Summary

In this conversation, John Raymond shares his experiences with buying turnaround acquisitions, specifically focusing on acquiring distressed companies. He discusses his background in helping small businesses with government grants and contracts and how he transitioned into the world of private equity. John shares his journey of working with various partners and the challenges he faced along the way. He also talks about the importance of due diligence when evaluating business listings and shares his experience in acquiring a trucking company. The conversation covers the acquisition of a trucking company and a furniture store, as well as the challenges and stress of turnarounds.

Takeaways

Education and formal training can be valuable in pursuing entrepreneurial goals.
Working with reliable and trustworthy partners is crucial for success in M&A.
Personal reflection and resilience are important in overcoming challenges and setbacks.
Taking control of your own destiny and pursuing your vision can lead to success in entrepreneurship. Acquiring and turning around businesses can be challenging but rewarding.
Insurance and truck breakdowns are major concerns in the trucking industry.
Effective marketing and advertising strategies are crucial for the success of a business.
Finding the right people to manage the businesses is essential for growth and profitability.

 

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Transcript:

Jon Stoddard (00:01.769)
Well, welcome to the top M&A entrepreneurs, John. Thanks for being on the show.

john (00:06.102)
Yeah, I'm excited to be here. Thanks for having me on. We've been working on coordinating this for a minute. Ha ha ha.

Jon Stoddard (00:11.597)
For a little time, yeah. So let's kind of talk about your story here. You and I, we had a conversation about this and you've worked on these, bought these or came in as part partner of these turnaround situations. But let's kind of rewind a little bit and talk about your origin story. What were you doing before this?

john (00:17.399)
Yeah.

john (00:33.166)
Okay. So I worked fast food for a lot of years as my like first job and whatnot. And then I got into business consulting. So I was helping small businesses with government grants, government contracts, like helping them find and apply for that stuff. We were doing business plans, pro formas, like all of this stuff. And I did that for, I don't know, seven or eight years. And during that, no, this is just like, so I would help, I would help 70 ish clients a week.

Jon Stoddard (00:54.997)
Yeah, is this for DOD or local stuff?

john (01:02.646)
Basically, this company would get leads and I would just sit and I would talk to these business owners about, hey, here's how you write a business plan. Here's the framework that you use. Here's everything that you do to get a business plan ready so that you're bankable. And then if you have the ability to apply for government contracts, here's how you register. Here's how you apply. If you're a nonprofit or whatever, here's how you apply for grants. Because there's a lot of bad information about grants and I won't dig into that here. But...

And so I did that for a lot of years and I just noticed that these businesses were all struggling and they would have financial problems, but the majority of the financial problems came from operations. And it wasn't, you know, it wasn't just money problems. They didn't need just more money because if you give them more money, then they're still going to run through it. Cause they haven't figured out operations. Yeah. And so I'm like, I need to be able to do this on a bigger scale. And how do I do that? Um,

Jon Stoddard (01:49.965)
That's always the next problem. Yeah, yeah.

john (01:58.93)
And so I just started to try and get money from investors. I started reaching out to angel investors and VCs and stuff like that. Like, Hey, here's what I want to do. And the first question was almost always, but what education do you have? And at the time I just had a high school diploma. I didn't know education, no nothing, no formal training, just had been helping these businesses. And so I went back to school and got an MBA in finance, like did the first four years of my undergrad and then got the two year MBA from Washington state. And.

Jon Stoddard (02:22.697)
Yeah, in finance.

john (02:29.238)
Then I'm like, okay, well now I've got this education. I'm gonna go get a job so I can start working on paying off some debt and get things situated while I start launching this, what I wanna do. So that's how it all really started, is to go back to the origin of like, the inspiration hit me back in like 2012. So this is an overnight success story of 12 years in the making. So, you know, it's been an interesting journey and I've learned.

so much along the way that hopefully it helps people and that they're able to resonate with some of what I've done and what they've probably been through too, that the sleepless nights, the pain, the stress, the everything. So that's how it all started. And then get through school, spend...

Jon Stoddard (03:12.118)
Yeah.

Jon Stoddard (03:16.557)
And then what did you do to get this ball rolling where you start seeing some success in these clocks?

john (03:21.406)
Yeah. Well, so I started, I started working at a job and just like developing the ideas and working on like what I wanted to do. I knew I wanted to, and this is, this is big picture. This is where I'm going. I want to have a private equity fund that investing companies and does real estate projects and so on. So private equity for both mergers and acquisitions and real estate. And I want to have a nonprofit partner. That's a five one C three that can get access to grants, capital, joint venture, and help communities.

So that's the big like where I'm going type scenario. And so while I was working at this job, I learned how to register a 501C3 not for profit. So I did that. I have a six, I successfully registered a nonprofit for tax exemption. And now I'm working on picking up the private equity piece. So I went through all of that, learned how to do all of that and then started working on acquiring companies. And so during that time,

Jon Stoddard (04:29.553)
Yeah, there was no audio there.

john (04:35.105)
Okay. So to jump back, I think I was talking about like, so I started working and trying to figure out like, who's out there that's doing this right now? I need buying companies. Yeah.

Jon Stoddard (04:45.609)
Yeah. Doing what exactly? You're talking about buying companies, but what like well-run companies, enduringly profitable 10, 20 years old. What like.

john (04:55.623)
At the time I didn't know, I just, at the time I'm like, I'm new, I'm naive, like, hey, I'll just go buy a company. Like it doesn't matter what company I'm confident in my abilities to be able to grow and scale whatever I get. I don't know, man, like 40 year old, know it all, I guess. I don't know. And the reason that I, the reason that I wanted to own companies so badly is because I make a terrible employee. I don't like taking action.

Jon Stoddard (05:07.92)
I see lessons coming.

Jon Stoddard (05:12.789)
Yeah.

john (05:25.087)
excuse, let me rephrase that. I don't like doing something just because somebody said, you should do this. What's the why behind it? How do we make things better? How do we improve processes? Like, let's actually make this thing work instead of you hear the excuse that it's job security, right? Like, well, if I keep fixing this problem over and over and over again, I have job security and that's not good enough for me. One of the phrases that killed me as a manager was, this is the way that it's always been done.

Okay, and what does that mean? And so I started looking for people that were doing buying companies, like whatever company, I didn't even care. I just wanted to find somebody that I could work with to figure this out. I have the background in finance. I know how operations work. If I can just find somebody that's that salesy person that can help raise money, it'll be perfect. Like that's the perfect marriage, right? Like what I'm not good at and marry it with what?

somebody else is good at. And so I listened to a bunch of podcasts and I found this guy. And I won't mention the name because that's really not the point here. But we started working together and he's like, hey, I have this company. They need $10,000 for inventory. Cool. I sent the person 10,000. No, he had the company. He had the company, it's a startup, and she needs an investor. I'm like, perfect.

Jon Stoddard (06:44.169)
So you found a company that was for sale? Oh, he had the company. Oh, okay.

john (06:53.731)
It couldn't be better. I need something to invest in. I want to invest in the company to get equity. Here's an opportunity. Like the investment's 10,000. You're buying her inventory. No problem. And so I sent the girl $10,000, just like created a promissory note or a convertible note and sent her 10 grand. And the terms were supposed to be three years payback or three months payback. It took two years. And that's, you know, naive on my part, right? Like I'm going to be able to turn

no problem. And so, I guess I'm so smart. I'm so good at whatever I do. Because I'm also working a full-time job. Right? And so I did. And when that happened, it started this whole steamroll of events happening, which was good. And the company has gone on to do some pretty amazing things already.

Jon Stoddard (07:25.773)
Because I'm so smart.

Jon Stoddard (07:31.565)
I'm so good at picking people that know what they're talking about. Yeah.

john (07:51.155)
She's been featured in like Vanity Fair and is growing this cosmetics brand and everything like that. She's doing amazing. It has been doing really well right now. So, and I'm still in communication with her. She's doing great. And her and her husband are both entrepreneurs. So it's, I think it's even better, but.

Jon Stoddard (07:55.885)
So she eventually turned it into a success.

Jon Stoddard (08:09.929)
And was that investment for equity or is just a loan? 10,000 a lot.

john (08:13.691)
It was a convertible note, but I decided to just take the cash out. Um, I didn't want to convert, um, just a niche that I didn't know a whole lot about. Um, again, the wisdom came after the investments. Um, she does a great job and it's a great company and it's doing really good, but it's not something I, I saw myself being a part of longterm.

Jon Stoddard (08:18.933)
Okay.

Jon Stoddard (08:37.057)
Sorry, hold on. I didn't get that mute button. I couldn't find it real quick. So I have to go back and fix that.

john (08:37.748)
Bless you.

john (08:44.35)
Yeah

Jon Stoddard (08:46.057)
Couldn't find it on the bottom there. All right.

john (08:50.811)
I make for some good B-real. But yeah, so I invested in this company. And so when that happened, this guy was like, oh, well, cool. Well, let's start working together to build up this thing. I get deal flow nonstop. And that's not a lot. He gets people bringing him stuff constantly. Like I would get 10 to 15.

Jon Stoddard (08:53.641)
No kidding.

Jon Stoddard (09:12.105)
What's he do? Why, why is he a center of influence? Attracts that.

john (09:15.671)
Mmm, because he's on social media a lot. He gets on a lot of podcasts. He talks to a lot of people He gets in a lot of rooms and so

Jon Stoddard (09:18.963)
Okay.

Jon Stoddard (09:24.929)
Would I know him? And I'm not going to name his name. Would I know him?

john (09:28.684)
I don't know. I don't know if you would or not. I'll share it after the fact. Like maybe we can like cut that part. Like I'll share it after the fact. I got two of them that, yeah. And it's more like, I get it. It's not about them. It's, I learned a lot from working with them. So it's not complete hate towards them, but what they said they could do didn't match up with what actually happened, if that makes sense.

Jon Stoddard (09:31.832)
All right, well, let's go.

Jon Stoddard (09:53.949)
Yeah, you can still learn a lesson based upon fictional characters, because that's your experience, right?

john (09:56.659)
Yeah.

john (10:01.147)
So we met and we started, this is during COVID, so this is 2021, like I think 2021, 2020, yeah, 2021. And then I started working with him and it was just project after project after project after project, like just, holy crap, like all of these people and he's mentioning all these names and I think that probably should have been a big indicator of he's throwing out all these names of like celebrities and famous people and athletes and stuff. And it's like.

Jon Stoddard (10:27.241)
He's name dropping kind of thing.

john (10:28.739)
name dropping like crazy. And so we go and we start working with trying to acquire companies and doing consulting and stuff like that. And we acquire a couple of companies. A lot of it was no money out of pocket. Some of it was come in and just help us and we'll give you equity. Like you guys know what you're doing. Come in consulting for equity or

Jon Stoddard (10:51.009)
insulting for equity gets, yeah.

john (10:54.219)
come in, help us consolidate this debt, you're able to raise money so easily, like come in, raise some money, capitalize us a little bit better, and we'll give you equity, but they were giving us equity right away. Like the minute we would sign paper, we were getting equity. E-commerce stores, they were apparel brands, they were, what were some of the other ones that we did?

Jon Stoddard (11:07.326)
And what kind of companies were these? They were... e-commerce?

john (11:17.851)
One was a recreational peer to peer lending company.

just you name it, across the spectrum. There wasn't one specific niche because he gets deals from anybody and everybody. People that have food and restaurants and just all over the place. But after a while, the things weren't hitting right. We're getting paid to do these things and he's this expert marketer and capital raiser and we're not raising money and we're not marketing.

There's something I'm like, this isn't hitting right.

Jon Stoddard (11:53.921)
So you're not marketing for the company, like the Consulting for Equity, we want you to come in and bring more customers to us, and that's not happening.

john (12:02.567)
Right, that's not happening at all. Like the marketing isn't happening. The email campaigns aren't going out like right. There was one apparel brand that hired us to do some marketing campaigns, right? Like some ads for Instagram. And the copy was wrong. Like they have the wrong complete dates on it. And she's like, this isn't right. And oh well, like whatever. I'm like, no, that's not how that works. So.

Obviously the warning lights start going off, right? And so then we end up at an event that was claimed to be at South by Southwest, but what it actually was some event outside of Austin, just at the same time of South by Southwest. So we're at South by Southwest and we're working on this deal and he calls me up one night and he's like,

this acquisition, they're gonna let us take over the company, a million dollar purchase price, our first payment isn't due until 90 days. And that's, you know, probably everybody that listens to your podcast, that's their like dream situation, like they're gonna give me a company and I don't have to pay them for three months, like literally zero. Yeah. But that was the intended agreement. He's like, I need you to draft it up and get it over for signature. I'm like, he's like, I'll send you the details.

Jon Stoddard (13:17.077)
Yeah, that's a deferred down payment. I rarely, rarely see that, right?

john (13:30.315)
I'm like, okay, cool. So the next morning I reach out to him and I'm like, hey, you never sent me anything. I can't draft up the contract. I need to get it signed. Like if they're ready to go, let's go. And he's like, oh, I got it taken care of. No big deal. It's all signed. We're good to go. Oh, cool. Well, that's awesome. So I just reach it.

Jon Stoddard (13:49.257)
He got it signed with you with it or just it sounds like yeah

john (14:08.087)
Hold on,

john (14:22.395)
not our company, his company. And I'm like, no, uh-uh, this is not right. So I reach out to him and I'm like, hey, what's, why is your company's name on there? And he's like, oh, so-and-so, and we were working on some other project with a big high profile person that was a CEO at a massive company, right? Like so, and he says, oh, so-and-so wanted it in a clean holding company for the cap table. I'm like, okay.

fine, you know, I can understand that. And then I.

Jon Stoddard (14:56.577)
I'm trying to help me out. I can understand that. I need a new holding company. That's what he told you. Yeah, well, what?

john (14:58.597)
Sure.

john (15:04.007)
Yeah, he said he not knew because his the company that he signed the contract with was part owner in our company So I had my equity held with one holding company and he had his with another holding company And that's the company that he used to sign the contract So I'm like, well that doesn't make any sense because you're holding our company with that. It doesn't make any sense So your cap table is not necessarily clean right like you're invested in other projects And so I reached out to this guy

I got his phone number, first name basis. We did a really cool event where we broke a world record at Mile High Stadium. So I know what they got. Like I just reached out to him and said, hey, what's the deal? Like what's going on? And that wasn't the situation at all. Like he didn't know anything about it. He hadn't been on any of these calls that this person claimed that he was on. He's like, I don't know anything about it. So that was like, okay, I'm good, I'm done. Like, I'm out. Like, see you later. You can keep doing whatever you're doing, man. Like...

You're good. Go do your thing. I'm going to go off and just start my own thing.

Jon Stoddard (16:09.109)
Yeah. Let me ask you about this and were you talking to your wife about this? And does she have any gut instinct about it?

john (16:17.387)
She did. So we went to an event in Long Beach. She had been kind of like bringing up things like prior to and had kind of been like, yeah, something just doesn't feel right about this. Like she'd only met him a couple of times. Like, so not like a huge relationship type, you know, where they knew each other very well. But he talked to a really good game. We went and did a bunch of events together. She went and participated. And she went to one with us in Long Beach. And that was in April.

Jon Stoddard (16:19.391)
She did.

john (16:47.231)
22, I think it was. And after that event, she's like, you need to just run, you need to run away as fast as you can. And that's essentially what we just kind of like cut everything off.

Jon Stoddard (17:01.309)
Yeah. So what, what did he do that changed her or silified her opinion of him?

john (17:08.383)
Well, it was, you know, one telling her what was happening, right? Like obviously what was happening. But then when we were at this event, so it was a charity event in Long beach that we went to, um, huge charity event that was on a battleship. And, um, she was, he was basically bad-mouthing me to her when I was not around. And she's like, you know what he's saying about you, right? Like he's telling everybody that all of these failures are your fault. And the reason that you haven't gotten any good deals is because it's your fault.

Jon Stoddard (17:12.201)
Yeah, yeah, yeah.

john (17:38.571)
I'm like, oh, well, that's great. That's good to know, right? Like that's, I'm like, this is not cool. So yeah, so that was the unraveling of that particular partnership, right? Like, so, but yeah, so it was definitely an interesting journey getting to that point, right? Like a lot of bumps and bruises along the way, just in that one year. Learned a lot about private equity, learned a lot about funds, set a fund up with a couple of people.

And then that fell apart. Like, so a lot of failures and things where it was like, hey, this is the next, I'm gonna get it. I'm gonna get it. I'm hitting on the door. I'm there. And then just nothing. And just, I feel like I'm just getting my butt kicked me. Yeah. Every single time. But you know, everyone feels worse and worse and worse as it's going along. And it's kind of like, well, what are you doing here? Like, is this gonna work out? Like, are you that guy?

Jon Stoddard (18:19.713)
You feel like you're getting at the, at bats. It's just not connecting the ball with the bat. Yeah.

Jon Stoddard (18:36.653)
You keep making mistakes. You keep making mistakes. I feel like, yeah.

john (18:36.719)
And so then, yeah, keep making mistakes. And, and you know, it's crazy because you talk to people about like manifestation and somebody was telling me, well, you're manifesting this. I'm like, am I? That's not what it feels like to me, but you know, who knows? But yeah, so that happened all like 21 to 22. And then in 22, I met another guy that, I have this business, you can buy it. I'll owner finance it to you, 100%, nothing down. It's a freight brokerage. I'm like,

I don't know anything about freight brokering. I'm really hesitant to buy this from you because I don't know anything about the industry, I don't know anything about the business, nothing.

Jon Stoddard (19:14.953)
Wait, so wait, where did you find this? How did you come across this guy that just says, I'm gonna give essentially give you the business and I'll be the bank, yeah.

john (19:22.728)
I met him at one of the events that I had gone to. And so.

Jon Stoddard (19:25.041)
Okay, so it was another one of those face-to-face kind of events.

john (19:28.167)
It was a face-to-face, it was a networking event and a racetrack. Then I met him and he's like, yeah, I've got a freight brokerage. I have this old MC number and it's, you know, an old MC number's worth a lot of money because they provide value, right? So freight brokering, for those that don't know what it is, essentially you have a company like, let's say Coca-Cola, right? And Coca-Cola has pallets and shipping containers of Coke to move. Well, they usually will hire a broker to connect with a carrier.

or a truck driver or a boat or a train or whatever, and they broker that freight from one destination to another.

Jon Stoddard (20:04.525)
And those are hard to get. Broker license.

john (20:06.123)
The, well, broker licenses aren't necessarily hard to get, but seasoned broker licenses are hard to get. Yeah, so a seasoned one is anything over in a couple of years old. So mine, this broker license is like 20 years old. So I'm like, okay, well, this has some value, right? Like, but I don't know anything about this industry. Like I know zero. And he's like, that's okay. I will stay on and I will help you get contracts because he did that for 15 years. I'm like, okay, cool, this works.

Jon Stoddard (20:12.365)
season.

Jon Stoddard (20:33.005)
So, but why you? Why, why are you like, hey, this is the guy that's gonna solve my problems. I'll still work in a business, but.

john (20:39.635)
similar visions, right? Like he couldn't own because of some agreement that he had with the company that he took the MC from, he couldn't own more than like nine and a half percent or something like that because like a non-compete clause or some kind of thing than the contract that he had back then. I don't remember all the specifics. And I'm like, okay, cool. If you're gonna actively participate and if you're gonna actively help get freight and do what you say you're gonna do, I'll totally buy it. Like that makes total sense.

Right? Like I never saw myself going into the freight or trucking industry or anything like that. Um, and then, so I'm like, okay, let's do it. So we signed the agreement on our financing, um, on this MC number. And so I start working on it and I get the insurance and I get the bond and I get everything that I need phone number for the brokering. I sign up for all of these software systems that you need to track freight rates and all this stuff. And the dude literally just disappears.

I see him on social media all the time. I see him posting on social media all the time, but I can't get him to reply to a text message that I've sent him. And it's like, what is going on?

Jon Stoddard (21:36.813)
Hmm

Jon Stoddard (21:43.725)
So what was your conclusion about that? He just wanted to unload it?

john (21:49.835)
It's still up in the air. It's an active thing that we're working through, but it led me in a direction to where, I won't dig too much into that situation, but it led me to a direction of like, why do I keep picking up with these people? Why don't I just go myself?

Jon Stoddard (22:09.217)
Why don't you, are you, why are these people attracted to me? Who am I that these people are attracted to?

john (22:16.243)
Oh yeah. Well, not only that, but I get why they're attracted to me because I see a big vision, right? Like I see a big picture. I just explained in the beginning, like this is what I'm going for. And so when you tell people that you've got that kind of vision, but you can see things at a very granular level, it makes it like, oh yeah, I want to work with this guy. He's got a finance degree. He knows numbers. He knows how to do valuations. He knows how to do CFO work and bookkeeping and contracts and right. Like, and so.

I get why people are coming to me, but at the same time, like I didn't see that I was providing value to anybody at the moment. So it was a really a lot of personal introspection at the time. I was beating myself up. No.

Jon Stoddard (22:57.705)
Yeah, you're not serving the world and actually seeing any results, helping people.

john (23:03.067)
Yeah. So I, you know, just constantly beat myself up over it. And it's like, you know, when this started happening, I'm like, wait a minute. You don't need these guys for anything. Like you don't need anybody else. You don't need other partners that aren't going to contribute and help and be part of the day to day. And so I saw this quote on online and it said, you know, if you have to ask them to carry the bricks, they're not the right people. Right. Like that's just it's the reality. And so.

I finally just like, you know what, screw it. I don't need anybody else. I know what the pieces of the cake of the freight industry are now. I'm just gonna go out and start acquiring those pieces, those ingredients. So I went and got a trucking company under contract. And the thing that sucked about last year was my wife was diagnosed with cancer in May of last year.

Jon Stoddard (23:45.185)
All right.

Jon Stoddard (24:00.81)
Yeah.

john (24:01.091)
And that made last year just the hardest year of like, forget all that other stuff that happened. Like none of that stuff matters. That's why I'm so just like, you know, it's whatever, right? Like it happened, I learned a lot. I'm not gonna sit and be angry about those guys and let it consume me because, you know, I almost lost her, right? Like that's something that totally took over my entire year last year.

Jon Stoddard (24:26.923)
Yeah.

john (24:27.511)
She was diagnosed in May and eight months later she was cleared. She went to radiation, radical surgery to remove the cancer and now she's still here with me. So I'm lucky enough to be able to still have her and her health. And so, but during all of that, I'm like, I just need to push harder. I need to push harder. I need to grind more, not in like a put my head down, but more of a how do I strategically make this work?

Cause I haven't had a job in two years. Like I haven't been working in two years. I've been able to generate enough income from the businesses and what I'm doing, consulting, so on that I haven't had to. And so I went and acquired a trucking company. And so I started on Biz Buy Sell. I started on Biz Buy Sell and I just started, my hobby on Sundays, and people may laugh at this, my hobby on Sunday is to pull up

Jon Stoddard (25:05.984)
Yeah.

Jon Stoddard (25:12.065)
So where did you find the lead? What kind of cap stack? Yeah.

john (25:25.711)
an app on my phone. It's, it's basically biz by cell, but it's called something else. I don't remember what it's called. Um, but I'll just go through and I'll just look for businesses for sale. And I just like check them, put them all in my cart. And then I inquire about all of them. And then, you know, they get a series of NDAs I sign them all. And then I start looking through the financials and the crap that you see online is just insane. Right? Like that the stuff that brokers,

Jon Stoddard (25:48.533)
What would you say that number is? 9 out of 10, it's crap?

john (25:53.451)
I would say is higher than that. It's like nine and a half out of 10. Not to get off track too much, but like I inquired into this marketing company the other day. And marketing, there's a very strategic reason why that is like, right? Like you go out and acquire a bunch of businesses, you need somebody to do the marketing. Well, why not own the marketing company yourself? Right? Same thing with accounting. I like accounting firms for that same reason. But one was...

Jon Stoddard (25:56.05)
Nine and a half. Yeah.

Jon Stoddard (26:17.26)
Yeah, yeah.

john (26:20.663)
this lady sent me this marketing company. She's like, I want 134,000 for it. I'm like, okay. Like that's her entire year sales last year and she's down 80% this year in revenue. And I'm like, well, if we're gonna do this, then I would want like serious portion owner finance. Like this doesn't even make sense to buy this for this. Like your net profit last year was like 16 grand.

and you're extract, you know, so like that doesn't make any sense, but people get these. And then you've got these brokers that like put these pie in the sky dreams for these people to like, Hey, your company is totally worth a million dollars. Like I had one, but I was working, it was a trucking company. He had four really old trucks that kept breaking down. He did have some contracts, but they weren't like guaranteed contracts with some dairy farmers in Florida. And

Broker reached out to him and said this company's worth a million dollars. I'm like, well your net revenue Your your SdE your eva dial, you know, it was a single member LLC Whichever terminology you want to use for that Was like a hundred thirty four thousand dollars Right, like he's not taking a salary. He's not driving. It's it's his drivers doing everything and his trucks are 15 20 grand apiece each right like doesn't have any trailers

Jon Stoddard (27:44.453)
What? Those are pretty old trucks or really bad shape. Yeah.

john (27:46.867)
They're old. They were old. Yeah, they were old. There were 24 teams and they were in bad shape. So you figure 15,000 each. So that's four times 15, that's $60,000, right? And you're doing 130 a year. Even if you do a three X multiple, this company's still only worth like 350, 400 max, right? Well, the broker said a million dollars. So then he's anchored to, I'm only selling for a million.

Sorry, man, like that's just not gonna work. Like there's no way this sells for a million dollars. No, no, no. This is just one that I was looking into to explain like that the majority of them are garbage. And you get these brokers that tell them that they can sell them for this and there's no systems in place. There was no dispatching, there was no manager, there was no anything, right? But the, so that might, to jump back to why I got to that.

Jon Stoddard (28:17.877)
And this is the company you bought or having this? No, this is just some other, yeah.

Jon Stoddard (28:24.991)
Yeah, yeah.

john (28:42.675)
That's what I do on Sunday mornings. I sit in bed for while we just hang out, have coffee and whatever, and I just inquire about listings. So then I just spend time going through P&Ls and balance sheets and looking at numbers and either writing LOIs or asking more questions and trying to get as much information out of the seller and the broker as I can before I even dive to an LOI.

Jon Stoddard (29:03.953)
Yeah. So tell me this Trunkey company that you bought, it was on BizBizell. How much were they, how much were they asking for? Half a million dollars. Where, where was it located at? Houston, Texas. So how are you going to manage that in Houston, Texas? You're in Utah?

john (29:07.925)
It was on BizBiz sale. They wanted half a million dollars. Half a million. It's in Houston, Texas. Yep.

john (29:20.551)
Well, it's trucking company. You can put anywhere, right? Like the trucks are on the road. It's not like they were, I mean, they had a lot that they were parking at. Um, but you know, you can park in a truck stop, you can park in a truck, pay lot, like the trucks don't have to be stationed anywhere and you can pick up loads from wherever, right? Like you can get loads from anywhere out there. Yep. All contract drivers. Yep. No employees at the moment. Um,

Jon Stoddard (29:40.917)
Yeah. And these are contract drivers or the employees of the company. Okay. Contract. Yeah. And did you, what was he looking for? He's looking for half a million dollars, but how does he want pay? And how did you finalize that deal?

john (29:55.871)
So you wanted a half a million dollars. And as I got digging into what the company was actually worth, I'm like, again, historical performance, right? Like you had one okay year that was like $1 million, then you doubled it to $2 million. And then this year it's tapered off. Like you're not driving the same amount, you're not making the same amount of revenue. I think it's not worth half a million dollars. There's no way I'm gonna do a half a million dollars to you. And so I just quit talking to him. And this was the time my wife was diagnosed like,

in May. So I was talking to him in March and April. And then about August, I think it was, which was about the time my wife finished treatments. They called me and said, Hey, if you can come up with $100,000, they'll just let you take the

Jon Stoddard (30:43.437)
So what was happening to the seller that he just started dropping the price?

john (30:49.531)
70 years old, wanted to retire. He's he's from China and he wanted to go back to his home land from where he's at. And I just don't think, you know, running a trucking company can be hard. They're expensive, obviously, like every time I turn around with one of these trucks, there's a repair. It's like 1500 bucks out of pocket. Just just like that. Right. Like every time, like even just. Last four days, I probably spent like eight grand in repairs. Just on.

Jon Stoddard (31:09.482)
Yeah, yeah.

john (31:18.739)
just on trucks or things that are broken or somebody turned too sharp and it tore the hose off the truck, like just crazy weird things. But so I just start like, okay, well, let's start looking at it. I'll come visit. So I flew down to Houston, met with the seller, had the trucks inspected, everything checked out.

Jon Stoddard (31:39.585)
So these trucks were 16,000.

I mean, they're old trucks, right? Are they the big... Oh, that's it. Okay, okay, right. This is a... So the trucks, how old were they?

john (31:45.351)
No, these are, this is a different, so these trucks were actually, yeah.

So these are 2018s that are worth about, they're worth about 40, 45 to $50,000. Semi trucks, yep, yep. To Kenworth T680s. And so I went out and looked at the trucks, that walked around, looked at the trailers. He was also selling another company that we're not obviously buying, but we were working on both at the same time. And so I was down touring his property, looking at his food distribution plant, the trucks, the everything in that area.

Jon Stoddard (31:56.105)
And then these are the big wheelers. Okay, okay.

john (32:21.223)
down there for a few days and spent some days with him. And so I'm like, okay, well, you know, I'll see what I can do. Like, I mean, this makes sense. I had an investor lined up. He was ready to put money into the company. I had a couple other investors that were ready to put investment capital in. And so total, all I had to do was come up with 100,000, but I wanted to raise 180 to get us so that we had money and then we had operating, right? Like,

Jon Stoddard (32:37.801)
What were they committing? How much, what percentage? All you need to come up with is $100,000, right?

Jon Stoddard (32:50.453)
Okay. And what, what did you offer these investors like a split of the company or split of revenue? Yeah.

john (32:50.603)
because they're expensive, right? Like if things come up and just to split, yep, equity. So I did a valuation. So I ran out of full valuation on the numbers. Here's what I think this company is worth. If you put in X amount, you get this percent.

Jon Stoddard (33:05.964)
What did you think it was worth?

john (33:08.203)
At the time, what did I do? I honestly, I don't remember what the numbers were. I've got the sheet downstairs. Yeah, right. Cause I mean, the trucks and the trailers alone, right? Like, so you've got, right. Asset value cash flow value. The taxes heap, they made it purposely look like they didn't make any money, which I understand, right? Like you take depreciation, they took a ton of depreciation off the trucks. I get that, right? All right.

Jon Stoddard (33:13.133)
I mean, he's asking $100,000, that's what... ..

Jon Stoddard (33:19.657)
Yeah, there's asset value and the cashflow value. Yeah.

Jon Stoddard (33:32.877)
Sure, 100%, especially in the year you're gonna sell it.

john (33:37.447)
So the trucks themselves, 50,000 a piece ish, right? So easy math, five times 25 or five times 50, that's about $250,000, right? Well, you had three refrigerator trailers and those are worth about 30,000 a piece, right? So there's another 90, so that's 360 ish, 340. And then you had two drive-ons that were worth about 15 a piece. So I mean, right there, you're...

Jon Stoddard (33:42.494)
And how many of those?

Jon Stoddard (33:47.041)
250,000.

Jon Stoddard (34:04.865)
one. On paper, it looks like you're getting the deal. Yeah.

john (34:05.627)
just an asset value alone, yeah, right. We're assuming some of the loans and you know, that's not a problem, we're gonna have loan payments anyway. So we assume the loans and we gave them 100 grand and we took the company. And so.

Jon Stoddard (34:22.398)
What was your split on this with the investors?

john (34:24.663)
Uh, mine was 62. Yeah, yeah, I gave away.

Jon Stoddard (34:28.929)
62 and okay, all right. And the investors offered equity. Was there some kind of revenue share also or distribution similarly?

john (34:39.503)
What they'll get distributions because of the equity that they hold, right? Like so we'll do the plan was to do monthly distributions Because I can do the accounting and keep the numbers up to date and then we can do reconciliation. We're gonna hold back Just like a corporation. We're gonna hold back 30% of the profits for the company to continue to operate We're gonna distribute 70% to the shareholders or to that because it's an LLC. I do a series LLC with everything I do and so

Jon Stoddard (34:42.225)
Okay, okay.

john (35:06.895)
My company owns 62% and then they own the combined four other partners on the other 38%.

Jon Stoddard (35:15.741)
And you found these investors from where? Is it your current networking? Yeah.

john (35:18.427)
Networking people, yeah, networking, talking to people, just sharing what I'm doing on social media, talking to people, hitting up groups, family, friends, just different things. And so no, I didn't put any money in, I just did all the research, I did all the work, I did the financials, I did the contracts, all of that.

Jon Stoddard (35:40.497)
Who was getting the loads, I mean, the contracts with the companies to move to point A to point B? Who was doing that?

john (35:49.627)
At the time, at the time they were, so it was a husband and wife running the company and she was basically doing everything. He was actually a truck driver. So he was driving most of the time. And that's part of why he wanted to sell to you, right? But then as soon as I acquired it, I found a local Houston guy that had trucking experience that was basically working as my driver manager. So yeah, so that's how we acquired that one.

Jon Stoddard (35:52.667)
Oh.

Jon Stoddard (36:18.793)
And what did you promise him? Because was it, how much was it thrown off cashflow? Kind of cash.

john (36:19.016)
And it's been.

john (36:24.303)
It was thrown off enough that I could pay for a manager. So he was making a salary. We were doing enough that wasn't a problem. Plus we had the operating capital reserve, right? Like until this thing gets up and rolling, like an average truck, an average semi truck in gross revenue, if it's super active, can generate anywhere between seven and $10,000 a week.

Jon Stoddard (36:28.032)
Okay.

john (36:46.599)
your driver pay and your fuel costs are about 60% of your cogs. And that's the thing you see a lot with these smaller companies is they don't recognize fuel as being a cost of goods sold. If you don't have fuel, you can't get the truck anywhere. It's part of cogs. The driver pay is part of cogs because the driver's not there again. So I figure 60% of that, but then outside of that, you don't have a lot of expenses, insurance is your next basic expense.

Jon Stoddard (36:46.677)
Yeah.

Jon Stoddard (37:02.241)
Yeah.

john (37:15.655)
Because the insurance for these trucks is, as you might imagine, it's insane.

Jon Stoddard (37:17.045)
You know I can need a million dollars on each trucks, right? Because if most trucks hit anybody, you're in trouble.

john (37:22.883)
Yeah, the insurance on those. And then if you're doing refrigerated loads, you also need like a contingent cargo insurance. So if anything breaks, your car goes covered, right? So we acquired this company, we hired a driver manager, put him to work, all the trucks break down. Every single one of them, like all five just down. All at the same time, it took us six weeks.

Jon Stoddard (37:46.429)
All at the same time.

john (37:53.287)
because six weeks to get three trucks up and running. It was nuts. Like, no, he was taking care of it. Like we had a shop, we were partnered with a shop that was down there. They did some pretty good work. They would get us in there. And then like, no, not even kidding. Like if you want to talk horror stories and stress and like what it's like to be an entrepreneur, we bought the trucks. One of the trucks we got finished, all ready to go, drivers pulling out of the garage, windshield cracks.

Jon Stoddard (37:57.225)
And did you, were you down there doing that or were you?

john (38:22.731)
Like, what? How does that happen? He picks up the refridgerator and then the refrigerator goes out. So it's not keeping anything cold now. Like just hit after hit after hit just constantly from the time that we acquired it. I mean still, like it's just been nuts. So, you know, it's taught me a lot about like my personal stress, how I deal with, you know,

and all of this too, because you've still got to find a solution, you still got to find a way to pay this stuff off and get things rolling, so.

Jon Stoddard (38:58.037)
Yeah, was the company profitable before you bought him? Or did they say it was profitable? In his IRS tax document, 1120, they're not profitable because he's expensing her.

john (39:03.197)
It- Look!

john (39:07.295)
They're not, but you could see that, like, so I pulled, I have the taxes. I looked at them and I'm like, okay, well they did $300,000 in depreciation, right? So right there, there's your profit, right? Like, so it's basically $300,000 on 2.1 million in revenue the year before. And trucking 10 to 15%, even though it's a pretty good number, so 2.1, you would expect to see 210,000 in profit.

Jon Stoddard (39:17.407)
Uh huh.

john (39:36.799)
So they wrote off 300, so you know, marginally profitable, because he's driving too, so that's accounting for some of that $300,000. And so yeah, we bought it, and it's been an interesting adventure. We're now, since September, six months, six months now.

Jon Stoddard (39:51.539)
How long have you owned it now?

Jon Stoddard (39:58.989)
Yeah. Have you got it? I mean, it still sounds like a patient that's still in intensive care.

john (40:04.967)
Yeah, I kind of planned on it being rough for about a year, which if you talk to a lot of people in this space, unless you're buying something that's like this massive where everything's already in place, tons of capital, so on, right? You can kind of expect some of that, right? Like you're gonna have some of that weird, awkward transition while you're kind of figuring it out. It's like a hockey stick. It's going like this.

Jon Stoddard (40:26.773)
Yeah, they call it a J-curve. Like it's just gonna tank. They first up.

john (40:33.747)
that the data intake that you have to take when you go into an industry is just like, right? Like I didn't know what a lane was when I first bought the freight brokerage. Now I'm like, okay, this lane and this kind of trailer and this does this and this does this. Yeah, it was a huge, massive learning curve, but it's been really, really good. I mean, we're still, we're down in Houston still running fracking sand for oil wells. But then,

I'm like, okay, well, what's next? And so I bought a furniture store.

Jon Stoddard (41:04.461)
Well, hold on, let me, what are you generating in revenue now? What is it throwing off in cash?

john (41:09.136)
Not great not great right now cuz we still got some trucks broken down. So right now it's still negative

Jon Stoddard (41:15.297)
Okay, all right.

john (41:16.035)
Yeah, so this can be a lesson learned. Like it's, it's been a struggle, right? Like I said, every time I turn around, it's like I'm putting $1,500 into repairs. So we generate, we generated a couple weeks ago, we generated 10 grand in revenue ish, right around 10 grand. After we paid for fuel, drivers, repairs, the chassis rental, we walked away with 500 bucks.

Jon Stoddard (41:23.881)
It- it- yeah.

john (41:41.599)
So I mean, it's getting there, but it's still a long way. Like we obviously need more trucks. Oh yeah. Well, economy's a scale, right? So now we've got some stuff on dedicated routes and the dedicated routes pay a lot more than what you would find on what's called loan boards. But now it's getting more trucks under us that we can go and scale what we're doing, right?

Jon Stoddard (41:46.333)
Yeah. Is there any daylight? Like what you have to do to get to there?

john (42:11.327)
Cause these trucks can put off, the work is consistent. It's not the work right now. It's the number of trucks that we have bringing in the consistent work. Cause if you're not owner operator, if you're not driving the truck, then the money's gotta go to the driver, right? Like, so you get what's left. And if they don't hit, like our break even point is five loads a week that they have to run round trip. They don't hit five loads, we're not making any money. So.

Jon Stoddard (42:12.341)
Consistent work, right? It's consistent work.

Jon Stoddard (42:37.505)
You're not making money. Yeah.

john (42:39.924)
We've had a couple of weeks where they've done really good. We had a guy hit 13 loads in one week. We had another guy do eight. So we're on our way. It's just slow and go.

Jon Stoddard (42:52.681)
Yeah, what do you need to do to get past this? To see.

john (42:56.395)
I mean more trucks is a huge like more trucks That are in not necessarily in better shape But we need more trucks that are go out and acquire another entity right like so it's either You can't cut expenses because really the only expense you have right now is repairs the driver insurance and gas So what are you gonna cut because you can't go do a job without gas you need a driver you have to have insurance Just hope that's that So you can either drill through acquisition

Jon Stoddard (42:58.933)
More trucks.

Jon Stoddard (43:19.076)
Can't. Yeah.

john (43:26.079)
which is what we're doing right now. I've got a deal flow of about 15 different trucking companies that I'm looking at right now. And then, you know.

Jon Stoddard (43:32.693)
Okay. So what was this? Well, let's go on to this next one. This furniture store.

john (43:36.927)
Yeah. Furniture store. So, um, this is an interesting, um, and part of it is, again, it's vertically integrated, right? Like furniture stores get freight from the Philippines, Vietnam, China, Turkey, so on, right? Like a lot of them do. Um, so I have a freight brokerage. So I can now broker my own freight from another country, get it to the U S to a port.

Jon Stoddard (43:41.089)
What the?

john (44:06.375)
and then eventually get to use my trucks to drive it to the stores and make money every step along the way, right? They're all separate entities and so it would be this contract, hires this contract and just have an arms length agreement in place type situation, right? Well, I had been looking at a furniture store in Kentucky for, oh, I don't know, a year, maybe not even a year. And then I just found it.

Jon Stoddard (44:30.638)
So wait a minute, why Kentucky?

john (44:35.931)
I just found it. I don't know. I don't know why Kentucky. The East obviously more densely populated than a lot of places in Utah. Utah they're just, I mean, there's a lot of businesses for sale. Don't get me wrong. That's not what I'm saying. But in terms of businesses that are for sale here versus what you find other places, it's not even close. But anyway, so I had been talking to this guy. I found him in some kind of group on Facebook.

Jon Stoddard (44:39.04)
Yeah.

john (45:04.603)
And he's like, Hey, I have a furniture store for sale that I'm going to be selling. And so I just started talking to him about it. And series of events happen. I don't know if you want the full story because I know the full story, but I can just like skip to the important pieces. I was in.

Jon Stoddard (45:19.157)
Yeah, just tell me like you're having it's an off market deal. All right. No broker. He's the owner of the store.

john (45:23.463)
Yes, off market deal, no broker involved, nothing like that. He's the owner. He owns a hundred percent of the company and we're just talking like, we just keep going back and forth through email and text and phone calls and whatnot. So he bought it from, I think it was family. Um, and he owned a construction company also. And he's like, this thing just, I'm not meant to work retail. I, it makes good money. And it did like, um, the

Jon Stoddard (45:35.815)
Why does he want to sell?

Jon Stoddard (45:50.285)
So what were the top line, bottom line numbers?

john (45:53.311)
So his first year that he took over, it was half a million, bottom line or top line. His next year, he almost hit a million in a small town in Kentucky. We're talking small town. Just regular like Ashley Furnit. So the majority of furniture vendors, the majority of furniture vendors buy Ashley furniture at wholesale and then sell it. I did not know that until I bought a furniture store. A lot of them use the same.

Jon Stoddard (46:07.969)
What kind of furniture does this sell?

Jon Stoddard (46:12.646)
Oh, Ashley, okay, yeah.

john (46:23.367)
vendors all throughout the process. So he's carrying these brands and get that you get it a wholesale and you mark it up and then you sell it. So yeah, his, his first year owning it, he did like a little over half a million. His next year owning it, he did almost a full million. So it basically doubled his revenue in one year. Yeah. Right. No, he wasn't doing any of that. It was all just word of mouth. He was just taking really good care of people. Um, he's a good guy. He's a really good guy. Um,

Jon Stoddard (46:38.829)
Well, he's doing something right, right? Was it more marketing or advertising?

Jon Stoddard (46:48.369)
Oh, yeah.

john (46:51.035)
and he just really cared about people and he was there like almost every day. So you can see like why he wouldn't wanna do that if you're trying to run a construction company and you bought a furniture, you have a furniture store that's gonna take up a lot of time. You need somebody that knows furniture and I didn't know there was so many nuances in furniture. And so him and I are talking and going back and forth and I got a call out of the blue one day from my friend. He's like, hey, I know this guy, he's in furniture. He's been looking to do government contracting.

I'm like, well, yeah, I know how to do that. Like have them give me a call and we'll just talk through it. So he and I talk and go through everything we're doing. Then I teach him like, hey, yeah, you need to do this and this and this and this. And this is how you register for government contracts. And then you go out and you bid and here's the website and all of this stuff. And so I'm talking to him and about a couple of weeks later I'm like, well, he's in the East. He lives in Massachusetts. Why don't I see if he wants to go in with me on it? Right?

like he knows furniture, he knows all about the industry, like he could go down there and run it because he's like, I don't care if I live here or not, I can go anywhere. And so we called and started talking. And so he knows a guy that does furniture liquidation. And so he calls this furniture liquidator and he's like, hey, I've got a really good deal for you. It's in North or in Tennessee. This guy just really wants to get out. He's got a lot of debt and he just wants to be done with the furniture business.

And so I'd already been looking at one, it was in Kentucky and looking up on a map and I noticed that this one's two hours away from this other one. So they're within driving distance. So after I went to Houston on that trip to acquire the.

furniture companies or the trucking company. I went to Tennessee to look at furniture stores. So we get talking to the owner in the Tennessee one and he's like, yeah, I just want to be done. Like, I can't do this anymore. It's too much stress. Like, I can't do this. So we settled on an agreement to buy him out for $20 plus assume some debt that he had.

Jon Stoddard (48:53.598)
Yeah.

Jon Stoddard (49:02.994)
debt payments.

john (49:04.283)
debt payments, but we'd also take all of the inventory at the same time. So, there's the offset there, right? Like, he just wants to be done. He just wanted to be done. He, in his...

Jon Stoddard (49:11.291)
He just wants to unload it. I mean...

So this is before you got the Kentucky deal? Or, oh, you never got the Kentucky deal. Oh, okay.

john (49:19.467)
I didn't end up closing on the Kentucky deal. No, I never got the Kentucky deal. Like I tried to make the numbers work and we finally settled on like, I think it would just be too hard to staff, right? Like it's in a rural town in Kentucky, like rural town. And so we finally were like, well, it's 20 minutes from a military base, but who are you gonna find to run it? Like how hard is it gonna be to get employees in there and keep employees in there? And...

We finally just kind of like, yeah, this just isn't going to work. Like there's just, there's just no way we can make this work. So we walked from that one and then ended up buying this other one.

Jon Stoddard (49:58.901)
which looks like a hell of a lot more challenging to fix.

john (50:02.391)
It has been very challenging. It has been extremely challenging. We're getting ready to relaunch our grand opening. We did a liquidation event for a couple more months, finished the year off that way, and now we're rebranding and relaunching it as a new brand. So we're right there.

Jon Stoddard (50:20.468)
So who is this guy from Massachusetts that you said? Yeah, and he came down and he's managing it. You're clearing out inventory. You're trying to get sales going. Where are you at?

john (50:24.819)
Yeah, yeah, his name's Dustin.

john (50:35.308)
Um, so we're, we're doing.

Okay, well they're gonna okay, I don't wanna lie and make it seem like everything's hunky dory. We're definitely on, we're definitely headed in the right direction to the point that we just acquired another store in, outside of Houston in Baytown as well. So we've got a couple of stores now. We've got, yeah, yeah. So we bought a couple more stores. We're looking to continue to expand in that arena. The margins are good.

Jon Stoddard (50:45.077)
No, you're... Yeah.

Jon Stoddard (50:59.157)
You and him together? Okay.

john (51:08.615)
in what we're doing. So it's just, it's getting both of these that the, I don't want to call it a failure, but the part where they missed was the marketing. They weren't marketing. They weren't getting people in the door. The employees were not of the best caliber in terms of like what they would do. They would, they would dress sloppily and they'd look like, you know, you want them to represent the store in a way that looks good. And so there's some things that we're working on tweaking and

mass hiring and doing some things right now that we're ramping back up to launch it at a larger scale. So the store did, yeah, the Tennessee store last year did 2.7 million, top line. Yeah. It's getting there. Like again, we're taking care of some of the debt in the process and so that's part of the getting to profitable, right? We got to.

Jon Stoddard (51:43.541)
Yeah, and this is the Tennessee store and then there's a Houston. Yeah. Okay.

Jon Stoddard (51:52.297)
and you bought this for 20 bucks.

And is it profitable now?

Jon Stoddard (52:03.861)
Okay. What kind of debt was this? Was it with banks or was it with the suppliers?

john (52:08.431)
Uh, there, uh, a little bit of both, a little mixture of both. So a little bit of a, an SBA loan, um, one, one small MCA loan and then, um, some vendors that, that they owed some money to. So.

Jon Stoddard (52:22.901)
Yeah, and you have to refi those somehow.

john (52:26.281)
We're just paying them off like we're going through we're calling on we're like, hey, what would what would you guys take?

Jon Stoddard (52:28.065)
paint them off. How do you assume somebody else's SBA law? You just tell him I'm going to pay through? Okay.

john (52:34.126)
Um...

Yeah, some SBA loans are assumable. A lot of them are not. And so we just, we made an agreement that we would work.

Jon Stoddard (52:47.021)
So this Tennessee store, over 2 million bucks, still not profitable because of the debt. So you're trying to get rid of that. When do you think that that's gonna happen?

john (52:59.036)
Um, I anticipate based on like what we're seeing.

If I had to, the goal is to have it, I mean by August, get the rebrand, get the signs up, get consistent ads going, TV, radio, internet, because the only things that they were doing was paying Google $500 a day.

Jon Stoddard (53:20.981)
$500 a day, yeah. And they weren't, there's no ROI on them? Okay.

john (53:22.311)
day. Google $500 a day. Not really. No, I mean, not in terms of like what you're I mean, just like anything, right? Like with you've got to have a targeted like who are you marketing to? It was just they were just paying for SEO, so that they could be on the top of the search results. That's you know,

Jon Stoddard (53:42.453)
Yeah. And that's every day for 365 days here.

john (53:46.215)
except for weekends. They didn't build them on weekends, but they build them Monday through Friday. Yeah, it was, it was nuts. I'm like, this is, this is crazy. They're like, you're dropping 1500, 1500 a week on Google ads and you know, where's your tracking? How do you know that you're getting any benefit from this whatsoever? So, so yeah, so it's, it's been interesting. And then yeah, we just, we just went into Houston in Texas.

Jon Stoddard (54:07.722)
Right.

Jon Stoddard (54:11.777)
Yeah.

Jon Stoddard (54:16.097)
So what are these stores you bought in Houston, Texas?

john (54:19.161)
They're at furniture and at furniture mattress as well.

Jon Stoddard (54:21.897)
Yeah. And you guys, where did you find that story?

john (54:25.871)
Same process. So actually I found it on BizBizell. And I found it where it wasn't listed by a broker. It was just listed by a guy. Yeah, there's tons of those on BizBizell. Like tons of them. You just have to do a little research. Ask some good questions. Just talk to them. It's like, hey, what do you need? What are you looking for? What are you trying to get out of it? Just asking really good questions and hearing what they have to say. I think that's a big thing.

Jon Stoddard (54:29.761)
Uh huh.

Jon Stoddard (54:33.985)
For sale by owner, yeah.

Jon Stoddard (54:50.677)
Yeah. So what was his reason for it? So tell me about the top line and the bottom. Was it profitable? Did he say it was profitable?

john (54:55.431)
So it was profitable.

Yes, and it is, but he wasn't really running it as a furniture store. He was running it as a, he owns the real estate. So he was more concerned about the real estate piece of it.

Jon Stoddard (55:09.389)
about the cashflow paying the mortgage on the real estate or did he own the real estate?

john (55:12.743)
Yeah. And then some side income on the, on top of that. So I think it's, it's been good and, you know, it's still an exploratory situation that we're working on. Like, does it make sense to stay in this building? Do we move somewhere else where we get more traffic? Because the city is a huge city. The population of the city that we're in is 90,000. So it's not like a small town, but the location isn't necessarily ideal. So we're, we're working on.

Jon Stoddard (55:16.257)
Gotcha.

john (55:41.107)
doing a liquidation event right now down there. We can do that for about 30 days. Yeah, yeah, and we talked, like, yeah, I don't want this on the podcast. A lot of furniture stores do cash transactions and they hide the cash. And so, yeah, so, so.

Jon Stoddard (55:45.958)
When you got the financials, was he making money? The- okay.

Jon Stoddard (56:03.305)
Yeah, I'm going to make sure I cut that part out. Five, 56.

john (56:08.875)
So he told and disclosed to me that there was some of that. And so, but he gave me a full list and this is why I don't want it on there. I don't want to get him in trouble. He gave me a full list of all the transactions that he did. Cause otherwise, why do you have $50,000 of inventory on hand? Cause he had 50 grand in inventory on hand. And if you're only doing $50,000 a year on paper, why do you have that much inventory? It doesn't make any sense. So, so yeah, so don't put that in there, but that's, that's why. So on paper,

Jon Stoddard (56:39.293)
Okay, he was, okay, so he was making money and what did he value it as?

john (56:39.352)
No it wasn't.

john (56:46.039)
Inventory, we sold it, we bought it at 60 grand. Yep. Yep, inventory and then like some extra. So it essentially was $6,000 down and then we're paying them over a year and the rest over a year and inventory was on consignment.

Jon Stoddard (56:48.693)
60 grand, so basically inventory. Yeah.

Jon Stoddard (56:59.701)
And then Bayover. Okay.

Jon Stoddard (57:07.165)
And your partner came down and said, Hey, we got to do this to turn.

john (57:09.755)
He's, yep, and he's down there right now, as a matter of fact. Yeah, we're running a liquidation event on it right now.

Jon Stoddard (57:14.985)
And you look like, like when you're going to see the daylight on.

john (57:19.387)
That one actually hasn't been too bad because we don't have a lot of overhead on that one. Like our rent down there is like $4,000. So if we sell four pieces, we're breakeven in a month. The one in Tennessee, the rent is $10,000 a month. So obviously the breakeven point on that one's a lot higher, but it's a 16,000 square foot warehouse. The one in, I mean, we can fill it up.

Jon Stoddard (57:37.485)
That's a... Yeah, yeah.

Jon Stoddard (57:43.541)
Does it need to be? Yeah.

john (57:48.967)
53 foot truckload of furniture for less than 20 grand. And that stuff will retail for about 40 to 50. The margins are really good in furniture and mattresses.

Jon Stoddard (57:59.233)
Gotcha.

Jon Stoddard (58:04.013)
So you're buying these turnarounds. I mean, what are you feeling about this? Everything seems like it's gonna, it's like those people that have China plates on those strings in there keep spinning them. Like something's gonna drop or you're just.

john (58:07.807)
Mm-hmm.

john (58:14.859)
Hehehe

john (58:19.428)
Yeah, right.

john (58:23.491)
some is going to hit. Well, the idea is to, I didn't get into turnarounds by on purpose. I just, again, the deal kind of just showed up and it was like, okay, I had to really think like, is this something you want to take on? Can you do this? Can you find the right people? Can you, can you get the systems implemented? Like, can you do it? That was the first thing. Originally, I wanted to just buy stuff that I didn't have to touch.

owner or manager managed and ideally that's where I want to go. These just came when they came, right? Like and it provided stable income and everything that I needed. But yeah, enough, enough that.

Jon Stoddard (59:05.194)
Are they actually throwing off cash to you that you're in the expense column?

john (59:10.683)
Yeah, enough that we're okay to get paid and take care of some things. Like it's not great by any stretch of the imagination, but it's enough to where it's, you know, again, you buy a company, it's going to be amazing. Right? Like exactly. You know, you buy it for 20 bucks. Like I'm already ahead. Our first month we did $300,000 in revenue. You think it's, it decreased from there because we uncovered some issues. But.

Jon Stoddard (59:15.757)
Gotcha.

Jon Stoddard (59:23.881)
And if you fix the problems, it'll be better. Right?

john (59:40.135)
Yeah, we did. We did 300 grand. Um, there was some, some theft going on. And so again, there was some. Yeah, they were still in inventory. They were doing cash transactions and then, um, they wouldn't get me inventory numbers, so they would do cash transactions and the inventory would walk out the door. Um, and I assumed some of this was happening with the old owner, but he didn't know. Um, you know, and that's not his fault to, to degree, but you know, it.

Jon Stoddard (59:41.181)
What issues did you uncover that you didn't see?

Jon Stoddard (59:47.653)
Oh, some employees were stealing stuff.

Jon Stoddard (01:00:00.329)
Holy crap.

Jon Stoddard (01:00:07.085)
Yeah. Dude, you spent 20 bucks on it. That's what you bought. Yeah.

john (01:00:12.724)
So, right, I already made it back, but I mean, it's, you know, you buy something like that, you can expect to have challenges, right? Like it's, it's a good deal for a reason, but that means that you're going to probably have to put in a lot of work, right? It's not going to just be this walk in the park. Like if it's cheaper, easy, like cheap and easy, right? Like it's not going to be cheap and be easy. It's, you know, if it's easy, it's probably a lot more expensive. So.

Jon Stoddard (01:00:20.875)
Yeah.

Jon Stoddard (01:00:38.109)
Yeah. Well, there's always going to be some elbow grease, you know, fixing going on.

john (01:00:42.407)
No, yeah, there's always going to be transition. There's going to be there's going to be problems. There's going to be culture changes. People don't like how you run things. It just you're going to have all that. That's just part of buying a business. You shouldn't expect it.

Jon Stoddard (01:00:56.717)
So you're in it, you're deep into it right now in this turnaround game and it's not, there's not daylight to it yet. What if you like, you know, your wife said, hey man, this is causing a lot of heartache or are you managing the stress without showing the strength?

john (01:01:00.827)
Yeah.

john (01:01:13.727)
I would say that I wasn't managing the stress very well in November. So November, we had closed on both companies. We had just acquired both companies. And I'm talking just recent November. And I'm pretty, pretty good at managing stress. Like I always have been. The world's burning down around me. I can like sit and figure out like, what do I need to do? I worked in fast food.

Like that's just part of the territory. Like everything's a chaos. Everything's mad rush everywhere. So in November I got COVID and my wife got COVID and my son got COVID and my daughter got COVID. And I got it really, really bad to the point that I was sick for the entire month of November. Like the entire month of November. I didn't get better until like the fifth of December. I think it was.

And so during that time I was sick and I was so stressed out I was clenching my fist when I slept and just like clenching like all the time Well, you can't really see it anymore. My fingers have gone down and swelling I tore the tendons on my index and my middle finger Just changing my clothes I was changing my clothes and snap and my finger wouldn't go straight

Jon Stoddard (01:02:36.021)
So you're tight, just like a piano string, just.

john (01:02:38.907)
Yeah, just snapped. Um, I heard the pop like, and then it wouldn't like straighten. I'll have to send you a picture of it. You'll, you'll appreciate the picture. It was weird. Um, but I have to sleep still with these splints on my fingers at night so that I don't clench my hands. So that month, it was a lot of like, you're not going to ever be able to do this. This is a train wreck. Why would you ever, why would you ever take on anything like this? Like this was stupid. Um, you're an idiot. Like.

beat myself up constantly day in, day out, day in, day out, like just over and over and over and over. And finally I was like, you know what? You can do this. Like you can do this. Like even if it falls apart, what's the worst that happens? Company's closed and you just go do it again. Right, like you already know the steps. You've already done it. Like this is what you asked for. Quit being scared and just go. Maybe you've got some bad people working with you, like whatever, like analyze what the situation is.

and let's just take the next step, take the next step, take the next step, take the next step. And so that's why things are better now, but like, yeah, man, it was rough. And I think the final turning point was we went on vacation in January. Yeah.

Jon Stoddard (01:03:53.009)
Is it, let me, let me ask you about that. Was it because you took too much on? I mean, you definitely glutton for punishment taking three things on in a 12 month period. So.

john (01:04:01.295)
Yeah, um...

Part of it's that, part of it is that the life of an entrepreneur, right? Like, well, if somebody's not doing it, right, I'm just going to take it over and just do it. And that's, when you're buying companies, that's the wrong attitude to have. Like, you can't do this. If somebody can do this 80% as good as you, pay them to do it. You just need to follow up. You need to make sure that they're doing it. You need to hold them accountable, just like you would if you were to have a job. You can't do their work for them. Help them learn how to do it.

If they don't have the skills, don't hire them in the first place and make sure that you're holding them accountable for what they're doing. So that's what's really turned it over is that getting some people in place that know what they're doing, that we've got, you know, we have a scheduled 10 minute call every day. Like it's not anything crazy. Like I'm not on the phone all the time anymore. That's why when you said like, when you want to schedule like whatever works, like this is fine. But.

Jon Stoddard (01:05:00.426)
Yeah.

john (01:05:02.071)
it, you know, holding them accountable, making sure that the metrics are in place, watching the numbers, knowing what, where we need to be. And so, yeah, I think there's, there is daylight, like things are going pretty good. And it's just.

Jon Stoddard (01:05:16.141)
this partner you're working with now, you like him better, trustworthy. Yeah.

john (01:05:19.155)
Yeah, yeah, he's a good guy. He's a pretty good guy. We get along pretty good. We chat every day. And he steps in and does, that's why he's down running the event right now. Like he knows Furniture and Equidation. He's down there with putting up signs and talking to customers and getting systems in place and doing all of that. So yeah, it's been a journey. So now, you know, eyes on the next one. We got these systems.

Jon Stoddard (01:05:25.226)
Yeah.

Jon Stoddard (01:05:44.566)
Maybe you should let this digest a little bit. And that's up to you. Yeah. Turn these around.

No, you're good.

Can you hear me?

john (01:05:56.746)
Yeah, I got a phone call. It interrupted the connection. It was at like one 10 or so, an hour and like 10 minutes or something like that. That's what it was at.

Jon Stoddard (01:06:00.535)
Yeah.

Jon Stoddard (01:06:06.397)
Yeah.

Jon Stoddard (01:06:10.117)
Yeah, so I mean this is not for everybody. Turnarounds are not for everybody.

john (01:06:13.938)
No, no mergers and acquisitions aren't for everybody. Like it, you know, I'd look at like the groups, like.

Jon Stoddard (01:06:46.541)
I don't think your audio is on yet.

Jon Stoddard (01:06:59.757)
So, hey John, can you hear me?

Jon Stoddard (01:07:05.941)
So, thanks for being on the show, John.

Jon Stoddard (01:07:14.001)
Yeah, it's not doing it.

Jon Stoddard (01:08:00.001)
That's alright man, I'll uh... I'm gonna...