From Layoff With a Newborn to a $1.9M Northern Lights Company in 12 Months After Finding The Perfect Business Partner

Summary

Podcast Summary

Podcast: Action Academy | Millionaire Mentorship For Your Life & Business

Host: Brian Luebben
Episode: From Layoff With a Newborn to a $1.9M Northern Lights Company in 12 Months After Finding The Perfect Business Partner
Date: October 7, 2025
Guest: Kyle Lutes

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Episode Overview

This episode chronicles Kyle's journey from being laid off—just after paternity leave—to buying and operating a $1.9M Alaska-based tourism company within 12 months. It explores how he partnered with Ashley, navigated the acquisition process, raised capital, structured the deal, and overcame the steep learning curve of being a first-time business owner. The central message is about building a life of financial and personal freedom through business acquisition, and the irreplaceable value of community, partnership, and speed.

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Key Discussion Points & Insights

1. Kyle’s Layoff & The "Now or Never" Moment

• [00:00] Kyle returns from paternity leave with his newborn, only to be laid off two days later.
• Saw this as an opportunity: "It's now or never. This is the time to go for it." – Kyle [00:03]
• He had been a member of Action Academy for a year, planning to build a side business, not necessarily to quit, but to create more options.

2. Choosing the Right Kind of Business

• [01:30, 02:42] Instead of buying a typical home services business, Kyle and partner Ashley closed on an Alaskan tourism company (Northern Lights, Arctic Circle, dog mushing, etc.)
• Aligned with his passion: "I care about giving people incredible experiences. Like that's part of my long term vision." – Kyle [01:30]

3. The Acquisition Process

• [03:37–06:54]
  • Ashley had a dialed-in acquisition system (lead gen via VA, systematic broker outreach, daily underwriting).
  • They cherry-picked deals—going in-depth on only 10–15 out of over 100.
  • Negotiations were tough: required specific SBA lender approval, seller only motivated by wife’s insistence, 15 different LOIs submitted, and 2.5 months of back-and-forth.
  • Close delayed due to holiday weekends; closed eventually with a celebratory group photo.

4. From Corporate to Entrepreneur: Mindset & Support

• [08:06–11:10]
  • Originally, Kyle planned only to build wealth on top of a well-paying job, not quit.
  • Joining Action Academy allowed proximity to mentors and a high-leverage network.
• Layoff forced the leap: shifted from hospitality industry plans to business acquisition for quicker cash flow.
  • Partnership was the game-changer: "I literally could not have done this without her... I always thought I had to go by myself. Whenever I tried to go by myself, there was always something missing." – Kyle [09:25, 11:14]

5. The Power of Partnership

• [11:16–17:15]
  • Ashley (operations/finance focus) and Kyle (sales/marketing) made a complementary team—both shared vision and values.
  • Advice from mentors: "Don't be thirsty"—offer value first, let authentic partnerships form.
  • They ran a “trial period,” collaborating on deal sourcing and broker calls before formalizing the partnership.

"Find somebody that's complementary to what you do." – Brian [19:03]

6. Drafting Solid Operating Agreements

• [20:28–21:42]
  • Lesson: an operating agreement shouldn’t just anticipate positive scenarios, but cover what happens if things go wrong (divorce, disability, lack of effort, buyouts).
  • Brian: “This needs to be an operating disagreement…” [21:09]

7. Deal Structure & Capital Stack

• [24:46–29:00]
  • Mix of SBA financing, 17% seller carry, and 10% down payment.
  • Raised capital from Action Academy community—over $250k committed in 24 hours; had to turn potential investors away.

“Within 24 hours we had 250k and we had to say no to four or five different people.” – Kyle [00:34, 30:37]

8. Raising Capital: Why Trust and Speed Matter

• [30:17–36:00]
  • Most investors were familiar with Kyle and Ashley’s journey via community updates.
  • Returns designed to outpace other asset classes in line with higher risk.
  • Passive investor perspective: trust the operators/team over just the deal.

"If you want to be a capital investor, speed is king." – Brian [34:53]

9. Taking Over the Business: The Emotional Rollercoaster

• [38:56–43:47]
  • Closing day was full of uncertainty, delays, and drama.
  • Celebration was brief; ownership was immediately hands-on with staff, dealing with company culture, and quick operational tweaks (e.g., “no more carrots on the sandwiches”—a morale booster for staff).
  • Key advice: audit before changing anything major; listen more than talk.

“Two ears, one mouth. Just shut up and listen for 30 days.” – Brian [42:26]

10. Early Days Priorities & Operations

• [45:54–48:55]
  • Treat employee review as a priority: rank each on performance and attitude (1–5; can’t pick ‘3’).
  • Assess fires by priority: “Is this a dumpster fire or a kitchen fire?”
  • Focus on three things to grow:
    1. Diagnose and extinguish major fires
    2. Drive sales and marketing (Kyle attending conferences)
    3. Build a culture and team for scale

“We’re going to rebrand...add cool tours...overnight Northern Lights dog sledding tours with a six-time Iditarod racer.” – Kyle [49:20]

11. Lessons & Advice for Aspiring Business Buyers

• [51:22–52:08]
  • You probably can’t (and shouldn’t) do it alone; surround yourself with great mentors and partners.
  • Embrace failure as learning; speed of iteration and starting is more important than “having it all figured out.”
  • Real learning comes from ownership, not study.

"The person who starts sooner and iterates very quickly is way further ahead than the person who waits for the perfect moment." – Kyle [52:00]

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Notable Quotes & Moments

• “I literally could not have done this without her... I always thought I had to go by myself. Whenever I tried to go by myself, there was always something missing.” – Kyle [00:34, 11:14]
• “As soon as I wired the money, had zero stress, zero concern... I trust these guys. I can work with these guys through anything.” – Brian [11:20, 14:40]
• "Don’t be thirsty." (On forming partnerships) – Cassidy Warren (cited by Kyle) [15:31]
• “An operating agreement is really an operating disagreement. You need to outline all of that and specifically call out what's going to happen or else you're putting yourself in a really difficult situation later on.” – Brian [21:09]
• “If you want to be a capital investor, speed is king... You got to be liquid. You got to have cash. You got to be fast.” – Brian [34:53]
• “You probably can’t do this alone. Find the right room, the right people, and start before you think you’re ready.” – Kyle [51:22, 52:08]
• “The human element... is so important to dial in, and it's hard to get that from a book or a podcast.” – Kyle [52:23]

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Timestamps for Key Segments

• Kyle's layoff and motivation: [00:00–01:30]
• Choosing a 'different' business (Alaska tourism): [01:30–02:42]
• Deal process and structure: [03:37–06:54], [24:46–29:00]
• Career and mindset journey: [08:06–11:14]
• Partnership formation: [11:14–21:42]
• Operating agreements advice: [20:28–21:42]
• Raising capital & investor selection: [30:17–36:00]
• Closing and post-acquisition transition: [38:56–43:47]
• Operational priorities after takeover: [45:54–48:33]
• Growth focuses and next steps: [48:33–49:38]
• Final advice to aspiring buyers: [51:22–52:08]

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Where to Follow and Book

• Company: alaskawildlifeguide.com
  • 10% off for podcast/Action Academy listeners (mention when booking)
  • Tours departing from Fairbanks, Alaska.
• Kyle on Instagram: @kyle.luets

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Conclusion

This episode is a playbook for high-achievers ready to leave the 9-to-5 behind. The journey from corporate layoff to successful business acquisition in a year is a testament to the power of decisive action, partnership, mentorship, and community. Key themes: go fast, partner well, secure the right coach and community, and learn by doing. The episode is packed with practical advice, relatable struggles, and energy to inspire your own leap.

Transcript

[A]

Two days after returning from paternity leave with a two month old, got the news at that point, realized it's now or never. This is the time to go for it. Almost three weeks ago, we closed on a tourism company in Alaska. Not just any tourism company, we're talking about fun tours, Arctic Circle tours, Northern Lights tours, snowmobile tours, dog mushing tours, like bucket list type stuff.

[B]

We just bought a multimillion dollar company that does Northern Lights tours that doesn't even operate the majority of the year. And this is within a 12 month time frame.

[A]

I literally could not have done this without her. I always thought I had to go by myself. Whenever I tried to go by myself, there was always something missing. Within 24 hours we had 250k and we had to say no to four or five different people.

[B]

All right, all right, Kyle. When people are hearing about business buying and we're talking about business buying, people think, oh, I got to go buy the H Vac company down the street owned by my uncle Jeff or owned by this, this all this old couple that's ready to retire. I got to buy a plumbing company. I got to buy something in the home services industry. That's what we see left and right over and over again. But you and I, my friend, along with Ms. Ashley, purchased kind of a different business. What happened? Tell us about this deal. Because I want people to realize that there's a little bit more outside of their buy box than they realize that's for sale.

[A]

Yes. So almost three weeks ago, we closed on a tourism company in Alaska. Not just any tourism company. We're talking about fun tours, Arctic Circle tours, Northern lights tours, snowmobile tours, dog mushing tours. Like bucket list type stuff. I care about giving people incredible experiences. Like that's part of my long term vision. This directly hits that like imagine yourself going on that you are going, by.

[B]

The way, twist my arm, dude. I'm ready to go. Yeah. So it's funny because we, we tell people we just bought a multi million dollar company that does Northern Lights tours that doesn't even operate the majority of the year. So tell us a little bit about the deal and then we'll break it down for people that are coming in for the first time and they didn't hear your previous episode. Because guys, if you are just now tuning in. Kyle and I did a full episode right after Corporate America and I told him I was going to buy a business with him. And now this is the episode where we bought the business together. And this is in a within a 12 month, time frame. So we'll put that in the show description and then the link for the other episode. But okay, so tell us about the deal itself.

[A]

So this business, it's, it's kind of right in the numbers that you look for when you're buying your business, at least that you know, I've been coached on. We've been coached on. It's a $1.9 million business as the purchase price, doing about 1.3 million in revenue and a little over 500k in SDE. And so you split that between Ashley and I and a little bit, you know, for investors as well, and you get to a point where not only does it hit our cash flow goals, both Ashley and I, as it exists right now, but it leaves a ton of upside in the future. And we made it happen through a combination of an SBA loan, seller finance and a little bit of a down payment too to make it all work.

[B]

Beautiful. And then how did we find this deal? And then we'll go backwards a little bit to describe your situation before.

[A]

So Ashley and I partnered up beginning of the year and she all credit to her, already had a dialed in acquisition system that I kind of jumped in on where she had a VA who was going out and emailing tons of brokers and was also looking at a bunch of listings would essentially get it all the businesses she, the VA would get back would be put into, you know, an Excel sheet for Ashley to underwrite and review. And so she'd get, you know, a couple of deals to review per day. And those that passed the initial sniff test, I then go out and speak with the brokers and get a lot more information and push the deal further to understand from there. And so we probably, when I jumped on, we probably went through 100 plus deals easily. And then looking really in depth, you're looking at more like 10 to 15 deals. And not all of them were actually as sexy as this company, to be honest. We looked at a lot of different ones, but we learned a lot along the way. And this one, when it came up, it was a hell yeah, it was yes. This one we have to go after 100%. And it ended up being pretty difficult to negotiate. By the way. The business owner, the former business owner wanted to make sure that if we're going the SBA route that the SBA lender was able to sign off on this exact deal. It wasn't just, hey, you're pre qualified for up to 5 million, which we were. It was no, I want you to find A lender who will sign off on this deal at that amount and guarantee that they're going to get you funding, which is like backwards from what it typically, typically is. And that was the only way they're going to sell. Because he didn't want to sell, his wife was forcing him to sell. So this was like his conditions. And so we did two and a half months of negotiations over 15 Lois. Like, that's an insane amount of Lois to take place. And we were finally able to kind of thread the needle and make it work with a lender and the seller and us to hit our numbers. Only because we went through 15 lenders to find the right lender that was able to make this happen. And because we really pushed seller financing, the deal was not going to work unless a portion of this was seller financed. And they finally realized this. And so we were able to finally get that to work after two and a half months. And then. Then you have your four months of due diligence, which was pretty intense, to be honest. And I honestly wish we went even more in depth. Like, there's things we uncovered and that in hindsight, we wish we went even more in depth, but finally that went through. And then went up to Alaska to, you know, seal the deal for it to sign. And then it got delayed even even more. So we got there, and then it was a week and a half later that we finally signed, and it got delayed on the day of signing. And I remember the group chat we had with all the. The investors and the owners. And I have to imagine it from your side. You probably were like, when is this thing going to close? Why does it keep getting pushed? And then finally the text came through, pictures of us with the owners celebrating. It was fun, but it was kind of wild to get here.

[B]

Yeah. I mean, from my perspective, I mean, just having done this a couple of times, I called it a mile away, but I just wasn't. I was trying to, like, keep you guys a little calm because it was Labor Day weekend and we were due for close the Tuesday after Labor Day. Or was it Labor Day or Memorial Day?

[A]

Labor Day.

[B]

Labor Day, yeah. So it was Labor Day weekend. And so I was like, there's no way in hell this closes after a long holiday. I was like, this is for sure gonna push to Friday. And then that's when we ended up closing. Was that Friday? So I was like, all right, cool. We're good on that one. But I want to highlight a few things there, and then we'll go backwards a bit. But I think it's just really important for people to, to pay attention to how you guys partner form this partnership. Actually, I will bookmark that. Let's go backwards first and let's talk about. Okay. Like people are hearing you discuss seller finance negotiations, four months of due diligence as if you're some type of acquisitions expert. This was not the case. So walk us through before to what you were, what your situation was in corporate, what happened, what transpired on our podcast, the decision that you made, and what brought us here. And then we will go into the partnerships because there's so much that you just said about partnership that I want to pull out for the listener.

[A]

Yes. So if we rewind a little bit. We did a podcast six, seven months ago where I had just gotten laid off from my corporate job. I had actually been part of Action Academy for about a year at that point, intending to create a lifestyle that made sense for me, my family, and was something where it was aligned with my long term goals. I could support them.

[B]

On top of your job.

[A]

On top.

[B]

That was the original plan. It was not to even quit your job. You just were like, I like my job. My job pays me well. I want to build some, I want to build the skill sets, build the community, build the relationships, to build wealth on top of my job. Because of how well this is going originally.

[A]

Exactly. And joining Action Academy was. I had this concept in my head where I know there's something greater, there's something more, I can be doing, something more fulfilling, something that impacts others more and more. And I just, I haven't been able to figure out on my own. And so it was getting in those rooms, getting in front of mentors and people who have already done the thing I'm trying to do. And so it was kind of a year of this bouncing around my head and learning and learning. And then finally the ax came, unfortunately, was part of a layoff, 10% of the company after nearly a decade there.

[B]

And paternity leave for you. You were on paternity leave with your.

[A]

First newborn two days after returning from paternity leave with a two month old. Got, got the news. And so at that point realized I had the support system, I had the goals, I had the vision. And I had luckily, a little bit of cash stowed away to have some Runway for the rest of the year. So it was, it's now or never. This is the time to go for it. And so instead of trying to go for a new job, I went full on into entrepreneurship. But I was Originally going the hospitality route, which I love, creating great experiences for others and I thought hospitality was actually the way to do that. But that's a long term play. I needed to change my cash flow situation within the next seven, eight months and buying a business was the way to do that. So that was the asset class I pivoted to and I focused on and I ended up looking quite a bit and found a partner within Action Academy, which is Ashley, who's been, I can't say enough good things about her. I literally could not have done this without her. And so I want to highlight the concept of partnerships. I always thought I had to go by myself and whenever I tried to go by myself, there was always something missing and it wasn't going as well or as far successfully as I'd hoped. I found this partner who had complementary skill sets but a shared vision. And that was the key mindset or the key partnership there. I love sales, marketing, partnerships, talking to people. I'm the front end. She is exceptional at operations, creating more efficient systems. The finance side, more of the back end, if you will. And so together we're able to form a formidable team that could run any company. Company.

[B]

I 100 agree with that. And from my perspective, every single deal that I've partnered with, which for people listening, this has been my largest single capital investment into any deal this thus far. I gave you guys 150 grand to do this one. I didn't even think twice about it. Like as soon as I wired the money, had zero stress, zero concern. I was like, you know what, go do it. Like, I don't even know when the distributions begin, to be completely honest with you. I'm just like, you guys tell me and then let's just rock and roll from there. So I want to highlight a few things. One, I want to highlight like Yalls Yalls partnership from my perspective. And then I would like for you to share some advice from your perspective. Number one, when I'm partnering as a capital partner, what I'm looking for is, number one, I underwrite the operators. I don't underwrite the deal as much. So I will look at the deal and I will back the napkin it to make sure that it makes sense. Number one. So I'll do like a high level underwrite of the deal. I'll do a more significant underwrite of the opportunity itself and the market itself. So I'm like, okay, cool. From a business perspective, from a business plan, from a market perspective, how does this look? And then the third thing is I'M looking for an operating team. I don't want to just be reliant on one guy or one girl. Every single deal that I invest in has at least two operating partners that are complementary together because it builds a more cohesive unit where you guys can go. And as you're getting your ass kicked, which will happen in business, you have somebody to lean on. Whereas if I like. And this is a selfish thing, but it is true from anybody that wants to be a passive investor like me, if you have a solo founder that you're investing in, they're going to be reaching out to you a lot with the emotional support, because, frankly, they just need it. Whereas if you have a partner, you're going through the trenches together. You have somebody that's down there. I want to highlight a specific moment where everything changed for me. And I was like, I am just going to blindly invest with you guys because we share all the highlight reels, and I want to share a moment where things kind of went sideways. And I was like, you guys pulled it through. So the first presentation call that we did, it was like, me, you, and Ashley, and we hopped on, and I was like, all right, guys, like, I'm cool for the 150, but let's talk through it. And we start going through it. It's like, the WI fi is bad. It's like a presentation that's done, but it's like, we're kind of going through it. And it was just like. I was like, yo, I don't feel good about investing in this deal. Like, this. This experience isn't that great. And you and I talked about it afterwards, and you're like, hey, man, I'm sorry that you feel that way. Like, let's do it again. Like, we want you on here. Like, let's. Let's redo it. And then you guys came on, and it was the best presentation I've ever freaking seen. And I was just like, dude, it was perfectly done, perfectly presented, perfect. Like, slideshow answered every single question exactly how I want it to be answered. And it was just a really cool moment of, okay, cool, we're gonna step up to the plate. Like, we're not here when things go good. We're here to fix things. And you guys crushed it. And so that was a moment for me where I was like, I trust these guys. I can work with these guys through anything. I'm ready to freaking go. And so talk a little bit more about the importance of partnership and who you're looking for and how you look for Ashley or any of the other potential deals. And then let's talk a little bit about the deal structure and how you guys are using me as capital. Because from a perspective of buying a business with low or no money down and seller finance negotiating it down to $0 down versus how you and I and Ashley are doing it, I greatly prefer this strategy. So let's talk a little bit more about what goes into you deciding the partnership and then we'll talk about that strategy.

[A]

Yes. So finding Ashley as a partner and any partner felt daunting initially, but I look back and it really took me a month and that was it.

[B]

Well, when you're focused, then, yeah, yeah.

[A]

And so I definitely want to credit some, some mentors and other folks in the group who gave great advice on this. I'll call out two. One was Cassidy Warren. I spoke with him. He's doing great things, Hotels, hospitality World and has his own podcast. And I asked him about partnerships and he said a really funny one. He goes, don't be thirsty. And at first you're like, that's very strange advice. But when you think about it is if you're being needy and immediately saying, I need this, this is what I want, you might get someone who has that. But for the most part, it's a one way conversation. It's a one way stream of value. But if you kind of flip it in reverse, um, which goes in line with what Mason Miranda in our group really harps on from the book, the Go Giver is leading with value. And so how are you able to create that value exchange when it's a truly a win win situation for people? And so the way I decided to approach it, even though I had like a timeline and Runway with money as well, I decided for once in my life to actually listen to mentors and applied this concept. And so I went out in the hospitality group and the small business group within Action Academy and shared what I can offer to others. And I also looked and saw what posts were taking place and see what people were looking for and saw where I could plug the gaps and help them and offer advice. And there were a couple different situations where I was able to provide something that helps someone. And in Ashley's case, um, she had been working with a partner and they decided it didn't make sense to work together. And so she was sharing. Hey, I'm kind of going at it myself for now. And I'm running into this challenge where I don't have the proof of funds for one of these brokers. To let me see the information on a deal. It's kind of this gatekeeping thing that a lot of brokers do is just to make sure you're not kicking the tires. Like do you actually have the funds to make.

[B]

Yeah, you want funds capital or you want a pre qual letter, the sba.

[A]

How do you remove all of these concerns out of the gate from a broker? And that's one of them. And so at that point she was looking for someone who had proof of funds at a certain level. And I actually had that at this point. So I said, hey, you're welcome to use it. And you know, it was a week or two and she kept, she used it and then she posted again, like, hey, I'm actually looking for someone who doesn't mind talking with brokers. I'm active military right now. It's very hard for me to talk to know brokers in the day. And that's not something I enjoy that much. I'll underwrite all day. And I said I can do that, no problem. And so just, we just kind of tested it out for a week and a half and I was helping talk to a lot of brokers for her and then I got laid off. Actually, I should say I should back up. It all led up to this. I already had started that before I, I got laid off and realized that this is something that I wanted to pursue further and just had an open conversation with her. It seemed like we were a decent fit and we both have similar goals and complimentary skill sets. You know, should we test this out? And so we tested it for a couple weeks and then decided to go full on after that. But that didn't happen until I had already built up trust with her, was helping her. And by the way, there were like 10 other folks that in some capacity was doing something like this as well. And this was one of 10 that took place place which enabled this partnership to happen.

[B]

Yeah, I absolutely love it, man. And to go back to a meaningful example that you shared kind of in passing previously is you said, oh yeah, she built up this, this system where VA was feeding her deals and she was underwriting them. And then she didn't need somebody to talk to the brokers because brokers is. Broker conversations are much more of a rapport relationship. And so you need somebody that can go on there and you can talk the talk. You know, you're just trying to build a relationship. And she's like, dude, I don't want to do. I want to like first off, I don't got time for that second off. That's not my skill set. I want to be in the background, like, being an operational freaking genius here. And so you came in and you were able to help with that side of it. So as a reminder, the lesson here, like the, the bumper sticker, is find somebody that's complementary to what you do. For me in sales and marketing, I'm looking for somebody that's in systems and ops and kind of risk mitigation, whereas I'm like, I want to go full on with it. When we were doing our operating agreements, can you talk about kind of v1 of the operating agreement and v2 of the operating agreement? Because you guys made some wonderful changes to it. Because I was able to read through it pretty extensively. And in the beginning, like, I think a lot of people mess up operating agreements. So can you first describe what an operating agreement is and then the changes and lessons that you guys had from drafting it and kind of editing it?

[A]

Yeah. The operating agreement basically outlines how you are agreeing to operate the business in all facets, like what, you know, what happens when this takes place, what happens when this takes place, what are we agreeing to work on, how do we delineate responsibilities, etc. And it's a formal way to put it in writing so that there's no gray area later on when there inevitably will be something that pops up. And so initially we went through and tried to outline as much as possible. I think your feedback was, was very helpful and it was honestly direct and brutal, but it's what we needed, which was cool. That's, that's nice, that's cute. But this needs to be an operating disagreement, I think is, is the phrase an agreement. What happens when one of you decides you're not going to work as much as you agreed upon? What happens when, you know, there's a divorce or anything other, you know, pops up? You need to outline all of that and specifically call out what's going to happen or else you're putting yourself in a really difficult situation later on.

[B]

Yep.

[A]

Uncomfortable conversations, but we're glad we had those.

[B]

And it should feel that way. It should feel that way. And that's why I'm so glad that you guys sent it to me. Because when a lot of people, when they're first getting started, your operating agreement is like, oh, my God, we're going to take on the moon and the stars and, and I'm going to do sales and marketing and you're going to do operations. We're putting in the operating agreement. Here's how we're going to split the profit. And, you know, okay, let's do some hard negotiations. I'll take 51%, you take 49%. I'll be the majority. I'll be the deciding vote. And, like, you're thinking of all the positives, but nobody's thinking about, okay, well, what happens if. If you just decide two years deep to just stop doing shit, then what happens? Because I've got so many friends that all of a sudden they're partners. And so number one is responsibilities like that. Number two, how do they get bought out of the company? Yeah, because I've got friends that bought a company at a 3x multiple. Three years later, their business partner who owns 50% of the company now decides, hey, I just don't want to do it. I'm just not going to work at all. And they own 50%, they're getting 50% of the profit, and they want to kick them out. And they're like, okay, well, I want a 6x multiple because that's the current market rate. And now all of a sudden you're paying double what your values are worth to that, this person. And you know that that's not the fair market multiple you would get if you sold the company. So it's a disagreement because the only time you're going to look at it a year, two years, five years down the line is when you're fighting. So you need to have everything in there. We even included a clause where for me as a capital partner and me as an advisor, it's like, okay, what percentage is revenue and what percentage is profit share tied to the actual capital allocation versus performance of. Of said duties? I said, okay, well, what if I get hit by a car, you know, and I'm hospitalized for 90 days? Do my distributions just get wiped out because I'm hospitalized for 90 days? Got like, terrible idea, terrible thing to think about. But another one was, I did another operating agreement where he. I was like, well, hey, what happens if you and your wife get divorced? Like, what happens to the business? Because it's a husband and a wife that I'm partnering with. I'm like, what if you guys get divorced? Like, what would happen with the company? And that's stuff that we have to talk about. It sucks, but that's what makes a strong operating agreement. And that's where most people go wrong. So I love that you guys were able to fix it. Now talk a little bit about how you structured the capital stack, because I've talked a lot about like my side of the capital stack on the podcast. But I'm curious from your perspective because I think it, I think capital in business buying is one of the easiest conversations to have. It's an easier conversation to have than even raising money for real estate. So can you describe about the process for people that are listening to this, that are coming into Action Academy or listening to the podcast? They've got 30 to $50,000 saved up and they're like, how the hell would I buy a 2 million dollar company? Like that doesn't make sense to me.

[A]

Yes, this is something I had no clue about until I actually started going through the process, but learned quite a bit. And so I think, you know, finding, you know, each different business we found was slightly different in ways to go about it. Sometimes business owners are okay with nearly 100% seller finance. That's super rare, by the way. Sometimes they want no seller finance. Sometimes it's okay. We're, we're, we're okay with a very, very small amount like 10%. And so we had to kind of back into what was possible by what the current, now former business owner wanted and expected and then also what was possible from a lending perspective and also what made sense from what we were able to contribute, what we thought we could raise, how that impacted cash flow and the goals we had with it. So it was really threading this needle, but it all depended upon what we could get from lending. And so that's why I went out and talked to many brokers, or excuse me, lenders about this. And I learned that no two lenders are exactly the same. And lots of conversations not just go with the first one because not only do different lenders have different interpretations of the SBA regulations, they also focus on different areas and are able to lend at different terms and care about different aspects of the deal. So one broker is, or lender is going to have a very, very, very different mindset and capability than another one. So we were able to talk to 10 to 15 and finally found one that was okay with this deal in the ways that made sense for us and could lend at rates that worked. But the one stipulation was that they needed to have some seller financing. And it was more that than the existing owner wanted to do. So we were actually able to push the existing owner from 10% seller financ, seller finance to up to 17% of the deal to be seller financed. So I think what it came out to was a total of about 2 million of a total loan because we included Some working capital in that 17% of it was seller financed, 10% was the down payment, and the rest was an SBA loan.

[B]

Yo, what's up, guys? One sec. You're listening to a podcast right now, and I freaking love that. But this is not making you more money. What makes you more money, more wealth, more equity, is being in the room with the people that you're hearing on today's episode. If you want to be around hundreds of other people like you leaving corporate America, doing big deals in business, commercial real estate and land, check out actionacademy.com, go in the show, link the show description, and click the link to book a call with our membership director team. We'll give you the resources, the connections in the community to actually pull off the stuff that you're learning about on this podcast, and we'll hold you accountable to the actual implementation of the information that is actionacademy.com now let's get back to today's episode. Can you talk about working capital and how do you go about. Because I don't think we've talked about it too much on the, on the podcast. Tell us what working capital is and how much should you allocate into your loan, if possible.

[A]

So it's essentially funds you're going to need to fund your business, especially in the beginning, right when you, when you join, when you, when you buy a company, there's going to be expenses before some income comes in and you need to have a cushion in case certain things happen. And so we needed to allocate a certain amount that we were comfortable with. Ashley is actually the guru on that side, so she'd be able to give a much better answer. But for us, we, we wanted to make sure we had, I think it was six months of expenses at this point. I know some recommend a little less, some recommend more. For us, that was what we were okay with, and there were a bunch of different ways to go about it, but we were able to actually wrap it into the loan for the most part. And we ended up unintentionally over raising a little bit from investors. So between the two, we had plenty.

[B]

Yeah. So working capital is super important for us at Action Academy, we keep 90 days of working capital at all times in cash. That would cover the entire operations of the company. I would suggest closer to six months. It depends how good your margin is and how capital expensive, how deep you are in capex with your company, how capex heavy you are in the company. So we're very capex light and so we can be a little leaner with our working capital. But I think that that's a, that's a great point to discuss right there. So, so you're talking about all this different stuff with all these different seller financing terms, all of the different kind of capital raising stuff. So talk about like the actual raise itself. So somebody that's listening to this may be like, okay, I understand how you raise money for like a real estate syndication kind of sort of, you know, 30% goes to the GP, 70% goes to the LPs that get an 8 to 8% preferred return, you know, and in three to five years they get their money back times, you know, a multiple at sale. How does it work in business from your, from your guys perspective?

[A]

Well, for, for us again, Ashley was able to put together what the returns were going to be and we talked to a lot of different mentors and capital raising experts to be able to understand what was attractive for potential investors. And we wanted to make sure it was higher than other asset classes because there's a higher associated risk with business. And we wanted to make sure that we aligned our interests with our investors long term. And so that's, that's, it's, it's very unique to each business. And, and again, I'm not the expert in this, so if I start quoting numbers to you, it's not going to be relevant to every business but for us. And the area that I found helped us the most in our capital raising experts was that Ashley and I had been telling our story to folks in the group. People had been hearing about it and following along and saw that we were partners, saw that we were going after a business. And then the saga of us going through 15 LOIs and then when we finally got the LOI accepted, it was one of the craziest moments I think I had ever been a part of just because it blew my, my expectations out of the water in terms of the response from folks in the group. And so we both posted that we signed, we had the LOI signed and that we'd be open to taking on a few investors. We didn't put terms, we didn't, we didn't say you need to invest in us. It was more we're open to taking on investors. We signed and here's this business and this is how exciting it is. Anyone want to talk? And we blew up. We had maybe six to 10 people reach out right out of the gate. You were right on top of that. Kudos to you. There were a bunch of others as well, and so what ended up happening was we thought we needed to raise 200k within 24 hours. We had 250k and we had to say no to four or five different people. It was one of the most surreal experiences because initially I felt raising capital would be difficult. But I think the way we set it up and the trust we built with everyone in the group ahead of time enabled this to all take place. If they didn't know who we were in the group, they didn't. No one trusted us. And we started saying this, it wouldn't be exactly the same. But I'm really proud and happy to say that our investors are 100% from Action Academy. So it's 100% Action Academy owned business and we got a lot of upside here, so hopefully everyone comes out on the winning side in a couple years.

[B]

Yeah, I'm not worried about that at all. Yeah, and it's. It's funny because you say that and a lot of people say that in Action Academy. Like, Mason just texted me me, he goes, hey. I just. He's like, I've got about 20 people that I could text at any given week and say, hey, do you want to throw 50 grand towards this? And he said, they will. And that's not normal, you know. And so it's funny, whenever we're. It's like not something that we pitch on. Like, the, the application calls for Action Academy, but it's like, dude, the amount of capital that you get access to. And I got, I've gotten five or six DMS personally of people that want to do what I'm doing that are members. I won't share their names, but they are saying like, hey, I've got $500,000 in cash. Like, I'm holding out for more small businesses, so I can go do exactly what you're doing. How are you doing it? So there's like millions of dollars of capital for that available, especially for small business. And I do want to point out another thing that's really important. As much as I'd love to stroke my own ego as somebody that's like the, the creator of the group and the founder of the group. And of course, I add value if I, like, you can't get ready. You have to stay ready when it comes to deals like this, no matter how good I am or no matter how much value you guys think that I could bring, if I wasn't fast to this deal, I probably would not have a spot. And it's super important to state that because for People that do want to invest and do have capital, you got to stay ready, dude. You got to be liquid. You got to have cash. You got to be fast. Every deal that I've done in Action Academy, this is my fourth deal that I've done with you guys. And I'm like the first comment or the first person or I get a text message that says, hey, call them right now. And I have. I have hundreds of thousands of dollars sitting ready to go, waiting, and I'm able to like, be able to pitch my value proposition out the gate. So, you know, anybody that's a capital investor, speed is king. And I think that same concept applies to deal flow too. Like, you cannot sit and think about it for days and days and days. You have to have a strong action muscle and be able to underwrite something fast, make an offer fast. Is there any, anything that you would like to add to that, Kyle? Maybe from, you know, the rest of the process as well with the wise. With the actual business process.

[A]

Well, one thing I'd. I'd say just on the capital raising standpoint, I think the. The leverage kind of shifted really quickly from we were. We initially it was. We have no clue what the response is going to be, how long this is going to take, who's going to be interested to. Oh, there's a ton of people interested. Well, how do we think about this to set our business up for success.

[B]

To set these strategically. Strategically.

[A]

And so the way we determined who would be the ideal investors was we set up calls with all of them and we wanted to understand what they were thinking about, what they were comfortable with. Yes, what the numbers looked like going through the business. But it was also what are their skill sets? What could they potentially contribute to add value to this deal beyond capital? And it takes a certain investor to be willing to do that, to be excited to do that and to have that skill set. And we were very fortunate that we were able to get a quite diverse group of investors that were all bought into that. You come in with a ton of business expertise and knowledge and connections. And the social media side, we have another investor, Marissa, who has phenomenal tourism marketing experience, like, insane experience. From that standpoint, we have Raj coming in. From the finance standpoint, we have Zach coming in. From the hospital hospitality standpoint. Oh, by the way, that's where we're heading long term, spoiler alert. So we feel like we have a really solid bench here and we're pretty pumped have ever involved. It's in fact that we have this.

[B]

I. I would say that. Yeah, I mean, we're all lucky, but it's like, you make your own luck because there's so many members. And it's something that I've talked about, too, where, you know, the reason that we do the events that we do, you know, for action, an action academy, like, big event, like our. Our Cancun events and stuff like that. They're $4,000 to go to. Like, it's. It's not like a hundred bucks, you know, and we don't make money from those. Like, that's us reinvesting every single dollar into the experience itself. And when we do that, it's like, who are the people that are in these rooms? Right? It's the people that you meet in person and you're seeing each other and you're shaking hands and you're hanging out at the hot tub and you're having some drinks together and you're in the pool together. It's like, those are the people that you're going to be like, okay, cool, I've got, like, a note on you, and I've got an eye on you. Like, I'm excited to see what happens next. And candidly for you, I was already looking for someone. I'm like, all right, cool. I'm going to invest with Kyle, like, whatever business Kyle does. And I think I even texted you that. I was like, whatever business Kyle does, I'm in. And so I was already bought in on you. And so I was like, okay, cool. So here's the deal. All right, sweet. Kyle's running it. I'm good. And then I was like, okay, now, like, let me underwrite Ashley. And then I talked to Ashley and I was like, oh, this is like, you guys together are like a freaking super couple. This is like a freaking power team that's going to be able to pull this off. And so super exciting. Let's now pivot a little bit to the. The close in two. And then you go from diligence to now, you take ownership of the asset, you take ownership of the business. Tell us the good, the bad, the ugly, because we share a lot about, like, the practical and tactical things to do. But walk us through. Like, how does it feel? Like, how's it taste like, how's it smell like, you know, what do you. What does it feel like to go through this process?

[A]

It was a lot emotional roller coaster because nothing is certain until you sign that paper. On the day of closing, we put so much time and effort, and then at one point, we basically said, hey, we're going all in this. We're not even looking at other deals because we're so confident. We're so close on this. And there was a huge risk to that. Right. If this fell apart, you start all the way back over, that's another six, seven, eight, nine, ten months. And so it's a good thing this closed. But when we finally, finally closed, by the way, it was delayed, and there were issues at the closing table. There was a hilarious moment when one of the sheets was actually completely ripped at that point. I won't name names, not me, but it was pretty dramatic and funny. But then we figured it out and got them to print it back out and sign. But, you know, five hours later in that day, we signed, took pictures with the now former owners, went out to dinner with them to celebrate, and then, guess what? We're owners. It started, it was like a very brief celebration, and then it was game on. Because what was unique about this is we had worked with the former owners to set a company picnic on a Sunday, and we close on the Friday. And so we got to meet the operations manager finally in person that Friday. We got to meet the assistant operations manager that Saturday, and then we met the entire company on the picnic on Sunday. And so it was immediately prepping with Ashley, how we're going to handle things, what we want to communicate, what we want to hold back right now, and then how we're going to handle everything, and then sharing notes along the way. So it was actually pretty in depth. But luckily we got to meet everyone. I'd say 70% of the company. There's 14 guides, two mechanics, three office staff. And we learned a lot in those three days. We learned a ton. I'll share some. I don't want to share, you know, too much. But we learned that the office staff was very excited for us to take over. The former owners were looking to retire for a long time, and it was evident in the way they ran the business that they were trying to retire. They were actually gating growth, which is great for us, meaning that there was the demand there, but they were artificially tamping it down in order to maintain a lifestyle and just get rid of the thing. And so what it translated to was the existing employees were getting frustrated with areas they could improve and grow the business and potentially earn more themselves. But they were being told, nope, we're not changing, changing at all. And so when they finally met us and understood our vision and how we were going to run things, there was a lot of excitement at the Possibility and where it could go. But then also from the guide standpoint, they're like, can we change this? This, this, this and this? Like, this doesn't make sense. The office staff saying, this doesn't make sense. And so learning. You know, I think I've looked into a lot of hormozy stuff and a couple podcasts with. You did with Cody Barton and a few other folks on what do you do when you take over a business? Well, the prevailing advice is don't change anything right away. Just. Just audit. Just understand what's taking place.

[B]

Two ears, one mouth.

[A]

Exactly.

[B]

Just shut. Shut up and. Just shut up and listen. For 30 days.

[A]

We intended to do that, and for most people are. But there were so many little suggestions that the employees had where they're like, can we please change this? This doesn't make sense. Like, an example is, well, the office staff actually makes sandwiches before the tour guides take the vans to go pick up the guests and they have sandwiches on tour. First of all, that's not the best use of office staff time. We'll discuss that one later. But there were little things, like the owner, previous owner, wanted them to put carrots on the sandwich because that's what he cared about. And it took an extra 30 minutes to slice them up and put them on, you know, all 30 sandwiches. It cost money and it was a giant waste. And even the guests didn't even like it. And so they said, can we please change this? That's a really easy change. No carrots. Very easy. So we made that change like it's. It's simple, but it built up morale in the company. And they're like, thank goodness. There were a couple little things with the office they wanted changed and a few others, but those were the type of things we're changing. Bigger changes will. Will come in the future.

[B]

Yeah. So it's. And also, like, this is a super cool period for Action Academy now because now that we're going into year three, going into January, it's like, now we get to roll out a whole new suite of services. And now we're bringing on coaches and mentors and people that are specifically helping with this side of acquisition now, where it's like, okay, now what happens with acclimation, which is what you guys are going through here for the next 90 days. Okay, cool. How do we think about things? Like an owner, how do we think about. Instead of me doing more work, how do we think about how do I inspire, motivate, train somebody else to do this function and have them Completely own it. Right. And then go from that to now, the architecture, where it's. How do we build the meetings? How do we build the cadence? You know, which ones of us are on the ground? Like, what vacations do we take? How do we. How do we run the year of this company? And how do we run the actual weekly flow of things? That. That way. Yeah. So that way you become the actual business owner, and then you run your business. Your business doesn't run you. Right. And so the biggest thing that I would recommend for you guys right now is, again, it's like two years, one mouth, like, be listening to everything, take everything into account. And then what I'd be doing is I'd be keeping a master doc where you've got, like, all of the potential problems, all the potential stuff. And then you're also looking at the different fires, and you're labeling the fires, and you're saying, is this a dumpster fire or is this a kitchen fire? So is this a dumpster fire? Is this a kitchen fire? It's one of my favorite new phrases. And because you're going to have right now, like, 900 fires burning at the same time, and you cannot put them all out at the same time. So it's like, okay, is this inside the house, where this is going to burn my house down, or is this just going to burn the dumpster down outside? And so you got to figure it out. And then you also have to take into account, take inventory of. Okay, cool. Like, so who are the A players? Who are the B players? Who are the F players? Right. So there is no C. So that's my favorite thing that my coach takes me through is rank every single employee one out of five. You cannot say a three. Can't say a three.

[A]

Like, that forces you to make it.

[B]

Forces you to make a decision in an honest decision.

[A]

Yeah.

[B]

So two different things. When you're going through your entire team, you're going through your entire team, and you're ranking them 1 through 5 on two different things. First one is performance. So, like, how well they do the job. Just, like, how they're executing, like, how they're performing one out of five today. And that just takes time. That's going to take you 60, 90 days to, like, actually see. So one out of five on performance, you cannot say a three. So it's either going to be a four or it's going to be a two. And then after that, you got to rank every single employee one out of five on attitude. So, like, how willing Are they to. How willing are they to be trained? How coachable are they? You know, how. How is the energy that they're bringing to the team, to the thing? Because there's only three reasons that an employee doesn't do something. It's either a can't do, it's a won't do, or there's an obstacle in the way. So, like, can't do is they do not have the proper resources or training. They just cannot do the thing. They don't know how to do the thing. An example of that right now in Action Academy is Estefania is learning how to do ads. She's learning how she had to learn how to do sales meetings and how to be a manager of a sales team. Like, this is not. Like, this is not won't do. It's just can't do. She didn't have the skill sets. Now she's building the skill sets, and we're investing in training for that. Won't do is an attitude problem. So won't do is like, okay, this person just won't do what we're asking them to do. Got it. And then obstacle in the way is probably one of the more common ones where they want to do it, they can do it, but the driver and the result still isn't being done. So there's an obstacle in the way that's preventing that. And for this, it could be the carrots. It's like, hey, we need to get the tours done on by this time. But this, this, and this are happening. We have to slice up these fucking carrots, and we have to do all of this stuff. And therefore, we cannot get the tour done on time.

[A]

Yeah.

[B]

So they can do it. They want to do it. But there's an obstacle in the way. So we're identifying all. All three of those with each one of the employees. And then you take a good, hard look at the end and be like, okay, cool. Like, what's the. What's the actual story here? And then that goes to a whole point of, like, a scoreboard system. So right now, you know, if you guys going. And God, man, I want to keep going with you for another, like, freaking hour, we can maybe do an entire coaching call on this. But right now, I guess to close this out, if you could pick three things, like, what are your. What are your guys? Three primary focuses that you're focusing on right now to. To double or triple this business.

[A]

So initially it's identify everything that's taking place. We've already identified a couple fires A few dumpster fires. So it's taking care of of those immediately to ensure that we're sustaining. And then it's how do we add fuel to a fire In a good way, not a dumpster one. A good way.

[B]

Yeah, yeah, yeah.

[A]

Come from sales and marketing and partnerships. I'm going to a conference in Anchorage in October, by the way, in like four weeks. And then lastly, it's cultivating a culture and a team that is entirely bought in and have the right skill sets and attitudes to be able to take us there. And each one of those, we're in the early, early days on, but all of those will take place. Not to mention we're going to rebrand, hello Alaska Wildlights. And we're going to add some pretty cool tours. By the way, we're going to do overnight Northern Lights dog sledding tours with a six time iditarod racer, which is gonna be really cool.

[B]

Freaking sick, dude. At the, at the end of the day, the one last closing piece of advice I can give in is to get, to get weigh in before buy in, right? You got to get weigh in before buy in. So number one piece of advice is don't, don't, should all over yourself. Don't say you should do this, you should do that, we should do this, we should do that. Like you guys are going to see some glaring, gaping holes in the business, right? Especially after talking with everyone. It's never your idea, it's the employee's idea. That's how they get buy in. Because now it's like you have them weigh in to get buy in. So now it's like the employees are all saying, okay, well, cool. Like if, if this is, if this is the goal right now, what would you, what do you think we should change to get to that goal? And they'll be like, well, obviously we should do this, this and this. You're like, got it. Cool. And then you give them the credit. So it's a cash and credit business. You get the cash, they get the credit.

[A]

I love it.

[B]

That's how you do, that's how you build. I mean, dude, it's just like, just if you do that system externally and you do the one out of five, can't be a three internally. Like that will take you guys through 90 days, easy. Like y' all will have the decisions. So, man, in closing, we can do a whole other call on this stuff. I freaking love this stuff. But in closing, man, what's some advice that you would give to anybody that's going through acquisitions right now. Or maybe they're listening to this podcast and they're like, I hear about this Action Academy thing. You know, I've been listening for a year, still haven't pulled the trigger. But I want to buy a small business. What would you tell them?

[A]

It's hard to do by yourself. If you think you can do it by yourself, good luck to you. Some people can do that real hard and a lot of other people. You need to surround yourself with people who have already done the thing and people who are willing to give you honest feedback and guidance and help along the way. And that was really the game changer for me. The other side is be okay with failure. Failure is information. Failure is something to learn from, not to be afraid of. The person who starts sooner and iterates very quickly is way further ahead than the person who waits for the perfect moment. And if you combine those together, the right rooms, mentors, people have already done the thing and just starting, you're going to get there. It's not going to be perfect, but you're going to get there versus waiting for a perfect moment and not get there ever.

[B]

Question man in closing, you've been a business owner for three weeks. How much more have you learned as a business owner for three weeks versus the three months, the three years that you've spent studying it so much.

[A]

A lot of it's the human element that's so important to dial in that's it's hard to get that from a book or a podcast. The human elements, handling those one on ones and handling situations. You kind of have to learn from other each experience.

[B]

Th percent you just got to go through it. Got to go to it and go through it, man. So if people want to follow you to find out more, if they want to follow the company, where can they go? And also where can they book a tour if they want to go see the freaking northern lights?

[A]

Yes. So I think this is the first time we're actually announcing what the company is. So the company is alaskawildlife guide.com you can find us on Instagram, you can find us book directly and I'm really pumped. The company never does promotions. They have never done discounts except a 5% military discount. Our friends and family, for anyone who is in Action Academy or is listening to the podcast and wants to take an incredible bucket list adventure, we will give 10% off. Just call us in the number on the website or book online and call out that you are involved with Action Academy. We will honor it. We can't wait to show you an incredible time. Come up, have some fun up north.

[B]

And that's Fairbanks, correct?

[A]

Fairbanks.

[B]

It's Fairbanks, Alaska, baby. Let's go. All right, guys, you're going to have that in the show description and as always. And Kyle, where can people follow you to, like, follow you personally?

[A]

The best place is Instagram. Kyle Lutes L U E T S We'll be sharing much more. We're going to build up the social media presence and share more of the story as we go. I appreciate anyone who wants to reach out. Happy to be an open book, help with business acquisition or just bounce ideas off you. Let's go.

[B]

Let's freaking go, man. Appreciate you. Excited for the growth, Excited to share the success stories, man. Let's freaking triple this freaking business. It'd be the best tour guide company in Alaska. Man 10x10x10x Man 10x let's go. All right, guys, it's been Brian and Kyle with the Action Academy podcast signing off. Boom. Thank you guys so much for listening to another episode of the Action Academy podcast. My one ask real quick before you go, if you enjoy this episode, if it brought value to you, please share this episode with one to three friends that you think could get value from it. This is how we grow the show and at minimum, if you could leave us a five star rating and review on Apple podcasts, Spotify or whatever platform you listen to that would mean the world to us is how we get in front of other entrepreneurs. If you're done sitting on the sidelines, you're done listening to the podcast. You want to be the freaking guest on the podcast podcast, go into actionacademy.com, go in the show description, the show link and book a call to speak with our Action Academy community. We have hundreds and hundreds of people just like you buying businesses and commercial real estate with full coaches, full mentors, full support, full capital, everything. ActionAcademy.com is where you'll find us.