How To Fix Operations & SCALE Any Small Businesses That You Buy (He Has $37M Of Businesses At 30 Years Old) w/ Cody Barton

Summary

Action Academy Podcast: “How To Fix Operations & SCALE Any Small Businesses That You Buy”

Guest: Cody Barton
Host: Brian Luebben
Date: October 30, 2025

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Overview

This episode explores the journey and strategies of Cody Barton, a business operator and acquisition expert with over $37 million in top-line business revenue by age 30. The focus centers on how to scale small businesses post-acquisition, with a strong emphasis on fixing operational bottlenecks, building effective teams, structuring partnerships, and leveraging business systems for significant exits. Cody shares actionable frameworks, cautionary partnership tales, and deep operational insights valuable for both aspiring and experienced business buyers.

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Main Discussion Points & Insights

Cody’s Journey: Real Estate to Business Acquisition

• Early Career Steps
  • Started in real estate at 21, got licensed out of misconception (“Spoiler alert. You do not need to do that.”) [02:10]
  • Transitioned from being a real estate agent to focusing on wholesaling, fix-and-flip, then rentals and Airbnbs.
• Pivot to M&A
  • Sought more scalable, sellable, and profitable business models.
  • Began building and buying non-real estate businesses, starting with a virtual assistant company, then expanding into various niches like luxury plants, cleaning, and media.
  • Realization: He thrives on team-building and operational turnarounds rather than client-facing real estate work. [03:39]

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Top Line CEO vs Bottom Line CEO

• Definitions
  • Top Line CEO: Excels in sales, marketing, brand-building, and takes over operationally sound businesses to ramp up revenue.
  • Bottom Line CEO: Focuses on fixing broken operations in businesses with strong lead flow but poor backroom management. Cody identifies as a “bottom line CEO”.
  • Quote:
    “My niche is all of those ops, finance people, leadership components to tack onto... great companies that are great at sales and marketing.” — Cody Barton [05:54]

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Strategic Approach to Buying a Business

• Self-Assessment
  • Cody recommends creating a three-column list:
    1. What you’re good at
    2. What you’re interested in
    3. Which businesses could achieve your financial goals
  • Quote:
    “I always like to start with the end in mind before I start something.” — Cody Barton [12:06]
• Establishing a 'Buy Box’
  • Define clear business criteria before searching (“Don’t buy a salon unless you know how you can help or what it earns.”) [12:57]

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Due Diligence: Case Study — Plant Business Acquisition

• Scenario: Great sales & brand, disastrous operations
  • Business did $3M top line, but:
    • No clean books for five years
    • Operations were a “train wreck”
  • Cody’s team approach:
    • Attorney for red flags
    • CFO (with doctorate in finance) spent 60 days reconstructing financials manually, transaction by transaction [07:32–08:23]
  • Quote:
    “He literally peeled apart through all of their bank statements... and was able to manually put together how the company was actually doing.” — Cody Barton [07:50]

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The Partnership Trap: An $800K Lesson

• The Story:
  • Early partnership in a business grew from $2M to $8M, then fell to $5M when partner checked out.
  • Lacked clear buy-sell agreement on valuation, leading to months of expensive, exhausting negotiations for partner buyout ($800K “lesson”).
• Structural Solution:
  • Cody now uses a Responsibility Matrix:
    • Outlines who is accountable for Marketing, Sales, Operations, Finance
    • Forms part of the operating agreement; breach triggers preset buyout terms and process [18:10–19:35]
  • Quote:
    “Do not enter into a partnership unless you have very clear buy-sell agreement language.” — Cody Barton [16:59]

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Hiring and Managing Teams

• Outcome-based Management
  • “Manage based on outcomes, not micromanaging every task”
  • Clarity on the outcome to be achieved; let experts own the ‘how’ [25:03]
  • Quote:
    “When I’m bringing someone in, how I’m going to manage them is: ‘Here’s the picture of what I want done at the end of it.’” — Cody Barton [25:03]
• Coaching Up vs. Coaching Out
  • When integrating new leadership or employees, give them the chance to buy in to new core values and vision. If not, replace them to prevent bottlenecks. [31:44]

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Acquisition, Turnaround & Operational Framework

• Cody’s 3-month playbook:
  1. Month 1: Intake all operational info (org chart, compensation, process walk-throughs)
  2. Month 2: Use “Impact/Effort Calculator” to prioritize high-impact, low-effort changes
  3. Month 3: Implement, optimize, and re-evaluate
  • Founders are kept involved in decision processes and rollouts.
  • Quote:
    “We’re not coming in and trying to change everything immediately. … We’re very cautious about what we’re going to… change, because we don’t want to blow up the business.” — Cody Barton [39:59]

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Timeframes for Change & Scale

• Implementation Time:
  • Most changes can be made in 3–4 months if existing leaders are receptive; full optimization might take 6–12 months.
  • Key variable is "teachability index" of existing management team. [43:23]

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Economic Benefit & Exit Strategy

• The Payoff:
  • When operational fixes are executed, business value can multiply.
  • At $1M EBITDA (profit), expect ~5x exit; at $4M EBITDA, ~8x exit.
  • Example with “Plant Guy” business: $3M topline → $600K profit → projected to double in a year, aiming for $1M profit and a $5M+ exit, with Cody netting $2.5M for his share, plus annual distributions. [48:48]
• Quote:
  “If you get to this million-a-year EBITDA mark… typically you can get around a five times multiple.” — Cody Barton [49:32]

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Building Self-Managing Companies

• Not Passive, but Leveraged:
  • Systematize, hire great people, and become “insignificant” so businesses run without you [44:42–46:14]
  • Dispelled the myth of “just hire an operator” for passive income.

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Advice for Would-Be Buyers

• Know your skill set and buy a business that complements it.
• Don’t rush into unclear partnerships—align core values and skills, and codify roles and buyout scenarios.
• During diligence, always keep multiple “irons in the fire” so one stalled deal doesn’t halt your acquisition pipeline. [28:21]

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Notable Quotes & Timestamps

• On top line vs bottom line CEOs:
  “My niche is all of those ops, finance people, leadership components…” — Cody Barton [05:54]
• On partnership structuring:
  “Do not enter into a partnership unless you have very clear buy-sell agreement language.” — Cody Barton [16:59]
• On team management:
  “I want to build every business that we work with into a self-managing company.” — Cody Barton [43:45]
• On economic upside:
  “If it’s doing a million bucks a year profit, 5 million a year exit is reasonable.” — Cody Barton [49:32]
• On buy box thinking:
  “I always like to start with the end in mind before I start something.” — Cody Barton [12:06]

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Key Segments & Timestamps

• Intro & Business Background: [00:00–03:22]
• Transition: Real Estate to M&A: [03:22–07:11]
• Due Diligence Deep Dive (“Plant Guy”): [07:11–08:23]
• Top Line vs Bottom Line CEO Explanation: [09:33–10:10]
• Business Buying Framework: [10:10–13:35]
• Partnership Fails & Lessons: [14:40–24:34]
• Hiring and Managing for Outcomes: [24:52–26:37]
• Diligence Pipeline & Keeping Momentum: [26:37–30:33]
• Turnaround Playbook: [35:28–39:59]
• Scaling Timeframes & Results: [41:12–44:31]
• Economic Benefits / Exit Math: [48:15–53:04]
• Code-shifting among Businesses: [54:17–58:53]
• Wrap-up & Where to Find Cody: [59:23–END]

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Resources & Links

• Cody Barton on Instagram: @codybartnofficial
• ScaleWithPros: scalewithpros.com

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This episode delivers a “masterclass” in operational scaling for acquired businesses, packed with hard-won lessons, frameworks, and actionable strategies—must-listen content for anyone serious about business acquisition and post-close growth.

Transcript

[A]

What's up, ladies and gentlemen, welcome back to the Action Academy podcast, Corporate America's least favorite podcast. This is the show that teaches you how to replace corporate with cash flow through buying small businesses and big old commercial real estate deals. Today, ladies and gentlemen, we have a wonderful interview for you. For my new listeners, we teach on business buying a lot on this podcast and you're going to want to listen to this episode all the way through. For our OG listeners, you will be familiar with the terms top line CEO versus bottom line CEO that we've talked about on the show before. But for our new listeners, here is what means. A topline CEO is somebody that can go buy a business and help in their sales and marketing. They buy a business that's operationally sound and they help increase marketing and sales. Duh. A bottom line CEO is somebody that buys a company that already has strong lead flow but a terrible dumpster fire of an operations department. Today's guest, Cody Barton is the one that fixes the operations department. He is the one that does the hiring, the management. He is an operator through and through. If you guys have heard of Pace Morby, Cody Barton is his operations brain. He's the one in the background running his companies. Cody has a real estate portfolio of over $10 million of value. His current business portfolio exceeds $40 million and collectively his team has generated over $37 million in top line revenue last year. So in today's podcast episode, you are going to learn how to scale a company after you buy it, AKA make a bunch of money. Right? So without any further ado, let's get to it. Mr. Cody Barton, as you started in real estate, now we're doing about $37 million in top line from your current business portfolio. So you buy and scale small businesses. Tell us a little bit about where we're at today. We'll go backwards a little bit to our real estate journey and then dissect what went into the decision making process for you to pivot to business acquisition.

[B]

Yeah, a hundred percent today. You know, I have a residential cleaning company that I had acquired. I have a an offshore virtual assistant agency that does bookkeeping services, admin services. I have a company called the Plant Guy that does these high end luxury plants and super niche business and also have a media company that does a lot of affiliate info, product, different things like that, and then a portfolio of real estate now as well. So that's the kind of now, but previously when I was 21 is when I actually got into real estate and got my license Cause I thought that's what I had to do to invest in real estate. Spoiler alert. You do not need to do that. Um, I just didn't have anyone rattle my head about, don't do that, you don't need to do that. But I just didn't know. So I got my license, worked as an agent for the first couple years with the intent of investing in real estate, and I wholesaled some properties. I did my first couple fix and flips, and then Foley was like, I am done doing real estate agent work. I don't want to work with another client. I don't want to represent another client again. And fully transitioned to wholesale fix and flip when I was about 23. And I really was all in on on real estate until I was about 26. And that's where the main focus was. Wholesale, fix and flip. Buy rentals, buy Airbnbs, and just rinse and repeat. Just that whole process.

[A]

Walk us through the transitions. You're doing this real estate thing. Walk us into how you got introduced to the M and A world, mergers and acquisitions, like business buy in. How'd you get introduced to that world? And what made you decide to go more so into pursuit of that versus continuing your flipping company and your wholesaling?

[B]

Yeah, I think the biggest thing was just where my interest and excitement level came from. Kind of got to this point within our real estate business where it's like, okay, we're flipping now, we're buying rentals, we're buying Airbnb. We had managers that manage the rentals, manage their bnb, so don't have to really do anything with it except to look at things that break on an expense report and be sad about H vac units breaking. So I wasn't really having to do that much in it and really was like, I liked the team building side of growing our real estate company and like having acquisition people, disposition people, you know, know rtc. You like having that team. And. But what I saw is like, the scalability of a wholesale business wasn't really there as far as like, for the opportunity that I was looking for. And don't get me wrong, for someone like, I was going to do wholesaling, should I not do it? You should definitely do it. That's a great entry into the real estate world. But for me, I'm like, I want to have a business where it could be generating multiple millions a year and like net profit and also is a sellable asset at some point. I guess there are some people that exit wholesale businesses, but it's like not that many and like the multiple aren't the greatest. I just wanted something a little bit different and I want things that I could grow and then eventually sell and they're a valuable asset to someone else. And so that was a realization that I was having. And so I started one of our first companies outside of real estate that we built was Start Virtual, which is a virtual assistant company. And that was one of the first businesses started growing outside and being in real estate. Other opportunities came up. You know, we. We built a real estate software app called Bats Driven, which we've since, I dunno, three years ago. We sold that app after growing it for a few years. And so we had the app and then we had a title company. We bought a title company here in Arizona and then we sold our title company. And what I really enjoyed and have really began just leaning into and which is what led me to today is I now, whenever I'm wanting to buy a business, I. I'm always looking for ones now that have a really great brand and they're already good at like the marketing and sales side of their business. And so I can come in and bring my expertise and my team's expertise where, you know, we're great at people building teams, the operations side of business, the finance side of business, the hr, the technology, and coming and bringing that into a business that's great at marketing and sales, it just like literally adds rocket fuel to it. And I've kind of just found that that's like my niche. Find great companies that are great at sales and marketing because companies and teams and people that are great at that. You get to this certain point where you're getting a bunch of people in the door, you're selling them a bunch of stuff for whatever the thing is. But then there's this scale that breaks because you have to now start building leadership and you have to start building the operational systems to be able to scale that up and continue to sell more but also not have people falling out the back door because operations are messy or know your people, the talent that you have aren't trained well enough to be able to perform or they're not specialized enough. So I, I love going in and like working on that side of business. My niche is like all of those ops, finance people, leadership components to tack onto. You know, like the plant guy, for example, you know, he came in there, if you look them up on Instagram, amazing brand, like freaking dope brand, great at marketing, they were great at selling their ops, were a Mess. Their finances were a train wreck like that. Like a train just crashed off of a bridge. On the finance side, hadn't done their books in five years. That type of. Yeah, yeah.

[A]

So what was the top line?

[B]

A 3 million.

[A]

They're doing 3 million and they don't have a clean. Wait. All right. Through your diligence. So, okay, I guess it makes sense because you're the operations guy. But if I'm buying a business for 3 million, top line.

[B]

And.

[A]

And they don't have a clean data room, like, why the hell would you buy that business?

[B]

So I don't take any credit for being able to do the due diligence. 1. We have an amazing attorney team that points out potential red flags, but my CFO is the reason that we were able to do that. So he locked himself in his office probably 60 days to cover this thing, and he's a freaking expert. Our CFO Ben, he has a doctorate of finance and accounting. He, like, nerds out on this type of stuff. And so initially I was like, we can't even. We can't buy this business. So he literally peeled apart through all of their bank statements and everything over a couple year period of time and was able to manually put together how the company was actually doing. And that's how we were able to do the due diligence, was he spent all of that time, you know, literally every transaction for a couple years to see what was real and what wasn't.

[A]

Wow, dude. There's so many parts that I want to pull out that are, like, really niche. But first I want to highlight something that you said that's really important because you are the opposite of me, which means at some point, you and I will probably do business together and make millions of dollars. But I talk about it all the time where I love, like, validating concepts, right? So it's like you come up with concepts and then you meet strangers that are in the game, that they're in their arena, and you're like, okay, I swing my sword this way. Is that the best way to swing it? And you're like, yeah, okay, cool. It is actually. So we compartmentalize it because we teach people how to buy businesses too. We compartmentalize it between top line CEOs and bottom line CEOs. So the million dollar question, multimillion dollar question, is, when somebody's buying their first business, what business do I buy and what value do I bring to the organization? And so we say is, if you're a top line CEO, then you're somebody that makes it rain in sales and marketing. So, like, for me, that's me. I'm like, I can build brand, I could build sales, I could build leads, I could build marketing. Give me something that's already operationally sound and is succeeding in spite of itself and in spite of their lack. They're like, oh, yeah, I just bought a business that does 900,000 top line organic word amount, no marketing.

[B]

Yeah.

[A]

I'm like, sick. You're like, yeah, rubbing your hands together. You're like, oh, cool. And my operator that's coming in from my community, he's doing the same. Oh, dude, I'm going to make it rain. Hell yeah.

[B]

And.

[A]

And so you're the opposite side. So your bottom line CEO, so you're going to come into somewhere that has great sales and marketing. You're like, okay, I'm going to clean up your back room and we're going to make this an actual, like, asset here. And I love that, man. Like, that is so cool. What's some other advice that you can give to somebody if you're speaking to somebody specifically that's in the hunt for their first business? What are some things that they can do correctly? What are some red flags for them to look out for?

[B]

Yeah, so I think, going back to your comment, and I like that top line versus bottom line. I really like that. But, but the. One of the first things that I would tell anyone to do is you can get out a piece of paper and you could write this out where basically, like, you have three columns on this piece of paper. So column one, what you would be basically writing out the things that you're good at. So I would write in this column, like, I'm good at building teams, I'm good at operations, I'm good at finance. I'm good at. I just write out all of the things that I'm good at. And then the next column, I would write out all of the things that are interesting or exciting or sound like something that I would be interested in being involved in. Maybe I like cars, but I don't necessarily want to be involved in the car business. But I like cars. I like. I like consulting, I like education, I like this. It's like I list out all of the other things that I like. And then the third column is I start listing out what are the types of businesses that can actually help me where I would be able to achieve my financial goals? And, and the question could be, well, how do I know? Well, there's a great tool called Google, and you could look up industries and look up average net incomes by a percentage that different types of businesses make. There's certain businesses like CPA firms, bookkeeping, 30% net profit is not, that's not uncommon. Yeah, that's not an uncommon thing to be getting in that type of business versus other businesses that might be super low, very product based, where you have lots of manufacturing and you're producing, you're holding lots of inventory. Like a business like that's going to just have a lower net because you have so much more, more overhead, you have so much more opex, you have so much more that you have to invest into it versus like CPA bookkeeping, just service. Right. So the, that third column is where you just start. If you're looking at, let's say you want to make 300 grand a year, CPA bookkeeping business, buy one that's doing a million top line and it's going to net 300 grand a year.

[A]

Statistically on average.

[B]

Yeah, statistically on average. So it's that the third one that I think some people need to do. Okay, what businesses could actually achieve the goal that you're looking for? Cause I always like to start with the end in mind before I start something. So I know, what am I, what's the plan? So one, I'm identifying in this process, what am I good at? Second, what am I interested in? Third, what are the types of businesses that could actually help me achieve the goal that I'm searching for? And then you look at these three columns together and start looking at where are the patterns? Oh, I'm good at, I'm good at finance and I like, I like that type of the side of the business. A CPA firm, that would be something that I could do. Maybe I should be looking at those. And so it just creates, creates some filtering where you can narrow it down to the things you're good at, things you like, and then maybe a few industries that could help you achieve so you can narrow that focus. You know, it's like in real estate, right? You don't, if you want to invest in real estate, you don't start with I'm just going to buy a house. What's the goal? What's your buy box? It's like in real estate, in business you want to have a buy box based on what you're trying to do, based on your market, based on your goals, like how much cash do you have? All of those things. So that's, that would be one of the, the first things that you do, whether you Know whether you're buying real estate or whether you're buying a business is having a buy box and you know, having some thought process behind it. Not just like I found someone that wants to sell a salon. Do you have any skill set in that area whatsoever? Do you have, you know, do you know how you're going to help that business? Like, do you know how much those types of businesses even make? No, but someone told me that they're selling it and I'm like, okay, that's cool. But like, oh, like we gotta, let's think through this a little bit more.

[A]

Yeah, yes, let's pull on that thread a little bit because that's another million dollar topic right there is partnership who you're bringing on because everyone oversimplifies. Oh, I'm just gonna hire an operator. Oh, I'm just gonna hire an operator. And yeah, so I literally just as we're recording this today, you're an operator through and through. I wouldn't even label myself as an operator whatsoever. Like, I actually struggle with a lot of the things that are very easy for you and it's probably vice versa, like things that are difficult for you. I absolutely, I'm like, dude, I'll do that in my freaking sleep. But I just interviewed Leila Hormozi last Friday. She's an operator through and through. Like, she's probably like a poster child for operators today. Yeah. What's advice that you would give to somebody that's working that maybe they're saying they're working that quarter million dollar job like me, man, they're trucking away. They need to make 200, $300,000 a year to be able to leave that job. There may be like they're a CPA or an engineer and they're just like, man, I need to buy a business. I actually have a shot at getting out of this thing, but I need to find a partner to do this with. I need an operator. What's some advice you can give to them, especially in particular for their first deal?

[B]

Yeah, so I guess the question, a couple of questions that come to mind on that is one, when you're talking about partner, is this someone that, hey, I'm going to give them 50% of the business? Like we're going to be 50, 50 partners on this or is it more of I'm going to own 100%, but I'm going to hire this person to operate the day to day.

[A]

So that's actually interesting that you say that and I'm curious about your perspective on this, because in my opinion, I think if you've never hired someone, going that route would be like just begging for disaster. If the first person that you're ever going to hire or attempt to hire is going to be an operator that runs the day to day at the business that you just bought, I think that's like, probably the worst thing you should do, in my opinion. I think that you should find the partnership, have an equity partnership first, find the person and then go look for the business that fills both of your skill sets. I'm curious about if that's something that you would echo if you would do it a different way.

[B]

Yeah. So I think it does come down to some of the. The skill sets. I'd say one of the first things is in any partnership, one, making sure that there are the matching. It is the right match. Where it's like a few things. One, core values. That's the first thing for me is like, core values has to be aligned. I don't care if they can know they're great at sales and marketing if they're a total butthole. They treat people, they do sketchy stuff like, I don't want to be in business with someone like that. And the first thing is core values is their core value. Alignment. Second thing is. Okay, is there skill set alignment? I'm good at all of the back. Back office stuff, all those areas, leading teams. Is this person good at marketing and sales where, like, they can be the rainmaker there and I can make sure everything else is taken care of. And if that's true. Okay, cool. Like, those are a couple of the initial things just on a partnership. And. But the other thing is now those are just a couple of the initial things. And then it goes into, like, partnership agreements. And there's a lot of things that I've learned from doing. Setting up bad partnerships in previous years to do it correctly now. Lots of lessons. I have an $800,000 lesson of a partner at a buyout three years ago of a business that didn't do anything.

[A]

Let's pull on that. All right. I think that's worth that stuff. That is top of mind. I think we should. Or Cody, we could just talk about flipping houses. Let's pull on that thread. Pause. All right.

[B]

Yeah.

[A]

Talk to us about your $800,000 lesson. Yeah.

[B]

So I'm not going to say the company or the person because I. I don't want to be disrespectful, but the lesson. But so essentially started all good, intense. It's like when you're first starting your partnership, you know, it's all high five. This is going to be great. Like you're going to have this percentage of equity, I'm going to have this percentage and we're going to do all the things we say we're going to do. And eventually things change. But so basically in this business we were growing. We got it to about 8 million bucks a year and damn. Yeah, so it was going well. And we got to this point where they were supposed to be accountable for these two specific areas of the business fully. Like they run those two areas of the business. And it got to, they were doing fine up, up until we were about a couple million bucks a year. And then what happened was they started another business and they stopped showing up. And so then the slack was just left for me and the other partner in the business to just keep pushing things, taking on the things that the other person is supposed to do. And by doing that then it started declining the business a bit because there was, it was like a ghost running these two areas of the business, which you can't have that. So we first it started declining the business because we were growing and those areas weren't getting the attention. So we got up to about 8, then we retracted back down over about a 12 month period to about 5 million. And at this time that partner just wasn't doing the things and we didn't have the right language on our buy sell agreement. Pro tip, talk to your attorney about what you should have in your buy sell agreement when you set up a partnership. Do not enter into a partnership unless you have very clear buy sell agreement language. So we went through this process. It literally took probably eight months and a year of my life off of my lifespan, having to go back and forth and negotiate and fight to get this partner removed out of the business because they were trying to get a ridiculous sum of money while at the same time they weren't doing anything in the business, while at the same time I was fulfilling the role that they were supposed to be doing at that time in the business. So it was like this whole thing of I'm doing their job plus fighting them about the valuation of what we're going to pay them on, while at the same time stressed out and dealing with all this and having to show up every day and put a smile on to the team. So going through that experience, we ended up just finally settling on amount because it was just back and forth and disagreeing. I think it's valued at this. They're like I think it's value to this and it's okay, are we going to go spend thousands of dollars and we got an appraisal done. They disputed it. Then we disputed and it was, it literally took seven, eight months almost, I don't know, upwards of a year to like finally settle on something. And it was so painful and stressful. And the reason I, it's worth worthwhile to share is just you want to set it up the right way when you're going to get a partnership and something that. And I could share it with you after Brian. But something now that I do whenever we're starting a partnership is I created this thing called a responsibility matrix which basically covers the core components of any business, which is marketing, sales, operations and finance. Obviously there's other areas, but they all fall under those four. And essentially what we do is whenever now we set up a new partnership, we fill out a responsibility matrix on the front end of who is going to own the accountability of the success in all of those in each of those areas. And then we attach that to our company's operating agreement so that if there's a breach, so say for example, we have someone, they're accountable for ops or they're accountable for finance and they're not doing it. We could send them, just like in real estate, we could send them a cure notice that they have 30 days to correct the breach of the action that they're supposed to be accountable for. And if they do not do it, we have a preset in the buy sell of what we will buy their equity out for and how it will specifically be financed or funded and how exactly it'll happen where there's no attorney bull crap that has to get involved because it's already preset from the beginning when everyone's high fiving and like excited versus when everyone's not having a good time because you're having to talk about this. So yeah, that's something that, that we do now.

[A]

Yeah. Do you recommend. So normally for us how we do it is like initial buy ins and at the present day value is how we like kind of function our roas today. Okay. Because that's super important language to include in the buy sell agreement because you don't want to have a company where you're doing 2 million and all of a sudden you take it to 6 million. And now they're trying to, which is, I'm assuming what he was trying to do is get the valuation at the 8 million or something. Say, oh, here's the potential at A multiple. I want this amount. And you're like, no, this is what we bought it for. So there should be a punishment for those shares. Is that correct?

[B]

Yeah. So we just have preset language in their work. Let's say, for example, most industries have a similar net profit multiple that they'll sell for at different revenue ranges. So we'll just put in at the current time of the agreement of. Okay, let's say, for example, a business is going to trade typically at three times the profit. There's a hundred different ways that this could shake out. Just for the example, three times whatever the profit is. So let's say that the partner is not performing well. We're going to look at our trailing twelve months profit. Let's just say it's 100,000 bucks. Our valuation. We're going to value it off of already says in the agreement, we're going to value it off of three times our trailing 12 months, $300,000. There's no fighting about it. It's just that's what we already agreed and everyone signed to at the time. And this is going to be updated yearly as things change. So you don't have to keep it that forever. But like at that time, that's what it is. So if they own 50% of the business, yo, you're getting 150 grand. Like, you ain't getting anything more. That's what it is. That's what you're getting. And here's written out how that will be financed or how you will receive it in payments or installments or whatever, initial down payment. So that's now clear. So there's no, like, okay, like, I think it's this. Well, we agreed up front, so there's no fighting. Yeah.

[A]

It's the same thing in real estate. Yep. Death, divorce, distress and disagreement. Right. So a lesson from Gary Keller that I took was that whenever you're signing a legal document, it's not an agreement. It's actually they're all disagreements because the only time you're going to pull them out is when you're fighting.

[B]

That's true.

[A]

So the game is just figuring out and this could all be solved with a proper lawyer and like doing a proper lawyer and proper legal diligence and stuff like that, I think is so important. And I would recommend finding somebody that has, like, been there, done that. And you're going to other people that have purchased businesses and have gone full cycle and you're asking them for referrals. Is that the same way that you would recommend or and what happened with the first one? Did you, I'm assuming you still had a lawyer.

[B]

What happened on that one? We just didn't have. We had the buy sell in there, but I learned how it needed to be set up. Like, we had very vague language around how the business was going to be valued. So what happened was if you go on Google and you type in how do you value a business? You'll get a hundred different ways. There's literally like a bunch of different ways that you can value it. And so he went and got an appraisal on the way to value a business that would give it the highest possible value versus it being off the actual cash flow of the business. And so we're like, we didn't put that in there, so it's left to be ambiguous. And so that's why going forward, I'm like, no, no, no, no. We're going to be clear from the front end. This is exactly how it'll be valued and this is the time frame that we'll value it based off of and this is the multiple that it'll be based off of. And that's it. There's no room for misinterpretation on it. It's very clear. And that was very mistake that we made.

[A]

Very black and white. So any generalities, any vagueness in your communication in the document, like you should have very, very laid out, this is what I intend to do. And if I am not doing this or if you aren't living up to this buy this metric and this metric, therefore you are void in this partnership and I'm going to buy your equity out at this amount.

[B]

Exactly.

[A]

I love it. Any other I want to give into future growth plans here in a second. Any other pieces of advice or horror stories that you've had from any other mistakes that you've made through like partnerships or through buying the wrong business or having or hiring the wrong person. Any other advice that you can give?

[B]

Yeah, I think I would say like just around hiring because you can take that similar advice from the business partnership and then also take it to building teams and managing and leading people. And a lot of times where people struggle with leading people is the. I always teach our teams, you know, when we're hiring people and we're leading people is we manage based off of outcomes, not off of micromanaging, like tasks and micromanaging things that they're doing. Now I'm hiring someone, I'm managing them or I'm hiring them to solve a problem. And that problem has a specific outcome that I'm looking for to have solved. And so that, that is typically when I'm bringing someone in, how I'm going to manage them. And a lot of times when people are, especially when they're first hiring, they like hire someone and they're like micromanaging every task that they're doing. It's really, I'm going to share clearly like an outcome of what success looks like and then manage that person to that success. It's, that's one of the, the big, big pieces. Okay, here's the picture of what I want done at the end of it. And I don't care really how you get there as long as you're following our company's core values, our mission, our vision, like you're all in alignment with that. Here's the outcome. You go and figure out how to do it. That's why I'm hiring the how, the who to do the how, which is like my CFO Ben. I'm like, hey, I just. The outcome I need is I need to see a fifth graders version of what's going on with this dumpster fire of books so I can look at it and see the actual profitability of this business so that I could make a confident decision based off of 5th grader version of this, of these financials to move forward. I didn't say I need you to do this complex audit case study thing and put it into the special software. I was like, no, this is the outcome I need you do it because you're the competent expert that I hired to do it. I just, this is the outcome I need at the end of it.

[A]

I have a question that could be like a massive bottleneck from what you went through there. And thankfully it wasn't, but I can see how it can be. Were you guys under contract on this business when you were doing that audit?

[B]

Yeah, so we, we started our letter of intent with the business and then it was like once we got like their, this, their top line, like, okay, like that looks okay. Like the books are a mess so we don't really know what's going on, but we're like, we're interested in the business because the brand is great, their marketing is great, they're selling a bunch of stuff, but there's a lot of things we can't really see under the hood. And we started the letter of intent and then it just took that time to do the actual like full due diligence, which then changed some of the terms of what we ended up Buying at and like how we structured the deal as we uncovered more and more. But yeah, we initially had a letter of intent upfront with our partner that we bought into it with.

[A]

I'm curious about how you maintain your acquisition metrics while you're conducting that type of diligence. Because we've seen a few deal cycles already that have been meaty deals for maybe like around the 6 million top line mark and you'll go through 90 days or 120 days of diligence, like really in depth diligence. And at the 13th hour you're like, we can't do the deal. And now all of a sudden you're four months deep or six months deep into this and you're just like, what the hell? And now we have no pipeline now. Now how am I, what am I supposed to do? And we've had that happen multiple times across our people. So I'm curious advice that you would give to while you're going through that, especially when the books weren't clear in the beginning. And that was like a risk. Yeah. For you guys to be under loi there with unclear books. But you just had the confidence on the team to be able to say, no, this still makes sense and I can make it. I can get us leverage here. Does that make sense about how to keep the trains moving in both directions?

[B]

Yeah. So like first in that deal, it's like in the letter of intent. It's not like a binding thing. We're 100% have to buy it. If we sign this loi, it was more like we're going off 100% of the assumptions you are telling us because the thing the financials are not clear. So we're just going to assume all this is true and we will 100% be changing the terms if what you say exactly right here is not true. So we aren't like really that worried about it because we're like, we're gonna find out the truth as we go through this process. I guess it also comes down if you're trying to acquire like multiple businesses a year. Like, I'm not trying to acquire any new businesses through the end of this year or probably even the beginning of next year. We're stabilizing, growing, optimizing the businesses that we have probably up until, I don't know, maybe quarter two of 20, 25, quarter three, and then we'll probably start looking at, okay, what's the next business that, you know, I actually want to buy and you know, integrate in with what we're doing. But obviously if you're like working on your first business, I have, I like having a couple irons in the fire. Obviously I can sell. Everyone knows the salesperson that has the almost closed deal that they're talking about. Oh God. John's going to, he's going to sign today. I know it. And then like next week you're like, John's going to sign this week. He said it's like you have these deals that are working but they don't, they don't always pan out. So it's, I like having a couple deals in the pipeline at all times when we're looking at stuff. And you could always say no to a deal. Like at the end of the day, it's like you're going to, you got to pick the better deal and that's going to happen. Just like in real estate, you're, you go under contract on this great deal. You're like, I'm getting a steal of a deal. You send out someone to go walk it and you're going to flip the deal and you're like, oh my gosh, the entire foundation is destroyed. It's going to be 50 grand to fix it. Okay, deal dead on. At least we had six other deals under contract because not all of your deals are going to close on real estate either.

[A]

Yeah, that's just something that we saw is they're like, oh, okay, I'm going to stop pursuing other deals and stop submitting, Lois. Like I'm just, this is it. And then all of a sudden you're like, oh, ow. There goes five months.

[B]

Every deal is going to die. And just, but move forward. Have, move forward with the, the thought that hey, this is going to work, but be taking actions as far as, hey, this may not work. So what else do I need to be making sure is happening in the meantime?

[A]

Boom. What goes into your decision making process to pump the brakes on acquisition versus match the gas?

[B]

You know, I would say because I'm very operationally minded, like I want to fix, I want to fix things before. I don't want to just throw more mess on top of what's already there. It typically takes, depending on what's going on with the business, it's going to take a certain period of time. Like I'll just talk through, like the cleaning business, for example. We have, we have a process that we go through whenever we go into any business. And it's the same process that just different steps that may have to be taken based off of what a particular business needs. And so when we come in, there may be a situation where we have to rebuild the whole team. Like the cleaning company that we bought, we were thinking that we were going to be able to throw on a lot of new growth very quickly. But when we came in, we had to fire the operations manager. We had to fire every supervisor that worked at the company, and that we had to fire the trainer, which is literally their whole leadership team, to train the cleaners, to manage the cleaners, to manage the scheduling, all of that. And we had to redo their call center that was doing all of their booking for the cleanings. So that delayed things and the growth cycle because we're like, we can't just go throw on more to something that doesn't have a good foundation. We had to bring in a new operations manager. That's phenomenal now. We had to bring in new supervisors, we had to bring in a new trainer. And why was that? It wasn't because we're like big, bad corporate type company where we just want to fire people. Like, we never want to do that. Our first thing is always we want to coach people up. We want people to be able to grow. But we're either, we. You either you have two choices. You get coached up or you get coached out. Like, we have to do these things. And we rolled out with them, their core values. We helped them establish their company mission, their vision. And so when we clearly define what our core values are, what our mission and vision were, which is one of the first things that we did with these guys, then we went through the organization and we roll them out, and then we start to see the people that buy in or are going to opt out. And those are the people that we have to coach out. Because if we have core values that are in misalignment, we're not going to be able to succeed long term. And so that was one of the first things we did. And so we're like, you know, we have these people that they don't want to buy into what we're doing. They don't want to buy into what we're building. They don't want to follow our new processes that we're putting in place. We can't keep them because they're going to. They're going to bottleneck our growth. We're stuck. So we have to. And again, that's why I'd rather coach up, because, like, they already are here. I want them to grow and we want to show them the vision of when we go here. This is what it means for your role, you'll be able to ascend to this. So this is what the opportunity could look like for you. And so we want to show them the vision of what's possible. But to get there, we all have to do some things differently. And here's the values that we're rolling out as a company, and these are the things that we're going to have to do. And if people don't opt into that, we have to replace them. It's just at the end of the day, core values, just in general, if someone's on a core value fit, doesn't matter how good they are at their job, they're not going to work at one of our companies. It doesn't matter.

[A]

When you're creating the core values, that's something that's done shoulder to shoulder or face to face. Is this something that you're putting on them or is it something that you're working with their team, their current team together, and you're like, okay, let's create these.

[B]

So for, so that cleaning company, for example, so the owners that we, you know, we bought into the company, the two owners that were there, I just walked them through the exercise and they created them. I just helped guide them. It's their baby. They run it day to day. I'm not running day to day. I'm in strategy. I'm in helping fix problems and things like that with them. But they need to be bought in. They need to be bought into what the values are. So I'm not going to tell them what they should have as their values. I know. I just went through this exercise where we coach them on how to come up with their values and then how do we roll those values out so they're bought in and then they roll them out to the team because they're. Then they're going to be bought in and consistently communicating those values to their team members and what it means to them and why it's important that those values are adhered to at the company. So those are a couple, the things that we do on the value side. I never want to tell someone what their mission should be or their vision or their values. I'm more of like the guide alongside them. Okay. Like, these are the things that we've seen work well and the companies we've built. Here's the structure. But we want your. All of your creativity and we'll just guide you along the way.

[A]

Yeah. I'm curious about your turnaround process. When you guys, you said you follow a similar process for each business. And for us it's 90 days. We're not trying to rock the boat, you know, 90 days. Yeah, we're. And so that's why I wanted to specifically say that because somebody may listen to this and they're like, oh, Cody went in guns blazing and fired the entire staff. And so there's two things that I want to pull out of that one is like, how did we purchase this business? I'm assuming that it was like a. More like a higher, A little bit higher purchase with some margin. I'm assuming that was within it because this sounds like a massive turnaround that can only be done with a little bit of margin. Is that true or.

[B]

Yeah, so I guess with, you know, the plant company or the cleaning company a little bit different on both of those. So like the plant company was a lot more work that had to go into it over this last year than the cleaning company.

[A]

That sounds like a shit ton of work.

[B]

Oh, dude, that stuff's easy for me. It's like as far as the things that we're helping them do, they're all easy things to do. The plant company was a lot more because it's like the expenses are crazy there and like the financial forecasting of inventory management and production management and like there's so much more that that had to go into that company to really get it. Get it where we needed it to be. And so really whenever we're going in and why this is something our, you know, my consulting company skill with pros does too. It's like we do the same things other consulting or whether we're going in and buying. And so really what we do is like when we're coming in, the first thing is we're trying to onboard and integrate all of their things from a few of the areas from the operational side, the finance, the people. So those are things from a tactical standpoint. I want to get the org chart. They usually don't have an org chart. I want to get just the people that work there and then I'll build the org chart so I can understand that. I want to understand how people are compensated. I want to understand how the business work. I look at every business as a conveyor belt. Marketing's up top leads fall onto a conveyor belt. There's a sales conversion event that happens. Fulfillment operations takes them down. The things that keep the wheels turning are the people, the HR and the finance that keep everything, keep the lights on. And it's really like the first month. Whether it's like on the consulting side or whether it's on the business buying side is we want to just onboard everything and get into what's going on. I want to understand like every step of the business. Walk me through, you know, Mr. Business Owner, how does a lead find you? How does a sale event occur? When a sale occurs, Walk me through your process of how you fulfill on your product or your service. Walk me through then how you're making sure you're doing that all profitably. Walk me through your team, why you have certain roles here, why you don't have other roles here. I want to just act like I know nothing and just, I want to understand the whole business. And we want to just intake everything in these different areas. And so that is the process in the first month. Month two is we start based off of we have a tool that we utilize. It's called an impact effort calculator. And we utilize this in every business because obviously when you go into any business, there's a hundred things that you could do, right? You're like, this is a good idea. That's a good idea. We should do this. We should, we, let's do this new marketing thing. Let's change this on the sales team. Let's integrate this new CRM or this new website or whatever. So you're like, we have a hundred things that we could do, so how do we decide what to do? So during that first month, as we're intaking month two, we're essentially establishing, we use this impact effort tool to come up with. Here's the 50 things that from our team and the team that we're working with that we all want to do. And then we start, we use this tool that, that I created to then establish, okay, I have just some, some filters on this where it's like of the things that we have. Let's rate each of these on a 1 to 5 of impact. Well, how do we decide what's impact? I have a few different things that go into the impact, but just a couple of them is like, is this going to significantly increase revenue? Is this going to significantly decrease expenses? Is this something that could be implemented very quickly? There's a few of those things on the impact. The effort is the next thing. So we're, we're rating it by, okay, a five would be this could generate a lot of new revenue for the business or it could reduce a lot of expenses. But the next thing we look at is the effort. How hard is this going to be to implement? Okay, if we want to change the entire company's CRM. We're going to have to train the entire team on a new CRM. Not only that, we have to set the CRM up, we have to test the CRM. It's going to take a couple months of adoption. You're going to have the team fighting with you because they're like, I don't like the way that the button works on this. You're going to be working through that. John still isn't using the CRM and putting the notes in. John, why aren't you doing it? I don't like the app on the phone. That's what you're dealing with. So it's like, what is the effort? And effort I look at when we're looking at this impact effort filter is how much, how many people have to be involved in it? What's the estimated amount of time to roll it out? Is this going to take three months, six months? Is it going to take a week? Can we do it in a day? And then once we've identified, okay, the potential impact, the potential effort, and then we put an owner next to it who would own the execution of this within the timeline that we're giving it. And then we essentially look at, okay, we have 50 things. Well, now we've narrowed it down to the top five things that are going to generate the most revenue, reduce expenses, and that we could do the fastest so we could see the fastest impact on the business. And that's what we go to work on within that second month, which is starting to implement those things. Month three, start to optimize on those things and then start to go back to the impact effort once those are implemented and start going down the list and maybe we add to it as we go. Those are the things. But generally, like you said, we're not coming in and trying to change everything immediately. That's why in that impact effort, we're very cautious about what we're going to go and pull a lever to make a change on, because we don't want to blow up the business. Like we, we're still learning the business. So we want to be very intentional. And the, the founders that we're working with, we have them very involved in that process. Or if we're consulting with the business, we're very. They're involved in that decision because they have context into certain things that we may not have context into. So long story short, that's one of the things that we utilize to best make a decision to what to change and when to change it.

[A]

Why?

[B]

And how to know who's going to own that change?

[A]

Hell yeah. Dude, that was awesome. How are you on time? We're at the top of the hour. Can you go another 10 or do we want to.

[B]

Yeah, no, I'm. I'm good. I'm good for a little bit. Yeah.

[A]

All right, cool. Dude, every. Every single thing that you just said there is gold. What would you say the normal average turnaround for a business for you guys implementing your systems is six months, nine months a year?

[B]

Yeah, it depends on how flexible the people are that we're working with. Like, if it's a company that we're like, no, I'm coming in and I'm consulting with and helping them just implement this stuff into their business, Helping them just install it into their business. You know, we could typically get a lot of the things that we're doing implemented installed within three to four months. Then there's a lot of optimization that has to happen after that. But usually within three, four months we can get a lot of the things that we know we want to implement done. But we have to. Every business is a little bit different. If we have to go into like the cleaning company, we have to turn the whole thing. Freaking leadership team that's currently here. It's going to take longer. Like, it's taking longer to do things because now we have brand new people that we're now training, but they're a core value fit. Now they're on board with the mission. They're freaking excited about the vision of where the company's going and what it means for them. And so then we could implement faster. So part of it depends on the actual founder, the business owner that we're working with, or the team that's currently in place to be able to execute those things. But let's just look at an example on plant guy. So they did about 3 million last year. We got into that deal. It was actually right around this time I flew out to Florida where the headquarters is there, and spent two days going through their whole business with them. And as we got into it now, I guess we're looking at about a year this year that company will do. Depending on like hot season for them is like November, December, like those are like the two juiciest months of the year. So really excited about that. But what we're tracking for right now is going to be somewhere between five to five and a half million. Maybe if we have a banger, November, December, we could get close to six, but where we've almost doubled the business within, within the year of working with them. Lots of challenges, lots of really hard stuff that we had to work through with that business. Those first few months you almost feel like there's not a lot of progress happening because there are just a lot of internal changes. But then four months, five months, six months goes by and it's like revenues increasing, things are running smoother. And that's a lot of the challenge too with operations is with sales and marketing. It's very easy to see a difference. It's like we sold more stuff.

[A]

Fast feedback loop.

[B]

Yeah, fast feedback loop. But when you're fixing ops finance like the people side you, things start to feel better. It's like things start to feel like they run more smooth. They start to feel like they're running like a well oiled machine. My thing is I want to build every business that we work with into a self managing company. They should be able to be a self managing company because that's a well run company because that means it's not dependent on any sole individual for the company's success. And so that is. So the long answer I guess is within six months we could make a lot of the changes within three, four months. The changes can be made depending on how, how moldable. The teachability index I like to call it, of the people that are in place, they have a high willingness to learn and a high willingness to change. Great. We're going to move faster and we're going to execute within the shortest period of time. If they have a low teachability index, they're adverse to learning new things. They don't like change. Well, it's probably going to take a year. It's going to take freaking a year and a half, which I don't want to work with those people anyway. So that's, those are things that come into play there.

[A]

Passive income, right.

[B]

Passive income.

[A]

I'm just going to buy, I'm just going to buy a business and hire an operator. Dude, what you said sounds terrible. I'm just going to hire an operator. This is the operator side.

[B]

Yeah, I don't know anyone that has that exact situation. Very passively you can have very leveraged business. Like with all of the things that my businesses are doing, I can go and travel for multiple months of the year. I could be location independent. I could do, I could take, you know, a month off and not work on the business and the businesses will still sell, they'll still operate, they'll still generate revenues. But oh, it's like I still, I'm Coming back and getting involved in things. It's the way that you set up the business, too. A lot of people, they set up their business where it becomes so dependent on them, where they're like, I am the champion and I have all of the answers and I solve the big problems. I'm like, how can I set the vision, the mission, the core values for my business? How can I then go and find extremely talented people, bring them in, pay them, pay them very well, and show them what the path for their future looks like, to tie their goals with my company's goals and let them run and let the who's that I hire do the house, lead those people well and treat them extremely well and have a great business? I. I've never been, like, I've never wanted to be the hero of my businesses. I'm not like, I want to know the answers. I'm like, how do I become as insignificant, insignificant as possible for the business where people are like, if we love when Cody's here and helping, but, like, we don't need him to do something with this. Like, we got it. Like, that's what I want people to be like, it's great when you're here, but we don't need you. That is how I know I've done a good job.

[A]

Exactly. I love everything that we're talking about here. And this is why, like, in the beginning, there's a slight fallacy that, you know, some people come in and they're saying, oh, I'm working this job and I'm going to buy this business on the side. And I'm like, that's not how that works. Which is why, like, the big fallacy when people come in is they view business valuation like real estate, and they think, oh, low price business, good deal. I'm like, buy the bigger business that has enough ste for you to actually get out of that job. Because if you're a CPA right now and you're making $300,000 a year, you can't just go buy a business on the side and do everything that Cody's talking about while you're working your job, while you're growing a family, while you have free time to eat, buy the. Go ahead and buy the business. It's the same amount of effort that has enough ste for you to go do this full time. And I want to use this as a great segue. Talk about the economic benefit of all this work that you're doing. So you people are listening to this at this point, and if they're still listening. That means that they're interested in this stuff. So talk about the economic benefit because right now we're making this sound really effing hard. And I want to preface this with saying the difference between growing your own business and doing what Cody is talking about. That's why I'm now going into acquisition. Because our core business that I started from scratch, Action Academy next year, our benchmarks are 5 million top line, 2 million EBITDA, which is a juicy business. Yeah.

[B]

Info businesses are the. Are the way I know.

[A]

And that if that's packaged well, that's a $10 million valuation comma. But yeah, keyman risk, like very info businesses. And when you start your own business, it's very difficult for you to remove yourself from it and actually have it be a sellable asset. So when I'm looking at buying businesses, I'm like, okay, cool. I want to see this as equity multiples and stuff that I could put on my balance sheet. So can you talk about the economic levers and how all this work is going to freaking blow out like your net worth and your distributions here?

[B]

Yeah. So let's just say, for example, let's take a plant guy. One of the things is, you know, he. There's key man risk there with the partner, which is Matthew, the plant guy, but he's going to stay with the business. Like, let me just walk through the plan of what we're going to do with that. That company. There's two potential exit points that we might make on this. So one is now we came into this business doing 3 million a year. And the bottom line, it did about 600,000 in profit off that 3 million, so about 20%.

[A]

So yeah, yeah, yeah.

[B]

The. Is that the right math? Ish.

[A]

Yeah.

[B]

Yes.

[A]

Yeah. But about 20%. 20% is about what you'd expect.

[B]

Yeah. So that was what the business was doing. And the plan on this is we're going to grow it. And the two big exit points for specifically private equity, which is where we want to go sell to for this particular company, is either once it's doing at least a million a year in profit, which will likely be this year, or trending for that by beginning of next year or 4 million. And why is that? Why is there this discrepancy between the 1 to 4? I've learned this really just. I have a coach that exited for over a billion dollars on a big H Vac company and a couple other companies, and he's taught me these multip. And how the private equity world Works and so you grew up.

[A]

Introduce me. That's a great podcast episode.

[B]

Yeah, no, I could definitely introduce you. And so I. So if you get to this million a year EBITDA mark million a year profit you can typically sell for and obviously there's so many variables that go into this, but I'm just giving some, some, just some baselines. Typically you can get around a five times multiple. So if it's doing a million bucks a year profit, 5 million a year exit is reasonable to, to be looking for the next step, stair step is that when you're doing about 4 million a year in profit, you can typically get about an 8x or more on when you go to exit. And so my question, and his name's Adam Coffee. My question was, Adam, why is it not at 2 million or why is it not at 3 million? He it's, he's like it has nothing to do with the actual profit of the business. It has more to do with the private equity companies fund size that they're managing and the size of deals that they have to buy. There's smaller companies with smaller amounts of funds under the 4 million a year in profit. So there's less buyers in that pool. So the multiple is around five times is what he's having us plan to expect. When you're at 4 million plus you can expect more of that 8x10 million in profit. He's like the sky become more of the limit depending on the type of business. But 10 to 12 to 14 times on a business of that size is very normal. And so with this particular business, the plant guy, my particular plan is growing it and I own about 50% of it, is to grow it to the point where we're over a million. So like we might make our exit in the next 12 months. But so if, say, let's say for example, we do that, we get it to, let's just say it's at a million in profit. We go and sell or I go and sell the half that that I have. And a private equity company comes in, they buy 60% of the company. They typically want to have majority. So they buy 10% from the partner Matthew there, that's the plant guy. And then I get fully bought out of my entire position and they come in and they buy it at a five times multiple. Well at that five times on a million, that's five million, five million bucks. And so there's two and a half million dollars. That's going to be the lump sum for that. And that business I'll share with you off of here because I don't want potential buyers to hear this somewhere and note where our entry point is. But I'll share with you offline the but that would be a lump sum of two and two and a half million bucks for that 50% while getting distributions along the way. So yes, like you're saying, lots of work, it's hard challenges, lots of things to figure out and problems to solve. But while I'm building other businesses. Okay, when we go to sell that. Okay, cool. I get a couple million dollar payday while I'm getting distributions along the way, while I'm getting distributions from other companies that I'm building, while I get payments from other investments that I have. The chunks of cash that you can get when you're growing these different companies is substantial. Especially when you get it to at least over a million a year in profit. You can get a good juicy check within just a short period of time. Like we're like, again, like we're a year into that deal. And so you have within the next six to 12 months, if we decide to exit at that point, to get a couple million dollar payday while getting distributions along the way is not a bad deal. While it's just, and that's like a side deal. That's not my main business. That's just we got this thing. I have a leadership team that's helping implement. Yes, I'm helping on a lot of the strategy and problem solving. But it's a good deal. It's, it's a little bit, it's a little bit better than real estate as far as the return goes. But I would say more, arguably more work for sure.

[A]

Yeah, we talk about money, knowledge and hustle in the real estate transaction. It's the same thing here. Yeah, you're, yeah, you're the knowledge and kind of the hustle, or at least you're orchestrating the hustle. I'd say you're more so the knowledge, but this just goes to show how important it is. My closing question is, like right now I probably work 10, 12 hours a day in my company. Like my business, it's my baby. And I candidly, I also enjoy it. If I didn't enjoy it, I would find more ways to system it, systematize and get out of there. So for me, when I'm in my acquisition, like I'm new in like the acquisition part, so it just bought one and it's gonna be a low lift for me. I'm very passive in that. But like for me, with what you're saying, I'm just like, dude, how the hell would I go buy these companies? And there's no way that I could go in and have this level of attention to detail and effort to turn these things around while I'm running my own company. So I guess that's a question I would have is I'm assuming the answer is like seasonality, where you're like, okay, for this season I'm going to be focused on this and then I'm going to get the management team in place and then I'm going to be able to move my attention. Is that kind of it? I just am wondering how do you code shift between different businesses in your own company?

[B]

Yeah. So one of the things and like the strategy that I follow on the businesses that we're acquiring is I want the founder to stay in place. So they are the face of the company and they still are running the day to day. They're still the champion of the team. Right. And so I'm not coming in and replacing that. So like the founder staying in place and in these particular deals. But you could also like to your point, you can install an operator. Typically they're not going to have the same passion as that found original founder, but you could do it. So I don't want to discourage someone from thinking they can't do that. But basically it's rinse and repeat on the same processes. Right. So like I was saying earlier, I see every business is the same. There's marketing, there's sales, there's ops, there's finance. Every business from an OP standpoint, it's the same systems and processes that I implement. It's like copy paste, finance, same things, copy paste the people, hr, team building, same things. People are emotional creatures. We have to figure out how to work, get them to come together and work together and do the things that create the result. A lot of the same, the things that have to be done in the businesses is the same thing over and over again. It's not like we're doing something new and the same. Like when you think about your expertise in marketing and sales, it's like when you go into a business, there's the same core elements that you're doing. It's just maybe tweaking it for that business. And so how I focus on it is a lot of planning in the team that's helping execute. Whether it's my, my team with scale, with pros, where we're coming in and consulting on a company, or we're going in and buying and doing and helping just implement this stuff. It's my team and I, we come in and we put a plan together where the cleaning company or plant guy, we create the annual plan for the next 12 months, what the business is going to look like in the next 12 months. And so I'm heavily involved in the strategy of that. Like where we spend upwards of two days depending on the business. We're breaking all of it down. Where do we want to be, how do we want to grow it? What does our org chart look like today? What is based off of our goal, our team size need to look like to achieve these targets? What else must be true? And so we create the picture of what we're going to create. And I'm heavily involved in that strategy for the business like plant guy or the cleaning company or whatever. And so I'm involved in that and then it's we pass it off to the team to okay, here's the blueprint of what we need to do now. It's execute and then how do we manage execution through the right planning sessions on weekly, weekly meetings, the right one on one systems, the right leadership systems, the right monthly check ins, the right quarterly planning sessions that we also do to make sure that we're staying on track for those things. And that's where I'm more involved in those where I'm not like every day involved. So I can come in and create the plan and it's just guys just follow the plan. That's the plans in place. Like we just need to do these things and then where I can work on my day to day business which is skill with pros is like my primary focus today and be able to just go and help implement those things. And I have a team too, so it's not like me. I have essentially how it's set up is I have a leadership team. So like I have my cfo, my head of operations, our senior web guy, like all of the core functions that we help fulfill on a business. So when we go in and we create that plan now it's like my amazing team is going and helping execute the plan alongside the company that we're working with. So that's how we set it up.

[A]

I can also see how that could be pretty vertically integrated. It doesn't sound so when I say code switching for people that are listening, it's for an example of me running this online coaching and community business through Action Academy. And then all of a sudden I have to code shift. All right now We've got a team of service techs that are cleaning kitchen hoods.

[B]

That would be very different.

[A]

That's a code shift. But from what you're saying, it sounds like you've actually built your process very, very elegantly to where your core business actually is, the implementation of these systems. It's just the difference is are you getting paid to do it with whatever your business offer is versus are you just having ownership of the company? So your team's already. This is what we do.

[B]

Yeah.

[A]

Anyways, so there is no COD shift.

[B]

It's just the freaking doing the same functions. Yeah, we're not like, yes, they're different types of businesses, but the same core foundational elements of each of those areas is the same and we implement them the same way. It's just do we tweak it based off of how this company functions versus keeping it the same? And so. And that's where it's like copy paste. I just install the same thing that's working over and over again. And we get better at it as we do it into more businesses because we learn things and we like, oh, so let's go back and re implement that across the other ones because we've learned this new way of doing this and now it's now part of the new process.

[A]

I think something cool to pull out of that is to for the listener, if any of you guys have your own businesses already, look to what you guys are already doing and see what businesses you can buy, where you can institute what you're already doing or something that you're already buying through a vendor and then just vertically bring that in house. It sounds like the smoothest and best way. But for sake of time, man. Where can people find out more about you? I freaking love this. We could talk for another five hours. Where can people find out more about you to go follow you, to partner with you, hire you, whatever.

[B]

Yeah, where I'm more active you could find on Instagram. Cody BartonOfficial. You know, I post a lot more on there and a lot of business stuff, but then also personal as well. You know, as far as learning about the group and the memberships and how we do consulting and help companies scale. ScaleWithPros.com is where we're at there. And I've also been putting out more. I used to on my YouTube, do a lot of real estate related content. I've slowly been transitioning now to doing. I have a scale with pros podcast on there and just putting out more. Just the stuff that we do. In businesses and just teaching people how to do it on there. So those are the, the main places.

[A]

Awesome, man. And guys, we'll have all those links in the description for the website, for the Instagram, for the YouTube. Cody, dude, awesome. Freaking crushed it, dude. Awesome coming on, man. Thank you so much for being here. And dude, yeah, talk soon. Like, we need to talk off camera, like for another 10 hours, dude. I'll just fly out wherever.

[B]

Yeah, yeah, Brian, thanks for having me with that.

[A]

This has been Brian and Cody with the Action Academy podcast signing off.