay.

Note – all numbers are illustrative examples. Bonside’s term varies by deal.

Longer term products (i.e. loans) are generally more favorable because they give you time to realize a return on the borrowed capital. However, these products often come with accrued interest, personal guarantees, and collateral requirements.

On the other hand, you can access shorter term products (i.e. Merchant Cash Advances) without those onerous add-ons. But if you have to pay it back in under a year, is that enough time to realize any return on that borrowed capital?

If it’s for an inventory purchase order, maybe.
If it’s for a buildout, probably not.

Until now, there hasn’t been a good middle ground for brick-and-mortar. That’s why we created Bonside – Part 3 now live.

In today’s world of financing, we often hear:

• Your interest rate is [percentage]

• It’s interest free, but your fee is [dollar amount]

• No interest, no fee – just a [fancy new term]

With everyone marketing “small business friendly” capital differently, it’s hard to parse out how friendly it really is.

We’re breaking it down, and starting with calculating the MOIC – the Multiple on Invested Capital owed.

If 1.6x is owed, that implies you’re paying ([Borrowed Amount]*1.6) in total. Note – all numbers all illustrative and for example purposes. Bonside MOIC varies by deal.

At Bonside, MOIC is a key term we share to provide full transparency on actual dollars owed.

It’s intuitive to how you operate a business because it makes it immediately clear how much you are paying for the dollars you are borrowing.

While MOIC is an important part of the equation, so are a few other factors:

• Time to repay

• Repayments as a % of revenue

• Total financing amount

• Guarantees and collateral requirements

Examining each of these variables is key to understanding your options. Over the course of this series, we’ll continue to uncover the trade-offs amongst today’s financing options – Part 2 and Part 3 now live.

“SMB” can be used to describe a number of businesses with varying margins, business models and stages of maturity.

Ask anyone, and you’ll hear a different answer.

Why? Because 99% of businesses in the United States are considered an “SMB”.

Let’s get specific

At Bonside, we’re building solutions specifically for brick-and-mortar services. We believe building for these businesses means realizing that they aren’t all the same; not simply creating “the X for SMBs.”

Because we, and all business owners, know that those solutions always fall short.

Partner with Bonside

We’re carving out our niche in the 99%.

If you’re a brick-and-mortar brand providing services, we’re built just for you. Get in touch.