Acquisitions Anonymous - #1 for business buying, selling and operating - This 19-Year-Old Surf Shop Makes $315K/Year — But Would You Buy It?

Episode Date: April 11, 2025

This week the team breaks down a 19-year-old e-commerce surfing accessories business with $3.4M in revenue and $315k in profit — but is the $1M asking price plus $1.5M in inventory worth it?Business Listing - https://synergybb.com/listings/established-helicopter-installation-company-in-mo/Sponsors:⚙️ This episode is sponsored by Inzo Technologies — IT solutions built specifically for small businesses and acquisition entrepreneurs. Get a complimentary IT audit of your target business at: https://inzotechnologies.com or email Nick directly at [e-mail].💸 This episode is also brought to you by Capital Pad — the marketplace connecting acquisition entrepreneurs with investors. If you're looking to raise capital or invest in small businesses, visit: https://capitalpad.comEpisode Description:In this episode, Bill D'Alessandro, Heather Endresen, and Mills Snell dig into a fascinating 19-year-old e-commerce business selling surfing accessories. With $3.4M in revenue, $315k in profit, and a $1M asking price (plus a whopping $1.5M in inventory), the team debates whether this old-school online retailer is a smart buy or a capital trap. They discuss Amazon dependence, inventory consignment strategies, growth opportunities in marketing, and the risks of low-margin e-commerce models. This is the quintessential e-commerce deal breakdown!Key Highlights:Overview of the 19-year-old surfing accessories e-commerce business$3.4M revenue with $315k in EBITDAThe challenge of $1.5M in inventory and low marginsWhy consignment inventory might be essential to closing this dealBreakdown of Amazon vs. DTC revenue mixMarketing opportunities: email lists, Meta audiences, SEORisks of thin-margin resellers vs. owning your own productsFinancing challenges with SBA lenders and consignment inventoryHow lifestyle businesses create opportunity for acquisition entrepreneursBill’s real-world insight on consignment deal structuresSubscribe 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]

The average order value has to be so small. You know, with that level of skews and the type of stuff we're talking about. Now we're talking two and a half million dollars. That's seven something multiple. So on a business that's got a 10% margin. So right there is kind of my biggest problem. This is the problem with all e-commerce businesses that don't sell their own products, is that your gross margins are low.

So you have to tie a bunch of capital up in inventory. Full set, accuracy is none. We don't have 100%. Hey, everyone. Welcome back to another episode of Acquisitions Anonymous. I am your host, Bill Dallessandro, and this is the internet's number one podcast on buying, selling, and operating small businesses. I am with Mills Snell and Heather Anderson today, and we have a deal that Mills found from Quiet Like Brobridge, who is in my opinion the best e-commerce broker on the internet. It is a 19-year-old surfing accessories business. And 19 years in e-commerce is like 100 in real years. It's like dog years.

There's a lot to like about this business, but we also had a lot of questions about it. Really interesting. And I thought kind of was like a perfect example of a quintessential old-school e-commerce business that could be bought and have a lot of energy injected into it. It has $315,000 of EBITDA, $3 million in sales. I think you're really going to like this episode of Acquisitions Anonymous. Okay. So everyone knows that one of the first levers you want to pull in an acquisition,

is updating their technology, updating their systems that might still be running on a spreadsheet or even on pen and paper. But tech is complicated. There's a lot of solutions out there. So choosing the right cloud platform, the right CRM, the right telephony, compliance, cybersecurity, not to mention implementing all that stuff. That's a job in itself. And I want to tell you about this week's sponsor, which is Nick Acres and Inzo Technologies.

So Nick actually knows about all this firsthand. He is a former searcher himself and bought Inzo Technologies, which is an IT-Firm. firm for small businesses. So Nick has seen the tech challenges that searchers face when acquiring businesses. He's seen him up close firsthand because he is a searcher. Now his team at Inzo regularly works with searchers on acquisitions, offers a complementary IT audit of your target so you can make a plan for what you're going to do on day one. Nick takes a personal interest in all of their searcher clients and draws on his own experience in the search base. And his business, Inzo, actually dates back to 1989, even before he acquired it. So the company has deep expertise for managing the tech for hundreds

and hundreds of small businesses over decades. So if this sounds like something that would be helpful to you, check out Inzo Technologies.com, I-N-Z-O- Technologies.com. Or you can just email Nick directly, Nick at Inzo Technologies.com. Happy Friday, everybody. As of recording, it's happy Friday. Yes. All right. I love our Fridays. Every business such a good mood. And Heather wakes up bright and early. Yeah, I don't love our Fridays because it's very early on Friday that we record. But I'm here and I have my coffee. My office in Columbia is in the epicenter of where they throw St. Pats in Columbia. And so like they're erecting stages and like the beer, you know, buses are rolling in and like it'll all just be like green beer and like, you know,

12 hours. Yeah. Cool. Well, I have a couple interesting deals for us to potentially talk about. I found I was starting to look, we had a listener reach out to say, hey, I really like the podcast. I'm thinking about selling my business. Do you know a broker in a certain area? So I was kind of going through my Rolodex and trying to see who I knew in that area. And I came across this website, though, that is like a, I think a cheaper version of Biz by Sell and came across a bunch of just ran. of interesting listings like explosive high growth eBit.ecomers direct to consumer toy company

a gold mine reserve in Utah for $55 million. Okay. A medical diagnostic lab in Florida. I mean, just I kept finding stuff and I was like, this is amazing. How many deals are we going to do, Mel? Should we roll them all up together? Yeah, we're just going to roll them all up. They're all unrelated.

But, you know, despite having all that. I also came across this e-commerce surfing accessories business that I've been waiting, Bill. We haven't been on the recording recently together, and I thought we have to have, we have to have Bill for this one. And Heather brings the California perspective, and here I am just in South Carolina. And I don't, you know, I've surf before, but I wouldn't, I wouldn't consider myself, you know, pro. So are you guys ready for this? When I, when I think of, you know, surfing experts, I do think of Heather Anderson. and she is clearly a hardcore surfer dude.

That's incorrect, but I do have friends that surf, so that's close enough, I guess. And you're probably like in, I don't know what their dispersion of customers is like, but if these are accessories, you've probably seen them walking around, you know, and being used. I probably have. That's true. This is shocking to me. It's a 19-year-old e-commerce business. Bill, how many, I mean, how many of 19-year-old e-commerce businesses are there in 20?

That's like a 100-year-old regular business. This business is 100 in e-commerce years. And it's a surfing accessories business with premium domain name and low workload. The revenue right now, what they have is $3.4 million, and they're making $317,000 in, they just say income. I'm assuming this is net income. and they're asking a 3.15 times multiple. So it's a million dollar asking price plus inventory. It says launched almost 20 years ago,

the surfing accessories online store is ripe for a new owner with marketing expertise. The business is the best online store in the world in the surfing vertical. They offer the best selection prices and customer service. It's multi-channel with 80% of revenue coming from Amazon and the remainder coming from their main URL and eBay. Amazon has continued to grow year after year.

The seller is carrying a million and a half dollars of inventory and stocks just under 30,000 skews in his 4,000 square foot warehouse in Colorado. Sellers willing to consider the inventory to be sold on consignment to a qualified buyer bill. This is just as it's like oozing with stuff that I can't. Oh, there's so much stuff to talk about here. Okay. He believes that one of the paths to more sales is carrying more items from industry brands. Stocking more options has led to more sales for his business over the years. Two employees in the facility run day-to-day operations of the warehouse.

The seller works part-time in the business. He usually arrives for an hour in the morning and a couple hours at the end of the day. As mentioned above, marking is a huge opportunity. They have a database with 80,000 email addresses, but they haven't sent an email in four years. This is so awesome. He has no expertise in areas like the meta-pixel in both capital. or other targeted methods that work with a defined audience such as, quote, surfers. He's an operator has done well because he understands that side of the business with an experience

marketer at the helm. The business could reach new heights. The seller will be an empty nester soon. He has decided to sell this business and try some new adventures. And Brad Whalen, who I know we've looked at some of his deals before and we've said good things. So what do you guys think about this? Wow. this is the I would call this like the prototypical e-commerce old like 19 year old 100 year old in e-commerce

years prototypical e-commerce business for sale like just a couple of things really stand out to me one the age of the business which is great right I like that it's I like it's been around like you're approaching lindiness at this point you know 20 years old in e-commerce the sort of classic you it's niche focused and the kind of a statement from the owner here where he's got 30,000 skews and also believes one of the paths to more sales is more skews on top of the 30,000, which, you know, gives me a little bit of a heart attack because he's got 30,000 skews already. But in his 4,000 square foot warehouse, which these skews have to be tight. These are tiny, right?

Like, what got to be? But like, it's surfing. So I wonder how much drop shipping there is here. Because I just, I would be shocked. I mean, maybe it's possible. But like there's got to be, so this says surfing accessories business. I wonder if it's stickers. I wonder, right, stickers on your surfboard.

I don't know if it's like charms or something. Wax, maybe. Yeah, wax, cums. But like, I'm the first. to admit I'm not a surfer, but like usually when I see people out there surfing, they have a surfboard and some swim trunks and that's not a lot of accessories. So that's why I'm wondering stickers, you know, or maybe it's something, you know, that you used to carry the surfboards or, you know, bags or car mounts or probably all the above if you've got 30,000

skews. But he's also got one and a half million of inventory. So that means I don't think it can be stickers either, which is like six, I mean, six, six months of inventory roughly, you know? I mean, if he's at around three, assuming that's, you think that's cost or retail? If it's cost, then he's probably got like, he's probably got like nine to 12 months worth of inventory. Maybe. So I think this is a retail business, right? I don't know that he's got his own skews or his own brands, right? His own product. I think this is a retail business because he's got 30,000 skews. And also his net margin is 10% here. Right.

And his net margin 10% and he's not doing advertising. I frequently see e-commerce businesses that are doing advertising with their own branded products at about a 10% even down margin. So I'm thinking what this is is retailer of not his own products, but also not doing any advertising, which they mentioned in the listing as a growth opportunity. So all these, to me, kind of scream retailer, reseller, right? And being that it is reseller and that many skews, it also, I would expect some component of dropship here. because you're not going to stock that many skews in a 4,000-griff warehouse unless it's stickers. And even if it was stickers, that's a lot of dollar value inventory.

So I wouldn't be surprised to find some blend of stock and drop ship here. Yeah. And I think if they were making, like if it was, you know, hey, we design our own stickers and, you know, we have somebody else print them, there would be at least some like mention of that dynamic. You know, I think it's just the average order value has to be so small. with that level of skews and the type of stuff we're talking about. I mean, wax, you know, a comb to like scrape the wax.

I mean, I'm just trying to think of like, you know, we talk about average order value for e-commerce. I don't know if this is a website, surfererswarehouse.com. I have no idea if this is it, but this is the top result for surfing accessories. So some of the things they sell fins on the bottom of surfboards, leashes to attach your surfboards. attach your surfboard to your wrist. Board racks, board bags, board repair, wax and traction, apparel, which of course we didn't think about, like that can generate a lot of skews as well. Suncare, surfing accessories include, so there's sunscreen here.

There's like patches for wetsuits. There's zipper lubricant. There's, you know, racks to hang your surfboards in your garage. probably like everything except the surfboard. So, I mean, that makes you think they've got to be drop shipping some of that stuff. In 4,000 square feet, you don't have, you just can't have that much stuff. You can't. I mean, I just like, I've run a lot of warehouses and that's not a big warehouse.

I mean, that is a, you are an incredible, which maybe this guy is an incredible operator. Like the density to get 3,000 square foot warehouse unless it is stickers is incredible. So you have to have some drop ship here. Well, and let's not forget, 80% of their revenues from Amazon. That's a good point. So they're using FBI. Yeah. So, but like, Bill, if you're doing that, you think the 20% of their revenue, which is basically $600,000, maybe $700,000, that's on their own.

com, they're shipping directly. But the majority of their revenue, you know, is just fulfillment by Amazon. Is fulfilled by Amazon or drop ship? Yes. I think so. which now they might be you know so if you're doing a lot of fb a fb a 4,000 square foot warehouse in Colorado becomes a little bit more like a prep and processing center right you bring stuff in you'll kind of kit it in the right size boxes you'll break it so you'll send it to all the different amazon

fulfillment centers and you'll sticker it as required et cetera so you don't have to hold a lot of it yeah um still though it's a lot of complexity at 30 000 skews i would be fascinated to know kind of the breakdown by skew by channel Right? Because like some skews probably rip on Amazon and don't sell on the website and vice versa. Which makes you think. I was noticing the multiple. At first it sounds good, 3.15, that when we add one and a half million dollars of inventory, which is more than the asking price, now we're talking two and a half million dollars. That's seven something multiple. So on a business that's got a 10% margin. So right there is kind of my biggest problem. What do you think, Bill? Yeah, so that's, I mean, I understand. I'm not ready to say this business is over inventory because to your point,

Mel's like this might be, it's probably a year of inventory. He's got 3.4 million of sales, right? So, let's see he's got a 50% gross margin. So that's, you know, 1.75 a year of cogs. He's got nine months of inventory, nine to 12 months of inventory, which is a lot, but not like absurd. So like I'm not trying to say this guy is over inventory. It's just the problem.

This is the problem with all e-commerce businesses that don't sell their own products. is that your gross margins are low. So you have to tie a bunch of capital up in inventory. So you've got, you know, 1.5 million bucks of inventory capital tied up. Maybe you can run a little leaner and get that down like 1.2. But you got 30,000 skews. Good luck.

Yeah. You're about to change the whole business model. Yeah. So like, I don't think you can squeeze it a ton. Like I got to believe the seller knows what he's doing. He's been doing for 19 years, which means you're making $317,000 a year on your $1.5 million. of capital tied up, you got a 20% return on the capital that's tied up in inventory,

which is not great. Yeah. You know, because you're going to have to finance that, right, if you're buying this business, right? And you kind of can't, you can't, like you look at this business, you go, oh, the asking price is a million bucks and I make 300 grand a year. That's a 33% return. But you can't count the EBITDA twice, right?

Like, it's because you're going to have to put capital in the inventory. So you've got actually like, two. $2.5 million into this, of capital into this, and you're going to make $300,000. Like, this is like 12% a year, which if you finance it with debt, Heather, like, what's it going to cost you? You can't. I mean, at seven multiple combined, the $2.5 million, you can only afford about 3.5 turns of SBA debt.

So you've got another, what is that, two and a half turns of equity. you have to put in. Yeah. So. Which you cut your equity demands a return as well. Right. Exactly. Right.

Right. And 300,000 is not enough for both. Right. And now, you know, in fairness, and I think, you know, in fairness here to Brad, the broker, I think he and the seller realize this, which is why they have offered to seller finance or do consignment for the inventory. The seller is willing to consider the inventory to be sold on consignment to a qualified buyer, which is great in that it helps you get the deal.

deal done, right? But you have to replenish that inventory. So like this is more of a financing vehicle than it, which is great and required. And, you know, they're right about that. But as you buy the inventory from seller, like this is functionally a short term note. Yeah. Right. Seller note. But you still have to with profits of the business or your own capital backfill that inventory as it sells through. So once you have chewed through all the consignment inventory, where you still are in a place just later, like a year or two later, but still you get to a place where you have $2.5 million of your capital in this business, and it has $300,000 of you adopt, which is fine if you're the seller, right,

and you didn't debt finance it and you kind of built to this inventory position over time, no problem. But it's a little tough as a buyer with new capital coming in. Bill, you have some experience with doing consignment type deals. you know, that doesn't come up all the time, but what are kind of the important things to be mindful of, like the pros and the cons of consignment? So overall, it's a huge pro for a buyer. And it's awesome that the seller and the broker here understand that is needed to get a deal done

here, which it absolutely is, to Heather's point, like you're just not going to be able to finance this with an SBA loan unless the seller helps you out on consignment. So in general, it's a very buyer-friendly term. is really great. The way it typically works, or I'll typically see it structured, just for, in theory, right, as you sell it, you pay the seller for it at COGS, right? So in theory, you would pay the seller every day. That's not workable. So the way I usually see it done is at the end of each month, you run a report that basically shows all the stuff you sold. And then you've got to compare it against the opening inventory. And you've got to like take the old.

opening inventory, each month you run a report for what you sold all the things that are on, because you sold some stuff that, you know, maybe wasn't on the opening inventory report. So like you say basically how you decrement the opening inventory report by the month sales until you hit zero. And then however much you decrement until you hit zero, you multiply by cogs and you pay the seller at the end of the month. And then there is also this scenario that presents itself where you go, hey, it's been 12 months, you know, or it's been 24 months or 36 months.

And you have some stale inventory that is still on consignment. What do you want me to do with this? I don't, you know, if it hasn't sold in three years and I still have $750,000 worth of your old inventory. Hey, everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called CapitalPad.

And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So CapitalPad is a marketplace for acquisition. entrepreneurs, that is people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest in acquisition deals. So if you want to back somebody buying a small business, CapitalPad is a place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors. So the really great thing, too, from the investor side is that CapitalPad takes care of all of

the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance, standardized distributions all up front in black and white. Basically, CapitalPad professionalizes investing in small businesses. And the returns can be really, really good. I'm so stoked they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right. So if this sounds like something that is appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out Capitalpad.com and tell them that Acquisitions Anonymous sent you. Yeah. So you usually see like an expiry to this because like, you know, you don't want to be

continuing to pay out the seller $100 a month, you know, while you continue to store this stuff also. So you typically see one of a couple different terms. You pick, you know, a year, two years, three years, some, you know, and longer is probably better, more reasonable for both parties, like two years or something like that. Because if you got more than two years of inventory, you shouldn't have had that anyway, and I'm not going to pay you for it. And usually what will happen is at the end of the consignment period, you can either say the title of the inventory reverts to the seller, but the seller is required to come get it. Right? Like, I'm not going to keep holding it for you. You better show up with a truck. And if you fail to show up with a truck in 30 days,

title reverts to me for free. Like, it just becomes my inventory. Can buyer and seller get in some fights over that at that point? Never. Never. Never. Never. Well, that's why you got to spell it out now, right? Because, yes, the fight will be.

Seller will say, you didn't try hard enough to sell my inventory. Yeah. Right? And buyer will go, I wasn't going to sell it out a loss, right? Like, I still got to pay you. Oh, that's another thing that is often in these agreements. You will pay the seller cogs or the sale price, whatever. is less. So this gives you the flexibility to blow out the inventory.

Mm-hmm. Right? And which seller kind of would want, right? It's better than zero. Yeah. So you want to kind of- But only if it's aged past a certain point. Can they do that?

I have, I don't usually put that in. I just, because you, but you buyer, you wouldn't want to do that anyway, because you're losing money too because you still have to pick it, pack it, ship, like, you still got to deal with it. Like, nobody's winning if you're selling it below cogs, right? that's not great. So you buyer, like it usually never comes to that, right? Usually it comes to, to Mills's point, it's two years old, you know, it's not moving.

Whose stuff is this? Right. And if it becomes seller's stuff, he's got to come get it. If it becomes buyer's stuff, then buyer can sell it below cogs and pay sell or nothing. Or buyer will bear the cost of disposing it, right? Which might not be insignificant either to. dispose a whole bunch of inventory or keep storing. So when you do a consignment deal, you've got to really think through what happens at the end of the consignment period if you've got

what is functionally junk, right? It feels like it has value because it was paid for, but it's also can't be sold, right? What happens to that? Because there's cost to dispose of it or keep storing it either way. So in that sense, consignment inventory can be sort of safer for a buyer and riskier for a seller because if you buy all the inventory with an SBA loan, for example, you're stuck with it. You already paid for it. And if you find out nine months into the deal that you've got a lot of obsolete inventory, that's your cost. You're the one that gets burned. Buyers get killed on this all the time if they don't realize that they shouldn't pay for obsolete inventory. So like to your point, Heather, if you're going to buy inventory up front, you as a buyer,

you're going to need to look at all 30,000. Now this deal is going to be structured consignment. But if it weren't, you a buyer would need to look at all 30,000 skews and the historical sales data on all those skews. And you'll typically see something like all inventory over 18 months of stock is going to be valued at zero. Yeah. So like you have this blended ratio to say, you know, in this business, I don't think there's really spoilage. Like if you bought a grocery store, right, like at a certain point, you got to throw stuff off the shelves. Yeah. But with this business, I don't think there's true spoilage except just that you would get.

get stuff that doesn't move. And so instead of paying, you know, par value for the inventory, you might pay 60%. And then a lot of times in purchase agreements, you've got kind of a true up, you know, at six months or something like that to say maybe somebody's held back in escrow or something on larger deals than this to go, hey, we found out that when we got in there and actually did our inventory accounts post-closed, you had a bunch of stuff that was really old that we didn't find before the purchase. Yeah, which is all stuff you've got to do when you buy inventory at front, which is why consignment

inventory is so elegant. It lets you get a deal done without financing the inventory at close and you get to negotiate this sort of what happens to all the stock nobody wants. You get to negotiate it in the sort of like future tense that people are less emotional about. Right? Who owns the inventory at close in consignment? Seller. Seller still owns it.

So if a lender does come along and try to do an SBA loan. on the enterprise value alone. They will not be able to their UCC filing, their collateral filing will not include the inventory. So that's a good point, Heather. You'd probably have to talk about that. Yeah. You know, you could also structure it as, you know,

like sort of like a contingent purchase agreement whereby buyer gets all of the, it's almost like a note that is the payment is calculated based on what is sold. Right. That's what a lender would probably require because they want to have a UCC on the business, which has to include the inventory at close.

That's a good point. So you need to basically functionally buy it with a seller note for, in this case, one and a half million dollars. But the term would be two years, let's say, payments calculated based on what's actually sold, the balance of the note for given at two years. Probably you'd end up with something like that. Yeah, that makes sense. which this is a great this is you know seriously kudos to the broker and the seller here for realizing

that this is the structure the consignment structure is needed in a business like this uh so you don't you just love to like the way that entrepreneurship works this this is in Colorado yeah yeah like this guy you know loved the sport loved things associated with it started a business and is nowhere near anywhere near to service it's It's amazing. What do you make, Bill, or good? What's interesting about that, Mills, is one of the stories from very early in my entrepreneurship journey.

I was living in Denver. And I was doing acquisition through entrepreneurship kind of before everybody knew that word. And I was looking at businesses to buy. And I looked at a business in Buena Vista, Colorado, that sold kayaks and, like, whitewater rafting accessories because Buena Vista in Colorado is a big whitewater town. And a whole bunch of surfing stuff. because it kind of feels related.

And I was like, I can buy this business. I can move to Buena Vista, Colorado. It's gorgeous, right? This store, it's still there. I was there recently and saw it. It sponsors like the annual Whitewater Festival in the town because the river runs right past their warehouse. I was like, this is, if I want to just like punch out and move to Colorado, like, this is

it. Buy this business, become that guy and like sail off in the sunset. But I was, you know, 27. I wasn't ready to do that. But like the lifestyle, like this could be an awesome lifestyle business. Yeah. What do you make of 80,000 email addresses, which is great, haven't sent an email in four years? Yeah.

All those email addresses are cooked. If you haven't emailed anybody in four years, you can send an email on that list, it's all going to spam. I mean, you will, you will churn half that. that list pretty quick. That being said, you still got 40,000 email addresses. You know, and you know they're surfers. The other way that it can be useful is you can upload those lists of emails to meta as a custom audience, because you know these are all surfer people, right?

So you can upload that to meta as a custom audience and then turn on audience expansion and say, find me more people like these 80,000. And you get really good targeting in meta. Meta will probably figure it out anyway. over time because meta knows who's surfers anyway, but this would be a nice kickstart to meta advertising. But I don't think it's like the key to massive growth. It would help.

Like you should definitely be, they should be emailing these surfers at least once a week during surfing season, for sure. Yeah. And probably not doing any, like they're not doing any content marketing or like things that can really keep people coming back to the website. Yeah.

I mean, that's sort of what I mean about how this is like a quintessential old school e-commerce business for sale. Like this is a probably awesome lifestyle business for the, the owner. They self-admitted in the listing, he's not a marketing guru. He's certainly, I mean, he doesn't know how to use the Metapixel, which means he's never running a meta ad in his life. So like this, he just hasn't kept up with like he's not sending email. Like he's, again, no offense to seller, but he's not really trying. Right. He's cruising. It's a lifestyle business.

And you do like when you see these in e-commerce, it's exciting as a, as a buyer and a marketer because there's just there's so many levers that this guy has functionally declined to pull because he is living a great life right um so you can pull this is still a great bit like like i think it's time to do thumbs up thumbs down but i'm thumbs up in the sense that i want to talk to this guy i want to know more about the business and like what i'm dying to know what what do you have 30 000 of in your warehouse and that's just skews so there's more than one item per skew and you know kudos to him. He built a really good business and it's running. We don't know anything historically. Like the business could be in free fall, but seems like he's running a pretty good business with a great audience. It's probably, I did some Googling and it's a small tam because I think the majority of the surfing tam is apparel and equipment. So like he may have a really, you know, decent piece of the tam for just the accessories, which, you know, probably not a lot of people chasing. Yeah. Yeah. So. So, So like I said, there's a lot to like about this business kind of has this lindiness, old school e-commerce, lifestyle business that you can come in and really probably hit the gas on.

The flip side that I want to understand, I would like it better if it was 80% dot com and 20% Amazon. Because at 80% Amazon, a lot of that doesn't matter. Like the email marketing, like a lot of his business is actually just being driven by discovery on Amazon. I'd want to understand if it's paid discovery, sponsored products, or organic. discovery, but like, again, you just have fewer levers on Amazon and fewer things that benefit you from your 19 years of kind of business reputation and experience because you're just typing in surfboard leash or whatever and buying one. And you are more exposed to Chinese competition and, you know, that whole pipeline of kind of driving your margins down. Now, if you're

buying branded stuff, the Chinese guys can't make the brand that everybody knows. And maybe you're the authorized reseller on Amazon and you have a contract and you're the only one. Now I like it way more. Right. So that's what I want to understand is how defensible is the Amazon side of this business, which is 80% of it against kind of cheap Chinese knockoffs who will eventually find you. Like you can hide in niches for a while. And that has been the story of e-commerce over the last 10 to 15 years. The niches in which you can hide are getting smaller and smaller and smaller.

right as as the Chinese competition comes for smaller and smaller scraps right so like I wouldn't want some securities through obscurity in this business I would want security through you know contracts as a dedicated resell authorized reseller of certain brands et cetera on Amazon or your own products which I doubt this has considering the skew count so that would make me feel better I'd be a little bit more nervous if it's 80% of business with no protection on Amazon yeah as a lender, I have to say I would be pretty close to thumbs down. I kind of like the business. I think the right person who understands marketing could have a lot of fun with it. It could be a great business. But as a lender, I think it would be a tough one. Just it's really thin margin and it's

Amazon. You know, most lenders kind of stay away from any e-commerce that is heavily Amazon, especially when it's this small because they feel like the entrepreneur just doesn't have enough control over their margin. And then you throw in this consignment inventory that has to be done kind of as a seller note. And although I think there's a mechanism that could work for a lender there, I think it would confuse most banks that do SBA loans. They would want to look at it like a regular seller note and they'd get very confused about a consignment inventory kind of seller note hybrid. So I like the business, but I think at least from a financing perspective, it's a tough one. Heather, have you ever seen consignment deals get done with SBA loans?

have, but I've seen them get messed up too. You know, like it just, it is typically something that the lender just doesn't deal with very often. And so there's just a lot of confusion all the way through the chain from term sheet, all the way through underwriting and closing on how to deal with it, with that. So it's tricky. It'll be tricky. And that's sort of where I've come down on this deal.

Like, I think I'm a thumbs up on call Brad from Quietlight, sign the NDA, get the book. Like, there's a lot that's really. interesting about this business. There's a lot to maybe like. If you find out that it's, it's an authorized resell on Amazon, you find out that there has been run as a lifestyle business. There's a lot of levers to pull still. This could be a strong thumbs up after you read the SIM. Or if you find out that it's not protected on Amazon, you know, and there's not a lot of levers to pull and it's kind of dwindling, it could be less good. But this is the type of one you hope to find. Like if you're looking for a business, you know, there's not much more you could see in a

teaser than this to say, I want the NDA. Like, let's try it. So I'm cautiously thumbs up. Price and structure, I think, is the biggest hurdle to Heather's point. You know, because together you got two and a half million bucks of capital into it. And it's got $300,000 VBADA solving that problem, I think is the primary problem to solve here. The business problems, it's probably a good enough business to transact, I would think. Structure and price is going to be your hurdle. I'm so glad.

I'm so glad, Bill, that we waited to do this one with you because me and Heather would have been like. Well, yes. Thank you, Bill. I don't know. I mean. Yep. And Sam, if you try to make me do a roofing deal.

Yes. Yeah. Shame on anybody who tries to do a roofing deal. All right. This was really fun. Love seeing you guys. Thanks for everybody who listened in. And if you enjoyed this episode, if you're looking for e-commerce, you can go to our website,

ACQU-Anon.com and look for. whatever type of deal you're looking for, manufacturing, construction, distribution, e-commerce, professional services. You can search by deal and find out more about what you're looking for. Thanks everybody for joining, and we'll see you next week.