Acquisitions Anonymous - #1 for business buying, selling and operating - How One Tweet Led to One SMB Acquisition! - Acquisitions Anonymous Episode 176

Episode Date: March 17, 2023

Michael Girdley (@Girdley) and Bill D’Alessandro (@BillDA) are joined by Joe Cassandra (@JoeCassandra) to hear his lessons learned in SMB ownership, running a children's retail store, owner-employee relationships, building a HoldCo, hidden expenses, and more.-----Thanks to our sponsors!This episode is sponsored by Acquisition Lab. Acquisition Lab, created by Walker Deibel author of Buy Then Build: How to Outsmart the Startup Game, is an accelerator with a highly vetted cohort-based educational and support community for people serious about buying a business. After going through the Lab's month-long intensive, you have ongoing access to almost daily Q&A sessions with advisors, regular live deal review forums with Walker, hand-picked vendors for your deal team, and a very active Slack group with other searchers on this path. Our team personally understands how to buy a business and will help navigate all the complexities of the process, as well as provide a trusted framework, tools, and resources to support you from search to close. The Acquisition Lab recently celebrated its 70th business being acquired and well over $100m in aggregate transaction value. The Lab is there to stand by your side, so you can take the right action (at the right time) and avoid wasting countless hours trying to "go it alone".For more information, check out acquisitionlab.com (link in the show notes) or email the Lab's director Chelsea Wood, [e-mail] to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Welcome to Acquisitions Anonymous. Michael Girdley here. We have a special episode for you today. This is a republishing, a reprise of our most popular episode out of our first 100, which is one we did with Joe Cassandra way back nearly 100 episodes ago, titled How One Tweet Led to a Business Acquisition. And it has gotten about three times what our normal episodes would get. So a very popular one, bringing it back again today.

And here is the episode. I hope you enjoy it. This episode is sponsored by Acquisition Lab. Acquisition Lab, created by Walker Debel, author of Buy Than Build, How to Outsmart the Startup Game, is an accelerator with a highly vetted cohort-based educational and support community for people serious about buying a business. After going through the lab's month-long intensive,

you have ongoing access to almost daily Q&A sessions with advisors, regular live deal review forums with Walker, handpick vendors for your deal team, and a very active Slack group with other searchers on this path. Our team personally understands how to buy a business and will help navigate all the complexities of the process, as well as provide a trusted framework tools and resources to support you from search to close. The Acquisition Lab recently celebrated its 70th business being acquired and well over $100 million in aggregate transaction value. The Lab is here to stand by your side so you can take the right action at the right time and avoid wasting countless hours trying to go it alone. For more information, check out AcquisitionLab.com, link is in our show notes, or email the lab's

director, Chelsea Wood at at buy then build.com. All right, welcome to Acquisitions Anonymous. I am one of your co-host, Michael Gurdley. We are back this week with another episode of our war stories format, and that is where we bring on somebody that we think has experienced some cool stuff

and is thinking about it in a neat way and tells us what they learned from those experiences. So ideally, this is meant to be really relevant to folks that are buying, selling, operating businesses. and today we have a great guest. Me and my co-host, Bill DeLessandro, are happy to welcome Joe Cassandra, who is here today. And Joe, we're just so excited for you to be with us. Yeah, I'm super excited.

I love following both of you. And, yeah, looking forward to it. Cool. Well, excited to learn from you today and learn from your experience. Before we kind of dive into the two topics we want to run with you with, why don't you take about a minute, introduce yourself and tell us how, you know, tell us what you do and how you got to where you are today. Yeah.

So I grew up, I wanted to be an accountant, and that's what I always wanted to do since seventh grade. All the kids thought I was weird. And I got through college, realized pretty much day one at my first accounting job. It wasn't for me. And spent the next few years trying to figure out what I wanted to do. And after failing at a few small things, I realized, hey, marketing is what I really love doing. And so I started picking up some clients in the marketing arena. and then 2016 quit my job, went full time in that.

And then from there, I guess fast-forwarding, it went really well. Started a real estate company with my wife. One of my clients that I had for many years wanted me to come on to help them with their marketing. And so I came on in 2019 as an executive. We 4Xed the business in two years and then we sold it last year. and then last year my wife and I bought a business on a whim which is what we're going to dive into a little bit today

and so we're involved in four different businesses got four kids married in Georgia so it's pretty busy in our house that's awesome that's awesome well cool well so yeah this goes to the two topics we want to talk to you about today number one going through the story of buying a business on a whim and how that's turned out and what you've learned from that And then number two, which we're going to dig into later, you know, you're starting to become a holdco.

And we want to dig into your thinking about that and your vision for where you're going. But, you know, let's start with this first topic of the business you bought on a whim. And if it's okay, I want to read the tweet that inspired me to reach out to you. And this is basically the story. And you wrote, how we bought a business in 2021, a favorite account of mine, real estate Trent, so it's at Real Estate Trent on Twitter, posted about there are still deals on LoopNet. you got on LoopNet five minutes later. You found an amazing deal.

You called the seller and you bought it 40 days later. And since then, you've dealt with a bunch of stuff. So, like, walk us through each of those steps. So you're set in life at this point. You, to some extent, stole your business. You're looking for your next thing. And then you see this tweet from real estate, Trent. So what happens to that point?

And how does the story start? Yeah. So in 2020, my wife and I would do in a lot of real estate stuff and went really well. And in 2021, I mean, if you're listening and at this point, I mean, the market was still going up really hot in 2021, still going up in 2022. And so we couldn't find any real estate opportunities. And so I'm, I get itchy trying, wanting to get involved and get my hands dirty. And so when I saw, when I saw the strip mall guy post that, I went on loop net. I'd been on loop net before, but I didn't know, hey, you could buy businesses on it.

That was just like a little tab there. If you go to loopnet.com, there's a little tab there. And it aggregates for biz by sell, but I'd never been on there either. And just started browsing and saw that there was a business that my wife and I go to. We shop in because it's a children's retail store. And so we've been to it many times. It's literally right down the street from us. It was selling at a crazy cheap valuation.

And so kind of on a whim, I call the same. seller, get her to agree to an LOI, and then tell my wife, hey, are you got, are you interested in doing this? And, uh, and then, yeah, just within 40 days, we were, uh, figuring out how did you do due diligence or anything. There was no lawyers involved. So it was really, I was trying to figure stuff out on the fly how to do due diligence on this, um, on this business. And so, um, it's a brick and mortar store. So how did, how did you know, how did you know when you saw the business on loop debt? How did you know it was, you said it was ridiculously priced in your favor? Like, how did you know that?

Like, what was your analysis when you first saw the business? So when in real estate, you can like look at comps based off of other homes that are for sale. I kind of did the same thing when I was looking at this business. What I did was I went and looked at what other businesses in the state or even out of state, what kind of what are they selling at in terms of valuations and stuff like that and I mean a lot of them you're they're they're selling at uh one X revenue or they're selling at three X Ibida or something like that and I'm not allowed to disclose the price what I bought it for but basically we were buying it for 0.75 of iBida pre-COVID and so what happened with her business and this is what I tell people right now

a lot of small business owners are burnt out from COVID and that's what kind of we ran into and they just want to sell their business really quick. And so that's how I kind of came to that. I was able to look at pre-COVID numbers after I talked with her and then realized that once we kind of get over that COVID hump, that this was going to get back to good numbers. So you gambled on the fact that the business was going to come out of COVID, essentially. You had belief that retail was coming back. Yeah, based off of studying the retail trends, I mean, this is,

mid-20-21. This isn't 2020. So 2020, yeah, it's a little bit more. I felt more would be more of a gamble. But this is, I mean, this was 2021. Things are opening up. I'm in a very red state. So I see all the foot traffic that goes on around us. And people were still out there buying. People were still going into stores and stuff. And that was, I was taking that and also looking at what the economy in general was doing, what kind of stats they were seeing in the retail sales. And I mean, In 2021 for in-store retail sales was really strong, while some e-commerce people, they struggled a little bit more compared to 2020. And so that was kind of where I saw the opportunity for sure.

Yeah. I mean, I think being an e-commerce guy, right? 2020 was bonkers for e-com, like rocket ship, right? Nobody bought a thing in stores or ever left their house. And then you started lapping in 2021 some extremely robust comps, right? And so we saw, I saw, if I'm talking to e-commerce people, a lot of flatness kind of year every year, 2020, 2020, which was still great because we were still up huge from first 2019. But the retail just exploded back in 21.

Yeah. And we saw the same thing, right? Right when we opened shop August 1st, sales were coming in. And, I mean, they were pretty strong all through November, essentially. I mean, some of the months were, the business is seven years old, and we were having record months compared to the last seven years that they'd had. Like, November was a record November compared to all the six November before that. October was a record October for all the octobes before that. And that's part of the economy coming back, part of some of the stuff that we did once we kind of took over.

And so, yeah, we're seeing strong sales. We're still seeing, I mean, we're recording this March 15, 2022. I mean, we're having a super strong march right now. So, I mean, we're seeing that trend still going. People are still going in store. So it sounds like your first step was you found a business you knew well and you actually loved, which was great. And you have four kids.

So it was in your wheelhouse. It was near your house. So that had a lot of positive to it. And then you did kind of, those are kind of the qualitative things, right? And then you also thought from a macro standpoint, the economy's coming back and, you know, this business is going to be poised to do well being in Georgia. right, where you're more likely to be open than closed. And then you did, it sounds like a rough back of the envelope valuation of the business.

Like, how did you go through kind of doing the next step of like evaluating the business in terms of return on investment and, you know, mitigating risk and all that kind of stuff? What were your next steps after you called the owner at that point? So after we called her and we got her to agree, we met, went and met her for lunch. She walked us around the retail store a little bit, explained kind of what was going on. And then she sent over the numbers for the financials pretty quickly. And as an accounting background, I was able to read them pretty easily. I can do that myself.

And from there, I mean, because she wanted a quick close, and that's why we're getting it also had a great valuation. Because we were coming with cash. We weren't trying to get an SBA loan or anything like that. We were coming with cash that we had gotten basically from all of our. properties that we bought in 2020 and we got money back from. We were then able to push that back into the business. And so from there, it was, I mean, we only had, like I say in the tweet, we only had 40 days of due diligence. So we were looking at the financials. We're also looking at what's in inventory and then what do we need to buy going forward. But I mean, I knew, based off of when we

bought it, that we were going to get our money back from purchase within a year. year, two years tops. So, I mean, that's a pretty, that's one of those investments where there's, there's like lower risk, but much higher returns in the end. And those are the kind of investments that I like. I'm not looking to go super high risk in any which way, especially when just starting out in the physical space. So very much an asymmetric bet, right? Like your downside was very capped, but your upside was pretty high. Yeah. So you mentioned you bought the business for three quarters times EBDA.

So in theory, if everything goes super well, you know, excluding kind of inventory costs and stuff like that, you could have gotten your entire investment back in nine months a year. Like it's, I mean, you kind of spread it out a little bit. But yeah, that if three, three quarters of earnings is three quarters of a year to like pay yourself back for your investment there. So is that kind of your analysis? you're like, okay, well, this is so cheap and there's not a lot of downside risk. Like, I don't even need to build a financial model, or did you go and build a financial model?

No, I didn't build any financial models. I knew, yeah, technically, yes, I could get money back in nine months, but I knew, number one, we were going to make mistakes. So we were going to buy bad inventory. We're going to make bad advertising investments. I don't know. All the unknowns that you don't know about. I mean, I built those in, basically. And so I figured, hey, even if we don't get our money back for one extra year, we're still going to do fine because we have so much, there's so much potential with the brand and with the opportunity just in this specific children space, there's so much opportunity that even though we know we're going to make mistakes the first 12 months, it's all going to pan out in the end as we make those investments over the next five years.

Yeah, and so then did you have to pay EBDA, 0.7, 5 times EBDA for the business plus the value of the inventory? Or did she just throw that in for free? No, it was all in there. She did have inventory pretty low because she's been trying to get out of the business. And so she's obviously not investing in the business. And so her business sales were pretty much going like this from 2017, 2018, 2018, 2019, 2020, 2020. And so I knew what was going on was she's not investing in inventory. So in retail, if you don't have a full store, you're making less sales, essentially.

And that's what she was doing. She was pretty much running like a skeleton crew store of the bare bones of the inventory that she could put on there. I knew if we can go in there, double the inventory, get online sales, because there's no online store at the time. There's zero. and then make strategic advertising and partnerships, I knew we could easily then pump that right up.

And, I mean, we're, what are we eight months in? And I mean, that's already proven correct in every way. So I got to imagine for a retail store, like, I mean, if you paid less than one times even done, inventory was included. I mean, you practically got the business for the value of the inventory, almost, I would think. So was the value here mostly, is funny.

Like I said, e-com guy, not physical retail guy. But the value here mostly is like the lease and the sign pretty much, right? And then you go, I've got a lease, I got a location and a sign. And if I fill the shelves, then I'll sell more just based on the people that come in. And then if I drive more traffic, I can sell even more than that. I mean, is it the basic calculus here? Yeah. So that's a good point, Bill.

So where we live, we live in a very fast-growing town. So 15 years ago, this town was... empty, essentially. And now they're building about five different neighborhoods with all houses that are 600 grand and up. I mean, that's all builders can build right now anyway. And so they're building all of that within a mile and a half radius from here. I also knew that, because we're like on a corner pretty much. So we're kind of tucked in a corner of it. But I knew, and I recommend people always read your local paper because you're always going to find these little tidbits. I knew that the big store in front of us was going out of business or they're

moving. So they're going to tear that all down and create more parking, more attractions and stuff like that. So it's going to draw even more foot traffic to our area. So those were all macro, local economic things that I knew was coming in. So yes, there was a bet on the location as well, for sure. So you close on the business 40 days later, like, You're de-risking the hell out of it because it's cheap and you feel like you have inside information. And that's wonderful. Those are two great ways to de-risk something. So now you own a children's boutique in your town.

What happens next? Like, surely not everything went perfect from there. No, of course not. We make plenty of mistakes. Yeah, tell us about it. That's what these war stories are all about. So a few of the mistakes. So one of the one of the things she hid from us was so so she she is a she owns a couple brands.

She owns a couple stores of different brands. So she sold just this brand and then has other stores for women's clothes and for jewelry and stuff like that. And what I found out later was she rolls all those up into a holdco, I guess you could say. And she passes some of those expenses onto the hold. She puts them on the hold co-p-and-l and doesn't trickle them down to the P&L. So I found some of those hidden expenses that I'm paying for a little bit. So that was something that she hid from us.

So just to pause there. So why do you think you didn't find that in diligence? Was that just because? Because she wouldn't show us the P&L of her hold co. She would only show us the P&L of the store. Uh-huh. So what kind of expenses was she rolling up? like she had consolidated utility bills or shipping,

shipping contracts or? Yeah, utility bills. Some of the taxes, like on inventory or rolled up in there. Some of the inventory, like I put them under cost of goods sold, like the bags that you'd put items into and stuff. I got some of those she would buy in bulk for all of her brands. And so she would put them all on just one P&L. And so, so those are all, that was, that was one mistake, obviously.

Another one we made was, and this is, I went into, like I said, I went into this knowing that I was going to make these mistakes. And so I was going to make mistakes that cost money. And so, we, we decided, okay, let's try every advertising avenue we can at once and see what sticks. And so, because I'm an online marketer person. So physical, physical marketing is a whole different ballgame. And so I'm trying school sponsorships, sponsoring the theater, newspaper ads, you know, every which one you can think, I'm just throwing it all at the wall to see what sticks. And what you find is that their ROI on a lot of those can be pretty much zero at some point. And so we figure that out pretty

quickly. And then I also found with advertising online, and this is what I always tell people, make sure if you're going to advertise online, that you have a specific call to action so you can track what you're doing. So if it's very vague, the call to action, or you're not able to track the metrics, you could just be throwing money at Facebook and not know if you're getting any of it back. And so we made some of those mistakes as well. And then right when we open the store, pretty much every employee comes to us and says, she's been underpaying us for years.

We demand a raise or we're leaving. And so we had to raise all the pay. By how much? Was it a lot? It was a lot. It was a, let's see. So some of them were making 11 an hour. And so I had to bump them to 15.

And then the manager, who we love, she's an amazing manager. She was making 15. 15 and now she's making 23. So those are big bumps for them. But I've seen it pay off because they're much more loyal. They're much more enjoy being there. A part of a boutique experience is you need employees that are willing to work with customers.

It's not Walmart where people are just walking around amously. They want that experience with the workers. And so it's paid off for us. So even though our payrolls decently higher, I would say, 10, 20% higher than what she used to pay, the seller. We're seeing the sales come in and help with that a little bit. What a, maybe this is a dumb question, but I remember when I was like a teenager, I would go to the gap and everybody, all the salespeople would argue about like who,

who got credit for my sale? You know, they'd like walk me up to the register and do this. Like, are there any, have there been any things where you've done that with the staff? Or it's like, okay, well, like, we're going to do this type of bonus deal if you reach this amount of sales for the day or any sort of individual kind of. of alignment of interest there rather than just you raising their salaries? Yeah, yeah. So there's a couple things we do right now that we immediately implemented.

So number one, if we hit our goal for the month in revenue, everyone gets a bonus in their next paycheck. And we've done that four times, I believe, since we've bought the store. Um, at certain, one of our, one of our biggest attractions is we do events. And so when they, like we have an event coming up, uh, next week. And so they'll get a special bonus on top of that just for working it. Cause it's a very stressful day for them. And so they get a bonus on top of that. Um, I also added, uh, so PTO days. So if someone's a full time worker, they can get two weeks paid off, uh, two weeks paid off. And then on top of that,

every year that you've worked there, you get an extra day as well. So we have some of our girls. They've worked there for three years. They've never had any paid time off or anything. And now suddenly we come in and now they have two or three days paid off. Our manager has almost three weeks of paid off vacation or paid time off. And so those are little things to kind of keep people knowing that we care about them and that we're looking out for them because they they didn't really come from that experience. before, but then also to help retain them a little bit, because if we can keep, say,

like our manager around much longer than what she was originally planning to, that makes it easier for us to work on the business instead of having to go in and be involved in the business, much more in the day-to-day. Yeah, dig it. So, and you don't disclose this if you don't want to, but could you just give us an idea of the order of the magnitude of like the business, revenue, profitability, investment, all that kind of stuff. I assume you didn't buy the real estate. Like, what order magnitude kind of numbers are we talking here? Is it a million dollar a year grossing business?

Is it $200,000 a year? Like, how big is all kind of what's going on with this particular boutique? So this year we'll do, just in store, we'll probably do about $600,000. And the margins on it are usually between 15% to 17%. or so, depending on how much inventory goes up, because inventory fluctuates all the time, depending on how much it costs us and whatnot. And you're talking net there? You're talking gross margins on the end.

I'm sure the gross margins on the higher got to be a lot higher. Yeah, gross margins. If you're just counting inventory, I like to include bags in there and stuff like that, because you always, that's involved in every sale. but if we're just looking at inventory, so when we buy a piece, what we try and do is get at least 58% margin on it. That's like the hope usually. Some of our gift items, you're going to get a lot higher. Jewelry is going to be a lot higher than that. But a piece of clothing, which is the best sellers, we try and get that 58 to 60%. And just this year, we've had to raise prices, obviously,

because of inflation and stuff's higher, and we haven't seen any pushback on it. But obviously, once you start discounting stuff, that's when you start dipping below that. And that's one of the reasons why her gross margins when we bought it were much lower because she wasn't changing prices. She's had some of the prices have been the same for three years or something, even though costs have been going up. And so that's our in-store. And then in the next month or so, we're in transition.

We're going to open our online store. and that should add a nice, decent chunk to our business. Yeah. Well, it sounds like you're just kind of putting the numbers together, going to make high five figures from this, this year, hopefully, and hopefully more in the future as you kind of grow it. What amount of time are you spending, say, what percentage of your focus? And is your wife running the business or are you running the business? Like, how are you guys actually like CEOing this particular boutique?

Yeah. So my wife and I, we split, we're split 50-50. So what she's involved in, she's involved in a lot of the buying, like what styles are in and stuff like that. She'll also work on the events with the staff and whatnot. My role is more back end, I guess you could say. So I work on any marketing pushes that we have, the email marketing. I also obviously do the finances and watch the margins and stuff like that. And then on top of that, I'm also, Any sort of, like right now we're changing our POS systems so that our POS in store can sync to our online store that we're opening. And so I'm in, that's kind of my thing. So I handle all those pieces. So in terms of day to day, that's not the, our in store manager is, uh, taking care of those, a lot of that, which takes a lot of it off our plate, which is also why we also why we want to keep her happy and pay her well and all that. So she, she kind of takes, uh, care of all that stuff. while we're trying to grow the business from the back end.

That's great. I have one more question, but before we leave this topic, Bill, do you have any questions? No, keep it rolling. Cool. So one final question, then I'd love to get on to the Holdco stuff. You know, what advice would you have for anybody looking to replicate your journey? Like, based on what you've seen and what you see people making mistakes,

potentially that should be doing what you're doing. Like, what advice would you have for listeners around that? I mean, see, I came in because I had other business ventures that were, I was able to then take that money and invest it into another business. And so I like that route that I was able to kind of profit to invest somewhere else. I know someone's starting from scratch that doesn't have money to invest in a business. It's going to be a little bit harder to secure that, to secure that funding. But, I mean, in terms of buying a business, I mean, I'm still new at it. So, I mean, I make a lot of mistakes on it.

But I would say at least make sure you know your numbers pretty well up front. And then treating our staff well has helped a lot. And so, I mean, a lot of people, they want to come in and they start cutting expenses right away. But right when we started, we needed the loyalty of the staff to help us because this is a whole new, this was a whole new venture. for us. We needed them to teach us, like how this business runs. And so, I mean, I guess you could say comes down to the people and you got to take care of them for sure, even if it costs you a little bit up front. I think that's, you got to take care of them. That's so huge. I mean, one of the things we try to do, if at all possible, if you can come in on day one and say, hi, I'm the new owner. You're all

getting a raise. That will go so far. Even if it's nominal. We did. Right. Yeah. Yeah. I think the other thing I heard from you is, you know, you look back at what the success is for every single private equity deal. And this was a micro-private equity deal. Like, the number one determining factor is the price you pay, like every single time. Like, and you can pay, you can overpay, you can underpay. And then what you do, execution is great, but the determining factor, you just got to buy it right. That's so impressive. So kudos to you. Thanks for sharing that. You know, hopefully that's inspiring to other folks. So we're going to do a word from our sponsor right now. So in our never-ending quest to have our podcast break even.

We'll cut to a sponsor live read here. And then when we come back, we're going to talk to Joe about how he's building his own personal holding company because that is hot on the internet right now. And we want to understand how he's thinking about it and what we can learn from what he's doing. All right. Welcome everybody to a fun little snippet that we're doing. This is Mills Snell, one of the co-hosts for Acquisitions Anonymous. And we have a use case to talk about today.

I'm joined by Dylan Scroggins from Fleedyos. Dylan, how's it going, man? Mills doing well. How are you? Good, good. Dylan and I met through SMB Twitter, and like a typical SaaS guy, he hooked me, and I'm on a recurring monthly membership right now for Flas. Yes, I love it. Dylan, tell us about Fleedyo and what it is you guys do.

Yeah, so Fleetio is a fleet management software that helps organizations track, analyze, and improve their fleet operations. What does that mean? all those pen and paper and Excel sheets you have for inspection reports, maintenance work orders can now be uploaded in a cloud-based platform and a mobile app. All right, Dylan, you got some questions for me. Aquasil, the roofing company that I own, we are a flea-o user, so fire away. And don't hold back. No, I appreciate it.

You don't hold back either. My kind of main question was just, what pains did you have besides an annoying SaaS sales guy blowing you up on Twitter? For the record, I didn't blow you up on Twitter. you up too much. But, you know, I would just curious, I'm always interested to hear what pains did you have, whether you knew them or not knew them, that caused you to even consider a move to fleet management software. Yeah. So Aqua Seal, we have about 50 pickup trucks and then a handful of other, you know, rolling stock, telehandlers, forklifts, dump truck, semi, those kind of things.

And we were tracking every, I say tracking in air quotes, because I don't know that we were really tracking anything. We had paper notebooks. You know, we did, you know, twice annual vehicle inspections and tried to make sure we had mileage updated. We used fuel cards, but, you know, not a lot of, not a lot of seamlessly between the different functions. And we were, you know, basically whenever a truck had a problem, we have in-house maintenance, which I know Flitio works both ways, but, you know, anytime a truck had a problem, we take it to our mechanic, he would try and do as much repair as he could, as fast as he could and get that truck and that crew back out on the road. But we really didn't have any analytics about, you know, what's the cost per mile? What's the, you know, what's the fuel efficiency per mile that we're

getting on this truck? How are we making sure that we stay on top of, you know, inspections and turn around repairs quickly? So we had just a kind of a rat's nest of, you know, of a fleet situation. And we were just through sheer grit trying to push it forward. All right, Dylan. Well, man, thanks for, Thanks for being here and being willing to chat about this and really appreciate Fleedyo sponsoring the podcast and being able to do this kind of in-depth combo. Yeah, no, we appreciate it. And, you know, Fleedyo, we are doubling down the S&B space, anything, pest control, construction, HVAC, whatever. We're all about it. So anything, less than 100 vehicles or even over 100 vehicles, we have a mid-market space as well.

But we're across all industries and actually in 80 different countries. So for all your global acquisitions anonymous listeners, tell them to give us. ring and, you know, if they mentioned this podcast, we'll see what we can do for them. Awesome. Thanks, Dylan. Awesome. Thanks, Mills. Sure.

Yeah. I mean, I'd love to hear. So, Joe, if you could just kind of, so how does the retail store and the online stuff fit into your whole code strategy? So pretty much what we want to end up doing is, so we have our brand here and then figure out what other brands that can complement it, essentially. So is there jewelry? Is there other small retailers that we can take over that can feed into it in some way?

I mean, we even looked at, we even looked at like a daycare or something like that to kind of feed customers or a dance studio or something like that. But the main thing is, so in a boutique, a lot of vendors that you buy clothes from, they're really small. They're not huge vendors. A lot of them are hand-to-mouthed. So if at some point we can acquire them so that we're then essentially, I guess, a manufacturer of our clothing, essentially, then we're going to drastically see our margins go way up, which is then able to expand. Our goal is to at some point expand physically. And that was the goal this year until a lot of, I don't know, kind of worried about a recession a little bit. So that's why we kind of pivoted to more going online first.

It's a little bit less risky to kind of do that as we kind of wait and see how the economy is going to shake out. But yeah, so it's acquiring some of those smaller brands that we can then have higher margins on and then expand physically into different places. So straight up vertical integration, a classic. Vertical, yeah. It's much easier that way. And so how does this fit into, you mentioned you're involved in four businesses now. Could you paint a picture of how those all fit together or maybe they don't and how you spend your time across those?

Well, I mean, we have a real estate company. It's mostly, it's all single family homes. Eventually we want to graduate into commercial. So if at some point we're able to buy the real estate and a retailer at the same time, I mean, we definitely open to that. There's not too many. I mean, you won't find very many of those opportunities anywhere. But hopefully at some point we'll able to buy the real estate that we're in. Right after we closed on this business,

I asked the property manager, how do I buy this whole building? But he said it, he said it wasn't for sale. I mean, it's a lot of built. It's a lot of stores on it. But you know what I love about you, Joe? I'd love to own the underlying real estate. You are fearless. You are fearless. It's freaking awesome. You know, you're just like the, you're just like the guy that walks into the bar. and you're just like, I'm going to talk to every girl here or whatever. It's just so cool. Just go. It's so neat.

Meanwhile, I'm in the corner like, I'm really scared to talk to anyone. Anyway, continue. No. No, I'm actually pretty, I like to take calculating bets is what I say. I'm not a huge, I don't think I take a lot of huge risks, I wouldn't say. So all of the real estate we bought is all, I got it at a big discount. I mean, that's just, and that's because I marketed for it off, off, off, off, uh, off, uh, off, uh, off, off, uh, off, that's, that's how I am. I got to, I got to find those, uh, good deals.

Yeah, dig it. So there's, it's, it's one of the things people really get wrong about entrepreneurship. Like, they think entrepreneurship is these big, like, if this doesn't work out, I'm going to be homeless kind of bets. And reality is, like, there are lots of folks like you who are taking very small, asymmetric, calculated risks repeatedly. And sometimes they don't work out. out. But when they do, like, you're going to be in the situation you are right now where you're going to be getting 100 plus percent IRA for the next years based on one year's investment and some sweat equity. And it can really pay off. You just got to do some work and hustle to find the deals. So, Bill, you're about to say something.

Yeah. Well, yeah. So I'm interested in sort of the expanding empire of Jeff. So there's retail store and then there's a single family real estate company. What are the other two? And then I have my marketing company, which I've had for seven years. And then the company that we sold, so when I came aboard, I was an executive in it, and I have profit sharing that I get from it every single month. And we publish, all in the financial space, we publish, we've created software, and now we've rolled up into, well, since we're required, now we're being rolled up into a large holdco of publishing and software companies. And so that's a, that's where all my time is divested. So interesting. So how do you consolidate? You basically got four income streams here.

Are they all just owned? Are they kind of peers where they're just all owned by you directly? Or do you have a hold co so you can move capital between them? I think people are probably interested about in structuring. Yeah. So I am. So I'll, My wife and I, we own the real estate in the retail business 50-50. I own the marketing company. And then I'm a partner in the business I was acquired. So that would be outside of any hold co because I just have, I just get profit sharing from it.

But then the others are structured independently. I wouldn't say that I pass money between them very much unless, unless like one gets a windfall, like I said, with real estate, and then I pass it into investing in another business. But in terms of day-to-day operations, there's not a lot of intermingling of that. Okay. And any shared services or shared employees or overhead, any of that?

I'll have VAs kind of do work for all of them. So I'll have a couple VAs that I work with. they'll kind of do some research for one. They'll run some crunch some numbers for another and whatnot. But in terms of shared offices or anything like that, no, I wouldn't, none of that. And what is your vision as it grows? Because the real estate portfolio is pretty passive. So, I mean, it's just handed off to a property manager.

Okay. And what's your vision as it grows? I mean, does it, you know, if you buy a brand, do you try to put that inside of the, you know, the same LLC that owns the RE? retailer? Do you try to, do you just continue splitting a 50-50 of your wife or owning it directly until you're, you know, you've got just Joe at the top of the York chart and a million different direct investments? You know, how do you think about layering it? Yeah, so the retail and the retail, um, uh, business is set up to be, uh, a hold co. So it's not directly the,

the retail or the retail business that we bought is just a, a DBA of it, essentially. It's just underneath it so that we can then add more brands on top of it once we put it in. So it all roll up to that, to what the business my wife and I own. So that's the end goal is to all roll up under that one LLC. So, I mean, I think, I'm sure everybody listening has their own opinions on retail, right? You know, the future of the internet, the future of not the, you know, the epic tuck of war between the internet and bricks and mortar retail. So I think that's a rather kind of tired topic. And rather than digging into that, I wonder if it's more interesting to just ask,

what is it like to own a retailer? You know, a business where if you are not open, if there's not someone there to literally ring the register, you are not making money, right? You know, if someone calls out sick, you're behind the register. You know, a hurricane comes and, you know, a tree falls in front of your store, like all that stuff. You know, what's it like to actually own a register?

a retail store. It's the hardest part of owning retail store is the the cash flow piece of it, because every time you're, you're getting a windfall to sell inventory, you then have to then start paying for the next inventory. So like we're buying inventory right now, not just for summer, but we're also buying it for fall at the same time. And so you got to plan ahead your cash flow in that regard. And so that's a little bit tricky because you have Walmart. I mean, they have huge leverage with their vendors. They can get you net 90 terms if they want to. When you're a smaller retailer, you don't have that kind of leverage. And so sometimes you're just, you have to pay for inventory when it ships. And then it ships to you. And then it's sitting in,

it's sitting in our storage unit or it's sitting in the back or something like that. And that's one of the reasons why we're going online to be able to get kind of that relief valve is how I like to explain it. It's, it's a way to get stuff that's not out on the floor, there's no room or anything like that and be able to actually start pushing to get that money coming in faster because that's how you grow. You have to get that money coming in faster if you're paying for inventory now, but you're not getting that dollar back for 60 or 90 days. It's really hard to then invest in something. And so in terms of the the employee side of it, my motto with hiring people is I'm always going to, I'm never going to try and cut costs with

our employees ever. It's never going to happen. I'm never going to cut their hours. I'm never going to cut anything. I actually try and I push them to go for more, go for more hours ago or push to ask for more and raises and stuff when they reach certain milestones and whatnot. And so my manager shall say, hey, I just met this person, but I don't think I have enough room. She's great, but I don't know if we have enough room on the staff. I say, just hire her. We will figure it out. In this environment, you just got to, if you find a good person, you just got to run with it. And you'll, you, you figure it out later. And, and so, in retail, there's usually a lot of turnover. But we have a staff of about 10 and we haven't lost

anyone. Everyone stays and everyone's excited to be there. And so when you say, hey, you have to go and do the register. If someone calls out sick, it's like, no, we've, we've gotten enough people that they're all excited to be that they all work with each other that that's never happened i've never checked anyone out my wife only check people out if she's bored and wants to go hang out in the store for a little bit but we're not ever having to be that hands-on uh day-to-day people which is which is what we want so that we can focus on the big stuff i uh i have a game that i play with my wife which i think she doesn't think is very fun but every time we are every time we are in a you know like independent mom-pop on retail store, I try to guess how many dollars in inventory they have sitting on the shelf.

I just look around and I'm like, oh, my God, the working capital in this room right now. Right. You know, especially if you go into like one of those like really well done toy stores where it's just like floor to ceiling toys like wall to wall to wall. And like those are the best stores to shop in. Like a really cool experience. But I just walk in. I'm like, oh my God, there are millions of dollars right. on these shelves and how are they financing?

You know, this is their entire net worth, probably, right? Is of the owner is sitting here right here on the shelves. So like I said, my wife thinks it's stupid, but I do it. I torture her every time. Like how, like, how, like, you think this is 500,000 of toys or whatever? Or plants or whatever store we're in. She's like, oh, my God. I'm divorcing him.

But it's, it's so much fun, though, to own it. That because, especially when you're in, in like, our town. people know who we are. They know like, oh, those are the people that own that store. And we love going there. The staff are so nice. You put on great events. And so you suddenly become a fabric of the community a little bit. And yeah, I mean, it's a lot different than doing like a service business. A service business, you're getting cash right away and all you're managing is contractors. But I mean, I do a little bit of, I kind of balance it a little bit. And so I enjoy it. I think, I think it's a lot of fun.

Super good. Cool. So, good. Well, Joe, thanks for being here. You killed it. I really appreciate you talking about your journey to buy the business and how you're putting together a Holdco. So hopefully all the nerds that listen to this that want to get into the Whole Co can see how

you're approaching it. And it's not as risky and crazy as you think. You just get into one business and then you get into a second business and you get into a third business. And maybe keep going after that. So thanks again for being here. Great job. Thanks, guys.

Thanks guys for having me. I appreciate it.