Jordan navgrad thank you for joining me today on acquiring minds thanks for having me Jordan I I love when my guests don't fit the mold of the typical acquisition entrepreneur I would put you in that category uh for two reasons primarily first you were employed at the same place for 17 years so an almost two decades stint as a single as an employer at a single place is not really typical on the resume of an entrepreneur and second you were never really interested in personal finance money and you only became interested in the topic about three years ago introduced to it by uh from Rich Dad Poor Dad that famous book that has introduced so many to personal finance and yet here you are having acquired a business so um not sure the Jordan of three years ago would recognize the Jordan of today uh but uh we're gonna we're gonna hear all about what that Journey looks like so maybe start us off Jordan with um you know these these 17 years what were you doing and what happened that prompted you to I mean Beyond just reading Rich Dad Poor Dad you know what go how does somebody working for 17 years go to buying a business so um I guess 17 years was um what I fell into and I got the um you know salary and all that the I I gained enough that it became like a golden handcuffs you couldn't easily walk away and while I wanted to start a business my wife was never supportive of being poor while we um did a startup so every time I tried she would say hey wait a minute that's not going to work for us um how many times did you try um a handful okay so you did you were entrepreneurial so it wasn't totally out of left field that you would eventually do something entrepreneurial right um okay um I um I feel like uh always been entrepreneurial I did uh start a business in college that I totally ignored for college um so it didn't last very long but you know I do um my family I guess um has always you know been entrepreneurial on most um most everybody in my family start I had started or run a business so ah you know that was kind of normal for me so finding myself at a job where I am stuck for 17 years was was out of the norm for my family um and you know it basically got into I was I was working for the Johns Hopkins Applied Physics lab um and doing DOD work so I was you know finding a lot of that stuff very interesting having gotten engineering degrees um and one thing led to another and I just kept you know um finding it hard to to break out of that um so then covet happened and that changed everything we decided to um sell our house and and move to a rental so that we could then have that money available to invest um we decided that um we wanted to get closer to my in-laws since they were getting older um we did all that and then um the coveted mandate started happening and I was totally against the mandates and um applied for an exemption and all that and long story short as it didn't work out they they um very much had a Draconian Style you'll do what we want or you won't work here so I knew I wasn't going to be working there for very long at that point um I was ready to dive off and start investing in self-storage um but the economics of that aren't nearly that of buying a business um that um you know as a typical search so along that Journey let me hop in here with a couple questions I just want to understand so you read Rich Dad Poor Dad you guys sold your house to invest that money what is that what does that mean exactly to so business so if I get into self storage or what okay so um you know it's we didn't have a lot of the way a lot in the way of savings um being a single income household in Maryland is is kind of tough um and my my wife homeschools our kids um so um we just had my income so we didn't have a lot in the way of savings well one of the things we did have was a house that we had bought and and renovated um so we did a lot of work on the house and we decided to pull the equity out of that and and then rent so that we could use that money to invest and it wasn't clear when we when we made that decision we didn't know exactly what we were going to invest in but we knew we wanted to have you know cash flowing assets instead of on just a liability so we really took that Rich Dad philosophy of your house is not an asset um to hurt and ran with that yeah and so is you read Rich Dad Poor Dad sounds like your wife is on board with all this so is she kind of also going on a personal finance Journey alongside you or you're doing it together yeah so um it took me a while to convince her to read Rich Dad Poor Dad I think maybe um maybe six months before she finally did and then she was totally on board with it which is what enabled us to do it because if your wife isn't on board you're not you're not going to be doing much right right behind every behind every good searcher there there's a supportive partner um and you so I imagine well I know from our pre-call you kind of go down the personal finance Rabbit Hole so Rich Dad Poor Dad leads I assume to all sorts of videos and personalities and stuff but you arrive at sweaty startup Nick Huber who will be familiar to many people listening uh and Nick Huber's big thing is self storage so you're you're you're for your minute for a minute there you're interested in Self Storage correct but you decided too expensive just expound on that just a little bit sure so I had been listening to a lot of self storage podcasts and all that trying to get um educated um so I understood this base and in that I found Nick um and I listened to the one podcast he had on buying a business and I'd never thought that was a concept I thought that's what rich people did right um ever thought that you could go out um and you know leverage a loan and get uh buy a cash flowing business so when I discovered that I was up all night on Biz Buy sell going oh my God it's not it's true there are actually these businesses yeah so I started um I I told my wife about that and she said that's a lot a lot better idea than Self Storage she was on board with that so um then at that point I um lost my job um or quit or most um and started full-time searching so that was in January that was in January of this year okay January this year yeah okay uh and and you didn't like Self Storage not just because you feel like the category has become a little overheated with all the the attention that Nick Huber and others are bringing to it but also because it's just I think you you told me it just appeals to you less and why was that well so it's I mean you're not you're you're not really managing much in the way of people you're mostly managing you know boxes and that's not very exciting although I still think there's value in self-storage investing it's just long term yeah and you know my wife didn't like it because I said well we're gonna pull in almost no salary for the first 10 years but then we'll make money give me your educational background uh you're an engineer you had mentioned but specifically can you be more so I went to NC State um and I did um a program called um accelerated um so I got a Bachelor's and Master's um in five years um and in electrical engineering and so I got convinced to stay technical um and I I finished those degrees and then went off and got a job at the Johns Hopkins Applied Physics lab and worked there for the that 17 years so so you are a a an electrical engineer with a masters and worked for 17 years as an engineer and yet you you find through the duration of your as you kind of see success in in promotions with during those 17 years that the management piece is not something that you were drawn to but in fact enjoyed yeah so actually I didn't um go into management because I wanted to climb the ladder or whatever I kind of went there because I was looking for a job outside and realized my skills were so um narrowly focused that I couldn't find a lot of opportunities so I wanted to find a way to have more opportunities and in that I discovered that hey management will give me those more opportunities they expect you to be broader so I applied for and got a job still at the lab doing management and what I discovered as you said was that I actually enjoyed it so that was kind of surprising helping people grow and you know um seeing them succeed really really um empowers me so that um wasn't what I was expecting um and so I kind of you know had a really good manager myself which helped um once I took on that management role and um grew and that kind of made it hard to leave um you know because I had uh somebody I trusted above me on But ultimately that um you know led to the mandates and that was that wasn't too hard after that and so you actually one of the themes often of business buyers acquisition entrepreneurs is is whether or not they're drawn to managing people many of the target businesses that acquisition acquisition entrepreneurs might look at are blue collar businesses meaning there's a lot of people management some people run toward that some people run away and it sounds like earlier in your ear earlier in your career you would have run away but as you matured and got some experience managing realized that in fact you liked it and so you actually were you were totally embraced that um the idea of man in fact even wanted it in the business that you acquired yes yes great okay so um Self Storage category is too hot seems boring um managing boxes you like managing people uh so are you at this point have you narrowed your search criteria to like a blue collar business what is what does your search criteria look like yeah so my search criteria um you know having read um all the standard books um and um you know spent time on search funder a lot of time trying to educate myself on what what what is a good Target and all that I had narrowed it down to the typical service based business right um in high school and all I did construction so I figured I'd fit really well with that kind of stuff so we're just trying to find that service based business where I could scale it and grow it and manage people and not have too high of capital expenditures that kind of stuff so that was kind of my search criteria which ultimately um you know that's what I was looking for I um ultimately bought a manufacturer so um you know there I was kind of like well let me look for what's commutable where I currently live um and broaden that out and just look at all the businesses that are available um that would be commutable and so then I discovered it and I'm like wow this this really this is the business and I told my wife I said I found it and she's like no she read the um teaser and said yeah this is it so and it ended up being it so and when so why was her reflex to say no because it was manufacturing rather than Services I heard reflexes say no was just because that was her attitude every time I brought her one and I'm like this one looks really good foreign you know she strikes me as one of those people who maybe where her she just says no to force you to think that much harder and and be that much more persuasive just just to like raise the bar a little bit so that you uh are more confident in your own thought process I love it yeah she was definitely doing that when you said commutable so you were where were you at that point you were you'd already done the move to West Virginia and what was what was the radius of commutability so my radius commut ability wasn't really into miles it was in time and I figured an hour and a half One Way um was the most that I was willing to drive so so an hour and a half radius from where you are in West Virginia does that get to any Metro areas does that get to DC or Baltimore yeah it gets basically to both right okay does it get up to Philly no you get to Philly or Pittsburgh no okay okay all right well still the DMV big area um including Baltimore and that even bigger so um that's pretty good the um okay you know one of the other things about your story Jordan is that you have been blogging all the while uh you've got a sub stack of course there will be a link to it in the show notes I encourage people to read it um uh quick digression tell tell us why you blogged through this experience well so um there was a couple reasons I wanted to blog first I wanted to hold myself accountable um for making progress um and I figured if I wrote that down that I would I would make sure I did more than had I not well the second reason is I wanted to make sure that others even though there are great um books and stuff they still don't get into all the nitty-gritty and so I just wanted to blog those nitty-gritties to show you know how how an actual search um went and maybe help somebody in the future um with their search um and then third I was looking for you know not having contacts and um you know finance and that kind of stuff not having an MBA and uh backing I was thinking that I might need investors and what better way for investors to get to know me than to be able to read my journey along and follow um so I wanted to build that trust um over time as we talk there were a few of your blog posts that uh jumped out at me that'll be that are well I mean they're all relevant to your story of course but a few that um I wanna I wanna um hook in as we talk so the first one is your approach to deal flow so um obviously deal flow is really the name of the game in Search um and you were trying to be intelligent about as intelligent about it as possible so you try to get Upstream on dealflow I think that your blog post was something along those lines getting Upstream um on dealflow what uh did what was your thinking what was your approach and what did you learn so um I guess you know trying to figure out how to get an upflow on the deal stream um was um not not simple right the books just talk about doing that you know uh established relationships with Brokers and get on their short list it doesn't really talk about the mechanics of how you go and do that um in discussions with the search Investment Group um because I was trying to be a part of their program they kind of um hinted that what they do is use a CRM and go out to all these Brokers and send out you know emails to explain the search and get on their list basically so I said well you know when they weren't when they didn't take me I said well I can do this on my own so I did just that I collected um scrubbed all the websites for broker information started compiling that and then started emailing those Brokers with a one-pager right um which I you know went on search funder and got lots of help on what should I say what shouldn't I say that kind of stuff um to to clarify that message and you know ultimately what I discovered was that all of those Brokers that I and that I initiated that process with and I gave up on that process about two or three weeks into it because all I was getting was the standard listings um and those standard listings were actually like from the worst Brokers they were ones they wanted 20 times cash flow for the business and that kind of stuff and so hold on hold on a second let me jump in you said you scrubbed the websites so by that you mean going on Biz by cell seeing the the Brokers alongside listings that are in your target geography and that seem like within the Industries or categories that you're interested in and then sending this an email to them um that says you know that has your one pager and it's basically introducing yourself and what you correct so far oh well actually by scrubbing the websites I mean I went on the like ibba and interxo and collected all of the Brokers contact information ah using a web scraping it's ah okay okay so you were just getting lists of Brokers you weren't looking yet at Biz by cell and seeing who the active purpose were okay and then you send out um emails to all of these folks with you're introducing yourself saying what your target is one pager about yourself um and then what you find is that this isn't that productive because really you're you're automatically put on their lists and it seems to be lists of you know Brokers not really selling quality not really putting out quality stuff right yeah I mean so I mean the um a lot of the brokers in Florida right are they can be anything from a real estate agent right um and so I was getting a ton of calls from them wanting to do you know buy side uh um engagements so they wanted to help me find that business um I was and then if I was getting on a list the list was always one where and I still have them emailing me today these businesses that you know will never sell because they're yeah and wildly over priced and you know unrealistic so that's that's what I found using that process um and so ultimately what I decided on was to use to to do as you said and look at the listed ones on Biz Buy sell find those that match like okay this is a a business that I'm interested in let me find out more information um and then you know as with a lot of them you're going to look at you're going to realize this isn't the business for me or I don't like the hair on this one um and so my goal then was to let the broker know why I didn't want to move forward on this business and by doing that I developed much better relationships with brokers um and I could tell of those Brokers which ones like if they were you know telling me the cash flow is a million dollars and then you get the the Sim and it's really 200 000 well you know this is a broker I don't really want to deal with because they're just inflating everything to unrealistic and it's not worth my time so so when so when you went to Biz by selling you identified Brokers that you wanted to reach out to more specifically rather than the ibba scrape uh how many how big was that list I assume it was a lot much much smaller so I mean I was when I was constantly looking at the listings and then reaching out to every one of those listings that I found interesting and so it was a whole lot smaller right which is um what ultimately led me to broaden it up in in terms of the kinds of business I was looking for um locally the other thing that strikes me is like you know one of the things I mean Biz by cell is amazing in many ways but it has the reputation for you know the very best businesses are pocket listings and are sold before they ever go public on Biz by cell not always I've had plenty of guests on here who found their business on Biz by cell but that is certainly the kind of the conventional wisdom you hear in the search funder circles and elsewhere and there is a lot of truth to it so um is it is it the best uh are the you know the broker selling the listings on Biz Buy sell you know are are they the best brokers because you know because they haven't been able to sell their listings you know off Market which is as we're told the best you know those are the where the best best listings and presumably best brokers are active sure maybe maybe so I don't know uh I don't really have a you know um inside knowledge on those Brokers um what I will say is I bought my business from Biz buy sell and the broker um I thought was very good so you know he's he he's the type that their brokerage carries one two three businesses tops um and they you know price them right to sell not to hold on to Forever try to scrape listing you know contacts or whatever so you know but you know if you if you can you know obviously if you're um a buyer that's seasoned and has bought many businesses you're going to get access to deals that other folks that aren't won't so you know yeah yeah um fair enough and we didn't cover what your your search criteria was other than the the geographic constraints what were what financially were you looking for well geographically I was actually looking um all the way from Pennsylvania to Texas kind of on the whole Southeast um and then some um financially I was looking for um anywhere over half a million in in ibadan to 2 million um figuring 2 million would be tough to finance but right right within my capabilities so um that's a broad range and yes a two million dollar ebitda business is uh a big a big bite for somebody who just read Rich Dad Poor Dad three years ago well well um you know I mean that at the um at the start I actually looked at a business that was like 330k or something in seller discretionary earnings or whatever and it and that seemed like you know hey that's that's pretty good money like if you can grow that and like great and then um once you figure out how much you're paying for financing and all that and then all of a sudden um that's not very much um and I would have made more you know staying at a job than doing that without all the risk and all that so that kind of set the lower bounds um I didn't really want to go down to you know 500 or whatever but I wanted to stay flexible enough so that there were you know there are more businesses down the lower end obviously than there are on the higher end so you're you're uh something tells me that your conversations with Sig with Robert Graham and Jordan Carter uh were influential in this thinking uh I mean a lot of people say it but they are um especially forceful in their argument that Searchers should only be looking for you know 700 ebitda or 700 sde and above yeah I mean and they make I think a very compelling argument because um you know there is all that risk and if you're going to do that you might as well um get to the point where you're going to get rewarded for it so you know and also I you know I I learned this rule of thumb late but it's it's a great um just at a glance you can look at an SD and have it mean be more specific have it be more meaningful to you good rule of thumb is when you see sde just have it and that's what you'll be left over with after servicing your debt if you're doing kind of SBA loan with kind of standard parameters so if you're looking at that 330 000 sde business really you're only going to have what's my math 165 to pay yourself and reinvest in the business and and and after uh Debt Service so just good good rule of thumb for people who don't already know this probably most listeners do but have that sde to um to understand what you're left with after servicing your debt okay well and Jordan I I didn't uh I either didn't understand or I missed something where you talk about your Geographic constraints being an hour and a half from where you live to the entire Southeast I miss you yeah so I guess I mean to make that clear I broadened my search um my first my my criteria was the whole Southeast for service-based businesses um and when I decided that I wanted to open up find more businesses that were closer in terms of being able to commute that's when I just took away and looked at all the businesses that were for sale so whether it was a gas station or or you know a car wash or whatever I just looked at everything that was commutable um instead of staying more narrowly focused yeah okay gotcha so have we have we kind of exhausted your your blog post about um getting Upstream on deals that was there did we cover everything yeah I think so okay because eventually as we as we already know you the deal that you found was not through any of that as it turned out it showed up on Biz by cell yes so is there any takeaway um from that I mean would you still recommend people do the final method that you arrived at which was looking at Biz buy sell and maybe a few of the other sites seeing the Brokers that are active and kind of cold outreaching to them it still still worth it would you say yeah and when I say I wouldn't do cold Outreach I would still inquire about their deal even if they're only marginally interested so you can get to know them a little better um and they'll actually pay attention to you if you're cool down reach um and they're good they're not going to pay any time and they're not going to give you any time right um because they're busy they got lots of stuff to do and you're one of the million people bugging them that you know probably will never close a deal right yeah yeah so and curious would you get on the phone with these Brokers or was it all over was it all over email that you were kind of developing relationships I I ended up on the phone with them but I started out over email and would I do that yeah I mean I I plan um to um after you know um some period of time when I get this business um running well and where I feel comfortable going and acquiring more businesses so I plan to use that method well you um will have already done deal then so I imagine a lot more doors will open to you and a lot more you'll get a lot more calls back there's a huge difference between somebody who hasn't ever done a deal and then somebody who has the credibility of having done one especially if you've then been successful with the business you acquired so that'll be that'll be fun okay so tell us more about the business that you found that you immediately loved and that uh your wife immediately loved too when she actually was willing to look at it so um the business is um a metal fabrication um so we manufacture stuff in metal and Plastics but um that includes Machining and Welding um so we build basically all kinds of different metal things um and it's sort of why it fits is because in my job I was in management over a small machine shop um as part of one of my duties and so I kind of understood the very basics of the business um you know in that job it was not about making money it was about you know just getting stuff done um the finance and all wasn't part of it but nonetheless I did have experience with that so um and I like I like building things I like seeing things built I'm you know Hands-On kind of person so that's why it fit really well and so um once I you know decided this you know this was the business to go after I you know did full court press and I met with the owner as quick as I could um we met in person um we hit it off really well and I at that point um my wife was like um it was supposed to be like a two-hour owner meeting ended up being like six and uh my wife was like are you ever coming home she knew right away um as I did that this was definitely the business for me so well what a lesson in uh um buyer seller chemistry which is another theme that you hear over and over again I mean just last week I was talking to a seller who sold their business and she said I had stronger offers than the person I chose but I liked the energy of the person I chose so I was I was willing to receive less money because I felt chemistry with the buyer and and so you're so six hours what did you you guys went for lunch and then lunch became a tour of the show how does two hours become six what did you do for those six hours you weren't literally talking the whole time well we were we were actually here at the shop uh after hours um so that the employees didn't know um and we did um we talked for a a good bit of that and then we did a tour of the shop and lots of questions and it just kept going and going and going um because I was you know interested in learning more as and you know by the time I left I told both the owner and the broker that I was going to put an offer in that I wanted to buy this business um and so you know I then worked with um within two days to put together the offer and get it in so so had you did you have your Loi templates and stuff ready to go or were you kind of scrambling because you hadn't yet reached that stage in your buying process yet no I hadn't reached that stage in fact the broker provided me an Loi template I found you know the ones on the Stanford um pack and you know tried to milled those two together and not make it too complicated you know it um I didn't end up wanting to use a lawyer for that aspect of it um so I I just took in used mostly what the broker had done I had ended up I ended up with two um one that was far more legally written that was mostly from the Stanford stuff and I ultimately chose the less legal one that the broker was familiar with so why did you choose that one because I wanted a better chance without accepting it yeah what did you get the impression that this was going to be competitive um yeah it wasn't clear right whether um there are other offers on the table when I put mine in um the the broker kind of alluded to there were other interested parties of course you know vaguely I remember aren't other interested parties so um but ultimately it ended up um I didn't have a competing bidder um but the business was Priced Right and the um I you know felt that the seller was being honest and ultimately to me that was the most important thing like all the Shady people that I hadn't interacted with and many other businesses I'd looked at um you know where people would run literally every expense through the business like there were there was one particular one where it was like there was like thirty thousand dollars of Bed Bath and Beyond that was added back it's like a person was single-handedly keeping Bed Bath and Beyond in business by the way so when when none of that was in this deal it felt right to me um so it was very clean yeah so you you did feel that um with a lot of the Sims that you looked at that there was there was there's a lot of shadiness out there a lot of a lot of uh Minds to avoid yeah well I mean you know you know and maybe that's a fact of those businesses being listed on on those websites is there still the the bad ones are hanging around right so yep exactly good great Point yep the two two follow-up questions about this business are more the can you tell us what some of the financials were yeah so I mean uh um the SD was um on the order it was over 800. um and then the um price was roughly a little over three times the sde so that's um you know right down the lane of what I was hoping to find what a find that's phenomenal and further evidence that um not only did you buy something on Biz by cell but you've found a sizable kind of self-funded Searcher special right there in Biz by cell um the now what was the hair on this particular deal what what was there to not like about it surely there must have been something well I mean you know um there's always hair right now so figuring out what that is in this case um there really isn't a management layer like almost all I have um you know nine employees and they almost work independent like um there's very little in the way of that kind of a management layer which I would have expected right um at that size of a business so you know what that ultimately means is that the seller um was doing all of that right which means I will have to do all that right and so um I you know that some people I would run away from that and say I just don't want to be there in the day-to-day buying myself a job right um but I was perfectly all right with that so I do want to eventually um grow to where I'm not in the day-to-day but um I'm not in any hurry to get away from it at this point well and it's not necessarily yeah buying the job but it's also I mean this is why you buy a business that has sizable sde because you have the resources to reinvest in in hot making hires now that means obviously that you don't take that money out of the business but you're buying this business to grow it anyway so um so let's actually just do some quick public math here so if it's 800 Ste you know following our rule of thumb I'm not saying this is exactly how your number struck out but following the rule of thumb you actually after your debt service have 400 left over you want to pay yourself let's call it between 100 and 200 so that leaves you 2 to 250 let's say 200 to 250 to grow the business and that's you know that's certainly enough to hire at least at least one maybe two managers although then you're really not going to have anything left over um but um is that kind of how you is is my math at least a passing resemblance to your plan yeah I mean that that was how I looked at it and is how uh um I'm you know looking at it going forward so it's it's it's um the the other hair on this deal was the um amount of working capital right that's how much how much work in capital do you need um and being a manufacturer um it's not you know my worry was that there's a whole lot of capital expenditures um the machines can be pretty expensive um how you know how often do you need to buy those and you know what does that cost well um you know digging in now um having owned it for three months the capex isn't really an issue but the the um what what most Searchers want right is a very short um working capital cycle in this business is uh not short 90 days some of the customers are net 90. that's a long time to put out money right before you get it back so yeah you know that part is that part is um you know some of the hair on it so going back to the management layer for a second um a follow-up question on the numbers what is revenue or roughly so 800 sde from how much revenue about 2.2 okay so a third so so yeah so over a third so that's like whatever approaching whatever somewhere between 35 and 40 percent um and you know I'm reminded of of my episode with Ryan Doyle who's a Searcher who had kind of seven takeaways from um seven seven things to red flags in businesses that you're looking at uh to be careful of as a Searcher that he's learned from looking at so many deals and decide and realizing like what the patterns emerge what patterns emerged from the deals that he ultimately said no to one of them was if margins are too high like you'd be like well you know how can Merchants be too high like more margin the more margin the better um it's it's exactly like what you found it probably means that the owner is doing everything and that if you really want to understand uh how what you might do with this business you should reduce that sde because you're going to need a manager uh if you if you want to you know build a growing asset and an asset that you your business that you yourself could eventually sell um so yeah so here you have 35 to 40 margins in your business it's I mean this you know this is a perfect example of that so um I encourage people to listen to that uh that episode by the way that was episode 81. don't be tempted eight signs of a bad business eight signs not seven returning to your story Jordan so um the the other uh can we spend a minute on the nature of this business I don't know anything about manufacturing I've said that before when I've had on guests who have bought manufacturing or manufacturing like businesses and in fact in a number of those cases the folks are they say well it's a manufacturing business technically but it's not really it's more kind of fabrication or a recent guess was like I actually he said I realized after six years of owning my business that I don't I'm not in the manufacturing business I'm in the e-commerce business we do some design here but basically the manufacturers in China I'm not really you know striking an arc at all sounds like yours is a real deal manufacturing business the Machine Shop am I right well yeah I mean yes and no we we do have some products that we make on a continuous basis um but most of what we do is Project based so we have a lot of recurring customers they come back to us over and over and over um but we build different things for them so it's not um there's it's a little bit like a manufacturer and a little bit not so the um a big portion of the work we do is for water treatment plants and every one of those is different and the kind of metal fabrication we do whether it's stairs or railings or you know grading that kind of stuff it's very unique to each project so we have to go out and measure it and then manufacture it to match so and so you're you're distinguishing that from a manufacturing business and then a manufacturing business is producing a product at scale and so they're just doing they're stamping out the same widget over and over and over whereas yours is kind of Custom Manufacturing yeah yeah that'd be a good way to distinguish the two and on this point about you recurring and reoccurring so it sounds like yours would be kind of the classic um well I was gonna say reoccurring because you have clients coming back but I'm not sure that is that is reoccurring uh technically either but did did that give you give you pause that it was that is Project based I mean that's often something that um that is is certainly not within the Sweet Spot of what Searchers look for project-based businesses correct um so no because I knew some of the work was that um reoccurring work so we build some things like and that portion of the revenue is on the order of 40 50 percent of the repeat stuff so that uh um I thought was a good stable base from the on the project side um you know to help balance that the project margins are higher which help great um you know and being that the projects weren't tied to you know I looked at pool building businesses and and that kind of stuff and there was a covid bump for sure in pools right um this business you know I was like well it's infrastructure if anything were at the beginning of needing to replace an awful lot of infrastructure so that project base to me seems like a good stable spot to be not necessarily like you know now that the pool bump is done people are going back to work they don't need their pools anymore you know um a whole lot more stable in that regard on the economy so sure well the other thing um that jumps out at me is um the a lot of what you were buying is these relationships that you have with the with the folks at the local governments or whoever is building the water treatment facilities and so those relationships presumably were with this owner this gentleman that you spent six hours with on that first meeting so something that is is so incredibly valuable and needs to be transitioned just so are those relationships did that strike you as um I mean did you recognize that and how did you how have you managed that yeah I mean so that that definitely was one of the risks right is can those relationships transfer and so when working with the seller um I wanted to make sure that he uh understood that that's what I um was worried about and when I wanted to make sure you know we worked on together to try to transition and so what what has happened is that we've gone out and met each customer um one by one together um and we talk them through the transition and ownership um he's still um working in the business so we still have that um in the business and I think for the most part those relationships is transferred really well um we have um we haven't had a single customer be like oh we're done you know um we haven't actually seen that like Trail off or anything else it's been um pretty constant so you know we didn't tell them all on day one we did that very deliberately after months of owning the business that way you can we could be like yeah this happened two months ago you know you still keep getting your stuff right so and did did you write that contractually into the purchase agreement that he would do that that he would that he would introduce you personally and and that because that's so that strikes me is so important and maybe something not to be left to you know a vague understanding or a handshake yeah I don't I don't think we wrote that specifically into the contract um we we did write in that he would be in in helping transition but um not the specifics of those relationships so it was kind of a trust thing um and again I feel like I could trust the seller so that was what I felt pretty comfortable with that happening so it has so and how many customers are we talking that he's you've gone and done site visits for the introduction just curious so at this point it's been about um well five or six um the smaller customers I mean we don't don't really care right if they're a smaller customer um so the five or six largest customers is the ones we've done so far okay Jordan let's spend just a minute on um the business of machine shops I I don't know um so kind of Define that for us for for those who are ignorant of of the whole world of manufacturing what is it machine shop it it's something that you see on Biz by cell you see these these types of businesses on Biz by cell um from time to time I see people in search fund are asking about them yeah so uh machine shop typically takes metal or plastic and then removes um parts of it to build things so it like um cuts away metal right um with um with different machines that are computer controlled so instead of like a 3D printer that builds up um a machine shop takes away material to get to the finished product so um we we are just a machine shop we also do fabrication and welding and that's different in that it's not not all machine shops have those capabilities and if you're building handrails you're not doing that in a machine shop because it would be um way too expensive nobody Bill afford it but when you're building handrails there are parts that you do want machined and so a typical Fab shop would pay a machine shop to do part of their work um we do both so we're able to cross that line so we we do that as well and a welding fabrication is you know much coarser not nearly as tight at tolerances so we're a machine shop we can be in talking in thousands of an inch in the well shop we're talking like quarter inch right but in a welding shop that's where you're actually you're you're you're creating something you're building up rather than cutting away was that one of those you do also cut away um in a in a weld shop um as well as build up so it's uh there's both okay okay and now that you have um shopped for one of these and an acquired one and and sat in the seat as CEO for three months any um anything that you might tell Searchers who are looking at this category to you know what to like not like be careful of anything come to mind um no I mean I'm I'm loving it there's not been a day where I've been happy to come to work which you know it's quite quite a change from when I was an employee so um you know if you like Hands-On stuff you'll like it yeah you don't you probably wouldn't okay okay um so this this is a business where you really gotta yeah uh invest in kind of learning and understanding and really um uh that what you're actually building and stuff this is Technical and you need to be drawn to that and enjoy it and learn it I think certainly yeah I mean to be able to price correctly and understand the Dynamics of oh well you know um one of the the things the former owner was doing and I'm doing now is figure out how to price stuff correctly right now if you price it wrong you can end up losing money instead of making money so um but to do that you kind of got to understand what the Dynamics of that are so if you're you know given a part that they want manufactured that's not machinable or extremely expensive you gotta understand well do they really want does the customer really want that or do they want it to be you know functionally um workable or you know and so understanding those um that aspect of the technical you know it's like you can't you can't just machine out square inside corners for example right um we get a lot of designers will put Square inside Corners because it's just easy well does the customer really need a square inside corner um and most of the time the answer is no but you know understanding those are kind of aspects I think is is pretty important and this is all stuff that you didn't know before yes you're an engineer so you're you know you're kind of you have an aptitude for this sort of thinking but you really didn't know any of this stuff before and what you just described for example something you've learned basically in the last three months yes okay Jordan I want to close out with talking about a couple of these blog posts that I mentioned um you you uh did a uh the post on day one so tell us what your your first day looked like so I mean the first day we decided um that I would come in um after the former owner announced um I had a meeting that he had sold the business so I came in after he'd already told everybody um and um this our business we really don't have like daily meetings or whatever it's a rare event when we get together for anything um like that so I came in and everybody was like dead silent they looked all shocked and surprised and awful and so it was it was it was quite uncomfortable but okay you know um I I gave um a short speech that said what I wanted to do why I bought the business um and essentially I got um okay we'll give you a chance kind of kind of response and um then it was you know everybody went back to doing like I said they almost all autonomous so they went back to doing their work and um that was it was really really strange because I wanted to be super excited and they all seemed pretty upset so we um you know it took it took a while um I you know I had to get to know them before they um when you know let me know what they thought um so it's been um it's been quite a process but you know I think connecting with people is not not too hard for me so um after you know after that first day I told them all I wanted to take them to lunch which um because the office has zero like you know I can't there's no offices it's like a yeah cubicle set up so it's all open yeah I wanted to uh um get the take from each of them on what they wanted you know with their with their job and what they wanted to see with the company um what they thought was wrong with it and that kind of stuff so I took them all out to lunch individually um which was you know it it cost me my waistline but sure that it was all good because they um really I got so many thanks from that like um they felt that was really um good uh to get a free lunch and have time to actually just discuss where they wanted to go and what they wanted to do so that was the beginning of building the Rapport that I think now that I've fully gained all their trust I haven't lost any employees um I think everybody's uh as happy if not happier than they were before so that's great Jordan congratulations when you said that they all seemed pretty upset is it just simply because people don't like change or was there something else yeah I don't think people like changed at all um and none of them had a clue that it was coming so yeah they were all just completely shocked um they've probably had in their heads all kinds of you know it's going to be this many years before the former I'm going to retires and that kind of stuff and so they weren't expecting it I guess and the speech that you gave what were the what were the key points so I mean I put that in my blog post but yeah um you know it oh let's see I I you know wanted them to know I bought the business because of of them right it was very much a um you know a good business because they or the you know providing the value and doing the work and um you know I let them know I looked at hundreds of businesses um and decided on this one I let them know my background and you know what what that you know I didn't come from money um that I you know worked my whole life I started working when I was six so um I let them know that I let him know my leadership style I you know I don't like to micromanage I don't like to be looking over shoulders constantly but I do like to the more people that will go above and beyond and you know that kind of stuff so I let him know all that um and I told him what I plan to do um by not you know not changing anything in the business for 90 days or very minimally um I let him know I you know wanted to grow the business um over time but I'm you know not not trying to be a big company I don't want to be huge I just um you know I think a lot of them really enjoy working for a small company um and the bureaucracy that comes with larger companies they don't want so I let them know that I let them know you know what my plan was for you know how I was gonna how I planned on trying to grow the business and then I let them know um what what what I had at stake and that I just wanted them to give me a chance so what did you have at stake um pretty much everything I mean I've I put in like I said I I sold my house and I used the equity um part of that to help buy the business I put it in my retirement money we didn't talk about that but I used the 401K robs um to fund the other bit so I don't have any investors um and then the SBA so and with you know as you know buying a business the personal guarantees on everything everything even the lease so they're like you know if the business goes down I'm never crawling out of that hole so and you told them at least some of that I mean you told them about the equity in your house for example yeah I told them that they had my you know entire life savings tied up into it so you know I um I haven't heard somebody say that as their as their piece of their day one speech but I I love that uh you know I feel like it's like you don't want to mention money maybe is people's kind of instinct but I think it's really compelling uh to say what you said because for so many Searchers this is huge uh they are you know many many people are scraping every last nickel uh to do this and many can't do it so they have to they have investors as well uh and this is just an enormous swing for almost all of my guests and maybe if they communicated that just you know transparently on day one that it would um that their employees would not own their new employees would not only understand how serious this is for them but it's also um you know it's a little bit of vulnerability on day one which is it can also kind of disarm people so I I love that you said that did you come up with that or does the literature say to mention um I I don't think I'd heard that um in any of the books or anything I think I felt like you know just letting them know what was at stake would help them um come to understand that I wasn't um some You Know Rich fat cat just you know lording over them kind of view it was the you know how I how I viewed it so well it sounds to me like a great day one speech Jordan but it sounds like it didn't wasn't effective I mean at least immediately well everyone went away grumpy it sounds like yeah well you know I I won't claim that it was a smashing success of a speech but I think it was the seeds that helped them you know um to gain respect for me so well and I don't mean to to suggest that the speech was the problem it's just maybe there's no way to give the perfect speech that will assuage people's concerns when they're kind of you know broadsided by this news news like this um yeah and yeah and and so then when you took everybody to lunch um did you uh I I recall from your post you know a lot of that was just kind of like Rapport building getting to know them personally rather than you know sitting them down at lunch and interrogating them about like what the you know what should be improved at the business um is does memory serve or I mean how much in these conversations these lunches with folks were you talking about the business versus just getting to know him personally most of it was trying to get them to get to know them personally I didn't want to um you know um press them I didn't want them to feel like I was in interrogation or anything like that uh you know trying to understand what they thought of the business was more of um like you know a very broad question that just wanted to get their take on you know why they liked or why they wanted to work there um or not right like you know none of them told me they were out looking for another job but I suspect that several probably did entertain that right um just being that there was change so yeah sure that they're still there so so far at least uh you seem to be doing something right knock on wood don't want to jinx it so Jordan you are you had said in your speech to everybody that you weren't going to change uh much for 90 days no big changes for 90 days um and we are right around the three-month Point um so you're at the point where you might actually now Implement some big changes do you have a list of things that you're gonna uh changes You're Gonna Make Or what where's that yeah so I mean I came in with a list in my head um the more I learned about the business the more I morph that list um you know it's a almost entirely paper business at this point um you know everything is printed and filed and you know checks are handwritten and mailed out um so one of the things I'm I am changing is bringing more of that online and less of it in paper so I had planned on implementing CRM and that kind of stuff to help now having been in the business long enough I'm not sure that is um worth the squeeze you know so my my plans have changed since when I originally came in but I am implementing changes now I'm not trying to make any giant abrupt changes just incremental uh incremental changes that improve things for example we have analog phone lines and fax machines and we don't really get any faxes so we're we're switching over to the digital system um you know it's not it it's already been signed but hasn't been scheduled yet but you know so we're going to be doing that where everybody will get their own phone line instead of one General number that Rings oh you know those kind of changes are are super simple um you know I'm making changes um in like equipment like you know we got guys in the weld shop that were sanding stuff with a with a angle grinder um which wasn't very safe and I was like why don't we have a sander I don't know swing by sander you know oh nice stand sander that'll let them work safer that kind of stuff so I'm making those kind of changes but I'm not trying to you know I I don't the systems are in place even though they are all in paper and all are very very methodical and good so it's just a matter of trying to transition those the digital um and then you know right now there is zero marketing so um I am planning to implement some marketing strategy to try to get more more business oh I was I took it to mean when you said that the implementing a CRM probably wasn't worth it that you had identified that like news a new sales effort or new business development actually wasn't a priority as it turned out but now you're saying that it that it I mean no it is I just think it's it is very much relationship based so trying to gain those relationships versus um you know cold emailing right so you know the CRM won't gain a lot in value if it's you know um just being a part of a cold email effort um versus you know meeting up with somebody um so one of the strategies that I'm implementing is I'm actually going to push the former owner out into the field to meet with the project supervisors of our current customers more um to get in their face more so they were more visible the point you made about the methodical systems even though it's you know fax machine analog phone lines paper-based you know um but but in fact really tight well-organized systems I I this is not the first time I've heard that and I would caution listeners like just because there's paper doesn't mean it's disorganized I think people conflate those two things paper means hot mess disorganized backwards not necessarily it just might just mean they haven't gotten around to putting in digitizing stuff but it still could be um really good processes which means that don't overestimate how much optimization there is just because you see a lot of paper um there's probably some to be had by digitizing all that but maybe not as much as you think I assume you're when a big change does come it's going to be a first hire starting putting in that management layer correct correct that assumption if it's wrong and if it's not wrong and it's right who what do you see your first hire being yeah so I mean I even um I haven't really been um focused on trying to figure out who to hire first um it's been um more of trying to understand you know where where um new customers that are um my feel is that if I can get you know significant work backlog built up then um hiring will be a lot easier right now um you know it's it's some somewhat being Project based um it's Ebbs and flows right so there's too much work there's not enough work there's too much work there's not enough work um I'd like to get it where there's always just too much work so that it's easy easy to hire um you know I I haven't really thought through management hiring on the former owner tried toyed with the idea of hiring a general manager to run everything um and he was unsuccessful in doing that um and you know there's some of that alignment of incentives right yeah to find the right person that's going to be interested enough that you know you can pay well enough to do it you know it it's it's not not simple did he actually hire somebody that didn't work out or he never even was able to hire someone he didn't he had a trial he had um somebody on a trial basis for like three weeks and he was like this just ain't working um he also um went down the whole like you know go to an employment agency and find somebody there right and like um tried he tried that method unsuccessfully um so his solution was sell the business oh that's what that's what prompted him to sell the business yeah because he he wanted to he he wanted to not be involved doing everything right it wasn't that it okay interesting because oftentimes when it's like that it's like the the owner operator usually founder is very Territorial and they just want to keep everything on their plate but he was actively trying to get it off his plate couldn't crack that nut and it was like okay I threw his hands up and as I said he's selling well um yeah we all know that that um general managers small you know small business SMB CEOs whatever operators whatever word you want to use for it um are the bottleneck to really being an acquisition entrepreneur to kind of taking it to the next level uh of your of your careers and acquisition entrepreneur and it's and it's a hard one um I I say from hearing from a lot of people not that I've not that I've done it myself so um so you'll have to let us know Jordan uh now that you are in the seat three months and you blogged about being going through the process of acquisition entrepreneurship you listen to all the pods including this one uh you've read all the books um what's uh what's different or surprising about about the process from just uh from versus just you know consuming the media and content around it well I mean I think you know the podcast really helped me a lot um because you hear um the stories of people that actually did it and that's you know a little bit different than the polished books where it's like here's the success and all that so that that really helped you know um I would say that you know it's the small businesses are all unique right so each one's going to be a little different and you know just being able to you know roll the punches I think is important but I wouldn't you know because I did listen to all the podcasts including every one of yours um I feel like I you know wasn't really surprised in the process it was you know it was it's tough It's not you know everybody says oh well you know in the 11th Hour you're gonna have a freak out and there's that kind of stuff and you know in in essence there's there was something that came up and it was like oh why you know you know is this really going to be a deal breaker so I mean all those things did pretty much come to pass as they you know as as many of your guests have said in terms of you know trying to get a deal over the finish line that was not well not simple yeah yeah well congratulations on doing so um and Jordan I wanna I do want to hear just one quick thought that you had said on a pre-call about how you feel about acquisition entrepreneurship being a path for middle class people to build wealth can you just yeah so I mean you know part of the motivation I had for going down this route besides Independence which was certainly one of it was to be able to build enough wealth in my family that um my um youngest who may or may not be able to support himself um can have a life so to do that um in employment it wasn't really um feasible um so um when I discovered entrepreneur acquisition I just uh you know realize that there was a path there to build real wealth and so by putting you know by by putting capital on the line by you know buying a cash flowing asset you know I think it's possible to step out of the middle class um not you know not there now but I hope to be and I think this is the right path to do it um so you know I think it's very doable by you know an average person so you don't have to be you know a Elon Musk can come up with you know some Grand startup to step out and and be able to build that well so that's um what you know why I view it as such a great path that's beautiful maybe I'll maybe I'll put your answer there at the beginning of the interviews place it into the beginning of the interview that was couldn't have said it better myself uh Jordan thank you so much uh for for doing this congratulations on your acquisition um congratulations for proving everybody wrong about Biz by cell you found your business on Biz Buy sell in less than six you did your search in six months um and uh here you are you know we're hearing the background noise of of the business that you now own the machine shop that you now own so uh things seem to be going in the right direction and uh I will love to watch you uh pull yourself out of the middle class uh over the over the next few years well thank you I really appreciate it I love your podcast hey thanks Jordan I love I love hearing that so good stuff thanks sir