shirag Shah thank you for joining me today on acquiring minds yeah great and happy to be here well long time listener so awesome I I love to have guests on who have been listeners before shirag you and your wife recently acquired sit means sit a dog training franchise in Austin Texas in fact really close to where you live although that was a coincidence we'll get to that dog training to me at least sounds like a really fun business to be in training animals is always kind of fascinated me so this one feels like you know a business where the content of the day-to-day the the thing you're selling is really really fun and attractive so I'm eager to learn about the dog training business yeah but let's start off with just the context how about a little background on you please sure I was going to introduce to uh the idea of Entrepreneurship as a small business underwriter I worked at a community development financial institution at the beginning of my career uh doing 7A SBA Loans and that gave me a lot of exposure to kind of a broad swath of Industries company sizes um and and most importantly like how to analyze um the actual performance and sustainability in certain companies so um that that definitely introduced me to just this concept of Entrepreneurship well I wasn't underwriter I thought the next best step would be for somebody to get an MBA so I went to uh Babson College which is known for entrepreneurship in that process I met um uh and then a software engineer that was working on a kind of a small project I kind of got myself a bit intrigued into what he was doing um and asked him like if I could help it anyways aside from just like introducing him to whomever so he he being an engineer um he wanted to focus on a lot of the the technical aspects of this thing and then I was like okay well I can I can support from a business development conceptualizing whatever it was so we we worked together to essentially build a small software to serve this product um basically um in the after hours care uh realm of medical uh service so what that means is like if you were to call a doctor let's say you're a pediatrician um and their office is closed instead of like talking to a human operator who has no medical background um you'd interact with our technology which would which would make it faster for you to ultimately provide the doctor details however it was in a in a market that was somewhat um let's say technologically deprived it just kind of fiddled out so but kind of took that experience um and realized like hey I like this this building thing um and I like I like working with software um and I like working with Engineers so I kind of forward into um product management I did that for four or five years I liked that a lot um I think I excelled at it like at every every place I worked at like I was either promoted or whatever the case but um the one thing that I realized was that I got pretty disengaged at every role relatively I would say quickly but after like a year and a half so um kind of taking that experience and then taking the SAS experience um I was like okay what can I do next this year was a really big um kind of monumental year in the sense that my my wife um and I became pregnant and um so at that stage I can keep working kind of towards this product management career um I'll get frustrated I'll get disengaged um or I can I can kind of re-enter entrepreneurship um and considering my previous experience I wasn't too keen on uh starting a new company I knew that would take a long time it was a lot of sacrifice and continue having a family soon I didn't want to to do that so uh I kind of thought about acquisition entrepreneurship um I was introduced to had you had you known about acquisition entrepreneurship before I guess yeah as a 7A underwriter you must have seen it a lot yeah I saw it a bit I I didn't realize what the like those businesses were actually doing I know for a fact that I read the book by Island dull with probably like everybody reads um and I know there's like there's a few other books but but you'd read it you'd read it before right before this year when you started getting serious about it yeah so yeah go ahead yeah I've read I read it in passing I I would just read a lot of I read a lot of business books right just like as someone who likes to read and um I think by then bill was kind of one of those books but it's like I'm just reading for fun just to kind of see like what what's out there but I met somebody actually last year around like in December that uh was going to uh he's actually going to Harvard Business School he was taking a class he told me his plan and his plan was I came to buy a house I'm gonna I'm gonna access the equity from the house and I'm gonna buy business I'm like wow that sounds like a genius idea so after he said that um I was like okay I'm gonna revisit this book um I read it again and I was like what's what can I do um what can I do next and what I learned from my SAS experience was like being in a like-minded community of people is really important I was actually an accelerator um when I when I uh kind of built and then launched my my SAS company so I joined um an acquisition an accelerated acquisition lab and that kind of that made that also also Walker yeah right exactly so program I kind of went from like an observer to like a committed serious investor um by joining the acquisition lab to be to be frank uh because when you're with those when you're with like one info like when the folks you realize like okay they can they're doing it there they've done it um it becomes a lot more real um and being that it's more realistic it becomes a lot more achievable so um I mean there were like thoughts in the process like hey I can't do this whatever like and uh but again like I would just kind of show back up um kind of interact with the lab um kind of revisit the content just keep kind of my my nose to the ground Stone and just keep keep moving and it'll ultimately kind of led me to where we are today so um yeah you know it's funny sharak that you're that you read the book up Ivan build and it didn't immediately grab you you know for a lot of my guests it's it's kind of an epiphany moment yeah we're like oh you know the light bulb be epiphany I mean they're you know choose your figure of speech but they um immediately are grabbed by this path and it's funny that I mean I'm sure a lot I'm sure countless people read the book and they've just put it back on the shelf and okay that was interesting yeah but for those who actually ultimately do become acquisition entrepreneurs I mean those who I interview like you right now um oftentimes just love it for a site yeah and then you're it's just funny that in your case it wasn't for you but you took a second pass and maybe you know just didn't hit you at the right time but funny that you um didn't have that and yet still ultimately did decide that the path of buying a business was yeah that's what you chose yeah I mean honestly I think it was it probably boiled down to it being like the most expeditious route to entrepreneurship uh considering like where we were financially and where we were familiarly like I there was actually a point during covid where my wife and I were exploring like another SAS like her and I were just like okay well we can we actually were going to build um like a it was called Furniture lab I mean this is kind of going up a tangent but my point is that like when you I think when you have less time um you'd be like it kind it creates a lot of clarity um and that's what happened yeah with my wife when we were pregnant I was like I gotta do something um so yeah so you um are in the acquisition lab it's feeling real you uh are in and out and communicating with the community and revisiting the material you're seeing um other people who are on this path as well uh and then so do you go kind of launch into a full-time search at some point where you're no it's actually just hammering it or what yeah so I mean I didn't um it was actually a it was a part-time search um so I was I was I would wake up I had a full-time job at the time I would just wake up like ex like in like abnormally early like 4 35. I worked from home uh so that was nice um I dedicate like five to nine uh five a.m to like 9 00 a.m maybe doing a lot of Outreach um interacting with Brokers lenders um kind of responding to emails reviewing my deal flow um and then throughout the day I'd obviously be committed to my job uh however like if things did arise being that I was working from home I could I could attend to them so if it was a broker call or a specific deal I wanted to analyze I think one thing I'm I'm personally very proud of is just like how I can manage my time um and like be able to balance and I think I do I'm I'm getting I'm I've got a lot better this this past year at managing boundaries um and so kind of having clear cut off time and so forth so I usually work from like 9 to 12 around lunch time like I take a short break respond to anything else um again from like one to five do whatever and then at work and then from five to like nine and come back at it so but it was it was all part time um and then I think on top of that on the weekends what I would do a lot is like I'm a very systematic person I would just tweak my systems and continuously like try to automate um and optimize I had actually hired a virtual assistant at the same time to kind of help me with dealflow um and so like he could he could do some like very high level filtering as well um I had I had said I my my goal was ultimately to get a full thing that this was like a Texas based and specifically austin-based search um I wanted to get I want to get full exposure um to just Texas uh Brokers and so I had I was on a lot of email lists I had a lot I had probably built over like 100 relationships to some degree varying degrees so I had him manage a lot of like the more automated like the more like I think they couldn't automate but like I could like delegate to him to some degree so yeah I was fully well there this sounds I I'm you know I'm intrigued by what you put together and how you iterated on it and how you're a self-described systematic person so can you give us a window into what your system looked like including your virtual assistant there at the end so like so anybody who's kind of kind of lost with that help them out yeah so and anybody that acquisition will be like speak to this I mean speak to me being systematic because I shared all of this with the lab and I think that like some folks like still might use it but I built my system in notion um and so I mean I'm sure a lot of the listeners are familiar with notion if they're not like it's a basically a it's so it's a lot of things it can be it's it's very flexible um in the sense that like you could make it a productivity tool um you can use it for like document management you can use it for a lot of things I basically built like a Deal review um kind of Hub let's say right so my practice was really it was not it's not complicated I signed up for all of these like uh email blast I built all these relationship with Brokers and so as part of that I would just get deals on a daily basis um my job would be and my job in my va's job uh would be kind of like to review and kind of exhaust all of these emails make sure that uh my inbox is basically at zero every day um and I was looking for my criteria so my criteria was basically um needs to be in Central Texas like uh ideally in Austin and the way I Define Central Texas was basically like anywhere from like Waco to San Antonio like kind of went either there's a Highway I-35 and it's kind of this Corridor and basically it was like oh I'm willing to drive like an hour um so other texas-based deals just because that Central Texas Corridor is not iron and say uh activity let's say volume so I kind of had to open up my eyes I didn't want to be too constrained um so we kind of just reviewed these emails whatever but the the key was if there was something that was um like let's say compelling enough we'd extract some of that data into notion um and so he would do it mostly manually and basically what we would do um is create like I mean you call it a deal brief whatever you want to call it but there was a lot of things in this um and this was actually based on uh my I guess my education acquisition lab so I would look at um I'll just I'll just actually speak to all of these all the data that I would try to extract so um there was a fit score so like how I felt about the business from like uh instinctual level like it was high medium low where it was located um where I found it and I'll get to like how I graded like the sources eventually actually got to the point where um all of the sources whether it be like a website or a broker I would grade uh based on like some specific criteria and that one kind of way into like how seriously I might consider their uh like a specific listing um what the sde was asking price to get a multiple from that um and then what I would do with all of that is that'll kind of like enter this like to review uh kanban um are you familiar with kanban at all or like what that that might mean conceptually but I've never actually used yeah and it's basically like just like a visual it's like a visual way of managing statuses so instead of like say like dropping things down I'm like whatever oh it's actually pretty common in like I think sales right like pipeline management like if you're an opportunity if you're like a lead to a prospect to an opportunity to like whatever so what we we basically replicated that in the sense of like um in our in my kanban I had so I'd have a backlog and basically everything that was of Interest went to a backlog and then I'd make sure that um I requested a Sim obviously which it would lead to signing an MBA um once I had everything it'd go into review go into analysis um and then at that point that's kind of like the crossover right where I'd submit submitted Loi um or I would no longer be interested um and there's also other uh columns for sold and in due diligence so basically what I could see at any moment in time is like how many deals was I looking at and this also like leads to um again with the acquisition lab might suggest I mean this is like an advertisement definition so um well happily the response yeah yeah so it works one thing that they suggest and I kind of augmented it for myself it was like kpis right like how many deals are you looking at per day um which ones like are actually which ones actually fit your criteria so I just had targets right so I go okay well I want to like if I want to close by this day I want to review X number of deals and um I want a number of these deals to be in certain stages so and that would kind of like Elevate or um kind of decrease my activity let's say like for the weekend or for like the day right like I could sense like okay I need to put more energy into this um or I need to change my strategy and that's where on the weekend I'd kind of tweak things because I'd like okay well like I'm not going to hit this target if I I keep if I keep acting like so kind of every week was kind of like a mini experiment like a small experiment so and just just to emphasize this point so people who understand you know this is kind of a the old cliche like it's a numbers game and if you if you imagine like crossing the Finish Line with a business that you've acquired that there's a funnel and you know you need to be filling this funnel all the time and you know at the top of the funnel are you know X number of opportunities 100 opportunities that are going to be whittled down and whittled down as you look more and more closely at them and then ultimately there's just going to be one that makes it all the way to the bottom of your funnel and sales people this for sales people and marketing people this is very natural they they think in these terms and and um but but it's really useful because it's like it forces you to think backwards so it's like okay I want to buy a business well how many that means I need to have you know three Lois and ten you know conversations going and 30 you know 30 interesting businesses in a hundred you know listings that I'm at you know that I that are a maybe and you know 5 500 you know 500 actually listings hitting my my inbox every month or something yep and so and then so you say to yourself like okay if I don't have those 500 coming in every month then I know in 30 days I'm gonna be really thin right and so it's just filling the pipeline and being numerical about it and understanding like kind of the steepness of your funnel and and how much you know how much drop off there is at every stage it's really it's really it can be quite like you said but it's a system and it can be actually kind of a puzzle and fun and and it certainly can also give you comfort like as long as I'm filling the funnel at this rate every month you know I know that I'm doing what I should to like at the end of the month have some real opportunities I'm looking at because sales people again will will learn this the hard way young immature sales people and acquisition entrepreneurs like you can turn around and think you were working on three awesome opportunities and you're gonna buy one of them all three fall fall through you look up and you got nothing right you got you got to start over from scratch refill your entire pipeline you gotta do so many things in parallel and concurrently yeah like you just it's not a link it's not linear you just can't treat it as a linear process and if you treat in the linear process you'll be stuck you'll get stuck a lot more often than you you you could if you just treated everything in parallel totally and and the classic hazard is to be really down far down the path on one business and you know get your heart more and more set on it get more and more invested on it emotionally imagine yourself in that business and then just leave the rest of your pipeline the rest of your you know your deal sourcing to the Wayside um that's the Temptation and it takes a lot of discipline not to do that and it's so important you not do that because of course if you lose that business which you know probably you may well then you're gonna be you know you're gonna be complete completely dry when you lose that opportunity so yeah absolutely um the your virtual assistant so this is somebody I assume offshore that you found on upwork sort of thing yeah so like I I um I hired somebody in India what he would do with this within the acquisition realm is just actually keep up with like Brokers so I know a lot of like this might go like against what what a lot of uh on acquisition entrepreneurs actually do or like Searchers do which is like using a CRM to build a very large broker Network and then blasting them with automated emails um I kind of took the route of being a little more personalized um at the beginning and see how that worked and then my follow-ups I had him do all my follow-ups and all my follow-ups were kind of based on some of the data that I received from Brokers more initial conversation so he would look at um I had a different table and a different not conbot like a different View for the status of my broker relationships and even review that um and then based on like the status like if it was did I received a SIM from them right works on an NDA with him um and uh like even or if I had no contact with them right it would kind of lead to like that's kind of a condition so then I would be like okay well if it if I've had no contact with them send them this like really simple templatized email reminding them of who I am but if I receive the Sim then I have had some like warm connection with them so use this templatized email so he's basically doing some form of automation but it's like selective Automation and I know like I'm sure I could use some CRM to do some conditional stuff but it was an easy way to to work with him and to get that done and then like he might he might report back to me on um if they responded um you know like what other like listing that that broker might have and it's yeah it was basically a lot of communications is he doing this following up with the brokers in your name yeah yeah okay yeah okay yeah in my name yeah um so it's keeping those you know those broker relationships warm you had a whole set of conditionals um and by warm it basically means emailing them in some shape way yeah in your name right right okay well we're just in your search now all right so let now tell us about uh finding the business that you acquired so how did how did you find it yeah so I mean this goes back to like that kanban view honestly so my my wife and I were going to go on there was they were we were going to go on vacation to Greece uh well we were actually um the next day planning on going and um at that point I'm gonna put my search on hold obviously because I'm going to be on vacation so um I went back to my view and I was like okay there's some there's some deals here that are like in review right or like let's say I think it was I I submitted an NDA and I got no D and I got no sim so okay I got I sent in the information why haven't I ever seen anything so this specific deal um or the specific listing I I guess I got like uh an early notification like a pre-public notification from a broker um and uh I responded to him I had actually never spoken to him before it was actually just like a blind sign up on a on a website um and uh I reached out to him um and uh like basically you didn't respond to me his he had a virtual assistant he responded to me and that assistant was like hey um this this listing or this business isn't on the market yet but um we you can send an NDA with us and when it is available we will send you the Sim we just wanted to get I guess like an early flavor of demand but anyways um I um yeah I submitted NDA it was like a week I didn't hear anything and I was like just again I was about to go on vacation so I was like okay there's a few deals here that I've submitted ndas for no Sims I'm just gonna reach out again um so I reached out again and um I which I like on a like a Monday night um and then on a Tuesday Morning um they responded to like hey the Sim is ready you can access it here I'm like okay why didn't that was kind of kind of disappointed because they didn't tell me um and I expected them to but that's the that's the reason you follow exactly and um and so um it was really this is like where it gets really kind of like I don't know serendipitous in a way because um open the listing and it was actually a dog training company that my wife and I had considered literally using for our most recently adopted dog we did we fostered a dog that we really loved um and uh we we wanted to get him trained and this was like it was funny because when we were like reviewing this website we're like oh wow like how great would it be to like be these these owners look so happy and so um and just like a really fun fun company and uh we were we were going to inquire after our vacation and so when I got this list I opened it it was this company it was unbelievable wait wait you were going to inquire about the business you no we were going to inquire about training but training oh yeah yeah sorry right yes as customers yeah yeah as customers but you had already looked around the website submitted a form or whatever and yeah and said to yourself huh wouldn't it be interesting to own this business these These are yeah I think they're having a good time what a coincidence I love it yeah and I don't know they're like so just go through those like it was like not mind games but like there was like like those simulations to themselves like hey like and they go so I'm like oh this is a cool business it'd be cool on this business because like yeah you can like just sense like oh like there's a lot of activity here like if you're if any Financial Center okay this is probably pretty profitable um and no way and I knew their price points I'm gonna be like yeah this is a pretty profitable business like they're doing well and they had a lot of scale in Austin to like okay well they're probably one of the if not the better best one here so um yeah so again like serendipitous like good amazing coincidence that it was this business and um yeah so actually that are you a superstitious person because this is a sign yeah no you're systematic or not yeah but come on but yeah but I mean how does one deny the feeling of like well this is a sign yeah so um that was a two we went on vacation on Wednesday that day I was like very aggressive um about uh getting a seller interview they need to I need something it's like now like today um but I couldn't get one until that Friday and we were actually already on vacation so I took this out we were in Greece I took this other interview but it wasn't really it went well so um and what was what was even I guess more of a coincidence is that the seller um was a product manager he used to be a product manager so he he Acqua he as a franchise he started like this specific location 12 years ago after becoming disengaged as a product manager and so like immediately him and I hit it off like he was like I gave him my Spiel he was like this is unbelievable because he just he just saw a lot of himself and me in the Senate like I was younger than him like I had a technical background um and so like we resonated immediately uh and even to this day like even we can get into like how things are we'll get into but how things are going like I can reach out to him with like technical questions he'll respond because he knows that like I know what I'm doing when it comes to like the systems that he's built like I mean and like it's kind of his legacy right so um well that must have not only given him him kind of an affinity for you but you comfort in in your decision decision your potential decision to buy this business as well because you know a lot of Searchers I think and my guests are like you know especially if they come from corporate or Tech or something it's like wow am I Really Gonna Get Off the traditional train here and and go run a Doggy Daycare or excuse me doggy dog training or whatever it is yeah and you know there's that nagging doubt to because it is kind of unusual and in fact how I found you is on LinkedIn you had made the announcement of this acquisition and I think that was kind of like your opening line was something like you know yeah I've been doing something traditional and now I'm not yeah so to see this guy who you might buy a business from who similarly like was on a tradition I guess was a product manager on some sort of traditional path and then got off that train and on this one and presumably has felt felt that it was valuable must have been it kind of must have reinforced your own decision to pursue this path yeah yeah I mean and what's great is that like and we'll get into the franchise Network too is what's even more validating because a lot of those folks who own different locations are coming from like white collar professions like actually like one of the like a few of the close folks that I I network with and then in the franchise Network there used to be like sales Executives or attorneys or like they work in tech for example so like they understand that like not only this is like a fun business it's a lucrative business because they're moving from like a relatively like like maybe high powered but at least like well-paying position to start this business and they understand like the risk and so forth with it all and they're very comfortable with it so yeah absolutely that definitely was validating right cool so he likes you you like him and you come home from Greece and the negotiation gets underway give us some parameters of of the business how much was it doing what does sde look like like what kind of what is a dog training business franchise look like and by the way so is this a single unit or is it a territory how are the franchises sold I think a tip so that's a territory yeah and I think I said back but there is a physical location yeah initiative physical locations um okay and so I would also say that like uh it wasn't just him it was also his wife his wife is kind of like I would say like involved to the same degree my wife isn't that like he's influential and and not and like not so much like the technical aspect of the business management but from like the people and cultural aspect uh and so I think I I resonated well with both of them and also considering like we they told me uh very frankly like they wanted someone who like dogs like loved dogs because that's a big part of being a really good owner here is like having a lot of empathy not only for the human uh but also the yeah right sure um so it really actually had my my wife I think she was in on the seller interview just like not so vocal but I think she was on it so it was kind of like um not just me and him but it was like the two of us and and so I think that that kind of helped a little bit as well um so um yeah so going back to like your your question about how like what a dog training company does in terms of financial performance so uh 2021 was a banner year for this company because of covid puppies so they did around um 2 million um in Revenue like around literally like 1.95 or something and um their uh their sde was around 600k that was pretty good like I mean like for considering where they were and they had taken a significant step back in their business um in 21 as well they they um hired a general manager um and so they were uh they kind of like I would say they weren't passively owning it they were still like like semi-active in it but but um they themselves were starting to think about retirement in The Next Step so okay what can we do to to Really systematize this and pass this on uh relatively seamlessly so that was a lot the also also cool that so that 600k sde is post general manager so you don't have to yeah allocate some of your STD to a general manager yeah that's great right yeah yeah so this is a nice nicely profitable business it's a it's a great I mean from like so many perspectives it's a great business yeah the manager and like like again like this I really respect the seller because like he's he was so um well uh like again like strategic and hiring as well um he has all of his employees do I think it's the culture index test or survey yeah um and like and keep in mind these are like these are dog trainers right they're not like you're not hiring like a sales professional or like a white collar player he's really looking for fit and so I really appreciated that because the employee we'll get into like the employees like any level of attrition uh which there's been none um and these employees like are just awesome fits for this specific like not like this specific company but like they're really good fits for this culture so um and this this manager was a is a great fit he's awesome um and so and like he's the opposite of me like I'm like kind of like um a pretty let's say like I don't know like a growth oriented um an Innovative person uh he is very tactical and I mean I can be tactical but he's like very very tactical so um we make a really good team but um yeah considering considering everything that like came with the business the SD is was awesome I was really surprised by but but actually like the 2021 was a good year um 20 and 19 are probably um I wouldn't say better representations but they probably balance it out so they did around like one point one point seven one point eight those two years and their SD then was around 500k so like you could say the average is around 525 550. uh rather than like 600 over like the past um just continuing watch because last year was just uh uh it was a great well it was an up it was an up your shrug but it wasn't like you know you hear about these coveted some coveted businesses that like yeah yeah yeah that's what 200 over so 15 yeah 10 15 nothing crazy yeah yeah and so like I think what came with that too um which might not be in all of the numbers is like the the migration the micro and like this is kind of what I'm not I would say to somebody I'm betting on this is being in Austin there's been like a migration of affluent uh like more I'd say like a more affluent population migrating often so uh with that with that they typically can absorb these types of services um but that's like another topic to some degree but yeah I mean I don't I don't think it's gonna go back to like 2020 I think it'll stick around like where 21 was um so yeah it's pretty good let's let's round out the deal the transaction and then let's talk about both the franchise nature of this and more about the the business of dog training so um so round us out on the uh on the transaction was it um was the negotiation pretty straightforward his documentation was great like there was nothing like no gotchas or um I mean I guess I'm still uh unearthing any gotchas at this point but there hasn't been any surprises let's say um but yeah it was it was clean like we had a obviously like a Data Center and he was extremely responsive and and so forth and and kind of providing all the information um so that was it competitive it was so it was like I asked him like towards the end like after we were passed through diligence like were there other buyers and there were but they weren't they were more so um like I'd say like strategic buyers um or buyers that he did not resonate with I just wanted to buy a business for the for the sake of buying which is fine I mean I think it just depends on on the seller and like what they wanted and I think that's actually one thing that should should be emphasized in a lot of cases is like there has to be a really good buy or seller fit um and in this case like it was great and actually like we didn't we didn't talk about like a I think we met might have talked about this in our first conversation I had a previous um and a previous Loi that was accepted but that buyer and I but that seller and I had a terrible fit um and so um any case yeah so yeah it went well negotiations were straightforward um I did uh I mean there was like some sticking points like in terms of um the like I'd say like the the trailing 12 months wasn't exactly where the bank needed to be so the edge is a big part the seller actually had to take an unexpected seller note pretty sizable seller note I could think it was like 20 of the of the sale price and he was okay with it the actual uh acquisition price was around 1.71 um and of that uh like 300 something K is it a seller note and the remainder is is financed by the SBA um the seller note is is it wait sorry it's just seller note and SBA and I mean I had my own Equity injections oh okay yeah and how Okay so that was 10 10 yeah yeah and that was made up of uh I think this is a good point too is like I access my HELOC for this so I had the the there's three parts to My Equity injection it was basically all my my real estate assets um what my real estate assets had generated in some form or another so I have a small residential portfolio and I've generated around like 50 60k in in like profit um I take the past two years plus I made um a pretty wise decision in our personal home but and like that we that appreciate it pretty greatly um I acquired a HELOC and then I raised a small amount from my family um and so those three parts were My Equity injection so I came to the table with around like 200. um but really when you think about it um my my only contribution was that I would say that Real Estate Investment Portfolio saving like Capital but it was his Capital that was going to be redeployed anyway towards the mass set so um it was I don't know you can look at it in a lot of different ways but personally I didn't put put in a lot of capital um but yeah that was it that's kind of the I guess the deal makeup and the the 20 seller note was just to to make it work with the bank so it wasn't okay okay yeah great and um let's see so it so 1.71 so just what is that like a three and a half multiple if we assume 550 yeah yeah great yeah yeah I think that's like it's fair I mean and I I look at I mean it's like probably at a premium to be honest but like I I think we might have mentioned that we talked about this one of the locations is like a stone throwaway so I mean I can't really I I can't beat that like in terms of like my commute or um so that was nice and just I don't think we set the timeline here sharada yeah so um Loi was at the end of July um acquisition was around obviously early October and yeah now I'm yeah around is it four months or three months no it's three and by the way the pregnancy came to pass and you had your son was born on November 19th so um lots of lots of changes in the shaw household very exciting yeah okay uh shark I want to talk about um the fact that it was a franchise so um these are themes that I'm hitting a lot now I'm talking to a lot more more people and uh at the intersection franchise and ETA um you know one thing so we all know that franchising it feels a little bit more restrictive some people don't like that and I will highlight the fact that you said of yourself that you kind of have an independent streak that was kind of part of the reason that you would kind of exhaust yourself after 18 months in your PM roles and just feel a little um you know you chafe at the oversight and the lack of creativity and so square that Circle for me because franchising has that has that reputation yeah yeah so so um as part of my strategy to kind of exhaust the state of Texas right in terms of like coverage um I started to as part of it consider franchise resales so I interviewed I interviewed a lot of franchises in the sense of like what their system was what they offered um what they expected from me um and so as part of that I basically learned a lot about franchises and their different models um so there's obviously like the model that's very prescriptive right like they're like hey like this is our technology this is our service model this is our pricing this is our marketing your only job is to deploy it and uh oversee like a specific territory or geography um with uh with that said uh sit means Sid is is a franchise in the sense that uh the delivery model is somewhat prescribed and by that I mean the Dog Training Method is is prescribed like we actually do use um an e-collar to to train our dogs um however when it comes to the business practices um there's very little prescription so what that means is you can package the training in any way you want you can price it in any way you want um you can Market it relatively flexibly like you you do have there are some boundaries um but the boundaries are natural considering the type of training that we offer um and so there are fit means sits that offer training like day training um like during the day they offer boarding overnight and they might offer grooming and also uh like even even some type of like day boarding right um we don't we don't offer all of that but it all just depends on your market so when it comes to like the business practice of profitability Like It ultimately is dependent on you um and that even goes so far as to the system as well so um all like there's kind of there's a few camps of uh technology Stacks within the franchise um we specifically use Salesforce like our uh the previous owner built a very uh let's say um very robust Salesforce instance and it's proprietary to dog training um for our franchises so we use it and then we actually re-sell those licenses to other franchises in the system as well so it's it's it's a really it's really open from that perspective from like uh systems and business management perspective and they and again and I think that one thing that I I did not mention is the the fee structure so um I I would say the more prescriptive that you are uh the higher the royalty fee and other types of fees in this case uh being that they are less prescriptive um the only fee that I pay is like a territory fee and it's like a few hundred dollars a territory and that's it like there's nothing there's no that's it that's your only franchise fee yeah there's no royalty fee there's nothing like that so uh wow yeah yeah so my fee is around a thousand dollars a month so that's yeah so that's why I like wow that that's another reason why like I was attracted to this franchise I interviewed a lot of franchises that I spoke to like a lot of Home Service franchises Automotive franchises and um kinda just tried to kind of build a mental model of all of them and uh this sits at like the end of the spectrum where it's maybe the most profitable type of franchise or you can make it extremely profitable so had you had you actually talked to sit me and sit corporate before this opportunity came in your lap no no no no no no no okay no but they're great so actually one thing to keep in mind too is that like ownership structure matters a lot so like a lot of franchises as you probably know by private Equity firms um or like second uh third generation owners and and uh or like so this it means owned by the founders and you have direct have I if I pulled out my phone right now I could call either founder um and he'd be willing to give me some type of feedback so um and that's awesome like just having that level of of access and like intimacy to things and they're very open and so it's it's actually interesting and it's a I think you told me it was a it's a 25 year old business but the the actual franchising it started franchising only in 2019 yeah like late 2000s late 2000s so it's uh so as a franchisor it's 12 13 14 years old so not super mature but also not too young um yeah and did you like look at the what other research did you do about the franchise did you look at the FDD for example I did yeah I'll tell you FTD I mean so as part of my due diligence I entered conversations with the with corporate and as part of that like we had an initial interview it went well and I had a series of questions they answered them punctually and and thoroughly um and so yeah I mean and there's nothing in and they provide the FTD I assume they provided it immediately so yeah and and um well I want to ask more about uh sit me and sit but before I do that just as an aside where when you did your research into a bunch of different franchises were there any that you were attracted to that you'd like to just call out and put on people's radar there's a home service one it was uh budget lines and sure they so I was just that's so funny I was just nosing around Budget Blinds yeah they have a really good um so actually this is the interesting part with private equity and private ownership or like familial ownership they were on my private equity and then private Equity sold it I think to a family and there's been a significant change in the dynamic between franchises and franchisors uh because of essentially attention and care that this family is giving this specific brand because when you have like a private Equity Firm that owns multiple Brands they don't they don't they treat them like well we would treat them as like a portfolio of assets which is if you're on the flip side of that it sucks because they're just treating you as like a kind of like what the number state so um budget blind has I think improved dramatically and I think the past two or three years because of that trans that was actually what the the franchise representative was explaining to me and they do a really cool job like actually like they're like um like I'd say cross-pollination among the network is really good they like they have a lot of resources for new uh prospective franchisors and then once you're in it I think they have a relatively good network of like uh of folks struggling to help each other out and so it means it is like that too we we have we don't have the right like our resources are good they're good enough but like our technology can be a little better in terms of like knowledge sharing um so circling back notice it means sit so um so really interesting about this the the fact that they're really not very prescriptive and the thing that their intent on is that you use their method so I guess the founders came up with their own kind of proprietary method of training dogs is the idea yeah yeah to some degree yeah like I mean like we like I mentioned we use an e-collar remote collar um to and it really it's attention-based training so we're trying to get and and so I think the one thing uh the objection that we receive a lot is that we are shock collar trainers and um in in in reality we're using the caller very differently in the sense of uh we're trying to get the dog's attention and then uh to some degree direct them towards the behavior that we want them to do and then we reward them right we reward them with like praise we reward them with whatever they might desire right so it's it's basically just form of conditioning and I think one thing that's very critical about our uh our actual Training Method is our is our callers very adjustable so it's actually it's adjustable in the sense that it um is somewhat dependent on the environment so like as you know like uh again we all live in a world full of distractions and so do our dogs so there's less distracting environments in that level like we don't it's very easy to get their attention but if they're like at a noisy street corner like in New York City you might need to get their attention a little bit differently so um we basically do that just to make sure that they realize that we are there we are there like leader we have like a proprietary caller proprietary e-collar um that we haven't we have an exclusive partnership with um sport dog I don't know if you're familiar with sport dog at all uh but it's actually for like for dogs like working dogs and we apply that same technology to pets um and it gives a dog it gives the owner a lot more control and then ultimately confidence that uh that their dog is reliable um so so yeah um so yeah like yeah so that's kind of like it's interesting when you go to I had to go to fit means in school they teach you these these like methodologies and um but it's like any framework right like you kind of mash it together it becomes your own so um that's kind of what they did okay well but so okay so they have this this method that they um it kind of say is there is there signature method and it they expect all the franchisees to use that that's the core um but then every a lot of everything else you can kind of um do on your own very interesting and I imagine that that for you in particular was as a great fit because as you as you said like you like Building Systems so you have the freedom to like all the kind of business operate or at least a lot of the business operations you can use your creativity and your systematic nature to build stuff um but what you would have lacked like how to train dogs that's what they give you so it seems like a great yeah exactly kind of fit for you um yeah for sure one of the things that uh is a theme and at the intersection of ETA and franchising again is like rolling up franchises so there are a lot of um kind of Legacy or mature franchises where the the original or previous generation of franchisees are now retiring Boomers like like independent businesses and so while an independent like it's like a single location of a franchise um might not generate very much sde maybe just a hundred thousand sde if the Playbook is to aggregate them uh and you know quickly you know say take a you know like a fragmented um franchise network but you know you you kind of look at your Geographic market and you see that there's 20 different whatever it is and and you know there there's 20 different owners or 15 different owners there's a path there to you know buy one the first one too small a business in its own right but for that Toe Hold for that that entree into this you know into this network and then from there you know hope and expect to then rapidly acquire a bunch more in your market and then emerge with 7 10 15 franchise locations and then you have a quite a sizable business and each of those Acquisitions is actually quite seamless in a franchise Network because the integration is is really easy depending on their franchise of course but in many cases it is certainly more than than buying 15 independent businesses and integrating all those together so from that perspective did you think about that and what did it what did sit me and said look like from that perspective yeah I definitely thought about that this this seller actually started to do that oh um a little bit more a little bit prematurely but he was started there and then realized that Austin was just a cash cow and the other location was distracting him so he owned San Antonio and Leon Austin I think he actually scaled up even to Seattle um and so he he I don't think he had the right systems at the time so there's probably a little bit more challenging to to replicate the success um but yeah definitely like I mean like there are BMX it means it is like a is a younger and growing um franchise like there's still a lot of geographic opportunity I mean even in Austin for example like I own I owned two territories um however like there's there's territories around us and that are that are growing and that are unowned um and then I could I can gradually enter as well so um so yeah definitely I mean that's something that um we've definitely considered I think the thing that like we we mentioned earlier was that like one location might generate like say like 250 or 300 in sde which is nice so like we might need to roll up less or like yeah scale to like a uh like a fewer number level uh but still a scale a bit so um so yeah yeah cool and how do you think how should one think about like so this is a let's call it a 13 year old franchise and like I did a Google map search for sit means sit in my market the DC Metro area and there's just like one like north of Baltimore so in the DC Metro area like that's far and pretty remote and so point being like it clearly hasn't really penetrated I mean it barely exists here um right so so it's not like a franchise that just is like in every Market is that something to be like concerned about or is it just like dog dog training you know there there isn't the it isn't there's not going to be the demand for dog training that there is for you know gyms or you know the next quick service restaurant it's just like a you know smaller market so therefore there's not going to be yeah as many of them or how do you like how do you think about that and interpret that yeah I do I actually agree with your latter perspective or opinion in that like Austin is a metropolitan area however we do have a lot like it's not as densely populated as certain areas uh and so because of the like people are more prone to having dogs and larger dogs and and taking those dogs out for like off-leash activities uh and so that there likely will be a higher uh demand for dog training or just like a different type of dog training whereas like a metropolitan area like you might you might still have dogs but they're maybe in a more controlled environment there might not be as many opportunities to like take them hiking let's say or like take them to like so many other like uh interactive like uh activities like I mean they probably have dog parks um and so forth but I think that's probably one way of looking at it it's an interesting interesting point I do think you need more space ultimately I mean that's one thing too is that our facilities require space so um yeah so our facilities are like four to five can they be anywhere like four thousand square feet to like 8 000 to whatever how ever largely want them to be I mean there's definitely limits and like reasonable limit I beliefs it means it also started off as like a almost a mobile dog training company right they'd come to you they'd train your home uh and so forth and there would be no facility however I think that the folks who have who have facilities are much more profitable because they don't need to travel they can they can scale up in a central location a lot faster so there's probably more of a movement that's a really good question that's like why um why his dog training more uh available or um I don't know like more successful in other markets than others um but at least that'd be my well and actually shrug to be clear there are dogs training businesses just not I mean and I guess I guess one of the other yeah just not sit being said I guess one of the other franchises is or corporate efforts that dog training is woofs there's a woofs I've seen do you know do you know this brand I know I've never heard of both okay so I think it's maybe maybe it's still a very I think maybe dog training franchising might be still pretty fragmented then and that could also be in other cases that like there's no like we claim we're the largest uh we all and I think nationally we do have the most locations which is great like it's a great selling point um however like it's still not like so sizable that like we own the market you know like we might be like one percent one percent of the whole yeah and worse might be another percent right yeah well sure I wanna I want to um wrap us up here but uh it's to do that let's just hear a little bit more about kind of dog dog training business just broadly not necessarily um the franchise aspect of it how much does it cost to have your dog trade like what is the the LTV of a customer in dog training land yeah so our programs range anywhere from 800 to 3000 and that ultimately depend on your dog's Behavior so um it all it honestly varies uh just because like every dog varies like it's a human right so they come with their own temperament their own background Etc um and so uh and the in the kind of average contribute I kind of based on contribution margin um is around 70 so which I think is really healthy so let's say like if it's around um three thousand dollar um all right package uh we'll probably we'll keep around seven percent up I think it's 2100 and that's after labor um that's after like inclusive of I think what we include in there is basically the service cost but it's almost like a it's almost like a service unit cost that we include there so it's labor um our caller that we have to use um and then uh does not include operating expenses obviously so um yeah yeah 70 is pretty good from that perspective um yeah wait that's really good isn't it yeah yeah I think it's really good and so so then I mean after that you don't you don't have a lot of other expenses like you don't have a lot of over you have your friends yeah big rent on it yeah five thousand eight thousand square foot Place yeah we have Brad we have like I mean you got your GM for for two locations so that yeah yeah I pay myself I pay myself a small salary um I have my office staff um who basically like customer I think it's a customer success or customer service specialist and they do a pretty good job of like scheduling and coordinating like and so forth so and how much but with all of that overhead or it's not so much but with that overhead um how much capacity do you have there like could you launch another territory and not have to do much additional hiring like you already you could already handle it with the capacity you have we would need to do more hiring um the way the way that like actually the seller described to me how he scaled in from like one to two locations was and he does this already we do this already they rotate um like trainers it's not like a trainer is dedicated to a specific location I mean there's a preference for one and we'll try to meet that preference but they might be like we have North and South so there might be North four days and South one so let's say like we open up like the East it might be like three one and one um but yeah I mean we're somewhat constrained by uh our like actual capacity but not significantly basically right now like we um we could open one I would like to have like one to two more trainers it's not it's it's strange like I'm like uh try to be systematic and scientific about like my next step but I think when it comes to like opening the location It's a combination of like a gut and also like okay what what makes sense um in terms of like the people that we have and then the demand that we have so right now I don't think our our demand is because we just um we just ended right we're ending our holiday season around Q Q4 tends to be not the best for for service based business and specifically like discretionary you could say this is semi-discretionary um uh so like our demand is just meeting our supply right now um which is good so we can get if you want to train your dog today we can get them trained probably the next like two weeks uh but like I'm imagining in the next two quarters are going to change significantly demand's gonna far out far exceed Supply and so like we'll need to and we are going to be hiring so at that point then it makes sense to be consider a new facility and so forth I haven't seen the data yet so I don't want to make that make that judgment or or take that step yet so yeah you said you're paying yourself a small salary so yeah is that just in an abundance of prudence or or uh yeah kind of I want to make sure that I can like live like well enough um pay pay my mortgage have like a decent lifestyle and then um I I think we might have discussed this in our first call as I follow uh uh profits first that's it I think that's been really helpful and so like I do have like a pretty healthy um owner's discretionary bucket I bet I've just kept I mean I could I could access it and distribute it to myself but I'm trying to say I want to keep it more so to reinvest um and if there's like larger expenses that I have to I have to have and I I will um withdraw it but I mean there's no need to right now so um yeah it's honesty and I'm I'm making a lot less than that whereas it was as a PM but it's okay I'm having a lot more fun well it's also presumably um not always going to be that way you're in you're you're one and right and you're being conservative and getting a lay of the land right right right right I'm being and like I'm an extremely it's it like I'm pretty um aggressive when it comes to like experimenting and growth and like trying to move it move the ball forward but I'm very conservative when it comes to like estimating expenses and like I I will always I always overestimate I'm always going to add buffers it's just um it's like just natural like I I don't have to like account like it's not like I don't have to think about it just happens naturally for me so yeah sounds like a good one yeah conservative financially but kind of risky with your experimentation and things that maybe don't cost as much money cool well um this has been great uh we covered a lot of territory how can as I said I found you on LinkedIn you you posted um when you made this acquisition so I was thrilled to see that and connect with you um so I'll link to your LinkedIn are you active on Twitter I do right a bit I mean I kind of took a pause on that also last year um it's just my first and last name turagsha dot IO yeah I mean feel free to reach out to me um always open to helping others and to get there so well encouragement to you to participate in SMB Twitter if you were already comfortable yeah yeah our re twit you should get on SMB twit and people would love to follow your journey there it's a it's a really helpful awesome collaborative Community lots of people doing lots of interesting fun things and lots of my guests have come from there so um yeah but I'll link call of that to the show notes and uh yeah look forward to reconnecting later this year seeing how things are going thank you very much for coming on sharak yeah no yeah I really appreciate you having me thank you 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