Acquiring Minds: Buy, Grow, Exit for a 24x Return in 3.5 Years

Episode Release Date: February 10, 2025

In this compelling episode of Acquiring Minds, host Will Smith sits down with Chris Edwards, a seasoned acquisition entrepreneur who has successfully navigated the journey of buying, growing, and exiting a small business with remarkable financial gains. Chris shares his firsthand experiences, challenges, and insights from his 3.5-year tenure as the owner of Affordable Flooring Warehouse in Steamboat Springs, Colorado.

1. Acquisition Background

[05:38] Will Smith opens the discussion by providing a brief overview of Chris's acquisition journey. Chris embarked on his entrepreneurial path by purchasing Affordable Flooring Warehouse in February 2021.

[05:43] Chris Edwards:
"I started my search in the middle of the pandemic... I ended up closing on Affordable Flooring Warehouse."

Affordable Flooring was a retail storefront showroom catering primarily to retail remodel customers and new builds, with a significant cash-and-carry segment serving contractors.

[07:04] Despite having minimal experience in construction or flooring, Chris was drawn to the acquisition for its favorable economics, location, and the belief that he could effectively learn and grow the business.

[07:46] Chris Edwards:
"I liked the economics of the deal. I thought the purchase price was fair... flooring was one of those industries where I thought I could learn and grow."

2. Business Growth and Financial Performance

Under Chris's leadership, Affordable Flooring Warehouse experienced substantial growth:

• Revenue: Increased from approximately $3 million to $4.5 million annually—a 50% growth.
• EBITDA/SDE: Doubled from around $500,000 to $1.1 million.

[11:36] Chris Edwards:
"We started at about 3 million and ended at about 4.5 million... EBITDA grew to a run rate of 1.1 million the last year."

This impressive financial performance positioned Affordable Flooring as a highly sought-after business in the marketplace.

3. Decision to Sell

After achieving significant growth, Chris made the strategic decision to sell the business in October 2024.

[10:10] Several factors influenced this choice:

• Personal Reasons: Plans to relocate with his family to the Front Range of Colorado made managing a business in Steamboat Springs challenging.
• Desire for New Ventures: Eager to apply his learnings to more scalable opportunities.
• Operational Challenges: Doubts about finding an operator capable of maintaining and expanding the business to its achieved levels.

[12:00] Chris Edwards:
"I felt like I wanted to take what I had learned and apply it to a more scalable business... decided to sell and move on to a new venture."

4. Challenges Faced During Ownership

Chris candidly discusses the hurdles he encountered while running Affordable Flooring:

• Partnership Breakdown: A key partnership in a countertop business led to intense personal and professional strain.

  [44:28] Chris Edwards:
  "I partnered with a key employee... had to fire him, and he ended up starting a competing business."

• Operational Intensity: The demanding nature of running a project-based business led to personal stress and altered his demeanor.

  [50:29] Chris Edwards:
  "I became more skeptical of things going right... more grumpy with customers."

• Finding the Right Operator: The isolated location and specialized nature of the business made it difficult to identify capable and invested operators.

  [16:13] Chris Edwards:
  "It would be hard to find an operator in Steamboat Springs capable of executing at the level I did."

5. Insights on Acquisition vs. Starting Fresh

A significant portion of the conversation delves into the merits and drawbacks of acquisition entrepreneurship versus building a business from scratch.

[24:53] Chris shares his evolving perspective, indicating a shift towards potentially starting his next venture rather than acquiring another existing business.

[53:16] Chris Edwards:
"I'm tempted to build something slower and from scratch... starting from scratch feels more attractive now than it was four years ago."

He weighs the benefits of having operational knowledge from acquisitions against the flexibility and control of starting anew. Chris emphasizes the importance of focus and the challenges of managing multiple businesses simultaneously, advocating for dedicating resources to grow a single, robust venture.

[28:24] Chris Edwards:
"I'd rather have one business that I'm really focused on, that can grow to 30 million quickly, rather than five struggling businesses."

6. Lessons Learned and Future Directions

Reflecting on his journey, Chris highlights several key learnings:

• Operational Systems are Crucial: Implementing robust systems and processes was vital in scaling the business effectively.

  [57:55] Chris Edwards:
  "The business is marketing, it's lead generation, it's lead conversion, it's leadership... understanding what a business really is."

• Importance of Adaptability: Recognizing the need to pivot and focus on personal well-being alongside business growth.

• Value of Customer Service: Investing in customer service and team training helped differentiate Affordable Flooring from competitors.

Looking forward, Chris is excited yet anxious about his next steps. While he remains open to both acquisition and entrepreneurial endeavors, he currently leans towards building a new business from the ground up.

[56:23] Chris Edwards:
"Acquiring a small business was life-changing... now, with some capital and experience, starting from scratch is more appealing."

7. Overcoming Adversity

One of the most poignant moments in the interview is Chris's account of overcoming significant adversity during his ownership.

[46:53] Chris Edwards:
"On my daughter's first birthday, I was on the verge of tears because I felt like the business was crumbling."

However, perseverance led to turning challenges into opportunities. Post the fallout with his partner, Chris implemented better systems and processes, ultimately having the best year for Affordable Flooring.

[48:34] Chris Edwards:
"We turned our attention internally, built a better business, and came out the other side much better for it."

8. Conclusion and Final Reflections

As the episode wraps up, Chris shares his gratitude and reflections on the intense yet rewarding experience of acquisition entrepreneurship. He underscores the transformative impact of owning and scaling a business, advising aspiring entrepreneurs to be prepared for both the highs and lows.

[69:18] Chris Edwards:
"Hopefully, this is helpful and that your listeners get some value out of it."

Chris remains optimistic about the future, eager to embark on new ventures armed with the knowledge and experience gained from his successful acquisition journey.

Notable Quotes

• Chris Edwards [05:43]:
  "I started my search in the middle of the pandemic... I ended up closing on Affordable Flooring Warehouse."

• Chris Edwards [12:00]:
  "I felt like I wanted to take what I had learned and apply it to a more scalable business... decided to sell and move on to a new venture."

• Chris Edwards [24:53]:
  "I'm tempted to build something slower and from scratch... starting from scratch feels more attractive now than it was four years ago."

• Chris Edwards [28:24]:
  "I'd rather have one business that I'm really focused on, that can grow to 30 million quickly, rather than five struggling businesses."

• Chris Edwards [57:55]:
  "The business is marketing, it's lead generation, it's lead conversion, it's leadership... understanding what a business really is."

• Chris Edwards [48:34]:
  "We turned our attention internally, built a better business, and came out the other side much better for it."

Key Takeaways

• Strategic Acquisition: Chris's experience underscores the importance of strategic acquisition—selecting a business with favorable economics, manageable complexity, and growth potential.

• Operational Excellence: Implementing strong operational systems and focusing on core business functions are critical for scaling and profitability.

• Personal Well-being: Balancing business responsibilities with personal life is essential to prevent burnout and maintain long-term sustainability.

• Adaptability and Learning: Being open to shifting strategies, such as transitioning from acquisition to entrepreneurship, highlights the value of adaptability in business.

• Financial Acumen: Achieving a 24x return on equity demonstrates the significant financial rewards possible through disciplined acquisition and growth strategies.

Chris Edwards's journey offers invaluable insights for aspiring acquisition entrepreneurs, illustrating both the challenges and triumphs inherent in buying, growing, and exiting a small business. His candid reflections and strategic mindset provide a roadmap for those looking to embark on similar entrepreneurial endeavors.

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