← Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
#213 Behind the Scenes of Buying a Business
00:50:01
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- [00:00]
Jack
Awesome, guys. You've made it to episode three of the Chris Barr saga. So in episode one, we learned who he is and his most perfect business. In episode two, we talked about him diving into pool businesses and going through initial models, as well as some strategies on how to get new leads. In episode three, we're going to do a deep dive into personal branding so that you look really good for the broker as well as looking great for the buyer. Stick around and find out. Welcome back to Jackisitions. We got Chris Barr on today for some awesome updates. Super excited to have you, Chris. I'm glad you're feeling better, man.
- [00:46]
Chris Barr
Yeah, it was a, it was a rocky start to the week there. But yeah, as I mentioned, man, just in time for Easter. We are, we are up from the dead.
- [00:53]
Jack
Ha ha ha. Risen.
- [00:55]
Chris Barr
I have risen.
- [00:58]
Jack
Sweet, man. So it's been a few weeks. We've, we've given it some time since the last time we talked. What's, what's going on in your world? What's the update? Have you, did you end up talking to some private equity groups? How, how have you been, have you been doing?
- [01:13]
Chris Barr
Yeah, I appreciate you asking. I know last time we spoke we really kind of focused on some sourcing efforts and kind of how to get some originations cooking. So I did reach out to some micro PE firms. Again, I'm hunting in such a small geographic area that there wasn't a ton of pickings, but the one group I did talk to was super amicable, really warm relationship there. They're definitely hunting through their pile to see if they're passing anything small that might be good for me. Likewise, they want me to keep bigger opportunities in mind for a potential partnership with them if I find anything really appealing that I just feel like is a little bit above my purchase price range. So, yeah, a fantastic suggestion.
- [01:55]
Jack
So completely a win win.
- [01:56]
Chris Barr
Right?
- [01:57]
Jack
At the end of the day, if they, you find something, it's a win for you and a win for them because in the long run you remember their name and potentially sell it back to them. But if you find something too big, then they're looking at you to say, hey, we also need an operator in this, we're looking for a great operator. Nobody's going around and doing this and so you're, you're showing, you're showing up when you know no one else is. So that's a great job. I mean, I'm pumped. I'm glad that's working for you. Just answer the phone is one of those phrases that's Always easier said than done. I know it was hard for me in my business because the phone always rings while you're out in the field trying to get something done or it's 8pm and you're trying to get your kids to bed. Well, I have the solution for you. I'm extremely excited today to announce quick staffers your go to solution for building a high performing cost effective customer service team. We are placing CSRs who have been pre trained on proven home service SOPs and scripts. The same ones that Wilson and I use in our business. For a limited time we're offering $500 off your initial placement cost for the first 10 signups. See link in the description below or head over to quickstaffers.com for more information. So. So you called around talk to some private equity firms. Just threw the idea out there what else you've been up to.
- [03:12]
Chris Barr
You know one of the things we talked about was using some B2B cold mechanisms to try to help put me directly in touch with some small businesses in the area. I like the idea on the surface it sounded great. Sounded like something I really wanted it to engage. And you mentioned some performance based mechanisms where you pay on commission rather than upfront. Wasn't able to really find much in that regard. Most did have some upfront costs included. Best deal we could find was really more than we were willing to pay. We're running a pretty slim small search fund over here so incurring some extra costs when especially it's really just taken legwork out of my end was juice wasn't worth the squeeze but I did engage some freelancers on upwork to help create a big list of CPAs and bookkeepers in my area to reach out to for some off market deals. They crushed that assignment. So that's been going well. Haven't gotten any deals from those CPAs yet but using them also to create a similar list for pressure washers and painters where they can build the list out. I'll do the cold calling which I think I'd actually prefer to do myself anyways so.
- [04:24]
Jack
So that's. I mean those are great points. I want to stop you there because because we I just had this really cool interview with a good buddy of mine named. His name's Elias. He's out in Denver and he I was asking him about this exact thing. I said hey why aren't you. You know why aren't Because I met him through he cold called me and my business. I said why aren't you using this third party? He Goes Jack, it just doesn't work the same as if I call, I call 100, 200, 300 people, I get one yes or two yeses. But those yeses are worth so much more in the long term than the potential no from someone else calling. And nowadays with all the AI and the garbage, we get that. That same day I had three messages in my email inbox in that time that we recorded. They were like, hey, are you willing to sell your business? And is the most regurgitated AI garbage. And so I think that there's a push or for people who are willing to push and do cold calling themselves, buy the list and just do it. So go so much farther and especially you're a friendly guy, like, it would work amazing.
- [05:29]
Chris Barr
Yeah.
- [05:30]
Jack
So that's, the first part is I think that's on the right track. The second part is you should add wealth managers to your search list. Not just you have CPAs, you have all those guys. Wealth managers are a big win because they win when you win. Right. So if somebody has a business, most of their assets are tied up in that business itself, right. One, two, three million dollars. They're working with a financial planner, a wealth manager, whatever you want to call them. And so when they sell, then that money moves to the wealth manager. And so it's this really good synergy where if you can work with wealth managers who kind of play in the field or dabble in the field and niche down a little bit, it's a win. It's not my personal strategy. I have only talked to one or two wealth managers and they've offered me businesses a little bit out of my region though it was down in like Pulaski, so a little bit too far for us to drive, but great. You know, it's a, still a good strategy is, is go to wealth management, see if you can get a hold of them and go from there.
- [06:35]
Chris Barr
Yeah, I also on top of CPAs and bookkeepers, I included estate attorneys just because if somebody retiring and looking at that next chapter, they're probably engaging in an estate attorney. So yeah, throwing them.
- [06:49]
Jack
This is so important and I'm so glad that you understand this one, because like I said, we're all working together on this. But two, having to explain this to new buyers is, is a very difficult thing for me because they only want to go the broker out. Broker, broker, broker, broker. And I have to tell them, hey, you're not going to get the best deal. But that's okay. Even that's not where my broker issues come into Play. My broker issues come into play is that it's such a fragmented market that even in your small region, if you were to call, you know, the top 50 brokers, you're not. And for your specific niche, you're not even going to have. Maybe I'll zoom out a little bit. If you called the top 50 brokers in the US and said, hey, I want an H vac deal, you'd probably, the top 50 brokers would probably own 10 of the market or 5% of the market. Like they wouldn't even have the vast majority of the H Vac market in lower middle market. It's just, it's so fragmented. There's so many people that are letting their buddies or their real estate agent, commercial real estate agent, no offense, but just this random guy sell their business for them. And it's so fragmented that you could, you could talk to a thousand brokers and you still wouldn't have most of the market covered. And so it's not a great lead source in the long run. It's a, it's an okay lead source but there's better ones and cards on.
- [08:14]
Chris Barr
The table to be totally transparent. That's probably the area where I've been weakest in the past couple, you know, weeks since our last conversation. I'm just getting such broker burnout. I feel like I have my handful that I talk to and that's, and that's great and I still see, you know, some good results and listings that worth looking at coming in from them. But I feel like I reach out to brokers, give the same old spiel. Sometimes they follow up, sometimes they don't. Good ones, bad ones. I still get put on the same MLS lists and get access to the same exact deals. And so it really, it was, it's a great upfront push and it's something that I do need to, you know, tighten the screws a little bit of staying on top of. But I really feel like the momentum of finding higher quality deals and stuff that's really in the select niche that I'm looking at is just going to come from more off market avenues again, the bookkeepers, direct calling, etc. So yeah, I'm really starting to see the value in that now that I'm in about month four of the search.
- [09:18]
Jack
Yeah, that makes a lot of sense. And so update, in terms of last time we talked, you were moving in a direction on a pool cleaning business. What is that currently look like? Did you end up going to loi? Where are you at with that one.
- [09:35]
Chris Barr
You know, I, I know that being decisive and getting something moving forward or off the pile is key. That being said, this one is really gonna been put on the back burner and I'm actually really comfortable with that. There's not a lot of competition on it, which really does not bode well for it. I do have hesitancies about how they're reporting income and I know that it's common practice, but as we talked about last time, it does create some red flags. It's not as vintage as I'd like. It's only been around five years, really. Ideally hunt for something around 10 years or older than that. So, you know, it's, it's there. Notice that no one else is moving on it. I, I can if I want to. There's been some traction with other deals that have been a lot more appealing, so I've kind of diverted my attention. There's. So I'm kind of fine where that one's hanging out for right now. So that's kind of links and grace on that front.
- [10:34]
Jack
I mean, respectfully, I, you know, I'm never one to tell someone that their deal is bad and they shouldn't do it because I'm not the one who's doing it. Yeah, but the, the pool business you were looking at, based on the numbers, it's probably a good thing you're passing in the long run just because it's, it's, it's a buyer's trap. Once again, it's. Then that's why there's no, there's no additional eyes on it. So for everyone out there, I'm going to talk about it because I'm not under PG or NDA and I'm not going to talk about it exactly because I don't want anybody to look it up and get Chris in trouble either. But essentially it was a $1 million purchase price and almost a 270, 280 in SDE. So realistically, it's running at a what, 4.4x multiple on a young pool business with, you know, just. It probably doesn't. It's a lot of construction base which in my mind takes it down even though it's in the pool industry. So different industries still project based, construction based, not reoccurring revenue, not service revenue. And so it makes it really hard, especially because you're running. It was three categories of business. So you're running three separate businesses in that. If, if it was one business in construction doing that or one business as a route doing that, like you have a really good singular business. Right. That's what I say. The same thing to people who do H Vac. If you have an H Vac company that you really like and it's selling, but it does 300,000 in service, it does 300,000 in commercial, and then does 300,000 in new construction, like those are three separate $300,000 businesses. Like, that's a tiny, tiny business, whereas it looks like a million dollar business. It's not. It's three separate small businesses. And so, you know, it's probably a good thing. I like that other deal, the other pool deal you brought. If it, like if you find something like that, again, that was significantly better. It was singular route based. It wasn't as much in revenue side, but in the long term. Right. Like I said, it was a. It had systems in place that would have allowed it. You to jump in and grow it.
- [12:54]
Chris Barr
Yeah. And you know, and revenue wise, it wasn't too far off. Sorry, not revenue wise. But as far as sd, they ran a much, much tighter operation, much more aggressive multiple. I don't think I'm violating any NDA stuff because this was all told me prior to even signing NDA, but it was owned by, you know, some billionaire and I have no idea who, which is why I'm calling it Scrooge McDuck's, you know, pool service deal. And, you know, and again, you know, maybe that guy makes his money by selling off, you know, half a million dollar businesses and taking advantage of guys like me. And I. I don't know. I tend to not think so. That. And anybody who's operating at that high level isn't cutting corners. And they're not cheating on their tax returns to try to save nickels and dimes there. They're not. They're not classifying labor as 1099 when it should be W2 to avoid a payroll tax. So a lot cleaner numbers. Again, it was singular in that it was a route and then some repair as far as servicing shock in the pool and then some repairs as well. So it was a lot more streamlined. Yeah, it was a much more appealing deal. We are. We do have finger on the trigger with loi. I'm planning on sending it after this call. I just wanted to see if any notes or any helpful tips on Lois came up from this call before actually sending it. But we're actually offering, you know, a little bit over purchase price because they are a contract on which one?
- [14:20]
Jack
The second. Okay.
- [14:21]
Chris Barr
Yeah, that's good.
- [14:22]
Jack
Yeah. So I like that deal. Yeah. For those listening, it was significantly less in terms of purchase price. It was same SDE and the revenue was less. But as expected, you know, it's one of those smaller businesses that it is a job to some extent. He's going to come, go in and have to operate it and have to hire pool guys and learn pool cam and you know, do the whole thing. But you know, I, I love pool routes. I think they're super scalable and extreme. You can get really, really efficient and then with a little bit of branding, I mean, I think there's a lot of opportunity for the disruption there.
- [15:01]
Chris Barr
Yeah. And you know, that was kind of why this guy created this pool route, is to really corner the market and you just kind of never got around to doing it. But as far as scaling goes, I see these. It was one of the, when I first started looking, it was one of the types of businesses I saw get listed all the time of a pool route here, a pool route there. So once you operate it and you've got your arms around it and you've been doing it to, you know, pull out a bit more capital, buy another 200 pools on a route and just grow that way through acquisition, seemed like a pretty solid model for scaling.
- [15:34]
Jack
Yeah, it definitely is. I mean the obvious downside, right, is the reason that there's so many small pool routes is because Chuck and Truck can go and take their, you know, 1996. I don't even know if this is the right model make, but they could take an S10 Chevy, an old S10 Chevy, throw some stuff in the back, some chemical chlorine, with some basic knowledge of how to clean pools and they, you can run a nice little route, go knock on doors there. There are tricks and tips like hey, we, you got to partner with moving companies to suggest on the move in, hey, you're moving in this house. I see you have a pool. You know, this, this is this guy's card. I would give him a call. He's an amazing pool guy. And so there's a lot of different tricks that are outside of the box on those ones because at the end of the day it's a very competitive market. There's lots of small fragmentation, but that can also offer opportunity when buying more of them. Right. You can buy a 30,000, $40,000 pool route and just keep going, keep growing like that.
- [16:38]
Chris Barr
Yep. Especially once you've got the branding figured out, you know. Yeah. Makes scaling pretty easy.
- [16:42]
Jack
Yeah. I think like a very similar one that I've really liked recently is the pest control, they've been doing very similar small trucks, lots of branding, knocking on doors, door to door. My wife just fell for it. So we now have a different pest control agent because she was telling me there's some young kid came knocking on the door and da, da, da, gave me this thing and I said, oh my gosh, you fell for it.
- [17:07]
Chris Barr
We thought about it for a bit and I don't know if it's like in my real estate acquisition background coming to haunt me, but I just think of like phase ones and environmentals and stuff like that, and I think of pest control liability for, for chemicals, toxins, stuff like that, and that kind of gave me the heebie jeebies. But, you know, again, I, I know people who it's worked great for, so definitely not knocking it, but yeah, like some of the other verticals we're, we're currently looking into.
- [17:35]
Jack
Sweet. So you're going to offer LOI as a backup position a little bit higher than the current position, just in the hopes that if something goes wrong, they back out, that they come to you.
- [17:49]
Chris Barr
Yep. And we were going to, we're again trying to put in a pretty competitive offer to, you know, if anything goes wrong with their current deal, they know they've got a great one, you know, right there to back fill it and to make it extra competitive, we were going to try to advertise a super, super short due diligence period, you know, talking to my pops, seven days, and I'm like a little, little bit too aggressive and especially with, especially with tariffs right now and, and all of what might be coming down the pipeline and how that can impact things. Definitely did not want to shorten DD up that tight, so gave him a standard kind of 45. Usually I would maybe negotiate, try and negotiate for 60, but 45. And the thing is, we are taking a run at this one because we're assuming that it's going to be very, very streamlined, very, very simple numbers. And so we have a lower tolerance for red flags on this deal because we're kind of taking a run at it with the expectation of clean and simple numbers. So.
- [18:50]
Jack
And are you, are you working. Where did you get your LOI template from? Are you working with a group? Did you buy it? What. Talk to me a little bit about that.
- [18:57]
Chris Barr
Yeah, and this is, you know, it's kind of nice to go through a trial run. Our broker that we're working with, he's actually been really, really solid to work with so far, and he said I, I really uniquely craft These Lois, you know, per the deal, I don't really go off a template. They're all pretty individualized and there lot more narrative in the LOI than I'm used to seeing. It's pretty black and white with a lot of the real estate transactions I've seen in the past. So you know, descriptors that would seemed out of place to me. But again this is my first LOI round in a small business acquisition transaction so far. So again I, I, you know, don't have much of a base comparison other than my real estate background.
- [19:38]
Jack
Yeah, I mean I would definitely, I mean it's fairly I guess, irrelevant because as long as you have the back out clause and, and you have some of the key clauses, it doesn't, doesn't create too much of a headache because they aren't as stringent as real estate transactions. But I was going to say I think you might have a leg up on a lot of people going into this situation because what we see a lot of times, like I was joking earlier, is a lot of times the broker ends up being a commercial real estate person that has moved out of commercial real estate and then they come into these, these transactions and they act like it's commercial real estate and then they have a bunch of buyers that go no, we're not putting down anything into escrow. We're not going to, you know, money. Although. Right. Talk about a way to really prove that you're a, a real buyer and that you're really into this is putting some money up. I mean don't get me wrong, I'd be very careful in what kind of escrow, third party escrow account and all that kind of stuff. But like that is a great way to push yourself to the head of the pack. If you are dealing with an ex real estate commercial real estate broker who is now brokering deals. But I mean the deal generally like the deal templates aren't. This aren't too difficult. Different in the sense that there is still a due diligence period. You're stating the terms and what you're expecting to buy on that. This is not binding. But this is, hey, we aren't going to we. If you have to retrade, you have to retrade it. This there the binding parts are like hey, we are not going to shut. You're not going to shop this deal around while I'm under contract with you. You're going to provide all documentation that we need to go through due diligence. But I would be careful getting A. It's probably fine. But I definitely feel icky about you taking in a LOI from that broker because they're not on your team. Right. Their goal is to sell the business. They're not. Their goal is not to help out.
- [21:40]
Chris Barr
Oh it's. It's my broker. Not the same.
- [21:42]
Jack
Okay, yeah. Okay, okay, okay.
- [21:44]
Chris Barr
My specific buyer broker. So he, he is on my side of the fence. Yeah, no, I would not be using.
- [21:49]
Jack
I was good. I was treading lightly there.
- [21:51]
Chris Barr
No, no, I appreciate it. Yeah, very kind of you, but no, I would, I would have slapped me for that one if I was in your shoes. So yeah, no, it's my broker. And again, while I'm not used to some of the nuances that come along with these transactions, there is a lot of parallels. Obviously tying it up and taking off the market key non binding and having an escape hatch key. All the basics are there. But one thing you mentioned was retrades. And I think that's the biggest difference maker between these Lois and what I've done in commercial real estate. Because retrade is like a four letter word. Nobody ever wants to retrade anything. It's. It's very, very icky. These are much more loosey goosey. It's more of a framework for how to move the conversation forward than it is a negotiated deal that you're just doing, you know, your checks and inspections and scrutinizations on. This is a. Everything's kind of loosey goosey and is. Is pretty contingent on everything else. I'm like what the hell are we even agreeing to here if everything's contingent on everything? But it really does work to my favor as a buyer. You know, I can set up an LOI as a multiple and then allow my own calculations of their SDE to speak for themselves. We can have an argument about what their ste is but we're. I've agreed that it's going to be based on some kind of multiple. So that flexibility is. Is new to me. But I see that there's a lot of advantages to myself as a buyer with that flexibility.
- [23:26]
Jack
Perfect. Yeah. No, that all makes sense. I'm going through currently a my last LOI sent out and yeah I mean really it's a lot of it's just dictating who's going to be doing what and let that there's going to be a non compete that they. You agree that 60 day due diligence, period, everybody's party is going to bear responsibility for their own expenses. Like very basic stuff. I guess the craziest part that I have is my creative financing all goes in there. How I'm going to buy the deal that you're going to buy it on 7A or cash or sellers know what that's going to look like at what percentages. So pretty standard stuff. I would highly recommend. I mean you, you're working with your broker. Once again, you only need to get one or two of them to really understand what they look like. And then from there it's rehashing old Lois. Make sense?
- [24:21]
Chris Barr
Yeah.
- [24:21]
Jack
But for everyone listening, if you don't have a professional one from a broker and or a law group, go get a basic one, pay the three, $400, it's worth it just to make sure you're covered. But yeah, that's neat. So, so you're going to put a secondary position loi on that and then have you been, have you been looking at anything else?
- [24:43]
Chris Barr
Yeah. So we've talked about that art framing business for a while.
- [24:48]
Jack
Not home service, but I love it.
- [24:50]
Chris Barr
I know, I know. Again, still service related and especially here in, you know, West Palm beach where you have Palm beach island right across the way and it's billionaires row over there and people get very, very high end artwork framed all the time. It seems like a pretty on brand business for this market in the service sector. And again, service is really where I'm putting the premium at. And it's interesting, you know, she wasn't wanting to entertain me as a buyer, you know, tried not to get offended.
- [25:22]
Jack
But how did you get in touch though originally? Where did that start at?
- [25:26]
Chris Barr
So it's actually how I ended up, you know, using the same broker that I'm working on that loi with now. I was talking with a different broker. He was kind of my number one guy and he was a super nice dude. But I saw this art framing business, I'm like, you know, I'd love some more information. And he just like couldn't get me an end or couldn't get me a cim. We fill out the NDA. But I'm like, it was weeks. I'm like, yo, like can I ever get a look at this thing? He's like, oh, the broker won't get back to me. And then I struck up a relationship with this other broker. He's like, yeah, I just showed that one a couple weeks ago. Let me put you in touch. So he was able to send it right over. I was interested. He said, you know, the seller has been extremely particular on the buyer. She's Choosing, you know, that they're choosing does not, you know, wants to have someone that has prior framing experience ideally, which I don't know where to find that.
- [26:21]
Jack
Yeah.
- [26:21]
Chris Barr
Was not wanting someone that resembled a PE firm. Didn't want someone who's going to view. View this as a transaction. Someone who's truly going to be an operator. I'm like, I'm your guy. And, you know, as far as that skills gap go, that's where I really saw an opportunity because I'm like, her and I are on the exact same page again. I'm looking at painting, pressure washing, opposed to things like H vac, which is your world. Because there I plan on being a true blue operator. And there is a technical skills gap with, you know, H vac, plumbing, something like that. Framing. I do feel confident that I can learn. It does. I mean, I respect that it's a. It's a trade. There's some complexities there. Nuance. I get it. But I can learn that. And she needs someone who's willing to learn and that she can teach this craft too, because the odds of her finding a ready to go framing so small is so small. So small. We're in the same boat here. So let's. Let's listen to reason. So she didn't want to entertain me as a. As a buyer. She said, you have no framing experience. I. I tried to milk what little I could. I was like, surveillance guy in the Marine Corps. I took tons of pictures. That's my art.
- [27:32]
Jack
And she's like, no, no, not at all.
- [27:35]
Chris Barr
So finally got her back to the table, and it seems to be moving in the right.
- [27:39]
Jack
Well, so how did you. How did you get it back to the table? I think this is important.
- [27:42]
Chris Barr
So kind of got creative and said, all right, like what. What would inspire her? And I said, listen, if we have a negotiated deal on the table, I'm willing to work under you, an apprentice, for six months free of charge to you. I'll continue to get paid out of the same, you know, fund I'm getting paid out of right now. And for six months, I will learn directly under you, learn everything I can possibly learn about the, you know, framing business. I'll be flexible if to keep you on as a consultant. If you want to be hands off, that's fine. But if I can pay you for additional consulting work down the road. Happy to do that. She's going to continue to own the real estate, which she owns now.
- [28:23]
Jack
So that makes sense why she's so picky about her buyers. Because that she's going to try to do a lease back and she wants that person to understand that they need to stay in that location to make it work in the long term. Same with pe. I want, she doesn't want them shutting down shop and then her having to worry about, hey, where am I going to get a new tenant from?
- [28:39]
Chris Barr
And it's twofold because it's her. B, you know, she said it's, it's partially that she's like A, I wouldn't want, you know, my tenant to go dark on me. B, that also means that like my baby went away. So it's a really kind of twofold reasoning for side, you know, definitely put up, you know, I said we can show a balance sheet that more than guarantees a five year lease in its entirety. So it was really the combo of those two things that, you know, brought her back to the table.
- [29:03]
Jack
I mean it makes sense because you literally put blood, sweat and tears into these companies for years and years and years. So you want to know that it goes to someone who's going to take care of it. I mean, I think it's a little short sighted that she was worried about that. But, you know, each to each their own. And so wait, how did you, when you were getting back to her to try and she's told you no, the broker told you no. I'm sure you were going through brokers. They kept saying, no, we're not gonna, she doesn't want to do this deal with you. What did you do? Did you send like a direct letter? Did you just send a really nice email? Did you call her? Like, what was the medium in which you got in touch?
- [29:40]
Chris Barr
The medium was honestly broker to broker. I really didn't have to get that crafty with the medium at all. It was really just the terms and the willingness I think to again do that six months apprenticeship free of charge to. But I just called my broker, I'm like, hey, go holler at her broker, let him know I'm willing to do this, see if she can come back to the table. And he said, okay, listen, she's willing to talk to you. We set up a call. She was not on the first call. It was just her broker. So I spoke to her broker personally, heard it from, you know, the horse's mouth. Then he relayed that to her. Then we all hopped on the zoom and you know, went forth from there.
- [30:18]
Jack
And that went well. After talking to her, she wants to continue forward.
- [30:21]
Chris Barr
Oh yeah, we're doing, we're doing an in Person tour. You know, I'm getting boots on the ground. So. Yeah.
- [30:27]
Jack
Yeah. Excited. More about framing businesses than now. I'm gonna go out there and see. I've heard about it through the grapevine. Like really good businesses, high end art. Like you said you're in a very affluent area so it works really well. So interesting.
- [30:43]
Chris Barr
You know I, it's not, it doesn't have a huge bandwidth for scaling. You know there's definitely a limited ceil there but they've been doing zero marketing for a while now. I mean it's been around since 88 have done. They've been mostly word of mouth so. And I remember we did talk about it's good to have some systems in there but like social. It's like catnip for Instagram. I mean it's like it's very, very marketable on social media and I feel like there's a lot of cool campaigns that you can do with art, art framing before and after, stuff like that.
- [31:15]
Jack
That's, that's true. That's a very good point is yes that I'd much rather see that business have the systems in place where you just have to turn the knob and it raises. But that being said, it is a very right. Somebody fixing an H vac system or I guess pulling a toilet. Not overly artistic in the sense of like videography. Putting together the art frame and cutting and slicing and putting the backing on, gluing it and I think with, with gorgeous art pieces by the way inside that frame that you're utilizing. So you get a little bit of that stolen, you know, the stolen ethos there from the art itself. That's, that'll be really interesting. I'm, I'm gonna be, I'm gonna be interested to see what the numbers in the business are because that's, that's gonna be, that's gonna be interesting. In general. I, I've never looked at an art framing business before per se.
- [32:12]
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- [33:05]
Chris Barr
Yeah, the margins are still really pretty good. And she treats her labor extremely well. They're full time and they have benefits packages and they go 5050 on, you know, insurance, stuff like that. So the fact that she's spending so much on labor, but the margins still look great on it, it's pretty dang encouraging.
- [33:25]
Jack
And what does she do in the business?
- [33:27]
Chris Barr
You know, she's pretty involved. She does a lot of customer interaction. She says people feel special when they get to talk to the owner and they get to talk to the boss. And especially when you're dealing with high net worth individuals like would be, they do like to have FaceTime with the owner. But I'm a relationship person.
- [33:45]
Jack
That's kind of fun.
- [33:46]
Chris Barr
Yeah, that's that. I do not mind that at all. She will, you know, put hands on and actually do some frame construction. Not a ton, but a lot of oversight, a lot of pricing, things like that. She does do her own books, but there is enough of a buffer in SDE where I can hire a bookkeeper and that's not a massive line item.
- [34:05]
Jack
So yeah, yeah, you can go overseas or even local and you'll be fine with that. And so here's my always my question is great lifestyle business, it sounds like, right? She works in the business, she's ready to retire, which is what I'm guessing she's getting out for. You get to meet cool people, you get to do cool things, but very low scalability other than raising prices because you are seen as a premium product, because your social media presence shows you as a premium product more. So I mean, I'm thinking like tattoo artists for example. A tattoo artist is a wonderful person, but they, they only get more money based on how great their art is and how well they're able to showcase and market that to then be able to charge more. And so somewhat similar I would imagine in this industry is, you know, putting a piece of art in a frame is definitely important and it costs a certain amount, but it's really like the labor and then I guess the cost of the frame. But there's no scalability in the long run, especially if it's a locale to geography. So what do you, what do you think about what are you thinking in those terms that's valid?
- [35:20]
Chris Barr
And again, the fact that they haven't done a lot of marketing, I mean, growth and scalability are two different things. But again, there is room to, I think grow the revenue here on some level. But 100 with you, there is a ceiling that, you know, I will be hitting and I would love to get your thoughts on this because not the scaling, not the growth is not something that every, you know, potential entrepreneur should not be thinking about. It is, but at the end of the day, it's not something that's been the highest priority to me. Something that is steady, something that is stable, something that is going to make an income level where I'm able to feed my family and, you know, not be overly stressed about income. You know, if it, if it does that, do I need to grow it? I'm a simple man with simple needs and maybe I'm being naive here or maybe I'm self aware, I don't know, you tell me. But if it said if it hits my income needs and is pretty steady. Eddie, I don't, I don't need to be Billy Big Shit and grow this thing to an empire, you know?
- [36:29]
Jack
Yeah, I mean, that's a, that's a great question. When searching for a business, it's. There are some wonderful lifestyle businesses out there that, that have no potential for growth whatsoever. I don't think that this is necessarily one of those, but there's definitely businesses out there that are like that and people have really, really happy, good lifestyles on them. Specifically, like, I think I talked a few weeks back about mortgage broke or not mortgage, lumber broker. And this lumber broker, he had his few contracts and he had his, you know, few people he worked with and he went to, to work at 10pm, went to the gym at 1 and then went home at 3. Like, the guy worked almost no hours and then answered a few phone calls, made $700,000 a year personally out of the million dollars a year that the company generated because it was just him, him and an assistant. So, you know, with, with those kind of businesses, it really depends on who you are and what you're looking for. Because even internally, like between John and I, John Wilson and I, John wants to grow $100 million business. I, I don't, I have zero want to make a $100 million empire. I'm, I'm more of that. I, I always say I'm I'm the, the first class friend who flies first class to go visit you. He's the private jet friend that he wants the private jet to go visit you. I'm like, I, I just want to go in first class. I'll even, even economy, I'll accept as long as I can get a window seat. So that, that's what I'm looking for. And I think that that's important to, to understand about yourself really early on because you can find a great business like this one. I think there's probably scaling options here. I don't think it's a hundred million dollar opportunity outside of maybe some kind of strange franchising.
- [38:14]
Chris Barr
But yeah, you know, not to get, you know, super philosophical on your show or anything like that, but I mean, if you look at life satisfaction, it's the delta between what you have and what you want. And you know, wanting more is kind of a, in my mind, it's a. You're never going to win that game. There's always room to want more. And trying to keep that, what you have up to speed with what you want feels kind of like a losing game. At the end of the day, my whole approach is want less, you know, and not say that I'm settling or not say that I'm setting my sights too low. But again, having the private jet, having one of the yachts out in Palm beach harbor, like, I don't need that. You know, that's not, that's not where my happiness is. Being able to sneak in the sneaky surf session at, you know, 7:00am is, is really more of a premium.
- [39:02]
Jack
I was just going to say most of us owners, I think in the beginning, what you're looking for, some of your time back. And when I say that people go, oh, time back, like, I'm going to work less, the answer is no, you're going to work more. You're going to work seven days a week, all day, every day, but you get to choose when you get your little time off. And so for me, it's like every morning I make my kids breakfast and then I'm home for dinner. So it's like those two windows, I'm working after they go to sleep and I'm working usually before they wake up. But those two windows is like, I don't have to go in the office till 10. I can do this podcast at 2:42 in the afternoon and not worry about it. But that's, that's where the wins are, I think. And you hit the nail on the Head. But that being said, sounds like a good business. I'm excited to hear more. I'm excited to see some more too.
- [39:48]
Chris Barr
Yeah.
- [39:48]
Jack
And I'm going to go down a rabbit hole here and try to find the, the opportunity in art framing in general and see what, where it can go from there. So.
- [39:59]
Chris Barr
Yeah, no, again, I'm excited. You know, I'm still fairly fresh in it. We just really had like, you know, our first, you know, hunky dory meeting where we're all kind of on the same page and want to move forward. I'm gonna put boots on the ground. So excited to report back, let you know what I, what I've learned. I gotta do plenty of my own research on this sector as well because it was definitely one that I did not see.
- [40:21]
Jack
Yeah, that's like one of the ones you don't expect. And then three, four years down the road you're like, oh, I, I guess I do this now.
- [40:28]
Chris Barr
Yeah, it's just kind of one of those things. Yeah, the universe has a way. And I remember it was similar with the, oh gosh, it was the arboretum or the, it was a greenhouse or land, not landscaping, but they did, there was a nursery that was in Greenville. Yeah, same thing. I don't think he was really planning on owning a nursery, but again, the universe just has, has a way of putting something in your lap. So excited.
- [40:57]
Jack
That's the fun part though, right? It's at the end of the day, you know, it's a choose your own journey style book here and you get to choose whatever you want. And if that's art fram, you're going to learn art framing and you're going to be the best dang art framer there is. And then in a few years you either like it or you won't. You move on. So, yeah, cool stuff. Do you have any questions that, that came up that you're like, hey, I needed to ask Jack that, what should I have done here?
- [41:22]
Chris Barr
Or anything, you know, I, I ended up bringing it up. It wasn't on my initial notes, but that broker burnout again, kind of feeling like, you know, the new brokers I talk to, I just get put on the, the same MLS lists. I feel like I look at my broker, you know, database, I'm like, I should plug through some of these. But I'm like, what's the point again? I'm just, you know, they're going to nod, they're going to smile. Maybe they send a follow up email, maybe they don't. At the End of the day, I'm just going to get put in front of all the same deals I've been seeing anyway. So is it really worth the opportunity cost there? Yeah, probably, because that's what they do. And being, being a name in mind for more brokers in the area can only be a good thing. But just want to know if you had any thoughts on, on how to handle the broker burnout.
- [42:09]
Jack
Yeah, so I think a big portion of broker burnout. And I don't know how you, you think about this or if you ever think about this, because I didn't, I kind of fell into it naturally. But my online presence is H Vac Jack, right? It's the H Vac Jack Jack acquisitions, H Vac guy. I'm always wearing H Vac. And so when I'm online talking about my wins and creating this version of myself online, I make sure that all my wins are forefront on my social media accounts. But I think that's important. I think that a branding yourself in some way, sense or form actually starts to help the broker process. Because I'm thinking, right, let's pretend that we're brokers for a second. You get hundreds of calls. Half of them are time wasters. They don't know that Chris is not a time waster. They don't know he's not a tire kicker. And you say, hey, like I'm looking for this size business, I'm looking for pressure washing and painting. Let me know. And then that in one ear, out the other. But if you were to be, and I'm just super being hypothetical here, but if you were to be Chris the painter, paint acquirer or something, you know, online, and that was your, your presence. And then they Google you, they say, okay, who's this Chris guy who does painting? And they, they Google you. And then boom, it's like, there's your LinkedIn, Chris the paint guy, the hits on Instagram, Chris the paint guy, Twitter's Chris the paint guy. And then all of a sudden, right, you've built this. I'm the paint guy. I'm gonna buy a paint business here. And now they're like, they feel a lot more, there's a lot more trust in that interaction, I think, than their general interactions. There's a lot more trust, but also it's a memorable interaction for them. So my suggestion in this kind of broker burnout is I think that a lot of times we're focused. Don't get me wrong, there's a lot of bad brokers. There's some good Brokers, I introduced you to one. But there's a lot of bad, bad brokers that don't know what they're doing. They're, you know, they're doing this because they, they saw something a long time ago. They thought, oh, I could do that. And then they just deal sit. And poor owners sit with deals that aren't selling. But on the other side, like, I think it's our job as buyers to help drive the story. And that's. If you're leaving with anything today, it's like drive the story of who you are and what you're looking for. Because the more you and the better you're able to do that, the more memorable and easy it is for a broker to sell you something. Right. So a lot of times the, the other side to this is the, the opposite, the exact opposite is going, hey, I want to buy a $1 million business and our purchase price of 1.2 million. And I was guilty of this. Purchase price 1.2 home service and SD above 200. Like, that's not, there's no memorable thing. Who are you? Like, yeah, I get that. But if you, if you do a personalized story about how, you know you're in the military and your surveillance made you this perfect person to buy an art business and our art framing business and that, you know, this just extremely personalized about who you are and why you're a great operator and why you're going to succeed and, and how you have the funds and how you have the backing. With real estate boom, like perfect that you can close, they're happy with you. They know that. And so that, that's my takeaway with, with broker burnout is we get caught up sometimes in how bad they are versus focusing on how can we make, what can we control. And it's like I can control making my story better and my outreach better with personalization and then that's how you win.
- [46:17]
Chris Barr
Yeah. Honestly, I did not see the solution to that being branding. That's, that's really not where my, my head was going to take me. But I, I know, I love where your head's at. And you know, funny, you know, quick story to close that in regards to that brand, you could. One of the things that the art framing owner did not. One of the reasons they didn't want to entertain me is their broker took a look at my website and I really tried to like, craft my bio, be very, very personal. Like again, small town guy, small business identity.
- [46:46]
Jack
I know exactly where you're going with this.
- [46:47]
Chris Barr
You know, and they took a look at it, they're like, oh, this looks like a mini PE shop. And I'm like, I'm flattered that we, we aired on the side of professionalism. I'm flattered that you think we're that legit, but like, no, we're, we're local yokels here, man. Like, wait. So realizing that I did not brand as accurately as I initially thought I did was a little bit of a wake up call. So I think it's, it's probably time for me to revisit that a bit. Yeah, I really didn't. I, I always kind of thought the website was something that like no one would go to. Like, I'm gonna do it just to say that I have it, but I'm starting to get the sense that, you know, branding myself as a buyer is, was more important than I initially thought.
- [47:29]
Jack
I had this conversation at SM Bash with quite a few people who are in the space, by the way, shout out, SM Bash. Super fun, good people. We had a great time talking about acquisitions and going through all of this stuff and we had this exact conversation was about. I did it too, you know, to try and drive ethos in the space. We build this website that is, I think yours is KC Acquisitions, mine was something ventures. And we're trying to actually emulate these PE firms and these venture capital firms and like their websites so that we can grab some of that ethos. But actually the opposite is true is most of the buyers don't want private equity or they don't want. Peter Lohman had a great statistic from Axios. Axios is a platform where you can look at deals kind of like biz by sell, but a little better, more curated. And he said he scraped all the data and the number one thing that stuck out was a personalized message. And then kind of along those same lines. Not all owners want private equity, not all of them want industry tuck ins, not all of them want this. That more often than not it actually led that they wanted a good operator who cared about the business and who sent them a personal note to say, hey, I want to buy and continue legacy. Which is wild to me because I thought the opposite.
- [48:52]
Chris Barr
Well, and I, it's weird because that's like really what I tried to create the branding to, you know, convey the message of is like, hey, I am, I am not private equity. I am just, I'm a guy, I'm an operator. I'm going to care about your business again. We, we come from a small business background. Yeah, we're a family shop. Like, it was. It was kind of branded or I thought it was branded to be very, very personal. But I don't know what I gotta do. Put on a pair of overalls. I have a big piece of wheat coming out of my mouth. Or be. Be more.
- [49:23]
Jack
We'll break it down next episode. We'll go through your website so everyone on YouTube can see it and go, oh, Chris is the worst website. It just shred you.
- [49:31]
Chris Barr
Yeah. Just absolutely roast me up. Totally good with it.
- [49:33]
Jack
Sweet.
- [49:34]
Chris Barr
Awesome. Well, thanks so much, Jack. Really.
- [49:36]
Jack
Yeah. Well, thank everybody for listening. Leave us 5 stars wherever you listen. Head on over to owned and operated.com to get some more of J Acquisitions opened and operated the workshops that's Owned and Operated Pro. All of our wonderful things that we offer over there. And yeah, leave us five stars so we can keep doing this. And thank you all.