Acquisitions Anonymous - #1 for business buying, selling and operating - How One Tweet Led to One SMB Acquisition! - Acquisitions Anonymous Episode 80

Episode Date: March 25, 2022

If you liked this episode, subscribe to our weekly newsletter and receive new episodes, offers and learnings directly to your inbox every week:https://landing-newsletter.acquanon.com/----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!Fleetio's suite of cloud- and mobile-based fleet management solutions enables fleets of all sizes to automate fleet operations and manage asset lifecycles. Users can instantly access and update data regarding planned and unplanned maintenance, fuel, inspections, parts, and much more. Fleetio improves communication and streamlines issue resolution with its mobile app, email notifications, and reminders. Fleetio integrates with telematics solutions for automated odometer updates and DTC handling, and pairs with fuel cards to automatically log transaction data. Fully optimize your fleet by giving fleet managers, drivers, technicians, and other personnel access to the tools and information they need anytime, anywhere.Questions? Call us at 1-800-975-5304 or email [e-mail]—--* 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.-----Show Notes:(0:00) Intro(2:09) What is the story on buying a Business for the first time?(4:39) Why did you think this was a good deal?(8:08) How did you evaluate the business on ROI and mitigating risks?(9:56) The business was cheap, it was an asymmetric bet.(13:05) How did you evaluate Location potential and value in the deal?(14:41) You bought the business. What happened next?(16:45) Offline & online marketing strategies(18:00) Owner-employee relationship management and incentive plans to build salesperson loyalty(21:21) What size does the business have? Which are the business numbers?(23:32) Who is the CEO of the business? How much time do you spend weekly?(25:02) What advice would you have on someone trying to replicate your story?(27:36) Fleetio sponsor - Fleet management service - Check them out!(30:49) How does the retail store fit into the HoldCo strategy?(35:45) How do you consolidate your income streams?(37:23) What is your vision as a growth?(38:19) What is it like to own a retailer?-----Links:Subscribe 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]

All right, welcome to Acquisitions Anonymous. I am one of your co-host, Michael Girdley. 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 loved 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. I 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. 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 hold co. 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've 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? 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 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 the strip mall guy post that, I went on LoopNet. I'd been on LoopNet 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 Buy 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 seller, get her to agree to an LOI, and then tell my wife, hey, are you interested in doing this? And then, yeah, just within 40 days, we were figuring out how did you do? due diligence or anything there's 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 it's a brick and mortar store so 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 uh priced in your favor like how did you know that like what what what what what what was your analysis when you first saw the business so when in in 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, 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, they're, they're selling at 1x revenue or they're selling at 3x I bidda 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 Ibeda 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 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 is 2021. Things were opening up. I'm in a very

red state. So I see all the foot traffic that goes on around us. And people were, 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, 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 talking to e-commerce people, a lot of flatness kind of year-over-year, 2020, 2021, which was still great because we were still up huge from versus 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, 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, this, we're recording this March 15, 2022. This, 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, 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, that had a lot of positive to it. And, and, and, and, 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. What? And then you did like, 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 easy. 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, two years tops. So, I mean, that's a pretty – that's one of those investments where 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 EBTA. 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, 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, 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 ebida you point seven times ebidda for the business plus the value of the inventory did she just throw that in for free no it was all it was all in there um 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, 2019, 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 die, and 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, it's 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 one and a mile, 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.

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 things she hid from us was so 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 whole, she puts them on the hold co P&L and doesn't trickle them down to the 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 had from us. So just to pause there. So why, why do you think you didn't find that in diligence? Was that just because? Because she didn't show us the P&L of her hold coach. You would only show us the P&O of the store. Uh-huh. So what kind of expenses

was she rolling up? Like she had consolidated utility bills or shipping contracts? Yeah, utility bills. Some of the taxes, like in an inventory or rolled up in there. Some of the inventory

like I put them under cost of goods sold, like the bags that you put items into and stuff like that. 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 those were all, 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 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 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 the ROI on a lot of those can be pretty much zero at some point. And so we figure that out pretty quickly. And then what I also found with advertising online, and that's 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 our employee comes to our. rest and says she's been underpaying us for years we demand to raise or we're leaving and so we had to raise all the pay by but we have a great staff I love 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 and now she's making 23 so that so those are 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 with the workers and so it's 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, uh, 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 it. Like, are there any, have there been any things where you've done that with the staff where 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 alignment of interest there rather than just 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. 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 next week and so they'll get a special bonus on top of that just for working it because it's a very stressful day for them and so they get a bonus on top of that I also added so PTO days so if someone's a full-time worker they can get two weeks paid off 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 items. 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, our in-store manager is taking care of those,

a lot of that, which takes a lot of it off our plate, which is also why we want, also why we want to keep her happy and pay her well and all that. So she she kind of takes 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 you rolling. Cool. So one final question that 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. 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 lot. It's going to be a little bit harder 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 that 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 it 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 and so many, even if it's nominal.

Exactly what 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 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. And that's so impressive. So kudos to you. Thanks for sharing that. 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 Fleedyo. 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 Flitio. 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 fleaio user. So fire away. And don't hold back. Don't hold any 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 too much. But, you know, I was 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 a fleet management software. Yeah. So Aquasiel, 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, we have in-house maintenance, which I know Flitio works both ways, but, you know, anytime a truck had a problem. We'd 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 just through sheer grit, 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, Fleetio, we're

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 a ring. And, you know, if they mention 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 co-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 close some, they're really small. They're not huge vendors. A lot of them are hand-to-mouthed.

And 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, 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. 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? He said it wasn't for sale.

I mean, it's a lot of bills. It's a lot of stores on it. You know what I love about you, Joe? I'd love to own the underlying real estate. You are fearless. It's freaking awesome. You know, 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.

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 market. And that's, that's how I am. I got to, I got to find those good deals. Yeah. 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 a 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. 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 since we're required now we're being rolled up into a large hold co of and software companies. And so 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 whole code so you can move capital between them? I think people are probably interested about in structuring. Yeah. So I am, so my wife and I, we own the real estate and 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, 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 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, the retail business is set up to be a holdco. So it's not directly, the retail or the retail business that we bought is just a DBA of it, essentially. It's just underneath it so that we can then add more brands on top of it. it once we put it in so it all roll up to that to what the the the business my wife and I own so that's the that's the end goal is to all roll up under that one one LLC so I mean I

think 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 was 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, 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 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 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 do 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 because 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 in 60 to 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 in 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 figure it out later. 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 gotten enough people that they're all excited to be there, that they all work with each other, 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 day-to-day people, which is what we want so that we can focus on the big stuff. 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 in a 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.

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, 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 it. But it's, it's so much fun, though, to own it, that because, especially when you're in, in, like, our town, now 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. So I enjoy it. I think it's a lot of fun. Super cool. Super 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 hold co um so hopefully all the nerds that listen to this that want to get into the whole code can can see how you're approaching it and it's not as risky and crazy 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 uh thanks again for being here great job thanks guys thanks guys for having me i appreciate it