Business Purgatory: What They Don't Tell You About Buying a Business

Hello, everybody. Welcome to my Thursday evening live stream. Tonight, we are having a discussion on what it's really like, some of the things to operate a small business, some of the things that people don't really talk about. I've entitled, let me pull this up real fast, I've entitled this one, business purgatory, what they don't tell you about running a business. It's obviously very exciting right now, the idea of buying a business. We see it all over the social media, it's all over online, everybody everywhere you go, everyone's like, "Hey, go buy a business." It's the fast-tracked generational wealth, there's passive income, all this other stuff, and I'm not going to go into all of it. It's obvious why people are attracted to this idea, but searching for a business and buying a business, that's not the game. That's just getting in the game, and that's pretty hard, that's pretty tough. We're all

trying to figure out how do I get in the game, but in reality, being in the game is actually operating that business. Tonight, we're going to talk about some of the things about operating that business that we don't really talk about, like people don't really mention. I'll start off by saying, the reason I'm doing this talk tonight is because, as many of you know, I acquired a small business, and it did not work out, it failed, and it wiped me out. As I got back online, I started talking about the realities and the risks that people face when they decide to acquire a business. I started meeting a lot of people who had had similar situations as mine, where they had gone out and they had bought a small business, and that business had failed. Talking about some of the real risks involved, something I was not expecting, and something that has actually started building more and more is that I've been contacted by business owners who talk about how they're unsatisfied with

the situation they find themselves in. That situation is usually one where they thought that buying a business would be the thing that would bring them some joy, bring them some wealth, bring them some personal satisfaction, and kind of be an escape, really, from corporate world and their way of becoming an entrepreneur. All of that can be true, but the truth is is that it's not for everybody. We see this online, but buying a business isn't for everybody, and granted, you won't really know if it's for you unless you try it or spend a lot of time with people who have already done it to try to figure out if this is the right route for you. But tonight, I'm going to talk about a few big pieces of feedback I've gotten from business owners who have not failed, business owners who have bought a business within the last five years, and those owners are unhappy with where they're at. I think this is a really

important topic because it speaks to business buyer fit. Just because you can buy a business doesn't mean you should. Just because a business is financially successful does not mean it's a good fit for you. I'm going to walk through a couple of these. To be quite honest, the thing that really spurred this for me tonight was that I had a phone call today with somebody who's in this exact position, and it kind of dawned on me while I was having this phone call is that I've had this conversation 20 times in the last couple of months. That's why I wanted to speak about it today, but they're in this position where they went to a fantastic MBA program. They had several years of work experience on Wall Street, had a fantastic financial career, and then decided to buy a small business. They did everything right. They bought a great business. It was profitable. There were no hidden red flags. They're not experiencing fraud or anything like that. It just hasn't been what they expected

it to be. By that, I mean, they've spent the last four years just really struggling, really fighting through to just to maintain where they were. It's not satisfying. It feels like a trap because you can't sell the business, but you can't walk away because you have debt. There's a lot of factors, and I keep leading into it, but there's a lot of factors I'm going to talk about. This is what spurred the conversation tonight. As we go, if you have any questions, drop them in the chat. I'm going to answer those as we go. Apology if I don't see it in time, but I'll answer those questions in the chat, and then at the end, we'll do a Q&A of whatever you guys are interested in. The first thing, workforce. We talk about this a little bit, but one of the things that people find after they buy a business is that the professional environment is not what they expected. We know this going into it. Think about this. Think about if you come from a corporate career, you're transitioning

from big tech, and now you're going to go buy a roofing company. It's a very different cultural environment for you. You're used to being at the tip of the spear when it comes to technological innovation. You're used to being surrounded by very intelligent people, very driven people, people who are aspiring to lead large programs or code the next amazing app or do something unique with the cloud. There's going to be something about that career field where it drives people who are ambitious and really pushing the limits of technology. When you go from that to working in a blue-collar services business, it's not that it's better or worse, it's just that it's different. When you're working in a blue-collar services business such as roofing or HVAC or plumbing or any of the other ones that we could go on with, I pick on roofing a lot just because I have a friend who does that. No hate to roofing, but if you go into that kind of environment, typically you're going to be installing and

repairing roofs. It's going to be you and a team of 30 people, the vast majority of which have never been to college, the vast majority of which probably dropped out of high school. It's a lot of labor or work. It's a place where you will not be able to vent your frustrations, vent your opinions. One, because you're the owner and it would just be inappropriate to do that with people towards the bottom of your organization. Two, because they cannot relate to you. They don't understand what you're going through. You can't in many ways do the work that they can do. They're much more skilled. They're much better at their job than you will ever be. Even if you spend a couple of years easing into that skill learning curve and trying to figure out that job, but they're never going to be able to sympathize with you because you're going to want to talk about this top 10 MBA program you went to. You're going to want to talk about these big projects you worked on when you were at AWS. You're going to want to talk about how your 401(k) is doing or how your P&L is growing

or how we can expand our customer base, how we can reduce risk on the debt, how we can maybe be able to recap our cap structure in the next five years. None of those conversations are going to happen with your general manager or your foreman or your front line worker. It's just not going to happen. It's a very lonely place. For many people who are buying a business for the first time, this is the first time they've ever experienced something like that. Because if you're coming from that kind of world, you most likely went to high school, then you moved on to college, then you moved directly into a corporate career, and then you did that for a few years, and then you either bought a business or you did an MBA program or something. So you've never worked in a trade. You've never been anywhere near that. You've never been around people where every single day, day in, day out, they're not on the same level as you. And by that, I mean they're not on the same path as you. They're not on the same vector as you. And that adds a whole different level of loneliness

when you're an owner. At this point, I really want to call out Rand Larson. He's doing an amazing job across Twitter and across LinkedIn, but being a business owner is very lonely. And so he's doing an amazing job putting together groups for owners to be a part of. And that's a fantastic thing because you need that kind of community. One to help trade tips and war stories and how to make things better. But honestly, you need it for therapy. You need to be able to vent your frustrations. You need to be able to talk to people who understand what you're going through. And so while we all kind of understand that moving into something like that, where the workforce is completely different, conceptually, we get that. But in reality, it's far more different than you can possibly imagine. And that's something to be very aware of because what you're used to, your environment is about to change fundamentally. And you may find yourself owning a business two, three years after you bought it. And that business could be doing great. I mean, we all know that you're probably not going

to hit like all the different financial metrics that you're hoping for. But sometimes you do. Sometimes it is everything you thought it was going to be. And your growth rate is great, but you get there and you find out, oh, well, I mean, we're hitting our growth rate. We're expanding. All this cool stuff is happening. But I just really hate my job. I'm just every day, day in, day out. It's the same thing. And that's a real thing. So that is one of the top frustrations I've been getting from people who bought a business in the last couple of years is that they didn't spend enough time really internalizing what their day to day life was going to be like. And I think that's a really important thing to think about. And one of the best ways to kind of mitigate that is if you're looking in an industry and you're seriously considering buying a business in that industry, find somebody who has bought a company in that industry, reach out to them on LinkedIn, on Twitter, send them somehow and just walk with them, like intern with them a little bit. And it

is absolutely worth every little bit of money you put into that. Like, if you got to fly somewhere, like find somebody and spend a week, spend two weeks, spend a month, like whatever you can do, just spend time with that person and walk through their day to day, see what their actual life is like. And that's really going to help you really understand whether or not this is something you want to get into. Because while some people have dreams of buying a business and holding it forever, the long term hold, and some people have fantasies of maybe selling it to a strategic or private equity or somebody five to 10 years from now, the truth is that the vast majority of small businesses will never sell. And while I hope that you have ungodly amounts of success, you have to go into this assuming that you're not special, that you're probably going to hold this business forever. And so find people who are doing the work that you're interested in doing, the business that you're interested in being in, learn what that's like on a day to day basis, and then really critically ask yourself, can I be the owner of a roofing company for the next 15, 20 years? That's

the question. So a couple of questions here in the chat. Yes, first question. My friend that I talked to today, yes, he was operating his business himself. He did a solo search. It was a self funded search. He bought a $5 million company still operating it today. Craig, great to see you. Albert, great to see you. Kevin, thanks for calling in from Florida. And yes, Craig, you're exactly right. It is your business. The business doesn't own you. You have to put it things in place. So yeah, really have a great idea of what you're getting yourself involved in. The second thing that you need to think about that has been a serious issue of frustration is the geographical constraint. And much like the first topic of understanding the career, the daily job to job that you're being a part of, is understanding that when you buy a home services business, you are physically stuck to that business. And again, I know this seems obvious, but I'm really trying to drill it through it and make it very clear. If you buy a plumbing company in Atlanta, Georgia, you're living

in Atlanta, Georgia. You will be in Atlanta, Georgia for the next several years for the foreseeable future. There may come a day when you have grown your revenues to the point to where you can feasibly build out management. You can feasibly have a GM. You can feasibly not be physically present at the job. But that takes years. It takes a lot of hard work. And again, I hope you get there. That's the whole goal, right? But when you buy a physical company, you are going to be physically there. And if you buy a company in Atlanta, Georgia, then you better expect that you're going to be living in Atlanta, Georgia for a very long time. So again, you really need to think about the geographic constraint that you're putting yourself on. If you have hopes of working remotely, then those are probably not going to stick with you. And yeah, Jonathan, I'm picking on Atlanta just a little bit because I'm originally from the Georgia area, North Georgia area. But it's a wonderful place to be. It is. It's great. It's not for everybody, right? And so this really brings me back because

when I first started searching as a self-funded searcher, the first thing I did after reading the HBR guide is I went to the Harvard Business School ETA conference. I think it was in 2021. But I was there, and I remember a searcher telling, like a business owner actually telling this story about how he was doing a nationwide search. It was a traditional search fund. And he bought a company in the middle of nowhere. It was somewhere in the Northeast. I want to say it was like New Hampshire or Maine, but it was really off the beaten path. And it was a manufacturing business. And the numbers were stellar. Like he got an incredible deal on this thing. And he was talking about how he bought this company and he worked there in the business for four years, something like four years. And it was in this small town. There was nobody his age there. He couldn't date. He couldn't meet people. He couldn't do anything. He was a single guy. And he would talk about how like he would go on these extended weekend trips down to New York City, just so he could see people, just so he could meet

women, just so he could meet friends, just so he could be around anybody. And he talked about how after four years, they finally did get an exit because this was a search fund. So it was a larger business. And the economics were great. And they found someone who was going to buy. But that didn't negate the fact that he spent four years grinding it out in this business in a place that he really did not want to be. So it's funny because I never really thought about that story. And I remember it now, but I never really thought about it until now. I'm having all these conversations with people who are like, I bought this business in Tempe, Arizona, and I hate it here. It's so hot all the time. And I'm originally from the Midwest, and I just cannot stand it. And similarly, somebody else was like, I bought a business in the Northeast, like in the Seattle area, and they suffer from seasonal depression. It's a real thing. And they're stuck there. So these, these types of things are not like, I know some people are thinking like, Oh, who cares, right? I mean, if the business is

doing, if the business is doing well, you know, cash flow is solid, then you should just be happy. But the truth is, is that what makes us happy, you know, is, is our day to day experience. So if you're not happy doing the work you're doing, if you're not happy around the people that you see every single day, and if the location you're in, like seriously drains you as a person, those are significant factors you need to think about. Because again, I was talking to my friend today, and he was just bringing this back to me. He's like, I've been grinding through this business for four years, there's no foreseeable exit for me. There's, I'm going to be here for a while. I can't leave. I can't sell the business. I can't sell the business the way it is. And I'm kind of stuck. And that's why I entitled this business purgatory, like you're there, you're stuck, you can't leave, you can't quit, you can't sell, you're just stuck. And so the geography of your business is really important. So really think that through, like again, just like the first one, if you know you're

going to be somewhere for a long time, like really, really think that through, assume that you're not, assume that you're not special, assume that you're not going to get that magical exit, and then really start to think about what that means for you and your family. The third thing, unsatisfied professional development. And I kind of, I kind of touched on this a little bit with the first point, but the truth is, is that the vast majority of searchers, the vast majority of searchers are people who, you know, at least in this, who are talking about it on LinkedIn, people who are talking about on Twitter's, they're people who, you know, they, they went to school, they probably got pretty good grades. They went to college. And then after that, they went into some sort of corporate career. And then, you know, maybe they went on and got a master's degree. But these are people who really feel pushed to have professional development. These are people who really feel pushed to have a personal development. And at least two people I've spoken with in the last couple of weeks have expressed the fact that they feel really stalled out in their life. And

that just goes back to the happiness quotient. Like, I'm just unhappy with where I'm at. I'm not, I don't see, my business isn't growing. I can't make it grow. The market I'm in is uninspiring. The, you know, the situation I'm in is, is not engaging. There's nowhere for me to build on my personal, professional growth. And these types of day in and day out experiences, they really do weigh on you. So again, you really need to think through what is the day to day experience that you're buying? What is that? Because in about a third of these cases, like, you know, in some of these cases, people are doing well. The economics are great. You know, they're getting exactly what they thought they were going to get. But in about half of them, they're struggling. They're really struggling. And the truth is, that you would think that having the positive economics would offset some of the personal unhappiness or the, you know, the professional lack of growth. But it really doesn't, because you're just unhappy. And happiness is everything. And if you, if you don't really, if that's

hard to imagine, think about this, like, if you did come from corporate, like think about I was working in big tech before I bought my company. I had a fantastic salary, fantastic benefits. I was surrounded by people who are very smart, very engaging. And I was unfulfilled. And that is true regardless of your situation. So you can be in a small business that is doing very well economically, and you can be unfulfilled. So think about how much worse that is when your business is actually struggling. So there's, there's definitely a pro and con to this. But again, it just goes back to thinking about what is your day to day like, you know, what, what kind of life are you setting up for yourself? One other thing I want to talk about here is that again, the my friend I talked to today, he made the point of saying, he's like, you know, even if I was able to sell my business today, I'm unemployable. And it's funny because he's never even tried. He, you know, he was

working like 10 years on Wall Street, got his a fantastic MBA program, bought this business is doing, you know, from the outside doing very well. The business isn't doing great, but it's alive and it's getting by. But he made his comment about how he's like, I'm unemployable. You know, he used to, he used to work at some of these really nice like brand name firms. He's like, there's no way, you know, after spending four years as an entrepreneur, I'm not getting hired somewhere. And he's like, to be fair, I don't think I'd want to get hired somewhere. But that really got me thinking because if you've been following me online, you know, very well that like, you know, I've been it's been a year almost since my business went under. And I'm unemployable. People look at my resume and they see all kinds of things that are very interesting and very exciting, but incoherent. Nobody wants to hire a software manager who is running a landscaping company. Nobody wants to hire a corporate development manager who led a roofing company. It's really hard to make the argument that you need to go back to investment banking after you've been running a car wash.

One, because even though you can make the argument that, and I think this is a very good argument, even though you can make the argument that your management skills are much better, you have a firm grasp of a PNL. You thoroughly understand cash flow management. And you probably have a much better grasp of ownership. And the problem is that, you know, corporations don't see it that way. They see it as a, they're trying to find somebody who can do a job very well. Not all the jobs pretty well. They're not looking for, and as much as they want to say, they're looking for leaders, they're not looking for leaders. They're looking for middle management. They're looking for somebody who can do a job very well, not take over and be a leader. And I've seen that happen over and over and over where you simply don't get the callback. I mean, you just, you just don't. It doesn't matter how many brand names are on your resume. It doesn't matter what MBA program you went to. And that is a very important thing for searchers to hear because sometimes you're taking a pretty big risk

when if you go to, like, if you go to a, like I have friends who go to a big MBA programs and like they're graduating from, from Wharton, they're graduating from Berkeley and they raise a search fund or they do a self funded search and they buy a company and they're like, well, if this doesn't work out, then maybe I'll just, you know, I'll go back to investment banking. Maybe, maybe you will. I hope that you get to do whatever you want to do. But the truth is, is that the odds are against you. The odds are that you are now unemployable. The odds are that that time you spent away is not going to help you on the next move. And this is something I really try to drive into searchers because instead of thinking about the economics, you need to think about what the outcome is. If you buy a small business and you operate that for three, five, seven years, you are now uniquely qualified to run a small business. And that's about it. And so that's what you're setting yourself up for. If you do a search fund and you buy a business in the lower middle market for, let's say it's doing 20 million of top line, you are now uniquely qualified

to be a lower, lower middle market CEO. That's your skill set. It's not going back to whatever career you used to have. So keep that in mind. Like you are fundamentally making a shift. I mean, to be clear, a lot of people I talked to, even my friend today, he's like, look, I don't even want to go back to corporate. That's fine. They don't want to hire me. That's fine. I don't want to be there. Like he is so far over on the entrepreneurship bug that he's like, I know I'm going to be doing this forever. But I also know that I'm trapped in my current business, mostly because the debt that I took to buy it. So that's something to really pay attention to because again, you're really banking on your future here. I've got one more point here and then we'll just move on to an AMA. But the last point is over and over and over, I've had this conversation over the last couple of months where somebody was telling me, they're like, I get into this company. It's doing well. I've been doing it for three or four years and then all of a sudden something happens and now I'm limping

along. I can think of somebody I spoke with three weeks ago who owns a business in Dallas, Texas. And when he bought it, it was doing well, cash flowed well. And then he bought it and then about nine months after he bought it, the market just fell out under them, like not just him, like the whole industry. And as a result, barely limping by. And this is where I started thinking about the term business purgatory. It's where you're making just enough profit to where you're not insolvent, you're getting by, you're paying the bills, but you certainly aren't growing and it's really hard to find any aspect or any route to growth. You're just stuck. And one of the main reasons you're stuck is because you've taken such a hit on profitability, but you still have to service the debt. So this guy I'm talking about in Texas, he took such a hit that now he's still paying his SBA loan. He's already had to have two, three month deferments on that. Luckily his lender is working with him pretty well, but he's already had two, three month deferments and he doesn't see a way out.

He's like, yeah, I'm just barely scraping. I'm barely making these debt payments. I'm barely keeping people running. And you know, the economy is just like, for what we're doing, it just hasn't come back. And he's trying everything. He's like, you know, I had a long conversation with him, he's working on marketing, he's working on sales, he's put himself out there. But again, with that kind of hit to profitability, there's only so much you can do. You don't have a lot of cash. And so you really do find yourself stuck, you know, where every three or four weeks, you're wondering if you're going to make payroll. And the thing that people don't talk about is that this is incredibly stressful. Incredibly, I still think I can say, I actually feel it right now. I still think about when I was running my company and I would go to bed at night wondering if we were going to make payroll. And it is, it is incredibly stressful when everything you have is online, you have a personal guarantee on the debt, and you don't know if the business is going to survive. And you know that if it doesn't survive, then you and your family are wiped out and all your employees lose their jobs. And you're scrambling to try to keep it alive. And every

time that you come up to the brink, and somehow you pull it out and you and you save the business and you keep moving forward, it feels like it's a huge load off your shoulders. But you know that it's coming again in like the next week or two, you know, it's something's coming. And every time something bad happens, it's like it's a hit back to where you were. And from a stress perspective, it's like you it's like you age five years for every year. And it's incredibly weighing on you. Again, talking to my friend today, I asked him, I was like, oh, let's assume a fantasy world where someone is willing to buy your business tomorrow for the exact value of the business, which would allow him to break even on his debt, and probably not guaranteed, but probably give his investors back their original cash with no with no return. So not a great scenario. But if that was the case, like how would that feel? And his first word was like relief. It's like this, this burden is just being lifted off your shoulders.

Like it's an it's an inescapable pressure that's on your chest because you can barely breathe. But that's the real world. You know, a lot of times, you know, searchers will ask me, they're like, you know, you know, they'll talk about like what it's like to operate a business. And I try to describe to him what it's like. And right now, the best way I can describe it is by using my military experience as an analogy. So I served in the Air Force for 10 years. And a lot of times people will ask me to say, Hey, what's it like being the military? And I'll tell him, I was like, I'll tell him what it's I'll tell you what it's like to go to boot camp. I'll tell you what it's like to wear a uniform. I was deployed twice. You know, I served overseas. I was stationed in Germany. I'll tell you what that's like. And you know, you can see you can you can see the shadow box on the wall. You can see I tell you all about it. But the truth is, is you have no idea what I'm talking about. You cannot understand it because it's not a job. It's a culture. It's a it's an environment. And that's why that every time I meet a veteran, and this is why veterans get along so well,

because we all understand the game where we all experienced the same crap. Like we all know what hurry up and wait feels like, you know, we all know what embrace the suck feels like, you know, we all know that. And it's more than a job. It's a it's a community. It's a culture. It's a lifestyle. And so the same thing is true for owning a business until you've done it. You simply don't understand. You don't understand the pressure. You don't understand the weight that you have as the owner where every single decision you make could make or break your company where the success of your business is solely on your shoulders. And that kind of stress weighs on you. And some people thrive under that. And some people barely get by under that. And some people get crushed under that. And again, I don't know what that's going to be like for you. But and really, the only way to know is to try. So if you if you need to find out there, that's how you find out. But beyond that, you know, I cannot emphasize enough how important it is if you feel like

you found a business in an industry that you think you would like to buy in. You really need to find somebody who's already operating in that space, find somebody, not just not just who's an owner in that space, find somebody who bought in that space, because then they're going to understand what that transition is like. Talk to them, find out what their day to day is like, find out if the life they're leading is the life you want to lead and really internalize whether or not this is the kind of thing that's going to bring you happiness. It's going to be bring your family happiness. Like I didn't even touch on this, but imagine with all that stress, all that geographic constraint, all that, you know, personal professional development struggle, that's amplified with your family. If you've got a wife, if you've got kids, if you've got a husband, if you've got extended family for not near your parents, like all of these things are factors, they're factors for your happiness. And I guarantee you if you're not happy, then the business will suffer because the business is a direct reflection of the owner. So I really hope that you take this advice, you internalize it. These aren't like, some of this is like, is my learnings because I've experienced it.

But the whole reason for this live stream for this topic today is because I've had this conversation over and over and over over the last couple of months with people who have not had a business failure. They're still in it. Some of them are successful. Their metrics are good, their economics are good. Some people are barely getting by, barely keeping their head above water. But regardless of how they're doing, some people are just really unhappy with the job they bought. And make no mistake, if you buy a small business, you are buying a job. Even if you buy at $5 million, you are buying a job. It's your job to build it into something where you're not in the business, but you're working on the business. But you are buying a job. So be very clear about the job that you're buying and understand whether or not it's the kind of thing that you and your family are on board with before you sign on the deadline. All right, well, I'm going to drink my tea for a second, take a breath, and I'm going to look through these comments. Thanks so much for the comments.

This is actually really helpful because it keeps things going. Craig, love the comments, man. Yeah, I mean, once you've been an entrepreneur for 35 years, you do become an employable. That is absolutely true. Gus, he says, "Jed, on acquiring minds, you talked about not going into buying a business with a roll-up in mind. Can you talk more about this? I'm looking at an industry that P is rolling up bolt-on, minimum $500,000,000. I'm not $500,000,000, I imagine." But anyway, it doesn't matter. Yeah, great question. So on the acquiring minds interview, I mentioned how I found myself in what I call an accidental roll-up. And all that is to say is that I was looking for a small business to buy. I found one and I bought it. And after I bought it, word got around that there was this new guy buying in the industry. And what I did not know is that this isn't always true, but this does tend to happen is that industries are very close-knit. Everybody knows each other. And

so I found that a lot of the owners in my area, several went to high school together. In fact, the seller of the company that I bought, his wife used to be the secretary for the owner of another company in the same industry, in the same area. So it's like they all know each other. And it's not just the owners know each other, it's the employees know each other. I mean, that makes sense, right? Because especially your foreman, everybody's getting their supplies from the same three places, right? So they're all going to run into each other. Most of them, even if they've been at the same place for 20, 30 years, they all know each other. They've been all in the same area for a very long time. And so I say all that just to say that like the word gets out. And in my circumstance, like once the word got out, there were other owners in the area who were like, Oh, maybe I'm interested in selling. And so within the first couple of months, I had four to five acquisition opportunities to bolt on. And this is what I was telling Will about is how like, you know, I got super excited because I'm like, Oh my goodness, if I was to, you know, move

forward and acquire all, you know, four or five of these extra companies, all within like a 50 mile radius of where I'd already acquired, you know, my $2 million company becomes a $12 million company. And that's very exciting. But the reason I call it accidental roll up is because the business model of buying a single business and the business model of doing a roll up are vastly different. And my mistake is that, you know, I got, I was so wrapped up in it that I did not step back, take a breath and really think about that because I was not prepared for roll up. The most important thing in my experience with a roll up is that you have to have a very clear strategy about what you're doing. And it's not just the systems and the integration and the tech. More importantly, it's the culture. Like you really have to make sure that you have a strong platform company. You have a strong acquisition thesis, like you know exactly what you're rolling up. And again, you have to be very clear. So like if you're rolling up HVAC companies, you're not rolling up HVAC, I'm rolling up commercial HVAC in this region doing that have this specific type of customer, because the more things

that you can align on, the less friction you're going to have when you're acquiring these extra companies. So you want to remove as much friction as possible. So that was strike one of things I didn't do. But, and then beyond that, you have to have a lot of capital because it's not just buying one company and then you're like, Oh, well, you know, I've got my DSCR of like one and a half. And now I've got a little extra cash so I can go buy another company. When you do a roll up, the culture is so important that a lot of times you're going to have you're going to have inefficiencies is the best way to say it. You know, we think about traditional private equity when people buy and they're like, Oh, I don't buy bought this company. Now I've had this whole other front office that I no longer need. So that means I'm laying them off. And I've all these other systems that I no longer need. So I got to get rid of those. So you're constantly restructuring business and and pulling it into your platform company. And so one, you have to have really strong systems and culture in your platform company so that it's not negatively impacted by the systems and culture of the teams and people that you bring in. You have to be very strong first so that you're not going to be damaged by your acquisitions. And then second, a lot of these companies,

like especially when you're doing like a quick roll up, you need to have cash quickly because things will go wrong. You need to have that. And I did not have that. So those are the two things I would really keep in mind. Again, it was an accidental roll up. It was not something that I would suggest. But if you find yourself in that kind of situation, just slow down and be smart about it. Know that you can do this a year from now, not tomorrow. So good question, though. So you're going into unconventional jobs like the military. This happens often. They're seen as a risk. If they don't fit neatly in the mold, hiring managers may hesitate if the veteran's background looks unfamiliar. Yeah, so you're exactly right. This anonymous user posting here, but you're exactly right. We see this with veterans like it's one of the things that makes a veteran transition from the military to the civilian world is that it's very hard to articulate what you did and say that in a way that makes sense in a civilian pro, you know, for-profit company. You know, if you're a nuclear submariner, then you know, nobody's doing nuclear submarining in the private sector. And so there are plenty of, you know, transferable skills. But the fundamental problem is that, you know, how

do I, how do I get across my value to the company? Because what companies are looking for is people who can excel at a single task. And it's not that it's just, you're doing one thing, but you're brought in for a function. You're not brought into like run a division. No one's hiring you to be, you know, the VP of North America or, you know, general manager of this or that. You're, you're, you're moving into a structure. And so you have to do really well in that structure. So hiring managers want to see that you're well prepared for that role. Not that you could do that role, but that you're well prepared and you've done that role in the past. And so that, that's obviously an issue that veterans have. But yeah, it's, it's exact same type of issue that entrepreneurs have, you know, if you leave Wall Street and you buy a roofing company and you do roofing for four years, it's going to be tough like to get back into Wall Street investment banking or whatever you were doing in the past. So these are things that you have to keep in mind. What do I think about buying proper management? I think it's just as good as any other business. I don't think that there is a, a good industry or a bad industry. I think that all industries have

their own pros and cons. And so that's why it's so important to identify the business buyer fit for you. The best advice I can give on that is that you need to look at your skill set and your background. And I highly recommend if you're going to buy a business, buy something that you either have direct experience in, or you have 10 gentle experience in. So for instance, I was speaking with a guy two weeks ago who was a software program leader at Amazon. And originally he was looking at a roofing company. I know I keep picking on them, but it was true. He's looking at a roofing company and just didn't feel right. He passed on it. Ultimately he just bought an MSP, an IT service provider. And he's like, granted, I've never done that before. I've never been a system administrator. I've never done IT service. But I felt so much more comfortable in this role because at least I understood what we were trying to do. At least with my background, at least I had an idea of how to get involved and how to learn quickly because my whole life was working in software. And so again, it's different, but at least it's tangentially related. And so every business is different.

Every business has its pros and cons. For property management specifically, one of the pros is that typically your asset light. That's a good thing. You're not dealing with trucks. You're not dealing with a lot of heavy equipment. So that can be a win. Profit margins tend to be a little bit better. The downside is that most of your IP walks out the door at 5 p.m. It's all human capital. And so it's human capital, it's relationships, it's managing HOAs or whoever you happen to be managing. And so yeah, it can be tough. It just depends on the type of hard you want to have. But great question, Jamil. Luke, a lot of people are giving advice in the buy business space, maybe frauds, especially the just hire manager bro crowd. Am I too cynical? Yes and no. I think it's obvious that if you go out on LinkedIn or YouTube or some of these other places, you find a lot of gurus. You find a lot of people who are more interested in selling courses or more interested in selling a program than they are in actually helping people. But I wouldn't automatically say that

there are no good ones out there. There are some people who really do care and are trying to help. The most important thing, I think there's two things. One, what has that person done in their past? Have they owned a business? Have they done the things that they're trying to say that they're selling you on how to do? And not only that, what's their track record and what are they doing right now? Those are good questions. So I try not to pick on people, so I won't. But the obvious answer here is like a Walker Dible. So he wrote the book Buy, Then Build. He operates in Acquisition Lab, which is an accelerator, a bootcamp for people who want to learn how to buy a business. I've never gone through that program. I have considered it, but I've never gone through it. I know people who have gone through it and they said it's pretty good. I talked to some people who were like, yeah, it was good, but it could have been better. But I mean, everyone has a different experience. But at the very least, at least Walker is like, he's running his own holdco. He's been doing this for a long time, so at least you know he's actually buying companies. That's a good thing.

Look at people who have other types of track records. I was on a podcast with David Barnett a couple of weeks ago. He's got a very long track record of coaching people on how to buy a business. He's been a business owner himself. He's been a broker himself. He does a very good job of doing risk analysis. The more you learn about the space, the more you can identify people who know what they're talking about. That's the most important thing. And it's not just for like defending against the gurus out there. It's, if you're going to buy a company, it's all you. It's 100% your responsibility. You know, you're the one signing for the debt. You're the one signing on the dotted line on the purchase agreement. So it doesn't really matter how you got there. You're taking responsibility for it. And when that happens, you have to be able to trust people who know more than you. But at the same time, you're the one making the decision on that. And so it's just like when you hire a lawyer, you know, you have to make sure that that lawyer knows way more about the legal process for small business acquisitions, M&A, than you ever will. But at the same time,

if you're not vetting that person, if you're not questioning that person, if that person can't speak to you in layman's terms about what you're getting involved in and why and give you real advice that you can then like double check and feel comfortable with, then that's not the right person for you. And so I just say that to say that like the best defense against the gurus is self-education. Learn everything you can about how M&A is actually done. And then when that happens, you're going to be more able to point out when something looks crazy. Like if someone's telling you, yeah, you can buy this business with zero money down and hire a manager and they'll run it for you. Like there's so many obvious red flags with that. So anyway, I'll get off that high horse. But yeah, I see it all over the place. It's not everybody, but the more you educate yourself, then the more you'll be able to see people who are actually giving solid advice because there are plenty of them out there. And the ones that more or less are just trying to take your money. Exactly, Craig. Find people who have actually exited from their business. You know, don't trust on chat GBT. Let's see here, a troll slayer. That's a great tag name. There was

a great acquiring minds episode recently that focused on the partner of the buyer. Partner of the buyer. I don't I think I saw that one. But yeah, I will take this moment to just highlight if you are searching with a partner. That's a great thing. It's good to have if you're going to do that to have somebody who where your skills can complement each other. The most important thing about a partner, a business partner is that legally speaking, this is this is right next to a marriage. Like you need to know that you're going to be with this person for a long time. And you need to have that conversation and not just the conversation, but you need to have a very clear understanding of who's in charge of what. And the best place to list all that out is in the operating agreement. So again, we've heard, you know, good fences make good neighbors, but in your operating agreement, that specifies who says what, who's got control of what, who makes the final decisions and everything. And so be really clear in your operating agreement. If you have a partnership about, you know, when there is an impasse, who's making the final decision? If one of

the partners wants to leave the business, what is the controlled mechanism for that? Does the other partner have the ability to buy them out? Do they have the right of first refusal? You know, what are the requirements of each partner in this partnership? And if they're not meeting those requirements, what kind of remedies are there, you know, to help force the issue or come to some sort of resolution? If you have a disagreement, is are you go, you're going to use arbitration? Like it's kind of like when you're getting married and you think of like getting a prenup. And again, like that's very personal. I'm not saying like you should have a prenup, but I'm saying if it's a business partnership, you absolutely need that prenup. And the prenup for you is the operating agreement. You need to be very, very clear about who's in charge of what and how those decisions are going to be made. Get a really good lawyer who does this, talk to other people who have searched for the partner and just be really clear that like, just like I was saying, like when you buy a business, you're in it for the long term. When you have a partner, they're your business, you know, spouse for the long term. So, you know, be aware of that. Okay. Did

you have serious conversations with your partner prior to buying a business and what would it be like and what would be like day to day? Yes and no. I definitely could have done better. So I had serious conversations with my wife about what it'd be like to buy a small business. I thought it was the, I thought it was the right move. I thought like, you know, I thought a lot of things, I'll say that. The best thing about my wife is that, you know, she trusted me, she trusted me to make good decisions. And if I was to go back, I probably would have done a few things differently. I would have been more clear on the risk. And to be honest with you, the best way for me to be more clear on the risk was if I understood the risk better. Like, and this is one of the reasons why I'm writing my book, Byra Beware, is because when I was searching, it was before things got super popular online, even though that was only like five years ago. But I read the HBR guide, I read Bybin Build, but, and I never met anybody who had a negative experience. And it's very easy to fall into the trap of, well, SBA default rates are like 4%. Somewhere between like

3% and 7% every year or something like that. And so it's very easy to fall in the trap of thinking, oh, well, then that's a 92% success rate. I'm going to be just fine because I'm better than 77% of people out there. And that sounds ridiculous. But that's the mentality that I had. And that's the mentality that a lot of searchers have is that the risk isn't that high because the default rates are so low. I'm here to tell you that that's not the truth. And although you may give lip service to the fact that a SBA default will wipe you out, you need to really internalize the fact that an SBA default will wipe you out, you will lose everything. And you need to be comfortable with that fact. And you also need to understand that the number one reason you don't hear stories of failure is because, A, they can't talk about it. 70% or more of people who go through these defaults, they sign non disclosure, non disparagement agreements, because there's going to be some sort of settlement in place. That's why you don't see people on LinkedIn talking about it. That's why the book I'm

writing is anonymized because they can't talk about it. That's why if you saw the acquiring minds episode, there's things I can't talk about. So that's one. And then the second reason is pretty obvious. It just sucks. It sucks. It really does suck. So to answer your question though, Mr. Troll Slayer, I did have conversations with my wife. They should have been more serious. And the best way that they could have been more serious is if I had more resources and I knew more or I had was better informed. And to be honest, I just wasn't as informed as I should have been. And although I knew that there were risks, I underestimated those risks. And yeah, that's why I'm trying to, that's why I'm out. Like my wife tells me and she's like, she'll see me posting on LinkedIn and she's like, are you spitting truth? I'm like, yeah, I'm spitting truth because it, because it's true. No one's talking about this. And so you need to you need to hear it. Again, not trying to discourage you just trying to help people have a more honest conversation. If not ETA, then would you recommend

looking at PE or M&A type roles? Okay, so I'm going to have to assume a few things here, but I'm assuming that you're somebody who's considering buying a business and you're thinking, all right, well, if I'm not going to buy a business, then what I recommend looking at working for a private equity shop or looking into M&A positions. I have no idea. It really just depends on what you want to do. Working at a PE shop is very different than ETA, because by definition, if you're working in PE, then you're most likely an associate or an analyst, you're doing deal sourcing, you're doing diligence checks, you're not operating the business. The only time you're operating the business is if you're actually like a CEO or CFO of a portfolio company, which you're probably not going to be. The only real way to get into that kind of role is by going either the traditional route of, you know, to be honest with you, it's like investment banking, then to PE, or do the MBA route to investment banking, then to PE, or if you link up with a PE group that does CEO in residence programs, that's

one way to do it. But really, I kind of touched on this early, but it just comes down to the kind of job you want to have. Like, you're not going to feel happy and fulfilled just because you work for a PE group. Like, if your job is sourcing and you hate sourcing, then being a PE analyst is going to suck for you. That's just the truth. The titles wear off quickly, the company brand names wear off quickly. I can tell you I've worked at Microsoft, I worked at Amazon. I don't care. Like, it feels really cool when you first start, it's like, oh, I got that cool label. But then it wears off very quickly. The titles wear away. So again, I would be very clear about finding roles, finding jobs that you enjoy doing. And if you enjoy doing them, then do that thing. You know, don't chase it just because it's something that feels prestigious because the prestige wears off quickly. And yes, Craig, great contracts make great partners. But I'll touch on that real fast. Another kind

of misunderstood thing. Something that people don't really think about a lot is that a lot of people, especially first time searchers, they put a lot of faith in their contract. They put a lot of faith in their purchase agreement. And I know they do because I did. And I also know they do because they say things like, I'm going to protect myself by having an earn out, by doing a larger seller note, by having a, you know, forgivable sellers note, by having a five year non-compete clause, by having certain types of representations and warranties like blah, blah, blah. All of those things are super important. You absolutely do need to do those things where they make sense. You absolutely need to have a very good attorney helping you. Someone who has a lot of experience in the space, understands the nuances of it and can help you, help protect yourself in your purchase agreement and all your other legal documents. But let me be really, really clear. Just because you are protected under purchase agreement and just because the other party, whoever that may be infringes on that

does not mean that you automatically win. All that does, all those legal documents, all they do is they give you a platform to sue. That's it. So if things go sideways and let's assume that, let's assume here, here's a very, here's a, here's a common idea. Like let's assume like you have a five year non-compete clause and let's assume the seller decides to start competing with you on day one. You sign the contract, you sign the purchase agreement and then within 24 hours they're opening up the brand new LLC. They're calling it something different. They're the name. They start soliciting your customers. They start soliciting your employees direct violation of the purchase agreement, direct violation of their non-compete. This is what I'm talking about. These legal documents, they're your foundation to sue. So obviously the seller in this situation would be infringing on the purchase agreement. So you can sue, but let's be really clear. Just because you can, doesn't mean that you're

going to win. It doesn't mean that it's going to happen quickly. It's most likely going to take a very long time. Lawsuits like this typically take a year, somewhere between six and 18 months. It takes a very long time to get this stuff done. So I say that to say, because while you're dealing with all this, it takes a very long time to get a resolution. It's expensive. And you're still dealing with the fallout of whatever they're doing. So if you find yourself in a situation where you need to sue someone, you're already screwed because the damage to your business is going to be catastrophic. And so while you do need to do everything you possibly can to protect yourself, the most important thing you can do is make sure that you don't get yourself involved in a deal with someone who is likely to infringe on that deal. It's so important. Like especially as a first time buyer, the number one thing you can do is do business with people you can trust. If you ever get the suspicion that the other person on the other side of the table is untrustworthy in any kind of way, walk away immediately. Just don't even play with it. So that's what I

have to say about contracts. All right, I'm going to hop off of here in five minutes. So or earlier, if nobody else has a question, but I'll stay here for a couple more minutes if we have any other questions. But great point, great point, Greg. And this is great. There's a lot more, a lot more comments this time. This is nice. And I appreciate you guys sticking this out too, because it is a little later. But if you didn't know, I've got a four year old and a two year old. And I have to wait until they fall asleep. And some nights, like tonight, they still haven't like four year old still has not fallen asleep. And so thankfully, his mom is taking care of him. But yeah, that's real life. Okay, well, for those of you, I appreciate you guys joining, I appreciate you guys with your comments. This is really helpful. If you have any questions, please leave them in the chat. This will be

posted on YouTube as a recording so you can always leave comments there. I try to answer as many of them as I possibly can. And as always, you can just DM me on LinkedIn too. That's a great way to keep in touch. But thanks for being here. Thanks for your questions. I hope this was helpful. And I'll see you next week.