Ep. 123 - Should I Sell My Junk Removal Company? with Conner Young

WEBVTT

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your light or your camera over a bit.

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Here we are on episode one

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hundred twenty three of the

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Trash Talk Business Podcast.

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I'm Andy Wines.

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This is our opportunity

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every week to come together

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to collaborate, to grow,

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build our junk removal dreams.

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This week, I got Connor Young joining us.

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Connor, what brings you to the podcast?

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Hey, Andy, I appreciate you having me.

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Just love working with a

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bunch of other fellow business owners,

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especially those that might

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not be super online or tech focused.

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So love listening to the podcast,

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love hearing some really

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cool stories that you've

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had and excited that you're

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having me on right now.

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Absolutely.

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So what's your background?

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What's your discipline?

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What value can bring to the audience?

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absolutely um yeah

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backgrounds in finance and

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investing so you know long

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story short my co-founder

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and I both started our own

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investment firms and worked

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with tons of clients that

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were super interested in

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traditional wealth

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management or portfolio management and

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We've been doing it for

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about four or five years at that time.

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And the COVID hit, of course,

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the world changed.

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And they said, hey,

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can you start looking at

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these commercial real

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estate or these private

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equity deals and

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investments a little bit more?

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Do the underwriting, the analysis.

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And so we took that on.

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And then they asked us the

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really big question, which was, hey,

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these are really good deals.

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Or I'm seeing all these

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small businesses on the

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private equity side.

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It could be with brokers or

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it could be on biz by sell

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or whatever it might be.

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I just don't want to be in a

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bidding war anymore.

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Can you find this

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landscaping or this trash

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collection agent or company off market?

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Give me the same EBITDA, revenue,

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employee size, everything.

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So in twenty twenty,

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they asked us that question,

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had no idea how to do it.

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We just said, hey,

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we'll just try to figure it out.

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And over the last four years,

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kind of built this giant engine,

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the company and

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have an online platform

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where we just basically go

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out and solve everybody's

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buy box and find the

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companies that they want off market.

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So you're really,

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you're working as a broker, but you're,

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you're, you're,

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so you're working for the PE firms,

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the venture capitalists or

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the individuals more than the sellers,

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right?

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yes for the most part yes so

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we'll have clients that are

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investors or small pe firms

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and then we'll attack in a

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very niche or targeted

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focus way more lower

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smaller size than what a

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normal pe firm might go

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after so our sweet spots

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typically one to ten

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million in ebita for a lot

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of these companies and um

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you know,

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kind of differs from where PE

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firms might set their

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sights on or sink their teeth into,

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but we attack it and

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provide those off market

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introductions all to our clients.

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And what are you seeing?

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I'm interested to have this

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high-level conversation.

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What are you seeing in our market, right,

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as far as junk removal?

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One of the challenges we

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have with junk removal is a lack of cops.

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They'll compare us to waste

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and refuge companies that

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have much higher revenue,

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but much lower EBITDA percentages.

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Yeah.

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We're not a landscape company.

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We're logistics in the waste industry.

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We're not exactly home

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services because there's

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normally not technical

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licenses and things like that.

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So what are you seeing in

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our industry in the junk

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removal space or even the

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waste industry as far as businesses?

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Tell me what you know.

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There's so many people,

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especially just let's just

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call it junk removal.

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So I'll just attack that

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first segment initially.

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the owners are probably in

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the highest level of an age

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demographic in almost any

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industry that we do all of

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the data sourcing and then

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finding potential sellers.

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So if you're a buyer of one

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of these companies or businesses,

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you're in a really good spot

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compared to let's call it an e-comm store,

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maybe a software company.

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And you're not really bumping into, oh,

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that's the age of a seventy

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three year old that wants

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to go ahead and sell their

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business or company.

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So for junk removal

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specifically and it could be all over.

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Right.

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We operate just in the US,

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but I would estimate you're

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probably hitting somebody

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in like the sixties, maybe even seventies,

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if you're lucky in terms of

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the age of the owner.

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And then starting a

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conversation with them is like, hey,

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you've probably thought of

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succession planning or some

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type of exit strategy.

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What does that look like?

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How can I be a part of it?

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Because if I can get this

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business at a great

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multiple compared to having

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a broker do all this work

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and everything else, let me have at it.

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So when you're looking at businesses,

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so a lot of us in junk removal, right,

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the goal is to get to a

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million in revenue, right?

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And then from one,

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it's going to get one to two,

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two to five is kind of the

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stepping stones, right?

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And the trajectory.

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So when you're seeing businesses that are,

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so one of the challenges we

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have is when we have people that,

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you know, let's say they're doing,

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you know,

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a million dollar a year business and,

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you know, four hundred thousand EBITDA,

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let's call it three fifty

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four hundred owner operator.

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He's taken a lot of responsibility.

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They're looking for an exit

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strategy at some point.

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What what course of action

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do they have at that size of operation?

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That's where we fit in.

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That's the gap in the market, if you will,

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where there's not a lot of

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eyeballs and attention,

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and there should be,

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especially if it is a

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really well-run operation.

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And it's doing it in the

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hundreds of thousands of EBITDA,

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but it's not really...

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you're not having people, you know,

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fight through the internet

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or clot each other in

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business by cell to really

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talk to the business owner.

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But at Cairo data, they are like,

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we really serve a smaller

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type of subset of different

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companies and businesses.

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So if it's that size,

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like you just mentioned,

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and the owner is looking to sell,

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do it off market because

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we're not brokers we don't

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take a broker fee we're not

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charging the fifteen plus

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percent that a lot of

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brokers do for honestly my

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opinion nothing um so if

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you're interested in

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selling we just have the

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basically highways set up

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so you can talk directly to

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the buyers or someone

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you're going to do

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succession planning with

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immediately yeah what with

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um for you how do you well

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how do you guys get

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compensated you get a flat rate

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Yeah.

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So we get compensated just

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based off of the sourcing

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individuals of data.

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If you want us to do the emails,

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cold calling letters, text messages,

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the connecting, sourcing everything.

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We have it built out as

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packages so you can just

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tell us what you want and

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we go out there and do it.

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There's no finder's fee.

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So everybody that comes in

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is just shocked that we're just, hey,

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you're paying us to do the

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work and the war effort.

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And technically,

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if you're an individual or

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you've raised some money as

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a traditional search fund,

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or maybe you're just a

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W-two and you're trying to

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do this on the side,

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having somebody in an agency like us,

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basically a consulting agency,

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put in forty,

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fifty plus hours a week of

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doing cold calls and emails

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and follow up is super valuable.

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So on a company like that,

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let's go back to our example,

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a million dollars, let's call.

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In our business, as an owner-operator,

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you keep things tight.

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You can be at forty percent.

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Right.

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Once like that's not, I would say,

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arguably scalable.

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Scale in our industry is

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about twenty five percent

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EBITDA with scale.

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Right.

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It goes down to twenty percent, you know,

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at certain thresholds.

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What is a business like that trade for?

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If we're saying forty

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percent EBITDA business on

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a million dollars in top line.

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Are we sticking with the

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junk removal industry?

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Yeah.

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I mean, junk rule landscaping.

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I mean, you know,

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kind of small mom pie type businesses.

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What I want, what I want to see is right.

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What multiples are businesses at a million,

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two and five selling?

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I have a pretty good idea,

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but I want to hear what you like,

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what multiple of EBITDA or

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what multiple of revenue

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are you seeing at actuality?

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Are they selling that trading that today?

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I'm going to give you the

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off-market answer yeah yeah

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that's why I hate it but

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I'll just give it to you

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because that's everything

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that we do and the

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multiples themselves um

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might be a little bit

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sweeter for the seller but

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it comes with the caveat

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that the sellers themselves

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are helping out on the

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financing or just doing

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seller financing too we

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help with that because we

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want that deal to go

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through right regardless

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because we're not brokers

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we're not collecting

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anything at closing or if

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it succeeds but we want

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that to happen because it

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does bring us more business

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which is awesome

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So take the million dollar

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example first on a million.

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I would, and you might hate this.

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You might love it.

00:08:44.639 --> 00:08:46.200
I would actually assume you

00:08:46.220 --> 00:08:48.081
can see anywhere between two,

00:08:48.201 --> 00:08:49.803
three and a half on the multiple.

00:08:50.484 --> 00:08:51.205
My number was three.

00:08:51.424 --> 00:08:51.544
Yeah.

00:08:51.565 --> 00:08:53.226
I mean, hillbilly math says three,

00:08:53.527 --> 00:08:54.868
but if you're at two to three and a half,

00:08:54.908 --> 00:08:55.129
that's,

00:08:56.581 --> 00:08:56.681
Yeah,

00:08:56.701 --> 00:08:58.363
which is a very low multiple for a

00:08:58.403 --> 00:08:59.724
lot of the off market, but it just,

00:08:59.864 --> 00:09:00.284
like I said,

00:09:00.325 --> 00:09:01.625
depends on the deal structure,

00:09:01.666 --> 00:09:02.466
what you might do.

00:09:03.726 --> 00:09:04.788
If it's a two million,

00:09:05.149 --> 00:09:06.028
you're starting to push up

00:09:06.068 --> 00:09:07.811
into the four X, five X,

00:09:08.211 --> 00:09:10.572
and then on three plus in the million,

00:09:10.592 --> 00:09:11.453
just EBITDA range,

00:09:11.693 --> 00:09:13.034
I would assume you can get

00:09:13.075 --> 00:09:15.456
from four to maybe six or seven X,

00:09:15.878 --> 00:09:17.719
just depending on where the business is,

00:09:17.818 --> 00:09:19.039
a lot of different clientele,

00:09:19.520 --> 00:09:20.421
ton of pieces that are just

00:09:20.480 --> 00:09:21.402
intangibles when you're

00:09:21.621 --> 00:09:23.063
evaluating the deal.

00:09:23.624 --> 00:09:23.724
No,

00:09:23.744 --> 00:09:25.325
I appreciate that because in our industry,

00:09:25.465 --> 00:09:26.304
our industry typically

00:09:26.325 --> 00:09:28.044
trades at a three to seven multiple.

00:09:28.666 --> 00:09:28.865
Right.

00:09:28.926 --> 00:09:30.186
So so and again,

00:09:30.225 --> 00:09:32.527
like and when people ask me, like, well,

00:09:32.567 --> 00:09:32.947
where are we?

00:09:32.986 --> 00:09:34.648
Well, you have to have infrastructure.

00:09:34.967 --> 00:09:35.288
Right.

00:09:35.427 --> 00:09:36.307
And once you the more

00:09:36.368 --> 00:09:37.187
infrastructure you have,

00:09:37.207 --> 00:09:38.048
the higher the multiple.

00:09:38.428 --> 00:09:39.828
Also, conversely,

00:09:40.109 --> 00:09:43.009
chances are your your margin is less.

00:09:43.090 --> 00:09:43.269
Right.

00:09:43.289 --> 00:09:44.850
So like Hillbilly math says

00:09:45.091 --> 00:09:46.191
you can be at forty percent.

00:09:47.692 --> 00:09:48.451
I won't be that aggressive.

00:09:48.792 --> 00:09:50.133
You can be at thirty percent

00:09:51.514 --> 00:09:52.654
profitability at a million.

00:09:53.176 --> 00:09:54.057
You're about twenty five

00:09:54.076 --> 00:09:56.339
percent profitability at two million.

00:09:57.019 --> 00:09:57.919
And then once you get north

00:09:57.940 --> 00:09:59.120
of that two to five range,

00:09:59.301 --> 00:10:01.062
you settle around twenty percent.

00:10:01.663 --> 00:10:01.864
Right.

00:10:02.004 --> 00:10:02.524
Up to three.

00:10:02.543 --> 00:10:04.206
And then there's some

00:10:04.245 --> 00:10:05.307
efficiencies you start to gain.

00:10:05.506 --> 00:10:06.707
Again, every business is different.

00:10:06.727 --> 00:10:07.688
But the point is,

00:10:07.749 --> 00:10:09.110
it's like you can stay

00:10:09.149 --> 00:10:11.011
small and tight and keep a twenty five,

00:10:11.052 --> 00:10:11.591
thirty percent.

00:10:11.993 --> 00:10:12.113
Right.

00:10:12.133 --> 00:10:13.254
If you have a if you have an owner,

00:10:13.274 --> 00:10:14.414
you know, owner.

00:10:15.376 --> 00:10:16.740
operator who's running the business,

00:10:16.921 --> 00:10:17.702
you can be at thirty

00:10:17.722 --> 00:10:19.106
percent at two million.

00:10:19.126 --> 00:10:19.587
You're going to be

00:10:20.580 --> 00:10:21.821
very much married to your company,

00:10:21.880 --> 00:10:22.501
I would argue.

00:10:24.222 --> 00:10:25.365
Or you have a lot of commercial work and,

00:10:25.384 --> 00:10:26.466
you know, there's other ways to do it.

00:10:26.505 --> 00:10:28.668
But typically what happens

00:10:28.687 --> 00:10:30.009
with our business is, you know,

00:10:30.048 --> 00:10:31.149
when people are trucking a

00:10:31.169 --> 00:10:32.071
truck when they're first starting,

00:10:32.311 --> 00:10:33.392
they're like sixty percent

00:10:33.432 --> 00:10:34.894
margin because it's them

00:10:35.293 --> 00:10:36.154
and their expenses are low

00:10:36.174 --> 00:10:36.995
and the truck's paid off.

00:10:37.456 --> 00:10:38.437
And then one of the one of

00:10:38.456 --> 00:10:39.918
the challenges they have with scale is,

00:10:40.018 --> 00:10:41.078
oh, I'm making less money.

00:10:41.119 --> 00:10:41.419
Well, yeah,

00:10:41.519 --> 00:10:42.581
you're going to make less money

00:10:42.600 --> 00:10:44.302
because now you've got real insurance,

00:10:44.322 --> 00:10:45.342
you have real truck payments.

00:10:46.385 --> 00:10:48.287
You're taking things to the actual,

00:10:48.346 --> 00:10:48.746
you know,

00:10:48.807 --> 00:10:50.067
I'm talking very tactically with

00:10:50.087 --> 00:10:50.687
our industry.

00:10:51.048 --> 00:10:52.028
Like you're actually taking

00:10:52.048 --> 00:10:53.229
things to the transfer station,

00:10:53.288 --> 00:10:54.548
the landfill.

00:10:54.568 --> 00:10:55.230
You're not just throwing

00:10:55.250 --> 00:10:57.770
them in your curbside trasher, right?

00:10:57.791 --> 00:10:58.390
You're scaling.

00:10:58.471 --> 00:10:58.850
That's it.

00:10:59.091 --> 00:11:00.331
And the challenge a lot of

00:11:00.351 --> 00:11:01.451
people have in junk removal

00:11:01.491 --> 00:11:04.273
is they'll be in it for five, seven,

00:11:04.332 --> 00:11:05.033
ten years.

00:11:05.114 --> 00:11:05.813
And all of a sudden, like, well,

00:11:05.833 --> 00:11:06.333
I want to get out.

00:11:06.394 --> 00:11:07.735
It's like, what do you have?

00:11:08.744 --> 00:11:09.566
What do you have other than

00:11:09.586 --> 00:11:10.388
a good name in town?

00:11:10.408 --> 00:11:12.812
And that's not a rhetorical question.

00:11:13.253 --> 00:11:14.294
What are your processes?

00:11:14.355 --> 00:11:15.297
What are your financials?

00:11:15.596 --> 00:11:16.538
What do you own?

00:11:18.263 --> 00:11:19.325
What assets do you have?

00:11:20.403 --> 00:11:22.086
What management team do you have?

00:11:22.105 --> 00:11:23.427
Have you leveraged your management team?

00:11:24.668 --> 00:11:25.690
Are they salaried plus,

00:11:25.730 --> 00:11:28.373
what do you call it, a profit share?

00:11:28.633 --> 00:11:29.413
Do they have equity?

00:11:29.553 --> 00:11:30.654
Oh, no,

00:11:30.674 --> 00:11:31.897
you just got a dozen guys that kind

00:11:31.937 --> 00:11:33.578
of show up and kind of bang out jobs.

00:11:33.599 --> 00:11:34.278
It's like, well,

00:11:34.298 --> 00:11:35.941
how much loyalty do those have?

00:11:36.201 --> 00:11:37.923
Do you have key personnel identified?

00:11:37.942 --> 00:11:38.163
Sure.

00:11:39.544 --> 00:11:40.205
Hell,

00:11:40.345 --> 00:11:42.025
even having an estate plan or a will

00:11:42.346 --> 00:11:43.466
is a tangible asset.

00:11:43.485 --> 00:11:43.806
Like, hey,

00:11:44.005 --> 00:11:44.966
something goes to shit while

00:11:44.986 --> 00:11:46.567
you're in the middle of the deal.

00:11:46.726 --> 00:11:47.407
What happens?

00:11:47.667 --> 00:11:48.447
And have you thought this

00:11:48.466 --> 00:11:49.388
through and have you thought it out?

00:11:49.628 --> 00:11:50.268
And that's a challenge.

00:11:50.327 --> 00:11:52.808
I had a guy recently come up, approach me,

00:11:53.509 --> 00:11:54.568
and he's doing this on the side.

00:11:54.589 --> 00:11:55.808
It's just like a half million a year,

00:11:55.869 --> 00:11:56.769
clears two hundred.

00:11:56.970 --> 00:11:57.250
And he's like,

00:11:57.370 --> 00:11:58.230
I want to sell the business.

00:11:58.450 --> 00:11:59.691
What do you have other than

00:11:59.770 --> 00:12:01.071
you and your name?

00:12:01.510 --> 00:12:02.871
Like, what do you have?

00:12:02.892 --> 00:12:04.634
And he didn't have much

00:12:04.933 --> 00:12:06.316
because he's running out of his driveway.

00:12:06.495 --> 00:12:07.636
He's got five, six guys.

00:12:07.817 --> 00:12:08.778
They go bang jobs.

00:12:08.957 --> 00:12:09.639
He answers the phone.

00:12:09.658 --> 00:12:10.519
He makes two hundred a year

00:12:11.399 --> 00:12:12.802
in addition to his full time job.

00:12:12.822 --> 00:12:15.083
And I was like, why do you want to sell?

00:12:15.904 --> 00:12:17.725
Like, what is it?

00:12:18.907 --> 00:12:20.489
Because you got to see in

00:12:20.509 --> 00:12:21.750
the real assets and the

00:12:21.809 --> 00:12:23.912
equation is people.

00:12:25.100 --> 00:12:25.919
And our clients have told us

00:12:25.940 --> 00:12:26.559
this the most.

00:12:26.720 --> 00:12:27.520
So this is where I'm just

00:12:27.541 --> 00:12:29.321
taking it from and love and

00:12:29.360 --> 00:12:31.822
see the value in assets of structure,

00:12:31.981 --> 00:12:33.341
operations and systems,

00:12:33.761 --> 00:12:35.743
which includes all your employees,

00:12:35.883 --> 00:12:36.842
everything set up.

00:12:37.222 --> 00:12:38.222
You're basically fielding

00:12:38.263 --> 00:12:39.043
leads and everything,

00:12:39.163 --> 00:12:40.423
bringing in new business.

00:12:40.864 --> 00:12:42.004
And then you've got to go

00:12:42.024 --> 00:12:42.703
through the process

00:12:42.724 --> 00:12:44.725
yourself of like scale, scale, scale.

00:12:45.304 --> 00:12:47.326
right so if you have

00:12:47.386 --> 00:12:48.128
something that's at two

00:12:48.148 --> 00:12:49.349
hundred k you do want to

00:12:49.389 --> 00:12:51.610
sell it I would just push

00:12:51.711 --> 00:12:53.711
on you to sacrifice a

00:12:53.731 --> 00:12:55.212
little bit more of that

00:12:55.293 --> 00:12:56.875
ebita to scale it in a

00:12:56.934 --> 00:12:58.596
proper way because if you

00:12:58.655 --> 00:12:59.897
push that two hundred to a

00:12:59.937 --> 00:13:02.038
million you could easily

00:13:02.078 --> 00:13:03.320
get close to a three point

00:13:03.340 --> 00:13:04.561
five maybe four if you're

00:13:04.581 --> 00:13:06.302
lucky just type a payday

00:13:06.863 --> 00:13:09.885
and then that's solving so

00:13:09.926 --> 00:13:12.587
many problems that honestly

00:13:12.628 --> 00:13:13.389
you could get out of

00:13:14.215 --> 00:13:15.235
Yeah, I mean, that's the difference.

00:13:15.535 --> 00:13:16.255
It's one of those, like,

00:13:16.316 --> 00:13:17.197
do you want to have money

00:13:17.216 --> 00:13:18.538
that's convenient or do you

00:13:18.577 --> 00:13:19.317
want to have money that's

00:13:19.398 --> 00:13:21.219
going to impact your actual

00:13:21.278 --> 00:13:22.059
wealth in your life?

00:13:22.539 --> 00:13:24.500
And that's what you're willing to play.

00:13:25.142 --> 00:13:28.043
So we have a question from

00:13:28.063 --> 00:13:28.524
the audience here.

00:13:29.004 --> 00:13:30.725
If I'm looking to exit and

00:13:30.745 --> 00:13:31.605
sell my junk remote company,

00:13:31.645 --> 00:13:32.886
where should I be at and

00:13:32.927 --> 00:13:33.886
what should I be aware of

00:13:33.927 --> 00:13:35.607
beforehand so I'm prepared?

00:13:35.788 --> 00:13:36.828
So what are things people,

00:13:36.889 --> 00:13:38.210
and you talked about that just now,

00:13:38.649 --> 00:13:41.111
what are things people can do today if,

00:13:42.604 --> 00:13:44.451
selling is in their next

00:13:44.511 --> 00:13:45.456
three to five year plan.

00:13:47.317 --> 00:13:48.278
Everyone talks about bottom

00:13:48.317 --> 00:13:50.298
line being super helpful

00:13:50.379 --> 00:13:51.438
and then main focus when

00:13:51.479 --> 00:13:52.320
people are just looking

00:13:52.620 --> 00:13:53.200
like you're going to have a

00:13:53.240 --> 00:13:54.659
lot of people that are window shopping.

00:13:54.679 --> 00:13:56.041
There's probably tens of

00:13:56.081 --> 00:13:57.000
thousands of people a day

00:13:57.041 --> 00:13:58.802
just on BizBuySell and they

00:13:59.221 --> 00:14:01.243
filter by bottom line and other things.

00:14:01.322 --> 00:14:03.903
But like I said just previously,

00:14:04.024 --> 00:14:07.345
having systems, sales teams, operations,

00:14:07.404 --> 00:14:08.184
employees,

00:14:08.745 --> 00:14:10.505
things put into place that help

00:14:10.826 --> 00:14:12.405
the brand or more importantly,

00:14:12.426 --> 00:14:14.346
the company really just keep trucking.

00:14:14.947 --> 00:14:17.412
more so than any type of

00:14:17.572 --> 00:14:19.515
other asset is very

00:14:19.556 --> 00:14:20.998
valuable for a buyer to come in,

00:14:21.038 --> 00:14:21.759
whether they want to be

00:14:21.779 --> 00:14:24.264
hands-on operational GM or not,

00:14:24.344 --> 00:14:25.086
or if they want to hire

00:14:25.105 --> 00:14:26.347
that out and then bring that in.

00:14:26.948 --> 00:14:29.269
So to put it at a point

00:14:29.350 --> 00:14:31.272
where it makes sense for

00:14:31.692 --> 00:14:33.212
getting a lot of people to buy,

00:14:33.793 --> 00:14:36.414
I would say have the system, the teams,

00:14:36.434 --> 00:14:37.615
the employees.

00:14:37.655 --> 00:14:38.336
And I'm not going to tell

00:14:38.355 --> 00:14:38.996
people to do that.

00:14:39.017 --> 00:14:39.836
You're running the company.

00:14:39.876 --> 00:14:40.557
It's your baby.

00:14:40.918 --> 00:14:42.599
So you know exactly how to do that.

00:14:43.038 --> 00:14:44.720
But then secondly,

00:14:44.879 --> 00:14:46.561
there's probably biggest importance.

00:14:47.062 --> 00:14:49.182
Be super flexible on trying

00:14:49.243 --> 00:14:52.284
to operate the seller financing.

00:14:53.327 --> 00:14:54.389
so a lot of people want the

00:14:54.408 --> 00:14:55.831
sure thing like hey if you

00:14:55.850 --> 00:14:56.730
can get the sba loan and

00:14:57.091 --> 00:14:58.153
it's for like two million

00:14:58.373 --> 00:14:59.394
and I love that price and

00:14:59.533 --> 00:15:01.176
yeah bring it in but you

00:15:01.216 --> 00:15:03.216
can get a lot of really

00:15:03.298 --> 00:15:04.938
interested parties if you

00:15:04.958 --> 00:15:06.461
can be open to creative

00:15:06.500 --> 00:15:08.422
financing what do you

00:15:08.442 --> 00:15:10.684
typically so I I um I had a

00:15:10.725 --> 00:15:12.186
guy right now who got

00:15:12.245 --> 00:15:13.787
burned on seller financing

00:15:13.807 --> 00:15:14.668
there's a three-year term

00:15:15.009 --> 00:15:15.969
with a balloon at the end

00:15:16.812 --> 00:15:17.933
And the business closed

00:15:18.315 --> 00:15:19.255
ninety days before the

00:15:19.296 --> 00:15:20.759
three years and you never

00:15:20.778 --> 00:15:21.880
got that final balloon payment.

00:15:22.721 --> 00:15:23.462
What are you seeing?

00:15:23.482 --> 00:15:24.465
Because that's that's the

00:15:24.485 --> 00:15:26.528
risk you take on a seller finances.

00:15:27.705 --> 00:15:29.206
So what do you see in typical?

00:15:29.346 --> 00:15:30.486
Let's use the example.

00:15:30.626 --> 00:15:31.607
Let's for hillbilly math.

00:15:33.229 --> 00:15:34.070
Two million, whatever,

00:15:34.110 --> 00:15:35.129
five million dollar business,

00:15:35.551 --> 00:15:37.052
million in EBITDA, right?

00:15:37.091 --> 00:15:38.452
Trades that three times.

00:15:38.653 --> 00:15:40.995
So they get three million dollars for it.

00:15:41.375 --> 00:15:42.216
That's our hillbilly math

00:15:42.235 --> 00:15:43.316
example we're using today.

00:15:44.116 --> 00:15:45.557
On that three million,

00:15:46.038 --> 00:15:47.860
what percentage is typically set?

00:15:48.200 --> 00:15:50.701
What is a down payment and

00:15:50.741 --> 00:15:52.102
what is a term on something like that?

00:15:53.844 --> 00:15:54.784
Yeah, if it's three million,

00:15:54.825 --> 00:15:57.245
then down payments, ten percent normally,

00:15:57.606 --> 00:15:59.368
whether it's SBA.

00:15:59.388 --> 00:15:59.668
That's it.

00:15:59.927 --> 00:16:00.447
Yeah.

00:16:00.548 --> 00:16:00.729
Yeah.

00:16:00.749 --> 00:16:01.849
So you got three hundred K

00:16:02.068 --> 00:16:03.129
you got to bring to the table.

00:16:03.590 --> 00:16:04.551
So if that's yours.

00:16:04.671 --> 00:16:04.971
Great.

00:16:05.350 --> 00:16:07.212
If you need other investors and, you know,

00:16:07.273 --> 00:16:07.852
play somebody,

00:16:07.972 --> 00:16:08.894
somebody plays a capital

00:16:08.913 --> 00:16:09.933
card and they get a piece

00:16:09.953 --> 00:16:10.735
of equity for it.

00:16:10.855 --> 00:16:11.215
Great.

00:16:12.816 --> 00:16:14.636
But then you're seeing, you know,

00:16:14.657 --> 00:16:15.577
some very.

00:16:17.065 --> 00:16:17.725
in my opinion,

00:16:18.125 --> 00:16:19.807
better structured deals if

00:16:19.886 --> 00:16:21.288
the seller or the owner of

00:16:21.308 --> 00:16:22.750
this business is willing to

00:16:22.769 --> 00:16:25.131
be patient and not have

00:16:25.152 --> 00:16:26.653
like a crazy high interest

00:16:26.673 --> 00:16:29.895
rate on a very short term sheet.

00:16:30.155 --> 00:16:31.376
So let's call it maybe a ten

00:16:31.397 --> 00:16:33.339
year or you can stretch it

00:16:33.399 --> 00:16:34.340
to five or seven.

00:16:36.201 --> 00:16:37.422
But if you were to say, hey,

00:16:37.481 --> 00:16:38.482
I can get the three hundred

00:16:38.503 --> 00:16:42.287
K for that deal, I know I can do this,

00:16:42.307 --> 00:16:42.847
this and this.

00:16:42.888 --> 00:16:45.289
And then on my debt kind of refinancing,

00:16:45.470 --> 00:16:47.152
even out of like EBITDA or

00:16:47.511 --> 00:16:48.692
what I can calculate out

00:16:49.134 --> 00:16:51.275
that million in SDE or

00:16:51.355 --> 00:16:53.398
EBITDA turns into after

00:16:53.477 --> 00:16:55.038
debt and other pieces and

00:16:55.080 --> 00:16:56.019
kind of scaling it up,

00:16:56.080 --> 00:16:57.701
maybe one hundred fifty two hundred,

00:16:58.062 --> 00:16:59.264
which is quite a slash.

00:17:00.407 --> 00:17:01.206
But if you can kind of

00:17:01.246 --> 00:17:03.408
calculate it out and be very,

00:17:03.447 --> 00:17:04.607
very cordial and

00:17:04.728 --> 00:17:07.269
relationship-driven with buyer and seller,

00:17:08.028 --> 00:17:10.108
that's the play.

00:17:10.169 --> 00:17:10.729
And how does that work?

00:17:10.769 --> 00:17:13.029
Okay, so let's run this example.

00:17:13.049 --> 00:17:13.710
And I'm going to start doing

00:17:13.769 --> 00:17:15.171
math because I love math.

00:17:15.230 --> 00:17:16.010
I love me some math.

00:17:16.030 --> 00:17:16.790
I like to get twitchy.

00:17:18.671 --> 00:17:19.251
So let's do this.

00:17:19.872 --> 00:17:20.852
Let's play this game.

00:17:20.872 --> 00:17:22.731
I might screen share for shits.

00:17:23.092 --> 00:17:23.772
We'll screen share.

00:17:23.792 --> 00:17:24.833
We'll do all the fun stuff.

00:17:26.692 --> 00:17:28.314
So hillbilly math is my thing.

00:17:28.354 --> 00:17:29.233
It's what I do best.

00:17:32.234 --> 00:17:33.516
Hillbilly math in a little bit.

00:17:34.155 --> 00:17:34.455
There we go.

00:17:34.476 --> 00:17:35.817
All right, let's play some hillbilly math.

00:17:36.317 --> 00:17:36.498
All right,

00:17:36.617 --> 00:17:38.358
so we're going to have a five

00:17:40.701 --> 00:17:41.780
million dollar business.

00:17:41.800 --> 00:17:44.702
I hope it's beeping at me.

00:17:44.722 --> 00:17:45.163
Got my zero.

00:17:45.183 --> 00:17:45.703
All right,

00:17:45.723 --> 00:17:46.424
we're going to have a five

00:17:46.444 --> 00:17:49.426
million dollar business for funsies.

00:17:49.467 --> 00:17:50.227
What did I say?

00:17:50.247 --> 00:17:51.607
I said a million dollars.

00:17:51.627 --> 00:17:52.308
We're going to have a twenty

00:17:52.328 --> 00:17:54.951
percent EBITDA.

00:17:54.971 --> 00:18:00.233
I'm going to use very...

00:18:02.294 --> 00:18:03.153
generic terms.

00:18:05.474 --> 00:18:06.595
And for those of you watching at home,

00:18:06.694 --> 00:18:09.135
EBITDA is interest before earnings, taxes,

00:18:09.175 --> 00:18:11.376
depreciation, and admirization.

00:18:11.616 --> 00:18:13.057
Took me a long time to get that word,

00:18:13.076 --> 00:18:13.696
that word down.

00:18:13.797 --> 00:18:14.137
Admir is,

00:18:14.157 --> 00:18:15.238
I still don't know if I say it right.

00:18:15.298 --> 00:18:15.478
All right.

00:18:16.198 --> 00:18:16.538
So we're,

00:18:16.557 --> 00:18:18.118
what we're saying is at this point, right,

00:18:18.138 --> 00:18:20.558
we have a million dollar, we have a,

00:18:20.939 --> 00:18:21.940
so that EBITDA percent.

00:18:22.740 --> 00:18:22.859
Yep.

00:18:27.013 --> 00:18:29.355
And our EBITDA is a true million dollars.

00:18:29.375 --> 00:18:30.737
And we're saying that in our business,

00:18:31.678 --> 00:18:33.118
those trade at three to five times.

00:18:33.138 --> 00:18:33.940
So we're going to have

00:18:33.960 --> 00:18:35.480
ourselves a trade at three.

00:18:39.183 --> 00:18:39.364
All right,

00:18:39.384 --> 00:18:40.224
so what we're saying is that's a

00:18:40.285 --> 00:18:43.127
three X. So with respect to the audience,

00:18:43.567 --> 00:18:44.228
so now we're saying that

00:18:44.248 --> 00:18:47.790
this business will trade at three times.

00:18:47.891 --> 00:18:49.613
So the business is worth for,

00:18:49.972 --> 00:18:51.114
what do you call it?

00:18:51.674 --> 00:18:52.474
Three million dollars, right?

00:18:52.494 --> 00:18:52.955
So you're going to do a

00:18:52.996 --> 00:18:54.297
seller finance at ten percent.

00:18:56.231 --> 00:18:56.451
Right.

00:18:56.471 --> 00:18:57.413
So then we're looking at.

00:18:57.913 --> 00:18:58.973
Or the down payment.

00:18:59.314 --> 00:18:59.653
You mean?

00:18:59.693 --> 00:18:59.894
Yeah.

00:19:00.074 --> 00:19:00.213
Yeah.

00:19:00.253 --> 00:19:00.814
Yeah.

00:19:00.835 --> 00:19:00.994
Yeah.

00:19:01.015 --> 00:19:01.275
Correct.

00:19:01.375 --> 00:19:02.836
So financed.

00:19:02.976 --> 00:19:03.155
Right.

00:19:03.195 --> 00:19:04.236
So that's right.

00:19:04.256 --> 00:19:05.037
The buyer.

00:19:05.156 --> 00:19:05.737
Right.

00:19:05.757 --> 00:19:06.096
Correction.

00:19:06.116 --> 00:19:06.557
The buyer.

00:19:06.998 --> 00:19:07.178
Right.

00:19:07.377 --> 00:19:08.038
So you're going to sell or

00:19:08.077 --> 00:19:12.661
finance over the two point seven million.

00:19:12.721 --> 00:19:12.820
Right.

00:19:12.840 --> 00:19:14.582
Let's go.

00:19:15.281 --> 00:19:18.564
Sixty eighty four one twenty.

00:19:18.624 --> 00:19:19.625
Over months.

00:19:19.825 --> 00:19:20.065
Right.

00:19:20.285 --> 00:19:22.145
This is five, seven and ten years.

00:19:28.819 --> 00:19:30.181
So you'd be cash flowing.

00:19:31.340 --> 00:19:33.201
Forty five thousand dollars.

00:19:34.542 --> 00:19:35.063
Monthly.

00:19:36.104 --> 00:19:36.324
Right.

00:19:36.943 --> 00:19:38.285
Or we do this over or we do

00:19:38.305 --> 00:19:39.684
it over annually.

00:19:39.724 --> 00:19:39.905
Right.

00:19:40.066 --> 00:19:41.405
Because what I'm looking at,

00:19:41.705 --> 00:19:42.586
this is an interesting way

00:19:42.626 --> 00:19:47.950
of looking at it, is doing doing this.

00:19:48.390 --> 00:19:51.490
What do you call it?

00:19:51.530 --> 00:19:51.872
Doing.

00:19:51.892 --> 00:19:55.692
Where am I going?

00:19:55.772 --> 00:19:56.713
I know I was doing something here.

00:19:59.223 --> 00:19:59.983
because I'm also looking

00:20:00.023 --> 00:20:01.704
from a capital gains tax perspective,

00:20:01.744 --> 00:20:01.924
right?

00:20:02.384 --> 00:20:02.905
So, right,

00:20:02.945 --> 00:20:04.385
let's say you sell that business, right?

00:20:04.586 --> 00:20:05.686
You'd be making a half a

00:20:05.707 --> 00:20:08.347
million dollars over a year,

00:20:08.768 --> 00:20:09.548
or you could be making two

00:20:09.568 --> 00:20:12.049
hundred seventy thousand dollars a year.

00:20:12.269 --> 00:20:13.130
Because where do you pay?

00:20:13.530 --> 00:20:14.851
Do you now have to pay this

00:20:15.070 --> 00:20:18.173
as a capital gains or income?

00:20:18.232 --> 00:20:19.313
Do you pay that as income at

00:20:19.353 --> 00:20:20.473
that point then annually?

00:20:21.710 --> 00:20:24.073
No, if you were just paying that, oh,

00:20:24.373 --> 00:20:25.595
in terms of you're the

00:20:25.654 --> 00:20:27.217
seller and then they pay

00:20:27.257 --> 00:20:28.337
you is what you're saying?

00:20:28.858 --> 00:20:28.959
Yep.

00:20:29.578 --> 00:20:30.980
Is that Campbell Games?

00:20:31.000 --> 00:20:31.442
What is that?

00:20:31.461 --> 00:20:32.282
Plus the interest.

00:20:32.423 --> 00:20:33.384
Yeah.

00:20:33.403 --> 00:20:34.005
Plus true credit.

00:20:34.045 --> 00:20:35.226
I'm doing, yeah, this is simple.

00:20:35.266 --> 00:20:35.967
Yeah, right.

00:20:35.987 --> 00:20:37.929
We add ten percent annual interest.

00:20:39.036 --> 00:20:40.557
carry the one.

00:20:40.777 --> 00:20:40.897
Yeah.

00:20:40.958 --> 00:20:42.219
And then you can still stack up.

00:20:42.538 --> 00:20:42.699
Yeah.

00:20:42.739 --> 00:20:45.540
You pay that as I tell a lot

00:20:45.580 --> 00:20:47.982
of owners and sellers, it's your pension,

00:20:48.463 --> 00:20:48.723
right?

00:20:49.384 --> 00:20:50.625
So this is your pension.

00:20:50.664 --> 00:20:51.625
It could be a five, seven,

00:20:51.685 --> 00:20:52.507
ten year pension,

00:20:52.906 --> 00:20:54.208
and it's paying you out monthly,

00:20:54.248 --> 00:20:56.329
which is coming from business buyer,

00:20:56.670 --> 00:20:57.891
which means there has to be

00:20:57.911 --> 00:20:58.892
a really good relationship

00:20:58.912 --> 00:21:00.153
and everything put there in

00:21:00.173 --> 00:21:00.814
the first place.

00:21:01.834 --> 00:21:03.253
um and then if it is seller

00:21:03.294 --> 00:21:04.694
financing you definitely

00:21:04.734 --> 00:21:06.255
have to have the down

00:21:06.295 --> 00:21:07.914
payment and then on the two

00:21:07.954 --> 00:21:09.236
point seven need the

00:21:09.256 --> 00:21:10.695
collateral of something

00:21:10.895 --> 00:21:13.656
right so if it's real

00:21:13.696 --> 00:21:15.037
estate or something else

00:21:15.356 --> 00:21:16.317
you get that and you can

00:21:16.336 --> 00:21:18.117
play numbers and then kind

00:21:18.157 --> 00:21:19.718
of stack it up but you're

00:21:19.978 --> 00:21:21.057
getting those monthly

00:21:21.077 --> 00:21:22.598
payments which are

00:21:22.638 --> 00:21:24.358
fantastic monthly payments

00:21:24.378 --> 00:21:25.959
to get just from the

00:21:25.999 --> 00:21:27.039
routine maintenance of

00:21:27.240 --> 00:21:28.039
running the company

00:21:28.779 --> 00:21:30.480
so it's by getting what you

00:21:30.500 --> 00:21:31.861
were already going to agree

00:21:31.901 --> 00:21:33.122
to on the three million

00:21:33.162 --> 00:21:35.103
dollars but let's say you

00:21:35.143 --> 00:21:36.482
ran it you know interest

00:21:36.502 --> 00:21:37.864
payments you could run an

00:21:38.023 --> 00:21:39.664
amortization schedule and

00:21:39.684 --> 00:21:42.385
it just gets crazy right

00:21:42.546 --> 00:21:43.205
because the banks are

00:21:43.226 --> 00:21:44.346
cleaning up the banks want

00:21:44.385 --> 00:21:45.146
all these deals to go

00:21:45.166 --> 00:21:45.866
through because they're

00:21:45.886 --> 00:21:47.688
making that much money and more

00:21:48.228 --> 00:21:49.667
But if you're doing the seller financing,

00:21:49.988 --> 00:21:51.169
you're selling it for three million,

00:21:51.409 --> 00:21:52.828
you're getting three hundred K up front.

00:21:53.169 --> 00:21:54.170
You're taking the big risk

00:21:54.190 --> 00:21:55.130
of two point seven,

00:21:55.369 --> 00:21:56.490
just kind of coming in over

00:21:56.509 --> 00:21:58.371
a certain amount of time, five, seven,

00:21:58.411 --> 00:21:58.931
ten years.

00:21:59.471 --> 00:22:01.412
But if you do it correctly,

00:22:02.372 --> 00:22:04.112
you're getting just monthly payments.

00:22:04.132 --> 00:22:06.432
That's just mailbox money, which is great.

00:22:06.452 --> 00:22:12.815
Yeah, no, this is a. Point around with a.

00:22:14.826 --> 00:22:14.967
Yeah,

00:22:15.027 --> 00:22:16.147
just playing around with numbers here.

00:22:16.167 --> 00:22:19.371
And so this model, very simple model,

00:22:19.431 --> 00:22:19.570
right?

00:22:19.590 --> 00:22:20.332
Let's say you have a two

00:22:20.352 --> 00:22:21.053
million dollar business

00:22:21.073 --> 00:22:22.074
doing twenty five percent.

00:22:22.594 --> 00:22:22.794
Right.

00:22:22.814 --> 00:22:24.435
So you're cash flowing a half a million.

00:22:26.518 --> 00:22:27.979
And you're trading at two point five.

00:22:28.279 --> 00:22:28.420
Right.

00:22:28.440 --> 00:22:29.601
You're at the one point two.

00:22:30.161 --> 00:22:32.522
Oh, I know why the math ain't math.

00:22:32.583 --> 00:22:34.244
And no, that is math.

00:22:34.285 --> 00:22:34.384
And.

00:22:36.586 --> 00:22:36.666
Oh,

00:22:36.686 --> 00:22:38.368
that's why I because we're we're

00:22:38.429 --> 00:22:40.250
starring stuff over here like a joker.

00:22:41.128 --> 00:22:43.912
I knew something was, I was like,

00:22:43.932 --> 00:22:44.752
I was like, that's fucking,

00:22:44.772 --> 00:22:45.534
that's too nice.

00:22:45.574 --> 00:22:46.654
That's too nice of a number.

00:22:47.955 --> 00:22:48.436
Right.

00:22:48.596 --> 00:22:49.317
This one happens when I,

00:22:49.458 --> 00:22:51.160
when I copy and paste and I don't stripe.

00:22:51.180 --> 00:22:53.201
So it's a, I work in, um,

00:22:54.042 --> 00:22:56.705
I work in sheets and an Excel and,

00:22:56.826 --> 00:22:57.646
and they both, uh,

00:22:59.730 --> 00:23:01.111
both operate slightly

00:23:01.151 --> 00:23:03.753
differently uh right there

00:23:03.894 --> 00:23:06.355
yeah so you're saying if

00:23:06.395 --> 00:23:07.596
you're even if you've got

00:23:07.737 --> 00:23:09.278
even a five hundred or even

00:23:09.338 --> 00:23:10.920
a three hundred you're

00:23:10.940 --> 00:23:12.622
still doing extremely well

00:23:13.102 --> 00:23:14.123
in terms of those monthly

00:23:14.163 --> 00:23:15.223
payments or just overall

00:23:15.304 --> 00:23:16.525
annual payments and that

00:23:16.565 --> 00:23:17.346
math right there what

00:23:17.365 --> 00:23:18.086
you're putting into the

00:23:18.105 --> 00:23:19.287
sheet doesn't even include

00:23:19.508 --> 00:23:21.169
interest right yeah yeah

00:23:21.209 --> 00:23:22.470
that's the thing even have a tool

00:23:23.510 --> 00:23:23.830
Yeah.

00:23:23.851 --> 00:23:24.811
Two million dollar business.

00:23:25.112 --> 00:23:26.012
Five hundred thousand.

00:23:26.032 --> 00:23:26.192
Right.

00:23:26.212 --> 00:23:27.034
You're going to trade at two

00:23:27.054 --> 00:23:27.753
point two five.

00:23:28.055 --> 00:23:30.076
So you sell it for one one point two five.

00:23:30.496 --> 00:23:30.737
Right.

00:23:30.757 --> 00:23:31.356
They're going to put down

00:23:31.376 --> 00:23:32.337
one hundred twenty five thousand.

00:23:32.357 --> 00:23:33.258
That's your nice lump sum.

00:23:33.558 --> 00:23:34.179
And they're going to owe you

00:23:34.278 --> 00:23:35.220
one point one million.

00:23:35.900 --> 00:23:36.101
Right.

00:23:36.121 --> 00:23:36.941
You can pay yourself one

00:23:36.961 --> 00:23:38.342
hundred thousand dollars a year.

00:23:38.442 --> 00:23:38.602
Right.

00:23:38.622 --> 00:23:39.103
For ten years.

00:23:40.184 --> 00:23:42.306
Yeah, for just nothing,

00:23:42.586 --> 00:23:43.425
collecting payments.

00:23:43.625 --> 00:23:44.445
Yeah, I mean, it's mailbox,

00:23:44.965 --> 00:23:46.247
but to your point, it's mailbox money.

00:23:46.267 --> 00:23:47.366
And so when you're looking at an exit,

00:23:47.826 --> 00:23:49.106
right, but that's, you know,

00:23:49.146 --> 00:23:50.907
that looks different, right?

00:23:51.448 --> 00:23:52.607
So let's just double your revenue, right?

00:23:52.627 --> 00:23:54.469
You go from two hundred, right?

00:23:54.749 --> 00:23:55.388
You're going to be looking

00:23:55.429 --> 00:23:56.148
at one hundred twelve

00:23:56.169 --> 00:23:58.089
thousand dollars a year, right?

00:23:58.109 --> 00:23:59.250
That's that's your salary

00:23:59.289 --> 00:24:01.609
for next for busting your ass, right?

00:24:01.690 --> 00:24:03.010
You're you're you're half of

00:24:03.030 --> 00:24:04.211
that at a million at thirty.

00:24:05.290 --> 00:24:05.391
Yeah.

00:24:05.411 --> 00:24:06.471
So none of these models are

00:24:06.612 --> 00:24:07.511
better or worse.

00:24:09.490 --> 00:24:10.952
Right, and this is only two times EBITDA,

00:24:11.173 --> 00:24:11.313
right?

00:24:11.333 --> 00:24:12.253
This is a million dollar

00:24:12.273 --> 00:24:12.855
business doing three

00:24:12.875 --> 00:24:13.915
hundred thousand in EBITDA,

00:24:14.376 --> 00:24:15.317
probably only gonna trade

00:24:15.337 --> 00:24:15.958
it at two times.

00:24:17.105 --> 00:24:17.727
Two and a half, three,

00:24:17.747 --> 00:24:18.607
I think is a stretch.

00:24:19.729 --> 00:24:20.430
Maybe you get it.

00:24:20.470 --> 00:24:22.172
You got it because, because day one,

00:24:22.192 --> 00:24:23.313
there's going to be a learning curve.

00:24:23.814 --> 00:24:25.675
And I would argue that

00:24:25.776 --> 00:24:26.757
people aren't as interested

00:24:26.797 --> 00:24:28.278
in this business, right?

00:24:28.298 --> 00:24:29.539
This is not as attractive as

00:24:29.859 --> 00:24:31.301
two million or five million, right?

00:24:31.321 --> 00:24:33.064
If you want to get into like the PE firms,

00:24:33.084 --> 00:24:33.904
they're looking for this.

00:24:34.345 --> 00:24:35.646
They're looking for the two

00:24:35.666 --> 00:24:36.528
million dollar business.

00:24:36.548 --> 00:24:37.648
Yeah.

00:24:38.930 --> 00:24:39.931
And to your point, yeah,

00:24:40.431 --> 00:24:42.272
when I've been approached about selling,

00:24:42.472 --> 00:24:43.333
they're looking at one to

00:24:43.373 --> 00:24:44.814
two million of EBITDA

00:24:45.115 --> 00:24:46.476
before they're even talking about it.

00:24:46.715 --> 00:24:47.355
So someone like you,

00:24:47.395 --> 00:24:48.356
you're filling in a very

00:24:48.416 --> 00:24:50.597
niche point of the market.

00:24:51.398 --> 00:24:53.840
Once businesses sell and

00:24:53.861 --> 00:24:55.602
they have been selling,

00:24:57.063 --> 00:24:59.884
what have you seen as far

00:25:00.025 --> 00:25:01.826
as the transition period?

00:25:02.066 --> 00:25:03.086
Are you still involved in that?

00:25:03.287 --> 00:25:04.008
What does that look like?

00:25:04.028 --> 00:25:05.729
Do the owners stay on for a period?

00:25:05.788 --> 00:25:05.828
No.

00:25:06.404 --> 00:25:07.125
Yeah.

00:25:07.145 --> 00:25:07.866
So it's a good question.

00:25:07.906 --> 00:25:09.288
That's why we're not brokers

00:25:09.368 --> 00:25:10.991
or we don't do the success

00:25:11.011 --> 00:25:12.753
finders fee because we want

00:25:12.773 --> 00:25:13.515
it to go to closing.

00:25:13.675 --> 00:25:16.460
And then once it's there, boom, high five.

00:25:16.880 --> 00:25:17.942
Transition period is

00:25:18.182 --> 00:25:20.806
definitely part of lots of...

00:25:21.646 --> 00:25:23.388
different resources and you

00:25:23.409 --> 00:25:24.970
know ceo mentorship groups

00:25:25.029 --> 00:25:26.010
or things that people could

00:25:26.030 --> 00:25:27.031
be a part of to help grow

00:25:27.051 --> 00:25:27.972
or scale or kind of

00:25:27.992 --> 00:25:28.973
transition into that

00:25:29.013 --> 00:25:32.298
company um but as a company

00:25:32.317 --> 00:25:33.898
cairo what we we just don't

00:25:33.919 --> 00:25:34.759
involve ourselves there

00:25:34.779 --> 00:25:36.382
because we say hey our

00:25:36.541 --> 00:25:37.623
biggest specialty is just

00:25:37.782 --> 00:25:39.404
finding these companies and

00:25:39.424 --> 00:25:42.988
then just making the connections right

00:25:44.070 --> 00:25:45.592
I would even say biggest

00:25:45.612 --> 00:25:46.471
subset that's grown over

00:25:46.491 --> 00:25:47.893
the last few years are

00:25:48.012 --> 00:25:49.613
those companies that are maybe,

00:25:49.673 --> 00:25:50.153
let's call it,

00:25:50.193 --> 00:25:51.773
they're doing three million,

00:25:52.013 --> 00:25:54.315
five million in top line revenue,

00:25:55.015 --> 00:25:56.655
and they're just hitting

00:25:56.675 --> 00:25:57.717
their head against the wall.

00:25:57.777 --> 00:25:58.856
Your question from the audience,

00:25:59.717 --> 00:26:01.137
how do I just maybe scale

00:26:01.218 --> 00:26:02.117
or just explode?

00:26:02.759 --> 00:26:03.679
You can get some of the

00:26:03.798 --> 00:26:05.160
greatest types of loans and

00:26:05.180 --> 00:26:06.440
structures from the SBA.

00:26:07.000 --> 00:26:08.941
You just need to go find, quote unquote,

00:26:08.980 --> 00:26:09.580
competitor,

00:26:10.342 --> 00:26:13.143
and then you can explode that way too.

00:26:13.883 --> 00:26:15.384
So doubling in size.

00:26:16.045 --> 00:26:17.986
You're saying merge.

00:26:18.046 --> 00:26:20.548
The other way, buy out your competitor.

00:26:21.147 --> 00:26:22.848
Correct.

00:26:23.308 --> 00:26:24.650
Yeah.

00:26:24.769 --> 00:26:28.012
Let's say your competitor is

00:26:28.272 --> 00:26:29.673
seventy four years old.

00:26:29.794 --> 00:26:31.615
OK, they may know you.

00:26:31.634 --> 00:26:32.816
They probably know the brand

00:26:32.996 --> 00:26:35.617
and you come to them and you're like, hey,

00:26:35.678 --> 00:26:36.979
not only will I take care of you.

00:26:37.938 --> 00:26:38.698
I've been doing this for

00:26:38.857 --> 00:26:40.999
eight years myself, six years, four years,

00:26:41.038 --> 00:26:41.439
whatever.

00:26:42.119 --> 00:26:43.759
I have proven that I can do it.

00:26:44.161 --> 00:26:45.000
So you don't need to worry

00:26:45.020 --> 00:26:46.582
about things falling apart.

00:26:47.001 --> 00:26:48.501
If you want to do the seller financing,

00:26:48.622 --> 00:26:49.863
that'll be extremely efficient.

00:26:50.222 --> 00:26:52.124
Sign NDA, share all financials.

00:26:52.243 --> 00:26:53.163
This is what's happening.

00:26:53.564 --> 00:26:54.724
Would love to kind of just

00:26:55.244 --> 00:26:56.286
take this conversation to

00:26:56.306 --> 00:26:57.605
the next level if it makes sense.

00:26:58.226 --> 00:27:00.467
We have seen that happen so many times.

00:27:00.666 --> 00:27:01.667
That's probably been the

00:27:01.748 --> 00:27:03.749
biggest trend center are

00:27:03.828 --> 00:27:04.929
companies looking to bolt

00:27:05.009 --> 00:27:05.970
on or add on to what

00:27:05.990 --> 00:27:06.849
they're already doing.

00:27:07.365 --> 00:27:08.307
And are they bolting on or

00:27:08.606 --> 00:27:09.307
are they doubling what

00:27:09.327 --> 00:27:09.968
they're currently doing?

00:27:10.008 --> 00:27:11.910
Are they bolting on like, hey,

00:27:11.930 --> 00:27:12.891
I have a landscaping company.

00:27:12.911 --> 00:27:13.751
I'm going to pick up a

00:27:13.832 --> 00:27:15.272
hardscaping or I have a landscaping.

00:27:15.292 --> 00:27:16.134
I'm going to pick up snow removal.

00:27:16.354 --> 00:27:17.895
Are they bolting on a different company?

00:27:18.336 --> 00:27:19.136
Are they picking up a

00:27:19.156 --> 00:27:20.518
different location or

00:27:20.577 --> 00:27:22.140
region of the same business model?

00:27:22.220 --> 00:27:23.040
Or are they just doubling

00:27:23.060 --> 00:27:23.800
the business model in the

00:27:23.840 --> 00:27:25.782
same geographic footprint?

00:27:25.823 --> 00:27:26.844
Kind of all of the above.

00:27:26.864 --> 00:27:29.125
But the biggest one is it's

00:27:29.287 --> 00:27:31.568
a different geography or region.

00:27:33.097 --> 00:27:34.278
Same business, different.

00:27:34.298 --> 00:27:34.519
Yeah.

00:27:35.200 --> 00:27:37.039
Same business, you know, ninety,

00:27:37.181 --> 00:27:37.820
ninety five.

00:27:37.861 --> 00:27:38.840
Yeah.

00:27:38.861 --> 00:27:39.561
Yeah.

00:27:39.582 --> 00:27:40.261
Yeah.

00:27:40.662 --> 00:27:41.702
But they're just like, hey,

00:27:41.762 --> 00:27:44.183
I'm in Texas and I want Arkansas.

00:27:44.364 --> 00:27:44.624
Right.

00:27:45.224 --> 00:27:46.565
And they just find the

00:27:46.605 --> 00:27:47.625
seventy four year old or we

00:27:47.645 --> 00:27:48.266
find it for them.

00:27:48.727 --> 00:27:50.007
That's in the different state.

00:27:50.326 --> 00:27:51.327
And then we connect them.

00:27:51.847 --> 00:27:52.387
And someone like me,

00:27:52.469 --> 00:27:54.470
I pay you to go find that person.

00:27:54.549 --> 00:27:55.289
Mm hmm.

00:27:56.529 --> 00:27:56.651
Yeah.

00:27:56.671 --> 00:27:57.592
And these four year olds

00:27:57.632 --> 00:27:58.732
that run these companies

00:27:58.752 --> 00:28:00.675
and these businesses, they're like, yeah,

00:28:00.756 --> 00:28:02.117
I don't know if I want to talk to anyone.

00:28:02.178 --> 00:28:04.220
And, you know, hey, the client themselves,

00:28:04.381 --> 00:28:05.041
they're running the same

00:28:05.061 --> 00:28:06.864
type of business down in San Antonio,

00:28:06.903 --> 00:28:08.286
Texas.

00:28:08.326 --> 00:28:09.166
You want to hop on the phone?

00:28:09.627 --> 00:28:10.548
Oh, that's kind of interesting.

00:28:10.749 --> 00:28:10.929
Sure.

00:28:13.010 --> 00:28:13.750
So I brought out one of my

00:28:13.790 --> 00:28:14.892
competitors here locally

00:28:15.531 --> 00:28:16.212
earlier this year.

00:28:16.313 --> 00:28:16.553
Really?

00:28:16.573 --> 00:28:16.813
Nice.

00:28:17.272 --> 00:28:19.115
And I brought him on as our integrator.

00:28:19.315 --> 00:28:19.775
It worked out.

00:28:19.954 --> 00:28:22.797
That's awesome.

00:28:22.856 --> 00:28:23.596
Good for you.

00:28:23.656 --> 00:28:24.597
And that actually came up in

00:28:24.617 --> 00:28:25.557
a conversation here on the

00:28:25.577 --> 00:28:26.838
podcast back in March.

00:28:27.819 --> 00:28:29.401
A junk wool company, Barton Brothers,

00:28:29.800 --> 00:28:31.241
they do junk wool and dumpsters.

00:28:32.201 --> 00:28:32.663
Case in point,

00:28:33.063 --> 00:28:34.703
there was one of his competitors, a

00:28:36.644 --> 00:28:38.665
one truck operation, like, twenty-five,

00:28:38.766 --> 00:28:39.807
maybe thirty dumpsters,

00:28:40.287 --> 00:28:41.647
and the guy only wanted to

00:28:41.728 --> 00:28:43.769
bang out his dumpsters, run his truck,

00:28:43.828 --> 00:28:44.709
and talk to his customers.

00:28:45.328 --> 00:28:46.250
And Barton was like, cool,

00:28:46.410 --> 00:28:47.550
let me buy all your assets,

00:28:47.931 --> 00:28:50.751
I will rewrap your truck,

00:28:51.152 --> 00:28:53.012
you can stay on for as long as you want,

00:28:53.353 --> 00:28:54.013
because ninety percent of

00:28:54.034 --> 00:28:55.173
what he's doing is driving the truck.

00:28:55.454 --> 00:28:55.734
And he's like,

00:28:55.815 --> 00:28:56.835
I will keep paying you what

00:28:56.855 --> 00:28:57.875
you were making before,

00:28:58.135 --> 00:28:59.316
I'm just going to up the

00:28:59.557 --> 00:29:00.277
price of the dump.

00:29:00.656 --> 00:29:01.277
So basically,

00:29:01.478 --> 00:29:02.678
I'm going to pick up your overhead,

00:29:03.077 --> 00:29:03.238
right?

00:29:03.398 --> 00:29:05.880
So he found his efficiencies by, you know,

00:29:06.400 --> 00:29:07.160
cutting down the insurance

00:29:08.500 --> 00:29:10.182
costs and the warehousing costs.

00:29:10.321 --> 00:29:11.823
So he made his efficiency there.

00:29:12.103 --> 00:29:13.282
He's paying the guy the same thing.

00:29:13.324 --> 00:29:13.723
He's like, yep,

00:29:13.743 --> 00:29:15.365
you're going to make the exact same.

00:29:15.444 --> 00:29:16.105
And I'm going to take away

00:29:16.144 --> 00:29:16.644
half your headaches.

00:29:16.664 --> 00:29:17.105
And the guy's like,

00:29:17.144 --> 00:29:18.905
where do I fucking sign?

00:29:18.925 --> 00:29:21.407
Because that is exactly your point.

00:29:21.607 --> 00:29:22.907
He loved doing what he did,

00:29:23.328 --> 00:29:25.250
the tactical part, the thing that he did.

00:29:25.529 --> 00:29:26.910
He didn't want to do all the other parts.

00:29:27.431 --> 00:29:28.651
And at sixty, seventy years old,

00:29:28.810 --> 00:29:30.011
he wasn't looking to scale.

00:29:30.332 --> 00:29:31.011
And now he's like, hey,

00:29:31.031 --> 00:29:31.893
I'm going to take a week off.

00:29:32.073 --> 00:29:33.173
He can take a week off and

00:29:33.193 --> 00:29:35.074
then someone else covers his route,

00:29:35.134 --> 00:29:35.615
essentially.

00:29:37.757 --> 00:29:37.977
I mean,

00:29:37.997 --> 00:29:39.077
I have two examples the last six

00:29:39.117 --> 00:29:39.838
months where exactly what

00:29:39.858 --> 00:29:40.759
you're saying is interesting.

00:29:41.059 --> 00:29:42.040
And that's too, like with me,

00:29:43.462 --> 00:29:44.544
expanding geography,

00:29:44.743 --> 00:29:45.664
what makes most sense to me

00:29:45.724 --> 00:29:48.147
is find a local company that's doing it,

00:29:48.607 --> 00:29:49.630
wherein I either take over

00:29:49.650 --> 00:29:50.750
their operations entirely

00:29:50.770 --> 00:29:51.811
and pick up their book of business,

00:29:52.413 --> 00:29:54.315
or maybe it's the opposite direction.

00:29:54.335 --> 00:29:55.155
I have a younger person.

00:29:55.175 --> 00:29:56.737
So the guy that I bought his business,

00:29:56.757 --> 00:29:57.538
he's twenty nine.

00:29:58.479 --> 00:29:59.359
So I brought him in.

00:29:59.440 --> 00:30:01.101
I bought him in or I bought

00:30:01.121 --> 00:30:03.482
him out and brought him in my business.

00:30:04.123 --> 00:30:05.304
And now he's running the business.

00:30:05.683 --> 00:30:06.045
However,

00:30:06.105 --> 00:30:07.786
he's been he's he went from year

00:30:07.846 --> 00:30:11.228
two to year eight in business overnight.

00:30:11.347 --> 00:30:13.329
Yeah.

00:30:13.369 --> 00:30:14.310
So that's also interest.

00:30:14.371 --> 00:30:15.290
That's that's what's

00:30:15.330 --> 00:30:16.291
interesting to me is I

00:30:16.311 --> 00:30:17.192
would love to buy out of.

00:30:17.853 --> 00:30:18.333
twenty five,

00:30:18.413 --> 00:30:20.032
thirty year old who has been

00:30:20.053 --> 00:30:20.913
doing it for a couple of years,

00:30:21.153 --> 00:30:21.894
hits his head against the

00:30:21.953 --> 00:30:24.114
ceiling because either doesn't know how,

00:30:24.193 --> 00:30:25.055
doesn't have the pockets,

00:30:25.075 --> 00:30:25.994
doesn't have the knowledge

00:30:27.234 --> 00:30:28.934
and wants to run the company.

00:30:29.214 --> 00:30:29.675
It's like, cool,

00:30:29.776 --> 00:30:31.915
I I can take care of the financing,

00:30:31.955 --> 00:30:32.736
the branding and all that

00:30:32.776 --> 00:30:36.017
other all the the additional stuff.

00:30:36.037 --> 00:30:37.596
You know, the like you said, you guys,

00:30:37.636 --> 00:30:38.837
you guys have an engine that works.

00:30:38.958 --> 00:30:39.238
Same here.

00:30:39.258 --> 00:30:40.577
I have an engine here with

00:30:40.597 --> 00:30:41.518
Campbell crew that works.

00:30:41.557 --> 00:30:42.038
It's like, cool,

00:30:42.057 --> 00:30:43.278
let's plug and play our process.

00:30:43.778 --> 00:30:44.898
You go take care of the customers.

00:30:45.924 --> 00:30:46.846
Absolutely.

00:30:46.865 --> 00:30:47.546
No, that's awesome.

00:30:47.646 --> 00:30:48.487
And you hit on the other

00:30:49.087 --> 00:30:50.449
side of the age spectrum, too,

00:30:50.548 --> 00:30:52.951
like these twenty to I'm sorry,

00:30:52.990 --> 00:30:53.991
twenty five to like thirty

00:30:54.011 --> 00:30:55.973
year old business owners

00:30:56.054 --> 00:30:57.755
that love the entrepreneurship,

00:30:57.855 --> 00:31:00.178
maybe not necessarily like, oh,

00:31:00.597 --> 00:31:02.420
I have to go figure it all out myself.

00:31:02.440 --> 00:31:04.761
But they just love doing the job.

00:31:04.781 --> 00:31:05.883
They got really good at it

00:31:05.923 --> 00:31:06.403
and they're like,

00:31:06.863 --> 00:31:08.744
I am they're cocky or they

00:31:08.785 --> 00:31:09.865
just understand I'm the

00:31:09.885 --> 00:31:11.406
best and I can just run this.

00:31:12.048 --> 00:31:13.489
But if someone came in and they said, hey,

00:31:13.909 --> 00:31:15.329
do you want to win under your belt?

00:31:15.430 --> 00:31:16.450
You're twenty nine years old.

00:31:16.849 --> 00:31:17.750
You run a company.

00:31:17.911 --> 00:31:19.131
You can tell people you sold

00:31:19.151 --> 00:31:20.531
that company and now you

00:31:20.551 --> 00:31:22.373
just work for whatever new

00:31:22.393 --> 00:31:23.313
brand new company,

00:31:23.633 --> 00:31:26.273
which that's how every technically works.

00:31:26.914 --> 00:31:28.515
And you come out on top.

00:31:28.675 --> 00:31:29.236
I win.

00:31:29.516 --> 00:31:30.336
And then we can just see

00:31:30.355 --> 00:31:31.277
where the merger takes us.

00:31:32.037 --> 00:31:33.758
That's probably I wouldn't

00:31:33.778 --> 00:31:35.417
say there's as many twenty eight,

00:31:35.458 --> 00:31:36.318
twenty nine year olds with

00:31:36.419 --> 00:31:38.038
like good enough companies to maybe sell.

00:31:38.078 --> 00:31:39.859
But you're talking about a

00:31:40.339 --> 00:31:41.721
much lower price tag, too,

00:31:42.080 --> 00:31:44.862
on those compared to a four year old.

00:31:44.922 --> 00:31:45.102
Yeah.

00:31:45.321 --> 00:31:45.481
Yeah.

00:31:45.521 --> 00:31:45.781
Well,

00:31:45.801 --> 00:31:47.042
you're going to lower price tag

00:31:47.063 --> 00:31:48.022
because the expectations

00:31:48.042 --> 00:31:49.304
that person is probably

00:31:49.324 --> 00:31:50.284
going to take part in some

00:31:50.364 --> 00:31:52.125
level of ownership of the new company.

00:31:53.605 --> 00:31:53.765
Right.

00:31:53.805 --> 00:31:54.244
Potentially.

00:31:54.305 --> 00:31:54.465
Right.

00:31:54.705 --> 00:31:57.246
We defer or deferred comp or

00:31:57.306 --> 00:31:58.727
seller finance or something.

00:31:59.027 --> 00:31:59.747
And they're also getting a

00:31:59.807 --> 00:32:01.307
job out of it and a job

00:32:01.367 --> 00:32:02.407
doing what they want to do.

00:32:02.468 --> 00:32:03.528
And that's the other thing.

00:32:03.607 --> 00:32:04.407
Money is money.

00:32:04.508 --> 00:32:05.409
Wealth is wealth.

00:32:05.449 --> 00:32:05.588
Right.

00:32:05.929 --> 00:32:07.429
And now they are doing a job

00:32:07.769 --> 00:32:09.329
where they're more they're wealthier.

00:32:09.730 --> 00:32:11.250
Because they reduce the risk.

00:32:11.431 --> 00:32:12.351
The challenge entrepreneurs

00:32:12.371 --> 00:32:13.111
have is the risk.

00:32:13.432 --> 00:32:15.772
I see so many cats getting a junk removal.

00:32:15.813 --> 00:32:16.712
They'll come out of the gate

00:32:16.732 --> 00:32:17.752
to a hundred their first year.

00:32:17.893 --> 00:32:19.394
They'll do two hundred their second year.

00:32:19.653 --> 00:32:20.994
And then they'll do two twenty five,

00:32:21.474 --> 00:32:23.215
two twenty five, two twenty five.

00:32:23.655 --> 00:32:26.836
And they cannot get over

00:32:26.876 --> 00:32:28.298
these humps because they

00:32:28.337 --> 00:32:28.998
can run the truck,

00:32:29.018 --> 00:32:30.239
but they put no processes

00:32:30.278 --> 00:32:32.118
in place to put truck number two, three,

00:32:32.159 --> 00:32:33.099
four or five on the road.

00:32:33.119 --> 00:32:34.779
And it's like, OK,

00:32:34.901 --> 00:32:35.780
you're making good money.

00:32:37.385 --> 00:32:39.669
And then like, what do you have?

00:32:39.929 --> 00:32:41.310
And they want to get to this point of,

00:32:41.691 --> 00:32:43.012
well, once I have four trucks,

00:32:43.153 --> 00:32:43.733
I'll be set.

00:32:43.794 --> 00:32:43.953
Well,

00:32:43.973 --> 00:32:45.615
you're at one truck and you have no

00:32:45.695 --> 00:32:47.077
idea how to get to two, three or four.

00:32:47.718 --> 00:32:49.119
So yeah, once you get to four, you're set.

00:32:50.682 --> 00:32:51.623
There is something

00:32:52.663 --> 00:32:54.406
preventing you to get to that point.

00:32:55.286 --> 00:32:55.567
Um,

00:32:55.606 --> 00:32:57.569
you're doing the kind of age old

00:32:58.049 --> 00:32:59.071
working in the business,

00:32:59.132 --> 00:33:00.493
not working on the business.

00:33:00.513 --> 00:33:01.214
A hundred percent.

00:33:01.434 --> 00:33:02.276
And then it turns into the

00:33:02.296 --> 00:33:03.037
business owns them.

00:33:03.076 --> 00:33:03.959
They don't own the business.

00:33:03.979 --> 00:33:06.201
I mean, these like cliche statements.

00:33:06.281 --> 00:33:07.784
And yet like you and I can

00:33:07.804 --> 00:33:08.766
sit here and say, you know,

00:33:08.786 --> 00:33:09.787
going back to that earlier question,

00:33:09.807 --> 00:33:10.327
what do I need to do?

00:33:10.367 --> 00:33:10.688
It's like.

00:33:11.229 --> 00:33:12.509
Well, if you are the business,

00:33:12.630 --> 00:33:13.131
then that's it.

00:33:13.971 --> 00:33:14.892
I read a reading.

00:33:14.932 --> 00:33:15.593
I'm looking for it.

00:33:15.613 --> 00:33:16.192
Nope, I don't have it here.

00:33:16.753 --> 00:33:18.154
Ten X is easier than two X,

00:33:18.194 --> 00:33:19.055
a book I recently read.

00:33:19.455 --> 00:33:19.955
Yeah.

00:33:20.076 --> 00:33:20.977
Last week's episode,

00:33:21.076 --> 00:33:21.917
I did like a forty five

00:33:21.938 --> 00:33:22.878
minute book report on it.

00:33:22.939 --> 00:33:23.838
It's that fucking good.

00:33:25.220 --> 00:33:26.481
And towards the end there, the book,

00:33:26.521 --> 00:33:29.183
it talks about running, you know,

00:33:29.463 --> 00:33:31.445
having an employee centric

00:33:31.546 --> 00:33:32.546
business and not only

00:33:32.566 --> 00:33:33.346
employee and centric

00:33:33.586 --> 00:33:35.028
employee empowered business

00:33:35.348 --> 00:33:36.329
where everybody in your

00:33:36.410 --> 00:33:38.611
business is running a ten X level.

00:33:39.392 --> 00:33:41.813
So that you can focus on you,

00:33:41.873 --> 00:33:42.653
not even your business,

00:33:42.673 --> 00:33:43.734
not even working on your business.

00:33:43.994 --> 00:33:45.194
You got people in your

00:33:45.234 --> 00:33:46.115
business working on the

00:33:46.175 --> 00:33:47.277
business and they're taking

00:33:47.297 --> 00:33:48.217
the next level because

00:33:48.257 --> 00:33:49.458
chance are they are better

00:33:49.938 --> 00:33:51.818
at every one of their jobs than you are.

00:33:51.838 --> 00:33:52.880
There you go.

00:33:52.900 --> 00:33:53.140
Yes.

00:33:53.279 --> 00:33:53.599
Do less.

00:33:53.640 --> 00:33:55.361
There it goes.

00:33:55.381 --> 00:33:56.461
Second best book I've ever read.

00:33:57.125 --> 00:33:58.345
I love that book.

00:33:59.165 --> 00:33:59.945
Okay, great book.

00:34:00.526 --> 00:34:01.586
Stephen Covey's Seven Habits

00:34:01.606 --> 00:34:02.666
of a Highly Effective People.

00:34:02.686 --> 00:34:03.647
That's still number one.

00:34:04.288 --> 00:34:06.729
I'm not sure how to dethrone that book.

00:34:06.769 --> 00:34:07.989
I read that book fifteen years ago.

00:34:08.230 --> 00:34:09.909
I still reference it almost every day.

00:34:10.090 --> 00:34:10.369
So, like,

00:34:10.389 --> 00:34:12.971
that is the... And when I tell

00:34:13.032 --> 00:34:14.052
people that Seven Habits is

00:34:14.092 --> 00:34:15.972
my favorite book of all time, like,

00:34:16.313 --> 00:34:17.552
it's inarguable, right?

00:34:17.572 --> 00:34:18.733
Because people are like, oh, yeah, yeah,

00:34:18.813 --> 00:34:19.353
I got it.

00:34:19.414 --> 00:34:19.554
Right?

00:34:19.574 --> 00:34:19.673
Like,

00:34:20.134 --> 00:34:21.735
people can have books they like better.

00:34:21.755 --> 00:34:22.655
Good, good, good, good.

00:34:22.715 --> 00:34:22.976
You know?

00:34:23.416 --> 00:34:23.695
Yeah.

00:34:24.773 --> 00:34:25.614
I'm not going to argue with folks.

00:34:25.634 --> 00:34:26.994
No, it was a great book.

00:34:27.114 --> 00:34:28.735
And then the TEDx is better than TEDx.

00:34:28.835 --> 00:34:29.556
My co-founder,

00:34:30.137 --> 00:34:31.677
he convinced me to read it last year.

00:34:31.978 --> 00:34:34.079
And it's game changing.

00:34:35.300 --> 00:34:36.121
That's one of those books

00:34:36.141 --> 00:34:37.342
that you could probably

00:34:37.402 --> 00:34:39.704
read it once a year and

00:34:39.784 --> 00:34:42.007
find tons of new ideas.

00:34:42.347 --> 00:34:44.128
Because when you do TEDx,

00:34:46.389 --> 00:34:47.570
what served you today,

00:34:47.911 --> 00:34:49.052
twelve months from now will

00:34:49.092 --> 00:34:49.853
not be serving you.

00:34:50.172 --> 00:34:50.914
Whatever the thing is.

00:34:52.789 --> 00:34:53.889
You know?

00:34:53.969 --> 00:34:54.730
So anyways,

00:34:54.809 --> 00:34:55.731
I'm getting all over the place.

00:34:55.751 --> 00:34:56.110
All right,

00:34:56.150 --> 00:34:57.211
what else do you want to talk about?

00:34:57.532 --> 00:34:58.692
We covered a lot in a short

00:34:58.711 --> 00:35:00.012
amount of time here.

00:35:00.112 --> 00:35:03.193
Yeah, no, I think it's been really good.

00:35:03.313 --> 00:35:05.454
I kind of love where you go

00:35:05.494 --> 00:35:07.695
with conversations with people asking,

00:35:08.637 --> 00:35:09.336
and I hear most of the

00:35:09.376 --> 00:35:11.797
questions on like early stages, right?

00:35:11.998 --> 00:35:13.778
They just have or got their

00:35:13.818 --> 00:35:15.360
company and they're hitting,

00:35:15.699 --> 00:35:16.860
they may not have even hit

00:35:16.900 --> 00:35:18.762
the hundred K per year mark, right?

00:35:18.782 --> 00:35:20.041
They're just trying to get the truck.

00:35:20.061 --> 00:35:21.282
They're doing the initial things.

00:35:23.304 --> 00:35:24.525
I would advise those types

00:35:24.545 --> 00:35:26.688
of people to stay away as

00:35:26.748 --> 00:35:27.909
much as possible from like

00:35:28.369 --> 00:35:29.992
the loan sharks or anything else.

00:35:30.552 --> 00:35:32.335
And just really just dig

00:35:32.375 --> 00:35:34.436
deep because it's your head

00:35:34.456 --> 00:35:35.978
down type of mentality, but then

00:35:36.860 --> 00:35:39.422
when you're ready to scale, right?

00:35:39.661 --> 00:35:41.282
Meaning you've scaled up and

00:35:41.302 --> 00:35:42.684
you feel great about the business,

00:35:42.983 --> 00:35:44.605
but it might be starting to plateau.

00:35:45.164 --> 00:35:45.985
That's where you start to

00:35:46.025 --> 00:35:48.527
take sacrifices or make sacrifices,

00:35:49.307 --> 00:35:50.369
hire this employee,

00:35:50.409 --> 00:35:52.150
take a lot less money out of the business,

00:35:52.190 --> 00:35:54.690
whatever it might be.

00:35:54.791 --> 00:35:56.592
I would love to know your take on

00:35:57.588 --> 00:35:59.271
When does someone need to

00:35:59.431 --> 00:36:02.132
worry about making that shift?

00:36:02.574 --> 00:36:04.074
Like they get hit a hundred, two hundred,

00:36:04.114 --> 00:36:05.757
like using the example of two twenty five,

00:36:05.797 --> 00:36:06.498
two twenty five.

00:36:06.538 --> 00:36:10.181
But what is that?

00:36:10.221 --> 00:36:11.902
So I'm going to rephrase your question.

00:36:12.983 --> 00:36:13.884
I hate the word need.

00:36:15.565 --> 00:36:16.405
There was two words in there

00:36:16.425 --> 00:36:17.606
that were not great words.

00:36:18.367 --> 00:36:18.487
Yeah.

00:36:18.527 --> 00:36:19.447
So this is the hillbilly.

00:36:19.467 --> 00:36:20.427
Here's the hillbilly math.

00:36:20.847 --> 00:36:22.789
The hillbilly math is fifteen K a month.

00:36:23.009 --> 00:36:24.088
Once you once you have.

00:36:24.469 --> 00:36:24.849
And again,

00:36:24.869 --> 00:36:26.309
this this changes in California.

00:36:26.329 --> 00:36:26.949
Maybe it's twenty.

00:36:27.170 --> 00:36:27.731
You're down south.

00:36:27.751 --> 00:36:28.891
Maybe it's ten or twelve.

00:36:29.251 --> 00:36:29.431
Right.

00:36:29.472 --> 00:36:29.612
Yeah.

00:36:29.692 --> 00:36:30.731
The hillbilly math says

00:36:30.831 --> 00:36:33.273
around fifteen K a month on a truck.

00:36:33.632 --> 00:36:34.813
You are at half capacity.

00:36:36.059 --> 00:36:36.320
And again,

00:36:36.340 --> 00:36:37.380
this is hillbilly math says a

00:36:37.420 --> 00:36:38.663
truck can do three hundred thousand.

00:36:38.922 --> 00:36:39.083
Yeah,

00:36:39.304 --> 00:36:40.644
it could be screaming ass in the

00:36:40.684 --> 00:36:42.768
summer doing a lot more than that.

00:36:42.867 --> 00:36:44.650
There's a seasonality to your business.

00:36:44.989 --> 00:36:46.152
Trucks on average do between

00:36:46.893 --> 00:36:47.813
two hundred fifty and four

00:36:47.833 --> 00:36:48.333
hundred a year.

00:36:48.554 --> 00:36:50.336
So let's call it three hundred per truck.

00:36:50.657 --> 00:36:52.438
So once you are at fifteen K.

00:36:53.260 --> 00:36:54.701
You are greater than fifty

00:36:54.721 --> 00:36:55.681
percent the capacity.

00:36:55.981 --> 00:36:57.061
That's when I add trucks.

00:36:57.402 --> 00:36:58.402
And when I had at one point,

00:36:58.443 --> 00:36:59.623
I had ten franchises across

00:36:59.643 --> 00:37:01.605
the country and we did models.

00:37:01.945 --> 00:37:04.045
We're in at ten K because we

00:37:04.085 --> 00:37:07.288
anticipated ten K, twelve, fifteen,

00:37:07.407 --> 00:37:08.307
seventeen, twenty.

00:37:08.347 --> 00:37:08.969
And, you know,

00:37:09.088 --> 00:37:10.469
and as as we do the models

00:37:10.869 --> 00:37:12.230
right when you're at ten K,

00:37:12.429 --> 00:37:13.170
that's when you start

00:37:13.411 --> 00:37:14.331
building out your team.

00:37:14.931 --> 00:37:16.132
So when you hit fifteen K.

00:37:17.512 --> 00:37:17.672
Right.

00:37:17.771 --> 00:37:19.213
Then you have another thirty

00:37:19.233 --> 00:37:20.213
days to get the team on the road.

00:37:20.233 --> 00:37:21.193
You have ninety days

00:37:21.253 --> 00:37:23.414
essentially from ten K. So

00:37:23.614 --> 00:37:25.115
I tell people for your first truck,

00:37:25.215 --> 00:37:26.117
once you're doing fifteen

00:37:26.157 --> 00:37:27.577
thousand a month consistently.

00:37:27.797 --> 00:37:28.898
So it's three months in a row.

00:37:29.978 --> 00:37:31.059
I not peak season.

00:37:31.099 --> 00:37:31.219
Right.

00:37:31.239 --> 00:37:32.960
If you do it June, July, August.

00:37:33.079 --> 00:37:34.701
OK, let's see what September rolls out.

00:37:35.101 --> 00:37:35.260
Right.

00:37:35.402 --> 00:37:37.021
If you do it January, February, March.

00:37:37.262 --> 00:37:38.222
OK, let's go.

00:37:38.682 --> 00:37:39.884
The other thing.

00:37:40.003 --> 00:37:40.603
And then.

00:37:41.304 --> 00:37:41.525
Right.

00:37:41.905 --> 00:37:43.146
I say go cash.

00:37:44.068 --> 00:37:45.469
run a fucking lean,

00:37:46.150 --> 00:37:48.331
tight cash business for as

00:37:48.492 --> 00:37:49.393
long as you can.

00:37:50.112 --> 00:37:53.356
And the second you decide to finance,

00:37:54.056 --> 00:37:55.557
finance everything.

00:37:55.577 --> 00:37:56.599
It might be cash business.

00:37:56.699 --> 00:37:58.681
I'm saying burn your fucking credit card.

00:37:59.280 --> 00:37:59.782
This is like,

00:38:00.041 --> 00:38:01.163
use personal credit cards

00:38:01.202 --> 00:38:01.744
until you can get...

00:38:02.344 --> 00:38:03.304
business credit cards put

00:38:03.646 --> 00:38:04.427
everything on a personal

00:38:04.447 --> 00:38:05.108
credit card because you got

00:38:05.128 --> 00:38:07.030
a thirty day to fifty nine

00:38:07.050 --> 00:38:09.233
day minimum loan right just

00:38:09.773 --> 00:38:10.835
and put and if you got no

00:38:10.875 --> 00:38:12.036
interest credit cards let

00:38:12.056 --> 00:38:13.659
those motherfuckers ride

00:38:13.699 --> 00:38:15.740
for as long as you can keep

00:38:15.780 --> 00:38:19.045
the cash turning keep the cash coming

00:38:20.264 --> 00:38:21.385
Then your next step is get

00:38:21.405 --> 00:38:22.126
business credit cards.

00:38:22.326 --> 00:38:23.367
Once you have the business credit cards,

00:38:23.407 --> 00:38:24.507
you might even go buy

00:38:24.527 --> 00:38:25.547
yourself another year of no

00:38:25.628 --> 00:38:27.248
interest and fuck around.

00:38:28.708 --> 00:38:30.210
At some point, for us,

00:38:30.469 --> 00:38:33.351
we launched in June.

00:38:34.012 --> 00:38:35.293
By January,

00:38:35.353 --> 00:38:37.134
we were at a point where we had

00:38:37.193 --> 00:38:38.153
cash to get us through the

00:38:38.173 --> 00:38:40.195
year and we need another truck.

00:38:40.355 --> 00:38:42.876
By January, and mind you, at this point,

00:38:42.936 --> 00:38:43.177
I was...

00:38:43.836 --> 00:38:44.998
eighty ninety thousand in

00:38:45.418 --> 00:38:46.860
credit card debt and family

00:38:46.880 --> 00:38:47.701
friends and everything else

00:38:48.081 --> 00:38:49.443
at that point though that's

00:38:49.463 --> 00:38:50.364
why we got a traditional

00:38:50.384 --> 00:38:52.326
financing on a vehicle and

00:38:52.565 --> 00:38:53.987
every vehicle not every

00:38:54.106 --> 00:38:54.788
almost every vehicle

00:38:54.807 --> 00:38:55.909
thereafter we did

00:38:55.929 --> 00:38:57.751
traditional financing I

00:38:58.030 --> 00:38:59.632
only buy new trucks the

00:38:59.853 --> 00:39:01.534
interest rates on a new

00:39:01.594 --> 00:39:02.795
truck versus a new truck

00:39:03.217 --> 00:39:04.358
it's significantly better

00:39:05.097 --> 00:39:05.659
Right.

00:39:05.679 --> 00:39:06.438
Used truck is going to last

00:39:06.458 --> 00:39:07.639
you three years, two and a half,

00:39:07.659 --> 00:39:08.059
three years.

00:39:08.079 --> 00:39:08.880
It's going to break down.

00:39:09.260 --> 00:39:09.960
New trucks are going to last

00:39:09.981 --> 00:39:10.621
you five years.

00:39:10.961 --> 00:39:12.402
It's the same cost per month.

00:39:12.722 --> 00:39:13.242
The question is,

00:39:13.282 --> 00:39:14.003
do you want to pay for the

00:39:14.063 --> 00:39:15.704
repairs throughout or do

00:39:15.724 --> 00:39:16.505
you just want to eat it?

00:39:16.945 --> 00:39:18.326
So I'd rather get a new

00:39:18.346 --> 00:39:19.246
vehicle at like a three

00:39:19.266 --> 00:39:20.166
point nine percent,

00:39:20.226 --> 00:39:22.309
four point nine percent than a used at.

00:39:23.188 --> 00:39:24.550
Eight, nine, ten, eleven percent.

00:39:24.829 --> 00:39:25.369
Right.

00:39:25.389 --> 00:39:26.630
Because that new truck.

00:39:26.670 --> 00:39:27.070
So that's it.

00:39:27.291 --> 00:39:29.393
And once you can afford, you know,

00:39:29.532 --> 00:39:29.873
whatever it is,

00:39:29.893 --> 00:39:31.813
three to five times the monthly payment.

00:39:32.373 --> 00:39:32.554
Right.

00:39:32.715 --> 00:39:34.376
On that new truck, you fucking go.

00:39:34.596 --> 00:39:35.496
And then at that point,

00:39:35.675 --> 00:39:37.938
I'm all about financing everything.

00:39:38.077 --> 00:39:39.818
I don't pay cash for anything.

00:39:39.978 --> 00:39:41.460
So it's cash as long as you can.

00:39:41.699 --> 00:39:43.061
And as soon as you decide to finance,

00:39:43.081 --> 00:39:43.621
you finance.

00:39:43.960 --> 00:39:45.081
And then the next step is

00:39:45.461 --> 00:39:46.702
leveraging lines of credit.

00:39:47.500 --> 00:39:48.840
Because once you get the cash flow,

00:39:49.601 --> 00:39:50.442
ideally you implement

00:39:50.481 --> 00:39:51.501
profit first day one.

00:39:51.822 --> 00:39:53.123
The sooner you implement profit first,

00:39:53.143 --> 00:39:54.063
the better, right?

00:39:54.224 --> 00:39:55.744
So you can put profit aside,

00:39:55.804 --> 00:39:56.925
even if it's one percent.

00:39:57.264 --> 00:39:58.246
One percent aside is better

00:39:58.266 --> 00:39:59.726
than zero percent because

00:39:59.746 --> 00:40:00.606
then you get the martyr.

00:40:00.786 --> 00:40:01.467
I've been working three

00:40:01.487 --> 00:40:02.547
years and I haven't paid myself.

00:40:02.688 --> 00:40:02.969
Well-

00:40:03.668 --> 00:40:04.108
You're dumb.

00:40:04.429 --> 00:40:05.309
And when I say you're dumb,

00:40:05.369 --> 00:40:06.170
I'm speaking to myself

00:40:06.489 --> 00:40:07.550
because I was the martyr.

00:40:07.590 --> 00:40:07.831
I was like,

00:40:07.871 --> 00:40:08.751
I haven't paid myself in two

00:40:08.771 --> 00:40:09.291
and a half years.

00:40:09.351 --> 00:40:11.032
I was scraping by and it's like, oh,

00:40:11.072 --> 00:40:11.853
stupid as that, Andy,

00:40:11.873 --> 00:40:12.653
you own the business.

00:40:13.454 --> 00:40:14.494
You can't put that on your employees.

00:40:14.514 --> 00:40:15.574
You chose to do that, right?

00:40:15.934 --> 00:40:17.096
So it is cash.

00:40:17.755 --> 00:40:20.757
It is traditional financing, right?

00:40:20.878 --> 00:40:21.458
I don't even like,

00:40:21.557 --> 00:40:23.099
I do not like unsecured loans.

00:40:23.579 --> 00:40:24.360
I don't fucking...

00:40:27.045 --> 00:40:28.106
Finance your fucking trucks.

00:40:28.226 --> 00:40:28.505
That's it.

00:40:28.706 --> 00:40:30.188
Finance your trucks and pull

00:40:30.208 --> 00:40:31.007
a lease for your building.

00:40:31.208 --> 00:40:33.090
There's nothing else you need to finance.

00:40:33.590 --> 00:40:35.152
Maybe a forklift at some point.

00:40:35.391 --> 00:40:36.432
The issue is when people

00:40:36.452 --> 00:40:38.635
start financing stupid shit, right?

00:40:38.775 --> 00:40:40.295
When I say truck, I always mean trailer.

00:40:40.516 --> 00:40:41.538
Like get a fucking ten

00:40:41.577 --> 00:40:42.257
thousand dollar dump

00:40:42.277 --> 00:40:43.800
trailer financing over three years.

00:40:44.360 --> 00:40:44.539
I mean,

00:40:44.559 --> 00:40:46.201
you're not you're talking two

00:40:46.240 --> 00:40:47.621
hundred fifty dollar payments a month,

00:40:47.641 --> 00:40:48.780
three hundred hours of payments a month.

00:40:48.960 --> 00:40:51.061
We're not talking massive amounts of money,

00:40:51.081 --> 00:40:51.262
you know,

00:40:51.282 --> 00:40:52.621
with two thousand dollar down

00:40:52.641 --> 00:40:53.742
payment or whatever the

00:40:53.782 --> 00:40:54.362
case ends up being.

00:40:54.382 --> 00:40:54.523
Right.

00:40:55.402 --> 00:40:56.163
That's it.

00:40:56.204 --> 00:40:56.704
Right.

00:40:56.724 --> 00:40:58.063
The challenge is when people

00:40:58.103 --> 00:40:59.204
go get that seventy five

00:40:59.244 --> 00:41:00.724
thousand dollar SBA loan

00:41:01.065 --> 00:41:02.684
and finance their whole fucking thing,

00:41:03.146 --> 00:41:04.266
they burn sixty of it.

00:41:04.385 --> 00:41:05.405
They got fifteen left and

00:41:05.425 --> 00:41:06.025
they have no money for

00:41:06.085 --> 00:41:07.126
operating capital and

00:41:07.146 --> 00:41:07.766
they've been paying

00:41:07.786 --> 00:41:09.586
themselves the same salary.

00:41:09.728 --> 00:41:11.168
They're waking up their last fucking job.

00:41:12.003 --> 00:41:14.684
No, no, sirree, Bob.

00:41:15.286 --> 00:41:16.786
Do not get a fucking SBA loan.

00:41:17.186 --> 00:41:18.949
The other thing is get the

00:41:19.028 --> 00:41:20.971
opportunity for loans or go

00:41:20.990 --> 00:41:22.452
get that SBA loan and just

00:41:22.632 --> 00:41:23.793
hide that money from yourself.

00:41:24.213 --> 00:41:25.434
I talk about those lines of credit.

00:41:25.735 --> 00:41:26.755
Go get the line of credit

00:41:26.815 --> 00:41:28.297
before you need the line of credit,

00:41:28.677 --> 00:41:28.836
right?

00:41:28.896 --> 00:41:30.237
Go get approved for a hundred.

00:41:30.398 --> 00:41:31.378
Let's call it hillbilly math.

00:41:31.980 --> 00:41:32.639
Go get approved for a

00:41:32.760 --> 00:41:34.362
hundred when you can get a hundred.

00:41:34.722 --> 00:41:36.244
And typically in our line of business,

00:41:36.284 --> 00:41:36.804
line of credit,

00:41:37.043 --> 00:41:38.646
you can get eighty percent of the

00:41:39.425 --> 00:41:41.306
uh ar under sixty days call

00:41:41.346 --> 00:41:41.827
it and then there's a

00:41:41.847 --> 00:41:43.086
fucking percentage right

00:41:43.266 --> 00:41:44.726
whatever so so if you got a

00:41:44.786 --> 00:41:45.827
hundred in your ar you're

00:41:45.867 --> 00:41:46.628
probably gonna get seventy

00:41:46.648 --> 00:41:47.827
five sixty to seventy five

00:41:47.887 --> 00:41:48.547
depending on how they

00:41:48.588 --> 00:41:50.168
factor what is of that is

00:41:50.309 --> 00:41:51.909
recoverable debt right so

00:41:51.969 --> 00:41:53.789
go get the sixty when you

00:41:53.809 --> 00:41:55.110
need before you need the

00:41:55.170 --> 00:41:56.309
fifteen or twenty thousand

00:41:56.530 --> 00:41:57.329
because if your ar drops

00:41:57.349 --> 00:41:59.311
down to fifty thousand now

00:41:59.371 --> 00:41:59.931
you're only gonna be able

00:41:59.951 --> 00:42:00.911
to get twenty five thirty

00:42:01.690 --> 00:42:04.512
So I say, go get your line at its max.

00:42:04.532 --> 00:42:06.474
Go borrow it.

00:42:06.534 --> 00:42:06.733
Yeah.

00:42:07.373 --> 00:42:07.574
Right.

00:42:07.753 --> 00:42:10.056
And pull ten thousand out of it.

00:42:10.175 --> 00:42:11.056
Eat the fucking interest.

00:42:11.076 --> 00:42:12.177
They're going to get gig you on.

00:42:12.456 --> 00:42:13.257
Keep it available.

00:42:13.336 --> 00:42:14.197
And once you're your pay it,

00:42:14.338 --> 00:42:15.137
pay it all the way down.

00:42:15.577 --> 00:42:16.958
So right now, like I have a line.

00:42:17.018 --> 00:42:19.280
I actually actually probably

00:42:19.300 --> 00:42:20.460
need to put I probably need

00:42:20.481 --> 00:42:21.621
to get some money on it.

00:42:21.641 --> 00:42:22.561
The last line I got.

00:42:22.601 --> 00:42:24.103
There's also two types of lines of credit.

00:42:25.639 --> 00:42:26.601
I can't remember what they're called.

00:42:26.621 --> 00:42:27.661
I'm way above my pay grade now.

00:42:28.382 --> 00:42:28.682
Basically,

00:42:28.862 --> 00:42:30.105
one where you can keep a zero

00:42:30.125 --> 00:42:31.206
balance and one you can't.

00:42:31.746 --> 00:42:32.827
There's a fucking... At

00:42:32.847 --> 00:42:33.648
least with my bank.

00:42:33.849 --> 00:42:34.748
So the one we had...

00:42:35.867 --> 00:42:36.527
And one you have to give

00:42:36.708 --> 00:42:37.628
monthly statements and one

00:42:37.668 --> 00:42:38.708
is quarterly statements.

00:42:38.949 --> 00:42:40.088
Basically it's the risk, right?

00:42:40.128 --> 00:42:41.528
The risk aversion.

00:42:41.548 --> 00:42:42.909
So like having a line

00:42:42.949 --> 00:42:44.550
available when you don't need it,

00:42:44.789 --> 00:42:45.769
that's when you get the line.

00:42:46.269 --> 00:42:48.269
And then a perfect business,

00:42:48.489 --> 00:42:49.469
you use a line to get you

00:42:49.489 --> 00:42:50.451
through the winter months.

00:42:51.130 --> 00:42:52.371
You pay the interest on it

00:42:52.610 --> 00:42:54.530
and you never dip into what

00:42:54.570 --> 00:42:55.271
is your profits.

00:42:55.291 --> 00:42:56.512
You never dip into money you

00:42:56.552 --> 00:42:58.572
have invested in the market, right?

00:42:58.592 --> 00:42:59.391
Because once you start

00:42:59.431 --> 00:43:00.012
dipping in the money,

00:43:00.032 --> 00:43:00.992
you have invested in the market,

00:43:01.012 --> 00:43:01.873
your money market accounts.

00:43:01.952 --> 00:43:03.032
Once you start dipping into that,

00:43:04.525 --> 00:43:04.985
You could be shooting

00:43:05.005 --> 00:43:05.545
yourself in the foot.

00:43:06.945 --> 00:43:08.067
The ultimate thing is you

00:43:08.106 --> 00:43:10.588
finally have six months worth of money,

00:43:11.228 --> 00:43:12.407
liquidity at all times.

00:43:12.748 --> 00:43:14.028
Once you have six months worth of money,

00:43:14.449 --> 00:43:16.409
then you can pull your own

00:43:16.449 --> 00:43:17.550
lines of credit for three

00:43:17.590 --> 00:43:19.791
to six months and still

00:43:19.831 --> 00:43:21.371
have three to six months of money,

00:43:21.472 --> 00:43:22.112
depending on where, again,

00:43:22.132 --> 00:43:23.193
you're not going to, a line of credit,

00:43:23.213 --> 00:43:23.652
you're not going to,

00:43:23.672 --> 00:43:25.134
it's not like you use it for three months,

00:43:25.153 --> 00:43:25.853
you're going to be out of money.

00:43:25.873 --> 00:43:26.835
No, you're covering the gap.

00:43:27.394 --> 00:43:28.315
So once you have at least

00:43:28.356 --> 00:43:29.376
three months of money,

00:43:29.556 --> 00:43:30.378
your emergency fund,

00:43:30.677 --> 00:43:32.099
your emergency fund in a

00:43:32.159 --> 00:43:33.079
perfect world is three

00:43:33.119 --> 00:43:33.960
months of all expenses.

00:43:34.260 --> 00:43:35.161
So if it costs you twenty

00:43:35.202 --> 00:43:36.862
thousand dollars a month to

00:43:36.902 --> 00:43:38.103
run your business all in,

00:43:38.143 --> 00:43:40.106
that's with with fixed and

00:43:40.286 --> 00:43:41.086
variable expense.

00:43:41.626 --> 00:43:42.969
Once you got sixty thousand dollars,

00:43:43.128 --> 00:43:44.969
now you got now you got the cushion.

00:43:45.391 --> 00:43:45.931
And that again,

00:43:45.990 --> 00:43:47.331
that's that wealth over time.

00:43:48.753 --> 00:43:50.034
And also borrow money when it's cheap.

00:43:50.295 --> 00:43:51.195
You can get money for less

00:43:51.215 --> 00:43:51.976
than five percent.

00:43:52.737 --> 00:43:53.378
Borrow the money.

00:43:53.898 --> 00:43:54.199
Yeah.

00:43:54.219 --> 00:43:55.260
Put the remainder in the market.

00:43:55.661 --> 00:43:57.163
Even a fucking conservative

00:43:57.443 --> 00:43:58.543
market can sit in money

00:43:58.583 --> 00:44:00.186
market can sit at six percent, six,

00:44:00.226 --> 00:44:00.806
seven percent.

00:44:00.967 --> 00:44:01.909
And you're making one or two

00:44:01.949 --> 00:44:03.010
points on the money borrowed.

00:44:03.771 --> 00:44:05.612
And you have the money.

00:44:05.632 --> 00:44:08.175
So, yeah, this is like day one.

00:44:09.192 --> 00:44:10.293
Do not go get that fucking

00:44:10.373 --> 00:44:11.534
SBA loan and burn it all up.

00:44:12.074 --> 00:44:13.056
Like burn up your fucking

00:44:13.096 --> 00:44:13.817
credit cards first.

00:44:14.038 --> 00:44:14.637
Burn up your,

00:44:14.958 --> 00:44:15.940
I fucking burn up your

00:44:15.980 --> 00:44:16.661
personal credit cards.

00:44:16.981 --> 00:44:18.882
I went from a credit score of eight,

00:44:19.043 --> 00:44:19.344
twenty.

00:44:20.043 --> 00:44:20.465
I think eight,

00:44:20.485 --> 00:44:21.326
twenty one was my highest

00:44:21.346 --> 00:44:22.266
credit score before I

00:44:22.286 --> 00:44:22.987
started the business.

00:44:23.588 --> 00:44:25.349
I was living in the six hundreds.

00:44:25.963 --> 00:44:26.724
for a year or two.

00:44:26.744 --> 00:44:27.724
They're like, six-forty.

00:44:28.164 --> 00:44:29.365
I like that six-thirty-nine.

00:44:30.907 --> 00:44:31.867
I wonder where I'm at right now.

00:44:31.927 --> 00:44:32.128
Actually,

00:44:32.148 --> 00:44:33.768
I'm not great right now because I

00:44:33.789 --> 00:44:36.590
pulled a HELOC because money was cheap.

00:44:36.650 --> 00:44:40.432
Actually, I was like,

00:44:40.592 --> 00:44:41.233
where's my credit score?

00:44:41.434 --> 00:44:45.735
Dropped like seventy points overnight.

00:44:45.815 --> 00:44:46.376
I don't have anything.

00:44:47.217 --> 00:44:48.358
I got my credit score up.

00:44:48.617 --> 00:44:49.818
It was chilling about the eight-fifteens.

00:44:49.858 --> 00:44:51.079
All of a sudden, it was like seven-forty.

00:44:51.099 --> 00:44:51.880
I was like, what is this shit?

00:44:52.541 --> 00:44:53.360
Because I pulled a HELOC at

00:44:53.380 --> 00:44:54.222
my house because money was cheap.

00:44:56.039 --> 00:44:57.099
Yeah.

00:44:57.119 --> 00:44:58.161
I mean, I mean, these are all good.

00:44:58.280 --> 00:44:58.561
I think.

00:44:58.721 --> 00:44:58.880
Right.

00:44:58.920 --> 00:44:59.702
If you get money in three.

00:44:59.742 --> 00:45:00.021
Yeah.

00:45:00.041 --> 00:45:01.643
I got money.

00:45:03.143 --> 00:45:03.364
Yeah.

00:45:03.463 --> 00:45:03.945
I got money.

00:45:04.804 --> 00:45:04.905
Yeah.

00:45:04.925 --> 00:45:05.865
I got money at zero percent

00:45:05.905 --> 00:45:06.626
and then I refined it at

00:45:06.666 --> 00:45:07.286
three point nine.

00:45:07.327 --> 00:45:07.666
So, yeah.

00:45:07.786 --> 00:45:08.788
So I use money.

00:45:09.168 --> 00:45:09.987
I use three point nine

00:45:10.027 --> 00:45:10.849
percent money to pay off

00:45:10.929 --> 00:45:12.309
eight point nine percent debt.

00:45:12.329 --> 00:45:13.451
Like, yeah.

00:45:13.490 --> 00:45:14.050
Hillbilly math.

00:45:14.490 --> 00:45:15.411
Again, it's it's.

00:45:17.550 --> 00:45:19.791
um yeah he'll believe me

00:45:19.811 --> 00:45:20.813
like now I'm all over the

00:45:20.833 --> 00:45:21.333
damn place cash is king

00:45:21.353 --> 00:45:22.315
that's the thing cash is

00:45:22.355 --> 00:45:24.376
king intelligence as soon

00:45:24.416 --> 00:45:25.858
as you can finance and also

00:45:25.918 --> 00:45:27.199
I tell people use what you

00:45:27.219 --> 00:45:28.641
got today if you got a shit

00:45:28.681 --> 00:45:30.362
truck it's fucking paid off

00:45:30.762 --> 00:45:31.764
use that use that use it

00:45:31.963 --> 00:45:33.025
don't buy another shit

00:45:33.065 --> 00:45:34.726
truck use your shit truck

00:45:34.927 --> 00:45:37.088
for so fucking long keep

00:45:37.329 --> 00:45:38.889
all that fucking cash and

00:45:38.909 --> 00:45:41.072
then go buy that brand new truck

00:45:44.393 --> 00:45:47.594
Even if you finance, you know,

00:45:47.635 --> 00:45:48.655
run it into the ground for

00:45:48.695 --> 00:45:49.655
as long as you can.

00:45:49.695 --> 00:45:51.536
Run your shit truck and then go buy.

00:45:51.675 --> 00:45:53.235
And then buy a new truck and

00:45:53.315 --> 00:45:54.215
a new trailer.

00:45:54.936 --> 00:45:57.036
The challenge is what ends

00:45:57.077 --> 00:45:58.157
up happening is guys will

00:45:58.197 --> 00:45:59.077
use the equipment they have

00:45:59.538 --> 00:46:00.378
and then they'll buy the next...

00:46:01.317 --> 00:46:02.438
truck that's slightly better,

00:46:02.679 --> 00:46:03.338
and then the next truck

00:46:03.358 --> 00:46:04.260
that's slightly better.

00:46:04.581 --> 00:46:06.121
And it's a mindset.

00:46:06.181 --> 00:46:07.784
They are living weekly or

00:46:07.844 --> 00:46:09.485
monthly at a time versus saying, hey,

00:46:09.505 --> 00:46:10.547
I'm going to take this five-year,

00:46:11.148 --> 00:46:11.327
you know,

00:46:11.387 --> 00:46:12.768
six-month financing out for this

00:46:12.789 --> 00:46:13.630
vehicle because I'm going

00:46:13.650 --> 00:46:15.072
to still be in business in six months.

00:46:15.271 --> 00:46:15.813
And I'm going to have a

00:46:15.873 --> 00:46:17.474
truck that works thirty

00:46:17.494 --> 00:46:18.916
days a month versus a truck

00:46:18.936 --> 00:46:20.277
that works twenty-eight

00:46:20.297 --> 00:46:20.998
days because two days a

00:46:21.038 --> 00:46:21.719
month I got to take it out

00:46:21.739 --> 00:46:22.360
of service because

00:46:22.400 --> 00:46:23.300
something went wrong with it.

00:46:24.144 --> 00:46:24.746
Um,

00:46:24.766 --> 00:46:26.045
when your truck goes down for a five

00:46:26.085 --> 00:46:26.726
hundred dollar pair,

00:46:26.746 --> 00:46:27.827
it didn't cost you five hundred dollars.

00:46:27.847 --> 00:46:28.788
It cost you twenty five

00:46:28.827 --> 00:46:29.708
hundred dollars because you

00:46:29.728 --> 00:46:30.648
lost a thousand dollars a

00:46:30.668 --> 00:46:32.190
day servicing customers.

00:46:32.971 --> 00:46:33.952
And that's the that's the

00:46:33.992 --> 00:46:34.911
mindset that people get

00:46:34.972 --> 00:46:35.833
tripped up on when they're

00:46:35.853 --> 00:46:36.413
first starting.

00:46:38.288 --> 00:46:39.407
They live somewhere in between.

00:46:39.748 --> 00:46:40.329
And you know what?

00:46:40.369 --> 00:46:41.268
If you want to be chucking a

00:46:41.289 --> 00:46:42.628
truck that keeps your expenses low,

00:46:42.849 --> 00:46:43.869
you bought yourself a job,

00:46:44.030 --> 00:46:45.070
you do two hundred a year

00:46:45.110 --> 00:46:46.030
and you take home a hundred

00:46:46.311 --> 00:46:47.170
after you pay your helper.

00:46:47.471 --> 00:46:48.291
God bless.

00:46:48.751 --> 00:46:50.112
The challenge is right.

00:46:50.791 --> 00:46:51.853
Connor ain't fucking calling

00:46:51.873 --> 00:46:52.793
you to buy out your business.

00:46:53.012 --> 00:46:54.472
The day you run your last

00:46:54.512 --> 00:46:55.594
job is the day your

00:46:55.614 --> 00:46:58.875
business is worthless.

00:46:58.894 --> 00:46:59.335
Yeah.

00:46:59.375 --> 00:47:01.295
Legacy by just putting the stuff in place.

00:47:01.376 --> 00:47:04.137
And like you said, if you got a truck,

00:47:04.177 --> 00:47:04.976
you own that.

00:47:04.996 --> 00:47:06.077
You own that forever.

00:47:06.617 --> 00:47:07.777
You run that down.

00:47:08.978 --> 00:47:10.239
Yeah.

00:47:10.260 --> 00:47:10.460
Absolutely.

00:47:10.480 --> 00:47:12.740
Anyways, there's my, uh, my two cents on,

00:47:12.860 --> 00:47:14.422
on financing junkable companies.

00:47:14.442 --> 00:47:15.362
It's good.

00:47:15.382 --> 00:47:16.822
I came to the right spot.

00:47:16.842 --> 00:47:18.563
There's questions on some financing.

00:47:18.583 --> 00:47:19.304
You got to talk to Andy.

00:47:19.344 --> 00:47:21.266
Yeah.

00:47:21.286 --> 00:47:22.045
What else you got before

00:47:22.085 --> 00:47:23.106
we'll get to our big finish?

00:47:23.367 --> 00:47:24.668
What, uh, any other questions?

00:47:25.608 --> 00:47:25.768
No,

00:47:25.987 --> 00:47:27.309
I think I'm good on the questions front.

00:47:28.128 --> 00:47:28.289
Cool.

00:47:28.409 --> 00:47:28.849
How can, uh,

00:47:29.210 --> 00:47:30.431
how can people get ahold of you?

00:47:31.451 --> 00:47:32.411
Yeah.

00:47:32.472 --> 00:47:33.612
Uh, if you want to buy or sell.

00:47:33.632 --> 00:47:34.432
Yeah.

00:47:35.625 --> 00:47:37.166
Yeah, best way is email.

00:47:37.545 --> 00:47:39.106
So you can get in contact

00:47:39.126 --> 00:47:39.945
with the team email.

00:47:40.126 --> 00:47:41.027
So that's just team,

00:47:41.367 --> 00:47:44.208
T-E-A-M at CairoData.com.

00:47:45.467 --> 00:47:46.829
I might even throw like a

00:47:47.068 --> 00:47:47.929
scheduling link or if

00:47:47.949 --> 00:47:49.389
people are actually super interested,

00:47:49.409 --> 00:47:50.750
they have a company,

00:47:50.769 --> 00:47:51.690
they want to go buy more.

00:47:52.250 --> 00:47:53.451
We're definitely the place to do it.

00:47:53.490 --> 00:47:56.170
So check out the website, CairoData.com,

00:47:56.231 --> 00:47:58.992
K-A-I-R-O-D-A-T-A.com.

00:47:59.972 --> 00:48:01.293
Happy to talk to anyone and everyone.

00:48:02.710 --> 00:48:04.614
So what was your top

00:48:04.635 --> 00:48:07.699
takeaway from today's conversation?

00:48:07.760 --> 00:48:07.960
I mean,

00:48:07.981 --> 00:48:08.681
you kind of got me with the

00:48:08.702 --> 00:48:10.144
hillbilly mouth on the financing.

00:48:11.206 --> 00:48:12.288
There's a few good things.

00:48:12.389 --> 00:48:13.791
I really like that...

00:48:16.505 --> 00:48:17.885
you bought out a competitor

00:48:18.025 --> 00:48:19.525
that was on the young side.

00:48:20.306 --> 00:48:21.626
And I'm not gonna ask you to

00:48:22.007 --> 00:48:22.847
share numbers or anything

00:48:22.927 --> 00:48:23.788
explicit on the call,

00:48:23.807 --> 00:48:25.108
because there's probably

00:48:25.148 --> 00:48:26.648
contracts and stuff where you can't.

00:48:26.728 --> 00:48:28.349
But I think it's very

00:48:28.409 --> 00:48:29.949
interesting because we're in that world,

00:48:30.010 --> 00:48:31.311
it's M&A and buying

00:48:31.331 --> 00:48:33.532
businesses in general all the time.

00:48:34.431 --> 00:48:36.715
and it's come up sometimes

00:48:36.876 --> 00:48:37.717
younger people that will

00:48:37.757 --> 00:48:39.500
sell out to the somebody

00:48:39.559 --> 00:48:40.481
else for the bolt on or

00:48:40.501 --> 00:48:41.862
that on but it's cool that

00:48:41.902 --> 00:48:42.864
you've done it and you've

00:48:43.045 --> 00:48:44.567
already you said things on

00:48:44.606 --> 00:48:45.527
the call so I think I can

00:48:45.568 --> 00:48:47.431
reshare it they've become a

00:48:47.530 --> 00:48:48.992
part of the new company and

00:48:49.012 --> 00:48:50.755
then they get the quote-unquote

00:48:51.237 --> 00:48:52.559
win of selling their company

00:48:53.059 --> 00:48:55.864
and then maybe some piece of new company,

00:48:56.304 --> 00:48:57.547
more of an ownership mentality,

00:48:57.626 --> 00:48:59.070
but they're super young and

00:48:59.110 --> 00:49:00.612
hungry to just do the

00:49:00.652 --> 00:49:02.235
freaking work and work in the business.

00:49:02.896 --> 00:49:04.277
That's so cool to hear for me.

00:49:04.931 --> 00:49:05.192
Yeah, no,

00:49:05.431 --> 00:49:06.893
it worked out splendidly well

00:49:06.932 --> 00:49:10.094
because he avoided the – he's got a wife,

00:49:10.393 --> 00:49:11.594
two kids, third one on the way.

00:49:11.875 --> 00:49:13.255
So he has avoided the risk

00:49:14.195 --> 00:49:15.876
he was imposing on his

00:49:15.896 --> 00:49:18.416
family had he jumped

00:49:18.476 --> 00:49:19.797
full-time into it because

00:49:19.818 --> 00:49:21.097
he still was doing – he was

00:49:21.117 --> 00:49:21.978
still working firefighting.

00:49:22.119 --> 00:49:23.199
He was a firefighter full-time.

00:49:23.619 --> 00:49:25.679
And so the risk aversion, right?

00:49:25.699 --> 00:49:26.940
So now he has the safety and security.

00:49:26.981 --> 00:49:27.840
And then to your point,

00:49:29.021 --> 00:49:30.262
he owns a junk and wool company.

00:49:30.822 --> 00:49:31.902
He doesn't own a hundred percent of it.

00:49:32.103 --> 00:49:33.184
He owns it.

00:49:33.623 --> 00:49:33.804
Right.

00:49:33.925 --> 00:49:35.706
And then when he, you know,

00:49:35.726 --> 00:49:37.568
when he got his, his, his money up front.

00:49:37.827 --> 00:49:39.789
So he got cash for business.

00:49:40.010 --> 00:49:43.373
It was cash and equity in our company.

00:49:43.913 --> 00:49:44.132
Right.

00:49:44.833 --> 00:49:45.153
One of the,

00:49:45.474 --> 00:49:48.836
one of the things that we had

00:49:48.856 --> 00:49:49.998
to work through was, Hey man, you're,

00:49:50.077 --> 00:49:50.818
you're still an owner.

00:49:51.458 --> 00:49:51.619
Right.

00:49:51.679 --> 00:49:52.579
And you get to act like an

00:49:52.679 --> 00:49:54.001
owner without the risk.

00:49:55.043 --> 00:49:55.264
You know,

00:49:55.304 --> 00:49:59.768
so the payday isn't it's bigger now.

00:49:59.989 --> 00:50:00.648
And when we when we

00:50:00.668 --> 00:50:02.150
extrapolated over a five or

00:50:02.190 --> 00:50:03.672
ten year period, it's better.

00:50:03.931 --> 00:50:04.092
Yeah.

00:50:04.271 --> 00:50:05.393
Maybe over twenty years you

00:50:05.413 --> 00:50:06.273
could have got more.

00:50:06.894 --> 00:50:07.155
Right.

00:50:07.414 --> 00:50:08.516
Had you built your own business.

00:50:08.715 --> 00:50:09.277
But what would you what

00:50:09.297 --> 00:50:10.237
would you have risk there

00:50:11.117 --> 00:50:12.179
with your with your kids

00:50:12.219 --> 00:50:12.960
and your lifestyle and

00:50:12.980 --> 00:50:13.561
everything like that?

00:50:14.061 --> 00:50:14.460
Yeah.

00:50:15.460 --> 00:50:16.460
Oh, here, Eddie in the chat.

00:50:16.521 --> 00:50:18.021
This is an interesting question.

00:50:18.041 --> 00:50:18.722
It has nothing to do with

00:50:18.742 --> 00:50:19.742
what we're talking about, but fuck it,

00:50:19.822 --> 00:50:20.722
I'll answer it.

00:50:20.742 --> 00:50:21.543
Hey, crazy question.

00:50:21.623 --> 00:50:22.925
What are good add-ons for

00:50:22.985 --> 00:50:23.764
junk removal service?

00:50:23.804 --> 00:50:25.146
My average ticket price is

00:50:25.186 --> 00:50:25.985
three eighty and we are

00:50:26.005 --> 00:50:27.646
looking to go up to four twenty.

00:50:28.266 --> 00:50:31.748
Here is the simplest answer I got for you.

00:50:32.349 --> 00:50:33.889
Up your prices by ten percent.

00:50:34.269 --> 00:50:34.489
Hmm.

00:50:35.213 --> 00:50:35.672
That's it.

00:50:35.693 --> 00:50:37.032
There is no add-on to junk removal.

00:50:37.193 --> 00:50:38.934
Either they have more stuff or less stuff.

00:50:39.554 --> 00:50:41.994
And the best way to increase

00:50:42.014 --> 00:50:43.295
your bottom line is to

00:50:43.414 --> 00:50:44.355
increase your pricing.

00:50:44.914 --> 00:50:46.855
Warren Buffett bought out a candy company.

00:50:47.295 --> 00:50:49.556
What the hell was a candy company now?

00:50:49.576 --> 00:50:49.655
Yeah.

00:50:49.675 --> 00:50:51.556
Warren Buffett bought out a candy company.

00:50:51.655 --> 00:50:51.876
Yeah.

00:50:52.516 --> 00:50:53.597
Sweets, I want to say it was.

00:50:53.617 --> 00:50:55.496
Now I'm going to have to look this up.

00:50:55.577 --> 00:50:58.237
I don't know the name, but yeah.

00:50:58.978 --> 00:50:59.318
All right.

00:50:59.338 --> 00:51:00.378
So I'm going to prove to you

00:51:00.418 --> 00:51:02.778
that this isn't me.

00:51:02.818 --> 00:51:03.958
I mean, this is me.

00:51:06.153 --> 00:51:06.893
um warren buffett candy

00:51:06.914 --> 00:51:09.135
company anyway so sees sees

00:51:09.175 --> 00:51:10.876
candy s-e-e-s like sees

00:51:10.896 --> 00:51:12.056
with an apostrophe sees

00:51:12.097 --> 00:51:13.838
candy uh he bought it out

00:51:13.918 --> 00:51:14.759
and for fifty straight

00:51:14.778 --> 00:51:15.958
years this is the only

00:51:16.039 --> 00:51:18.161
thing he bought in this is

00:51:18.201 --> 00:51:19.161
the only part of the

00:51:19.201 --> 00:51:20.181
business he is involved in

00:51:21.242 --> 00:51:22.762
he ups the price every

00:51:22.782 --> 00:51:24.164
single year every single

00:51:24.184 --> 00:51:24.985
year he looks at every

00:51:25.025 --> 00:51:25.485
single one of their

00:51:25.525 --> 00:51:26.865
products and ups the price

00:51:27.728 --> 00:51:28.708
Sometimes it's one percent,

00:51:28.748 --> 00:51:30.009
sometimes it's seven or eight percent,

00:51:30.268 --> 00:51:32.050
depending on how they're performing.

00:51:32.351 --> 00:51:34.331
And the company has scaled

00:51:34.711 --> 00:51:36.032
tremendously because he's

00:51:36.112 --> 00:51:37.753
not afraid to up his prices.

00:51:38.094 --> 00:51:39.855
When we look at inflation,

00:51:39.894 --> 00:51:41.576
inflation is five, seven percent,

00:51:41.615 --> 00:51:43.016
whatever the hell it sits at these days.

00:51:44.617 --> 00:51:45.697
Raising your prices by five

00:51:45.717 --> 00:51:46.838
percent is only keeping up

00:51:46.858 --> 00:51:47.358
with the market.

00:51:48.411 --> 00:51:50.132
And every study I've done, right,

00:51:50.652 --> 00:51:51.972
it is simpler to raise your

00:51:52.012 --> 00:51:53.713
prices by five percent than

00:51:53.773 --> 00:51:55.394
cut your expenses by four percent.

00:51:55.994 --> 00:51:56.554
And when you're running a

00:51:56.615 --> 00:51:58.096
business at twenty five percent margin,

00:51:58.335 --> 00:51:59.657
it's the same bottom line.

00:51:59.817 --> 00:52:01.018
You're not working more and

00:52:01.038 --> 00:52:02.398
you're not cutting anything else.

00:52:03.018 --> 00:52:03.938
So you want to go from three

00:52:03.978 --> 00:52:04.840
eighty to four twenty.

00:52:07.074 --> 00:52:08.554
average ticket price, right?

00:52:09.635 --> 00:52:11.456
The other answer is go do commercial work.

00:52:11.476 --> 00:52:14.516
Commercial work's going to be higher.

00:52:14.697 --> 00:52:16.038
Go advertise and do more

00:52:16.697 --> 00:52:17.858
jobs for realtors and

00:52:17.898 --> 00:52:19.159
senior living because those

00:52:19.199 --> 00:52:20.480
tend to be larger jobs.

00:52:20.679 --> 00:52:22.019
So there's some metrics like that,

00:52:22.219 --> 00:52:23.860
but if you want to overnight change it,

00:52:24.340 --> 00:52:25.442
up the price is ten percent.

00:52:25.822 --> 00:52:28.603
Do five percent every single half a year,

00:52:29.023 --> 00:52:29.202
right?

00:52:29.222 --> 00:52:30.403
So two and a half percent a quarter.

00:52:31.224 --> 00:52:31.983
Whatever, right?

00:52:32.224 --> 00:52:33.744
So we did a price raise in

00:52:33.804 --> 00:52:35.344
January last year.

00:52:35.364 --> 00:52:35.945
I'm going to do another

00:52:35.985 --> 00:52:37.206
price raise in January of this year.

00:52:37.226 --> 00:52:38.626
I'm going to base it off of inflation.

00:52:38.885 --> 00:52:39.626
It'll be somewhere between

00:52:39.646 --> 00:52:40.447
three and five percent.

00:52:40.706 --> 00:52:41.067
Last year,

00:52:41.086 --> 00:52:42.447
I raised my prices seven percent.

00:52:42.788 --> 00:52:43.487
January one,

00:52:44.248 --> 00:52:45.447
our close rate last year was

00:52:45.487 --> 00:52:46.289
sixty four percent.

00:52:46.469 --> 00:52:47.389
Our close rate this year is

00:52:47.429 --> 00:52:48.289
sixty six percent.

00:52:49.469 --> 00:52:50.929
Close rate not affected whatsoever.

00:52:51.090 --> 00:52:51.829
So you want to go from three

00:52:51.869 --> 00:52:52.670
eighty to four twenty.

00:52:52.690 --> 00:52:52.771
Yep.

00:52:54.833 --> 00:52:56.195
Because the bolt-on services,

00:52:57.458 --> 00:52:58.259
unless you want to grab a

00:52:58.298 --> 00:52:59.541
fucking ladder and start

00:52:59.561 --> 00:53:00.302
cleaning out the gutters

00:53:00.342 --> 00:53:00.983
while you're there,

00:53:01.644 --> 00:53:02.827
and that's a terrible idea.

00:53:03.507 --> 00:53:04.489
Because that's not what you do.

00:53:05.467 --> 00:53:06.047
Right?

00:53:06.067 --> 00:53:06.847
So there's a couple of things.

00:53:07.007 --> 00:53:08.068
Go after higher and more

00:53:08.108 --> 00:53:08.929
influential areas.

00:53:08.949 --> 00:53:09.389
You're going to have a

00:53:09.409 --> 00:53:10.128
higher price point there

00:53:10.148 --> 00:53:10.909
because they have more stuff.

00:53:11.369 --> 00:53:12.409
Go after commercial work.

00:53:12.429 --> 00:53:13.030
Those jobs are typically

00:53:13.050 --> 00:53:13.690
going to be larger.

00:53:14.030 --> 00:53:16.311
Go after realtors and senior

00:53:16.351 --> 00:53:17.913
living because those projects,

00:53:18.452 --> 00:53:19.893
when there's a real estate transaction,

00:53:20.273 --> 00:53:21.175
forty percent of our business,

00:53:21.235 --> 00:53:22.215
our business revolves

00:53:22.235 --> 00:53:23.416
around a real estate transaction.

00:53:23.675 --> 00:53:25.135
And when there is a real

00:53:25.155 --> 00:53:26.056
estate transaction,

00:53:26.257 --> 00:53:26.956
the ticket price is

00:53:26.976 --> 00:53:27.777
normally one and a half

00:53:27.818 --> 00:53:29.038
times our average otherwise

00:53:29.077 --> 00:53:31.059
price because a life event

00:53:31.139 --> 00:53:32.159
is I got a new couch.

00:53:32.340 --> 00:53:34.041
OK, couch removal is one thirty nine.

00:53:35.260 --> 00:53:36.983
life event, I'm moving out of my house,

00:53:37.222 --> 00:53:37.864
you're probably going to

00:53:37.884 --> 00:53:39.565
have more than a couch.

00:53:39.625 --> 00:53:42.748
Again, hillbilly math.

00:53:42.768 --> 00:53:43.409
I wouldn't look at your

00:53:43.469 --> 00:53:44.730
average ticket price as much.

00:53:45.349 --> 00:53:46.630
Look at where you're making

00:53:46.672 --> 00:53:48.512
your money and find those

00:53:48.552 --> 00:53:49.393
sweet spot SKUs.

00:53:49.434 --> 00:53:51.635
Some people, their best SKUs,

00:53:52.175 --> 00:53:53.396
their highest EBITDA SKUs

00:53:53.677 --> 00:53:54.619
are their quarter and half

00:53:54.659 --> 00:53:56.780
trailer and they can do a

00:53:56.840 --> 00:54:00.384
shitload of them versus you

00:54:00.403 --> 00:54:01.384
have the highest EBITDA

00:54:02.548 --> 00:54:04.128
On your full, right?

00:54:04.369 --> 00:54:05.929
And your highest revenue.

00:54:05.969 --> 00:54:07.550
Figure out what kind of

00:54:07.570 --> 00:54:08.951
business you want to be and do that.

00:54:08.990 --> 00:54:10.150
The other thing you're going

00:54:10.170 --> 00:54:11.092
to do from three-eighty to

00:54:11.112 --> 00:54:12.572
four-twenty is start

00:54:12.592 --> 00:54:14.032
charging for hot sauce.

00:54:14.632 --> 00:54:16.353
So hot sauce, right?

00:54:16.472 --> 00:54:17.652
I buy hot sauce, big fan.

00:54:17.693 --> 00:54:20.353
Crystal, Frank's,

00:54:20.393 --> 00:54:21.715
basically anything other than Tabasco.

00:54:21.735 --> 00:54:23.514
I was down in Key West this weekend,

00:54:23.534 --> 00:54:24.715
so Crystal was everywhere.

00:54:24.976 --> 00:54:27.775
Anyways, Crystal or a hot sauce,

00:54:27.936 --> 00:54:29.516
when the price of hot sauce changes,

00:54:30.177 --> 00:54:31.318
Nobody noticed, right?

00:54:31.338 --> 00:54:32.458
If my hot sauce goes from

00:54:32.518 --> 00:54:34.360
two forty nine to two fifty nine,

00:54:34.639 --> 00:54:35.920
I'm not looking for a

00:54:35.960 --> 00:54:37.521
different hot sauce price or, you know,

00:54:37.623 --> 00:54:37.782
hell,

00:54:37.802 --> 00:54:39.563
you go for two forty nine to two

00:54:39.603 --> 00:54:40.043
seventy nine.

00:54:40.083 --> 00:54:41.144
You can jump up ten percent.

00:54:41.465 --> 00:54:42.646
Does not impact my life.

00:54:43.427 --> 00:54:44.407
So you want to jump from

00:54:44.447 --> 00:54:45.487
three eighty to four twenty.

00:54:45.748 --> 00:54:46.708
Start charging.

00:54:48.344 --> 00:54:49.706
are willing to pay for that

00:54:49.726 --> 00:54:51.327
you have a greater cost to dispose of.

00:54:51.387 --> 00:54:53.309
So charge for TVs, charge for bulbs,

00:54:53.349 --> 00:54:54.228
charge for batteries,

00:54:54.248 --> 00:54:55.510
charge for chemicals or

00:54:55.550 --> 00:54:56.751
paints or stomach chemicals

00:54:56.831 --> 00:54:57.472
if you take that.

00:54:57.731 --> 00:54:59.733
So charge for ancillary

00:54:59.793 --> 00:55:00.793
things as part of your

00:55:00.833 --> 00:55:03.556
service that you have a greater cost for.

00:55:03.817 --> 00:55:04.657
There's some places,

00:55:04.697 --> 00:55:05.757
depending on where you're at there, Eddie,

00:55:05.938 --> 00:55:07.378
there's some places that

00:55:07.398 --> 00:55:08.280
will charge extra for

00:55:08.340 --> 00:55:09.981
mattresses or couches

00:55:10.201 --> 00:55:11.121
because they get dinged at

00:55:11.141 --> 00:55:11.983
the transfer station.

00:55:12.731 --> 00:55:14.454
So there's the answer.

00:55:14.474 --> 00:55:15.396
There's a couple different

00:55:15.416 --> 00:55:15.976
courses of action.

00:55:16.137 --> 00:55:17.280
Simplest thing is you raise

00:55:17.300 --> 00:55:18.322
your price by ten percent

00:55:18.382 --> 00:55:19.063
over the next year.

00:55:19.403 --> 00:55:20.246
Your average ticket price

00:55:20.266 --> 00:55:21.007
will go from three eighty

00:55:21.027 --> 00:55:22.268
to four twenty like that

00:55:22.389 --> 00:55:23.452
because you're jumping ten percent.

00:55:24.449 --> 00:55:27.670
Um, there's that top takeaway for me, um,

00:55:28.731 --> 00:55:30.492
is coming from someone like you.

00:55:30.791 --> 00:55:32.713
I I'm glad you just gave us

00:55:32.733 --> 00:55:33.733
the brass tacks, right?

00:55:34.413 --> 00:55:34.574
Right.

00:55:34.594 --> 00:55:34.753
Hey,

00:55:34.773 --> 00:55:35.873
if you're under a million dollars in

00:55:35.974 --> 00:55:37.855
EBITDA, you know,

00:55:37.875 --> 00:55:39.275
there's very few people interested.

00:55:39.315 --> 00:55:39.954
It's more niche.

00:55:40.335 --> 00:55:41.175
You're a guy that can help

00:55:41.195 --> 00:55:41.856
these people out.

00:55:42.615 --> 00:55:44.277
Um, cause we have some of these guys like,

00:55:44.336 --> 00:55:45.556
Oh, I want to sell to a PE firm.

00:55:46.257 --> 00:55:46.478
Hey man,

00:55:46.498 --> 00:55:47.518
until you're at five million with

00:55:47.637 --> 00:55:48.717
a million dollar EBITDA and

00:55:51.059 --> 00:55:52.521
You are so inconsequential

00:55:52.541 --> 00:55:53.822
to them because if they're

00:55:53.842 --> 00:55:54.862
taking fifteen percent

00:55:55.483 --> 00:55:56.965
right or whatever they're right,

00:55:56.985 --> 00:55:57.684
it's going to take six to

00:55:57.724 --> 00:55:58.525
nine to twelve months.

00:55:58.826 --> 00:55:59.527
They want to cut.

00:55:59.827 --> 00:56:00.588
They want a piece.

00:56:00.807 --> 00:56:01.969
They want a long term play.

00:56:02.230 --> 00:56:03.510
They got to figure out the financing.

00:56:03.690 --> 00:56:04.431
So I really like what you

00:56:04.472 --> 00:56:06.893
said was or just keep it in perspective.

00:56:06.914 --> 00:56:07.313
Like, hey,

00:56:08.034 --> 00:56:08.976
if you're at under a half

00:56:09.016 --> 00:56:09.896
million dollars in EBITDA,

00:56:10.844 --> 00:56:12.405
You're going to trade two to

00:56:12.445 --> 00:56:13.306
three and a half percent.

00:56:13.565 --> 00:56:14.666
That's it, right?

00:56:14.987 --> 00:56:16.327
And you can find more

00:56:16.367 --> 00:56:17.547
creative ways to make more

00:56:17.668 --> 00:56:18.487
money over a ten-year

00:56:18.568 --> 00:56:20.389
period by doing seller financing.

00:56:20.668 --> 00:56:21.329
You might be able to get a

00:56:21.409 --> 00:56:23.010
better multiple because

00:56:23.030 --> 00:56:23.630
it's going to be slightly

00:56:23.670 --> 00:56:24.250
more attractive.

00:56:24.510 --> 00:56:24.769
Plus,

00:56:24.789 --> 00:56:26.050
you can do the interest because you

00:56:26.070 --> 00:56:26.831
either pay the interest or

00:56:26.851 --> 00:56:27.490
you pay the tax.

00:56:27.590 --> 00:56:28.731
Or you either get the

00:56:28.771 --> 00:56:30.012
interest over time or you

00:56:30.032 --> 00:56:32.932
pay taxes now on those real earnings.

00:56:32.972 --> 00:56:35.253
So I'm glad we had this

00:56:35.273 --> 00:56:37.494
conversation because often it's like,

00:56:37.534 --> 00:56:38.235
how do I get jobs?

00:56:38.255 --> 00:56:39.215
How do I get the phone to ring today?

00:56:39.255 --> 00:56:40.175
And it's like, well, fuck it.

00:56:40.275 --> 00:56:40.938
when you're only living for

00:56:40.978 --> 00:56:41.880
today and this week,

00:56:42.420 --> 00:56:44.045
like you're a business owner, right?

00:56:44.105 --> 00:56:45.389
Do what you got to do so

00:56:45.409 --> 00:56:46.431
that you own the business.

00:56:46.451 --> 00:56:47.333
The business doesn't own you.

00:56:49.550 --> 00:56:49.690
Perfect.

00:56:49.710 --> 00:56:50.291
All right, Connor.

00:56:50.311 --> 00:56:51.090
This has been fun.

00:56:51.110 --> 00:56:51.791
This has been real.

00:56:51.811 --> 00:56:52.731
This has been real fun,

00:56:52.751 --> 00:56:53.711
as Green Day would say.

00:56:55.211 --> 00:56:55.891
What do we got coming up?

00:56:56.992 --> 00:56:57.532
This is what we need.

00:56:57.572 --> 00:56:58.373
We need more guests.

00:56:59.233 --> 00:56:59.934
I need more guests on the

00:56:59.974 --> 00:57:01.233
Trash Talk Business Podcast.

00:57:01.554 --> 00:57:02.494
I got guests in two weeks.

00:57:02.574 --> 00:57:03.855
We have a vacancy next week.

00:57:04.215 --> 00:57:05.195
So as you're listening out there,

00:57:05.215 --> 00:57:05.976
if there's someone you

00:57:06.036 --> 00:57:07.016
think would be a great or

00:57:07.036 --> 00:57:07.956
you know would be a great

00:57:07.976 --> 00:57:08.596
guest on the show,

00:57:09.336 --> 00:57:11.117
have them link up with us

00:57:11.177 --> 00:57:13.277
at TrashTalkBusinessPodcast.com.

00:57:13.637 --> 00:57:14.820
And if you could be a great guest,

00:57:15.420 --> 00:57:15.681
come on.

00:57:15.701 --> 00:57:16.141
So even Eddie,

00:57:16.161 --> 00:57:16.882
you want to come on the show?

00:57:16.902 --> 00:57:17.882
Let's talk about pricing.

00:57:18.885 --> 00:57:20.005
We can talk about what your pricing is.

00:57:20.025 --> 00:57:20.646
We'll do the model.

00:57:20.666 --> 00:57:21.407
I'll pull up the Excel.

00:57:21.427 --> 00:57:22.188
We'll do a little hillbilly

00:57:22.228 --> 00:57:24.010
math and all we'll have fun.

00:57:24.452 --> 00:57:25.693
So you want to be a guest on the show?

00:57:25.753 --> 00:57:27.135
Trash Talk Business Podcast.

00:57:27.576 --> 00:57:28.996
It's a real simple application process.

00:57:29.036 --> 00:57:29.797
And we would love to have

00:57:29.818 --> 00:57:30.980
you on the show next week

00:57:31.079 --> 00:57:32.501
or the following weeks as they come up.

00:57:32.922 --> 00:57:34.983
I do know we have Mrs. Raven

00:57:35.063 --> 00:57:36.583
Barton coming up in a few weeks.

00:57:36.603 --> 00:57:38.264
That's the better half of Andy Barton.

00:57:38.666 --> 00:57:40.106
She will talk all things

00:57:40.286 --> 00:57:42.168
marketing and customer acquisition.

00:57:42.507 --> 00:57:44.628
She loves herself some mailers.

00:57:45.009 --> 00:57:46.250
So that show is coming up in a few weeks.

00:57:48.311 --> 00:57:48.731
There we go.

00:57:48.751 --> 00:57:49.472
That's the Trash Talk

00:57:49.512 --> 00:57:50.592
Business Podcast for the week.

00:57:50.853 --> 00:57:52.454
On behalf of Taylor, our producer, Connor,

00:57:52.474 --> 00:57:53.954
our guest, I'm Andy Wines.

00:57:54.094 --> 00:57:54.914
Thank you for joining us.

00:57:54.994 --> 00:57:56.295
We will see you next week.

00:57:59.940 --> 00:58:00.740
Thanks for listening.

00:58:01.161 --> 00:58:02.704
Tap subscribe or follow to

00:58:02.724 --> 00:58:03.846
get the latest episode.

00:58:04.146 --> 00:58:05.628
And if you enjoyed this episode,

00:58:05.750 --> 00:58:06.570
be sure to leave us a

00:58:06.610 --> 00:58:08.293
review and tell a friend to listen.

00:58:08.755 --> 00:58:09.396
To learn more,

00:58:09.655 --> 00:58:12.360
visit trashtalkbusinesspodcast.com.

00:58:12.780 --> 00:58:13.161
Bye now.