Expensive Lessons from 36 Acquisitions | 334

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Transcript

SPEAKER_01 0:00

Welcome back to the Business of Beers Podcast, your daily dose of strategies, tools, and tips to help you build an eight-figure business. Today's episode is a clip from one of my YouTube lives. If you'd like to hear the whole thing, there's a link below in the description. Cheers.

SPEAKER_00 0:16

Now, some of these are covering more than more than just seller financing, but some of these just like acquisition stuff. I mentioned earlier, if you're here like from the beginning, that there was this deal that lady was asking $500,000. I thought it was too much. I literally like, we didn't talk for six months. And because I was stuck on the price and I was like totally blind to terms, even though I've like, that was like three years ago. Like I had done a bunch of deals prior to that. But I got, I just got like sometimes you get stuck in your head. And like so it went on it went on ice for six months that cost me at least $100,000 of profit. Because as soon as we got into that store, like we rolled out new compensation plans, we rolled out our advertising, we upgraded the technology, like we made literally changes overnight that that doubled the business. And so I think about like the six months I could have got a head start on that thing, all because like I I was like stuck on thinking about the wrong thing. I was thinking about all the reasons why she was wrong and I was right, versus asking myself, what would I need to believe, or what would what would this deal need to look like for me to want to do it? And then and then we got it. So back in 2018, it was the first seller financing deal that I did, where I I didn't even know this was like a thing. And this guy came to me, we'd known each other for a while, and he says, Brian, I want you to buy my store. Here's here's what I here's what I want. Give me 50K down, again, it's always it's always 50k. I don't know why. And give me 3.1k a month, and it was gonna be for five years, plus a balloon payment at the end. I think it was 160K. And and again, his store was 100k, you know, I think the purchase price was 350. So uh it was making 100k profit, he was asking 350. So ultimately he said, Brian, you can take over my business, it's making $100,000 a year. All I want is $50,000 up front, and then you can make payments for me for the next five years, and at the end of the five years, you're gonna owe me a balloon payment. But in five years from now, like just save up the money and you'll be able to afford it. And I was like, All right, sounds good to me. Uh great store in the city, uh, right by by by Penn and Drexel and like all the big colleges here in Philly. And day one, I walk in, and I uh the the I I pull up to the place and there's a car next to me. And again, I've never met anybody, right? I my whole thing, like I don't meet people before before I buy the deals. And there's this, there's a truck parked and there's this guy sleeping in it. And I'm like, oh great, we got our first customer, right? Uh and then I'm like sitting there waiting, waiting for the manager to come and like you know open up the door. And then this guy in the truck like rolls out, you know, pulls up his pants, and walks over to the door and unlocks it. And I'm like, oh, oh great, he must be the manager. So I walk in and I I uh say, Hey, I'm Brian. I'm I'm like I'm your new boss, I guess. And he goes, uh just to let you know, I'm quitting in a month. And I'm like, okay, okay, nice, nice to meet you. And I learned like through the conversation that his routine was like to go to the shop, to go to the casino, to go to the strip club, to then uh fall asleep in his truck at the shop, and then like sometimes he showered and sometimes he didn't. I learned that some of the mechanics, one of the mechanics would go to a bar at lunch and drink, right? But then come back and work on someone's car. Great. Uh and the place is a the phone's ringing off the hook, customers are pouring in. And I'm like, man, this is a freaking gold mine. And we got all these guys in here who are like dangerous to to everyone. And so we immediately fired, literally, have fired everyone. And luckily, like, you know, we had some other people that were able to bring in from from some other stores to be able to like bridge the gap. And the next year, I mean, the the the next year we made $400,000 out of that store. We doubled the revenue. Uh, we got all these scumbags out of there, we did a bunch of marketing, whatever. It's it that store alone made more money than my all my other stores combined. Um, and the but the the bigger lesson was like, think about the hair. Like the seller comes to me, he gives me a great deal. He know, of course he knew that this guy was a terrible manager. Of course he knew that there was probably some issues with the technicians, but he didn't want to deal with any of it, right? He was tired, he just wanted to get out. He he just wanted someone else to deal with the problems. And like, you know, I am more than willing to deal with anybody's problems because we have the systems to fix it. But sometimes that's what you're getting into. And just knowing that, going in, that the the greater the deal on the front end, the chances are there's a bunch of like hair and ugly things on the back end that you're gonna have to be able to fix and sometimes fix them extremely quickly. Or like, you know, if I didn't do that, it would have been a complete disaster if someone got hurt, if you know, whatever, all these things. And so talk about reputation and whatever. Um so just know that. Know that you are going to possibly have some things that you have to fix immediately. Now, that was like the that was the first time I had it was a like that. Luckily it was early because now every deal since I'm just pretty much prepared for like literally anything could happen and we're we're ready to go. Um I would be careful of like the un the unprofitable stores if you don't know what you're doing in that you're hungry for a deal, you find the store that's barely making any money, and again, you want to do this thing, you want to buy the seller financing, you want to you want to get the whole deal, you want to grow. But just be like really careful with that. Because like, I mean, I have one store, so I I bought a package of seven stores once, and one of the shops was losing I'm gonna say it was like eighty thousand dollars a year, like in the red. Like sales were that bad and the reputation was terrible that every single year this store was burning eighty thousand dollars of cash. The rent's high, all the things are high, like we're spending money on advertising, nobody's coming into the store. Like it is it is a loser, right? By by by all accounts. It's just a shame because it used to be one of the top stores in the in the in the state, but whatever, it it's a loser. And you know, at a as part of the package deal, it was okay because like the total net was fine. But what if the seller didn't sell me the whole package and he went to somebody else? And what if I owned just a single store over here that was, I don't know, what for easy for let's just say let's just say for easy math. Let's say I was a single shop owner, I I had a business that was making $160,000 a year. This guy comes to me and says, Hey, I don't I want to sell you the store. Man, I'll give you no money down and you know just pay me $2K a month for like whatever. Doesn't like doesn't even matter what the terms are. And and and you see that it's losing money, and you think to yourself, well, I I can turn it around, I know that I can do it, blah, blah, blah, blah, blah. All these things. Like you're you're you're you're you're you're really confident in yourself. But like here's the challenge is that immediately the thing's losing money, right? And like you're 160K that you thought you're making, right, the day you buy it, you know, obviously there's like month to month, and I'm talking in terms of years and all this stuff. But like, I want to get to my point. That this single store literally cuts your profit in half. And that maybe this store is gonna take way longer than you think it will to get it up and going. And that maybe like even today, like it we just we just did okay this month, but like I think the next year I lost 60k, and then I lost 50k, and then it was 30k, and now I'm like breaking even, and maybe we'll turn a profit in 2026 there. But it's been like five, I've been in the store for five years and I haven't made any money there. I've I've lost money every single year. And it's getting better, we're growing the reputation, we're but we're fixing the things, blah, blah, blah. But like all that being said, is that sometimes these deals that are that have been like beaten down, that are really unprofitable, could potentially like wreck you if you're really small and just starting out. For me, I have 36 stores, like I can sustain a couple losers, knowing that like, you know, in the end it'll it'll all be okay. But like if you're if if you're not in that situation, just be really careful on them because the worst thing you could do is like you, you, you know, you're doing well, you're building a system, you take on this then total like shit store, and then all of a sudden it is like totally wrecked all the things you're building. Now you're stressed, and like, and and and now this other store is suffering because all of your attention's over here. And just like I wouldn't take a loser store on until you're like you have enough like bandwidth and team and like cash flow to be able to tolerate um the wherewithal of it all. So that would just be my like word of caution as I've as I've like been through it many times, and I've I've I've worn many scars of of unprofitable stores that I got with seller financing on killer deals because they wanted to get out, right? Um and ultimately, you know, as a business owner, the better you get at operating the thing that you do, just that the easier it does become to turn these things around. And so focus on the things that you can control. We focus on sale cash flow, we focus on building a team, and then we can go from there.