How to Buy Your First Business With Almost No Cash

0:00All right, let's go. Rohan, four Roofers? You want to do Roofers? Or do you want to do virtual rockstar? >> No, no, go for four Roofers. >> Four Roofers it is. >> I'm confused by the revenue profit piece. >> Which is very high, it looks like. >> Hello? Can you hear me? >> What's up?

0:25>> Hey, Alex. Awesome That's been a awesome advance so far. Three months is crazy. >> Congrats. >> Thank you. Thank you. God mode of fire status. >> [laughter] >> Yeah, and and I think happy birthday or belated birthday as well. >> Thank you, I appreciate it. Is it tomorrow? >> Yeah. >> I don't even know. It's like whatever.

0:49All right, man. So, talk to me. So, Roof It, you have four four Roofers, is that the name of the company? >> Yeah, so I I own a business. I'm looking at it more like a a learning not earning phase. So, it's really just me at about 200k a year profit. But I kind of look at it again, it's more like more as a job at least at the moment. So, performance-based marketing agency for roofing companies. And the main reason I did that was I wanted to try to learn marketing and it was almost a vehicle to do that.

1:19>> Okay. I love that. Love that, dude. Awesome. >> it was it was a I appreciate that. I I mean, I took a lot of it from the content that you put out there, so obviously yeah, I did it, but a lot of credit will go to you on that. >> All the credit goes to you, dude. You did it. >> All right, so then it was a means to achieve that, uh not really the end business I wanted to to end up there. And I'm still doing it, of course. But about five months ago, four or five months ago, I've been working with one of my clients for a really long time.

1:47>> Okay. >> And I added on consulting just for them. >> Yeah. >> And it's a really good opportunity to learn a lot really fast. >> Okay. >> Uh >> worked out really well, learned a lot, helped them grow, and I want to keep doing that and also made money because I've had a performance deal with them as well. >> Okay. >> So, again, I I want to learn as much as I can. So, my thought is if I learn how to run and grow a roofing business, that'll be really viable. I can then productize that. So, then uh you know, that that's all the context that I have. So, I'm head down working on this, but what I'm trying to think about is in like a year or two, where do I go from there so I can position myself best to then align with that?

2:29>> Yeah. >> So, the three things that I'm considering later on, um you know, to try to learn and get to that point would be number one, trying to facilitate roll-ups, something I've seen you talk about. >> Yeah. >> Um and then number two, either just buying a roofing company and trying to grow that and maybe acquire other ones growing it, you know, organically or then through acquisitions. And then number three would be, I don't know, like a private equity firm that uh buys and grows roofing companies as well. And I'm open to other suggestions,

2:56>> Yeah. >> too. >> So, >> And the only additional other thing I'll say is that um my my number one goal is just to grow if that helps you answer any anything else. >> No, that helps. So, I'll say that the three doors you have are not mutually exclusive. So, they actually sound more sequential than they sound different. And so, I think that your next natural the next natural step would be for you to take over or buy one of the uh roofing, you know, one of the roofers, right? And then you install all the stuff that you've learned between, you know, working with all the different roofing to actually run it well, right?

3:28That's probably step one. Step two is once you have the all the operations down, you have that business, you've grown it, you've expanded EBITDA, then you can say, "Okay, I'm going to you're going to be in the situation of like, do I buy or do I build?" Right now, in the space you're in, there is a lot of M&A activity, but at the same time there's a lot of M&A activity because there's still plenty of roofers that, you know, just like will sell for not a tremendous amount of money, especially the smaller ones. And so, you could buy those up if they especially if they're older and they have a phone number that always keeps ringing so that's like nice cuz there's always you know an established you know they just have like kind of a book of business that just continues.

4:00But roofing is so transactional and and and sales heavy up front it only makes sense if there's long-term maintenance plans that already been built in so they have recurring revenue you know on an annual basis. So with that being said step one is I think like like right now you're doing 220,000 a year which is okay. I would want to make sure that you're really confident that you can take this over cuz it's going to be a little bit more risk though. To be fair and I mean it was the presentation I gave today like you're going to make a bet here right but that's you're betting on you. So you make the bet and then you you know you acquire one of the the roofing companies that you feel like has a structurally sound that you can drive you know a huge amount of improvements in the business step one. Step two you can expand that business continue to improve the cash flow of the business and at that point you can choose to acquire other roofing companies or depending on how much it cost you to open a new location de novo you could just do it yourself. And that's going to be the decision that you make then once you have more information from the existing roofing company that you just took over.

4:53>> Okay so then you wouldn't you wouldn't go into then like that again the private equity side and or like roll ups they would more so be buying your own and then expanding that. >> Well there's nothing wrong so so the things that you have outlined are sequential. So I would not say go do a roofing roll up without ever having run a roofing company. >> Yeah yeah okay. >> Or done a roll up for that matter. Like that's two entirely different skill sets and you have neither right now. So it's like I'm trying to pay down ignorance tax number one transition from just marketing agency and a little bit of consulting to truly owning and running a roofing business which will which will come with a ton of other things and ignorance that you're going to have to pay down. Once you pay all that tax down and you succeed then it's like okay to expand we can buy or build. In the buy or build concept that is where M&A and kind of the roll up concept that you're looking at comes from but the end goal is maximizing EBITDA for lowest amount of effort and capital. It's a blend of those two things.

5:50>> Yeah. >> But it's a return on effort. Yeah. >> The other ones later on, obviously the first step will be buying that. >> Yes, exactly. >> buying it, um I I've seen like some older things from you. Um would you suggest like waiting a little bit then trying to do a seller financing type thing or like I guess I'm not too well versed on on uh how I would buy a roofing company, I guess.

6:17>> I mean, I think right now step one is like you just need to like go like where you're thinking probably like two years from now. >> I mean, I would be open to doing it sooner. >> Oh, no, no, I know you're open to doing it sooner. I'm saying that I'm telling you this will probably take you 18 months to 24 months to learn. >> To learn >> how to run the roofing business. >> So let me just clarify. When you're saying to learn it, are you saying from the company that I would then buy or from the consulting side to then buy it?

6:48>> Yes. Like you >> Saying how what What has to happen in order for him to buy the buy the company? Like what How does he learn? Does he buy one and operate it or But then you're saying But then he would buy it now so he could learn. >> Yeah. >> Okay, so so buy now and then cuz yeah, so then would I do like try to do like a seller financing thing? >> Oh, like I see you How do you make this first deal? Yeah, yeah, yeah, yeah, sorry. I'm misunderstanding. >> Yes, yes, yes, yes. >> Yeah, yeah, yeah, you I mean, you would want You want to get the lowest purchase price possible and then you want to get as little of that to be cash down and then if you need to have a third-party SBA loan or something like that to cover some of the cash down payment, you can do that. So, you might You'll probably have a mix of three things, which would be some of your capital, some capital from a third-party financing arm, which a roofing business is is a pretty established normal business to get lending for, and then you'll probably try and get the seller financing for call it between 20 and 50%.

7:39>> Okay. Awesome. All right, well, that's uh that helps a lot. I appreciate it and um I appreciate all you guys and like I mentioned like a lot a lot of the frameworks that I've been mentioning here is just come, you know, right from a lot of you guys' content. Um and so yeah, just just really thankful and I appreciate all the help. >> Appreciate you, man. Thank you. Thanks for donating bucks, man. If you like this video and you're a business owner who wants to break through your current revenue ceiling, I just sold every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so you can click here and you can check it out. Again, absolutely free and since you're a business owner, I appreciate you and enjoy.