Workshop: Trucking-Unternehmer will auch Produkte verkaufen

0:00Unternehmer/Gast I sell a service. I own a transportation company. >> Cool. >> We uh deliver chemicals to the fracking companies, last mile transportation. Like this? >> Um there we go. Nice. >> Revenue-wise, uh we did 10 million last year. Year before that was seven. Year before that was five. It kind of just kept growing. >> Um >> Awesome. >> And this year decided to slow it down a little bit, not like well, I guess slow it down to get myself out of the day-to-day.

0:29>> Okay. >> It's worked. While doing that, I realized that I can make more money taking and selling to customers that my customers don't sell to, the same product that we're transporting. >> Say that last part again. >> All right. So, I'm more of a specific type of person. I sell polymers or I I transport polymers, friction reducers. >> Okay. >> Uh S&F is one of the biggest. They make it. >> Right.

0:54>> There's 40% of customers they won't deal with that want to deal with me, that want to buy it from us. >> Uh-huh. >> My struggle is is I figured out how to continue to replicate the trucking industry like the trucks and grow that. So, do I keep focusing on that, which is a very cash-intensive business, like I have to put a lot of money up front, or do I use my trucks to sell the product to the end user?

1:19But I also struggle with that cuz how do I balance the two cash like Sorry, I >> You're good. Don't worry about it. >> How do I balance the two? Like So, if I like I'm regularly floating a million and a half, 2 million in receivables for BKT, and I want to start buying the product. Well, I have to pay in 30 days. I'm not going to get paid. Kind of same cash >> Things you're going to add another cash flow constraint to the business. >> Say that again. >> So, basically, if you're buying the the the the stuff that you're going to sell to the end users, like you're going to add cash constraint to the business.

1:50Alex >> Okay. >> Right? >> Yeah. >> So, then they would further constrain it would basically pile on these cash you can strain. So, said differently, why do it versus just doubling the existing business? Cuz like the way that I think I'll I'll explain where my thinking is. So, I had a a good friend of mine from high school, actually. Um that's a strong statement, an acquaintance of mine from high school.

2:20Um who uh had a had a a general contracting business. And um in his general general contracting business, he realized he was he was pretty good at roofs. And so, he started doing roofs. Um and I called him up and I was like, "Hey, how's the business going?" He's like, "Ah, we're growing. It's great." And and so, he was explaining to me. He's like, "So, we we do roofs primarily." I was like, "Okay." He's like, "We also do, you know, some contracting work." And I was like, "Okay, that's another thing." He's like, "We also kind of buy and flip houses." I was like, "Okay."

2:49Um he's like, "But that's he's like, you know, didn't want to leave money on the table." Um which is like my favorite entrepreneur statement ever. Um and I was like, "So, what stops you from being a billion-dollar-a-year roofing company?" And the answer is the general contracting and the real estate flipping. I was like, "Well, what stops you from being a billion-dollar-a-year real estate flipper?" The answer is the roofing and the general contracting. And so, basically, if you already have a winning model, to me, I'm like, there's no reason to not just become even better at the thing that you're currently doing and compound the competitive advantage that you have.

3:20There's always going to be better you know, there's always going to be opportunities. >> I guess I looked at it as a more of a controlled thing. Like, cuz there's for most part, our customers we've started with have been with us for six or seven years. >> Mhm. >> Um >> On the trucking side? >> Yes, on the trucking side. Uh huh. >> But they also do dictate the rates. Like, I can, you know, continue to raise my prices and eliminate customers, which we have done. But you they're only willing to pay so much. And it's like, well, if I'm selling the chemical, I'm still going to get what I want for transporting it, and then you're getting paid to sell it, too.

3:52So, I don't It's just one of those things that's like >> The only reason I hesitate is just like it's adding It's just It adds complexity to the business. Um again, given the limited context that I have of like 5 minutes of hearing about the business, like um it's a huge decision. Um but from my personal experience, when I had um gym launch and Prestige Labs, I basically said, "Oh, I've got this distribution base of gyms, and so why don't I just sell supplements through my distribution base?" Which on the service level seems like a smart idea. But what it ended up doing is that it completely slowed down the growth of my main business, which was the license licensing business. And so, it felt like, "Oh, there's this big pot of gold right here, but if I took all the attention that I put into starting this supplement company and manufacturing it and distributing it and, you know, the testing it and the flavors and the marketing and all that stuff and the support team that I had to do for the product, I could have taken all of that energy and just gone double down into the thing that I should have done. It was one of the bigger mistakes that I've made. And so, if you already have a business that's gone from five to seven to 10, I'm like, "Well, maybe next year you're at 13, year after that you're at 17." I'm like, "That sounds like a pretty good business."

5:06>> I'm Yeah, I guess I guess it's more of I what I wanted to do. >> Well, if you want to do it, that's a that's a life question more than a business question. Yeah. >> But how do I How do I make it make sense to not screw my first business? >> Well, yeah, that's always the I mean like there's always opportunities, and the thing is is the bigger distribution base is, which it will continue to grow, the more enticing the other opportunity will be, right? The woman in the red dress, she just always is more and more attractive. The more distribution you build, the more skills you have, and the more opportunities you see.

5:38Like believe me, the amount of opportunities that I have to turn down now is like sickening. But it's just like taken to the natural extreme, can I build a $100 million dollar year trucking business? If the answer is yes, then what risks that? Everything that isn't that. That's fair. I mean, it seems like a simplistic way of viewing the world, but it's also really hard. But I also think it's probably the right call. I guess >> I was more or less thinking of it in the transportation most of the time for hazmats companies. Once you get to where you do 15 to 20 million revenue, you get bought out.

6:11>> Okay. Like Quanex, Heniff, Daseke. >> Do you not want to get bought out? >> No. No, I started this cuz a lot of >> You could always just keep owning it cuz they can't force you to give They can't force the money down your throat. >> [laughter] >> Like, no, I'm just being real. Like, I mean, a lot of people take the exit then because at that point they probably have, you know, between I know what what are margins? >> Mhm. 20%. >> Okay. Yeah, so at 20 you have 4 million in EBITDA, maybe five, right? And so at that point they maybe give you eight or 10 on it. And so most people are like, "Okay, well, for 40 million bucks I'll walk away."

6:42And that's why a lot of people Like, usually that's I mean, I think part of the reason that institutional investors come in at that five-ish million is that at that point is where most business owners are like, "Okay, this is enough for me to be done forever." And that's probably why there's a ton of M&A activity. This is me just speaking speculatively. So, I don't think there's anything inherently like, okay, if a lot of people get bought out at 20, like, fine, but there's also companies that get to 100. And it's usually just a a more stubborn founder who does it for different reasons, which I actually think is a good thing. >> Okay. No, that gives me peace of mind. Thank you.

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