#220 Buy vs. Build: Start or Acquire Your First Business?

Summary

Owned and Operated - Episode #220: Buy vs. Build: Start or Acquire Your First Business?

Release Date: July 8, 2025

In Episode #220 of the Owned and Operated podcast, hosts John Wilson and Jack Carr delve deep into the perennial debate of buying versus building your first HVAC or plumbing business. This insightful discussion provides listeners with a balanced perspective, drawing from the hosts' personal experiences and industry expertise. The episode is meticulously structured to guide aspiring entrepreneurs through the complexities of making this crucial decision.

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1. Introduction to Buy vs. Build

The episode opens with Jack addressing a frequently asked question from listeners: whether to buy an existing business or build one from scratch. He emphasizes the importance of entering the market, stating:

Jack Carr (00:00): "The one that I do get a lot question is buy or build. Specifically in HVAC and plumbing. I still live by the motto of it's better to be in the game than not at all."

John briefly chimes in, setting the stage for a comprehensive discussion.

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2. Perspectives on Buying a Business

Jack's Approach:

Jack shares his experiences with acquisition, highlighting scenarios where purchasing a small business proved advantageous. He recounts a personal success story:

Jack Carr (03:29): "I bought that size of a business and the only thing I'll say that the benefit of that was that my phone was ringing day one."

He underscores the immediate cash flow benefits and market dominance that can come from acquiring a well-positioned business.

John's Concerns:

Conversely, John raises concerns about the current market conditions affecting acquisitions. He points out:

John Wilson (04:12): "But if shit's expensive, which right now interest rates is a thing on acquisitions. I'm not all geared up on deals right now."

John is wary of the high interest rates making acquisitions financially daunting and stresses the potential cultural mismatches that can arise when integrating a newly acquired team.

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3. Building a Business from Scratch

Jack's Philosophy:

Jack champions the idea of building a business, especially in today's dynamic market. He reiterates his belief in the importance of risk mitigation:

Jack Carr (05:21): "As long as you're doing some risk mitigation. Because I think there's enough opportunity on the whole that if you can just get in the game, you can change your life and win."

He acknowledges that while building offers control, it comes with its own set of challenges, especially for those new to entrepreneurship.

John's Insights:

John complements Jack's view by emphasizing the significance of cultural fit when starting fresh:

John Wilson (08:29): "Which I think you're going to have that in my big."

He explains his low tolerance for operational inefficiencies and cultural misalignments, preferring to build a team that aligns with his values and operational standards from the outset.

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4. Resource and Skillset Considerations

A substantial portion of the discussion revolves around the resources and skillsets required for both buying and building.

Jack's Take:

Jack highlights the risk profiles associated with each approach:

Jack Carr (17:40): "I think the answer is like, what's your skill set?"

He advocates for aligning one's personal strengths with the chosen path, suggesting that operationally minded individuals might lean towards building, while those with strong marketing or financial backgrounds might find buying more feasible.

John's Counterpoints:

John counters by addressing the financial implications of starting a business with limited funds:

John Wilson (26:00): "I think if you say I'm going to go out and buy a, a million dollar business, SBA is going to say what, 10% down? So that's 100,000."

He argues that starting a business requires substantial initial capital, especially to cover operational costs and generate sufficient cash flow, making buying less attractive in high-interest environments.

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5. Market Conditions in 2025

The hosts analyze the current market landscape, particularly focusing on interest rates and their impact on business acquisitions.

John Wilson (30:03): "Yeah, that's where my kind of thinking is. In 2025 I will say that interest rates suck."

They discuss how the high interest rates (around 9-10%) make financing acquisitions more expensive and less appealing. Additionally, they touch upon the labor market, contemplating the sustainability of trades amid technological advancements and AI integrations.

Jack Carr (31:08): "The safe investments are Hands on my thinking. Maybe, maybe not."

Both agree that while the market remains robust, the cost of borrowing and operational challenges necessitate a careful evaluation of the buy vs. build decision.

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6. Summing Up and Final Thoughts

In their concluding remarks, John and Jack summarize their respective stances, recognizing that neither path is universally superior. They emphasize the importance of personal circumstances, financial readiness, and skill alignment in making the decision.

Jack's Final Words:

Jack Carr (38:50): "I still say buy because if you can get a good brand that has some level of trust, you can retain most of the customers on your first buy."

He encourages listeners to enter the market strategically, leveraging existing brands and customer bases to ensure immediate cash flow and business stability.

John's Closing Argument:

John Wilson (26:14): "I've never heard of her. What?"

He reiterates the value of building from the ground up, especially for skilled technicians who can command higher wages without the financial strains of starting a new business, advocating for a low-risk, high-control approach.

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Notable Quotes with Timestamps

• Jack Carr (00:00): "It's better to be in the game than not at all."
• John Wilson (04:12): "If shit's expensive, which right now interest rates is a thing on acquisitions."
• Jack Carr (05:21): "There's enough opportunity on the whole that if you can just get in the game, you can change your life and win."
• John Wilson (08:29): "That's cultural. That's a cultural problem. And that's what sounds like a pain in the balls to me."
• Jack Carr (17:40): "What's your skill set?"
• John Wilson (26:00): "I think if you're starting with 100,000, you should not start a business."
• John Wilson (30:03): "Interest rates suck."
• Jack Carr (38:50): "You can retain most of the customers on your first buy."

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Key Takeaways

1. Buy vs. Build is Contextual: The decision hinges on individual circumstances, including financial capacity, skill sets, and tolerance for risk.

2. High Interest Rates Impact Acquisitions: Elevated borrowing costs make buying less attractive, tipping the balance towards building for many.

3. Cultural Fit is Crucial: Whether buying or building, ensuring cultural alignment within the team is paramount to avoid operational hiccups.

4. Skill Alignment Drives Success: Entrepreneurs should critically assess their strengths—operational or marketing—to determine the most suitable path.

5. Market Conditions are Dynamic: Staying informed about economic factors, like interest rates and labor market trends, is essential for strategic decision-making.

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Conclusion

Episode #220 of Owned and Operated provides a nuanced exploration of the buy versus build dilemma for aspiring HVAC and plumbing business owners. Through candid dialogue and real-world experiences, John Wilson and Jack Carr offer invaluable insights, equipping listeners with the knowledge to make informed, strategic decisions tailored to their unique business ambitions.

For more in-depth discussions and actionable advice, visit www.ownedandoperated.com and tune in to future episodes every Tuesday.

Transcript

[Jack]

The one that I do get a lot question is buy or build. Specifically in H VAC and plumbing. I. I still live by the motto of it's better to be in the game than not at all. As long as you're.

[John]

Yeah.

[Jack]

As long as you're doing some risk mitigation that if you can just get in the game, you can change your life and win.

[John]

Which right now interest rates is a thing. On acquisitions. I'm not all geared up on deals.

[Jack]

Foreign. Welcome back to owned and operated. What's going on, John? Let's do it.

[John]

Should we. Standing podcast.

[Jack]

I move around way too much for a standing podcast. Just so much room for activities in this room too.

[John]

Yeah, there is.

[Jack]

There is all of jack positions is done standing.

[John]

Really?

[Jack]

Yeah. I have a standing desk and I stand behind and do that just because I can't sit this that long.

[John]

Yeah.

[Jack]

But I'm very excited for today's episode. Okay, so this is a question that I get all the time from who?

[John]

Random. Random DMs.

[Jack]

Yeah, random DMs. A lot of times.

[John]

Much more.

[Jack]

I'm the people's champ. John.

[John]

I actually think that's right.

[Jack]

40 million means something to me. I'm going to get a T shirt. John. John. T shirts. 40M. 40,000,000 8.

[John]

I would wear that as a hat, actually.

[Jack]

Honestly, I might come up with something. I'm gonna pay a graphic designer to come up with something cool for that.

[John]

Yeah, no, I'd wear that.

[Jack]

I was looking for something like. Do you. Do you was. Did you come up with that closer tea? No, no, someone else did that.

[John]

Yeah.

[Jack]

Cuz I like that too. I was like, man, that's kind of.

[John]

No, it's fresh. It's. Dude, it's so good. I've got a hat. He got me socks. It was awesome. I won't say it's Brandon. We're. You know, he's got to come on the show for that to. To be a thing.

[Jack]

No, but point being is that swag was. Was legit. I was like, dude, I like coffees for clothes is already taken like that. Everybody knows that one.

[John]

Oh, I have that cup.

[Jack]

Yeah. Love it. I'm just saying, like some.

[John]

Some cool 40 mil ain't owned and.

[Jack]

Operated swag that has some like.

[John]

I'm not at 40, neither of us.

[Jack]

But it ain't when you get there. Maybe it will be, but we'll see.

[John]

Yeah, yeah, yeah. I'll let you.

[Jack]

Let me know.

[John]

I'll let you know. Literally in about 12 months.

[Jack]

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[John]

Okay.

[Jack]

Or yeah, build side. Because starting up a company from zero and buying a two man shop, same thing. Yeah, almost the same thing. Unless there's some really extenuating circumstances. So I bought that size of a business and the only thing I'll say that the benefit of that was that my phone was ringing day one like. But the reason I bought that business was because it was the only H Vac company in a suburb.

[John]

Yeah.

[Jack]

So we had complete market domination. The guy wasn't running the business well at all. And he just happened to dumb luck fall into doing a few right things. But for most companies I think it's built.

[John]

I'm going to, I'm going to toss you a quote.

[Jack]

Okay.

[John]

You ready? Well, LeBron action there. Football catch when assets are expensive. But build assets. So it's not my quote stole from somebody else. But if shit's expensive, which right now interest rates is a thing on acquisitions. Like I'm not all geared up on deals right now. I think that's also like I don't want the hassle. So you know, I'm coming at this conversation from a deal sounds really annoying. Like I'm gonna spend a lot of time around maybe find a deal that's still a piece of probably.

[Jack]

Yeah.

[John]

And I have to fix it and make it a real business versus like I can take less money and just go launch one. So I think my perspective is not great because I would Bias towards build. But I also probably have more resources and know how than the average human being about to launch a plumbing company.

[Jack]

And that's the hard part is because I, I still live by the motto of it's better to be in the game than in not at all. As long as you're.

[John]

Yeah.

[Jack]

Kind. As long as you're doing some risk mitigation. Because I think there's, there's enough opportunity on the whole that if you can just get in the game, you can change your life and win. There's a few instances where it's not and then those are the terrible stories that we never hear. Yeah, but that's like the mitigation there is like don't buy construction. Don't buy construction.

[John]

Literally. Stop. No, you need to stop. Those are the only DM. Those are the only DMs I get. You get all like the hey man, love you. You're cool. Well, you're one of the people. 40 million is to you. And I get the hey man, so I'm gonna buy a new construction. And I'm like, dude, just stop.

[Jack]

Yeah, most of mine though, you know, it's somebody who's picking up like a four man plumbing shop and their service only. And I'm like, yeah, let's look at the numbers and then go through the deal with them and see if it's good or it's bad or whatever. But like that's the vast majority of what I'm getting. So I have like two calls this week for two different. One is a franchise.

[John]

It might also because I be. Because I don't look at my DMs.

[Jack]

Could be that John opens up his DMs like, oh, there they all are.

[John]

Yeah, it's a lot.

[Jack]

Yeah.

[John]

But like in my defense, you know it. Everyone's either trying to sell me like an AI automation or like some guy keeps pinging me on LinkedIn. This one I do open because it's just like it's happened enough that I'm like, what's this guy about? He's trying to sell me steel. Like eye beams.

[Jack]

Yes. I'm like, yes.

[John]

What am I going to do with this?

[Jack]

My, my favorite is when I get the, the dms are. Hi John. I'm like, oh my gosh, you're not. Instant block.

[John]

Dagger. The heart. Wrong one, you piece of.

[Jack]

But point is, is like I do believe that they're. That you're right. I think that both of our ideas here are actually not mutually exclusive in the sense that when you, when you actually own a business. Buying a business can be more distracting and can cause more things to break and cause more things to be messed up. So it's easier to take the cash flow you have and invest it in growth initiatives versus investing in a business that's going to break your systems. It's going to ruin your life for six months. The CEO that you hire in that business going to quit and then you have to go and run it. Like all of the.

[John]

Well, are we talking about this as new entrepreneur or like adding more shit to your existing business?

[Jack]

No, no, no, I'm saying, I'm saying that like you mentioned, like, hey, I. It just sounds like a lot, but when you're new getting in. Yeah, it sounds like a lot, but that's kind of the point. Right. When you're new and you have. You're full of piston vinegar from your W2 and you just want to own it yourself. Like, I remember the days when that, that like I'm. I woke up and I was like, I'm ready to deal with the, the shitstorm. Like, oh, I have to run calls on the weekend. Who cares? It's all building for me. And now it's a little different just because now I have systems in place that I don't run weekend work. So if I have to run weekend work, it's like, why. So that's what I mean is, is I think there's an expectation at the beginning of dealing with the craziness that comes with buying a business versus your perspective now is like, buying a business sounds like a headache. Because it is.

[John]

Yeah. I mean, the biggest headache is cultural.

[Jack]

Yeah.

[John]

Which I think you're going to have that in my big. Like, if I did or you did as a new entrepreneur, like, it is cultural. Like in the business you bought, the guy quit. Riches business. The guy quit. So, like, that's cultural. That's a cultural problem. And that's what sounds like a pain in the balls to me. So I would rather I, I'll. I'll start this a different way because I, it's. It's almost all people. Like, my tolerance for. Is so low at this point. Like, I got a, I got a. Yeah. Very low tolerance for bullshit. Like in basically any part of my life.

[Jack]

Yeah.

[John]

So if I have to deal with something that's like very clearly bullshit, like, it's, It'll just stop.

[Jack]

Yeah.

[John]

Right there. That is it.

[Jack]

No time.

[John]

No time. So like, if I walked into an acquisition, it was a four person and I started to like, sense bullshit. We Would fire the whole team immediately. Like, I just don't have the patience for him. So building is attractive because you can pick the team you work with. And that I emphasize a lot because I want to pick the humans. I want to. I want to make sure we get along. I want to not have a cultural issue that's annoying to like, provide a good thing.

[Jack]

So you're 100% right. Because that's where I was going with it. Is my general advice when I. When I go through this and I said on acquisitions Anonymous is I said I would pick build over buy for my personality and buy versus build for my personality because I'm operationally minded. I can run calls if I need to, I can do operations if I need to. I can do marketing a little bit if I need to. I can run the entire business myself. That being said, there's different individuals with different characteristics, right? So a lot of times what we see or what I see is the people who are trying to build actually don't have a background as a technician or don't have a background as somebody who can be technical. And so what they do is then they go, they're great at marketing. They're the amazing marketer, They're SEO geniuses, whatever the case may be. And they, they partner up with someone who's supposed to be their operational partner. And that person is just terrible. Nine times out of 10, they fail because it's just. It's a bad partnership. And they feel stuck because you can't fire that person because you don't. You're not able to do the technical side. So how do you bring in somebody fast enough who's willing to take that risk with you on the technical build side? And so it's really difficult versus what we see a lot. And what actually works a lot in the early stages of the build and is like, hey, I'm a technician. I'm going out on my own. Getting kicked in the face from a business, running a business point of view, like, oh, what's insurance? What's. What's workers comp. Why do I have to do this, this and this? HR violations. What are you talking about? But at least they can run the business like that. The labor portion of the business now they just have to figure out how to get those jobs. And so it's this weird, like, which personality type are you? What. What is your skill set? Because I think this person can easily. And for people listening, the person who's the technician can get to that 1 million mark, right? Because they can do it by themselves, maybe with one other helper. But the person who is marketing oriented can't because they, they can't run the call. And if that person sucks that they're partnering with, they are in a bad spot. Does that make sense?

[John]

I think it does. I think you should zoom out a little bit. So if I launched, I corporate spoke.

[Jack]

Didn'T I zoom out? Yeah, I think that's accurate. That's not corporate speak. It's corporate speak. We're being told it's corporate speak.

[John]

Damn it.

[Jack]

I thought you were the fun guy. What's too.

[John]

Thought I was too. But apparently I'm a, you know, Jack.

[Jack]

You'Re too close to the situation.

[John]

My ankles are out. How corporate could I be? Like literally both ankles.

[Jack]

So much ankle, so little time.

[John]

Yeah. All right. So I think you got to zoom out.

[Jack]

Okay.

[John]

And hear it. If I was launching and I think this is what people should be aiming at, obviously I've been in this trade my whole life, so like a little bit different. But I think you can shortcut a little bit. If. If I was launching a new plumbing business in like this is what we're actively talking about. So like new location. We're kind of leaning towards build because it sounds much easier than buy. If you've been listening to the show for a while, you know that we've been big fans of service killers. One of the things that they just dropped that we are really excited about is a pay per lead program. So what they help you do is they help you directly gain access to leads and scale up your lead partner program. Go to service scalers.com and say we sent you. So I think it would succeed for. Well, it would succeed for a number of reasons. None of them having to do with me personally running the water heater calls. So I think if. Yes, the marketing is important. But the way I thought about this before this was like 10 years ago I was explaining to my dad I was in the field. I was a plumber at the time and I, I wanted to transition my role to the office, which was a big deal because there was like six total people in the company. So like one more person of overhead wasn't. It's a lot, you know, and I didn't appreciate that as much as I do now. But like that was, that was a big deal and I can understand like his hesitation. And I remember at that time, I'm sure I was reading some book, but I was like a 23 year old punk and, and I was reciting to him A man that had run a business for 40 years more than I had. The different stages of a business and why they mattered. It's fun to look at yourself ten years later.

[Jack]

Daddy's a 40, he's a four year veteran. He's like, what are you? Oh, my son, where did I go wrong?

[John]

I know, I know. So, but like a business is like eight things.

[Jack]

Yeah.

[John]

And only one of them is the thing that we do. Like, only. So out of the eight things that a new plumbing company would need, maybe only one of those is actually plumbing and the other eight is like, what's hiring? Like what's leads, like what's sales?

[Jack]

Like. Yeah, but in the build, I agree with you. But like in the build, build phase when you're zero to a hundred thousand, none of that like hiring doesn't matter.

[John]

Gotta hire your first couple texts.

[Jack]

You do have to hire your first couple techs. But if you don't have cash flow coming in, how do you hire your first couple texts?

[John]

Yeah, I think we should have specified how much resources we're starting.

[Jack]

Yeah. Because so, so I think like the average person that's starting, right, you're getting the dm.

[John]

It's not me.

[Jack]

If you say, I mean, if you say I'm going to go out and buy a, a million dollar business, SBA is going to say what, 10% down? So that's 100,000. So you say 100,000 to buy a business. That's a million dollars.

[John]

Yeah.

[Jack]

Or 100,000 to start a business. Like the startup cost on a plumbing business alone. And then you have to take into a factor, okay, who, who the build profile is. Right. Because the other side to it is yes, you're right. Like there's a decent portion that are other things, but licensure. And who's like, are you a plumber or are you not a plumber? That's I think the first place to start. Because if you are a plumber, great, you can go get the licensing and then I think you're 100. Right. Like I say, if you are in that trade, or you at least have enough experience in a very, very similar trade like facilities maintenance, but even there be very wary, but something of the sort. Then like, yeah, you go, you, you're there. You go hire a marketing team, you go hire, you know, resources to go hire these couple teams. But if you are an MBA right out of Wharton and you need to start, you have your 100k, you want to go start a business, the first thing you have to do is find Somebody who's going to hold that license for you. Right. And then even if that person is holding the license but doesn't want to run plumbing calls knife, go find and hire your first person. Meanwhile, your cash expenditure is just dwindling. Right. So my, my thing is the pet. Like who are you? What's your skill set? And making sure that, and this actually applies to buying too. Like when you're buying, if your skill set is lending you to be more operational, you can buy a smaller company. Like I did. Like, I'm not going to say stay away from a $1.5 million company, but if your skill set is marketing, stay away. Your skill set is finance. Needs to be 2 to 3 million because like we talked about on another podcast, you know, CFO doesn't matter until you're 10, 15 million. So like what as a CFO position are you going to do at a $3 million H vac company? The answer is really little, like very little strategy. Because you're fighting.

[John]

Yeah. There's nothing strategic about you.

[Jack]

See, I'm saying. So that's what my wonder is, is, is I, I don't know if there's an answer to this. I think the answer is like, what's your skill set?

[John]

And resources.

[Jack]

And resources. So in your example.

[John]

Because I think 100,000.

[Jack]

Yeah, that's what I was going to say. Let's play this out.

[John]

I guess like what, what I struggle with and have for years. I don't, I'm gonna, my perspective. Yeah, I did, I bought a business because I, the trade was different and it used to be the way that you made the most money ten years ago was you launched a business that's not really the way it works anymore. And I don't really understand like the, I don't understand why people in today's environment are launching businesses when as a technician you can go make 200 plus. Like that's insane. Do you have any like, I know, you know, but like it's going to take someone years to replicate that income owning their own business. That's not like, oh yeah, I got there immediately. No, that's like five years. So like you're gonna lose a million dollars of take home income that you would have made W2 for basically pride.

[Jack]

And lots of headaches.

[John]

And lots of headaches. And it's like, it's insane. I, I, so, so your example, I.

[Jack]

Know what the answer is.

[John]

Your example is 100,000. And I was like, why would anyone like in, in my scenario if that's the resources you're starting with. You should not start a business like I think that you can if you're a plumber here at Wilson or electrician or H vac, like sales install, you can make 100, you can make 150, you can make 200, you can make up to $300,000. Like, we have guys clearing that. Why would you ever. I'll tell you, take all the risk. I'll tell you for jack reward.

[Jack]

So I mean, as someone who did that, tell you the reason, because it doesn't. Because we. We were bringing home on a W2. I'm more than forthright with this. We were bringing home over 250,000. We were in California. So that means a lot less.

[John]

Yeah.

[Jack]

So that's especially in Napa. Like, I was troubling getting gas. But point being is like we were making good six figures at 28 years old, 27 years old. Like, you're right. There is a path where this individual. You could go work that W2, you could go save a percentage of that into the s and P500 every year, and you can be a millionaire by 50, 55. Right. That time horizon gives you enough time with proper investment to actually be really wealthy by the time you're in your 50s. Right. The reason that you take the moonshot is because you're trying to speed up that time horizon. Right. There is a real case for a lot of people. I just shouldn't say a lot of people. Excuse me, should rephrase this and be very careful. There is a real shot where there's a reality in somebody buying a $1 million business, top line business. So 200,000 in EBITDA business and then in five years selling that for 10 million or 15 million.

[John]

What percent chance.

[Jack]

There's a. There's a more percent chance than it working at a W2. So if it's 10, 15, 20%, your.

[John]

Risk app, you think that's 10%? You think there's a 10% chance?

[Jack]

I mean, I think that I'm.

[John]

I think there's like a 01.

[Jack]

I mean, my time horizon on just.

[John]

Like pull up the chart of like size of businesses. It's like 0.01. Isn't this point like we could okay the date, find the data.

[Jack]

Let's. Let's do this.

[John]

There's no fucking chance.

[Jack]

If you bought a $2 million business and you doubled it every year for five years, who's got the skill set to do that? I'm doing it.

[John]

Yeah.

[Jack]

I don't think I'm an Amazing operator. I think that I put myself in a position where I can talk to. See, I don't even want to inflate your head here, but I could talk to mediocrely good other operators, go on podcast with them.

[John]

I know a guy in Ohio.

[Jack]

And are you with them about why I'm right, why he's wrong, and then somehow that makes me a better human. Seems to work so far. But point being is like, I think whatever that percentage, a 1% chance that there is a moonshot chance. And I think it happens and we hear about it more. Right. We don't. We get the survivor bias on this as well. So like don't get me wrong, there's huge survivor bias of people who actually win and who actually do well. That's the, the people we hear of. We hear of the Tommy Mellows, the Wilsons, the, the rapid responses with.

[John]

I'm going to insert myself here because with Tommy, Tommy also had an incredible team that did get rich at his time of exit.

[Jack]

That's true.

[John]

So I, I think that like that's my argument here is I don't think that you should ever just like go work for, for some random fucking company.

[Jack]

Yeah.

[John]

I think as a tech, as a. As a leader, you can be an entrepreneur within an organization with none of the risk.

[Jack]

Yeah.

[John]

Like when eventually our business will transact. When that happens, a lot of people are going to make a lot of money.

[Jack]

Yeah.

[John]

And like that's a much higher chance of success with like zero risk than the risk. Different things.

[Jack]

Right. So the risk is like, it's not personal risk in the sense that. But there is time risk, there's opportunity risk.

[John]

Is risk.

[Jack]

The sense that. Right. I'm owning my own journey.

[John]

Yeah.

[Jack]

In this sense, all those people that have worked with you since you were at $2 million plumbing company are still here. Like they took huge chances to work with John Wilson rather than.

[John]

Yes.

[Jack]

Joe schmo, who's still $3 million.

[John]

Right.

[Jack]

Right. So. And out of. Do you want to talk about percentages out of every business that you could work at that you would actually go from 2 million to 40 million in eight years. Like very, very few companies do that. Agreed.

[John]

That was my argument two months.

[Jack]

It was your argument two minutes ago. And so to tie yourself to that business and to say put in two, three, four or five years of time to then it stall out or to never sell or to never get the opportunity to.

[John]

But as money through it technician, the ones that are likely to launch their own. So my example was for leaders. So, you know, for leaders, like, we're working on a mechanism where our senior leaders are rewarded at the time of whatever our. Yeah, we want to go raise and go keep growing. So. And we want our leaders to win like at that point and then beyond. But for text, you can just make 200 grand. Like 200 grand is a lot of money.

[Jack]

It's a lot of money.

[John]

It's more money than most owners make for the first 10 years of their business. And it's risk free and you can make it almost anywhere. Yeah, I really struggle. So we had one person leave last year and I love him, he's awesome. And I still don't understand the math because he was earning a lot.

[Jack]

Yeah, the math is that he's really good at it. He thinks he can go out and do it himself and succeed. And then in 10 years, eight years, five years, whatever your time horizon is, that's less than the W2 path that you can sell for $10 million. Right. You make 10 million. Honestly, most people, if they're making 4, 5, 6 million dollars.

[John]

Right. So it's much more likely it sells for one if most.

[Jack]

Way more likely. Way more likely.

[John]

I think we're. Yeah, I think we're. I think that's the issue I have with this. Like, yeah, we can launch it. We'll sell for 10 million. Like, probably not. I mean, you might be able to build something that could sell for 1 million bucks or like maybe 2. But so to sell, even to sell for $1 million is $300,000 of net at 3 times. That's a good multiple. And it's going to take them a decade to get there.

[Jack]

Well, maybe, maybe. Nafi listens to owned and operated podcast.

[John]

Tune in every Friday.

[Jack]

But yeah, no, I don't disagree with you. I think that it's, it's a risk profile thing and somebody who is trusting in themselves goes and takes that risk and buys something that they think that they can flip at 100,000.

[John]

Well, and my argument is if 100,000 is the pool of funds you're working with. Yeah, you need to go back to work. Like, ouch. Figure out a better pool of resources because you have a real risk of bankruptcy there. That is just unnecessary.

[Jack]

I don't disagree with that.

[John]

And like, if you went and worked with again, if I, if I, John, am launching a plumbing company in Columbus tomorrow. Non Wilson, like, you know, Jack's plumbing, it would win.

[Jack]

Yeah.

[John]

And I, Because I know how to hire techs, I know how to drive leads. We know how to run a plumbing company. So go figure out how to run a plumbing company. Like, go work with one for a couple years, make a ton of money doing it, then maybe figure it out with like 300 grand at your disposal.

[Jack]

Yeah. Save up a little bit more.

[John]

Yeah. I feel like 100 is like literally too small of a number.

[Jack]

Yeah.

[John]

I mean, now granted, I'm not desperate, so maybe if someone's in a feeling, emotionally desperate. Yeah, it would be a different math.

[Jack]

I don't, I don't disagree with anything that I think either of us has said. I just think that the point of why and where and when is kind of not me justifying it, but me just explaining why that behind the reasoning is that there's this moonshot at least. Maybe I'm just speaking from my personal experiences. Like, that's my way for generational wealth and I can hit it by the time I'm 40. Like, I don't have to wait till 50. I don't wait till 55. I don't have to wait till 65 to retire. Like, I will have my retirement where I can pull $250,000 a year at my 4% or whatever the fire people do. And like, I don't put any money into retirement accounts. Like, all my money goes back into investing in the business. And so I burned the ships. I turn I, I John, you're going to love this. I put 90k into my business, so not even 190. So you can too, if you follow owned and operated. But the reason at the end, and I said this on, on acquiring minds. The reason it wasn't acquisition Anonymous is acquiring minds. I wrong podcast. Sorry for sorry Will Smith earlier mess up. But the reason that I did it and why I keep coming back to this, like who, who are you are as a person is when I came out and bought the business, I was not a marketing guy. Like, I didn't know the first thing.

[John]

About SEO or the first five years of my career. I didn't know anything. The same thing. And you would probably find podcasts where I'm like, oh, I don't know anything about marketing. And now I feel like I'm like, pretty good.

[Jack]

I feel like I'm better than the average. Yeah, even agency. At some point you have to be. And that's the thing. And it's crazy. But the reason that I I'm happy was because I didn't know marketing. I bought the business. Everybody quit on me. But I was like, I guess I'm just gonna go run calls. Ran Calls made it work because that was my background.

[John]

Yeah.

[Jack]

And marketing just the phone just kept ringing. The phone kept ringing. People kept calling to getting work like naturally that suited my skill set really well. And and then after I was able to get away from this and hire I can then go figure out this. But if I didn't have this and I built and then all of a sudden everybody quit on me when I built like phone's not ringing and I'm not really learning or running calls. So now I'm just screwed.

[John]

Yeah.

[Jack]

Going to zero.

[John]

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[Jack]

Yeah, that's where my kind of thinking is. In 2025 I will say that interest rates suck.

[John]

Oh yeah, definitely loans like 10% right now.

[Jack]

10%? Yeah, I think I'm at like nine.

[John]

And on top of that like the market is still a, like this market is still hot.

[Jack]

Super hot.

[John]

Yeah, it will be interesting. We have not been looking at all like I'm not even really trying to look for deals. It will be interesting to see in the next like two years. I feel like it's hitting like fever pitch. Right? Like it's gotta slow down. On the one hand we don't want it to.

[Jack]

I was just saying on the one.

[John]

Hand I actually value high.

[Jack]

But yeah, I think, I don't think it's going to slow down. And the reason why is the comment we made about all everybody's job is going to be a plumber in three years because as AI eats up different jobs, the ones that are safe and the safe investments are Hands on my thinking. Maybe, maybe not.

[John]

Yeah.

[Jack]

Honestly, I hope not. I don't want everybody to lose their jobs and become plumbers, but makes labor market easier for us.

[John]

Yeah. What I think. What I think is, I think reminds me a bit of like, Gold Rush.

[Jack]

Airbnb Rush or Bitcoin Saga 2016.

[John]

So we have meme coins. Well, it's like. And what position do you want to take? Yeah, because we're. You and I are in an interesting position, I think, because we are, you know, we are actively digging for gold. We're prospectors, but we're also like, we run the trains that get the shovels to the prospectors. So people sponsor the show, they sell the shovels, run on those trains. So I feel like it's just an interesting spot to be. Because we're sort of like, as it. As the market continues to grow and as more people are like, oh, my gosh, you can get rich being a plumber and like all this other stuff, it the. Yeah, it's just. It's kind of interesting.

[Jack]

Definitely, definitely. But in this. So in this market today, you would lean towards build. But knowing. Is that correct assumption?

[John]

Yeah. 10% interest is too much.

[Jack]

Yeah.

[John]

I think that all the companies that are attractive enough would be overbid. Like, there are dog companies that I've bid on that are going for like six times and I'm like, you should have gone for a two and like, best. Like, I'm really grateful that I get to compete against the PE that bought them because, like, I know it's going to be easy. Yeah, it is currently easy. It's great. We just got like five guys from them, so. Yeah, so we get. I think it's easy because. Or avoid it. Interest rates are high, multiples are still high, and you can't control the culture. I think when I, like, obviously, I feel. This is my perspective now. I clearly felt different years ago when we were buying, but I just have such a low tolerance for, like, cultural mismatch that if we came in, you would probably be a clear house, which, like three years ago, I would have never thought that I would say that because it was like, that's not us or me or whatever. And it's like, no, I would, I would.

[Jack]

Yeah.

[John]

Would just. Cause it's like, I don't want to deal with, like, why have six months of headaches when you can just have an hour of headaches?

[Jack]

Well, and the reason on the smaller companies too, that they. They're trading is because the owners are tired because of the bullshit and so the bullshit is caused by them mismanaging companies, not running it correctly, letting the. The techs run all over them, let the text not sell. And so someone comes in, it's like, hey, you got quotas to meet. You gotta generate revenue. Good luck. And I have to wait. I don't generate.

[John]

I've never heard of her. What?

[Jack]

I don't generate revenue. I just fix things. It's like, yeah, but you gotta offer things too. No, no, no. I just go in there and fix things. Not my style to offer people things they don't need. It's like, no, no, no. They just don't know about them. Yeah, you don't have to slam.

[John]

Yeah, it's.

[Jack]

It's a whole sales thing.

[John]

It's funny.

[Jack]

Oh, it kills me.

[John]

It's funny. This was on, like, Reddit maybe a.

[Jack]

Year ago.

[John]

And someone was a cashier at a coffee shop, like a local community coffee shop, and I think she made eight bucks, ten bucks an hour. I don't know. And the business did, like, $200 of coffee shop sales that day. And she made like $120 or something like that. And she, like, sent a picture of the cashier. It was like, 200 for the day. And she's like, well, I'm gonna go ask for a raise. Like, they got 200 bucks today. I did that. And it was like, she got thankfully corrected because it was such a ridiculous, like, yeah, what about the rent? What about the coffee? What about the benefits? What about, like, literally anything? But it was comical, and I feel like it is. It is tough. That is part of the problem with, like, I think trade schools don't do a good job of explaining that, because we get a lot of, like, these young kids that just. They don't yet understand, hey, yeah, fixing stuff is important, but you do have to literally cover your wage.

[Jack]

Yeah.

[John]

Like, we have people astonished when we say that, hey, you have to. You have to make more revenue than your wage. And they're like, how on earth could I ever pot? That doesn't even make sense. I covered my wage. I'm good. And I'm like, what about the gas that got you there? Like, why don't you pay for that? I'm like, how do I pay for that? They're like, from the revenue I bring out. I'm like, that just covered your wage. So, yeah, it's. You sort of get there. But some. Some people, you just never do.

[Jack]

Never do. Yeah. And so.

[John]

So anyways, I'd rather not deal with that bullshit. Yeah, I'M pretty good on it. Maybe like three years ago, I would have, like, taken on proving that one plus one equals two, but today I find it easier to just say, you're right, Arco's hiring.

[Jack]

Yep.

[John]

I'll still eat that name.

[Jack]

Cut. I think I'm still in the buy category. Even with the high interest rates. If you can get a deal, that makes sense. Not crazy.

[John]

Yeah.

[Jack]

I still think it's more important to get in the game.

[John]

Yeah.

[Jack]

And more important. Important to have the phones ringing day one than anything else. Just because that climb of trying to grow from that 0 to 1 million mark is so brutal. Excuse me. I should rephrase that. It's extremely brutal for people who've never done it.

[John]

Yeah.

[Jack]

That 0 to 1, like learning.

[John]

I feel like you should work alongside someone that does. Because the groups that I'm in.

[Jack]

That's true.

[John]

The friends that I have that are actively launching, like, I'm coming from the perspective of, hey, I have like 10 friends actively launching, like, locations.

[Jack]

Yeah.

[John]

In places that they don't have a brand. So it's not like they're getting to make use of the brand. They do have systems, they have opera. They understand how to do it. And for all of them, 3 to 5 million in the first year is the expectation. Like if we launched, it'd be 3 to 5 million in the first year. Which be our target. Like our. Our rough estimate so far is 200,000 in the first month. And it's not that much resources. It's just we know how to do it.

[Jack]

You know how to. And that's the crazy part is Right. The switch for me too, to try and learn that that marketing does not equal lead gen. Took me a solid minute to understand, like, oh, marketing actually, like, this person's a marketer. Doesn't mean anything. 0% if they don't understand local service. Lead gen, because it's a. It's. It's a subsect of business that it's its own thing and doesn't touch anywhere in the marketing. I had people come out of marketing college and they're like, hey, I got marketing degree. It's like talking about them about Legion. Zero idea.

[John]

Yeah.

[Jack]

No idea. Like, they know what SEO is. But what's the strategy to get me to number one SEO? People who are the best at that are the people who've just been doing it.

[John]

Doing it. Yeah.

[Jack]

And so I still say buy because if you can get a good brand that has some level of trust, you can retain most of the customers on your first buy, you can spend still that 10%, even though it's a high interest rate. Still pretty juicy. 5% if you, you know, have the the owner do a full hold so you can get in with a lot of leverage. There's high risk, though. High risk. But if you believe in yourself, you burn the boats. Good luck.

[John]

Yeah, good luck. And I say, listen, owned and operated. Go work in a business and build this. Yeah, good debate. If you like what you heard, make sure you like it. If you like Jack's mustache, make sure you sub. And check out owned and operated.com for information on the workshop in August.

[Jack]

Sam.