Loading summary
Transcript179 lines
- [00:00]
Host Walker Deibel
These days when you hear marketing agency you probably think a dispersed remote team of graphic designers, social media managers, Google Ad buyers, but envision instead the traditional agency, the Mad Men style in person office experience where creative types are ideating, iterating, challenging each other. The campaigns are less about conversion rates in roas and and more about spreading ideas. That's the type of agency that today's guest bought at age 57, Brian Houck set out to buy a business. For his next chapter he hired a buy side advisor, Calder Capital, whose name you have heard on this podcast and who happened to be based in Brian's own Grand Rapids, Michigan. We hear all about the experience and costs of of working with a buy side advisor, which I increasingly feel is a strong if overlooked option for many searchers. That said, it is not a panacea. Brian was spending money quickly and went through three broken Lois before finally getting to close with the agency. He bought extra credit projects so he was fatigued and wondering if this path of buying a business was the correct one for him. One of his key learnings from that uncomfortable search was to meet sellers very early. When you're doing a proprietary search or.
- [01:33]
Host Will Smith
Having a buy side advisor do it for you.
- [01:36]
Host Walker Deibel
Sellers that engage are not as decided that they want to sell their business, so you would be well advised to figure out as soon as possible if you think you can get all the way with a seller. Those three broken Lois of Brian's largely attributable to sellers who only later realized they didn't actually want to sell their business. That and much more in this interview with Brian Hauk, owner of Extra Credit Projects.
- [02:06]
Host Will Smith
Enjoy.
- [02:08]
Host Walker Deibel
There are sticking points that are common in searcher deals, often relating to due diligence, findings, non competes, indemnification and of course working capital. Attorneys James David Williams and Bill Barlow return for an office hours to walk you through these sticking points and how to overcome them. That is today, Thursday, August 21, noon Eastern. The webinar is Overcoming Common Deal Sticking Points. Link to register for the webinar is right at the top of this episode's show notes or on the Acquiring Minds homepage acquiringminds Co. See you at noon. Welcome to Acquiring Minds, a podcast about buying businesses.
- [03:08]
Host Will Smith
My name is Will Smith.
- [03:10]
Host Walker Deibel
Acquiring an existing business is an awesome.
- [03:12]
Host Will Smith
Opportunity for many entrepreneurs and on this.
- [03:15]
Host Walker Deibel
Podcast I talk to the people who do it. If you ask owners in the ETA and search community which insurance broker provides highest quality work, great outcomes and has a practice dedicated to searchers and acquisition entrepreneurs, one name comes up again and again Oberle. Oberle Risk Strategies has worked with hundreds of searchers over nearly a decade and is in fact led by a two time successful searcher, August Felker, which makes Oberly, a specialty insurance brokerage for searchers, by a former searcher. And if you've got a business under Loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. An easy, no risk way to get.
- [04:03]
Host Will Smith
To know August and the team at.
- [04:05]
Host Walker Deibel
Oberle to take advantage. Check out oberly-risk.com that's o b e r l e-risk.com link in the notes. Brian Hauck, welcome to Acquiring Minds.
- [04:21]
Host Will Smith
Thank you, Brian. You bought a creative agency, Mad Men style creative agency. So everybody in the office kind of jamming on ideas. We're going to hear all about it, but start us off with some background on you, please. Sprint.
- [04:37]
Guest Brian Hauck
Sure. Well, I started my career in corporate America, worked for Cintas Uniform Company for about 15 years. I described myself as the poster child for corporate America. I was the youngest plant manager, youngest general manager, got involved in all sorts of different things there and had a great experience. And after all that, I quit a perfectly good job to start my first business in my late 30s and I'd never look back. So since then I've been more of a serial entrepreneur and have had a number of different businesses, most of them startups, a couple of them, one in particular I was able to acquire through someone I knew. And so this particular business was the first time I had been through a formal business acquisition in my career.
- [05:27]
Host Will Smith
Great. And just take us back to those 15 years at Cintas and then going striking out on your own despite all the promise your career still had at Cintas. Why that decision at that moment?
- [05:41]
Guest Brian Hauck
Well, I, I tell people I, this is, it's not a slam, but I, I joined the company because of the culture and I left the company because of the culture. And I was making a lot more money when I left the company than when I joined the company. And so it definitely wasn't a money motivation situation. But I'd risen through the ranks and was fortunate enough to be on the inside of a lot of discussions and there were just a lot of leadership changes and philosophies that weren't lined up with the same program that I signed up for. Obviously, things change over time and so I just got to the point where it was starting to feel like a job for me and I've, I've always enjoyed the fact that I've loved what I've done over the course of my career and I was to the point where I just wasn't there anymore. So I knew I needed to make a change and literally I gave him four weeks notice. But I pushed stock options and, you know, they had, they had a lot of golden handcuffs on me and pushed it all across the table and said, see you later. And my boss at the time privately said, I'm, I'm jealous. And, you know, so it was, it was a scary move. Definitely put all my cards on the table and all my, all my resources on the table to do it. But I, I've never, I haven't spent 30 seconds second guessing that decision.
- [07:04]
Host Will Smith
Well, what is particularly interesting about your confidence in that decision is the business that you proceeded to then start did not end well. No, that's not what, that's not what we're here to talk about. But I do think that your financial trauma in that moment is, is worth hearing a quick, quick recap of because it, it, it's context for who you later became.
- [07:28]
Guest Brian Hauck
Sure. So I started a company called My Way Mobile Storage, which was a kind of like a pods type of company where you have a mobile storage unit that gets dropped off at someone's house and then stored in a warehouse. And I, I had studied 1-800-got junk, which is. Was founded by Brian Scudamore out of Canada. And I looked at their model and he started that business to be a franchise. And I had read the E Myth by Gerber. The premise of the book is why do four out of five businesses fail after the first year and another four out of five fail after five years? And so he did. Gerber did a ton of research and what he came up with was the number one reason businesses fail is that the operators, the entrepreneurs that are starting the business, fail to create the systems that are needed to support the growth of the business past a certain level. And a lot of businesses either grow themselves out of business or they just fail because they don't have the right systems in place. And so the premise is if you design your business to be a franchisor or a franchise, it forces you to systematize all of your processes, just like a franchise would have to systematize their marketing strategy and your hiring strategy and your IT strategy, all that type of stuff. It's all documented and you have systems in place. So we treated it like a franchise from day one and it was a lot of fun.
- [08:54]
Host Will Smith
And what happened.
- [08:56]
Guest Brian Hauck
So rather than get bank money or any type of SBA money, I went for private equity. And so I, I leaned in on people that I knew, which a lot of entrepreneurs do that, and I would discourage anyone from doing that if you can at all get away from borrowing from non sophisticated investors. But that's what I did. And so I slowly accumulated a group of investors that helped to fund the startup and the subsequent growth of the startup. We started to sell franchises, but again, we were selling franchises to some of the folks were very sophisticated and some were not as sophisticated. And as we rounded the corner into 2008, if you recall, that was not a great year for a lot of folks, and ourselves included. And so capital was drying up and we really needed to pull ourselves out of it. And in the process of that, I had some shareholders decide that they wanted to go a different direction. And so to make a long story short, there was kind of a behind the scenes rally. And because I didn't have any capital, my, my venture capital that hasn't backed out on a deal in 16 years up until that point, had to cancel the appointment because it was 2008 and the market had just crashed. And so I went through a hostile takeover. I personally lost everything at age 41, and that was going into 2008, 2009, so not a great period of time, not a great experience to go through. I don't recommend it to anybody.
- [10:34]
Host Will Smith
Yeah. And yet you still didn't doubt your decision to leave Cintas and become an entrepreneur?
- [10:41]
Guest Brian Hauck
Oh, no. Not, not even a little bit? Not even a little bit.
- [10:44]
Host Will Smith
Wow. And so then if you didn't regret that decision, when you're licking your wounds, it's not, I'm going to go back and get a job. It sounds like you were basically a convert. You were an entrepreneur come hell or high water at that point, no matter what.
- [11:00]
Guest Brian Hauck
Yeah, I, I, that's a great way to put it. I, I, I definitely it's a, it is a decision, it's a choice, and it's different for everybody. But I, I just felt like if I went back and got a job that it would be, that comfort would be hard. It would almost be like a trap that would be hard to get out of. I was, I was proud of myself for leaving in the first place because that was extremely difficult and, and, and you know, financially and otherwise. All my, all my friends were there. I'd been there my whole career. And so it was a, it was a big move. But I, I knew that I, I wasn't sure what I was going to do, but I knew it was going to Be something. And it wasn't going to be just working as a middle manager for some company someplace.
- [11:46]
Host Will Smith
Okay, that was age 41. You lose everything. You are today 58.
- [11:53]
Guest Brian Hauck
I am so.
- [11:54]
Host Will Smith
So there have been 17 years. In the interim, we're not going to have time to hear about all of those. So fast forward us to the latest chapter. And what were you doing that led you to now want a business, as you said, going through doing this sort of formally for the first time?
- [12:11]
Guest Brian Hauck
Sure. One of the things that took me a while in my career was to discover what my, what my gifts were, I guess. I think, I believe everybody has been given gifts. We just don't always know what they are. Some people can look at a sunset and paint that sunset more beautiful than the sunset itself. There are people that just have gifts that other people don't. And so it just took me a while to figure it out because sometimes you just assume that everybody thinks the way you do, and when you realize that they don't, then you kind of discover, oh, maybe I'm just really good at this. And so, and I will caveat. There are a lot of things I'm not good at. I don't, I don't want this to sound like, oh, Brian's look great, all this stuff, because there is a lot of stuff. There's a steep, steep drop off after my. I've got a skill set that's about this narrow. But I've realized that one of the things that I just have a. An ability to do is I can look at a situation in a business and, and see around corners. I have the ability to just start to push, put things together and the tumblers just kind of click faster than my brain can go. And I just get a picture of what the business is going to look like and how. And it just comes to me and I can't describe. I can't tell you why or how. But that's. That is. It has proven to be pretty helpful over the years, not only for my own businesses, but for other people's businesses as well as a consultant, in other words. And, and that again, I, I came up through the ranks not liking consultants very much just because a lot of them, I felt, didn't really know what they were talking about and didn't do what I did. And, you know, there are all those things. And so it was interesting and ironic for me to actually be a consultant and a coach for a few years there.
- [14:02]
Host Will Smith
And so this discovery of your talent, your unique talent, led you to want to buy A business because you wanted to pour this talent into something that you owned rather than into what, into your clients, businesses.
- [14:17]
Guest Brian Hauck
Yeah, the, the consulting thing was fine. It was, you know, it, it made, you know, it checked the box. I made, made money. I was helping people. I had a lot of flexibility. I, I could make, you know, as much as I wanted to make. And that part was great. And I was good at what I did. I think the feedback I got on a continuous basis was very strong. And it was a 100% referral based business. So I never really had to market it or advertise it at all to be able to be successful, at least in my definition. But what I ran into is because I could see this is what's possible and this is what this business could do. And it was just so apparent to me. I consider myself a fairly good communicator, but I couldn't. There were a lot of situations where I could get the owners of the business or the decision makers of the business to see some of it or to buy into part of it, but there was always just so much left on the table. It just felt like we were squandering opportunities and especially in situations where there were cultural things going on. And it just started to weigh on me, like I wanted to do something about all that. I wanted to go in and fix it, if you will. And part of that's unhealthy, of course, but it just wouldn't go away. And I knew in my heart, like the quickest way to solve that is stop complaining. And if you're so sure that you know what you're doing, then just go do your own thing again. And then you only have yourself to blame, as if it's not running the way you think it should. And so I challenged myself with that and said, well, why don't you just do that then? And I talked to my wife about it, we prayed about it, we spent a lot of time just saying, am I doing this for ego reasons? Why am I doing this? And I just realized it's a passion and this is kind of what I've been waiting to do. So I just need to go figure out what my thing is and go do it and give it everything I have.
- [16:20]
Host Walker Deibel
Running payroll, paying your bills, closing your books, and producing financials. These are critical tasks every business owner must do or oversee. But spending time on them distracts you from the leadership in growth work you want to do. So let system 6 do it for you. Owned and led by a former Searcher, Chris Williams, System 6 is a leading outsourced finance team for hundreds of SMBs, including over 50 searcher acquired businesses. Chris, Tim and the System 6 team understand firsthand the challenges, the opportunities of jumping into a business as its new owner. So whether you own your business already or have one under LOI, talk to System 6 about how they can give you time back and improve your financial operations. Mention acquiring minds and they'll provide a free review of your books and financial ops, a $500 value. Check out system6.com, link in the show notes or email helloystem6.com.
- [17:31]
Host Will Smith
One question I often ask of my guests is why buy a business rather than start one from scratch? You've already answered that. The point was to fix what, what you wanted to do. This passion was fix an existing business. Therefore, to do it for yourself meant buying an existing business, not starting something from scratch.
- [17:51]
Guest Brian Hauck
Yes. And here's what's interesting. So throughout my career, I was kind of the turnaround specialist. I was the fixer. And so they would throw me in the bottom 10% of the locations or I would go in to help a struggling location with their facility or their sales team or whatever. And so that's really been my, my pattern my whole life. And I kind of thought in the back of my mind, whatever business I buy is going to have some issues that I'm going to have to adjust. And I ended up buying a Super bowl team and I got to take over a Super bowl team and you know, try being the head coach of a team that just won the super bowl and you're the new coach. It's like, well, don't mess this up. And so it's been, it's been an interesting process.
- [18:36]
Host Walker Deibel
Well, well, it is, it's a great.
- [18:37]
Host Will Smith
Point, isn't it, Brian? Because you, you, this talent was as, as a fixer, as you put it. But the what you want to buy in a business is not a low quality business. In fact, you know, you really don't want to get stuck having bought a business that is in really bad shape because even for a fixer, there's just too much risk there. So a big part of this game, this art, is identifying from the outside when you're doing your diligence. Is the business that I'm contemplating acquiring a good business. So, yeah, so, so if you do your search right, you end up with a good business and your special talent has less application.
- [19:17]
Guest Brian Hauck
Maybe, maybe you never know. You never know.
- [19:20]
Host Will Smith
All right, well, so, so how did you approach your search?
- [19:26]
Guest Brian Hauck
So the, the old Me of earlier in my career would have just said, I'm going to go out and do this myself, because that's kind of how my dad raised me is why would you pay somebody to sweep the floor when you can sweep the floor yourself? And so there's a lot of that in me. I'm pretty hardwired that way. And so part of my growth was to say, I'm not going to do that because it's just not wise. And so looking back to anyone who's listening, wisest decision I ever made was to hire a broker, a good broker on the buy side to help me with the prospecting and help me with the handling, if you will, of the sellers on the other end.
- [20:11]
Host Will Smith
And so we're talking about Calder Capital here, which is a name that the audience will recognize.
- [20:16]
Guest Brian Hauck
Yes.
- [20:16]
Host Will Smith
I've had a number of guests on who have used Calder, and they send me stories like yours from time to time. So say more about your decision to use a side advisor. You've already said breaking your reflex, which is to do it yourself. But, you know, let's not be pennywise and pound foolish here.
- [20:34]
Guest Brian Hauck
Right.
- [20:34]
Host Will Smith
Still, a buy side advisor comes with a not insignificant cost.
- [20:39]
Host Walker Deibel
Walk us through the numbers and the.
- [20:41]
Host Will Smith
Kind of ROI calculation in your mind of outsourcing this piece.
- [20:45]
Guest Brian Hauck
Sure. And apologies in advance to Max Fryer, who is the founder of. Of Calder and. And Sam Sar, who's my broker, if I'm not supposed to be talking about this. Sorry, guys.
- [20:57]
Host Will Smith
But I'm sure they're thrilled that we're.
- [20:59]
Guest Brian Hauck
Talking about it, so it's all good. All right. Well, at least I got a shout out, right? Got their names out there. But the. There were two levels, I believe, of. Of program that I could sign up for. There was whatever the middle level and. And then the platinum level, which was 5,000 bucks a month. And that got me weekly meetings with their team. They would do prospecting for me, guaranteed me, I think it was 10 prospects in a six month period of time, something like that, which my reality, my experience was much higher than that, but that was the minimum that they suggested. And the monthly fees, if you were to buy a business would roll into their commissions at the closing. So if the fees were $30 and your closing fees were $100, you would only pay 70 bucks at closing. And so that was a piece that, that kind of sold me on it because I had made this. It wasn't that I was still making a decision if I wanted to buy a business. I knew I wanted to buy a business. I was committed to the process, and so that made sense to me. And so I was willing to. To spend that money out of pocket to get me there.
- [22:10]
Host Will Smith
Yeah. So I guess the calculation is five grand a month is a lot for pretty much anybody.
- [22:17]
Guest Brian Hauck
It's a lot of. A lot of after tax money.
- [22:20]
Host Will Smith
Exactly.
- [22:21]
Guest Brian Hauck
Right.
- [22:21]
Host Will Smith
After taxes. And so. But if that's going to go toward the commission that they're going to charge anyway, it's not really lost money. It's just prepayment. So what you have to. To. So, so. So from that perspective, it really makes good financial sense. What you have to be sure of in your own mind is that, in fact, you will close, because if you don't close, then then that is just lost money out of pocket, not going toward anything. And. Which is what you just articulated that you knew you were. You were committed to doing this, and therefore it made sense you were going to buy a business no matter what sort of thing.
- [22:55]
Guest Brian Hauck
You got it.
- [22:56]
Host Will Smith
Yeah. Okay. The. And then the. That fee that the $5,000 a month goes to their commission is not insignificant. That's also a big chunk.
- [23:09]
Guest Brian Hauck
I don't.
- [23:09]
Host Will Smith
I don't also don't want to say their prices, but I think it's roughly layman scale. Something.
- [23:15]
Guest Brian Hauck
Something like that.
- [23:16]
Host Will Smith
Yeah, something like that, but not insignificant. But that can be rolled into. That can be financed as part of the acquisition.
- [23:23]
Guest Brian Hauck
That's correct.
- [23:24]
Host Will Smith
It's really. That sizable fee is being paid by the business that you acquire.
- [23:29]
Guest Brian Hauck
Correct.
- [23:30]
Host Will Smith
In the sense that it was financed and then you're, you know, the business is helping you pay down your loan.
- [23:35]
Guest Brian Hauck
Correct. Okay.
- [23:36]
Host Will Smith
Okay, great. And you happen to be in their home in the same place. You're in Grand Rapids.
- [23:42]
Guest Brian Hauck
I'm in Grand Rapids, Michigan. Yes.
- [23:44]
Host Will Smith
Is that how you ended up working with them, or is that just a total coincidence?
- [23:48]
Guest Brian Hauck
Yes. I had a couple of friends of mine that have their own mortgage business that we have launch all the time. And. And so they. I told them what they were doing, and they recommended Calder pretty highly, actually. And they. They know a lot of people in town. So I. I valued their recommendation and did my own research, but found the same thing to be true, that as I. As I started to run, the idea passed other people I trusted, the same name kept popping up. So. And we're at. Looking outside, looking in. We're really fortunate to have that resource in our backyard because, you know, Grand Rapids, we're not. We're not New York or Chicago. You know, we're Grand. We're Grand Rapids. So it's nice to have that type of resource right here in our hometown.
- [24:31]
Host Will Smith
Great. Okay, Brian, tell us about what you found in terms of the businesses that you looked at that you went, went down the path with.
- [24:40]
Guest Brian Hauck
Sure. So the first thing you have to decide is, you know, what type of business do you want? What's your geographic range? You know, there's all those, those standard questions. And from a geographic standpoint, I was looking for a one hour radius from where I lived or less from a, from a drive standpoint. I really wasn't too limited on the type of business simply because I had worked in and with enough businesses to know that the fundamentals of business are pretty similar across all sorts of markets and types, whether it's service or manufacturing or whatnot. I felt comfortable that I could adapt if some of the other pieces were in place, to almost any type of business. I did say no to things like housekeeping businesses. I didn't. One of the businesses I owned prior to this was an LED lighting company that I was basically a general contractor. And I realized on my best day I'm a very average contractor. I'm just not wired up to do that. So, so contracting was out, housekeeping, those types of things, lawn care, they were off the table, but everything else was pretty much fair game. And so to their credit, in 10 months they brought me 34 prospects, which is way more than they ever promised. And you know, anyone listening to this, I don't think that that is their claim, so that Sam's not squirming in a seat right now, but they did a great job.
- [26:06]
Host Walker Deibel
And these were, these 34 were all.
- [26:08]
Host Will Smith
Viable leads that met what was your size requirement?
- [26:12]
Guest Brian Hauck
I was okay with EBITDA really. Anywhere from 500,000 to, you know, 5 million, you know, anywhere in that range. Yeah.
- [26:23]
Host Will Smith
Oh, okay. So I, that's quite a range, Brian.
- [26:25]
Guest Brian Hauck
It, it is a range. And I did look at some larger businesses. They presented those to me and especially early in the process. And that was intriguing to me and it was, it was really forcing me to stretch my paradigm of what's possible. But I, you know, those deals didn't come to fruition. We did have a few letter of three different Lois on the table throughout that process. And keep in mind, when you're doing a buy side transaction, depending on how the broker is doing it, you're largely talking to people that, where their business is not listed for sale. And so there's a little bit of a process there just to, just after the first conversation because the owner is probably sitting in his office with the door closed, hoping no one can hear him saying, yeah, I'll talk to you about possibly selling my business. But that's pretty much where they are mentally and emotionally. And so there's a few more conversations that need to take place before you can really get comfortable that, yes, this is a deal, this is something that we can start to invest our time and energy into, or I don't think this guy can ever let go of his business, or I don't think he's serious. So there's, there's some of that vetting that they do a good job of upfront as well as they can. But once you're in the process, you have to be prepared for the fact that this guy might not be at the table. You kind of have to test that early. I found.
- [27:53]
Host Will Smith
Well, this is such an important point, Brian, because to your, as you said, when you're doing what we call proprietary search, or in your case, you've, you've outsourced it, but somebody is doing proprietary search that is sending cold outreach to owners to see if they might be interested in selling their business.
- [28:11]
Guest Brian Hauck
The.
- [28:12]
Host Will Smith
These sellers are not necessarily. There's so much work that goes psychological and, and kind of prep work that goes into a seller considering selling their business down to making the decision to sell the business and preparing it for sale. And often for businesses that are listed already for sale represented by a broker, the broker, the sell side broker has done that hard work, that handholding, that prep. And so when you do a proprietary search, it's on you to do all of that. And not only is that just a lot of work, but to your point, there's, it introduces a lot of risk that the seller just won't get there. They think they want to sell, and then at the last minute or some way, some way down the process, decide that they don't. So it, so it is a, a weakness of this method of finding, finding a business versus just looking for what's already for sale out there where you know the seller is for the right price, they're selling pretty much. I mean, of course, sellers can always back out. But, but there is kind of a, there is kind of a bright red line there. If a business is listed for sale, they are very likely, if you meet their price, willing to sell. So say more about the experience that you had. We heard you say four Lois. Three broken Lois. And the fourth is the one you closed on. Was that why those three other ones broke?
- [29:34]
Guest Brian Hauck
Well, I would say there are various reasons, but I will, I Think you made some really good points there. For anyone considering this, this path, you do need to factor in the, the risks in your time and, and your resources. In terms of. Of you. These aren't surefire deals. And, and there are, there are a number of things that bubbled up in my experience. One of the things that happened to me in, in one of the situations was we didn't realize this, but the seller already had another seller kind of in the wings. And even though he didn't have his, his business listed for sale, there was another seller over here. And so he was able to use our presence and our loi, if you will, as leverage just to get the deal that he wanted to get with the guy who he was intending to sell the business to in the first place. So that was the last one I went through, which was really frustrating for me because we, he. He kind of led us on.
- [30:34]
Host Will Smith
Yeah.
- [30:34]
Guest Brian Hauck
And, and played us a little bit.
- [30:36]
Host Will Smith
Which he used you.
- [30:37]
Guest Brian Hauck
Yeah. To it to an. And you know, you can, you can protect yourself. You can flesh that out as best you can. But at the end of the day some people are just going to do that and there's not much you can do about that. But it is frustrating. And to your earlier point, you know, if you're. I was 10 months in at that point, you know, 10 times five. Quick math in your head. You know, carry the one. It's, you know, $50,000. So that's a. I don't know. You know, I don't care who you are listening to this 50 grand, you know, watching just lighting that money on fire. That's not a great feeling. And of course emotionally you're fatigued and, and so I was in a. I was in a place where I was really reconsidering the process and whether, whether this is. I believed in my heart still it was the right direction. Direction. But it was a. That was a lot of. A lot of not yeses. And so it was. I was really strongly reconsidering whether I should continue or not.
- [31:34]
Host Will Smith
And was this doubt that you were feeling, Brian? Obviously, as you said, lighting 50 grand on fire will just create doubt. But was there some other doubt like that maybe a bad buyer or that these sellers were never going to sell or that the quality of these leads were really not that good? Was there something else like structural you thought was flawed here or was. Was you weren't going to be able.
- [31:58]
Guest Brian Hauck
To make happen the, the shift that I made mentally that caused me to continue to move forward. Yeah. Which is probably what you're looking for. The shift I made was if I looked for a common denominator throughout the deals that I had been. Been involved in. I realized that I wasn't close enough to the seller, the owner, early in the process. And we had a conversation and, you know, you have these zoom meetings or in person or however it works out, but I was, I was. We'd have our meeting, and then I kind of stepped back, and then, you know, my broker would do his thing and there'd be a lot of stuff behind the scenes. And I realized that I needed to set it up so that I had more frequent touches with the seller and just to, if nothing else, to do an eyeball check just to make sure that it's a human transaction. Hey, this is us doing business. This, I'm real. This is my time. These are my resources. That's your business. We're either. This is either a meaningful conversation or it's not. And, and so I, I realized that had I done a better job of that throughout the process, that I could have either. There are a couple of deals that might have come together.
- [33:21]
Host Will Smith
Yeah.
- [33:22]
Guest Brian Hauck
And there are definitely a lot of deals I would have been able to flush out sooner. And both, both of those are helpful processes. So, so that's what I, that's what gave me the courage to say, all right, I'm going to keep doing this, but if I'm going to keep doing this, I'm going to make sure I am, like, upfront and personal with the seller from the first, from the first moment until we close on this thing. And that ended up to. That ended up to be a good idea.
- [33:46]
Host Will Smith
So, Brian, I'm reminded of this phrase that I've, I, I've heard recently, and I feel like it pops up every now and then now, belly to belly. Getting belly to belly with your seller.
- [33:58]
Guest Brian Hauck
Haven't heard that for a while. Yeah.
- [34:00]
Host Will Smith
Yeah. So I feel like that's what you. That, that's the, the takeaway for the audience. Get belly to belly with yourself.
- [34:05]
Guest Brian Hauck
There you go.
- [34:07]
Host Will Smith
You look them in the eye.
- [34:08]
Guest Brian Hauck
Get your naval out there. Right.
- [34:10]
Host Will Smith
Yeah. All right, cool. Now tell us about the business that we're here to talk about.
- [34:19]
Guest Brian Hauck
Okay. Well, I, I bought ecp. The owner's name was. Is Rob Jackson, but he, he owned the business at the time. And I. The reason I. The biggest reason I wanted to do the buy side. Let's back up a second. Sure. Is if you buy. If you look at a business that's already listed for sale by a broker, you have to You've got all these prepared layers of financials and legal documents and all the stuff that you're supposed to see. And really the last step of the process is you get to maybe meet the owner. You know, it's kind of like buying a house through a realtor. They just don't want the people to meet, you know, and, and to me, especially with a small business like this, to me, the owner's everything. I, I'm going to get the data that I need. I mean, I, I want to see the financials and I want to see everything else, but a lot of the data that I need is right there, right in those eyeballs. And I've learned that over the years to be very helpful if you pay attention. And so I wanted to meet the owner first and then sort everything out second. And the few deals that we did run into some shady financials didn't surprise me because I met, because in those situations, not this situation, but in those situations, I had met the owner and I was like, yeah, I want to look at this. But a couple of those things just didn't line up, you know, and, and we all know what we're talking about. And so if you do, if you're an entrepreneur and you're listening and you're out there, you're probably nodding your head, saying, yeah, I've got a good, good read on people. There you go. If you have a good read on people and you trust that read, then definitely meet the owner as early as you possibly can.
- [36:02]
Host Will Smith
Great. And so when you did that here, you got, he passed, he passed your, your sniff test.
- [36:09]
Guest Brian Hauck
There were a couple of things. Number one, I like the guy and I liked his philosophies. He had also, after Covid, he had mentioned that just it affected everybody. The way it affected him is he realized, hey, I can't do this forever and what's my plan? I don't have an exit strategy. So after Covid, he actually started the process of stepping away from his business, which is really unusual if you're going to do a buy side transaction. Most of these guys, this is the first or second time they've ever thought about selling their business, not to mention having a plan where they've been systematically stepping away from it. So that was appealing to me and I wanted to learn more about that. He had also offered the business for sale to some of his key employees, and they had just said no. And that's another key piece that I would highly recommend people look at. Is, is the last thing you want to do is buy a small business with a handful of key people at the top who were expecting to buy it themselves. And here you come in as the new owner. And now of course there's, there's sour grapes to say the least. And it's not a, not a great situation. I stumbled across that a few times. And, and there's also situations where it's like, hey, my, my daughter's in the business and we're, we want her to keep 20% ownership, you know, blah, blah, blah. So there's. There. You've got to kind of watch for those strings attached, if you will. Yeah. That are not always visible up front.
- [37:38]
Host Will Smith
And so tell us more about ECP Extra Credit Projects.
- [37:42]
Guest Brian Hauck
All right.
- [37:42]
Host Will Smith
Business itself.
- [37:43]
Guest Brian Hauck
So Extra Credit Projects is a creative ad agency based in Grand Rapids, Michigan. They've got a satellite office in Detroit. But it is a truly fundamental, if you will, marketing agency, meaning they. All of the employees are full time in person. We don't have any remote workers here and we do have folks that work 1099 outside of the studio, but all of our employees come to work every day, five days a week. And it's a collaborative environment. And I've worked with a lot of teams over the years and like I said, I've, I've had to turn around situations and take over messes. And so I'm used to my dose of humanity. And I know if you get a handful a group of people in a room, just things are going to happen. Right. And when I stepped into this environment, I was just amazed at the fact that we're in an environment where ideas are being critiqued on a daily, if not hourly basis. My ideas to you, your ideas to me, our ideas to the group. Lots of opportunity for aggressiveness, defensiveness, passive aggressive behavior, all that stuff. You know, the human stuff. This team has found a way through their culture to go through all those processes without that heartburn, without, without all of that humanity, if you will. We just kind of, we just. They're able to elevate the idea to a level that it's not attached to their ego. And the feedback that's given is all so carefully crafted that it's, it's very direct and it's very helpful to the, to the concepting. But none of it's personal and none of it is. Is vengeful or attack or anything like that. So it's, it's just a, it's an amazing group of folks. And when I said I bought a Super bowl team, I meant it like that is My super. The, the results and the financials and all that stuff look great. But the real, the real secret to the business is that culture. And, and so that's really what I've committed to since I've come in here is to say I need to protect that and then grow that. But that is our, that's our secret sauce. That's, that's what makes this place different and that's what you can't replicate very easily. So.
- [40:02]
Host Will Smith
And how many people are at the business and how old is the business?
- [40:08]
Guest Brian Hauck
The business has been around for 18 years, I believe. I think 18 is the number. And we have 10 employees that are W2 employees and then we have a handful of folks that are 1099 that I call them the inner circle. But people that we bring in for larger projects, whether it be animation or video production, that type of thing we have with some specialists in house. But for bigger projects we'll bring in, we'll bring in more.
- [40:38]
Host Walker Deibel
What do the following Acquiring minds guests all have in common. Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursam. They all went through the Acquisition Lab, the accelerator and community for people serious.
- [40:54]
Host Will Smith
About buying a business.
- [40:56]
Host Walker Deibel
But they represent just a sliver of the Lab's success stories. The number of deals across the Lab's cohorts now stands at over 120 with over $300 million in aggregate transaction value. The Acquisition Lab was founded by Walker Deibel, author of Buy Then Build, the book that introduced so many of you to the very idea of buying a business. The Lab offers a month long, intensive, almost daily Q and A sessions with advisors, live deal reviews with Walker, Deal team introductions in an active community of serious searchers. Check out acquisition lab.com link in the notes or email the Lab's co founder, Chelsea Wood. Chelsea@buy then build.com.
- [41:44]
Host Will Smith
And what can you tell us about the, the numbers, the financials of the business?
- [41:50]
Guest Brian Hauck
Well, the financials were very strong that I looked at. Obviously anybody listening to this, who is going to. I did an SBA 7 a loan to buy the business. And so when you factor in your debt service, of course the financials change a lot. And so you want to make sure that with any business that you've got more than enough buffer there to not only pay yourself, but to make the whole thing worthwhile. Just surviving is not a great idea when you're looking at a, at a business like this and the risk that you're about to take. So, so that was really important. The financials were very strong and Even after, you know, doing projections, I did three year projections very quickly and, and the numbers look great. So that piece, that piece looked really good. Their reputation in the marketplace, I mean ECP has just destroyed the awards that are given in, in not only in Michigan but nationwide on a lot of their works. They've just been, they've got accolades coming out their ears. And so that was, and, and for a small agency like this that's, that says a lot because they're, they're competing with everybody. You know, there's not a, there's not a small agency award and a big agency award, there's just the award, it's based on your talent and so to be able to be recognized in those circles is pretty impressive to me.
- [43:10]
Host Will Smith
The just before we get into more of the work, the financials of this business I know from our pre call are basically if you're a self funded searcher, it's in the range of what you really hope you can find. We're not going to say the exact earnings number, but regular listeners will understand what that means. And then the multiple that you paid for this was what. I think you can share that.
- [43:35]
Guest Brian Hauck
Yes, just shy of 4 is like 3.92 I think is what it came out to.
- [43:40]
Host Will Smith
Great. So this ended up being a self, what we call a self funded search deal or an SBA style deal with a size range that self funded searchers love to find. Very reasonable multiple for that size. And how did you structure the acquisition?
- [43:58]
Guest Brian Hauck
It was a 10% seller note with a two year standby, which was the advice of my broker. Sam highly recommend that if you're going to do seller financing is that two year standby which basically means the note accrues interest but you don't make payments until the beginning of year three. So helpful because in most cases you're probably going to keep the owner on for a period of time. So you've got that additional payroll that's not cooked into the books because you've got yourself and an owner for a period of time and then you just have unforeseen expenses. And of course you're trying to grow any business that you are buying so it gives you that extra room to make the investments that you need to make and to kind of get through any speed bumps that you might not have seen coming and still have a game plan at the beginning of year three to start your, your repayments on that piece of it.
- [44:51]
Host Will Smith
And that seller note is amortized over how long, what's the term?
- [44:56]
Guest Brian Hauck
So the SBA requires you to amortize over 10 years or the length of the loan. And that's, there's just no way around that. We, the seller was not interested in that. And so we did a side arrangement for a five year deal.
- [45:11]
Host Will Smith
Okay.
- [45:11]
Guest Brian Hauck
So we. He's getting fully repaired, repaid years three, four and five.
- [45:16]
Host Will Smith
Ah, okay.
- [45:16]
Guest Brian Hauck
Right. Yeah.
- [45:19]
Host Will Smith
And then the SBA piece was 80%?
- [45:24]
Guest Brian Hauck
Yes. Yeah, roughly. Yeah. With closing costs and some different stuff in there.
- [45:29]
Host Will Smith
Okay. And so you had to bring 10% of your own equity.
- [45:33]
Guest Brian Hauck
Yes.
- [45:35]
Host Will Smith
And can you share what you came out of pocket for or directionally.
- [45:41]
Guest Brian Hauck
All in. It was about a half million bucks. If you just take a step back because I, I had some opportunity costs that I, where I, I thought the process was going to. That was the other thing I would, I would say to anybody, expect the process to be a longer one and not a shorter one. Not just after you find the business, but just finding the business. I figured I'd have a business, something under, you know, under an LOI in a couple of months of searching. And, and of course that wasn't, that wasn't the case. So. Yeah, about.
- [46:14]
Host Will Smith
So you're factoring in those additional months of opportunity cost, even without that, I'd.
- [46:19]
Guest Brian Hauck
Say for 400 plus, something like that.
- [46:22]
Host Will Smith
And does that, did that clear you out? Was that everything that you had or, I mean, how much risk are we talking about here to you personally financially?
- [46:31]
Guest Brian Hauck
Sure. Well, one of the. If you're married and you're listening to this, I highly recommend getting 1000% support from your significant other as you go through the process and communicate early and often. And one of the things that I agreed to with my wife is that we wouldn't have to liquidate any of our properties. We have a couple of duplexes and we have a cottage up north and, and whatnot. So we didn't want to have to sell anything or liquidate anything to do it. So. So it used up, I would say, most of our liquidity, but not our, you know, it didn't take a dent into any of our investments or anything like that. Great.
- [47:13]
Host Will Smith
Thank you for the transparency, Brian. We appreciate it. Well, and actually one more thing before we move back to hearing about ecp. The. You did an SBA loan. As everybody listening will know, of course SBA loans come with personal guarantees. So the personal guarantee is something that scares off a lot of people. I mean, it's a non starter for people. And often there's a correlation to age and responsibilities. You are now 58, many 28 year olds won't, won't accept a personal guarantee. Did you. Do you feel like your age played a role in how you weighed that particular burden?
- [47:58]
Guest Brian Hauck
I would say it's actually probably harder for somebody in my position to do it if, if you were even slightly risk averse. I, I don't think someone in my position would, would do what I did. And I credit my wife for trusting me on this. But it is a lot. I mean, you have to encumber everything and, and everything is everything. And so it's one thing to be 28 and starting all over again. I was 41 and I had to start from scratch. Not a, not a fun thing to do at any age, but at age 58, certainly not something you want to do. So for me it was a matter of, of making sure I'm hedging my bets as best I can and that I've got the highest probability of success that I can, that I can come up with.
- [48:45]
Host Will Smith
Okay, Brian, back to extra credit projects, ecp.
- [48:49]
Guest Brian Hauck
Yes.
- [48:49]
Host Will Smith
You had said that you guys win awards not just in the state of Michigan, but nationally and not just against like sized agencies, but against much larger players.
- [49:02]
Guest Brian Hauck
Sure.
- [49:02]
Host Walker Deibel
What types of, what types of work.
- [49:04]
Host Will Smith
Does the business do and what types of clients does the business have?
- [49:07]
Guest Brian Hauck
Yeah, you see me looking up our works all. I'm in our, our back conference room right now, but our work's all around us. And you can see like even the billboard up right there. Yeah, that was a, that was one of the award winners and it was just a promotion for the, the Grand Rapids airport and you know, spring breaks around the corner. We had an inflated. And we had a, we had a flamingo campaign. So we had flamingos that were, it was kind of a guerrilla tactic that we were doing different things around town with flamingos. And so it all tied together. So that's, that's one of the concepts we did. Another thing we did for that same client is we actually approached Van Andel arena, which is our local sports arena, and we wrapped the steps with the same wrap that you would put around a car, but we wrapped the steps to make it look like. And they have this huge set of steps in the front of the arena. They're majestic and it's very, very prominent. We made it look like stacked luggage and we put messaging on it. And that actually won a local award and a national award. And it's called non traditional marketing. But it was just a lot of fun. And it's fun creativity. If you do it right, everybody wins. And so if you look at it from the client one, because they just got all sorts of accolades for that, even within their industry. They won marketing awards for those ideas that we were able to support them with. But the arena itself, there's a three year waiting list of people who want to advertise on their steps and their steps were never a revenue generating wow piece for them before. So they're happy, of course.
- [50:53]
Host Will Smith
Oh, great. Talk about ROI on that campaign.
- [50:55]
Guest Brian Hauck
Yeah. So I mean, everybody wins. So it's a lot of fun. It's a lot of fun.
- [51:00]
Host Will Smith
That's great. Let's double click a little bit on the fact that this, as I said at the top, is a Mad Men style creative agency, which is not actually what we think of these days. When we think of marketing agencies, we probably default to thinking about a digital agency where you have a remote staff. Probably a lot of them offshored, probably a lot of people, you know, running PPC campaigns and making Instagram ads sort of thing. That, that's the sort of default picture, I'd say of an agency these days. But your style is doing, first of all, not just social, but in real IRL stuff, in real life stuff like you just described, with bigger clients. Kind of traditional. It's, in some ways it's, it's traditional advertising. So talk to us about that type of business versus what we think of as digital agencies today. I feel like what ECP is, is, is less common than it used to be, frankly.
- [52:01]
Guest Brian Hauck
That's a, that's a great way to put it. And I'd love to say that I had the, the wisdom to be able to look outside, looking in to see ECP for this unique trait that they had. And I, I really didn't appreciate it until after I bought the business. So this, this wasn't something that I really fully understood even outside looking in. And it was just, it was the reason why all the other parts of it looked so good. It was the secret sauce, the engine that kind of drove the results that I was attracted to. It was that truly creative piece. Einstein, I think, once said, creativity is just intelligence having fun. And that's how I look at collaboration. It's just you get a bunch of smart people together and you give them a problem and then you just turn them loose and they just get to spin on it and throw it different directions. And it's so fascinating to watch the evolution of our ideas in the studio because there's such an iterative process, meaning you have an introductory, we have boards all around the studio physically. So we'll take ideas and we'll print them off and pin them up with. With pens and sketches or drawings or whatnot. And that's how we operate. And we just kind of go through cycles of ideas, and each iteration we just kind of take the ideas and it starts broad and then we'll just pick different directions. And by the third or fourth iteration, we're. You're seeing just this amazing. These amazing concepts and this. The depth of these different messages coming through, and it's a lot of fun. And all of it is tied to the brief, which, you know, in our industry, the brief is the. They're the must haves and preferreds from the client. So the brief basically says, this is what we're trying to do. And that's. That's one thing that most people don't realize is marketing. Marketing, when it's done well, is solving a problem. Marketing isn't just cool stuff or fun stuff or whatever good marketing is, is directly addressing a business problem or problems. And if done correctly. And so I know when we talked before, we talked a little bit about AI, but that's a piece, and I don't mean to jump ahead, but that's a piece that I think AI is going to really struggle to address is the imperfect process of sitting across from a client and getting out of them. What is it that you really need most of the time? In my experience, when, when people are talking about their business problems, they'll tell you something, but usually the first thing they tell you isn't their problem, it's just what they think their problem is. Most of us don't fully understand what our own problems even are. And that's part of the challenge that we have as a marketing agency. And I've been teaching my team this is when we meet with clients, they'll tell us what they think they want, they'll tell us what they think they need. But it's our job to kind of help that process along so that we can figure out what is it that's behind that. Why is it that your sales are down and why is it that you're losing business to a competitor? I mean, there's more to the story than we're just losing business to a competitor. There's gotta be something else to it. And so until we get our. Until we can figure that piece out, we can't really give them the solution that's gonna be most helpful.
- [55:31]
Host Will Smith
I mean, Brian, it's probably annoying. You probably hear Mad Men jokes all the time, but I do, I do Feel like what you just described there is, is akin to some of those best, some of the best scenes from that show where there's real kind of onion peeling to understand the, you know, the problem behind the emotion behind the product behind the. And you just kind of like are trying to distill something to its essence and capture that and re. Amplify it. I mean, it's really quite a neat exercise, I imagine. You mentioned AI I started this segment talking about digital style agencies. Everything that you're saying sounds all well and good, Brian, but I would imagine that there are market pressures that make it hard to survive.
- [56:21]
Guest Brian Hauck
Sure.
- [56:22]
Host Will Smith
With this older model or traditional, let's call it traditional model, all of your folks are, you know, in the office. So first of all, you know, you've convinced everybody to come in every day or, or maybe the owner, the previous owner had hard enough to do that. Second, they are all W2. They're all here domestically, they're not offshore. So are you not finding clients pushing you on price, squeezing you on price and enforcing, or did, or the previous owner enforcing an adaptation so that you end looking more like the digital agencies that we kind of envision?
- [57:00]
Guest Brian Hauck
Sure. Well, obviously price is always going to be important to, to any client. And, and so, you know, that's, that's just always going to be part of the discussion. But, but price has, you know, there's, there's the cost of something and there's the value of something. That's, that's, we all know that formula. And so I've, I've found it, actually. I won't say easy, but we have so much credibility and we have such a great reputation for what we've done for other businesses both locally and nationally, that clients that we're speaking to normally appreciate that and, and understand that. So the, the conversation is more around scope of the project, if you will. If, if we have to work with, let's say we quote a hundred thousand dollars for a project and we have to. And the client pushes back and says, hey, we just don't have the budget for that. Well, then the conversation shifts to, well, let's, let's go back to what is it that you need a marketing agency to do for you in the first place and what are you trying to accomplish and, and how does that lead to your business objectives and all that type of thing. So it's either a matter of we have to reduce the scope just based on some pragmatic budget issues that are temporary, if you will, or it's a matter of Helping the client expand their understanding of what we can do for them and what we actually, what we provide. If, if in this, in this example, if we do $100,000 worth of creative for somebody, meaning creative, meaning coming up with the ideas and all the, the different applications, not just for outdoor, but digital and social media and you know, all the, the whole gamut, that client still has to spend money to place all of that marketing into the marketplace. And it's going to be an awful lot more than a hundred thousand dollars. It'll, it might be $500,000 or $600,000 that they still have to spend to put all of that messaging out there for it to have impact. Because our agency is full service, meaning we not only do the creative side, but we do the media placement as well. We can actually coordinate both of those strategies. So not only the messaging that you see back here, but where does that messaging show up and why and when? And the bigger question is to whom? You know, who's our target market and who are we trying to, what messaging do we want to get across to which people? And those are all questions that you obviously ask in marketing. And so being able to control and direct both sides of the, of the business makes us more efficient and it also gives more lift to the client. So there's, there are a lot of value propositions that we can throw in there. If price does come up and you know, you could say, you could argue to say, well, it shouldn't be 100,000, it should be 75,000. And you go to this other agency who's only going to quote $75,000, you're still spending a half million dollars to place this information out there. Do you really want to risk a subpar message on a half million dollar investment? I mean, to me that's, to me it's the opposite. Like if I'm spending a half million bucks, the difference between 100 and 120, if I can hedge my bets with a buck 20, and I know it's a really good agency and they have cool ideas, I'm going with them. So it's almost the opposite.
- [60:27]
Host Will Smith
It's great.
- [60:28]
Guest Brian Hauck
Yeah.
- [60:30]
Host Will Smith
And you mentioned the media placement and media and the creative side. What are the, how do you call the two buckets of the business?
- [60:40]
Guest Brian Hauck
The creative and media is basically creative and media. Yeah, yeah.
- [60:45]
Host Will Smith
And how your full service and that is a differentiator and how those two kind of sides of the house can, can work together. But from our pre call, I know that those are actually very different businesses. In the way revenue is generated and, and in fact probably the quality of the revenue perhaps. How did you think about quality of revenue of the entire, of this entire business? Another thing to call out that's obvious is it is a project based business, which is something that is always a target. Business always gets a little ding for being project based as opposed to recurring. How do you respond to the question of quality of revenue?
- [61:23]
Guest Brian Hauck
Well, that was a concern looking at the business. The other thing that is worth mentioning is as we, we were weeks before the acquisition date when the question came up of assignment of client contracts. And in our industry, you know, contracts are basically purchase orders. You can have contracts with large, you know, if you're, if we're doing business with intel, we would have a pretty ironclad contract. But doing business with a local bank or, or somebody who's, who's doing a medium sized project, usually it's either a PO or some sort of a contract where we can pretty much get fired if we don't do our job or if they don't like us. And so the question became, do we? Nobody knew about the acquisition. Even the employees didn't know about it in advance of the acquisition date. And so the brokers were pushing to say, hey, we've got to get all these contracts signed over to the new entity before the closing because if there are any issues that come up, we've got to flush that out before the closing. And which, if I was a third tier manufacturer for the automotive industry, that would make perfect sense because you've got hard contracts and those need to be assignable or not. And that can have a lot to do with your revenue stream. But in this world we, it was a huge pause and it was like, oh crap moment. Like probably the scariest moment of the whole process for me was oh man, I've got to go into this either I've either got to push these clients with a decision having not met me and with no, no heads up of hey, here's what's going on and here's why and you've got to sign this in the next week or something, or just buy the business with nothing, with no conversations, no contracts signed over with the hope that everything's gonna be fine and I took the ladder.
- [63:21]
Host Will Smith
And did anything bad happen as a result? How did these clients react when you introduced yourself as new owner?
- [63:29]
Guest Brian Hauck
Well, I, I started sleeping about a month later. But we were, we had a, we had about 10 or 15 key clients that we had to have conversations with and we went 15 for 15. And so all of conversations went well, it went beautifully. It, it just, it went really well. And so I'm very, very thankful for that. But that I will say of all of the decisions I had to make and all the risks I had to consider, that was by a mile the scariest point of the whole process. Sure.
- [64:10]
Host Will Smith
Yeah.
- [64:11]
Guest Brian Hauck
You've already encumbered, you know, all this stuff is in place and it's like, oh crap, if a handful of these big accounts just say, hey, no way, Jose, this isn't what I signed up for. See you later. It's, it's not going to be what you bought. Right, right.
- [64:30]
Host Will Smith
And when you say big accounts, is there customer concentration or is. Does any single account represent more than say 10% of revenue?
- [64:39]
Guest Brian Hauck
Yeah, I've got a, I've got a couple of bigger accounts and then they, and then it kind of smooths out a little bit. But we have, we have probably three or four larger accounts that are a decent chunk of our revenue. And so we did those first, of course, and they went really well. And again, the piece that was helpful there is the owner had started stepping away a few years ago. And so while they knew of him and his name is tied to the, was and still is tied to the business to a certain extent, just because he started the business, they realized that the creative content and the business, the, the product that they were receiving wasn't necessarily dependent upon him.
- [65:21]
Host Will Smith
Yeah.
- [65:21]
Guest Brian Hauck
And, and that was a big deal. And anybody buying an agency like this or an accounting firm or something where you're dependent on a person and their relationship with the clients, there are just so many nuances to, to consider there.
- [65:35]
Host Will Smith
Yeah, absolutely. Certainly in a consulting or white collar business, the principle is so often the face of the business and you need to work around that or avoid it altogether. Fortunate that Rob had already started moving away. I got to let you go here in just a sec, but two more questions for you. First, the. You don't come from a marketing background. You sure are talking the talk now. You're a quick study. You seem like you've been in this industry for 30 years, but in fact you were new to it. How did you, how did you get comfortable with entering into a, a brand new industry? This is maybe this is your special talent.
- [66:19]
Guest Brian Hauck
Right.
- [66:19]
Host Will Smith
This is partly that, that getting into looking into a business and understanding it very quickly.
- [66:24]
Guest Brian Hauck
Yeah, well, a couple things. First of all, I'll start with the answer and work backwards. I, I've said this so many times. I should have been doing this my whole Life, like I haven't. I'm having so much fun. I have fun every day. And not that it's an easy business because it's not a very intense business and we're solving problems on an hourly basis here and that doesn't stop, but I am having so much fun. And what I didn't really realize, and maybe this will speak to some of your listeners, but I didn't realize just how creative the entrepreneurial process was. I mean, now that I say it out loud, you can point at it and say, of course it's a creative process. You know, you're arguably with a startup, you start with nothing and you create something. So that's all, that's pure creativity. But you don't really think of it in terms of creativity like as an environment like this. And the, and the parallels are amazingly similar. Even the, even the, the creativity of preparing for a sales presentation or a business negotiation and all the, create all the layers that go into that and all the dynamics and those of you that are in sales are like, yeah, I get it. The pre call plan, you know, it's. Every time you go through, you rehearse something, it gets a little bit better, you know, and it's. They say it's the exact same thing. And so while I'm not an art director and I can't paint a sunset, my stick figures are hilarious, my kids laugh at them all the time. But I do feel like I'm very much a part of the creative process and especially when it comes to tying ideas together with the objective objectives of the clients, which is arguably one of the most critical pieces to what we do. If it's smoothly into what I've been doing my whole life.
- [68:18]
Host Will Smith
Well put, Brian. Thank you. Last segment here, I want to talk about doing this at age 57, now 58. Many of my guests, the vast majority, are kind of the, the kind of bell curve would be from, you know, late 20s to a lot of people in their 30s into their 40s.
- [68:39]
Guest Brian Hauck
Sure.
- [68:40]
Host Will Smith
Very rare. Is the entrepreneur doing it at age 58?
- [68:45]
Guest Brian Hauck
Yes.
- [68:46]
Host Will Smith
How did you, did that give you pause? Did that give people in your circle pause? How do you think about doing it, doing it at this age?
- [68:55]
Guest Brian Hauck
I, I think it'd be fair to say most, most people in my situation are just don't have the energy or the, the willingness to do what I'm doing or, or the willingness to take the risk, if you will. I, I get that, but I, I've always been, I've always been a little bit younger than my, my age. You know, we talked a little bit before. Even when I was 40, I thought 40 year olds were boring, so I hung out with people younger than me. And so I feel that way a little bit now. Like at age 58, I, I have to remind myself, like, hey, you're an old dude. You know, Like, I just, I still feel like I'm in the game and I feel like I did when I was 35, you know, and so I, I don't. Until, until God slows me down, you know, my body slows down or my mind slows down, I, I'm just going to keep doing what I do and I, I'm not going to just sit back and ride it out. I mean, we had, arguably my wife and I, you know, when we looked at this, we had, we had a. Fortunately, you know, we, we stowed away enough and it made some good investments and had some cash flow coming from rentals. And, you know, there was a, there was a scenario where I could just kind of keep doing the consulting thing and throw in a few other stuff and do some speaking or whatever and, and ride it out and, and financially that would have probably made sense for us. But it, you know, I, I always say so. So when I was a executive coach, I'd always get at questions about setting goals, right? I was like, hey, can you help me set goals? And goals are important. Don't get me wrong, having a plan is important. I encourage anybody to have a written plan for their life, personal and professional. But most people's goals are just a to do list. It's just a list of things you should be doing. I need to lose £20. I just need to go to the gym more often. I need to, you know all this stuff and the way I have a term that I call stupid with two O's, and to me, there's good, there's awesome. And then all the way down on the scale is stupid. And if something's stupid, the way I define it is you involuntarily smile when you think about it. You just can't, you just can't not smile when you think about it. Like, it's, that's what stupid is. And everyone has stupid. Everyone has like that thing where they just think of it and they get. And you just, you can see their face light up. And that is why I'm doing what I'm doing is because it's stupid. It is a cool studio in the north end of downtown. It's got cool people here. We do amazing things every day. I get to use my talents every single day and help build this team and develop these folks. Heck, I'm 58. They all have unbelievable career opportunities for whatever. Whether it's they want to run this place or they want to learn how to run a place and go somewhere else. I mean, this is just a, it's a great thing for everybody. Why wouldn't you do that? And so I would just encourage anybody if you're thinking about, you know, especially as you get older and don't, don't settle for what you. What sounds good or what you're supposed to do. Like, that's ridiculous. Just keep, just keep brainstorming until you find yourself subconsciously smiling, whatever that was, that's stupid. And that's what you should do. Wow.
- [72:22]
Host Will Smith
What a framework, Brian. I love that. I, I just, that that's just such a good. That's such a. You know, it's something like. Well, I, I don't even want to belittle it by saying it's. It's like follow your passion because we all know that the dangers and how, how trite that one is. But it, it's kind of like triangulating to, to discover what turns you on in an indirect way. How does your body. How does your body respond?
- [72:50]
Guest Brian Hauck
Almost.
- [72:51]
Host Will Smith
Yeah.
- [72:52]
Guest Brian Hauck
Bodies are smarter than we are. So listen to.
- [72:55]
Host Will Smith
Yeah, well, we'll, we'll leave on that. Wise note, Brian. Really, really a fun, A fun framework. The stupid framework. Two O's, everybody. Thank. Thank you for coming on, Brian. Congratulations on this acquisition. It's. I mean, it's clearly just lit you up. So I think you'll be an inspiration to people at all ages on this path that you. You've gone down. Thanks for your transparency and congratulations again.
- [73:21]
Guest Brian Hauck
Appreciate it. Will. Thank you so much.
- [73:23]
Host Will Smith
Hope you enjoyed that interview.
- [73:25]
Host Walker Deibel
Don't forget to subscribe to the Acquiring Minds newsletter. We send an email for every episode with an introduction to the interview, a link to the video version on YouTube, and soon, key takeaways, numbers and more essentials from the interview. For those of you who don't have time to listen or watch it, subscribe at acquiringminds.co. you'll also find all our webinars there.
- [73:51]
Host Will Smith
On the website, both those we have.
- [73:53]
Host Walker Deibel
Coming up and recordings of past webinars. At this point, There are over 30 webinar recordings, a wealth of information, information on all the technical nitty gritty of buying a business.
- [74:05]
Host Will Smith
Acquiringminds Co.