From ZERO to $25 MILLION in 1 Year with Inc 5000 Shannon Scott!

 Summary

In this conversation, Shannon Scott shares his extensive journey as an entrepreneur, detailing his experiences in mergers and acquisitions, the lessons learned from early exits, and the transition to software as a service. He discusses the importance of passion, competitiveness, and effective management in achieving rapid growth in startups, as well as the challenges and opportunities presented by high-risk business environments. Shannon emphasizes the significance of empowering employees and fostering a culture of learning and accountability. In this conversation, Jon Stoddard discusses the growth of his business, focusing on government incentives, innovative business models, and strategic acquisitions. He emphasizes the importance of family influence and mentorship in his entrepreneurial journey, while also addressing the challenges of work-life balance. Stoddard shares insights on how to navigate the complexities of running a business and the significance of having a supportive network.

Takeaways

Shannon started his first company at 19, showcasing his lifelong entrepreneurial spirit.
He has acquired nine companies over his career, demonstrating a strong focus on growth through acquisition.
The first company he sold was an IT consulting firm that reached nearly $12 million in revenue.
Shannon learned valuable lessons from his early exit, including the importance of timing and market conditions.
He transitioned to a software as a service model, recognizing the need for technological advancement in his business.
Shannon emphasizes the importance of empowering employees and providing them with equity to foster commitment.
He believes that everything in business is personal, which drives accountability and performance.
His recent startup achieved $25 million in revenue in its first year, highlighting effective growth strategies.
Shannon values high-energy individuals with diverse experiences for management roles.
He stresses the importance of continuous learning and training for employees to adapt and grow. We're on track to do 50 million this year in revenue.
Government programs incentivize businesses to retain employment.
Hiring veterans can lead to federal funding opportunities.
Our business model relies on a core group of trusted partners.
We're making strategic acquisitions to disrupt the market.
The permanency of R&D tax credits makes them attractive.
We plan to triple the revenue of acquired companies in year one.
Teaching my children about entrepreneurship is important to me.
Starting a business requires hard work and sacrifices.
Having a strong CFO is crucial for business success.

 Watch the Interview:

Transcript:

Jon Stoddard (00:00.694)
Welcome to the top &A entrepreneurs podcast. We have a guest today, name is Shannon Scott. Shannon's a lifelong resident of Alabama. That's great. He's done &A work, bought a company for 800K in revenue and built it to 20 million and sold it. He's worked and built and sold 15 companies, startups over last 20 years. Welcome to the show, Shannon. Thanks for joining us. Thank you. Yeah, absolutely. I appreciate the opportunity to be here.

So let's start about your journey. Now, have you always been an entrepreneur? Or did you work for somebody all the time and just say, that's not me? I started my first company when I was 19 years old. So guess you could say I've pretty much always been an entrepreneur. I think my previous job from my first business was I was a bus boy at a barbecue restaurant. It's really big down here in Alabama in the South. So yeah, been an entrepreneur ever since then.

Yeah, and let's talk about the well, the show is called Top &A Entrepreneurs, but let's talk about that acquisition you did. Now, have you how many of you have done over your career? So I've started 15 total companies, but I've acquired nine and that's in the last 15, 15 years. Yeah. All right. So let's talk about that first one. What was that? First company was an IT consulting company. We did. Now, this was back in the day before DSL and cable Internet. This was back in the ISDN days.

where we were securing networks with hardware and not software. So we were going into hospitals and major medical practices and securing it with hardware called AdTrend. At the time it was a Cisco competitor, but we were one of the few groups in the Southeast that could do that. So I had gone out and actually hired a bunch of AdTrend technicians to come work for us. We actually lived in a small townhouse together, gave them all equity in the company. So they were already servicing a lot of those counts.

Came over, worked for us, all became partners in the business and turned around and sold it to a competitor when I was 23. Wow. How was the exit? mean, what did you grow the revenue to? We were just short of about 12 million on the exit. Wow. That's lovely. I mean, what did you feel at that time? Should I do this again or were you happy with this life changing event? well, you know,

Jon Stoddard (02:27.393)
I think like back then, most entrepreneurs wanted to do, I decided I was going to take a little time off and try to be a professional poker player in Las Vegas. So moved out there for a while. Quickly realized probably after three or four months that I, that this is not the life for me. I need to be back in business. I need to be owning a business. So, and I started a few other consulting firms, learned a lot of lessons from that first business for sure.

I probably sold it too early, should have held onto it a couple more years, but I've always had that itch to continue to grow, acquire, and start businesses. I don't think I'll ever get rid of that. I'll probably work to the day I die for sure. Yeah. I love that. I will too. I'm 60 and I'll probably work till the day I die. Yeah. I love doing this. So what was, you said you learned a couple of lessons for that acquisition. One was to, you sold too early. Do you think you could have grown it to 50 million or a hundred million in revenue or what?

Well, think I could have, I definitely feel like we could have at least got to the 20 million mark within the next 24 months. know, 23 years old, somebody waves a $12 million check in front of you and you're, you know, it's hard to turn that down. You know, I've probably sold it for cheaper than I could have sold it as well. You know, these are all life lessons. But you know, the company was, it was a great learning lesson for me. And you know, I don't ever look back. You've got to continue to look forward.

revenue from, you know, profit from that sell that company and allowed me to acquire through a few more other companies within the next four or five years. So no disappointment there, but definitely life lessons learned for sure. Yeah. Well, what was the multiple on the exit there? Was it, I mean, it was a one, it was a one-times multiple. was a service-based business, you know, a contract service-based business. So

You know, lot of that, especially back then, I mean, those contracts were a dime a dozen. You know, they were going with the cheapest hourly rate, you know, not necessarily a lot of those technicians back then couldn't be certified except on a few small things. You know, there's so many certifications nowadays for all the equipment out there, all the tech software certifications. So it was a service based business and the company did grow. They grew our book of business to probably 30 million in revenue. And then they did an exit. I don't know exactly what multiple they got, but. Yeah, was that one X of sales?

Jon Stoddard (04:44.957)
One exit sales, correct. Yeah, okay. Yeah, that's how CPAs account and so forth to service based businesses. So you use the money on acquiring a number of other businesses, what same industry or what industry you go to into? A little bit different industries. I mean, we did have a company that did some internet development work programming. So we went more from the hardware side of software side of things. We built some large internets at one point. And we built an internet for Mercedes, which is,

They had just moved to Alabama manufacturing, know, there a couple of their vehicles down here. So a lot of, but a lot of more secure internet internal, you know, what you would consider now would it be like a SharePoint? We were back in the day trying to build a SharePoint applications. It became, it kind of grew into a marketing company as well. You know, we started developing websites, started building some markup materials, doing video creations. So it kind of created a spun off on a life of its own.

That company we actually rolled up into another local company as well. I did not hold onto that company as long simply because I had another opportunity to come across for an investment that was a high growth company. They wanted me to be CEO, so I kind of sold that to my business partner and jumped to this new entity. Yeah. Did you have to invest in it or they just wanted you to take over it? I did. They were looking for capital and this was in

2007, I had owned a couple of small companies in between that time, but 2007, they were looking for about a million dollars in capital. And we were, you I had obviously just come off selling that other organization, but this was a company very similar to a company I'm CEO of right now. We basically did business incentive consulting and the CEO had approached me with my IT background and said, you know, we'd like to talk to you about a possible investment in the company. We're trying to raise a little capital right now, a small company. were

goodness, seven employees at the time, about doing about 800 a year in capital, or in revenue, excuse me, 800,000. When in there, I looked at the process. It was a very paper-oriented process that they were doing and they were trying to service companies nationwide. And this is back when people were still using facts, right? So people were faxing information, extremely insecure. So when Anna said, listen, this is a great organization. The business model is amazing, but this definitely needs a tech play.

Jon Stoddard (07:07.437)
you know, we need to turn this into kind of a software as a service instead of a, you know, a service business and a paper-based business. So we did. We spent the next two years growing it as a software as a service. Back then that term was not very popular, right? wasn't software service companies were not very, you know, high-end in 2009. So we were one of the first two in my book to consider launching a company of that nature. So. How did you make the decision that the growth of this company that was all paper

but nationwide was a lot better opportunity than the other ones. Well, so this company has, it was unique. There was very few companies at the time doing this. I mean, you could find a digital marketing and programming company on almost every corner, you know, back during that day. This company had three competitors in the country at the time. Two of them were Fortune 500 companies. So we kind of were able to sneak in and disrupt the market tremendously. You know, these companies, these larger companies were not nimble.

They weren't developing technology. They were doing surveys over the phone, doing surveys over fax. know, we're releasing mobile apps at the time, you know, on original iPhone. We're releasing, you know, SaaS based software, lot better security, a lot better screening. So we were able to pick off a tremendous amount of their clients, even their fortune clients, because of the fact of, lack of security, but B, this was a segment and not a core product of these businesses.

So they weren't paying a lot of attention to it. was acquisitions that they had made previously. They weren't growing that side of the organization and allowed us to pick off a lot of clients. Yeah. How did you, you brought a million dollars into that? I mean, what did that buy you as far as a slice of the equity? Did you just say I'm in charge also? of the, I think it was, it was kind of a mutual decision. So at the time it was a very executive heavy organization.

I would say probably 80 % of the salaries were going out to what you would consider stockholders or original investors of company. And just not a lot of work getting done and a lot of things being accomplished. So the CEO at the time was probably enjoying the fact that I would come in and be the bad guy a little bit, know, put some pressure on the executive team and tell them they're gonna perform or they're gonna be out, especially because I was bringing, you know, some financing to the organization. So I came on as president initially.

Jon Stoddard (09:27.797)
stayed as president for a year, took over the CEO role, ended up doing an MBO, management buyout, fairly shortly after that to get the stockholders out of the organization, especially the underperforming stockholders. And when I say underperforming, some had other businesses, some just weren't able to contribute to the business and some just obviously didn't wanna contribute. So went ahead and did a clean slate on the MBOs, kind of started from scratch, the whole board out, including the original founder and the original CEO at the time.

Yeah. And what did that buy you as far as the slice of equity, 50 % or more? The original investment bought me 20%. The MBO was a full buyout. Yeah. so a hundred percent. A hundred percent, yeah. Yeah. And what did you take that to with your? So we took it to just short of it, goodness, when I bought it, was about

3 million in revenue, we took it to about 10 million in revenue really quickly. We were in 8,500 award winner three years in a row. And then when we hit about that 10 million dollar revenue mark, we got approached by an organization that just was offering us way, you know, three times revenue at that time, which was just unheard of for that business. So we obviously jumped at the chance to get acquired from that company as well. We're gonna find money like that out there.

Yeah, well, today is kind of might even been higher, but what was your feeling about that? just look, you went to the rest of the board or you went to 100 % buyout, we're never going to get 3X again, was there any kind of I'm trying to find out like why people sell. I have a mentor that says, hey, it's great to own it, it's better to sell it. Well, so at the time, the nature of the business is really

the revenue potential is a tax credit organization. So what we're doing is we're consulting companies throughout the country on business incentives that are available based on federal government and Congress passing laws. At the time that we sold the climate in Congress was not friendly to business incentives. In fact, there were a lot of bills that were up there to pass. They didn't pass, but it was a very high, it was a very high risk initiative because, know, in these,

Jon Stoddard (11:52.705)
Businesses, they're high profit, but they're also high risk. So the Congress at any point can say, you know what, we're just not gonna give research and development credits anymore. We're gonna take that away. We're not gonna give business incentives for hiring people on welfare food stamp benefits. It's called the Work Opportunity Tax Credit Program. These are things that Congress passes and they've been passing for 20 years, but there was a lot of talk in Congress at the time that we're gonna probably cut back on a lot of these business incentive programs because the...

The culture and a lot of the talk up there was, businesses aren't paying enough taxes, especially these Fortune 500 companies. They're not paying their fair share in taxes. So there was a big groundswell for that. And some of those bills did get passed, not the major ones, but it was a risk reward situation. Yes, we could have held onto it and grown the organization bigger, but at that time for what they were valuing the company at, and they really wanted the client list to be honest with you, they were rolling.

end up into a bigger organization that did multiple things was able to kind of diversify the service offering. But you know, that risk was probably for the rest of the board not worth taking considering the temperament in Congress at that time. Yeah, was it 3x it was all cash? It was not all cash. There was some stock in the deal for a couple of the executives and a couple of board members. Some of the other board members did not want to, you hang on and just get they wanted to full cash for their stock. Yeah. That's impressive.

I and then what did you do after that? you know, took a couple, honestly, I said I was going to take a couple of years off, but as the story goes, the first time we talked about your, to do that. Yeah. Tried to do that. I actually bought a couple of, you know, invested in a couple of franchises, you know, during that two year time that I was kind of working through what, my next step is going to be. Did some venture capital for some small startups here in Birmingham.

and currently, you know, I'm sitting on the board of some of them as well. And then came back out and launched a business after that two-year kind of non-compete situation was over and started a business. It's similar to it, the business I sold recently. I'm not exactly like it, which we're taking more of a software, a heavy software approach and more of a kind of a white label and reseller approach for CPA firms. So it's a different business model, but kind of same industry. But during that two years, I was just, you know,

Jon Stoddard (14:13.461)
Investing in businesses, seeing where I wanted to be, figure it out. But I've got a passion for this industry. And once you have a passion for something, man, it's hard to let go of. Yeah. And those franchises, what kind of franchises did you buy there? So I bought a franchise. actually bought a staffing company. know, staffing has been a hot business for many, many years. Climate right now is probably not the greatest, but this was pre-pandemic. And, you know, these staffing companies, they do sell for impressive multiples, you know, if you hit a certain revenue number.

I also bought a pet care company. It's very similar to like an Uber where the, a wag, you've probably heard of wag, right? These people come into your house. was a softback, wasn't it? Yeah, yeah. So this was a, this is a franchise that, you know, comes to your house and you, hire centers very much like Uber drivers and they take care of your animals. That way you're not having to board them. And then I also bought a promotions company. So we do a lot of promotional materials for trade shows and things like that.

Yeah, what was your grand plan? Cause that's a diverse set of businesses. It was to diversify. It was diversified a hundred percent. know, yeah, we knew me and my original partner in the larger company that sold, we knew we were going to put something back together again. I've also invested, mean, just, you know, I've got a small investment in a distillery. We'll be one of the only bourbons distilled in the state of Alabama here this year. So that's a passion thing.

for me, I'm a big bourbon guy, bourbon connoisseur. So that's more of a passion thing, but he and I, and he and I are in that business together. We knew we were gonna put something big together, but in that period, these businesses, especially the franchise, they're kind of self-sustaining, self-running businesses, right? They're a business in a box. I mean, you have to work the business and you have to, you know, it's quite an investment in some of these businesses, but I've got strong managers running the businesses for me, diversifying that portfolio a little bit.

Quite frankly, the first couple of years, wasn't a terrible tax write off because you know, you're going to take some losses in your first couple of years of buying a franchise, right? Your return on investments, you're probably looking five to seven years on most franchise businesses for return on investment. you know, that helped from a capital gains perspective a little bit as well. Yeah. How did you, are you good at selecting managers and just identifying great people to put in those roles? You know, I would say I've learned a lot over the years. I would say there's not a,

Jon Stoddard (16:35.725)
method or secret formula that I use. I do like high energy people that have experience outside of that industry that can bring a fresh perspective to the industry. It's okay to have some similarities, but you've got somebody who's been sitting in the industry for 20 years, they're going to do what they've done every single day. They're not going to bring fresh perspective or fresh ideas. But I think more importantly, it's about empowering the people.

It's not been making them understand it's okay to make mistakes. I don't want you at my doorstep every day asking for permission. I want you to ask for forgiveness and let them be empowered and let them learn, but set expectations. Make sure they understand the KPIs when they first start that position. This is what I expect to do. These are the revenue targets that we're gonna hit. And here's the consequences if we don't hit them. And I guess the most important thing is bringing these managers in is giving them equity.

I truly believe that employees should earn equity in every situation, especially from a management level. They got to have skin in the game, especially in this climate right now, this employment climate. I mean, you understand it's impossible to keep people, but it's even more impossible to hire them. So you're seeing more more companies having to do that. That's something that we've done from the beginning. mean, and most of my businesses that have sold, there's been either an equity payout to the employees or there's been a cash benefit or cash incentive for them upon the sale of the company.

Do when you go recruit somebody, are they looking for equity in a business? Like that's part of the pitch or is it higher distributions? It kind of varies. You know, I've had some employees that have flat out come in here and said, Hey, look, you know, the only way I'm going to make this transition is with equity. But what I've seen, you know, more attractive to people nowadays is just this profit sharing. know, equity scares people sometimes, especially people who've never owned equity in organizations and especially in a startup situation, right?

Equity to them means, if something goes wrong, I'm on the hook for this stuff as well. That's not necessarily the case, right? Especially depends on how you structure the corporation, right? But it does sometimes kind of throw people off, especially who don't understand, never owned equity, have never been in stocks before. know, profit sharing is much simpler to explain, hey, look, we make X, you're going to get Y. Yeah. So what are the consequences if somebody doesn't hit their numbers, let's say the first quarter, second quarter, what does that look like?

Jon Stoddard (18:53.601)
Well, I mean, obviously we're going to, you know, I'm not a person who pulls the trigger. I believe in mentorship. believe everybody should have an opportunity to learn and grow personal growth and business growth. But I mean, there would be expectations. we in a first startup, I kind of give a six month period. said, like, here's the first things I'm going to expect to get in six months. One is to learn the business. Two is learn what the competitors do. I think the competitor SWAT is one thing every single business should do. The first thing they should do outside of hiring a couple of good people is understand your competitors, understand the market, get some time and give them time to breathe.

and look at that. And then at that point, you if they're not continuing to meet the KPIs, then I mean, that's, unfortunately, you're in the business to make money. You know, I use this kind of motto everywhere. Everything's personal. You know, I can't stand it when I get on, you know, read these books and these self-help books and these business books. don't take it personally. It's just business. That's not true. Everything in life is personal. And I don't mean it from, you know, necessarily competitive standpoint.

But if you're gonna be in a business and you're gonna own stock in a business and you lose a deal to your competitor, that's money out of your children's pocket. That's money out of your children's college education. Take it personally. Don't have to get mad about it. Don't have to pout about it, but take it personally. Because when you start taking things personal, then it becomes a different scenario to you every single time you approach a deal, every single time you approach a client, or even when you make a customer service call. Take it personally. And that's the kind of people I want. I people who will take these things personally. A loss is a loss.

You learn from losses, you move on from losses, but you don't wanna repeat that. Are you training people for that or are you trying to identify that characteristic? I mean, is there a kind of a test that you put through people through to find passion like that? There's not a test. there are, you know, I have used services before where they've given, you know, psychological assessment testing. to me, it's about the passion and the competitiveness.

You know, I like to have ex athletes. You know, they're very competitive people by nature. One of my most successful managers has been, it was a former, you know, Miss Mississippi, a beauty queen. She's very competitive by nature. So to me, it's about the competitive heart and the competitive spirit. You can learn almost anything. If you have the desire and the will to do it, you can learn almost anything. Some of the businesses I've been in my life,

Jon Stoddard (21:21.901)
Like that first business I was telling you about that only had three competitors that when I invest in 2007, it's, there was no business like it out there. couldn't go hire experienced people, right? Cause you can't hire experienced people from a business that you're creating. So it's gotta be about something else. It's gotta be deeper than that. It's gotta be the one that's to learn. And this new company that I have today, 95 % of my employees have never been in this industry before.

But they're learning, they're training. We have a corporate trainer on staff and our corporate trainer's job is to train them on a daily basis. Anytime there's something new, we're out there training. We're doing lunch and learns. We're continuing to self-educate our employees on monthly basis. That's on-sensitive. That's correct. Yeah. How big is that now? Our first year, we hit 25 million in revenue. 25 million in first year and that was a startup or a... Yeah, it was a startup. Wow.

We're on track. You got to explain how you did that. How did you do that? Yeah. Get to 25 minutes. It was a combination of experience in this industry. A combination of learning how to streamline a sales process and a partnership process where we don't have to reinvent the wheel. So we rely on a lot of partners to bring us business. We don't have a huge internal sales staff. We do referral, referral partner relationships, strategic partner relationships. We partner with software companies.

So we had a network of people there that we've used previously. went back to, we got some help from Congress and quite frankly, we got some help from COVID unintentionally, but there was some bills passed in Congress to help small businesses with COVID recovery. And part of what we do, our consulting is part of business recovery and business incentives, right? So it kind of hit perfectly at the same time, but we've been able to do this with a very skeleton staff. We have less than 25 people on staff at the

at the moment, which is tremendous, but we're on track to do 50 million this year in revenue. And right now, we're looking at two acquisitions of companies in the next two months that will enhance that even more. Yeah, and this is the R &D tax credits and R &D tax credits, work opportunity tax credits, disaster incentives. If your business is affected by floods or hurricanes or fires, there's all kinds of government incentives that come behind.

Jon Stoddard (23:41.057)
They're trying to encourage businesses to retain employment. You your first natural reaction is any CEO when something bad happens is let's get rid of our most, you our biggest expense, which is always labor. These government programs are trying to incentivize businesses to say, hold on, stop, take a breath. Don't fire everybody. We know there's something bad happened. We're going to come in with some incentives. And sometimes they're cash for funds. Sometimes they're incentives on future taxes.

but just take a step back, take a deep breath, we're here to help. And that's gotta be a learned behavior, right? So the government continues to try to do these things after a disaster or a pandemic. Is that most of your business now is from the disasters or the reason I bring this up is this, ran across a guy that owned a IT company and started another company called Strike Tax, which is R &D tax credits. And he said that's taken off and he's gotten all kinds of...

publicity, attention towards that. You think that's a billion dollar opportunity. Yeah, I mean, it could be. There's, and R &D is one of the things we do. So something similar. We do some different types of credits as well, like the work opportunity tax credits and new hire credit. So if you hire people based on certain demographics, for example, veterans, if you hire veterans, there's federal money for doing that. If you hire felons, people on welfare, food stamps, unemployment.

That's a huge opportunity. mean, unemployment is one of the biggest categories in the country right now. What is there, 40 % of all able-bodied American workers on some type of government benefit right now. So as you hire them back off of unemployment, there's business incentives there available to you. R &D is one of the things about R &D that's so appealing right now is that it was made permanent a couple of years ago.

It used to be a bill that was fluctuating back and forth, whether they would renew it. But the permanency of it, I think, makes it very attractive. It's a lot of work. It's difficult to have mass quantity of clients when you're doing a lot of paperwork. I'm sure this individual that you know is probably developing some software component to it. That's what we did as well. I want go back to your business model. You relied on other channels.

Jon Stoddard (25:54.925)
Kind of like an affiliate network or a distribution network to get the message out about your product. Yeah, absolutely. Yeah, I mean, so we could, you know, the, could hire, go hire a hundred salespeople. I mean, if you're in a payroll company, you know, if you're working for an ADP or you're managing an ADP, their success is based on sales reps. They put a bunch of sales reps on the street. There's a lot of high turnover, a lot of training. Our model is a little bit different because of the speed we had to get to revenue.

the speed I wanted to get to revenue to take advantage of some of these incentives that do expire, I can go hire a sales force of a hundred people. That takes time, it takes training, it takes effort, or I can bring in a core group of people that I trust that I know can learn quickly and rely on partners to give us leads. I mean, we're gonna pay $7 million in commissions out just based on last year. For a group of 50 or 60 business owners and a couple of independent sales agents, that's a lot of money. We've got a...

We've got a retired HR consultant in Mississippi that we're going to give $800,000 commission check to this year. She's been retired for 17 years, I believe. That's a pretty good payday. That's a great payday. So you had, let me go back to that. You have 25 employees, right? So it's your something like that? Yes, 25. And doing about a million per employee. It sounds like. That's correct. And most of those employees are our service.

and software technicians. So we only have five full-time sales reps. Wow. What's your plan for exit on this one? Are you courting private equity funds to say this is what we're doing to kind of build up the excitement around this? Or are you waiting for somebody else to go, we got to buy this company? So, you know, I've always kind of

raised my businesses off of two different philosophies. One is we can build a business or two is we can build a business to disrupt a market. These types of businesses that I'm in right now are definitely disruption businesses. What I mean by that is we're gonna go after the big boys that are playing. We're gonna go after the fortune companies. We're gonna go take a percentage of their market share. This is not a business I'm looking to exit in the next one or two years. I do have some acquisitions I'm making right now, strategic acquisitions.

Jon Stoddard (28:15.789)
for tech and for client base as well. So, you know, one is an IP purchase, one is gonna be a stock purchase, but it is to buy market share, but also to increase awareness. These are gonna be big splashes. A lot of headline, a lot of press is gonna be, a couple of these businesses are very unique businesses that compliment, they're not the same business that we are, but they compliment the services that we offer. And then we'll look at, you know,

equity at some point, some private equity at some point, mid next year. But right now with our revenue and the track of our revenue and profitability that we're making right now, there's really no need for capital. I mean, if we do, I can put the capital in myself, but a $25 million a year with 25 employees, you can understand in Birmingham, Alabama, our overhead is not killing us by any stretch of the imagination. And if we hit 50 million this year, mean, we're at a 60 to 65 % margin. So you're on toward target towards 50 million.

after just two months or is it a different calorie year? So by the end of this calendar year, our target's 50 million based on our growth patterns and based on the clients we've already signed up. and how are, what about the employees here? Do they own stock in the company, equity? We do have a group that do own equity and everybody else does get profit share. Yeah. So everybody in the organization is either getting a profit share or does have a

a small percentage of equity in organization. Yeah. When you go back to that, those two acquisitions you're making, you said that one was IP and one was stock. What do you mean stock and products of inventory or stock? No, sorry, it was going to be a stock purchase. So we're buying the whole company. We're not just buying the IP asset. So, you know, essentially being the IP, one would be an asset and one would be a stock purchase. So the intellectual property of one of the companies we're looking to buy is very complimentary to

and preventing us from having to build some software right now, to be honest with you, would probably take us 12 to 18 months to build. The other is, it's an extensive client base. It's a perfect fit for our client base and for our core product offering. So our goal is to buy that company and approach that client base that they currently have with our service and product. Yeah, that's beautiful. Are they profitable companies? Both of them. One is a breakeven and the other one is profitable.

Jon Stoddard (30:37.557)
And you could immediately, just like the person that bought or the company that bought your company for 3X, plug it in and probably pay for itself really fast. We will at minimum triple their revenue in year one. At minimum, that's 2023 or as soon as you acquire it? And how is that purchase? Is it your cash out of pocket? Are you trying to finance it LBO? What?

It's gonna be a stock and cash, 85 % cash and the rest in stock. Yeah, that's lovely. I mean, we're gonna see you on, you were already on the 8500, weren't you? Well, we were back in 2007, eight, nine. yeah, we'll definitely be this year. mean, out of, when we went from, the company actually initially launched in 2020 and November of 2020.

So very little revenue and know, Inc 500 is based on year of year revenue growth. So from going to- 5,000%. Yeah. Yeah. From going to a couple hundred thousand dollars to 25 million in year one is probably going to have us. That's probably at the top. Yeah. Probably somewhere out there. So what is this? I got to go to back about, you know, who Shannon is, like what motivates you to keep doing this and you know,

keep seeing these opportunities and just going back to the Wells is I gotta do this. I gotta do it. I feel it. Well, I think motivates me and this is probably a pretty cliched answer is I have a group of children that are very entrepreneurial spirits themselves. My 13 year old daughter runs a sugar scrub business already. What? A sugar scrub business. like a skincare business on Etsy. You know, her first day in business, I think she sold like

$1,200 merchandise her first day in business at 13. How did she do that? I mean, you got to get attention to what did she do? Well, I mean, she she made some creative videos and we spent we spent some ad dollars and you know, she's 13 years old and she's she's determined or she's when we first sat down and talked about this business, she said that, you know, I want to give a percentage of my profits back to children with cancer.

Jon Stoddard (32:52.397)
And of course, she you know that messaging is part of it. She lives up to that. I mean, we do the same thing every day here. So you're aware of percentage 1 % of all of our profits go to veterans job programs in our company and then the other percent of profits. So we have 2 % of profits going out. The other percent goes to disaster recovery programs, local disaster recovery, not a national Red Cross, if hurricane hits Houston, Texas, we're going to find a local charity and a percent of those profits will go to that as well.

We believe in giving back to the community and doing business with integrity, but I'm teaching my kids to do the same thing. And they've seen this grow over the years. And I also have adopted two kids as well. They are, boy, they're entrepreneurs. They're asking me every day. They want to come work here every single day. So I think that's part of the motivation to keep going. But the other part of the motivation is, I look at some famous...

some famous football coaches in history and also look at my own grandfather to be honest with you. You got a couple in Alabama, I just can't think of them. Yeah, right. There was a coach, there was a coach. And it's so funny, my grandfather before he passed away told me this, there was a coach, know, somebody might know him, I think his name is Paul Bear Bryant or something. There was a, there was a new coach. goes, Paul who?

Right exactly right. think he's kind of taken over a little bit, especially for the younger crowd. My my kids don't know who Paul Bear Bryant is, but I remember watching an interview when I was a kid with his wife and they somebody asked him. The local reporter said or asked her what's going to happen to him when he retires. Because he's been in football his whole life and she said, well, he'll probably pass away.

He won't have anything to do. He'd be bored to death in a tongue in cheek manner. he'd be probably, I believe if I recall correctly, think Paul Verbrine after like eight or nine months of officially retiring died. You know, I think there's, and my grandfather was saying, my grandfather worked, my grandfather passed away at 98 years old. died or he worked until he was 97. He, he set an example for me and I'm not saying that everybody should do that. You shouldn't enjoy life. Don't get me wrong.

Jon Stoddard (35:00.855)
But I think there's something about waking up every morning and have something to do and have something to accomplish and that brain activity that keeps you going. And I want something to accomplish every single day. I would be bored. I'm just not a guy who wants to sit with a fishing pole. I know a lot of people enjoy that. I'm just not that guy. I want to be in an office doing a webinar, doing a zoom meeting. That's the kind of thing that motivates me. Yeah. I tell you, you follow Charlie Munger. I mean, both of those guys, Charlie's 98 years old and still loves doing what he's doing. Absolutely.

Absolutely. mean, I'm hoping to, and I would probably tell you that, you know, my significant other would probably not want me working that late and I probably won't go to 98, but I'm always going to be doing something, you know, so. It's just, go ahead. I want to go back to your kid there that $1,200. You touched on a thing that's really people are doing today because Snoop Dogg does it, Ryan Reynolds does it, The Rock does it.

they productize their audience, they build an audience, and then they sell to that audience that they do. yeah. Yeah, absolutely. Absolutely. And she does. I mean, she understands the audience. And quite frankly, majority of people buying the product from her or moms, they're saying that they're thinking they're old to selling to moms. Okay. Yeah. Yeah. I mean, it's a it's a it's a female product. It's a body product, but and she's home making it. But I think they see her on that video. And you know, she's appealing to them. And she and my daughter understands the market. I mean,

These mother have children too, you know, and they want to support another child who, you know, they want their child to grow up and maybe start a sugar scrub business. So we actually see that demographic and you can see a little bit about who's purchasing those products. And, know, I mean, parents to support parents, support kids. And my goodness, those videos, my daughter does, she's going straight to their heart, a hundred percent straight to their heart. Who helped her write the script? Because the content is one of the most important things to get people motivated, having a great offer.

I would say, you know, I obviously helped her polish the script. you know, I have some people around me, obviously marketing teams and stuff that have helped, you know, polish the script as well. But she went around to some of my neighbors or females and said, Hey, well, first of all, here's some samples of the product. So tell me if you would buy it, but also tell me what you think about it what you feel about it and what it makes you feel like when you use it. Yeah. And she got the feedback she needs. And so she.

Jon Stoddard (37:26.955)
She kind of created the content, or she gave me an idea of what she wanted the content to look like. And we obviously helped and ran with it. I mean, obviously she's not creating videos on her own. We're getting a little assistance there, but she's actually showing videos of how she makes the product. So they're seeing exactly step by step of what goes into that product. So I was impressed. Yeah, that's amazing. What if she comes to you and say, hey, I don't wanna go to college. You cool with that?

I'm totally cool with that. I am going to encourage my children to do whatever they want to do. a child who's probably going to end up in an Ivy League school who's also a tremendous soccer player. And he can pretty much go wherever he wants to. And he wants to be an accountant. He doesn't necessarily want to be an entrepreneur. wants to be a CPA or something. for his sister. Yeah, right. I mean, maybe one day he'll come work for me and be one of my CPAs.

It's about their dreams. I got to live my dreams. I want to encourage them to live their dreams. And if it's, you know, doing a sugar screw up business or it's becoming a hairstylist and opening a salon or something, you know, that's their passion. And I want them to do what their passion. So how are you as a dad? Do you tell them to outline what they should do or do you wait for them to come ask the question and you answer? no, I definitely wait.

I definitely wait. I'm not outlining anything for them. I'm encouraging them to be creative and come up with things and they're seeing it. Now, you know, one of the things I think I would regret if somebody asked me what my one of my biggest regrets was, you know, raising companies like this is raising children and you're on the road a lot. You're working a lot of hours and you know, I probably miss some things that I regret missing in my children's life, but I think they're seeing that now and they're seeing that work pay off and they're seeing some of the advantages they get out of that and what

probably was hurt at the time has become more understanding, but I think it drives passion too. Sometimes you gotta miss the soccer game for a meeting, right? And it's terrible and you get home and you feel guilty about that. But my 18 year old son, he's like, know, hey, I get it now. Like I get why you did this. I get it because you gave us the opportunities to do these things that we wanna do. Yeah. All right. That's beautiful. I mean, I just, this is a weird thing, but I just watched something. I think it was Netflix, the Manning family.

Jon Stoddard (39:43.959)
You know, Eli Archie, Peyton and Cooper, he just wanted to be a dad. He didn't want to, he just wanted to be there because his dad, walked in his dad just committed suicide. So his job was just to be there for his kids. A dad, not an NFL dad, not an NFL coach, just a dad. Yep. Yep. And I think, I mean, there's a lot of people who can balance that, but you know, again, in any situation, especially when you're starting a business, mean, you know, I, when I,

Mentor and I teach people on a daily basis, get phone calls, hey, give me some advice for this, this, and this. I'm like, everything you think that starting a business is gonna be, throw it out the window. If you think that you're gonna take 20 vacations a year, throw that out the window. It doesn't matter how successful you are, you still aren't, there's no such thing as vacation. Your cell phone's gonna ring, you're gonna have an employee problem, you're gonna have a client issue. Forget all that mess. I don't care what you've been taught or what you read in a book somewhere, you gotta be prepared to put in the work.

and it's gonna be 12, 14, 20 hour days sometimes. And you're gonna have to understand, you're gonna miss some of the things. You're gonna miss some of the things with the kids, with the family. That's just what being an entrepreneur is about. Some people are cut out for that and some people aren't. It takes a special type of person to realize that they're gonna miss out on a big portion of their most important asset, which is their children. But hopefully they're learning and growing through that experience that the kids are and the family is as well.

Well, I think your kid, your 18 year old, just said, well, I see why you did it because it gave us these other opportunities. Yeah, absolutely. Absolutely. Well, Shannon, I want to appreciate you just spending 45 minutes with me. This is lovely. And we're expected to see you on the INC 5000. Is it INC 500 or INC 5000? I think it's 5000 now, but we're hopefully we'll be underneath the 500 mark. Yeah, if you go from

zero to 25 million first year and then 25 to 50, you're gonna be on there. Yeah. Hey, how does that help you? Do you like the accolades and the recognition or does that help you get business? Well, you don't honestly think that anybody's ever made a choice of our company because we're an ink 500, you know, recipient, you know, when it comes down to it, to me, it's about the product and the character and the integrity of the organization, but it does help on a marketing perspective, but the,

Jon Stoddard (42:03.359)
Inc. events and of course I know pandemic wise that probably hasn't happened but I remember going to those deep 500 events in 2007, 2008, 2009. It is an amazing networking event. And I think that's probably the best benefit. You've got 4,000 CEOs of companies that are showing up to get an award but they're also there to learn and they're in a network and we don't even go to trade shows anymore and set up a booth.

We go to them, but we don't booth. We don't set up a booth anymore. Cause I think that's just lost a lot of lustre. What we do is we go there and network with other partners, set up dinners, do those things. So to me, that was the real reward of the Inc 500 as far as the business is concerned. you know, it's great to have that plaque on the wall and it, and it does from a recruiting perspective, I think it can help you from an employee base. Cause they understand your stable company and your growing company. Yeah. Definitely getting noticed on the private equity cause private equity sits there and looks at those companies and going, well,

What about this guy? yeah, for sure. We had a lot of calls. mean, the first three or four weeks that magazine is released, you your friends ringing off the hook as a CEO and, you hey, hey, are you interested in this, this and this? You know, at the time we're like, you know, we're good. We're growing, we're sustainable. We've got great cashflow, but it's a great opportunity. It's a book of lists for them to invest in. Yeah. Let me ask you, course, one last question before you go is, do you have a group of masterminds that you work with?

coaches, mentors that run 100, $500 million businesses that you can go to? So I do, I've had a mentor when I was fairly young. He is, he is retired now. You know, I will bounce some things off of him, but I'm part of a local group. It's called Vistage. Yeah. So it's a local CEO group here and where our headquarters are. you know, I do have, and this is a fairly new thing to, for me to Birmingham, but

You know, we network on a monthly basis. You we're able to drop ideas, bring problems to the table. And I think it's important. think every, doesn't matter how successful you've been. I think every CEO should surround themselves with three really good people. One is somebody, a mentor that you trust. Two is a strong CFO. And when people ask me like what I spend most of my money on or what was my best investment, it's a strong CFO.

Jon Stoddard (44:18.049)
There's probably only one person in the organization that's ever been able to tell me no for 20 years and that's him. Because you know, as an entrepreneur, I want to go, go. I want to run, run, run. I want to sprint. There's no such thing as walking. And to have someone you trust enough to be able to walk in your office and say, hold on, we're not writing this check today. We're not spending this money. We're not going to do this acquisition. That's something that I need around me all the time. And I think the final thing is a supportive, you know, obviously family group. You got to have people behind you that support you. So those are the three main keys to me.

Lovely. Did the CFO say yes on both of these acquisitions you're working on? Yes. All right. I got the buy-in there. Good deal. Hey, Shannon, thank you very much for spending time with the top &A entrepreneurs. Absolutely. Great to be here. Appreciate it, John. Take care. Cheers.