Acquisitions Anonymous - #1 for business buying, selling and operating - Let's get rich pumping poop! - Acquisitions Anonymous Episode 132

Episode Date: October 14, 2022

Want to receive this listing in your inbox? Signup for our weekly newsletter:https://www.getrevue.co/profile/acquanon-----Michael Girdley (@Girdley) , Mills Snell (@thegeneralmills), and Bill D’Alessandro (@BillDA) discuss a very cheap Mobile Pump Out Business in Washington State. We will get a deep dive into how this deal works and why this deal is so cheap. We will also consider if this business has a chance to increase its charges considering the number of competitors in the field.Moreover, we would like to talk about how this business can double its revenues. Lastly, we will be figuring out some funny yet interesting strategies or schemes this business can do to make more money than they are making today.-----Thanks to our sponsor!Live Oak Bank - Whether you’re looking to build, buy or expand your business, let the team at Live Oak Bank be your financial guide. With Live Oak, you get a partner who believes in your success and is willing to take the journey alongside you. We provide small business loans tailored to your goals.Fuel the growth of small businesses across the country; bank with Live Oak Bank.You can contact Heather Endresen, Director & Founder at [e-mail]. Mention this podcast in the subject line and ask her about office hours to get in touch.*Live Oak Bank is the #1 SBA 7(A) Lender. The data supplied by the SBA reflects 7(a) highest dollar volume during FY 2021.-----Show Notes:(00:00) - Introduction(00:45) - Our Sponsor is Live Oak Bank(01:53) - Deal & financials: Mobile Pump Out Business (06:10) - What is included in the deal? What are they selling?(08:07) - Is there pricing power here?(08:58) - When do they make the bucks?(10:38) - What is Bill’s first move when he buys the Business?(11:35) - Would we buy this for our kids?(15:28) - How do you double revenues in a Mobile Pump Out Business?(16:10) - What’s a Funny yet Interesting Strategy for this Business?(17:00) - What is the Cookie Company war in Utah?(19:00) - Who’d buy this?-----Additional episodes you might enjoy:#131 People are getting rich with Med Spas. Will we?#130 Should we buy this Vegas Wedding Chapel Chain?#128 Who should buy this $4.4m EBITDA, cashflow machine?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]

Hey, everyone. Welcome back to another episode of Acquisitions Anonymous. I am one of your hosts, Bill Dallisandro. And today, everybody always accuses us of pooping on the businesses on this podcast. So we've got a poop business this week on Acquisitions Anonymous. So I think you'll enjoy this fun episode. It has both poop and boats. In the meantime, though, if you are enjoying Acquisitions Anonymous, we would really appreciate it. If you would subscribe to our newsletter, you can find it on our Twitter profile, Twitter.com slash ACQU Anon. Or if you would leave us a review on Apple Podcasts or wherever your podcasts, you get your podcast, we really appreciate it.

It helps more people find us and helps us stay in touch with you. So without further delay, let's get into this week's episode of Acquisitions Anonymous. This episode is sponsored by Live Oak Bank, the number one SBA lender in the country by dollar amount. But they're more than the top SBA lender. They also provide USDA and conventional financing, tailoring each loan to their customers' unique needs. Whether you're looking to buy or expand a business, let Live Oak be your financial guide. With Live Oak, you get a partner who believes in your success and is willing to

take the journey alongside of you. LiveOak's M&A financing experts lend across many industries nationwide. They also have over 30 industry-specific teams whose lenders are experts in industry-specific small business loans. Some of these include health care, seniors housing, and service contractors as well. With their dedication to efficiency, collaboration, and in-depth knowledge of M&A financing, they'll take you where you need to go. Visit live oakbank.com slash AA and make sure that's a lowercase A and another lowercase A to connect with a lender today. So again, that's live oak bank.com slash AA with two lowercase A's to find out more about Live Oak and to connect with the lender there and tell them that the acquisitions anonymous folks sent you along. Thanks a bunch. All right.

go. There is a very crappy business today on Acquisitions Anonymous. Cool one from BizQuest. It is a mobile pump out of your boats, and Michael is going to read this one to us. Okay, so I have about a million dad jokes about this poopy business, but I will refuse to make them. So here it is. It's from BizQuest, and it is a mobile pump-out business serving Anna Cortez, Skylide, and LaConnor. If you don't know where those places are, they're in Washington State. And I know that because the listing says they're Washington State. It is near a place called Skagit County. So I assume these are just like random, like coastal areas near the Pacific Ocean.

They're asking $150,000 for this business. It does $100,000 a year in revenue, $75,000. thousand dollars in cash flow and that's parentheses sellers discretionary earnings it has furnisters fixtures and equipment seventy five thousand dollars so i assume that includes boat and all kinds of stuff um the business description is the following it is a boat um called sanitation offloading solutions sOS and that boat provides a holding tank pump out service to boats and an accordis skyline and like Connor, blah, blah, blah. This business was bought three years ago and was formerly named Pump Me Out and has a long track record of revenue with excellent growth opportunity.

These business names are hilarious, by the way. This is pretty pump me out. Who names their business that? Anyway, okay, about the business, two employees. It includes all equipment, including the pump out boat in the price. The boat was repowered last year with two brand new outboards. There is no competition in the area and the growth opportunities are numerous. Excellent growth, as this has not been the focus of ownership. It could be made more of a focus doubling revenues would be very doable. The business reason for selling is that the business was purchased as a good job for owner's children and both are done. I wonder what both are done me. Both are done with college. The dad is done with the kids. Business always purchased a good job for owner's.

there's college children, both are done. I would think they're done with college. I'm hoping. Okay, cool. Cool. All right, training and support, they will provide you to operate the poop scoop for both the job and the scheduling billing as needed. It has been viewed.

I love how this brokerage shows how often the ad has been viewed 313 times. So it leads me to believe this is not that hot of a deal. So anyway, we have this poop boat that it looks like this might actually be the picture of the real boat. Do we think this is a picture of the real boat? Definitely, because you can see the literal poop emoji logo on the boat matches the poop emoji logo on their website. It's really interesting. This is a really, it's really interesting as a business to buy for your kids. And then it looks like a kid, a young man, let me describe it with a very expensive sweatshirt on, like a $200 sweatshirt and a man bun, and then a purebred dog in the cabin.

So all very consistent with the idea that this was something. some dad decided his kids needed to toughen up and he's like, okay, kids, get out there and pump some poop. I love it, though. Like, you could have bought them like a club or like some like, you know, business that probably fit with their personalities. Like, no, you're getting on this boat and the salt water pumping out poop. Go.

And they did it, I guess. Well, I mean, the other thing I'm blown away this picture of the thing is this kid with the man bun has no protection on. Like I would have like whatever, whatever is above an N95 mask, like an N95 I would have that on. I would have like four inch thick neoprene gloves on. Like you are, I know the stuff that ends up in human waste,

and I don't want that anywhere near me. Anyway, and then the lab. Do you think you get the phone number if you buy this business? Because you see it's something like 1877, SOS dash number two, num two in UM2. If you don't get the phone number,

the price gets cut in half. SOS num two. So for, if you're listening, and you're not a boat person. So what this is is if you have a boat that is nice enough to have a bathroom on it, which maybe there are a lot around Washington, all that Amazon money up there and Microsoft money.

But if you have a boat that is nice enough to have a bathroom on it, it does not just flush the poop into the harbor, right? It flushes it into a holding tank, which fills up over time. And eventually you've got to pump that out because it is illegal to dump it into the harbor for obvious reasons. So you need someone. someone to basically putter over to your boat, hook a vacuum up to your tank and suck it out

into their bigger tank and then who knows what happens to it. So that is what this business does and they charge you kind of per pump out. And we went to their website and their pricing is for a less than 50 gallon poop tank. It is $40 for a pump out. If it is more than 50 gallons, it's $50. And then if there's multiple tanks on your boat, they charge you $10 for extra tank. You can also subscribe, here we go, to a weekly service for a live-a-board boat that is $125 a month. So that's, you know, you would need this kind of every time you came back from a big trip.

You wouldn't need it every single time or you probably, it's one of those things like when it gets full or like every month so your tank doesn't get really nasty. So that's what this is. so cheap. It is, seems very cheap, especially considering the boats that they are probably pumping out

are worth a lot of money. And then how are they, yeah, how are they going through and like scheduling this and stuff? Like, do you have to be like on, so,

so if I understand this right, somebody sits by the boat and then if you have a holding take less than 50 gallons, you call these guys, and then the person hops in the boat, drives over and pumps it out, that's the business model here.

That's the business model. It seems like they schedule them in advance a little bit because they have a price here for any emergency pump, which is $125. We're overflowing. Get here now. This is a true SOS. Yeah. So I read the website and it seems as though they service a couple marinas. And it seems like we'll be in your marina on Tuesday. You know, tell us if you'd like to be pumped out. And it seems like they get everybody. And that's why the emergency pump basically includes a trip charge, I would thank to your marina. Man, I just, I mean, just rough modeling, making a living doing this. Like, the boat itself, right? They just paid to redo all the engines. Like, so that's probably another 10 grand in engines they just did. How many poop pumps do they have to do a day to make this thing profitable? Like, if you, it just, just the math on the labor, right?

Let's say it takes you 30 minutes to drive over and pump out 50 gallons and then go offload that someplace. Okay, so you can do, let's, you're doing 80 bucks an hour in revenue with this boat, eight hours a day. Like, then you're paying somebody $25 an hour to drive the boat and then all of the overhead. Like, I just don't understand how this business makes any money. It's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, like, you know, 15 or 20 back to back to back and you don't have the drive time. I think that's the only way they can do a bunch in one.

And then they have a big enough tank that they probably can do 10 before they, they offload it, you know, offload their own or whatever it may be. So this is interesting here. Great point, Mills. This is interesting. How will I know when my boat has been pumped? Look for our SOS sticker. Don't worry, it's easily removable with a pump out date as well as a roll of toilet paper.

So, okay. That's smart. That is awesome. By the way, this is the first business we've ever looked at that throws in a free roll of toilet paper when you visit there. So by the way, I think we'll do this again next week because we'll cover an olive garden. See what I'm doing there? All right. Anyway, I noticed you did the Olive Garden is terrible. I don't, it's terrible. I just want to say that. Like, you would say that. People poop on me liking chilies, but anybody who thinks the Olive Garden is good, like, you should just leave America. Like, I'm done with you. Anyway, go ahead. Okay. Sorry. So, I mean, the first thing I would do if I bought this business is increase the prices. I mean, if I need to drive to my boat, get in my boat, drive it to your marina and pump.

your poop out, that's going to cost you a lot more than $125 plus tax. You know, that's going up significantly. Less than 50 gallons, 40 bucks to pump out the poop. And then more than 50 gallons, it just becomes randomly $50. I think there's probably some opportunity to optimize the pricing here for sure. The other thing that jumps out at me, though, is you have to work this business. Like, this is the definition of SDE, right? This business has $75,000 of cash flow with, parentheses, seller's discretion or earnings in the listing. So you buy this quote-unquote business, like now you have a job that pays $75,000 a year pumping poop, right? I mean, this is buying a job, straight up. What's also mind-blowing about this, you know, I just did the rough

in back of the envelope gross margins and stuff, calculation. And like, they say they have no competition. It's like, why haven't you raised the prices? It's just, it's mind-blowing. But also, I maybe that's where we should go next, is the seller context here is fascinating and also something I'm never going to do, which is, it appears dad, who probably is a pretty wealthy person, has decided he wanted to harden his children and bought this poop pumping boat for his kids to go be professional poop pumpers while they are college kids and putter around, empty out feces, and graduate from college being more in touch with reality. Um, just,

Have you guys heard that thing that Chris Saka's parents did? Uh, he talks about the sweet and sour summer. I guess in high school maybe every summer, his parents would help line up like two jobs. Half the summer it would be like working in construction or, you know, something that's like grueling and terrible. And the other half of the summer, he would like shadow a lawyer or a doctor. And so right away, he realized like, I need to make decisions. that, you know, take me in this path, not this path, but they called it the sweet and sour summer. This dad is just like, you're going to have sour summers all, you know, and maybe not just the

summers year round throughout college and this is how you're going to pay your tuition by, you know, pumping poop. I actually like it, Michael. I would totally do something like this for my kids. I like it too. It's, and it could, I mean, it's not like, all right, it's not that bad, right? Like you have to, like actually in the tank. Right.

It's just a pumping thing. Look, well, okay. Okay. So here's, I think, a slight difference. I have teenagers. You guys do not. So I would be curious to revisit this. If you feel the same way about this,

10 years from now when your little ones are 15 and, you know, telling you, shut up, dad, because they don't, they don't hear your ideas. Fair point. My kids talk back, but not. not in a teenager way. The oldest is eight. Have you ever tried to spank a 16-year-old? It doesn't go as well as you think.

I mean, I kind of think about this, though, like this dad, to your point, Michael, like he bought this business. And let's just say maybe he got a good deal and he didn't pay, you know, two times. Maybe he paid like one times or one and a half times. After, you know, paying his kids or maybe they didn't even get paid, Maybe they just paid for their college or something with the proceeds. But, you know, he puts two new engines on the boat. I'm like wondering, did he recoup his investment, you know, in his hold period?

And now whatever he gets for this is just gravy. Not financially. His investment was that his kids pumped poop for a couple years. He got that. Now he doesn't need the business anymore. Yeah. But you know what I mean? Like, did this guy get made whole?

I'm just, I'm wondering. There is no way this thing cash flowed $75,000 in the past 12 months. There's just no way. And maybe this is also Seattle, you know, Pacific Northwest. So it's, you know, it's probably the boating season is what, four months for pleasure boating because the rest of the year is just too terrible to be out on the water. But like, I bet you there are a million hidden expenses that this like this perform of P&L here doesn't include.

Like I bet you, I'll bet you dollars to donuts, this bono, this boat is on dad's boating insurance. There's no way it's been treated professionally. Very possible. So it says twice in the listing that there are multiple growth opportunities, excellent growth opportunities. If made more of a focus, if your kids weren't also trying to go to college and not wanting to do this, if you focused on this revenues could. would be very, it says doubling revenues would be very doable.

So how do you double revenue in a business like this? Double your prices? Just raise the prices, right? That'll be $5,000. You buy another boat. That's the only way to do that. No, we already covered it's way too cheap. They say they have no competition.

They're basically charging subsistence rates. That's my question, right? So they got no competition. They're covering, you know, three marinas. or whatever. I think just that's the amount of poop in these marinas, right? So you can't. There's just no way to get more poop unless you go to more marinas and maybe you need more

boats. So hilariously, one time a person who is related to me wanted to go after a certain competitor in this particular business. So he started a competitive brand that sounded very much like the competitor's brand. And so basically he was like the guy that, you know, you get off the cruise ship and you walk down the pier and there's like six T-search shops and then you discover they're all owned by the same person. Like I think you could do the same play here, which is you go and you get another boat and you make it like the sworn enemy of this boat and you have them have like price wars and all this stuff. But in reality, they both just charge really high prices. They're like flip each other off as they drive by in the marina, like throw some poop at each other.

Underdief that they all that's what all those cookie companies are doing in Utah. Have you guys seen that? No, what's going on? Apparently in Utah, there's like these cookie companies that are, you know, calling each other out, taking out billboards against each other. And, you know, it's become like very, very dirty. Like the gloves are coming off and they're accusing each other of like, you know, defamation or copyright and.

fringe men or like trade dress and there's like all these different things but it reminds me of this like you could create sOS two or something and just almost make it your marketing is like that you're competing with them but this is the thing this type of business it almost doesn't work financially if you have to buy a new boat the only way it works is if you have an old boat that just cost you you know a fifth of the price of a new one yeah do you think this 150,000 includes uh the boat at an original cost, our current market value for the boat? I don't know. Zero.

I just think it's hilarious that, like, usually, you know, it's like real estate included, not included. And, like, in the subtitle, it says, you know, price includes the boat. No, it says sanitation offloading solutions is a boat. Like, you can't buy the business without the boat. Like, this is a boat for sale. Do you remember, do you remember we, maybe it was you and me emails, we reviewed, uh, you know, an operating tour company, I think in Tampa or Sarasota or something like that.

And it was like, okay, you buy this boat, you live in the boat. And then people come on to your, get off the cruise ship, they come onto your boat. And so basically the price of the business was how much it would cost to own the boat. Like that's basically what it was. So it feels like the same thing here. Man, I bet you, I just, this cash flow number is just so high. Like, it's just not real. I bet you when you did.

I think the only scenario where this. deal makes sense is if you own one of these marinas. And you're there and you already have staff and you're already used to the lifestyle and the seasonality. And you're like, this is easy. Like, we've been paying these guys to come do this anyways. We can do it for less if I own it. And, you know, there's got to be something like that. That's the only scenario. So I think, I think in a lot of cases, Mills, that is how this industry is structured. That the marina just provides it as a service and then you pay for it. You know, just like the marina. sells gasoline, they sell snacks and stuff. They also pump you out. So I think that's pretty common.

I will say, though, like this business is a small, it's one boat, it cashless $75,000 a year. We've been pooping on it, no pun intended. If you were to show me a SIM for a business that was 10 times this size, you know, had a couple boats with servicing a bunch of small marinas, I kind of like that business, right? I mean, you know, talk about a business that's never. going anywhere. Like until people stop pooping in boats, you know, they're going to need to be pumped out, right? So this is a, if it were bigger, uh, and you had a little bit of view on, you know, is it defensible? The marinas can't just start up a boat and compete with you. Maybe you have contracts with the marinas that you cut them in and they can't or whatever.

You know, I could see this being a great business with some scale. Yeah. We talked about it. I think it's open by there's one that's owned by Progressive and I think another one's owned by Berkshire, the, the towboat. Have you guys seen those? Yeah. Like just an amazing business. Like, oh, hey, you're broken down? That'll be $1,000. You know, it's just like, it's just some dude with a rope and two onboard engines.

Michael, it's better than that. You subscribe. Yeah. You pay, you pay a membership fee to Cito and they have badass boats that will come see. That is amazing. That is amazing. That's the best business ever. It's the best business ever.

And that happens all the times. Like, occasionally I'll just be like stumbling along and I'll be like, This is a freaking amazing business. Like, the world needs to see this. It's just why I have a newsletter, by the way, that we're just, that's business like this. But when I saw yesterday and it was just crazy, you know how, do you know how when you go into hotels and they have, like, the phone in the room, right?

And it has, like, the little custom number pad, like, that says call zero for the operator and all that kind of stuff. And it's specific to each hotel. Turns out there's a company in Denver that, like, just does all of those. Like, if you want to get those printed, that's who you go to. So they do all, like, the little random printings and cards. and stuff like that. I was like, this is freaking awesome. Like, you just become the supply for that one particular thing.

So anyway, I don't know how we went from one poop boat to printing phone labels. But man, yeah, if you had like a chain of poop boats, that would be much better. But you also have the real estate, I mean, the geography problem here, right? Like, if how many poop boats, you know, do you need them every 50 miles, every 30 miles? Like there's, it's got to be hard to get efficiencies and economies of scale getting bigger kind of like the towboat stuff that we just talked about. I mean, yeah, sure. And this business isn't big enough to have multiple employees per boat and to have that redundancy. So, you know, if your employee calls out sick and it's not your kid and you can't compel him to go, you know, work,

then what do you do? I mean, somebody has to have their, their poop pumped or else they're going to be, they're going to go find somebody else. As assuming there is somebody else. I think that's the key. Like, this is, if you don't get out there, just we pump your poop tomorrow, deal with it. you know, that's, that's a good business. And I don't know. Like one of these boats say costs 100 grand. And if you're in the right places, it could cash flow 100 grand a year. Like, yeah, it's CAPX, but it's not crazy CAPX.

Yeah. This all, when I did, when I would dig into this, I would just start with, can I raise prices? Because I think if you could raise prices to where you say you double this to where you're doing 200,000 a year, you could have one very good employee that you manage who is able to handle all the fulfillment. And you could pay that person really good money. working five or six hours a day. And then the rest of it, you know, does pretty well. But at these prices, scares the crap out of me.

No pun intended. And maybe we should leave it at that. It scares the crap out of us. All right. Thanks, y'all. That's it for another episode of Acquisitions Anonymous. If you could please join our newsletter and leave us a review. If you like this, we send out all the episodes via email if you're not a Twitter person,

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