← How I Built My Small Business
How I Built My Small Business
Nik Hulewsky - He Put $180k Down. Then Built and Grew $18m in Businesses.
00:49:43
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- [00:04]
A
Welcome to How I Built My Small business. I'm Ann McEntee, your host. Today's episode is with fellow podcaster and now friend Nick Halewski of Nickonomics. He's an excellent host, and I've had the honor of being on his show a couple of times, so I thought I'd turn the table and put him in the hot seat. So I think something that people will wonder, obviously, after they click on your episode is like, who the heck are you?
- [00:33]
B
Who the heck am I?
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A
Who is Nick Kaluski? Yes. Who are you and why do you have something to offer people?
- [00:41]
B
Well, that's a great question. I don't know if I have something to offer people. Hopefully they stick around long enough to make that decision. I'm just kidding. Who am I? So I'm a husband. I'm A father of five boys. Been married for almost 20 years. Serial entrepreneur, mainly with healthcare experience. I have operated in home health and hospice for a long time. And then in 2020, I decided I was done working for other people. I bought my first business, which was a medical billing company. It was a $3 million company. And then I started a home health and hospice from scratch. I grew both of those businesses over the next few years, added different components to them. Medical staffing, medical practice management, home care. And we grew the medical billing company to about a $7 million company and the home health and hospice to a $15 million company. Sold those companies. And then for the last two years or so, I've just been. I've just been dabbling. I've been like a kid in a candy shop. I'm like, oh, that looks tasty. Let me try a little piece of that. I want to learn about cac. I've never heard of CAC before. What's a roas? Wait a second. You. You can just knock on people's doors and get business? So I've just been exploring and trying to get to know different businesses. I've invested in RV parks. We have. I have an E commerce business that used to sell crypto miners. N E R S, not ors. So these are not underaged crypto people. These are machines sell crypto miners to people who are mining for bitcoin. I have a digital agency that does digital marketing for small businesses. We have a tree trimming business in Dallas that just services the Dallas market. We launched that as a test. So, yeah, I got my hands in a couple of different things at the same time. Just because I'm obsessed with entrepreneurship, I freaking love this game. It's so fun.
- [02:16]
A
What, what are, how are you capable of doing this much? Where does. Okay, so healthcare obviously is a big part of it. It sounds like that brought you two of your first major windfalls.
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B
Absolutely.
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A
What were you doing before that?
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B
So before that I was working in healthcare. I graduated college in 2012. I was a little older, I was 27 at the time and I'd started late. I thought I was going to be a musician. I met my wife and then for those who can't see me, I'm doing air quotes. We decided I would go back to school and so I went back to school anyways. I graduated a little bit later, but as I was graduating was when the Affordable Care act was coming out. And if you remember, many of the listeners will remember it was a big deal because now we were ensuring health care to everybody in the country. We hadn't had that before. And I was a political science and economics major. So I loved this intersection of money and politics. And I thought healthcare is a really cool space to get into. At the same time, I'd grown up with a twin sister who's developmentally delayed. She was like the level of a two year old. She died a couple of years ago. And so I'd seen caregivers come in and out of the home and provide a service to us that we couldn't provide ourselves. And I knew that it was life changing to these families. But I also knew that if I saw blood, I would faint because just getting my blood drawn to have it tested at the physician's office, I get lightheaded, I have to lay down. So I thought, what can I do? How can I get into healthcare? And my brother in law was working for this company and he said, hey, you might want to try this healthcare thing. It's home health and hospice. And I said, sign me up. And so for the next eight years or so, I worked in home health and hospice. I worked for a publicly traded company and that segment of the business went from 15 million to about $150 million in revenue. And I was a part of their acquisitions teams. And then I worked for another company. And eventually by 2020, I was like, you know, I've done this. I've helped negotiate, I've helped transition, I've helped turn around a bunch of different healthcare locations. I think I could do this on my own. I don't know why I'm working for other people. And so I made the leap into entrepreneurship.
- [04:19]
A
So was that job where you got all of the experience that you felt you needed in order to take the leap from being an employee to then buying a business.
- [04:31]
B
Can I tell you the story of getting into it? I was working for this company. They had offered me equity, and they were like, hey, 3% equity in this business. And I was stoked because I'm like, this could be a million dollars. $3 million, Jess, this is going to be amazing. And I sacrificed. I was gone every single night during the week for, like, two years. Well, right before COVID hit, they had done some acquisitions which put the company in jeopardy, and there were some problems not in my region. And so they had to go and raise money. I didn't know this at the time, and they had come to me about a month earlier and they said, hey, remember that 3% equity that you promised or that we promised you? Yeah. We need you to take out a loan, sign your name, put your house up as collateral, and buy one of our businesses, quote, unquote. And we're going to use that money as working capital so that we can pay off these debts and figure stuff out. And I was like, red flag. No, that's not the deal. Yeah, yeah, exactly. Like, that wasn't the deal. I'm good. Signing my house. I'm good, like, helping the business grow if we're going to buy something new, but just to, like, refinance and play this shell game so you can have working capital. So I had told them at that point, I'm like, I'm not comfortable with that, and I want something with equity. So we need to figure something out. And if we can't do something long term with equity, then I'm going to move on. But I'm not putting you guys in the lurch. So they're like, okay. This was around Christmas. So my wife is pregnant, greatly pregnant. She's going into labor. And I get a call from one of them that morning, and they're like, hey, we're in your town. Can we grab lunch? And I was like, that's freaking weird. February 19, 2020. And I was like, jess, they wanted to meet for lunch. She was like, well, you know what? Contractions are far apart. Just go meet them. This is our third kid at the time, so she kind of knew the rodeo. So I got. All right, so I go to lunch and I'm meeting with them and they fire me because they went out and raised money and they needed to cut costs. And the private equity fund that was investing in them was like, well, he's not staying long term. You need to cut costs because you can't even make payroll, so fire him. And. And they came and they fired me. And I'm like, okay, well, how long are you giving me? And they're like, well, till the end of the month. I'm like, it's February 19th, guys. Oh, my wife's giving birth right now. Yeah. Now, they were in a very difficult position. I've come to empathize with them a lot more in subsequent years. But in the moment, I was freaking pissed. I was like, are you freaking kidding me? My wife's in labor. You fi. You're firing me? And now what am I supposed to do? Like, you're firing me Because I was upfront with you about I need more equity. It turned out to be the best thing that ever happened to me. And because February 19, 2020. What happened? Right after February 19, 2020, Covid, the world shut down.
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A
Yeah.
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B
Yeah. And so I got to be home with my little baby right after he was born for months. And had I been in health care still, I would have been going crazy. I would have been working like crazy and managing these operations. And, you know, God bless all the people who worked hard during COVID and were actually providing care. I just know it would have been a nightmare for me and my family. So I got very lucky in that I was fired in that moment because I got to spend time with my son and I got to negotiate this business that I was looking at. So I had already started looking for a business, and I decided to look even harder. I found this business, it was a medical billing company, and I started having negotiations with them, and we started moving quickly. But I think your question was. That was my long winded answer.
- [08:00]
A
How did you find it? Where were you looking?
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B
Great question. So at the time, my thesis was I really like tailwinds. And you and I have talked about this before. I like, like big macro changes. So I had this criteria. I knew that I wanted to buy a health care company because I'd had experience in health care, and it just seemed like a no brainer to me. Find a healthcare business and blow it up, because you know what you're doing there. The second piece was I wanted to move to a market that was growing faster than the rest of the United States. So I was looking at markets in, like, Arizona, Utah, Idaho, Colorado, et cetera. Like, okay, cool. So healthcare market that's growing. Great. And I wanted to find something that was not patient serving. So I wanted to be a vendor to healthcare operators, but I didn't want to be the actual operator themselves. So that leaves kind of like back office solutions. So I decided, all right, cool, I'm going to find something in this medical practice management space in one of these markets that's in healthcare because I can leverage my experience that way. Luckily I had experience finding deals and so I really just went to that playbook. I was like, I'm going to reach off market to the companies that I've identified because I had already identified this really like narrow criteria of businesses I wanted to buy. I just looked up that list and started reaching out off market to individuals and having conversations with them. One of them happened to be a person who was thinking of selling and her and I built a really good relationship and that's, that's how I found the business.
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A
So you're, you cold contacted businesses to see if they were available for sale, correct?
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B
Yeah. And it wasn't like a mass cold contact. What I would do is I would get the list and then I would go and research them. I'd look on LinkedIn, I'd get their background profile, I'd see like, are they in the age range where they might be retiring? I gave them a message of like, hey, I'm moving to Boise, I have all this healthcare experience. I've seen. You've operated in this space. I'd love to just have a conversation with you. So it went from just this cold call. Oh, private equity fund is just trying to do a roll up to this guy. Seems nice. He's got a family. Oh, he's got boys, they're moving to Idaho. He's got healthcare experience. Oh, this actually might work out. I am kind of thinking about retiring. So those messages tend to have a much higher response rate. But you have to do a lot more work to qualify the type of business in the geography, tailor the message and really be a person to them. But when you reach out.
- [10:21]
A
So you didn't have a broker working for you, you weren't going to networking events, you weren't doing anything else to find these. It was your own research.
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B
I've never bought a business on market and it's not advice I would give to a first time buyer. I think you do need to go through the process of working with a broker. Even if you find the business off market, go find a broker because you haven't gone through the due diligence. You don't know what red flags, yellow flags are. I had had all that experience with the healthcare companies that I worked for in the past. I had already done dozens of transactions before I had done the Due diligence. I had found them. I negotiated the loi. I had worked on financing all that stuff. I just had never done it myself, like by myself. So I. I kind of knew what I was looking for. But no, I didn't. I didn't go through brokers. I think brokers are great for getting your reps in and for getting a lot of experience. But for me, I kind of had already known how to do it.
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A
And you had the experience?
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B
Yeah, I was very lucky.
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A
For anyone who's listening, though, it's good advice that they should go and seek a broker because there are so many steps in the process and if you don't know what you're doing, you can. You could really get fleeced.
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B
Have you ever bought a business with a broker?
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A
We've sold businesses, only with brokers.
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B
You sold business with a broker? That is so funny. I did the same thing. I've never bought a business through a broker, but I've never sold a business without one, not through a broker.
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A
Okay, so let's talk the numbers a little bit. How much cash did you have to have down? How much was the business? What did the numbers need to look like? What did the potential of the business need to have in order for you to want this deal to go through?
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B
Yeah, I was looking for businesses that were at least in the mid teens of a net margin or cash flow. So 15% net income for some of your listeners, they may be like, that's really low for me, coming from health care, like home health. Margins were 8%. Right. So 15% seemed like the promised land to me. So I needed to find a business that was net netting 15% a year. I needed to have some scale associated with it so that it could support my salary plus some cushion. So when I was looking, I wanted to have a business that could do at least $600,000 a year. That was the number that I came to. At least $600,000 a year in net income at a 15% margin before I'd even look at it. And then from there, the multiples, I won't say they didn't matter to me. They did matter to me. It was more about a debt service coverage ratio. So you can look at multiples all day long, but the truth is that's just what other people have paid for those businesses. What you really want to look at is what is my debt service coverage ratio? So if a business is spitting off $600,000 a year in cash flows, if it's my first business, I want to have at least a debt service coverage ratio of 1.5. And so what that means is my debt on that business will be $400,000. So my debt payments to the bank paying off the Note will be $400,000. 1.5 times that 400,000 would be $600,000 in net income. So all of a sudden, because I knew what my margin wanted to be, because I had created this number of $600,000 of net income, I also now knew what my max sort of debt obligation could be. This $450,000 number. This is funny. I haven't done this exercise in like five years. So hopefully my numbers are right. And then from there I was like, okay, $450,000. Working with a bank, I can probably afford up to a $4 million business. And then that. So that was my range in sort of deciding the size and scope of the business.
- [13:43]
A
How much of a down payment did you need in order to secure the financing?
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B
So the SBA at the time, the rules are 10% that I have to come down with. So most bank financing, I have to come down with 20%. But through the SBA, it's a great program, I can come up with 10%. So I was thinking, if I'm going To do a four million dollar deal, I have to come up with at least $400,000. Now, I didn't have $400,000 at the time, but I had, we had sold our home. So we, we bought our home in 2015. Market went crazy, it appreciated, and we had about $200,000 of equity that we had built up in the home. So I thought, all right, I got $200,000 there. I could probably raise friends and family money for the other 200,000 if I needed to go up to that $4 million mark.
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A
Okay, but it sounds. You said if, like. So you didn't do that.
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B
I didn't, No, I didn't. I was very lucky. I found this business. You know, we started negotiating. In the middle of the negotiations, I found out it's, it's not a loophole, but it is a way that the SBA gets around it. The SBA, the 10% down rule isn't actually 10% of your cash down. It's a 10% equity injection. And the way that they will count the equity injection is either cash or, or other contributed equity. And if you structure a seller note. So if I go to the seller and I say, hey, your business is $5 million, I'll pay you $4 million down, will you carry a million dollars of this purchase price. That's a seller note. If you structure that seller note in a way where you don't make any payments on it until the SBA is paid off, they will consider that million dollars, or at least a portion of that million dollars as contributed capital and they will allow for an additional 4, 5%. So you can, you can get into a business for kind of as little down for your first business as 5% down if you've got it structured the right way. Your second business, you can get in for as little as 0% down because you're effectively using your current business as leverage. But that's, that's how I did it. So I actually only needed to put down, see, what was the math? About $180,000. I still did take some friends and family money, but personally, I think we put in 100 of that 180,000 and.
- [15:49]
A
You got a close to $4 million business.
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B
We got a $3.2 million business. Yeah, yeah, so we got a $3.2 million Business. The bank underwrote it at about $450,000 of EBITDA. But I was looking at it and I was like, now this business could do like 7 or 800,000 just because of my pattern recognition. From what I had seen before, there's a lot of owner stuff that was being run through the business anyways. There was a lot of fat there. So I felt comfortable jumping into the business even though the multiple quote unquote was high because I knew that our debt was covered and I knew it was a great business. So yeah, I got in a $3.2 million business doing $450,000 a year on paper, in net income. Thankfully, my thesis was right. We, we, they were doing probably closer to 700 when we made some of those changes. So it was the type of business that we needed. And we got, I got in for less than $100,000 of my own money.
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A
Okay, so what was it really like when you closed on that business though? Like what, how many people were on the team? What were the hardest parts? What did you not expect?
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B
Okay, this is where it gets even crazier, Ann. I was moving to Boise. I was buying this business. It was a medical billing company. My brother in law owns a large skilled nursing facility company. And he was like, hey, if you're moving to Boise, let's start a home health and hospice together. Because we have all these skilled nursing facilities. We discharge these patients home, they go home on home health and hospice. We, we should capture that Business. And you have home health and hospice experience, Nick. So I'm like, I would love to, but I'm buying this medical billing company so I can't really do it. And after talking a lot, we were, I was like, well, I could get my other brother in law to come up and run this medical billing company. Oh, I did so many things that like break the rules, I always say, like, don't hire an operator. And that's exactly what I did. Anyways, so we brought, we brought my other brother in law up, he ran the medical billing company. And then I started right away building this home health and hospice from scratch. Yeah, yeah. So literally, literally, we closed on the medical billing company in July. I was already like working on the home health and hospice full time when we closed on the medical billing company. So I really wasn't at the medical billing company foreclosed. Like, I wasn't there to meet the new team. I wasn't the owner and I had a great relationship and I knew some of the leadership team, but that was my brother in law who was running that business. And so he was there meeting everybody. Looking back, I don't know that it was the smartest thing, but it, it did work out for us.
- [18:16]
A
No hiccups.
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B
I mean, that's a great question. There were hiccups down the road. I didn't pay enough time and attention to that business because down the road issues came up which, which then kind of got me to a place where I'm like, we need to sell this business. And I think that had I been running that business full time, I would have never sold that business. But I got scared. I was like, rates are going up. It feels like we're on some shaky ground. Healthcare is changing. I don't really know this landscape that well. It felt like I was having to make a bet again on this business. And I just decided, let's just sell it. And so we sold it. And it was good. I mean, it was, the year that we sold it, it did like $1.3 million in net income. So the business grew significantly. But I think if I had been there day to day and just had known it, known it intimately, I wouldn't have felt scared and I wouldn't have sold out of a place of fear.
- [19:07]
A
Interesting. But your, your time and energy was occupied with the other business. So you sold both of these businesses within a span of like 3 years?
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B
Yeah, I sold the, the medical billing company we sold in two years and then a year later sold the home health and hospice.
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A
Okay. So. And I don't know what you're comfortable revealing, but what did you walk away with and what have you done with that money?
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B
Oh, Ann, Buy a guy first.
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A
Hey, you tried to ask me how much I sold my business for and I was like, I'm not actually allowed to talk about that.
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B
I did.
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A
And then you tried again and I was like, nope, can't do it.
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B
One of the companies we sold to a publicly traded company and then the other company we sold to a private equity fund. So I can't tell you I'm going to pull you. I can't tell you the exact dollar amounts, but I will say not eight figures. Mid seven figures is sort of like where the walk away range comes in.
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A
And when you say that you wished you hadn't sold that first business, what do you think it would be worth today?
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B
I actually don't think it would be worth a lot more than it was back then because asset valuations were just nuts. The reason I say that I wouldn't sell it or that I wish I hadn't sold it is just because it's consistent. I was spitting off a million dollars a year. Healthcare continues to grow faster than inflation and the rest of the economy. These physicians need the services that we were providing. It wasn't going away. And so from that perspective, it was just a great business. It was a consistent business. And looking back, I'm like, you're a dummy for selling that. That's more of why I think of it. I don't think it'd be worth way more money, but I do think that it would just still be doing what it was doing.
- [20:42]
A
It was, it was stable and it would have been relatively easy to keep it. Okay, so you have your hands on all these other things. I mean, you said the tree trunk business in Dallas.
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B
Yeah.
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A
So are you just like, you know, people, other people, they shop on like Amazon and you're just like, what business am I going to buy today? I'm going to buy a business. Dallas.
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B
Okay. At first, I think you can probably resonate with this when you go through this period of time. So from 2012 until 2023, I was just like, heads down, locked in to what I was doing first working for other companies and then running my own businesses. And so when I sold those businesses, it was like the first time where I could ever pick my head up and think, what do I want to do? What am I interested in? And I went a little hog wild. I'll admit that I spent too much money on a bunch of different projects, But I really was like a kid in the candy shop because I'm like, I don't know what all these other businesses. SaaS. I've heard SaaS is cool. Oh, home services. That's really cool. And so I actually didn't buy a bunch of businesses. The only business I really bought was this RV park. The rest of them were just kind of started from scratch or incubated. And it really just came because my. My best friend and I have shiny object syndrome. And we think this might be a cool business to test. Oh, Nick, you've got some cash right now. Let's throw some money at it. And so that's kind of what we did over the next two years. We. So I bought an RV park.
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A
Tell us quickly, like, give us, like, the one minute overview of the RV park. Like, where is it? What you buy it for? Does it cash flow? What. Why did you buy it?
- [22:10]
B
Okay. O. This is great. It's not as good as you think. This. This RV park was in Texas, and we found it off market. My. My friend Chris is deep into the mobile home park space. So we find it off market, significantly undervalued. Buy it for $300,000, and we're like, oh, man, with. If we change some rents here, we can get it to be a $1.2 million park. So at the time, it was cash flowing about $30,000 a year. We thought back of the envelope, we can get it to like $100,000 a year. Right? So that's. That's a really big swing. And then if you. If you're like, all right, the cap rate, which is how these parks are valued, if the cap rate's like 8 or 9% or even 10%, we've got at least $1 million park. So it made a lot of sense. So we buy the park, we make the changes, we increase the rents, and things are going swimmingly. It wasn't doing 100,000 because we hadn't reached max occupancy, but it was. It was doing about $7,000 a month. So it was, like, on its way there, which is that $84,000 a year run rate. And then the city sent us a letter and said, you're not up to code, and you haven't been up to code for years. And we're like, wait, what the freak? And this was. Yeah, like, now I know. If you're ever buying in a freaking RV park or mobile home park, go check with the freaking city to make sure that there's no outstanding items on that park. So anyways, so we missed that in due diligence. And the park, we had to kick all the tenants out, ended up coming back. We had to put, I don't know, a couple hundred thousand dollars into the park. It ended up being a headache. And I was like, I just don't even want to deal with it. So we sold the park. We didn't lose any money on it. We bought it for 300 and sold it for like 350. So we made a little bit of money on it, but it would have been cool. I mean, like, the plan was cool. It was executed the right way, but we just freaking missed on the due diligence and that'll kill you. So don't. I thought I could just buy off market and be cool, but apparently it doesn't translate to other.
- [24:02]
A
We all make mistakes. We all make really bad mistakes. You were talking. I was just thinking about all the different mistakes that I've made in my career and in our business journey. And it's like, no, you just. But you, you would have learned so much from that process. So are you going to buy another RV park, or is it no longer a possibility?
- [24:20]
B
Oh, I would absolutely buy another RV park. 100%. Yeah, yeah, yeah, absolutely. I'd buy an RV park, but I will buy. Only buy an RV park if it's with somebody who wants to actually operate it. Like, that was the problem is like, neither Chris nor I were going to go operate it. And so then when it came out, like, oh, we got to do all this crap to it. We're like looking at each other like, who's going to, you know, the Spider man meme. It was like, are you going to go? Am I going to. What are we? So, yeah, it'd only be with somebody who is operating it or with like a fund who has multiple parks and they have an infrastructure in place, or if it was really close to me and I could go and actually kind of manage the park myself. But yeah, I still love rv. I think they're amazing real estate.
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A
Once you get one, it's like everybody comes knocking and says, hey, I've got a deal. Are you interested? So it's an interesting sort of insular space in a sense that, like, they're amazing businesses. Yeah, you get in the door and then you realize there's a whole world of you guys out there.
- [25:12]
B
So here's what's crazy. I love these businesses because of the real estate function of it. And I just had this guy, I talked to this guy on my podcast, who is buying car washes? I didn't know this. So if you buy, if you buy a RV park, for example, if I buy it for a million dollars, I get to depreciate a lot of that. So I have like accelerated depreciation. So it lowers my taxes, but only if I'm a real estate professional. Oh yeah, that's the only works. So I've got like 500, $600,000 in passive losses right now sitting there that I've had for years because I don't have passive income to offset. Yeah, it's freaking great. I was thinking, I'm like, oh cool, I'm going to get all this depreciation. And then my CPA was like, yeah, that's, that's not how it works. You don't have passive income. So frickin screwed myself on that. But car washes, I didn't know this since they're a business. You get the real estate, you get the accelerated depreciation. And it's not passive income business car washes you can actively deduct from your taxes. And the reason I love real estate so much is because if you have a high margin business like you did with your Christmas lighting business, and you've got these high, you know, cash flows coming in, you can just take that money, redeploy it into real estate. Yeah, you're now sitting in an actual asset, not a services business. You can depreciate that asset, you can offset your taxes, you can have more cash available, you can invest it into your business, you can grow even more and then put those cash back into real estate. So it's like this amazing virtuous flywheel that can lower your taxes but also allow you to, to grow real wealth. And I say real wealth purposefully because I think you cannot have long term wealth without real estate. And that's why I love RV parks. But the car wash businesses in particular, because they have that tax component that can really accelerate things.
- [26:48]
A
Or you can just become a real estate professional. I am a real estate professional. It is not that hard.
- [26:52]
B
No, no.
- [26:53]
A
And go and get your agent's license. Your agent's license, literally. You could take a course online and get your agent's license, find a broker that will let you hang your license with them, and then make sure that you manage your real estate assets for, I think it's, I forget there's a, it's like six or seven hundred hours a year or something that you dedicate towards the management of your own real estate. And You're a real. Real estate.
- [27:15]
B
I'd rather do it the hard way. I'd rather do it.
- [27:21]
A
Okay, so the, the arbor business. So the arborist business on a tree trimming business down in Dallas. How did you get this started in Dallas? Why Dallas? How do you manage your crew from a distance? What are you doing with that business? What's the point of it? Like what you said you were doing it kind of as a test model. So get us into your brain.
- [27:40]
B
All right? So Chris and I, we've been best friends. He, you may have seen him, the Kerner office. He has his own podcast. He's growing like crazy. But that guy has never worked for anybody in his life. He's been. He's the consummate serial entrepreneur. And so when I had this exit, I was like, Chris, what could we do? Let's do something fun. And so we decided to launch this thing called co founders, which is let's partner with college students who have ideas. Like, we have the capital and the knowledge. They have some ideas and the work ethic. And let's partner with them and fund them. It'll be really cool. It was really cool for a couple projects. It turns out you need a lot more money than I had in order to make something like that work. But one of the ideas that came from it was this kid James, freaking amazing, graduated from Bowling Green. And he was like, hey, I'll move to Dallas. I just want to do a business with you guys. And we thought tree trimming seems really cool. Chris had launched a tree trimming business with a friend or helped a friend launch a tree trimming business years earlier through these, like, creative growth hacks. And so we knew that we could generate demand. And so, like, let's test it. And so James came out. James is operating the business and I put some money behind it and we just went with it. And effectively what we've turned into is a lead generation company that subs out all of the actual business. So James answers the calls, he goes on site, he quotes the jobs he responds to. Angie's List, Thumbtack, Jobber is the system that he uses. Google, lsa, all of those systems. We've also used mailers, texting software, any and all automations that you can think of. But the gist is if you can increase that speed to lead, if you can respond really quickly, you're gonna win business. So James responds really quickly, does the quotes, and then he's got a bunch of people that he subscribes these jobs out to. So we don't actually own any equipment. Yeah, yeah, it's eventually it's probably better if, for margins if you own all that stuff. But we were like, we don't want to buy a truck, we don't want to buy, you know, stump grinders, we don't want to buy all this heavy equipment in order for us to do the true training business. So let's just find people who are already doing that service, use that sub network to do the fulfillment, will be the lead generation and we'll collect margin between. So that business is not huge. It does, I want to say 7 to $800,000 a year in top line revenue, probably in the ballpark of one to $200,000 a year in bottom line performance if we were taking money out, but we're not. Everything's just being reinvested into the growth of that business. So that's where it is today. And it was a test because we were like, how could we get into home services? And so we wanted to test it.
- [30:14]
A
So you don't technically own a tree trimming business, you own a lead generation business that has a niche in tree trimming. Yeah, but you are, are you thinking of trying to expand this into other markets? Like, are you going to try to do lead generation in like, you know, lawn care and window washing and this is going to become a huge lead generation business or is this, this was just a case study and you've done it and that's enough.
- [30:37]
B
It's that it was a case study, we've done it and that's enough. As you know, there is no shortage of good opportunities. So could we do that? Yes, we could do that. But there's a lot of operational complexity and executional risk that that would have to happen in order for that business to be successful. So we just wanted to see could we do it. Like, we think there's all these boomer businesses that are being sold and the valuations are stupid high. And we're looking at this like, well, what do they actually do? They're just really like getting leads and doing the fulfillment. I think we could do the same if we just figure out a way to get the leads. And so we, you know, that's what we did. Angie's list, Thumbtack, Google LSA and then we've got some programmatic SEOs. We built out our website so that we're getting a lot of leads from the website. Google business profile is optimized. You did some gray hacking, gray hat stuff in texting, finding information for contractors in the local market, texting them to get business, et cetera. So we launched that business. So it was more of a test to see, like, could we do it? And yes, we could do it. But no, we're not looking to get it in other markets.
- [31:37]
A
But you're not going to. It's not. It's not worthy enough of your. Of your time and effort to go.
- [31:41]
B
But do you want to hear something cool?
- [31:43]
A
Yeah.
- [31:43]
B
So if you go on Twitter, and you're probably not on Twitter, but I'm not. There are these guys who do stump grinding. So there's a. There's a stump grinding craze right now. All right. Chris and I did a podcast a year ago where we talked about stump grinding, where we were like, we think someone could start a stump grinding business because of our experience with the True Trimming company. We're like, yeah, and this is how you launch it. And we gave the exact playbook of how we launched the True trimming business. Just gave it out there. We talked about it, gave it for free. And this, this one guy was like, I think I could do that. And he's done $250,000 in his first year after quitting his job. Like, that's net to him. And it spawned like 10 other of these stump grinding guys. So it's like, that has been super gratifying to see, like, not only did it work for us and tree trimming, but we just talked about it and these people listened to it and were like, we think we could do that. And. And now I can't. You know, I can't get through Twitter without seeing a bunch of stump grinders in my feed. But it makes me feel good.
- [32:37]
A
And you change someone's life. And my husband literally rented a stump grinder the other day and ground a bunch of stumps around.
- [32:42]
B
They're amazing.
- [32:44]
A
Okay, but so now you have the money from your exits. You've got these little side projects that you're dabbling in. What are you really working towards? So you want co founders to become kind of like, is this like a business syndicate type of concept?
- [32:59]
B
So to be honest with you, that's what I thought I was going to do. And I've been dabbling and messing around and the kid in the candy shop. But where I have recently come back to is I was trying to do, like, everything else. Like I said, I'm like, oh, what's CAC and what's SaaS and what's whatever, Home services? And I finally got to the place where I was like, my Experience has been in healthcare. I know that better than probably 99% of people who've operated in that space. Why would I pivot now? Like, why would I pivot now into vending machines or a home services business? I could not saying I can't, but like, it just seems like I would lose a lot of that compounding knowledge. And so two months ago I decided with my brother in law who still has the skilled nursing facility company, that what we are going to do is focus on bringing a lot of these really good ideas from other industries into the healthcare space. Because healthcare is antiquated. It is super old school. If you think that what you're doing is old school, go, go look at the back office of a healthcare company and you'll be like, they're still like billing on paper. It's because they're mandated by the government to have patient records for seven to 10 years. You know what I mean? So anyways, they're very antiquated. And as I've been having more conversations with entrepreneurs, I'm like, that's really interesting, that pricing model. Why don't we do that in healthcare? Oh, that's really interesting the way you acquire customers through Facebook ads. Why don't we do that in healthcare? Oh, AI, we don't even talk about that in healthcare because everyone's afraid of hipaa. And where he and I came to was like, we should start a venture studio. He has a company that has 5,000 employees, 8,000 patients, 60 facilities that we can then test these ideas within as like an incubator idea and let's see if we can change the health care space that we're operating in. Let's see if we can actually bring all of that knowledge and all that skill set to make an effective change in this market. So that's, that's what I'm doing right now. I'm pivoting. I'm trying to shut down all of the distractions, but as you know, it's not super easy to just shut them down overnight. So I'm trying to shut all those down and just go all in on healthcare and improving the experience both for the patient and for the employee in the healthcare space.
- [35:06]
A
I feel like your ADD just went and your brain is just like fully coherent now. Like it all makes sense. Right?
- [35:14]
B
Right.
- [35:14]
A
Because it's like the distractions and oh, I'm gonna do step grinding and all this. But you do talk with a lot of very fascinating entrepreneurs. So it's really hard to shut it down entirely. But yeah, why Wouldn't you focus on healthcare? You know the space, you clearly have a passion for it from your own experience. And healthcare is only growing.
- [35:37]
B
It's only growing. The demand for it's only growing. The spend on it is only growing. The problem set is only growing. Like we don't know how we're going to fund all these liabilities in the future. So there's a ton of things that we need to fix and solve within healthcare and that's what I get excited about. So, for example, just building simple tools using AI can save one or two full time employees, or simple tools can help a patient get better experience and we can lower the cost of that patient being treated by 20, 30%. Well, what happens if we're able to do that system wide now? We're able to do 20 to 30% more with the same amount of dollars as the government is cutting our reimbursement and as patients are demanding more and more care and we're getting less and less workers into the space. So there's this really cool. Cool is the wrong word. There's this really complicated problem set that needs to be solved within healthcare. And if you're in healthcare like I was, you don't necessarily have the tools necessary to solve them because you're the one who's kind of contributed to creating the problem. I don't mean that in a negative way, but you just, you just don't know any better. And that's why I'm excited now is because I feel like, oh, cool, I've kind of like found some different tool sets. Let's see if we can make a change.
- [36:42]
A
Okay, let's say somebody's listening in. They're thinking, well, I'd really like to get involved in the healthcare space as well and find my own little sleep liver niche where I can provide something useful as a business.
- [36:54]
B
Yeah.
- [36:55]
A
So one complaint I hear a lot of healthcare professionals complain about constantly is that when they go home at the end of the day, they still have all of their, what do they call.
- [37:05]
B
Them, charting notes, documentation.
- [37:07]
A
They have all of their charting notes and documentation. And what a slog it is. And how, as you're saying, antiquated it is, let's say that a person sits there and they're like, I'm just going to start writing down every problem that I see in the healthcare system that needs a sleep solution. Then what? Yeah, as an entrepreneur, someone who's done this, what do you think they do next?
- [37:25]
B
Dude, I love this question. This is my favorite question. It all comes Back to know yourself. What are you good at? What are you not good at? What's your superpower? What are the things that you freaking suck at? So the problem set is only one side of the equation. The other side of the equation is you and what are you uniquely suited to solve? So healthcare is such a big and broad category, huge, that almost any experience that you have can be applied to that space. You're not necessarily providing care to patients, but you're serving the health care industry, which is growing like crazy. So if I were an entrepreneur, I would first look at what do I know really well. Am I a coding engineer? Do I understand data architecture? Am I a massage therapist? Am I somebody who has a lot of experience managing teams and people like, what are you really good at? And, and then you can look at how does that apply to these different problem sets within the healthcare space? Because all the things that we currently do outside of healthcare still needs to be done within healthcare. If you're an engineer that creates plans or like design for buildings, well, guess what? There's healthcare specific design that needs to be implemented in order for a hospital to meet certain standards and regulations. If you're a massage therapist, well, guess what, these patients need massage therapy as well. So I would take it from that.
- [38:40]
A
You could basically layer anything on top of the healthcare space.
- [38:43]
B
Sounds like anything on top of the healthcare space. Now there are probably some things where you're like, well, I don't know if this necessarily translates, but I promise there is something in your skill set that can easily translate to having value within healthcare. Here's a perfect example. A friend of mine works for a large healthcare company. He doesn't know the first thing about diagnosis. He's not a clinician. But what he is is he knows how to write SQL code, and so he manages SQL databases exceptionally well. Well, what's really important, healthcare right now, we have a ton of data out there, but how do we extract value from it? How do we identify patients who are high risk? How do we see that they're potentially going to the hospital before they know that they're going to the hospital? Well, unless we have someone to actually play translator between all of the data and making these inferences by architecting some data infrastructure, we can't do it. But that's my friend, he works for a large healthcare company and that's all he does, is he sits and writes SQL code to make sure the databases are managed to the where we can actually extract valuable information. So yeah, I would say any skill set that you have is applicable to healthcare.
- [39:45]
A
Okay, let's say someone like him though, he doesn't want to work for a company, he wants to take his expertise and he wants to actually start a business. What if the person doesn't have business experience? Are you pro partnerships? They go and find someone that has that skill set or do you think they need to go in, get some education? How can they become entrepreneurs?
- [40:04]
B
Yeah, I think there are two types of entrepreneurs. Well, there's probably a spectrum, but there's like hustlers. That's probably you. You're probably in the hustler category where you're just like you were always thinking about how can I flip this to make a buck. That's not me. And then there's people who are more thoughtful and like, I want to do entrepreneurship, but I don't feel like I have the skill set. To the hustlers, I would say very easily pick a high ticket service, focus on marketing. That's where I would focus first and like driving value that way and then market. You market to those practitioners. So let's just say physical therapy clinics. All right, that's a high ticket service. I'm going to go help them with their digital marketing or digital infrastructure. And now I'm going to go find physical therapy practices to bring on as clients. I'm going to do all of the digital marketing. That's kind of the framework I would look in. If you're a hustler, if you're more like me, I would go get a job at one of these healthcare companies. I would optimize not for salary but for experience, which is what I did. Go somewhere where they give you an opportunity to manage things. And it doesn't have to be a massive team or $10 million, but just something. There's lots of companies, skilled nursing facility companies, home health and hospice companies that are looking for leaders. They don't pay well in the very beginning, but you can get a ton of great experience in just understanding the mechanics of these businesses. And then you can take that experience and apply it to buying a business. That would be my recommendation for the two ends of the spectrum.
- [41:26]
A
I think that is such good advice because you kind of hit, you know, there is a spectrum, but you have hit the kind of the opposite ends of it. And obviously there's everything in between. All right, so you, 10 years from now, 20 years from now, what is your dream? What is your goal? What do you want to achieve and why?
- [41:44]
B
Wow, that's a great question. Like 20 years from now, if I Look back on myself, what would I be proud of? Yeah, I would be proud. If my boys are hard working, productive, humble members of society. Nothing would make me more depressed than if they were entitled dregs on society. And that doesn't even mean like, oh, they've got a business and they're making tons of money. I don't, I really don't care about that piece. I just want to see them contributing. They could be like, my oldest son wants to be a music teacher. Like, nice. And just go be the best freaking music teacher that you can be and leave a really good impact on the kids, on the kids that you teach. So that would be one. My kids are really good. I'm still married. Would. Would be like, all right, if I'm still married with a good relationship with not. Not just like, well, we stayed together for the kids, which thankfully, I love my wife, she's fantastic. She's the reason I've done anything successful. And if, if she just has decided to still not divorce me in 20 years, I'll consider that a win. And then third, if I can look back and say, I worked with people that I wanted to doing the things that I wanted to work on, I'm not optimizing for a billion dollar exit. That's just not where my head's at right now. Right now I just want to make sure that I'm in control of my time and I'm in control of the people who come into my orbit. That's why when I met you, I'm like, oh, that's a person I want to stay in the orbit with.
- [43:09]
A
Ditto.
- [43:10]
B
To me, that's real wealth is being able to control your experience. And that doesn't mean being able to pay for the, you know, Turks and Caicos and going to Greece every year. Those can be additive, but I think at its core, real wealth is being able to say like, I enjoy the people that I work with. I enjoy the thing that I do. I'm proud of my family and I'm proud of my relationship with my spouse. If you can say those things, then 20 years from now, I'm stoked.
- [43:34]
A
Red, that's an excellent answer. I like that. I think I like you more now, too. Getting to know you more. And I'm like, oh, yeah, we're pretty aligned. Okay, last question here. If you could go back and have a conversation with yourself when you were in your early 20s, what would that conversation look like? What would you say? How would it go?
- [43:57]
B
I'll give you two answers. The first Answer would be knowing everything I know now, I'd be like, move to San Francisco. Because I just think you can be like a BC player in San Francisco's tech scene and just like fall backwards into a hundred million dollars of equity because you were, you know, employee number 10 at Airbnb. You know what I mean? At least that's my perception. So that, that's where my mind goes first. But on a more serious note, you know, I love my life, I love my family. It's been like, I feel incredibly fortunate and incredibly blessed at the same time. I lost my sister two years ago. We had a son pass away eight years ago. And those are really hard experiences to go through. I'm very grateful that I went through those experiences because I, I think that whatever message I could have given to my 20 year old self, my 30 year old self had to learn the hard way. And you can only really learn those by actually going through them, which is family is the most important thing. Time is finite and optimized for the things that are going to give you the best experience with those people while they're still here. So I don't know that it's necessarily what I would say to my 20 year old self as much as just to yourself before you go through those experiences, which is there is an upside to the downside. It's going to be really hard. You're going to have really difficult things, you're going to struggle through, but if you can make it through that, you are going to be so much stronger than you can even imagine right now. That's probably what I would say, other than like buy Microsoft or like Nvidia right now. But you know, you know what I mean? Like, of course you're going to say those, but you know, holistically, from a life perspective it would be, yeah, it's okay, it's going to suck for a while, but those experiences, if you let them, will shape you into an incredibly strong human being.
- [46:04]
A
Yeah, yeah. It reminds me of a quote by Francis Weller, just that for anybody who has experienced grief, that, it's like the experience of the mature person is to hold grief in one hand and gratitude in the other and to be stretched thin by them. That has really spoken to me as I've experienced grief as well. And it, it really, it's changes you. It does, but it can change you in a good way. So yeah. Yeah.
- [46:33]
B
If you let it.
- [46:34]
A
I, I feel for your losses. Nick, it's been an awesome conversation. I am so grateful to have just met you. Through the podcasting space because, as you know, I fluctuate with whether or not I want to continue doing this and, you know, interviewing you, meeting you, it's just one of those reasons why I'm like, this was a good reason to start this.
- [46:53]
B
Well, thank you.
- [46:53]
A
Thanks for coming on the show.
- [46:54]
B
Anybody listening, make sure you let Ann notice she cannot stop, okay? It's not allowed. We need more Ann McGinty in the world.
- [47:03]
A
Today's key takeaways start with what you know, leverage your experience and double down on industries you already understand. Before chasing shiny objects, look for tailwinds and focus on sectors that are growing faster than the broader market. Support roles really matter. Sometimes the best opportunities aren't front facing. Think back office solutions, vendors or tools that support a booming industry. Be proactive in finding deals. Create your own opportunities. Great businesses rarely sit on the market and entrepreneurs who build their own deal flow get access that others miss. For first time buyers, work with a business broker. They can help you avoid pitfalls and educate you on acquisition steps. Run the numbers with discipline. Set your minimums. Define how much net income a business needs to generate to support your life and obligations. Use debt service coverage ratios and aim for at least one and a half times to ensure the business can comfortably handle loan payments. You can get creative with SBA rules. The 10% equity injection can include seller financing if structured so payments are deferred until after the SBA loan is repaid. Solve real problems in antiquated spaces. For example, healthcare is ripe for innovation. From documentation to patient experience, there are countless outdated processes waiting for simple, effective tools. Look at your skills. Almost any skill set can add value in healthcare or other large, underserved industries. Know yourself and your style. What are you good at? What do you dislike or struggle with? Build around what you know. There are two main entrepreneurial paths and everything in between. There's a hustler who chooses a high ticket service, focuses on marketing and sells to clients, or an apprentice who gets a job, optimizes for experience over salary and learns the mechanics of the business before buying their own. And lastly, hard life experiences carry hidden upsides. Lessons you can only gain by enduring them. When you make it through, you emerge stronger. Time is finite, so optimize for what matters most. Meaningful experiences with the people you love. That's it for today. I release episodes once a week, so come back and check it out. Have a great day.
- [49:40]
B
Sam.