In this episode of the M&A Launchpad Podcast, hosts Feras Moussa and Casey Minshew welcome special guest Blake Hutchison, the CEO of Flippa. Blake has been running Flippa for six years and shares many insights into how finds the edge to stand out as a giant in the industry. Flippa is a marketplace that allows buyers and sellers to transact on technology-backed businesses.
The discussion explores how the landscape of digital business acquisitions has evolved, particularly through Flippa’s unique marketplace that connects buyers and sellers of digital assets. Feras reminisces about the early days of Flippa in 2009 and reflects on its transformation into a diverse platform for acquiring digital assets such as websites, SaaS products, apps, YouTube channels, and more.
Blake shares insights into current market trends, multiples for different asset classes, and examples of successful acquisitions facilitated through Flippa. The episode provides valuable information for anyone interested in the potential of digital assets to enhance or pioneer their entrepreneurial ventures.
In this podcast episode, we discuss:
· Taking Military Skills into Entrepreneurship
· Stress of Cash Flow Management
· John’s Acquisition Story
· Operating in the Commercial Painting Industry
Time stamp:
00:00 Introduction and Key Takeaways
01:17 Ensuring Financial Health When Buying a Business
02:01 John Murphy’s Journey: From Military to Corporate
02:17 Transitioning to Real Estate and Business Acquisition
02:58 Challenges and Lessons in Business Acquisition
06:45 Insights into the Commercial Painting Business
14:43 Navigating Financial Closings and SBA Loans
16:52 First Steps in Business Acquisition
17:43 Implementing Changes and Software
18:25 Cashflow Management Challenges
21:20 Coping with Stress and Military Experience
26:40 Leadership and Company Vision
28:58 Future Plans and Advice for Entrepreneurs
29:45 Rocket Round: Personal Insights
31:36 Final Thoughts and Encouragement
You can connect with John by email: john@dcd-inc.com
Additional Resources:
- Access our archive of video interviews on YouTube
- Get in touch with show hosts Casey Minshew and Feras Moussa at – info@equitylaunchpad.com
- Looking to invest in M&A opportunities or partner with an advisor to acquire, scale or sell your business? Visit Equity Launchpad
Transcript
00:00 all right on today’s episode we
00:01 interviewed John Murphy where we talked
00:03 about what it’s like to go from being in
00:05 the military to a Fortune 50 company to
00:07 real estate and then ultimately going
00:09 off and buying your business and really
00:11 some of the challenges around being an
00:13 entrepreneur and having your own
00:14 business and how they really kind of
00:16 relate to some of the skills and things
00:18 that you learn in the military so Casey
00:19 what was some of your takeaways you know
00:22 being a kid from somebody that was in
00:23 the military my son going and focusing
00:26 on waned to join the military there’s
00:28 just some amazing leadership ATT
00:30 attributes that the military teaches
00:32 it’s pretty powerful you can see that
00:34 John’s really focused he’s he’s
00:36 implementing EOS he’s using that
00:38 leadership ability but you know what no
00:40 matter what he said even being deployed
00:42 two times does not have to it’s about
00:45 the same kind of stress stress to
00:48 managing payroll and making sure
00:50 sometimes you’re sure to payroll and
00:51 that stress of financial stress so
00:53 nothing’s GNA prepare you more to be
00:55 able to run a business than to go out
00:57 and to do it right no absolutely we
00:59 talked about again just some of those
01:00 skills that are usable and some of those
01:02 skills that aren’t and you know it’s
01:04 having EOS helps give structure right a
01:06 lot of military people like having
01:07 structure and it helps make a business
01:09 successful so lots of details on this
01:14 one all right guys just take one second
01:17 here real quick when you’re buying a
01:18 business ensuring the financial health
01:19 of the company is critical and that’s
01:21 where a quality of earnings partner
01:22 comes in quality of earnings gives you
01:24 confidence in the financials of the
01:26 company that you’re purchasing it aims
01:28 to protect your investment and ensure
01:29 you that you’re stepping into a
01:30 profitable business on data Patrick of
01:32 okam Advisory Group is your Dynamic
01:34 quality of earnings partner he’s here to
01:36 help you buy the right business on your
01:37 timeline Patrick’s entire practice is
01:39 focused on business Acquisitions your
01:41 Niche is his niche in over the past
01:44 decade Patrick’s helped more than 200
01:45 buyers like yourself successfully
01:47 purchase and operate enduring profitable
01:49 businesses in fact Patrick’s helped some
01:51 listeners of this show so if you’re
01:53 buying looking for help with the quality
01:55 of earnings Financial due diligence
01:57 Network capital and more head to
01:58 oconnell advisory group.com or just
02:00 click the link in the show notes John
02:02 welcome to show thanks honor to be here
02:05 yeah likewise man so we’re Facebook
02:07 friends and I’ve seen you over the years
02:08 but I didn’t really know enough of your
02:09 story so it’s again I’m excited to kind
02:11 of hear it so for those listeners you
02:12 want to share a little bit about your
02:13 background and kind of your history yeah
02:16 absolutely I’ll give you the quick
02:17 rundown so after college military career
02:21 and then transition out of the military
02:23 into the corporate world W2 worked for
02:26 Fortune 50 company manufacturing
02:28 leadership and then about halfway
02:30 through that tenure about 7 years there
02:33 I started investing in real estate built
02:34 out a portfolio I uh graduated myself
02:37 from the W2 world and then shortly
02:40 thereafter started looking into the m&a
02:43 space found the acquisition World
02:44 learned what kind of the the search was
02:47 even though I didn’t know the
02:47 terminology at the time right I was just
02:49 interested in buying a business I found
02:52 Bill Allen’s 10day crash course on
02:55 business buying on Facebook so I took
02:56 that knew enough to be dangerous right
02:58 couple weeks later found my my first
03:01 attempt at an acquisition and uh yeah
03:05 that one failed and
03:06 then joined another group shortly there
03:09 after that another business and eight
03:11 and a half months later acquired that
03:13 one which I currently own and run for
03:14 the last 13 months all right so a lot to
03:17 unpack there so let’s go through the
03:18 step by step so military career went
03:21 into Fortune 50 company said you’re
03:23 manufacturing leadership correct all
03:25 right so what does that mean for people
03:26 yeah it was a med device company so I
03:29 was in the operation
03:30 side of manufacturing for a lot of
03:33 Orthopedic medical devices gotcha gotcha
03:35 gotcha okay and being from the military
03:37 obviously that probably gave you a good
03:39 Baseline for leadership and so on that
03:42 side were you were you really
03:43 cultivating sales leadership was that
03:45 kind of the whole idea of with the
03:47 fortune 550 company yeah I think it’s an
03:50 easy translation when you get out of the
03:52 military it’s a big organization very
03:54 structured you know there’s corporate
03:55 recruiting firms and I used one of those
03:57 to find my next gig in a Fortune 50
04:00 company it’s an easy translation with
04:02 your experience and kind of the
04:03 hierarchy and the model that they have
04:05 so it’s an easy segue but being a
04:06 veteran and especially having a couple
04:08 tours you know we are used to more risk
04:11 and leading through that adversity and
04:13 as a result of that it’s tough to get
04:15 stuck into a corporate career you know
04:17 so to speak when you have that kind of
04:19 entrepreneurial Spirit right yeah and
04:21 you know thank you for your service you
04:23 know my father served my son is
04:24 currently at A&M he’s joined the core
04:26 he’s going to go to the Air Force RC
04:28 program so we’re huge huge proponent in
04:30 the military and it’s the leadership
04:32 skills that it brings so it’s just
04:34 really important but it also translates
04:36 into entrepreneurship right it allows
04:39 you to I mean I can’t speak for you
04:41 because I did not serve you know verison
04:43 I both have gone to the Harvard ETA
04:45 conferences multiple years and it seems
04:47 like a lot of the guys take their GI
04:49 bills and then they go into if they can
04:51 get into the Harvard NBA program they go
04:53 into the the entrepreneurship side of it
04:55 and it seems like a military Trend when
04:57 you meet these guys to go like hey I
04:59 want to run my own business
05:00 yeah I think there’s just a ton of
05:02 direct correlations there for success in
05:04 the military especially when you look at
05:06 you know the last decade wartime
05:08 deployments you’ve got a lot of
05:10 adversity that you’re leading through a
05:12 lot of unknown scenarios you don’t you
05:14 have limited information and you have to
05:16 make high level high stress decisions
05:18 and that’s a direct correlation to what
05:20 we do in entrepreneurship yeah and so
05:22 but then you you kind of shifted though
05:23 for before you got into entrepreneu you
05:26 started student real estate right and so
05:27 what was was your initial thinking hey
05:30 going to build wealth with real estate
05:31 and keep your W2 and then you shifted or
05:34 was that really the launching pad to let
05:36 you have some income so then you can
05:37 actually jump into entrepreneurship or
05:39 did you not know at the time yeah I mean
05:41 I think I’ve had that entrepreneurial
05:43 DNA since I was born right I always
05:45 wanted to build wealth even when I was
05:47 younger like I started my own Ira when I
05:49 was 21 just of my own accord you know
05:52 always kind of had that DNA so started
05:54 doing the real estate venture as a means
05:56 to work for myself and and build wealth
05:58 over time and I got to that as they say
06:01 the the Level One Financial Freedom
06:03 where you’re able to just kind of cover
06:04 your basic expenses but I knew there was
06:06 more to it so and that’s kind of when I
06:08 fell into the acquisition World got it
06:10 okay so then you got into the
06:12 Acquisitions World sounds like you got a
06:13 little bit exposure into the search
06:15 World concept is that right yeah that’s
06:17 right even though I didn’t know that
06:18 terminology until you know a few months
06:20 away from closing on my second business
06:22 right so I’d been about a year and a
06:23 half in the in the process with one
06:25 failed deal again I found that 10day
06:27 crash course I took that and just knew
06:30 enough to be dangerous I tried to bring
06:32 my you know Creative Real Estate
06:34 Financial structuring background into
06:36 that deal and they were very
06:38 unsophisticated seller so it it just
06:40 really didn’t work and I didn’t uh know
06:43 how to close that one unfortunately uhuh
06:45 so then I guess the one you did in them
06:47 closing right was it a was it a vertical
06:49 that you were specifically looking at or
06:51 were you looking more broadly and you
06:52 kind of came across a deal and you know
06:54 walk us through how that transaction
06:56 went and What attracted you to that
06:57 business yeah absolutely so it it kind
06:59 of boils down to my criteria so I was
07:01 looking geographically in about a one
07:03 state radius so it was drivable and SBA
07:05 lendable right and then from a size
07:08 perspective it met a certain buy box so
07:12 that was kind of critical for
07:15 understanding you know size years in
07:17 business and then also for the employees
07:21 profit margin all those different things
07:22 right so that was critical for the I was
07:26 looking at two primary Industries so
07:28 Construction Services and then also in
07:30 manufacturing and fortunately this one
07:32 is in commercial painting and so all
07:34 those things kind of lined up it ended
07:35 up being about 2 and 1 half hours from
07:37 where I live and that’s how I selected
07:39 that business yeah so what you like
07:41 about commercial painting what was it
07:42 about it now that you’ve had it how many
07:44 years have you had it sure uh 13 months
07:46 so just over here congratulations so
07:48 what do you like about it thanks yeah
07:50 there’s uh there are some Moes around it
07:52 right so commercial painting has it’s
07:55 very relationship based so we work with
07:56 a lot of general contractors in West
07:59 Michigan and it’s a 61y old business so
08:01 that was another reason that’s not
08:03 necessarily directly tied to the
08:05 commercial painting space but when you
08:07 have a business that’s been around that
08:09 long you know they’re they’re doing
08:10 something right so they had the good
08:12 reputation the good history which was
08:14 critical factor in my decision making
08:16 process right got it see Casey asked the
08:18 wrong question I usually ask now that
08:20 you’re in it what do you not like about
08:21 the business hey I wanted to start with
08:24 I wanted to start with the nice positive
08:25 stuff before we get into the other part
08:27 of the business there you go what do I
08:28 not like about the business bu uh you
08:31 know it it’s got the challenges of every
08:33 service-based business right so there’s
08:35 tighter margins than my original
08:37 criteria would kind of lend me to it’s
08:40 there seasonality in the business we’re
08:41 in West Michigan so we shut down our
08:43 exterior painting from about November to
08:45 March yeah there’s just you know you’re
08:47 kind of standard construction industry
08:49 challenges and same with commercial
08:50 painting and paint costume gone up a
08:52 little bit too right I mean you’ve dealt
08:54 with some paint cost increase over the
08:55 last few years yeah yeah that that
08:57 hasn’t had as great of an impact as I
08:60 would say more on the labor end oh the
09:02 labor end yeah we’re we’re we’re
09:04 currently getting our house priced to to
09:05 do a paint job and so I’m dealing with
09:07 it no I haven’t painted theide oh okay
09:10 outside this time the inside yeah yeah
09:12 so I but but I’m getting quotes and
09:14 doing all that stuff and it’s just
09:15 there’s no consistency it’s it’s
09:17 honestly like who wants to win the job
09:19 it seems like now this is residential
09:21 right I imagine on the commercial side
09:23 there’s got to be just some consistency
09:25 and how you bid a project there is yeah
09:27 competition yeah yeah and kind of going
09:29 back back to where you asked about what
09:31 I like about it I’d say what I like
09:32 about it over your standard residential
09:35 painting as well is our average ticket
09:37 costs are are much higher right so we
09:40 can do Residential painter average might
09:42 be you know 5 6,000 we’re right around
09:45 the 225,000 so the the number of jobs
09:48 and complexity in managing all those
09:50 components is significantly reduced when
09:52 you go to the commercial side yeah
09:54 absolutely so so then I mean get us into
09:56 the deal a little bit right so you know
09:58 what was the seller like how’d you find
09:59 the deal and how you know what were the
10:01 revenues and how did you end up coming
10:03 to terms with seller on
10:05 evaluation yeah absolutely so uh how I
10:08 found it I’m not a great uh person to
10:10 talk to when it comes to like a
10:12 proprietary type search where you’re
10:13 you’re building out this website and
10:15 doing all this Outreach and everything
10:16 because I found my deal about three
10:18 weeks after I started looking on bis
10:19 byell so and it was off of bis byell
10:23 yeah yeah folks there are deals on those
10:25 sites I’m sure there’s some learning
10:27 lessons you took from it right it wasn’t
10:28 like there’s probably some things that
10:30 you you’ve done we’ll let you finish
10:31 your stuff but I want to hear some of
10:32 those things you learned from working
10:34 off of bis byell yeah so found the deal
10:36 on bis byell you know reached out to the
10:38 broker it was kind of interesting it’s
10:40 not a very attractive bis by sale deal
10:42 it had the numbers it met my criteria
10:44 what I was looking for but it didn’t
10:46 have like a a nicely formulated Sim you
10:49 know the broker was actually a franchise
10:51 broker and this was his first private
10:53 business that he was selling so there
10:55 was a lot of little components that I I
10:57 think kind of kept a lot of buyers away
10:60 even though when I did start to get
11:01 under contract there were a couple other
11:03 Lois on the table so yeah so that’s
11:05 essentially how I found the business and
11:08 then moving forward I got in front of
11:10 the seller very quickly started building
11:12 the Rapport and learned what he wanted
11:14 out of the transaction so then crafted
11:16 my Loi around his his kind of Exit Plan
11:19 and the number he was looking for and
11:21 then end up getting under contract for
11:22 it any any tips and tricks on things you
11:24 included in the LOI or things you should
11:26 have included in the LOI yeah yeah it’s
11:28 tough because every deal is so unique
11:30 right every seller’s unique every
11:32 buyer’s unique so my best advice that I
11:34 give to people is is spend the time get
11:36 to really dig in deep to what the seller
11:39 is looking for out of the transaction
11:41 you know we like to play in the I’m a
11:43 retiring first second third generation
11:45 owner space so that is ideal because you
11:49 can craft and formulate your offer
11:52 around what they want a lot of times
11:54 those guys have been in guys or gals
11:55 have been in the business for 20 30 40
11:57 years and they’ve made a boatload of
11:59 money money it’s not necessarily a
12:01 financial play for them right so you can
12:04 get a little bit more creative with the
12:07 numbers got it and so what were the what
12:09 was the revenue the iida and what’ you
12:11 buy for so in the full 23 year they did
12:15 8 million in revenue and the SD was
12:18 sitting right around a million and then
12:20 the multiple was right at a 3X not bad a
12:23 good buy it’s a healthy you know fairly
12:24 healthy business and did you have to
12:26 explain a lot of that to the seller when
12:27 you started working with them or because
12:29 obviously the broker didn’t know what he
12:30 was doing right so were you doing while
12:33 you were learning you’re also educating
12:35 him right yes yeah that’s a thing let me
12:38 go teach you about it now I read this
12:40 today crash course yeah yeah for sure um
12:43 well I was a little bit more mature in
12:45 my process that because I’d already gone
12:46 through one fail deal oh yeah so that
12:48 that deal five months $40,000 in due
12:51 diligence cost the sellers pulled out a
12:53 week before closing so that that was a
12:55 tough lesson learn and then I joined
12:57 Kyle’s group and he has a very strict a
12:59 toz process and you get to learn the
13:02 full spectrum of what you need to close
13:03 a business which helps a lot going
13:05 around the second time and he’s got the
13:07 community so you’ve got the sounding
13:08 board and I’m running into roadblocks
13:10 you know I can I can reach out to people
13:12 that have been there done that and that
13:14 was one of the key factors in my success
13:17 in closing the second business right so
13:20 yeah got it and so okay um multiple yeah
13:24 3X 8 million Revenue million of SE so
13:29 you mentioned Mar Marin right so you
13:30 said one of the things you didn’t like
13:31 right it wasn’t EXA so did you expect
13:33 the margins that you closed at or did
13:35 the margins change what what was it
13:37 about the margins that that didn’t
13:38 really fit your thesis no the margins
13:41 held consistent so going into it
13:43 traditionally so for the the painting
13:45 industry you’re looking at a a 40 gross
13:48 15 net that’s a healthy company in the
13:51 painting industry however my buy box was
13:54 20% or greater right so it was kind of
13:56 right under that minimum threshold for
13:58 what I was really looking for but when
13:60 you look at it across the industry it’s
14:02 a very healthy company so that’s kind of
14:03 why my tune changed even though it’s a
14:06 it was on the larger side in my buy box
14:08 so you just have to look at that’s
14:10 that’s one piece I tell a lot of people
14:11 is you know you’ve got like a lot of the
14:13 traditional search funds they have this
14:14 whole Litany of like checklist right of
14:17 what you need to be to have a successful
14:20 business or what they’re looking for
14:21 recurring Revenue sticky customers
14:23 limited customer concentration this
14:26 business didn’t fit a lot of that
14:27 criteria but it had a lot of other
14:29 aspects that were very attractive so I
14:31 mean 60 years in business right they’re
14:33 doing some large contracts they’ve been
14:35 doing it with this general contractor
14:37 for 10 plus years right so these great
14:39 relationships and all these these other
14:41 factors that made it a very attractive
14:43 business so so you closed used SBA right
14:46 so this is your was this your first time
14:48 to go through any type of financial
14:49 closing like well you’ve done real
14:51 estate so you obviously used to the loan
14:53 and all that process so the personal
14:55 guarantee none of that was a big issue
14:57 for you you felt like no problem with
14:59 this SBA walk us through some of that
15:02 yeah I mean I wouldn’t say it wasn’t a a
15:04 big no problem no big issue I had done
15:07 some commercial real estate I had a
15:09 couple seven figure loans but this was
15:11 my you know largest loan to date so and
15:14 and it’s a it’s a whole new Arena too
15:15 when you’re you’re walking into a
15:17 business acquisition versus just doing
15:19 some you know investments in real estate
15:21 rental property type thing a lot of
15:22 similarities so I credit you know real
15:25 estate investing to building some of
15:27 that risk tolerance up to enable to to
15:30 take that leap make that transition a
15:32 little bit easier right to the to the
15:34 business a lot of m&a is financial
15:36 engineering and financial competency and
15:38 if you’ve done real estate you typically
15:40 have a leg up on a lot of people that
15:42 happen right exactly transactions right
15:44 you get the chance that you your your
15:46 knowledge through being able to do
15:47 transactions know how to structure like
15:49 you said earlier creative model
15:50 financials Ian being creative in your
15:52 financing thinking outside the box I
15:53 mean all that’s pretty important yeah
15:55 100% I think that’s kind of held me back
15:57 in my first deal because I was trying to
15:59 get super creative with it whereas if
16:01 I’d had just gone with a straight SBA
16:03 loan and paid him out 100% with no
16:06 seller financing no collateral I
16:08 probably would have closed that first
16:09 deal right so it’s all part part of that
16:12 learning process and and kind of fun
16:14 fact on that one I reached out so that
16:16 was a fencing company I reached out to
16:17 that seller 6 months after ID fell out
16:19 of contract with him and he had been
16:21 through another buyer at that time and
16:24 he so he was he was getting fatigued
16:26 right and I have a business partner in
16:29 the real estate space and I I figured he
16:31 would be a great owner operator for that
16:33 business so I connected the two and he
16:35 closed on that business I believe five
16:36 or six months ago nice oh nice yeah
16:40 story there well so let’s talk about you
16:42 know I guess what’s happened in your
16:43 business and what’s happened in his
16:44 maybe if you know so you know you’re
16:46 you’re 13 months into it right SD was
16:48 one when you took over you know where’s
16:50 SD and how are you feeling about the
16:52 business right and what were some of the
16:53 first changes that you made once you
16:54 kind of did take over yeah so you know I
16:57 learned a long time ago in my military
16:59 career because again a good parallel to
17:04 why military folks and veterans are
17:07 successful in in the entrepreneurship
17:09 world is we’re used to that
17:10 organizational management organizational
17:12 change so we often every two to three
17:15 years we’ll move to you know another uh
17:18 unit another organization and we have to
17:20 learn that organization in a very short
17:22 period of time and then we have to start
17:24 affecting change making decisions and
17:26 accomplishing those those missions and
17:28 goals so that skill set know is directly
17:30 applicable to acquiring a business I
17:32 came in you know first four to 6 months
17:35 really just learning the people learning
17:36 the industry learning how we do things
17:39 cash flow Management in the business
17:41 building those relationships and then I
17:44 would say around that same Mark I
17:46 started making tweaks making changes EOS
17:49 implementation started about 6 months in
17:51 uh started adding some additional
17:53 software and those types of things what
17:55 was the main thing you started taking
17:57 down with you because obviously you
17:58 didn’t have an imp do you have an
17:59 implementer with you or was this
18:01 something you have done s Implement yeah
18:04 so I I didn’t have experience with the
18:05 OS prior to and I did hire a third party
18:08 implementer to to help us in the process
18:10 yeah oh and it’s valuable I mean that’s
18:11 what we have and it’s just sometimes
18:12 nice to have a a neutral person that a
18:15 keeps you kind of accountable and
18:16 becomes also you know can be the bad guy
18:19 if needed right it’s hey we’re just
18:20 doing what he his process his thing it’s
18:23 not me that’s you know forcing you to do
18:24 this thing or this wave so yeah dive in
18:26 a little bit on your cash flow
18:27 management because that that’s also such
18:29 a fundamental thing so for our listeners
18:32 you know there’s all the one this is
18:34 very complex it sounds simple this but
18:37 there’s just so many moving Parts in in
18:39 a business is living and breathing
18:41 especially a business that’s generating
18:42 you know three four million doar in
18:44 Revenue no I’m sorry you bought for
18:45 roughly around three million to an eight
18:46 million of Revenue so it’s got a lot of
18:48 living and breathing it’s got a lot of
18:50 parts it’s got a lot of things and it’s
18:51 60 years old so it’s got a personality
18:55 it’s got a culture I mean it’s it’s a
18:57 big undertaking right so be able to come
19:00 in and affect change to be able to know
19:03 how to Pace it but the number one thing
19:05 is is if you don’t have cash you’re
19:07 toast right and so cash flow management
19:10 and and I’ve learned this now like our
19:12 first two Acquisitions like man it’s
19:14 critical it’s like spending the time to
19:17 understand how the money moves and how
19:18 it comes in all of those pieces so what
19:21 was your what was your take in the first
19:23 13 months with cash flow yeah you’re
19:25 spot on and I have had some significant
19:27 cash flow challenges right so again this
19:30 is my first acquisition so I didn’t do a
19:33 thirdparty QV and great kind of tied
19:36 into your episode with Patrick oconnell
19:39 right L that one uh totally took out
19:42 some things from that and would do it
19:43 made the mistake too brother yeah right
19:47 so uh unfortunately I under capitalized
19:49 going in I did negotiate some working
19:51 capital with the business but it was
19:52 probably close to 50% of what I needed
19:55 to have a stable cash flow he took the
19:58 entire account receivable with him which
19:60 was not insignificant it was $1.3
20:02 million and I negotiated half a million
20:05 in working capital to transfer at the
20:07 close right so I had about that 50% Gap
20:11 and compound on top of that that was
20:14 October 1st of 2023 that I transition
20:17 the business and that’s the essentially
20:20 the beginning of our slow season right
20:22 so we had had that factor we had the
20:24 under capitalized and we had the the
20:27 lower Revenue season for the next four
20:29 to five months so we we’re in a very
20:32 extreme cash flow crunch right so I had
20:35 to manage my way through that and figure
20:37 out you know how do you extend credit
20:38 terms with vendors you know how do you
20:40 leverage lines of credit uh fortunately
20:43 I have a real estate portfolio that I
20:44 could leverage as well and just manage
20:46 through that down season as we get into
20:49 our busy season in the spring of this
20:51 year and then you come pound further on
20:54 top of that is as you get busy and you
20:55 have larger contracts we’re 100%
20:57 commercial companies so we’re paid on
20:59 net 30 45 day terms and then you add
21:02 retainage on top of that so even on that
21:04 30 to 45 days you’re only getting 90% of
21:06 your Revenue so there’s this long lead
21:09 on your your cash flow conversion cycle
21:11 and you have to manage through all those
21:13 different periods so now that we’re on
21:15 the back end of the busy season we’re
21:17 starting to come out of that hole right
21:20 yeah so you’ve been through some pretty
21:22 stressful things right it sounds like
21:23 you’ve had two deployments you’ve been
21:25 through War you’ve I mean a lot of stuff
21:27 that most of us that position
21:29 talk to us I want the listeners to know
21:32 like because everybody has a different
21:33 way of dealing with stress so in that
21:35 moment right I mean that is it that that
21:37 feeling I we had that feeling in July
21:40 with with H&M we had a hurricane we were
21:42 shut down for 15 days with no power and
21:45 you’re talking about a massive massive
21:46 $25 million Revenue business so that’s a
21:48 big impact right so I remember being
21:51 helpless that feeling like what do I do
21:53 now like how do I feel with so how do
21:55 you cope like what would be your advice
21:57 and you’re solo we at least have
21:58 partners and bounce on you know levers
22:01 the networks of each other I mean the
22:02 coping mechanisms you picked up from the
22:04 military to allow you to stay focused to
22:06 not you know get the you know lose your
22:09 in the middle of the night per se
22:10 you know what I mean yeah no it’s a
22:12 great question and and it’s uh it it’s
22:15 funny because you know you have those
22:17 experiences in the military you you get
22:19 deployed and you’re in you know
22:20 dangerous environments and you’ve got
22:22 that kind of fighter flight kicks in but
22:24 it’s a very different kind of stress
22:27 right the one thing military folks are
22:29 not worried about is when their paycheck
22:31 hits their account right they’re they’re
22:33 government employees so that Financial
22:35 stress isn’t there so we talk a lot
22:38 about you know veterans being great at
22:40 small business leadership and
22:42 Entrepreneurship but but that’s a muscle
22:44 that’s a skill set that’s not built out
22:46 right so I would say you know outside of
22:48 my deployments and that stress I would
22:51 equate entrepreneurship to equally as
22:54 difficult because of that Financial
22:56 stress right so I mean coping me
22:59 mechanisms I’d say I don’t have any good
23:01 ones right but one thing that’s helped
23:04 me through it all was to have a network
23:08 and community of people that are going
23:11 through this process right so I can lean
23:13 on them you know I have some great
23:15 friends now out of the out of Kyle’s
23:17 group that uh are just they’re they’re
23:20 in it right so a good friend of mine you
23:22 know we ran a marathon last month
23:24 together we do training he had a failed
23:27 deal so he’s been through that deal when
23:29 went bankrupt so you hear all these
23:31 stories you know a lot of podcasts are
23:33 out there of of failed deals so it it
23:35 helps you kind of compartmentalize and
23:37 say okay well this this is the
23:39 experience right there there’s no
23:40 guarantee of success and
23:42 Entrepreneurship is what it is you you
23:44 give all the inputs and then you you
23:46 just know don’t know what the outputs
23:48 are going to be right sure yeah that
23:51 continuous Improvement you know fail
23:53 forward all that mentality but you know
23:56 I asked that question particular because
23:57 we all have different coping mechnisms
23:59 because stress is real it’s and it’s
24:01 very high especially when you’re
24:02 thinking about making payroll because
24:04 it’s not just your lives it’s not just
24:06 you it’s not about your payroll it’s
24:08 everybody else’s payroll right and it’s
24:10 that feeling where you wake up in the
24:11 middle of the night and you’re sweating
24:13 like holy crap like I what if I what if
24:15 we can’t make payroll that’s a real
24:17 feeling right so you’re 13 months in and
24:19 it sounded like really in your first
24:20 couple months you’ve had that experience
24:23 yeah absolutely I mean we’ve had there’s
24:25 weeks where I pay myself nothing I’ve
24:27 had a week where I had to stroke a
24:29 $47,000 check just to make payroll that
24:31 week right and fortunately I was able to
24:33 leverage my real estate portfolio and do
24:35 that and and I think that’s a good point
24:37 too is not every absolutely but not not
24:41 every buyer is well suited to buy every
24:43 business too right there has to be kind
24:46 of a a good assessment of your own
24:48 capabilities both financially
24:50 operationally you know
24:52 experiencewise and assessment of that
24:55 business and see where those two things
24:58 marry up
24:59 right I completely agree so I guess 13
25:02 months into the business are you feeling
25:03 good about it you happy you made the
25:05 purchase and is it growing or is it kind
25:07 of plateaued still I mean how are you
25:08 feeling about it overall yeah I feel
25:10 really good I think we’re on the tail
25:13 end of our our cash flow challenges it’s
25:15 going to take one more full season
25:17 really to get the business capitalized
25:19 properly where where it needs to be
25:21 right uh like I mentioned we implemented
25:23 EOS so we’ve set out our one three and
25:26 10 year goals for the company the whole
25:28 team is is super aligned they had a lot
25:30 of buying and and they had a lot of
25:32 input into developing our vision for the
25:35 company itself and also for the new
25:38 culture we came up with our new core
25:39 values and we’re rolling out those core
25:42 values to the whole organization uh so
25:45 yeah all in all I’m I’m really excited
25:47 about the company yeah John one of the
25:49 one of the things we implemented at H&M
25:51 that I found to be just phenomenal we
25:53 live and breathe off of it it’s called a
25:54 13we an now it’s a 13we budget right and
25:57 it takes all of our pay Ables all of our
25:59 receivable potential we build it out so
26:02 we can actually kind of forecast 13
26:03 weeks in advance we know where our gaps
26:05 are we know and it’s just become like a
26:08 living breathing methodology of those
26:10 kind of things and for our listeners we
26:12 We’ll add some kind of Link down there
26:13 to so you can kind of see it but that
26:15 that analysis is just pretty phenomenal
26:18 at least for me for cash flow it lets me
26:20 know hey in the next 13 weeks especially
26:21 when feris and them are like hey how are
26:23 things you know and I’m like hey let’s
26:25 pull up the 13 weeks it’ll tell us
26:27 everything right yeah we don’t care the
26:28 14th week just the first 13 so it’s your
26:31 90 days right that it’s that mindset so
26:34 anyways it’s pretty cool but um but it
26:36 kind of goes back to to Really you know
26:39 and here’s really my big question so
26:41 when you go in from a leadership
26:43 standpoint right into the business now
26:45 you you You’ obsessed how are you
26:48 looking to impact through leadership
26:50 with your group so 13 you’ve been in
26:52 their 13 months 14 months what is your
26:55 leadership plan what is your strategy
26:57 how are you going in and and and are you
26:59 are you trying to elevate certain people
27:01 through leadership I mean what are what
27:03 is your game plan in that yeah so you
27:06 know I inherited a great company you you
27:08 never really know what you’re going to
27:09 get right until after you close and
27:11 you’re you’re sitting in the seat and
27:12 you’re running it right so you you can
27:14 go through the best due diligence
27:15 processes and and all that but I was
27:18 fortunate enough to inherit just a
27:20 fantastic team I mean the seller was
27:22 working 3 to 5 hours a week in the
27:24 business for the prior three years right
27:26 so they were really running the
27:28 day-to-day operations and through
27:30 implementing EOS and getting all that
27:32 alignment the critical areas for me to
27:34 work on the business which I’m fortunate
27:36 to spend most of my time doing was on
27:39 the vision side you know where are we
27:41 going as an organization you know what
27:43 does the next decade look like for us
27:45 and then the culture side as well you
27:47 know this is the construction industry
27:48 so you’re going to get you know just a a
27:51 mix of of things that you have to deal
27:53 with right so really defining what our
27:56 culture is and then making sure we’re
27:58 living up to those core values and
27:59 starting to transition how we do things
28:02 right so I view it as you know my role
28:05 as the owner is is a Steward I’m a
28:07 steward of the of the business I’m here
28:09 to enable support and help each employee
28:12 in the business at at every level got it
28:14 it’s a great way to look at it and and
28:16 and I gotta ask you know the business
28:18 that you sent over to your friend how’s
28:20 that doing is he feeling really good
28:21 about it or is he having some challenges
28:23 there too yeah like I said he’s five or
28:25 six months in so he’s um you know first
28:28 few months are always tough you know
28:30 trying to understand the business and
28:32 and get a feel for it and he’s never you
28:34 know run something like that so he’s
28:36 he’s he’s kind of on the uh getting up
28:39 to that upper part on the J curve I
28:41 think he’s he’s understanding it but
28:43 again it’s fencing in in that business
28:45 is in Indiana so they seasonality
28:47 component to that as well so he’s got to
28:49 get through that slow season cycle and
28:51 then you know up to the the hot hot and
28:54 heavy season during the summer and I
28:56 think he’ll do really well with it
28:57 though and then maybe last question I
28:59 mean what’s next for you right is just
29:01 continue to operate it as is and just
29:02 kind of do incremental growth do you
29:03 plan to go buy businesses to bolt in do
29:06 you plan to go buy another business as a
29:08 you know completely different vertical I
29:10 mean what do you kind of see the future
29:12 yeah I mean uh nothing’s off the table
29:14 right uh I’ll take my plan for now is
29:18 you know I’ve got a 10-year vision for
29:20 the company and we’re gonna march to
29:22 that and and that’s what the direction I
29:25 want to go if we end up you know
29:26 partnering with folks to to help out
29:28 maybe private Equity Firm and that’s the
29:30 great thing about EOS is there from an
29:32 exit planning standpoint you know
29:34 there’s a ton of private Equity firms
29:35 out there that love businesses run on
29:37 EOS you know or have playbooks to
29:39 implement it after they acquire them so
29:41 there there’s a lot of that lines up you
29:42 know all right awesome perfect all right
29:45 let’s move on to our rocket round where
29:47 we get to ask our guests uh some three
29:50 great questions here so I’m gonna ask
29:52 the first one so what do you like to do
29:53 in your free time yeah that’s that’s a
29:56 interesting question you know so I live
29:58 live in two states I I’m a you know
29:60 single dad half the time and operate a
30:03 business in a real estate portfolio so I
30:04 don’t have a lot of free time but uh I
30:06 like to like I mentioned I ran a
30:08 marathon training for another one next
30:10 year and then I also like road course
30:13 racing so probably get back on the
30:14 racetrack next season cool all right and
30:17 next question most memorable moment in
30:19 your business Journey yeah I mean there
30:21 there’s a lot of memorable times I would
30:24 say my most proud moment is when I
30:27 walked in on a Friday morning into my
30:31 office comence room door was closed my
30:33 VP was in there with one of our
30:35 employees after the door opened I went
30:36 in and talked to him and both he and one
30:39 of the the project managers were rolling
30:41 out the people analyzer for Eos and
30:44 they’re evaluating him based off of our
30:47 core values and some other metrics too
30:50 and I had zero involvement in that so
30:52 just watching them kind of execute on
30:53 that strategy was was awesome ni it’s
30:56 like watching your kid learn to walk for
30:57 the first time other
30:59 100% all right last question what is
31:00 your favorite tool or
31:02 resource yeah I mean we’ve talked about
31:04 it I have to have to say it it’s
31:06 definitely EOS you know it’s not get it
31:09 gets some Flack but need to go buy an
31:10 EOS business man you’re a walking
31:12 talking commercial for them I know I
31:14 should probably get some endorsements
31:15 but no it’s just a really good set of
31:18 tools for somebody like me in particular
31:20 that I’ve never run a business from
31:22 every you know a toz aspect so it’s got
31:25 tools for all of the major problems in
31:27 your business structure for those
31:29 listeners that don’t know what EOS is I
31:31 mean it helps give you structure that’s
31:33 rinsable repeatable and you know
31:36 scalable so John before we wrap up get
31:38 everything done tell our listeners like
31:41 I mean you’ve done it right you’ve gone
31:42 through it like take take a few seconds
31:45 here give them words of encouragement
31:47 give them advice what would you add to
31:49 them uh closing out the the call
31:51 today yeah absolutely I think uh two
31:55 pieces one is you need to network in
31:58 find some type of community whether it’s
32:00 just your network or it’s it’s a paid
32:02 Community you have to get around people
32:05 that are doing this right so you have to
32:08 learn the process and and it’s a
32:09 language quite frankly so you have to
32:12 learn the language and get around people
32:15 that have been through the process you
32:16 know the old adage of find somebody
32:18 that’s where you want to be and learn
32:20 from them that’s 100% applicable in this
32:22 case and and like this shit’s hard right
32:26 so you have to it’s it’s a marathon
32:29 there’s a reason I run marathons right
32:30 there’s so many parallels between being
32:32 an entrepreneur and running a marathon
32:34 um but you have to be in the communities
32:37 then the other piece is getting over
32:39 that first fear hurdle right it’s just
32:41 taking daily action it’s huge and
32:45 unwieldy when you look at an acquisition
32:47 of a business but you have to break it
32:49 down into the components and then just
32:51 take one step every day you know I’m I’m
32:54 calling this insurance guy you know this
32:56 is my task for the day you know so just
32:58 taking one step at a time and you’re
32:60 going to look back and you’re going to
33:01 have so much growth and learnings from
33:03 all that right great advice I would Echo
33:06 all of that greated John how can people
33:08 get a hold of you I’m on LinkedIn or uh
33:12 John DCd dc.com all right perfect John
33:17 again man thank you again for your
33:19 service being a total badass running a
33:21 marathon and all your hard work and I
33:23 wish you the best in your journey and so
33:25 thanks for joining us today thank you
33:27 call thanks for having
33:29 me thank you for listening to the m&a
33:32 Launchpad podcast if you’ve enjoyed
33:33 today’s podcast and would like to
33:35 support us please leave us a rating and
33:36 a review after you listen I’m Casey muu
33:38 and I look forward to talking with you
33:40 next week
