Helping a $5M Car Parts Business Decide When to Sell

0:00Unternehmer/Gast Hey, Alex. Um What? >> So, I'm trying to look like you. >> Oh, yeah. >> Jack. >> Um >> Sorry, I interrupted you. Sorry. >> Uh so, I sell performance upgrades to German car owners. And uh we're doing about 5 million in revenue last year. Uh I'd like it to be at 10 or 12, but um I think what's stopping me is is actually a question that's kind of come up a few times, which is like, "How do you know when it's the right time to sell?" I've got a good offer.

0:35>> Okay. >> And uh >> What's profit? >> Uh 2.1. >> Amazing. Okay. 2.1. And what's the offer for? >> Uh six. >> Okay. So, 3x, that's a little low. >> Yeah. >> Is there any recurring nature to the business? >> to the sheet, I'm actually negative, but uh >> [laughter] >> Fair. Is there any recurring revenue in the business at all? >> No. I mean, uh maybe like 10, 15% repeat buyers, but >> Got it. That's all. >> one and done. >> Understood.

1:01>> Yeah. >> Um what are gross margins on Is it like chips that you sell? >> No, it's a hard parts. So, exhaust systems and intercooler systems, intake systems, stuff like that. >> Okay. Uh and so, they want to buy it for six, and you're making 2.1. Okay. And is that appealing to you? >> Yeah, I mean, well, you come to a room like this, you know, it doesn't seem like much anymore. >> [laughter]

1:29>> You know, >> You're like a rich version of all the people I know. >> [laughter] >> But I mean, you know, I I didn't come from a lot of money. I was like a middle-class family. I mean, if I invested right, I could be pretty all right. >> Dude, you're making 2 million a year now. >> Yeah. But But I'm working a lot. Or, well, it's it's actually I'm a lot less of a key man risk than I was. >> Right. >> Um I do I do like it. Um but I don't want to miss an opportunity when the time to sell is high. Uh Yeah.

2:01>> So, you're just trying to decide whether you Like, let me ask you a different question. Um do you have another business you want to start? >> Nothing serious, no. >> Okay. Is that six that they're going to try and pay you all up front? >> Four and a half. >> Okay. And then the other one and a half is you rolling it as equity or is it over time? >> Uh seller no >> Finance. Yeah. Okay. Um Well, they're really just paying four They're paying you 2 years.

2:28>> Mhm. >> They approached you, right? >> Um no, I gave it to some brokers just to put on the market to see what yeah. >> Got it. Have you negotiated this at all? >> Um like little bits here and there. I I told them I I want I wanted to walk away with six. >> Okay. >> Um but

2:54Alex >> Yeah. >> They they said it's not worth that. >> Okay. >> So. >> Well, to them. >> To them. To them, yeah. >> Um It's a tough one, man. Uh you don't have a plan for what you want to do next. Um I would ask you how much you've saved up if you're comfortable saying it. But like >> bucks. >> Okay. You have a few million dollars. So, does four Well, you're going to get four and a half, then you're going to pay 20%, right? >> with like three.

3:20>> Yeah. So, does three change a lot for you? >> Um Well, it's It's definitely enough to not have to work. I think I figured I'd make >> to work, dude. >> Yeah, yeah. >> I'm just like, let me just save you this part. You're going to work again. >> Yeah. True. >> Like, you can get drunk for like a week, and then you're like I can't do this forever because then I will be an alcoholic. And so >> Too many spots on my liver. >> Yeah, right. [laughter] So, and then you're like Do you have kids?

3:48>> No. >> Okay. Are you married? >> Nope. >> What are you What you going to do? >> [laughter] >> You're just going to wake up and be like >> [laughter] >> Like, you going to golf? You know, like what like I'm being so real with you though. Like what would you do? >> Um Well, to be honest, you know, like a lot of people in here, you know, had my head down in the warehouse in my house for the last decade and it's like I just want to like go out and see stuff. >> Yeah.

4:14>> You know. >> So, so this is just a fun this is like a fun frame which is like is there a way that I can get the business to continue to make money and go out and see stuff? >> For sure. >> Because you probably even then it's like you as somebody who's done this, you get tired of traveling at a certain point and you kind of like miss having roots in your own [ __ ] and your own all that, right? And so, one of the things that I've like I know absolutely for certain is that we always want what we don't have. And so, like single people want to get married, married people dream about the time they were single, people who have kids wish they could not have the kids for the day, people who don't have kids want to have kids. Like like you know, employees want to be entrepreneurs, entrepreneurs wish they could just get a stable paycheck. Like it's it's endless. Like we always want what we can't have, right? And so, uh the moment you sell the business, you'll wish you had the business.

5:04>> Yeah. >> And so, I just think that like this will not scratch your itch. Okay? If that's the purpose. Now, like I think basically the justification of like I could get, you know, $3 million after everything and you already have a few million dollars is really going to change nothing about how you live. Again, this is a an entirely personal decision. I'm just walking you through how I think through it. Um it's going to change nothing about what your day-to-day looks like except for all the stuff that you enjoy doing in your business, you won't get to do anymore.

5:33And there's for sure [ __ ] that you don't like doing, but like life comes with overhead. And so, the things that if all of that's gone, you get rid of the good and the bad. >> Yeah. >> And that's for and people forget about getting rid of the good. And so, now you've got to somehow replace the good which means you're going to start a business again, and then you're going to be like, "Fuck, I wish I had my whole team." I only say this having done this before. Like you're like, "I really wish I had all my people, but I can't cuz I just sold the company, and I have a non-compete,

6:00Alex >> [laughter] >> and I can't take them." So, um I would encourage you before selling to see like if I had a gun to my head, they're going to kidnap me cuz you have no kids, right? Not me, you. I don't care about me. But like >> [laughter] >> uh they're going to kidnap you. You're going to get napped unless you can just solve for the things that you want. Maybe that's traveling once a quarter. Maybe every 12 weeks you take a week off. >> Yeah, I already do that. >> [laughter]

6:24>> All right, every 6 week you take a week off. Like what Like I'm kind of like this it feels like a like a it feels like a nothing burger. You know what I mean? Like you're going to make the amount of money that you're going to make from the sale in like 24 months. >> Yeah. >> And you're going to have to probably work on afterwards a little bit. >> Yeah, uh 6 to 12. >> Right. >> [snorts] >> So, it's like you're going to have to work for the next year. You're going to make that money in 2 years. So, you're doing the sale and getting rid of the company for 12 months.

6:56>> Well, they are going to pay me a little bit for my time. >> Not nearly what you make from the business. >> For sure. >> So, like all of this for 12 months, and then you lose the thing. Are you good at other stuff? >> No. >> Okay. >> [laughter] [laughter] >> That was >> [laughter] >> That was the most honest answer of the day.

7:24>> Yeah. I I pruned away all those other skills. >> What was that? >> I pruned away all the other skills. Yeah. Everything outside of that I'm no good at. >> So, you can do whatever you want, obviously. I think that if we if we think about it from the frame, I don't know what you gain. And so, I don't think I'd sell it unless I was like, I want to do this. This is the big business. I'm going to take this with the money to do this next thing. All that would make sense to me, but you're like, this is all I know. They're going to pay me basically 18 months of work.

7:54Uh and then I won't have the thing I know and love. And what I'm trying to get like what job will this money do for you is not a ton. And so, you're like, I feel like I've got my head down. And I think what you're hoping for is a guarantee from a world that will never give you one. >> Mhm. Okay. Thank you. >> [applause] >> Hello. >> Hello.

8:21Alex >> How are you? >> Excellent. How are you? >> Awesome. So, my name is Lois. I am a >> Lois? >> Lois like Joyce but with an L. >> Lois. >> There you go. >> Got it. >> So, I'm a registered nurse. Retired now and I sell a online coaching program where we help nurses who are happy make more money with travel nursing, >> Yep. >> PRN nursing, strike nursing. And then it kind of like snowballed into another problem where nurses are like, you know, I don't want to travel nurse forever.

8:49You know, they want to get married. They want to have kids. And so, there is a huge gap in the marketplace where a lot of healthcare workers are burnt out. They want to pivot, but it's like all we know is like you know, healthcare. >> Yeah. >> So, the second leg of my business is uh helping them transition into entrepreneurship. I do life insurance. We have a health insurance leg. I have a digital product business. So, I'm kind of like just a connector [clears throat] to help them pick a path.

9:15>> Is revenue under 1 and 1/2 million dollars? >> I'm doing 1.5. >> [ __ ] nailed it. >> But the profit >> I'm I'm telling you I got to I've done these before. All right. Um because you sounded distracted enough to not be able to hit three. >> I am distracted. They [snorts] told me that. We're profiting about 1.2. So, we have great margins. >> Amazing.

9:38>> Yes. I I was organic the first 3 years. I just started running ads about like 9 months ago. >> at that 1.5 thing. Sorry, keep going. >> Yeah. >> [laughter] >> You knew it. >> Yeah. >> Uh just started running ads the last I I do a lot of digital challenges, so like 3-day challenges, 5-day challenges. Did just did one last month. >> Yeah. >> Spent about 25k on ads, made about 500k, so like 20x ROAS. >> Chill.

10:02>> So, the goal is to finish this year with 10 million. I feel like all I need to do is just spend more money on ads. The problem and the question that I have for you >> is that I am the dancing >> Yeah. Keep going. >> I'm the dancing bear. I'm the personal brand. >> Mhm. >> So, I know I can do more of the things. I guess my question is how do I increase the value of what I'm offering, the price point of what I'm offering, but like less of me. Because they're coming for me. They want to like spend time with me. It's, you know, nurses.

10:36Alex >> What's the offer? >> So, just helping them pivot into life insurance specifically. >> get the outcome. What do you deliver? >> Like I'm coaching them. I'm teaching them how to get licensed, how to sell. >> More detail. So, in what format or medium are you doing that? >> So, we're doing uh like a like a high-ticket program. So >> that. That's the offer. What are you doing that is not scalable? So, let's say we let's say we So, you're at 1 and 1/2, right? So, let's say we 6 or 7 next to the business. How many customers did you sell at your thing?

11:08>> 150. >> Okay, so at 150 customers uh I'm already guessing that you have one to many in terms of delivery. >> I do. >> So, then what stops that from being a thousand customers from your delivery? >> I guess the results, like I feel like they like more of like touch points with me, like Q&A. I feel like I'm doing like 4-hour zooms of like, you know >> They want to like it's It's same question they can >> just doing one to many Zoom calls and answering questions. >> Correct.

11:34>> Okay. >> have other coaches, but I feel like they don't execute until like I tell them. >> if they were, then they'd be you. Yeah. Okay. I'm just trying to find the problem. >> I guess like how do I remove myself? >> I don't think you're going to. >> Thanks. >> [clears throat] >> Or like how do I get them to like >> You're not there right now. It's too early. >> It's too early. >> Yeah. You're like this is not in the Um let me ask you this. Would making $10 million change your life?

12:02>> No. >> Okay. Um >> It'd be really cool, though. >> Okay. >> [laughter] >> Would it Would it change your financial situation? I'll say that. Can you do things with that that you can't currently do? >> For sure, yeah. >> Okay. How long were you in health care? >> 8 years. >> Okay. Is this easier than that? >> For me, I like it better. I like business. >> it was not a trick question. Um would you work really hard like if you 8 years ago were like I could work really hard for a year and make $10 million, would you do it?

12:32>> As a nurse, no. >> 8 years ago, if we you did it for less than that, >> Correct. >> so you wouldn't do it for more than that? >> Working as a nurse? >> Then? >> To make $10 million? >> Yeah. What did you What did you make as a travel nurse? >> Maybe like 100k. >> Okay, so would you do it for $10 million? >> Oh, yeah. Yeah, sorry. I think >> Okay. Got >> [laughter]

12:56>> I misunderstood your question. >> Right. Yeah, not a trick question. I'm walking through logical frames. So, if you were talking to yourself 8 years ago and said, "Hey, I could work at an easier thing that you like more and make $10 million, why would you want to stop?" >> I'm strong. >> You like what you do? >> Yeah. >> You're good at it. >> Mhm. >> You want to help more people? >> For sure.

13:20>> So, what's the issue? >> I guess how do I like leverage my team? Like for example, this event is amazing. >> Thanks. >> And I love the I love the fact that even though you're the one with the personal brand like it kind of ran kind of without you for the most part. And I guess do I have to wait? Like how long do I have to wait to get there? Ready to get there. >> Yeah, all I do is just collect checks. That's >> [laughter] >> That's That's how my life is.

13:46Alex Um Yeah. >> Too soon for me. >> Um I think you're super early. I just like we could go we could start walking down that like what you should do. I just don't think it's relevant at all. >> Okay. >> Like you spent 25 grand and made 500. I would like you to spend 500 and make 10 million. Let's do that. >> You're right. >> Let's do that for a couple years. And then be like, "Huh, now what do I do?" >> [laughter] >> And what's cool about that is that you'll have like 20 or 30 million dollars to get really good people with.

14:16And so right now you're trying to think about how to solve a problem that requires money. Like these people are not cheap. >> Right. >> Right. And you need more money to get that caliber of person. >> Mhm. >> And right now you'd be risking a huge percentage of your income in order to probably shrink the business. >> Mhm. >> And that doesn't feel like the right move. So basically you're going to give up margin and maybe some growth by not being as close to everything. And it's got to be really [ __ ] big and really [ __ ] profitable. So that when you take that hit it still grows and it's still profitable.

14:49>> That's true. >> Does that track? >> Yeah, thank you. >> [applause] >> Alex, this is your last question. >> Oh. It has to be amazing. >> No pressure. >> [laughter] >> Hey Alex, my name's Andrew McNair. I'm with Sleep Well at Night Capital Swan Capital. We do wealth management for federal employees. And so we have about 7 million dollars revenue, 3 million EBITDA. We're trying to get to 10 million of EBITDA. And so what's really holding me back is we need to scale and help the 7,000 federal employees we want to do. We need three wealth advisors, three wealth managers really fast. And so I'm thinking, do I train internally, which takes a while?

15:30>> So you're here. >> Right? >> Right. >> A lot of manpower issues. And so, do we train internally? Do we go recruit, try to get them to come to the Redneck Riviera in Pensacola? Or do we try to do something >> Redneck Riviera? >> Oh, you bet. >> Okay. >> You got to come down. >> give that vibe. >> Yeah, but it is that vibe. >> [laughter] >> It's the best. Um so, or the last is do Pursuit of Happiness with Will Smith, have like maybe 10 recruits, and whoever survives survives. But they have to get licensures, you know, with the SEC. They have to be very technical to be compliant. They need licensures.

16:06>> So you have a what I call a many ways up the mountain problem, which is that all three of the paths are likely work if you do them well. Um so, this is a buyer build scenario, which is like I can buy the talent or I can build the talent. Each one has its own issues. Buying the talent is typically faster. Building the talent builds more long-term value in the company. I tend to, because I like training, which hopefully maybe you guys have seen. I like training and education. And so, one of our big the reasons that it's so many of my businesses are service-related is that I'm pretty good at helping people learn how to do [ __ ] well.

16:40Um and so, I tend to do that because you also get better margins. Because you can take someone who has lower skill, pay them at their current skill level, add skills to them, charge what the new skills are able to get, and that arbitrage is yours. And that's fundamentally what service businesses are about, which is like how how big of a discrepancy can somebody come in from labor that they come in at versus what you can charge for, and the delta there is either how good you are at marketing and sales or how good you are at training. If you're good at both, you make a lot.

17:06And so, um for you, do you feel like you are So we have the call it, you know, we're holding tryouts, right? We have that one. We have the go recruit some killers and bring them in. Uh and then you have your third option of like You said three, but it's I feel like there's two. >> I think I lean towards the more let's get a group in there and see who survives and who really wants to help these these people.

17:35>> And I think that my perspective on this is that I You can absolutely do the Northwestern Mutual we just recruit everybody in and see who survives model. I prefer to have exceptional training. And I take the belief that like everybody who graduates the Hermosi school of sales will be a closer. It will just take some people longer than others. And then for the people that it takes longer, I make the decision whether or not it is worth it to me to continue to train them.

18:04Alex And so then you get better and better at training your, you know, key skills. And so I would say likely you would probably want to get people who have those licensures cuz that's I I personally wouldn't want to do that. I would get the people who have licenses who are junior, probably suffering at the Northwestern Mutual sales like PNC etc. >> the golden handcuffs to them. >> Right. Exactly. The early guys, first 3 years when they're just sucking, you know, wind trying to get their business going. Just saying, "Hey, I already have an acquisition system. I'm going to feed you clients. We're going to do a rev split on it and you're going to be happy dealing with real Americans who you're helping out."

18:36Alex >> So that's the route up the mountain you would take. >> That's how I would do it because that's my skills and resources. Do you feel like you're better at training or do you feel like you're better at not training? >> [laughter] >> Well, you you you laid out the three different entrepreneurs. I mean, I lean towards marketing and so part of me is like, "Well, we could probably market that job better and maybe get someone remote and not, you know, get them from far away and then just try to get them bonus to come over."

19:03Alex >> Mhm. >> On the Redneck Riviera. >> 100% the Redneck Riviera. >> Yeah, yeah. >> Yeah. No, I think I think I think you'll be able to I mean, you just have to sell it, right? Just like anything else, but if you have that skill, I think you'll be able to do it. Um I would just say that where would I invest my time if I were you? It would be the back-end acquisition funnel, which is you should know all the metrics for that because like you're getting you're thinking 7 to 10, and if I can encourage you to do one thing, instead of thinking 7 to 10, think 7 to 70.

19:30Just think from that, which is like what am I going to need at 70 that I don't have now, which is like you're going to need an entire recruiting machine, and you're going to need an acquisition machine in terms of branding and up front. Your way of getting customers right now is reliable. >> Very. >> Okay. So, can we do more of this? >> Lots. >> Okay, great. So, like the constraint clearly is this manpower side, and so that is going to unlock a huge amount of enterprise value. That's what I'd be laser focused on building out that recruiting, onboarding, training, performance management, compensation system so that you can give someone a very clear career path that they're never going to need to leave if they come through your way.

20:04>> Perfect. Thank you so much. >> Appreciate you. >> [applause] >> Um you guys are awesome. Uh Ed is also awesome. Um So, uh 2 seconds on Ed. Um Ed is the second oldest >> [snorts] [laughter] >> longest standing. There you go.

20:30Um uh member not even of AC Qui cuz he worked with um us at Jim Launch. He was the top gym owner out of thousands of gyms. He was number one, which I think is pretty cool. Um and then I somehow convinced him to sell his gym and join us at Prestige, and he absolutely murdered it. Um when he left to go after we sold to go flip gyms, uh Prestige never grew the way it did with Ed there. Um and then once he was flipping gyms again, uh we had enough time that non-competes and all that was okay for me to be like, "Hey, man, like want to do want to do another ride with me?" And uh thankfully, if you're a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift.

21:11So, my team and I put together the $100 million scaling roadmap, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly where they got stuck and how they got past it. And so we broke it into these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct the business and you're trying to scale, we'd love to help you out. On the thank you page, you can just book a call with my team and we will look at the business, see if we can help, and if we can, we'll invite you out to Vegas and we'll do this in person live.