John hubard welcome back to acquiring minds thanks thanks for having me John you have the unique distinction of being my only guest drinking a beer during our first interview so obvious question okay you beat me to it couldn't even ask there it is um so John we spoke uh for our first interview about a year and a half ago a year before that you had acquired a trailer fabrication business and when we spoke things were going well and you were bullish about the year that we're now in 2023 and even as far out as 2024 so you were looking ah had two years and your projections were bright so I wanted to have you on for an update before we get into the the now John refresh our memory remind listeners who you are and what you acquired yeah so I uh John hubard have acquired a trailer Manufacturing Company in the Tampa Florida area in 20 2021 prior to that you know working it backwards I was in grad school I got NBA from SMU it was free I actually got paid to attend school by Uncle Sam so I figured why not uh prior to that I was running a small business uh for a rich old white guy in Texas um and before that building houses before that a cop for two years and before that I spent 13 years in the military great well I remember one of the the angles of our first interview was that you were a cop that had been a cop former cop buys business uh which was which was super interesting still is so okay John and then refresh our memory on express trailers or now Express custom trailers yeah it's a trailer manufacturer small one location you one facility here in uh Clearwater Florida it's a clear water address but we are over in an industrial area closer to St Petersburg so if you're picturing palm trees and I was out there making trailers with shirts off that's that's not really what it is um but uh when I first bought the company it was just a normal trailer manufacturer they built uh high volume of trailers sell them to dealers across the state they had around 15 full-time dealers um and then they had a sprinkling of these like commercial kind of one-off vehicles they were doing for yeah other businesses government accounts and whatnot that's what it was when we you bought the company great and remind people also your how the deal came together just real quick we're not of course going to do the whole acquisition story but Sam's role search funder's role yeah search fund.com I decided one day I was going to kick the search off I was about to you know I was my last semester at grad school so I went on search funer and basically said here's where I'm looking to buy a company here's how much money I need uh if you're an investor and you want to invest email me because that's how foolish I was that's how I thought it worked um but people did email me I got linked up with Sam Rosati from pursuing capital he's here in the Tampa area um flew down met him over some wings and beers at the original Hooters in Clear Water and uh we said yeah let's go find a company and fell into our lap after about 90 days closed in 60 and uh that was it uh so I actually I might have forgotten that from the first time around so you and Sam got connected before this particular opportunity before Express came along you kind of he helped you search and and yeah um kind of worked with you gotcha all right yeah absolutely and then what what did express trailers look like and give us some numbers around the business when you bought it in 2021 uh specifically Revenue headcount yeah so they had 35 employees they did just over five and a half million in revenue on that they did 741 eida and then we were able to buy it for two and a half two and a half million two and a half million yeah two not multiple yeah it was a pretty good deal um we did a I don't know if you remember from the first one but we did a stock purchase which is pretty painful but since these were the original owners of the Secor by doing a stock sale they then got to avoid paying capital gains tax on it so we got it for almost a 25% U discount if you will because we're willing to do a stock purchase which isn't nor normal on a business to this side so yeah and were you nervous about that no um yeah you know only because of where the company was Sam kind of had some personal connections to the seller um having a good deal team down here and having you know Sam as my partner on the deal a former lawyer and accountant if it's not past him then I definitely wasn't going to catch it so great John okay so that was 2021 when you bought it here we are uh recording in September 2023 how are things going good uh busy we are in the the stages of renovating and moving into a new facility um a much larger nice new facility you know I say our facility is finally going to be on par with our product um it's kind of been the goal since day one you know our first big thing was the website and uniforms and branding our product was Premiere and then everything else in relation to it was subpar so we're finally getting everything around our product up to the same standard our products uh gang Buster year for us you know we we lost our biggest customer coming into this year um they were 25% of our Revenue in 22 150 units and decided that they just didn't want to order any trailers for 23 so that put a pretty big hole in our board um and like things have happened since we bought the company people just started calling and we got a new customer from Word of Mouth referral from someone else that uses our trailers and their first first order was 18 trailers for just under a million dollars and that filled the board back up um and then you know other small deals kept coming in and then we landed a really big client and green workor tools um that were going to be their manufacturer moving forward so uh even when we take a hit and lose your biggest customer uh we rebound and now we're going to have a new biggest customer next year even if these guys come back they'll no longer be our largest customer so kind of took a ding to start with but solved the customer concentration problem we were looking to address anyways um and we got a whole bunch of customers to fill their spot so so far the one thing I've learned at trailer industry is uh especially with what we do in kind of Niche commercial manufacturing if you lose a customer it's pretty easy to replace them uh lead time is usually people's biggest problems so gives you a lot of pricing power and uh negotiating power as a manufacturer in this space that's awesome John I want to ask two follow-ups there first I was going to call out the customer concentration yeah it sounds like maybe it was a blessing in disguise you lose a customer that's 25% of your Revenue which of course is why we don't like customer concentration CU it's scary One internal decision at your biggest customer means it's 25% drop in your Revenue so we try to avoid that and then so that happened to you uh but you refilled that quickly th those lost sales quickly and so it would seem like well maybe that if you if you refill it with multiple uh customers rather than just one then that 25% is now chopped up into smaller percentages and and you basically smooth out your customer concentration which is awesome however what I heard you just say is one of the customers that refilled that that hole is actually going to be bigger than the one you lost so are you or are you not going to have more con customer concentration going forward yeah no so that's a good point to clarify so coming into the first year running the business they were probably 12 133% of our Revenue the second year they jumped to 25 you you know they went from ordering they you know ordered three times what they normally ordered in one year period which was great for us because it was the year you know if you go back and read or watch episode one it was the year we fired all the dealers so to have them come in and order a 100 extra trailers replaced basically everything we lost to the dealers at a much better margin so yeah 25% going into this year they went for 25% to zero which hurt we've replaced it with six new business accounts and one of those Green Works will probably end up still being around 12 to 15% of Revenue as it sits today um yeah but that's uh not as wor I'm as BR view a landscaping company what Greenworks is going to be doing is selling EV trailers to end users municipalities and stuff so they have a long-term plan like a five-year production contract they're looking at so um a little less scary than I just see how many trailers this Landscape Company orders every year yeah yeah totally because they're they kind of represent a little bit of a channel for you and also 12 or 13% is way better than 25% in terms of customer concentration yeah although I expect you I expect you're you are hoping to grow that account so maybe it does become more than 12 and 13% over time Green Works yeah and you know the way we look at some of these new big accounts is with what our margins have gone to and what we've been able to do with evida you know I'll I'll take a swing on five years of One customer being 20% of my Revenue knowing that if I lose 20% of that Revenue the business is still doing okay you know it's almost like icing on the cake thing we can lose that customer and and be just fine Revenue wise because our operating costs aren't really moving but our profitability has skyrocketed so it gives you a lot of wiggle room to kind of uh swing for the fences on some of these deals cool well we're going to we're going to return to that your how you how iida has changed uh but Revenue how iida and revenue kind of as percentages of each other have changed because that's a big part of the story I think since we last talked but before we do I want to hear more just about the the trailer business so you had said a few things here in the last couple minutes you've fired your dealers you are doing more custom work so um I guess let me preface all this by saying a few weeks ago I spoke with Shane URS who was another previous guest who came back on for an update episode Shane bought uh North Texas trailers which is uh three a business of three trailer dealerships in north Texas and so he's he's a dealership business basically we and we talk about what it's like to be a dealership business and and the trailer business and so one thing that he said is that the trailer business is actually hurting a little bit it was it was a CO it was a little bit of a delayed Co bump but it definitely benefited from Co and now like many co bump businesses it's also kind of coming down pretty hard um now that the co demand has gone away so what give us what's your experience kind of um in the trailer kind of the macro look at the trailer industry demand for trailer yeah um I mean it's I can see what he's saying as far as the dealer Network and Retail channels go uh it makes me glad every day when I come in I got a production board that there's no longer a dealer trailer on it because we're completely insulated from that um you know what you had was prices for materials went up a ton in like 19 and 20 steel aluminum wood everyone raised their prices customers still needed the trailers and they were buying them because interest rates were D mean damn near zero in some of these financing things a couple years back um prices for raw materials went back down but most manufacturers kept their prices the same that they were CU people were still buying it so they had huge profitability because now their you know their gross margin has gone up by 15 points um and people were still buying them because everyone was financing them when rates were historically low and now that's over so the guy that's looking to go pay 14% now through Sheffield financing to get a landscape trailer is incentivized to just keep that trailer and get some work done on it keep it running for a couple more years um you know because when it was you know it wasn't a little bump when the trailer industry went crazy um you know lead times were almost a year people were selling their used trailers for more than a news trailer just because of the availability so um there was no incentive for people to keep the trailers so they people were ordering like crazy yeah luckily our customers are commercial accounts and they usually take our product add their autr mons to it and then they sell it to an end user so um and most of these end users deal in like pipe repair Construction you know Municipal electronics and energy repair so they're customers are buying trailers regardless of what the economy is doing um but it was good to be a trailer dealer for the last two years and I think they're finally coming back down to realistic um margins and stuff and I'm just afraid that guys came in and bought them off of a big bubble and now you know future revenue for dealers isn't going to support their Debt Service yeah you said about people just basically holding on to their trailers now that things are more interestate financing has gotten so expensive and so they're just servicing them that's actually uh I don't want to steal Shane Thunder but that's one of the ways that he's actually done well so revenue's gone up for him because as sales have dropped he's he's really done a good job of service and parts and so on and really um kind of juicing that side of his business or seeing Demand on that side of his business okay well this thing John this big strategic decision that you made to cut out dealers and kind of go direct give us more on that why did you make that decision and how is that shaken out yeah um it was really um you know not like a genius financial decision or something like crazy Insight I had like I woke up in the middle of the night and like started riding on a dry race board with a marker um I just looked at the margins for the commercial trailers we were making which were you know 30 35% minimum versus dealers trailers which actually averaged like negative 6% a trailer to a dealer so not only were they not making money off of it the commercial trailers were literally the only thing making the company profitable um and I did what any smart person that buys a business that's currently running well enough for you to sign your life away to buy it is I let the people that were running the business do what they wanted finally and the number one request was get rid of dealers it's a headache it's a nightmare we a custom trailer manufacturer that doesn't lend itself to mass-producing trailers um so yeah that was fire the dealers and we'd be happy so with that I then got to go in and look at the numbers and say okay there's they're not just complaining about dealers there more work you know they might not realize what's going on here but something they realize isn't right so just looked into that and the numbers backed it up and uh just made the decision yeah to take our Tommy Boy to me and my VP and we drove around Florida and fired all the dealers in person uh some of them I showed them math brought a spreadsheet when we printed out and I said you know would you keep doing business at a loss um because I didn't honor any of the orders that were on the board I said we're taking them all off I'm not going to to keep the old owner word I'm not going to lose money for the next eight months just to keep you guys happy when I knew they were making almost 50% markup on every trailer they sold from us so in those conversations were you also kind of giving them an opening to be like we'll pay you more like we can renegotiate this agreement we have and if you pay us more for these trailers you've ordered we'll fulfill but otherwise we're out um no what they would have had to go to to make it to go from a negative six to like a 30 like we would have want margin wise would have just been I mean unrealistic they would have had to almost pay twice as much for the trailer um one guy asked us what the price would be and I told him and he said okay yeah that's I couldn't make any money off that uh and then two is is just you know going back to my you know do less work and make more money if I could make 10 highly customized trailers versus making a 100 kind of stock boring just send to a dealer and try to hit 10% margin on them trailers I'm going to take the Super custom stuff too um you know another thing with dealerships is if you're just selling a stock trailer if someone else can just stop making a stock trailer almost as good but for cheaper they're going to win when when I have a customer in a commercial custom trailer that spends you know 6 months working with us designing their trailer and then we've been making it for the last five years that that company is not going to stop and go spend another six months R&D with another manufacturer just because we raised the price you know 3% yeah no absolutely it it really creates a sticky relationship that's great now there's there's got to be some counterargument to this and and I know uh from our conversations Offline that choosing to be a custom and and so you changed express trailers to Express custom trailer so you put custom in the name now this is really strategic positioning for you going forward and the Cav before I forget side note I regretted it almost eight months later and in hindsight I wish I would have named it express commercial trailers um but I'm not going to go through another name change again in three years that would just make me look like an idiot so we're stuck with's so much better about commercial than custom commercial kind of conveys what we do like Fleet Management sleet production you order in bulk and we give them to you throughout the year heavy duty you know commercial grade with the custom you still get You Know Rich dudes calling you wanting you to build them a car hauler for the Ferrari or like a Barbecue Company Wan you to build them a custom barbecue trailer or something um so yeah what we do is customize but it's more commercially customized so yeah and I think Express custom commercial trailers you start getting ridiculous so we're Express custom but in hindsight there's a mistake I wish I had done it when you buy a company you want to change the name write it down and then think about it for 90 days and then see if want to change it well you could just kind of start calling yourself in passing ECT and then everyone starts knowing you as ECT and then you know sometime later you sneak in a change for what that c me actually means yeah and delete all delete all blueprints of it on the internet so people will think you know what's that Mandela effect you I swear it used to be Express custom trailers yeah yeah um so the the potential downside here is that presumably when you're doing kind of mass market products Mass Market fabrication of trailers in this case it's a bigger market and so if you wanted to get really big that's the game you would play even if margins are Slimmer elbows are sharper it's more it's a more competitive game and if you're going to be in the commercial customization space um it's uh you know the The Tam the the ceiling on how big you can get is a little is lower is that a did I hear you right when you kind of explained that to me earlier and and was that basically a trade you were willing to accept yeah you know for probably the first 18 months that was the logic I used um just I think to make myself feel smart for doing what I did um but now that I've actually seen trailer deals in trailer manufacturers for sale that kind of come across my inbox from some broker you know we will probably do six million this year in Revenue but on that we'll bump up against two million in iida for the first time ever you know in the company's history um and you know there's a trailer manufacturer for sale somewhere in the US right now that has hundreds of dealers two manufacturing facilities in two different states 200 employees and they're doing 2 million iida 25 million in revenue and thousands of units a year versus our 300 um so I mean that's a lot of work I just think about managing two facilities paying taxes and telephone bills and ADT Security alerts for two facilities and 200 workers and all the issues in HR that now is Multiplied times 200 and the logistics the dealer networks and sales guys on the road all the time and for us at the end of the day to make the same amount of money I am completely okay with that that's that's dramatic so just just so so people heard that they're doing 20 25 million in Revenue to get to 2 million in eitaa with 200 employees you're doing you're projecting doing six million so 25% of their revenue to get to the same eida with how many employees today uh we have 30 including myself 30 that that really is dram 28 28 including myself sorry and I would not count me as an employee I'm pretty useless there okay um now you know that being said and I don't think it's GNA apply to anybody listening to this podcast but you know the game you know um if you want to be like the trailer king of America you know and do 150 million 200 million a year in Revenue now those guys are making some pretty serious money these are publicly traded compan companies whatnot but 25 million is still considered a small trailer manufacturer so I definitely have no designs to have like a corporate headquarters and be like a big text or a you know utility trailer um but I see how much larger Revenue wise I could grow Express and what that margin would be and that just doesn't seem like a path I want to take like I don't chase Revenue we Chase EA don't chase Revenue Chase EIT though words to live by and so John this raises the question then of what what you think that Express custom trailers can get to revenue wise I guess period or within five years um if if you're not gunning to be one of the like large volume manufacturers yeah so we are kind of peaked this year in our current setup you know we did all the easy stuff Revenue was here call it five and half six million but Eva it was down here so we did all the easy stuff just swapping customers out and raising prices to pretty much max out like we're not going to make more than 2 million EV on six million Revenue we're at Top Line of customers now everything is as efficient and as profitable as it's going to be so the next step is what we're doing this year a new facility a big you know 40,000 foot facility and we also are leasing another space across the street for excess storage big you know new state-of-the-art paint booth break rooms for the guys air conditioned spaces offices conference rooms so we can host you know when these clients are coming to design this $80,000 trailer you know we're not sitting on the shop floor sweating our ass off um and then going to a second shift would be our you know we looked at the cost Effectiveness and going out to the country and building 60,000 Square fet to pump more through or staying where we are now which is in pretty urban area and staying pretty modest with our footprint but going to a second shift and the second shift just makes way more sense for us because we can turn it on and turn it off if a customer is currently ordering 60 trailers a year and then the next year says guys this product is moving can we get 200 we can now say we give us a 90-day ramp up and we can hire 10 more guys and go to a second shift and in the same square footage still pump out you know probably twice as much a year um not to mention you know from the first episode we're currently in two facilities and the production line stops in the middle of production and we have to hook the trailer up just as a skeleton like a frame of a trailer and take it a couple miles around the corner sitting at three red lights and one u-turn on a six lane road to take it back to our other facility and unhook it so now those guys can finish the process so just by being in one long contiguous space we're gonna probably increase our you know unit count a year we could do by 20 trailers just by cutting out the red lights and u-turns um in a new space with second shift I think we could probably get to 12 13 million revenue and then past that you know someone smarter than me would have to come in and take over because now you're really having to go dig and fight for these custom commercial accounts that uh right now we're just calling trailer manufacturers trying to find someone it'll go through the hassle of Designing a custom trailer for 6 months um and then shipping becomes an issue the single biggest option you can add to a trailer is to be delivered you know we had a customer in the Pacific Northwest who ordered a trailer that came out to like 18 Grand a trailer but to deliver it was $3,000 extra to every trailer so you can imagine how at scale that doesn't work for and you can't put these things on a flatbed or a train you know they can only be pulled one at a time a pickup truck so some of that Logistics supply chain stuff limits how much this can grow but it's not meant to it's niche Custom Manufacturing which is why you can charge so much for it and with the changes that you've made and now with this new facility this contiguous facility so you're not going to have to have these two um stages of the of the fabrication process miles apart do you think you can still hold on to those 33% % margins that you're getting now 2 million profit on 6 million in Revenue at 12 and 13 million yeah I mean so far everything is you know we're putting a a a good chunk of change into this yeah to do it right from the beginning you know we're probably dropping a quarter million bucks on rehab in this place um but you know after that I I can't see you know why it wouldn't everything we start looking at we think we're going to add cost because there's more square footage and stuff now but now we're also don't have to pay for dumpsters at two locations we don't have to pay for security systems at two locations we don't have to pay for you know uh utilities two locations the building we moved into is much newer and nicer and it's 100% concrete so now our property insurance and everything drops it's a nice new safer space so our workers comp audit is going to drop because of some of the new safety features in the building sprinkler systems why not all that so we're only raising our rent basically cuz we couldn't find a place to buy where we are it's way too populated um but we're also cutting out a ton of like ancillary secondary cost she don't think about until you start adding them line by line on the p&l um yeah so yeah if anything I think it's going to increase our margins just slightly probably not enough to be significant but it's better than going down that's fantastic John well it seems like things are going really really well uh you mentioned that at 12 or 13 million you know you kind kind of hoping uh gunning to get there that somebody else might have to step in to take it from from there to the next level so do you is that are you showing your hand there that you see you don't see yourself doing this forever and ever what's your forgive the question but what's your five and 10 year plan yeah yeah no um you know what funny is it's only been what not even 3 years yet and I feel like I have mentally probably about six months ago transitioned cross the Rubicon if you will from being a new buyer to now a seller potentially so that's a really weird dynamic to you know think about like even the first year and a half you're still like the new making all the changes you're still in buyer mode and now to kind of mentally transition to well things are going really well so now I'm approaching things more as a seller and so I think about not necessarily what can eat me out more money now in year three as a buyer but okay what do I need to do now that might cost me something that's going to make this more attractive to the next buyer like what systems and processes can I put in place what facility improvements can I put in place to make this thing you know more valuable as an asset to sell more so every decision is how can I get the p&l expenses down um that being said obviously yeah I'm definitely thinking about what this looks like in two or three years exit wise and then you know it's the the big huge question is do you go absentee and trust someone to run it or do you just take your money and baell out while they get is good and go buy a farm in New Hampshire I thought it was North Carolina that you had your eye you know what this is a huge this is a huge update um North Carolina was my uh I guess you say middle ground it was my I AC to North Carolina yeah um and then started talking New Hampshire which New England was kind of one of my dreams um and then out of nowhere my wife came around and was like yeah that sounds awesome actually let's go do that let's go buy a farm in New Hampshire so uh that's probably the biggest update since the first podcast guys is I've now been you know given quasi permission to start looking for farms in New Hampshire so um and where are you from John nowhere everywhere uh I was in in the military for 13 years and then I was in Military and uh FBI brat growing up so I went to 13 schools in 12 grades so oh man uh and my wife was also a coast guard brat so we really wherever we point to a map and go is where we're from at that point wild wild way to grow up well I I want to make sure we're we're crystal clear about what you might be saying on the on the business John you're not saying that what's good for a seller is what's good for the perspective of selling this business is basically just building Enterprise Value so I'm trying to build Enterprise Value to one day sell you know you're actually talking more near term like you are thinking about how to package this business for sale yeah absolutely well you know I think uh you know a year and a half ago when we talked it was more the plan for the business was was putting off decent cash cash flow it it's got a management team in place if I can run this thing you know semi absente from across the street in Florida then and take home a couple hundred grand a year it's not a bad life um right and we knew making some of the changes the profitability was going to go up um but how much the demand increased and how much of profitability went up even surprised me um you know quality product price was one of the last things the end the conversation a lot of these companies calling for is just one can you make us what we need two how soon can we get it and then eventually oh yeah just so I can fill out the PO like what's what's this going to cost me um so it went from being a kind of cash flow thing to man we're we're really juicing this thing now you know the investors I got the investors paid off quick you know they're all paid off so I'm in the money now if you will um and it's just seeing other trailer dealers for sale has it plays a big part in it and knowing what multiples are so if you're around 2 million then you're probably going to be able to command a 5x and trailer manufacturing right now so you start looking at okay we bought it for 2 and a half million I've already paid the investors back I could own this thing for three years potentially sell it for $10 million and you know I own 70% of the company is how our cap table looks so then I started thinking well I put zero dollars into this deal in 2021 and potentially in 2025 I could sell it and walk away with $7 million yeah that's pretty amazing John that is and I'm sure somewhere if Sam finds time to listen to podcast he's cringing because I'm a very open transparent book and he's probably worried some future buyers hearing this and taking down notes and you know you said back in September that you would be willing to take a 5x multiple and this thing yeah but the numbers help you know the numbers help give reality to it and the thing that fues me most is people come on and stay so V in the details and I know as a Searcher that didn't help me at all like I want to know like Year Day One what can I pay myself if I run a company questions like that so this is this is how it looks when you buy a company and after three years you're thinking about selling it for 10 million bucks so I just want to try to be as transparent and candid about it and I feel like that would probably help people the most listening to these podcasts and these stories is putting some numbers to the to the pipe train well that I really appre appreciate that John because you are dead right you know from your own experience and I hear from listeners all the time how much they value the transparency which I'm which I'm always pushing for and can't always get so I really love that you uh have just shared all this with us it's a it's it's really cool to kind of hear the calculation real time of somebody who bought a business business is booming and what does the net Equity proceed potential look like uh to use you know fancy PE PE language like the money that you could actually put in your pocket after all this is said and done and if you in 2025 uh but John one thing I was going to say about Sam Rosati is he's also probably cringing because often investors when they're they've invested in a business in a search business and it's going great and with no end in sight they want that operator to keep keep growing the thing and so to to go back to something that you touched on the operator question if this thing is Cash flowing $2 million and I mean you can you can buy an army of oper for that amount of money and still be taking home good money and have the operators grow it so why not why not that especially because you know you're a young guy you've got you could hold this for 30 years yeah it's true I you know the short term is you know the other thing I think it's important people think about is we bought this company doing 750 in evida which means you basically have no cash you know you you do a deal flow calculator trying to hit that 1.5 Debt Service for the bank and you quickly realize a company doing a million in iida means you're going to have 200 grand left at the end of every year actually spend on the business after investors Debt Service your management feed to around the company for yourself um so you get to 2 million and now you might actually end up having a million dollars that year because you're still paying down on your debt service and whatnot now that's easily solvable on our problem because we could get really aggressive and probably play off pay off all the de service you know next year and then that makes it a much more difficult decision for me because right now if tomorrow someone came in and said I give you 10 million I say cool I knock off call it two million to pay off all the debt and seller note and everything so now I'm only eight but I still get 70% of that so it's it's almost like at this point the uh like trading in a car you owe on it's like well I'm G have a payment either way so I might as well just take whatever they're going to offer me on my trade in at this point I think mentally I'm thinking well a sell wipes away all this debt too that's also hanging over my head and this PG I'm signed up for my house and my cars and everything um yeah now once you get to be completely debt free and it's all true free cash flow that'd be very hard to walk away from you know thinking about it if you truly are just making two million Straight Cash homie um yeah with nothing to do with it versus reinvested in the company or take distributions on it so uh if we get there in the next 18 months and all Debt Service is paid off and it's just cash in the bank sh sheing every month then I think mentally I would kind of flip the switch and say okay let me just bring in some someone to run this and even if it only lasts for three more years fully absentee that's still kind of a break even on what I would I got proed wise exactly exactly but if it doesn't and I bring someone in and take my eye off the ball and they run into the ground then now I've gotten a third of what I could have got if I sold it so it's just one of those uh what is it future value of money type deals um yeah yeah well and eliminating risk if you sell there's no more risk anymore yeah and you know we kind of talked about it off air I think before the last interview but you know and we're absentee owners now I think about guys like me and Rich Jordan and you know they're kind of absentee owners in the physical sense but you're still very involved in the business big picture- wise big decision wise you know you're still responding to emails this is how we should play with this new customer and whatnot so I feel like that would be hard to give up those daytoday or week to week bigger decisions to a hired CEO um that you don't really know and I get you could hire them I guess and then work with them for a year but now that means I have to go to work for a year and I spent them for that's the whole point of being absentee um and what would I even show the guy I'm not there every day now so I would be a terrible person to transition with um and a lot of the bigger picture like future business Direction stuff um and Rich prob tell the same thing is almost a gut call you know it's you can spreadsheet it out all day but sometimes I think it comes from you know maybe the benefit of being in the military or being a cop is kind of reading a situation reading a person knowing how much you can push how much to pull you know what buttons to press to get the guy to commit to buy order 100 trailers and there's kind of intangible things like that that I don't know how I would sniff that out hiring a CEO and then who do I hire we're very Niche kind of company within the trailer industry a a CEO that runs a bunch of dealers wouldn't know what to do with our company a CEO that's run a big trailer manufacturer before pumping out dealer trailers wouldn't really know what to do with our company so I don't I don't even know where I would start looking for that person to replace me honestly I'd probably defaulted just hiring a veteran um but the veteran I would hire what I would probably see in them to want to replace me they would probably have aspirations of owning their own company so then I kind of lose that so it's um it becomes tricky that's when you're like you know I'll just sell it to P firment they can worry about who runs it well I have never been in that position and never hired a CEO uh and I think it is really really challenging to hire a great one but let's not forget that there is absolute magic to be had when you can find the right person and then they can become your CEO I mean that's Warren Buffett's Playbook I mean I you know I don't want to be somebody who's quoting Warren Buffett I'll probably get it wrong among other for among other reasons but you know my sense is he sees his job as basically just CEO picking businesses to buy of course and then picking the leadership to run and if you can do that well it's you know it's wor it's worth the pain uh of trying to figure out how how to do that learn to do that probably make some bad picks along the way but when when it hits It's it just such an incredible value unlock that um yeah for a lot of people it's worth a pain so I I would just that's kind of my inexperienced uh reaction to everything you just said which was fascinating I also want I want to ask a couple more follow-ups on everything you just said Sean um you basically just said this yourself but I just want to push on you to do this before you make any decision about selling or not please pay down that loan because the psychological effect of having a loan over your head I think it can't be understated so get free and clear get that loan off you know out of the way gone forever and then make a decision about what you're going to do uh because I think it it can Cloud your Cloud one's judgment um and then the other thing I want to push back on is you you you know you joke about how lazy you are and how you don't want to do anything I got I got to ask have you ever really not done anything like some people think they want to sit on the beach and do nothing or sit at the farm in New Hampshire and do nothing I know Farms are not are hard you know you have to manage a farm so there's probably going to be some chopping wood or whatever but H you know then they discover oh wait I actually kind of like you know going to work or having a business or whatever it is so so do you know that you're you really want to do as no do nothing as much as you think you do yeah so this is actually really interesting timing for this question because um you know I was actually sitting out back last night in Florida smoking a joint perfectly legal here um talking about this Farm in New Hampshire um and I I realized you know I love working I love work but I detest having a job so like the days that I'm not working because I'm lazy and I don't want to have a job I have to go to every day I am spreading 50 bags of mulch in our flower beds I'm repainting our entire back porch I'm installing fans I'm you know I've we've lived here for two years and I'm almost running out of stuff I can do to the house now um because I like physically working and you know earning your dinner and earning that cold beer at the end of the day but I hate having a job in a place that I'm expected to report to which is probably explains my my jobs I've never had a single job that was stationary I was in the military then I was a cop driving around a car and then I was a home builder driving around a truck on site and then I was a GM for a restoration Home Remodeling Company who worked out of his truck driving around DFW all day so I would die if I had to work in an office um so love working hard manual labor do not like going to a job um if I had to go do construction every day for Liv problem John you've already solved that problem you're a business owner if if I had to go work on a framing crew building houses every day I would hate my life but my dream is to not have to work so I can build my own house you know what I mean it's just one of those it's like a tom tom story you know work is whatever boy's required to do on that point John the the other thing I'd say about you know just being really careful before you choose to sell getting your loan out of the way before you think seriously about it is also you know a lot of a a lot of people in search you know including you have bought a single business and so in life it's really easy to extrapolate from your you know experience but it's a data set of one and so you you may think to yourself well I'll sell this business I'll kick back on my farm in New Hampshire and then you know if I if I don't like it if I'm bored I'll go buy another business you know I'll be that much more experienced whatever well what I would say is like just because you bought a business that's going gang busters they're not all like that all you got to do is is you know go through the archives of of acquiring minds and you'll hear that a lot of people have really hard times buying businesses so I wouldn't underestimate your good fortune and I'm not taking anything away from what you've done and you know the skill and your talents that you brought to this business but of course every good business story there involves some market dynamics and so on that are that are luck for lack of a better word so I wouldn't underestimate your good fortune in your first search experience where you bought this business that's absolutely kicking ass um don't assume that if you you CH you know choose to sell this kick back on the farm get bored on the farm want to buy another business that that second buying of a business experience is going to be as awesome as this has been this is really precious what you got going on here yeah and you know to piggy bag off that I want to move that risk off of myself and that work and that stress off of myself moving forward to other people which is why one of the first things I did is start investing um so I own uh 10% of a HVAC company in Tennessee as well that the first company I bought into as an investor with a much more qualified owner operator than I am um who has plans to continue buying hvat companies and kind of do a rollup of this whole geographic area and I am going to be a 10% minimum investor on every one of those opportunities that comes across my desk so my goal is to uh you know say say it's a two-year punch out and I just sell the company and I'm done well I want to have at least 10% stake in five or six other companies by then so um and then I think if I did get barded and wanted to get more involved back in the& space it would be as a larger investor and a deal um a 20 30% investor where I could kind of you know come in help them start the company off or something but I don't think I'll ever go back to just kicking around and buiz by sell buying another company um no I mean it's it's no insult to hear it I think I got extremely lucky with this one and I had a good deal team and Sam basically spoonfed me this deal so um but that's my life is 39 years of falling face forward in a pots of gold everywhere I go so it's it's a strategy it's the one I'm using it's working out it's a good strategy I was going to say one thing I I talk about it I go and talk at Sam's boot camp but you know one of the things that changed for me after after year one to year two and year three is you know I don't care what it takes I want to own it every piece of equity in this company if I can as much money as I can put into it I'll take a refy on my house I want as much Equity you know 60% is not good I want 71 if I had the money to go back I needed 300K for my deal if I could go back and do it all over again with knowing what I know now I still would have taken the investor money to own 70% of this business and then I would have taken them my 300K and invested 100K in three other deals and from the start of owning Express I would have owned my company and 10% of probably three other deals um just because I mean that's everyone loves doing this because of the ROI so why not early as possible the investors are who make all the money in the search F world you know it's a reason that some of the biggest investors are the guys that teach search finding at the top Business Schools because there's no better way to make your money so as early as physically possible don't buy a bigger house don't go buy Navigator or something invest in other small companies Searchers coming up um and in my case it's easy they're all smarter than me so why would I not let them make money for me um but that's my one piece of unsolicited advice that's great Before I Let You Go John there was one other question I wanted to ask you about which is leadership so just to remind people you just touched on it one of the things you do did when you were contemplating search you talk about this in our first episode was you got a you operated a small business in in in DFW in in Texas it was a home building business right uh yeah they like window and door replacement company right it was the window and door replacement company and you wanted to see you know is this for me can I do this how hard is this and after I think it was six short months you were like I got this I can totally do this so that was kind of one of the the things that really made you feel like I'm going to pursue this path now and then meanwhile you've had this great run you're having this great run okay so that's kind of your your one uh type of small business leader owner then there are plenty of Stories on acquiring minds of people who buy a small business and are really challenged by it um by leadership in particular by the culture of small business how it's different than you know corporate world by any number of things what do you think is so different I don't know if it's about you or your perspective Ive or them or what but like that contrast I know it's something you thought about what would you tell people um you know like three big takeaways is one you know the military style of leadership you learn especially in the Special Operations Community is you want that new leader that's kind of The Quiet watches Waits and kind of learns the Dynamics of the team and you know not standoffish but you know it's coming in as a leader of a high functioning team which is what you should be coming into if you did four months of due diligence to buy this company then just kind of observe what they're doing for at least you know a month before you start making wild changes and assumptions about who is or who isn't a good employee um you know two is I feel like the benefit you know me and other veterans have coming from this is we don't really know anything about business so the business is kind of an ancillary thing we manage with help from smarter people but we're really good at just managing the day-to-day and I think a detriment to a lot of people coming from you know Corporate America if you will especially from like consulting or something is the desire to need or maybe even the subconscious need to make a splash like that's how you get promoted you work on a big project if you're a consultant your whole job is to come in and spend 90 days and Implement a plan to make improvements well this these aren't those situ ations this business should be humming along because you're not getting an SBA loan for a rebuild you know the it's it's not easy for these companies to meet the debt service coverage ratio so the ones you're buying are good functioning companies which is why you're having to out bid people to get them so don't change everything on day one because you think you know what's better for the company or who is a good fit or who is in a good fit you know I came in and changed our whole customer base but I didn't come in and tell the guys this is how we're going to start doing invoicing this is so dumb why are you doing it this way this doesn't make sense um because it obviously does cuz I just bought you you know it's it it would be AK kin to going buying a brand new car and coming home and then tearing your car apart and complaining about how poor quality is and it just doesn't then why did you just buy this car um and then three I think a lot of people don't seek out I I don't know what you call this the psychologic behind it but you know sounding board Echo chamber type things where I think people purposely avoid seeking out peers that will call them out and you know say no you're doing really bad at this like I don't I'm not going to tell you oh this is hard and small business people just don't understand like you're just doing really poorly at this and here's if you want me to tell you here's the things I would say you should do better and I have friends like that and I have peers like that that know other businesses traditional Searchers but much larger businesses but seeking out critiques and you know I want someone to talk about the company and tell me the things I could be doing better um and I I think a lot of people don't seek that out it's not a very corporate America thing to just come in and close the door and have someone sit down and say we're not leaving until we figure this out um so long story short the benefits of being poor and blue collar growing up I guess you just know how to work with you just know how to work with blue collar people and I mean unless you find that unicorn that's what you're buying you're buying an employee list of blue collar people so that shouldn't scare you they shouldn't feel like the help like you truly this is what makes your company run and I think some people just can't fake that funk because they have no basis in that as a background yeah well so that that that maybe is point number four that you if you've come from if it feels like familiar environment to you you're probably going to just ease into it better than if it's a completely foreign environment to you which is part of the reason why I ask you know the the white collar person buying a blue collar business question constantly because it's um it is just a big change that I don't think can be overstated so and I think we agree on that because you just kind of concluded by saying that that has big a big been a big advantage to you that this doesn't feel like a foreign environment to you yeah no I mean uh a couple lefts when I went right in my life and I could be the guy weld in making my failure right now you know what I mean so it's I'm a lot more grounded in there and I could still be the guy making a trailer 6 months from now if the business goes bad and I got to fire everybody you know what I mean so it's not uh but um you know I've just I'm not a very good I don't make a very good rich guy I don't think I ever make a very good wealthy guy you know I feel bad people carrying my bags from the car on like an all-inclusive vacation so it's just it's not like I understand them truly that is that is who I am I just happen to be on the top of the York chart in this one case great John well let's realiz apologies yeah apologies to your viewers they just had to watch me double fist espresso and craft beer I just realized I've been doing that for the last hour yeah so so yeah for those who are not watching John is not only nursing a beer he's nursing his coffee so going back and forth we're not going to tell you we're not going to tell you audience what time of day day it is right now yeah it would be improper to tell you it's at 10 o'clock in the morning John uh actually last question for you because this is where I would say uh John how do you prefer people reach out to you and you have had a lot of people reach out to you after your first episode here you've been on other podcasts and sometimes that Outreach uh maybe isn't as uh effective as it could be what do you say please yeah you know it's um I came to the realiz realization a year and know in the company that almost all the stress and like scheduling conflicts and me rushing around from place to place and just feeling like I always had a deadline was self imposed because I was just accepting everyone's you got five minutes to chat can I jump on a zoom can I get 20 minutes of your time um because you know I was put myself out there J blue Court capital.com here's my email address any questions you I was still high on the oh my God you can do this and make a living um and then it just become you know all-encompassing of my time then it got to the point where I was replying to everyone like hey I'm sorry I wish I could I just don't have the time and then I realized I was still spending an hour a day just replying to emails declining and then it got to the point where I just you know not to sound harsh but realized I don't owe the it's like it's a cold call sales thing more or less like I don't owe you a response just because you happen to email me um and I mean at the end of the day I got three kids under the age of five you know my wife works uh it's busy and to be honest half the calls I got on were people just talking at me for 30 minutes telling me their life story and their grand plans for the future and never really asking me any questions so it got to the point where I'm like why am I taking these calls anymore I don't I could really care less about your life story and where you think you're going um and then I started tailoring more to like specific questions about a particular deal then people started asking me to take a look at their deals tell them where I'm thought and I am not the guy for that um so now it's unless something is pretty specific industry related hey you know we're looking at this company to buy I know you have a trailer company or I'm looking at buying this what would it cost me to replace my entire fleet with 20 Gooseneck trailers specific kind of questions not to say that also benefit me but I mean ultimately my business this is my time so um that said if you do reach out to me and I don't get back to you it's truly not personal I didn't read remil and say you know screw this one guy in particular but uh I'm not a social media guy I don't have any social media I don't you know so uh this is one of two podcasts now I will be on um and really any questions they're going to ask me I've probably answered in one of these two podcasts so it's uh it's not you guys it's me but that's just where I'm at and occasionally I'll get on a run and respond to like 20 emails in a week um but I haven't been that lately so don't feel bad if you reach out and I don't reply but uh it gets pretty overwhelming with the amount of people that once some of your time yeah well that's really good to hear John or for or for the audience to hear because I always te people the guest up to share how they can be um outreached too and it's probably been a similar experience for many of them so I I think the takeaway for the audience is if you're going to ask a busy professional who's bought a business for their time treat that time as the very scarce resource that it is and come with some specific questions that where you're really accessing the value that they can add you don't need to tell them about you so to distill that it's kind of like come with some specific questions that hopefully are specific to their knowledge set or the business they bought or the type of search that they did where they can really feel like they um added value to you in your search yeah I mean the ones that still get a reply to this day is an email I get that says hey short intro me and so and so are Partners we both went to XY School here's where we work we launched the search here's five questions I have for you when you did this what were you looking at do you think this is important what would you say and that's easy to sit there and reply to five specific questions and now you have it in writing it's easy to reference you're not missing the conversation because you're trying to take notes um and it's not someone just calling and saying hey just tell me about yourself and how you bought a company and I'm like I'm not I'm not going to have this conversation again go find a podcast um yeah bull short bullet point quick concise questions is a good way to get a response and start a conversation cool that's really valuable all right John hubber this was a lot of fun very interesting thanks again for being so transparent about the psychology of now becoming a maybe seller so really appreciate it and of course uh your story is evolving quickly so we'll have to see what maybe 2024 maybe 2025 having you back on again yeah we'll do a third episode do it if you'll do it we'll lay out we'll lay out the financials and do a poll and let listeners decide if I should buy it or sell it or keep cash on it that sounds fun I like that I like the sound of that Sam is having a heart attack somewhere right now yeah totally all right John thanks a lot man I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business