Stop Talking About Deals. Start Learning How to Run a Business | Joseph Cabrera | AO 60

Everyone today seems obsessed with buying businesses.

Spreadsheets. Deal terms. Financing strategies.
ETA. Search funds. Private equity playbooks.

But almost nobody is talking about the thing that actually matters…

Running the business.

In this solo episode of the American Operator Podcast, Joseph Cabrera (JC) breaks down the growing disconnect between the world of business acquisition advice and the real world of small business ownership.

Because the truth is simple:

The deal might take a few months.
But running the business will take decades.

Most of the great businesses in America weren’t built by analysts, MBAs, or “finance gurus.” They were built by people with grit, courage, and relentless momentum — the kind of people who started businesses because they had no other option.

In this episode, JC challenges aspiring owners to think differently about what it actually takes to step into the owner-operator seat.

He talks about:

Why focusing only on deals and spreadsheets is dangerous

The character traits that actually make great operators

Why relationships and community matter more than models

The difference between buyers and operators

Why small business success is more art than science

What aspiring owners should really be studying

Small businesses are the backbone of America — and the future of those businesses depends on operators who understand what’s truly at stake.

If you're thinking about buying a business, this episode might change how you think about ownership entirely.

Subscribe for more conversations with the people building, buying, and operating the businesses that keep America running.

Join the Movement
Tactical insights and behind-the-scenes stories from America’s operators:

• Website: www.americanoperator.com
• AO In Action: https://www.youtube.com/@AmericanOperator
• Instagram: https://www.instagram.com/theamericanoperator
• Newsletter: https://americanoperator.substack.com
• Locally Owned and Operated: https://www.locallyownedandoperated.org/

Transcript

00:00:00:00 - 00:00:08:00
Speaker 1
what are you finding are consistent characteristics of these operators that just really make it work?

00:00:08:00 - 00:00:11:01
Speaker 2
how do you handle pressure, right?

00:00:11:01 - 00:00:25:15
Speaker 2
And have you really handled the weight of, you know, 30 and 30 employees that rely on you 100% for their livelihood? Right? A community that has like known this name for a really long time,

00:00:25:15 - 00:00:29:23
Speaker 2
there has to be a lot of like respect for the owners that built this as well. Right.

00:00:29:23 - 00:00:38:03
Speaker 2
And like when all of that in a bank and, you know, investors are pressing you because things aren't going well, how do you react.

00:00:38:03 - 00:00:49:00
Speaker 1
All right, team, we are here. Back in studio with, in my mind, the one and only Judd Goodrich. Plus, I don't know anybody else named either one of those names. And so good to have you back here today.

00:00:49:02 - 00:00:51:08
Speaker 2
It's great to be back. It's been, a couple months, so.

00:00:51:09 - 00:01:11:22
Speaker 1
Yeah. Well, for those who don't know, Jen, go take a look at early on one of our episodes, a wealth of knowledge and just a just a great way of delivering what I would consider sometimes complex information in a really approachable way. But judge, member of our team leads a lot of intense and, important efforts here at the company.

00:01:12:00 - 00:01:31:14
Speaker 1
But I figured today would be a good, good opportunity to get Jed back in the series. You have owners in here. We're chatting with them on what's going on in their business and so on and so forth. The Jed's got a great perspective of what's kind of going on across different companies, what's going on with owners, folks that are becoming operators, and just the general SMB small business landscape, you know?

00:01:31:14 - 00:01:46:00
Speaker 1
And so we're going to dive into those things and just kind of give folks, let's just call it like a little state of the Union or current event, but, just for folks who don't maybe know you, well, they should, but if they don't, how would you describe what you do here and the things that you lead?

00:01:46:02 - 00:02:10:04
Speaker 2
Yeah, absolutely. So right now, what I'm focused on is two things. One is finding great owners that are looking to for support on their transition and succession planning. So leading a team that's working, reaching directly out to owners, creating partnerships with anything from Rias, you know, maybe some other like investment banks that, that can share, you know, deal flow with us.

00:02:10:06 - 00:02:31:05
Speaker 2
And really just looking for awesome owners that need support and want to, transition their business in a more unique way where they're really thinking about the legacy, the customers, the employees. And then I'm also heading up the investment arm, which is the team that takes like the tactical approach of how do you actually buy a business, right?

00:02:31:05 - 00:02:55:22
Speaker 2
That's everything from looking and going through the diligence process, setting up from a legal transition perspective. But then also finding great operators and with all the deals that we, and the businesses that we help purchase, we always bring on, you know, advisors that will sit on the board. So leading kind of the packaging process of we find a great business, okay, let's make sure we understand what we're buying.

00:02:55:22 - 00:03:06:22
Speaker 2
And you know, this is a really quality operation to stack you up with, a board that can help support this business and, you know, new CEO and operator that's going to run it day to day.

00:03:07:00 - 00:03:14:06
Speaker 1
It's a 17 sided Rubik's Cube ride to land the plane on, like the very best chemistry combo you can imagine. Yeah.

00:03:14:06 - 00:03:21:15
Speaker 2
Yeah, it's, probably, you know, maybe over a thousand deals for few that actually go through the finish line. So we look at a lot.

00:03:21:17 - 00:03:38:11
Speaker 1
Yeah. I mean, no, I it has always been a helpful just like for me personally, even if I want to just kind of get a, you know, if I whatever want to just gut check, you know, the complexity that goes into putting all these things together. I just spent a few minutes just getting an update on what he's working on for the day.

00:03:38:11 - 00:03:59:21
Speaker 1
The one thing that I always find very interesting is that, like there's some level of pattern recognition, but even if it is, oh, another plumbing company, oh, hey, another main like manufacturing thing. You know, maybe a former military guy or gal would be great to run it. That's about as much about recognition as you get, right? Because you get personalities that come into it, different markets, all those things.

00:03:59:21 - 00:04:01:08
Speaker 1
Right. It's not one and the same.

00:04:01:10 - 00:04:19:20
Speaker 2
It is a a game of edge cases. So yeah, everyone across the board, like we have a fantastic team that is very like adaptable to be able to see. Yeah, there are some patterns for sure that you can like identify. But the biggest thing is being able to look at a problem or a situation, handle it appropriately.

00:04:19:21 - 00:04:30:05
Speaker 2
And make sure that everyone is, you know, you were able to follow through on a great outcome, right? So a lot of it is, problem solving, which makes it super fun.

00:04:30:07 - 00:04:56:04
Speaker 1
So let's, maybe start at the highest level we possibly can start, man. Like, you see all angles of what's going on in our, in our, in our world of owners retiring, trying to figure out what happens next, new folks trying to take over. But what would you say the if you were going to give folks just kind of a general feel and state of the union of just small businesses transferring from one hand to another, what is the update you would give in there?

00:04:56:06 - 00:05:21:07
Speaker 2
Yeah, I mean, there's a couple of things. I think this is the overarching, market kind of like dynamics is it's positive, right? Like there's obviously a bunch of stuff happening in the world that is like relatively negative right now. And small business is strong. So we've seen it like anecdotally through businesses. We've looked at super strong end of year finish really strong like first couple months in the year.

00:05:21:09 - 00:05:47:14
Speaker 2
And then, you know, it's just looking at a report from like small Business and Entrepreneurship Council. Like 81% of business owners feel like 2026 is going to be very strong. Financials are, you know, strong from last year which is fantastic to see. Right. So there's a lot of positive trends there. You're seeing a good amount of these businesses that are tackling AI and using, new approaches, new technology to solve, you know, problems.

00:05:47:14 - 00:06:06:23
Speaker 2
You know, it could be anything from, hey, it is very hard to get talent right in certain markets. And like, how can we create a couple automations that free up some time of, you know, our operations manager? Right. So it's over half are using it in some capacity and that trend is going up. Quite a bit, which is fantastic to see.

00:06:07:01 - 00:06:39:09
Speaker 2
So I'd say from that perspective, really good from a time for someone to sell their business. Probably the best it's been in a couple of years. There are tremendous amount of buyers in the market. So, the price that people are getting for the business compared to a couple of years ago is, significantly higher. Even with some of the interest rates and like some of the challenges on the financing side, it's still proving to be, I would say there's a lot of poor buyers who maybe can't come up with the financing, but there's plenty that, you know, have adequate capital.

00:06:39:09 - 00:06:59:22
Speaker 1
Hey, y'all. Quick break here at American operator. We believe that small business is the backbone of this country, but more and more Main Street getting swallowed up by big corporations, wall Street or some of them are just shutting down. If you've ever thought about building something of your own, or just being a part of saving the American Dream, head on over to American operator.com.

00:07:00:00 - 00:07:10:11
Speaker 1
It's your one stop shop for inspiration stories, and you'll get to join this really great community of patriots that believe our country still worth fighting for. All right. Back to the show.

00:07:10:11 - 00:07:17:03
Speaker 1
So what is the encouraging behind that, you think? Why is it that that seems to be the case that more buyers have entered?

00:07:17:05 - 00:07:32:07
Speaker 2
I think there's a couple of things. One is like, you know, became a meme and a trend to, to buy a business, right? Which brings in tens of thousands and like, it's easier to make money selling a class on buying a business than it is to actually buy a business and make money off of that. Right.

00:07:32:07 - 00:07:58:00
Speaker 2
So, like, you have a lot of folks that are promoting the, opportunity, but which definitely is a double edged sword can be great. And also can introduce more challenges of tire kickers. Yeah. But then you also have more of like a macro finance impact where there is a, a lot of capital that was raised to invest to buy companies that is, kind of sitting on the sidelines still.

00:07:58:02 - 00:08:26:12
Speaker 2
So it's called dry powder. It's, I raised $100 million fund and I have 80 million. I can still deploy, there's less opportunities to to buy some of these businesses. They're getting more competitive. There's less sellers on the mid to upper end of the market, which is causing everyone to start going down and down, right, so that it's not uncommon to see some of the biggest financial firms, you know, folks will know Blackrock, of course, and Goldman Sachs.

00:08:26:12 - 00:08:48:23
Speaker 2
I was actually talking to someone that had a small Hvac business in the middle of Ohio, right, 600 K of ASD and getting offers from Goldman buyout fund for six x cold email from an analyst. So just shot it over, you know. Wow. So there's there's definitely a lot of, interest on buying, you know, mainstream businesses.

00:08:48:23 - 00:08:52:19
Speaker 2
And that will continue to continue to happen elastically.

00:08:52:21 - 00:09:02:18
Speaker 1
What worries you about that level of interest, especially from the big guys or what? Which is what ruminates in your brain when you think about that?

00:09:02:20 - 00:09:34:22
Speaker 2
I think that there's when you look at it from like a, maybe like a Goldman perspective or like some of, like the larger firms. I think realistically it's a lot of like financial engineering. I think the quality of these businesses, the underlying quality of the businesses will falter where they will realize that they either have to grow tremendously if there isn't someone to buy their ten, 15, 20 that they, you know, purchase that they thought they would get more for, they'll be true impacts on like the actual operations of the business.

00:09:35:01 - 00:09:59:20
Speaker 2
Right. How many people can we actually employ? How aggressive do we gotta get on pricing? I think the result is, if you pay too much, you have to charge more and you have to save money on operating this company. Right. Which decreases the quality of the service you're offering. And it makes it more expensive for consumers. So the end impact will likely be is, it's more expensive to get your roof done.

00:09:59:20 - 00:10:11:16
Speaker 2
It's more expensive to do. You have, some pest pest issues. Right. I need to go have someone come in, get all of these rats out of my house. Right. All of that starts to get more expensive.

00:10:11:18 - 00:10:42:00
Speaker 1
Yeah. You start. Yeah. We see that time and time again where you get the. The financial engineering behind a lot of it ends up becoming the thing that in a way, ruined the ultimate value of that business found success on to begin with, you know, and they continue enduring value in that town. And I think a lot of the this is a lot of the things I know we spend a lot of time chatting about here at the company, which is, you know, you kind of want to get more folks like, hey, why you should be into this even if you never want to be a small business owner or whatever, like it will

00:10:42:00 - 00:10:53:09
Speaker 1
impact your life if these things keep gobbling up, because you'll find that it just going to be more expensive to exist as a human. Yeah, when these are not locally owned and operated. And this is kind of the things I know we spend a lot of time thinking about.

00:10:53:12 - 00:11:20:04
Speaker 2
Yeah. I mean, if you if you take like it's very similar to what happened with single family homes, right. Like you basically introduce, you know, before 2015 there was not any institutional set up and more than a thousand units. Now there's thousands of that. Do but basically what they can do then is just artificially increase the price of a home 20%, which there's probably a calculation of how many people will never be able to buy as a result.

00:11:20:05 - 00:11:47:17
Speaker 2
Right. And they'll always be a renter. Right. Those, obviously it's like that hits home because home ownership is how most folks, in previous generations accumulated their wealth. The reality, though, is like I needed a new, heating cooling unit and I go get five beds. All of those are owned by the same group. I think I got a decent deal, but in all reality, it was all the same firms.

00:11:47:19 - 00:12:11:07
Speaker 2
Right. And that money that I spent, you know, $25,000 on, maybe I paid an extra five, $10,000 for it compared to if there was like a true competitive landscape. That money is also not going to the, the city that I live in, where it's going to get replenished back and spent. It's generally, you know, a firm and limited partners that are, not there.

00:12:11:09 - 00:12:28:19
Speaker 2
Right. So then all of a sudden there's less money coming, circling back through the community, being spent on other businesses. Which then, yeah, has like a massive impact. And I think that is, almost inevitable unless there's like maybe like, some government interaction, I would say.

00:12:28:21 - 00:12:47:12
Speaker 1
Yeah, we're doing our best to kind of keep that. I think this is where the American people at general just have to participate in it. It's like, I always thought was like a function of getting older. Like all of a sudden, like, it's like, when do you start caring about, like, community stuff and attending a chamber meeting and like, you know, going to the the local town hall more than ever?

00:12:47:12 - 00:12:58:18
Speaker 1
I think that is probably if that was, let's say, a when you had more time in your life to be less chaotic and you were a little bit older and you had time to pay attention, you know, to kind of what's the happenings in your community?

00:12:58:18 - 00:12:59:08
Speaker 2
Yeah.

00:12:59:10 - 00:13:08:02
Speaker 1
I feel like that age is kind of dwindled earlier now because it kind of has to be. Otherwise you'll be left out in the cold and go, what the heck happened around me?

00:13:08:04 - 00:13:25:11
Speaker 2
Yeah, I mean, it's also like people have to realize that it's happening. I think they don't even really, really know. But if you've ever been to like, a dentist that is owned by private equity and then all of a sudden you're like, why are they upselling me? Why are they telling you? My teeth are kind of yellow, like they have packages for this, this and the other.

00:13:25:13 - 00:13:42:14
Speaker 2
Yeah. And then all of a sudden you're like, well, and then you get some procedure done, you get some root canal and like, you realize that you didn't really need it right then people are starting to think about it. They're like, wait, what's going what's going on? What's going on here? Why are there six different packages when I just need to get my teeth cleaned?

00:13:42:14 - 00:13:44:01
Speaker 2
Because I'm supposed to do this every six months?

00:13:44:01 - 00:14:07:03
Speaker 1
Yeah, yeah. And some high tech, like little form that you get again, you know, and let's go to over towards like you talk about ownership and I think and, and you talked about the, going down market in these Hvac companies. It's prompting in my brain, about the businesses and the owners, you see, that are retiring and they're bringing, you know, you're you're seeing all these come across y'all's desks.

00:14:07:05 - 00:14:27:22
Speaker 1
What are you finding right now is making businesses that you see, like, very competitive and interesting and gets you your light bulb on and going, like, I need to talk to this owner. And what are the things on the flip side are like, yeah, probably not a fit for us that that that has nothing to do with size and and more to do with just kind of the mechanics of the business that you're seeing.

00:14:27:22 - 00:14:35:20
Speaker 1
And so if you could kind of just share both sides of the coin there so that my, my hope is that that owner sitting out there is going, hey, Jed, it's mine. Any good?

00:14:35:22 - 00:14:58:06
Speaker 2
Yeah. Yeah, I would say it like if you boil it down into like a couple things, like one of the biggest aspects that any individual that's looking to buy or group that's looking to buy a business or is they really want to understand what happens when the owners aren't there. Right. How durable is this business? If you went and took a three month vacation, what would happen?

00:14:58:08 - 00:15:38:10
Speaker 2
Right? Is this business still going to be able to operate completely the same, or is there going to be day to day issues obviously from like, a larger strategy perspective? Of course, if you lose your, you know, your CEO, it's, it's it's a problem. But like functionally, can the business continue to operate. Right. So like if you're thinking about selling, this is where you want to be able to like, educate, your operations manager, maybe you have GM, maybe you just have, you know, some like service managers, right, that are running crews, educate them more on the, more aspects of the business as possible.

00:15:38:11 - 00:15:59:09
Speaker 2
Right. And then I would really think through like the gaps if you left, this is what would be required. What that will do is two things. One is it's super upfront approach in when you're going through the process of selling your business, right, like, hey, the inventory management, no one really knows how to do it. It's really critical for the business for these three reasons, right?

00:15:59:09 - 00:16:19:14
Speaker 2
I'm really good at it. This is how I go about doing it. But what it also then does is, helps you kind of think through who would make sense to buy this business, right? What skill sets to that does that person have, and will they be able to fill my shoes? And there's some folks that I think this is where they really struggle, right?

00:16:19:14 - 00:16:34:13
Speaker 2
I'm really good at sales and marketing. The business is just like, yeah, I would say that's a bad example because most businesses need it. Right? But it could maybe more like I'm really good on the operations side and like the operations are handled by someone else. Okay. Like that's not really the skill set that's necessary to make this business successful.

00:16:34:18 - 00:16:59:10
Speaker 2
So I would definitely look at it from that perspective. Any way that you're able to diversify your customer base is, is something that you want to be thinking about a couple years in advance, right? People are going to discount that 2,030% customer, and you're not going to get the same value out of it. And you can also and I just talked to someone recently that, you know, kind of went through this exercise of diversifying into different sectors right there.

00:16:59:10 - 00:17:31:17
Speaker 2
Like we have a lot of financial, companies. Okay. Like let's look at having that less than 50%. Let's get that under like 20 to 30%. So if something happens in that industry we're not is impacted. So very, very critical. I would say investors are generally and like buyers are generally looking for reoccurring. Right. So if it's all new construction versus maintenance and maintaining and going back every couple months, every six months is, is definitely attractive.

00:17:31:19 - 00:18:03:22
Speaker 2
I'd say like we're probably less like, yes, of course. Recurring revenue or reoccurring revenue is great, but it's not like, a necessity per se, because some industries, it's not how they're set up. But I would say that's definitely like very critical. The other thing about it is, like, are you able to describe how you generate revenue, what you see commonly is like, okay, top line revenue is super consistent, five and $5 million every year.

00:18:04:00 - 00:18:23:22
Speaker 2
And someone can look at that like, wow, this is a really durable company and the revenue is really repeatable. But on the back end, you know, it's an owner that is just pulling every single lever to get to that amount, right? They don't exactly know where the leads are coming from, how they're actually generating, $5 million. They just grind and then they get there.

00:18:24:00 - 00:18:46:08
Speaker 2
Right? I think that's a little bit harder for us to be like, okay, how feasible is this to continue to happen into the future? Because that's basically what everyone is buying. It's like they look at the historicals and they're say, can this continue to happen? Right? Versus, yeah, you know, 20% of our revenue is coming from Google Ads and another 20% we have these like referral partnerships.

00:18:46:08 - 00:19:05:22
Speaker 2
We kind of kick back, a feed to them. And you know, another 50% is coming from, you know, word of mouth. And they're directly calling our line on our website, or they're hitting like the contact form on our website. And, you know, we have some articles that are, you know, we see that it's coming through those channels.

00:19:06:00 - 00:19:29:05
Speaker 2
That's really helpful to like, understand because then we can, you know, someone can actually look at it and be like, okay, like if we invested a little bit more in one of these categories or is there a lot of risk, right, on the referral agreements, all the referrals come from my Uncle Joe. Okay. Well, Joe is probably getting a killer deal on some type of like back end relationship.

00:19:29:07 - 00:19:38:08
Speaker 2
That makes things a little bit more challenging. And like, if Joe goes away, 30% of the revenue is gone. You know, it's going to be hard for someone to get comfortable with it.

00:19:38:10 - 00:19:58:17
Speaker 1
It's kind of like if I'm an owner sitting here right now and I'm thinking, okay, I'm probably a year, maybe two out from selling my business just based on, you know, Jed's inside here. I might be thinking, all right, let me first see, I'm going to kind of go backwards or just like, let me first see if I can describe how I actually make money and can I clearly articulate that to somebody.

00:19:58:20 - 00:20:16:02
Speaker 1
And if that answer is probably more than ten factors or more, you know, because it, you know, like why I do this thing that I did this other thing and then this, you know, whatever it you can't capture that might give you a leading indicator that it is very owner driven as opposed to maybe you've put some systems and stuff in place to help.

00:20:16:04 - 00:20:36:03
Speaker 1
Additionally, I might also be thinking, how reliant is it on me? And if it is relying on me, what is me mean? Am I a great sales person? Am I a great operational person? Do I just have a knack for for this particular design? I design all the furniture in our company and so you know that.

00:20:36:05 - 00:20:50:16
Speaker 1
So if I were to go away, can somebody else? I love the three month analogy. Like, if I disappear for three months, what breaks and the company in a pretty catastrophic way. And maybe let me start thinking about putting folks in place.

00:20:50:18 - 00:20:56:20
Speaker 2
And you could add to that too, with like, like take estimating, for example, you have like.

00:20:56:20 - 00:20:59:13
Speaker 1
Doing bids and quotes and stuff. Yeah. Right.

00:20:59:15 - 00:21:17:16
Speaker 2
There's two, two owners that I see, one that has a calculator and this calculator, they're going to plug in a lot of figures about, about the job that they're doing. They maybe have a third party team that helps them pull together. Okay. How many light fixtures do we need? How many pieces of equipment? Whatever it is.

00:21:17:18 - 00:21:44:22
Speaker 2
Right. And it's. And then they're like, hey, in order to win a job, you need you can't be above 17% margin, right? That's basically what the market. That's fantastic. That's relatively easy for someone else to take. The other side of it is like, well, you know, back eight years ago, I did this septic tank installation and I realized that it was going to cost an extra $20,000 because we noticed that there was this pipe coming through.

00:21:45:00 - 00:22:09:01
Speaker 2
Okay. Well, this is going to be now really hard because now we have 20 years of like, situations that you ran into that helped you understand how to be competitive, how to estimate how to bid. Yeah, right. Versus like breaking down a process that someone could just take run with. It's relatively small, but anyone that does like fixed cost bidding, this is where new buyers really get hurt.

00:22:09:03 - 00:22:28:18
Speaker 2
And it becomes really risky. Okay, we jump on to a, year long project, and we're underwater off the bat. Or we find out a couple months in, it feels a little bit risky. Unless you have a tremendous amount of experience doing that exact same thing. So which generally most people don't, they adjacent experience.

00:22:28:18 - 00:22:44:16
Speaker 1
Or done it for a little bit of time, but not enough to see it all. The would you say to an owner who's tuning into what we just talked about, do you think that they have to fix those things for their business to be sellable? Like, would you, would you say all those things have to be addressed otherwise?

00:22:44:16 - 00:22:47:04
Speaker 1
Like, I'll take a look at it and nobody should know.

00:22:47:04 - 00:22:58:08
Speaker 2
Like if you if you broke it down to like order of operations, the one that should be addressed early would be, getting like a true, like, account.

00:22:58:10 - 00:22:59:10
Speaker 1
Like an account.

00:22:59:10 - 00:23:30:22
Speaker 2
Get the get the financials really cleaned up. Chart of accounts. You know, if you're on a cash basis, probably look to to migrate to accrual, or be ready to be able to move the cash books to accrual that is like at the forefront necessary. And then, you know, you can highlight some of these items. I don't think all of it needs to be fixed, but a lot of like, you know, you know, owners that we're working with like middle of the transaction, they're still working on the business.

00:23:31:00 - 00:23:46:16
Speaker 2
Right. So like, but you know, even highlighting, hey, these are the things and a lot of times like we could maybe like sit down with them for a couple hours and be like, how would we do this? How could we like, make take your information and put it into an SOP and then we're we're probably be fine.

00:23:46:18 - 00:23:58:16
Speaker 2
It's just how many of those things are there? How reasonable is it to get that information under a three month, six month time period? It is what has to be, logical for a buyer.

00:23:58:21 - 00:24:33:00
Speaker 1
Yeah, and it's tough because I think I'm thinking about my, we get some family, business owners, and there's always, like, the one guy who's probably a family member who's, like, really great at keeping a truck alive or any piece of equipment alive forever. Yeah, I've had that that I'm thinking about somebody specifically your day. Like they have that one piece of equipment have been around for like, decades, but they're just, like, not a knack that you can bet on in the future, which actually would mean that you'd probably need to rotate a fleet of tractors or trucks a lot sooner, because you just don't have that unique skill set.

00:24:33:03 - 00:24:48:11
Speaker 1
Yeah, that's something that I think if you just thought critically about. But it's hard because it comes it feels like it's, I wonder if you get this feeling too, like it feels like it's a slight against their business, but it's not. It's like, remarkable what they've been able to do while they were sitting in the chair. It's just like, not.

00:24:48:11 - 00:24:53:02
Speaker 1
It's not an easy thing to carbon copy over and know that it's going to endure the same kind of success moving forward.

00:24:53:05 - 00:25:28:21
Speaker 2
Yeah. I mean, like the way that I would look at it is like 20 years of, like hands on experience to get you to that spot, right? Anyone that's buying a business, they have realistically like 6 to 12 months to figure it out, right? So how fast can they actually do it? How reasonable is that? So yeah, definitely not a knock on the business, but there's, you know, different pressure when you're, you're starting out with two trucks, you're learning some lessons the hard way, but you're the one dealing with it versus you have investors, you have a bank, you know, asking for money every month.

00:25:28:23 - 00:25:31:09
Speaker 2
It becomes a little bit different of a dynamic.

00:25:31:10 - 00:25:45:01
Speaker 1
What are the, and doing all this, what are the things that are challenging? Like what are the things that become from your seat and our teammates just a very tough task to go through.

00:25:45:03 - 00:26:05:22
Speaker 2
Yeah, I mean, I definitely like on the there's certain elements even just on the financial side, right. Like, just a breakdown. I kind of said like the cash to accrual. The reason that's really challenging is because I have no idea how much cash is required to operate this company because there's no accounts receivables. There's no accounts payables.

00:26:06:04 - 00:26:27:00
Speaker 2
All right. So when I look at it, things look really lumpy where like cash is going in and out of the business. It's being booked. And then, you know, you have scenarios where, you know, owners are like, yeah, like I'm owed $1 million. I think you're like, oh, that's a huge that's a huge thing, right? Like, is it coming in, is it not?

00:26:27:02 - 00:26:51:21
Speaker 2
When did you ask what did you like? Put out the invoice. Like when do we expect to get this money. So that's like a relatively small thing, but it comes up all the time. And I think what happens is the, the, the owner maybe has someone that's kind of doing the bookkeeping but not like, able to like, move from, like from a cash to accrual basis.

00:26:51:21 - 00:27:08:02
Speaker 2
Right. So they're not really prepared. They don't have the resources in order to even do that. Ask that ask is coming. Which then most people will be like, oh, that's a little bit too hard for me to like, evaluate if I can do this. So your goal is to try to make things a little bit easier for folks.

00:27:08:04 - 00:27:39:11
Speaker 2
You know, we've we've definitely gotten creative around this. Like, you know, we're working on a business that doesn't have any inventory management. The team went out and counted 10,000 pieces of inventory. Right. And that is, you know, that's how big for accounting shops do, audits, right? They go out and they count inventory. So, like, I'm proud of our team for being willing to go do that, you know, with the owners for five hours, and figuring out, like, how much are we working with here?

00:27:39:13 - 00:28:05:19
Speaker 2
So there's definitely aspects like that. It's like systems, access to information that makes things relatively challenging. The other side of it is, you know, really be thinking through any contracts that you have, that are necessary to operate the company. I would say for folks that don't have, the right licenses, that are looking to buy, you know, definitely be a little bit cautious.

00:28:05:21 - 00:28:25:20
Speaker 2
That's something that we have learned a lot of lessons around. So you have to be ready to operate, ready to understand. Okay. If we lose a license, what is the impact that, you know, if it's an employee has one of them and they move on? So those are definitely like, you know, a few lessons that have been learned.

00:28:25:20 - 00:28:50:19
Speaker 2
But I would say in the end of the day, I feel like almost anything is you can solve it. It's just a question of how much time and when you when we think about it, it's like there are certain groups that have been really prepared. They have a lot of the information, which makes it easier for us to understand really what's happening in this business under a 30, 45 day period.

00:28:50:21 - 00:29:07:08
Speaker 2
And the ones that it's all kind of scattered and it's almost impossible to obtain at a certain point in time. You have to be like, is this is this worth it? Right. We're almost 50 hours or 70 hours into being able to understand how this business actually ticks. Most people are in a fall out after a certain amount of time.

00:29:07:10 - 00:29:21:21
Speaker 2
They need legal expenditures and all these different third party, reports and quality of earnings, in order just to see what's happening. Right. Most people don't have that, baked into what they're willing to do.

00:29:21:22 - 00:29:38:10
Speaker 1
Yeah. And to dance of being able to figure out. It's like an effort from an owner's perspective that's worth doing it here business to be the very best represented, especially if you know you get a great business. It's like the best way to represent this thing that you should be proud of.

00:29:38:12 - 00:29:38:21
Speaker 2
Yeah.

00:29:38:21 - 00:29:56:17
Speaker 1
So to somebody who's never seen it before, at the same time, you know, there is a bit of I recognize there's like a bit of things that you probably never had to even exercise, you know, like, I never even had to think about that piece. Now I'm having to and I don't know, like, inventory is like, now I don't even.

00:29:56:17 - 00:30:17:04
Speaker 1
I've just always just knew what to do, you know, whatever it might be. And so do you have any advice for an owner sitting out there who. I mean, let's take inventory because I think it's just like maybe a straightforward example. They don't have any formal inventory system management. It's just kind of like they just kind of have a, an organic way that they order things on a weekly or whatever basis.

00:30:17:04 - 00:30:31:23
Speaker 1
And maybe their business has enough margin to allow for things not to be perfect. Where does somebody start seeking? Especially there. Like, I have no idea how to do that. Are they going down to local college and finding somebody to go help them do this? Like what? Where does one start with trying to get some expertise in there?

00:30:32:04 - 00:30:32:12
Speaker 1
Yeah.

00:30:32:12 - 00:31:09:07
Speaker 2
I mean, like a really lightweight way to do that would just be, tracking what is purchased, what is sold and, and how long you hold it. Right. Obviously that becomes a little bit more challenging if you have thousands of items that you're selling. But, you know, generally speaking, if we if you can look at that, okay, every quarter we buy X amount, and we buy it for this reason, like we're getting ready for, you know, some seasonality or whatever it might be or just that's how fast we turn our inventory.

00:31:09:09 - 00:31:25:09
Speaker 2
And then, yeah, at the end of the year, getting someone to count everything of where you land, if you're off to make sure that you understand how much inventory you have give me can be helpful, I'd say something like that is less impactful. Something that would be like more impactful would be because we can go figure that out, right?

00:31:25:09 - 00:31:50:08
Speaker 2
Like we spent four hours, we counted some inventory we know we didn't need like a nice dashboard to like, yeah. Tell us exactly. But something that could, you know, come up that would be like, a challenges delaying any like CapEx, any maintenance. What I mean by that is practically is okay. We have, you know, 30 trucks, they're all on their last leg and we need to buy 25 new trucks.

00:31:50:10 - 00:32:12:20
Speaker 2
Right. Well, some people will do is they'll think about that, like, let me just delay. Let me last as long as possible. What another way an approach would be is like, if any of you are doing this and like, really, you know, refreshing the equipment is letting folks know, right? Like, we just had, you know, a conversation, and it was like, here's everything that we refreshed in the last couple years.

00:32:12:20 - 00:32:29:07
Speaker 2
We invested a lot of money. This is how long it's going to last, right? So you're not going to have to worry about. Yes. It like from a cash flow it hurt us with this equipment is going to last us 1015 years. And you're not going to have to worry about that headache of going through that process like that's fantastic.

00:32:29:07 - 00:32:48:06
Speaker 2
Yeah. Right. And others will it'll be like the machines, you need to knock them twice on the right and like, maybe it turns on half the time and as a result, like, you know, some of the, the end products don't get finished because the, you know, it's down for a day and they have the mechanic in, who also is the owner of the.

00:32:48:08 - 00:33:05:22
Speaker 1
Yeah. A lot of like price for the sellers. And what they can maximize a lot of it is, is determined on confidence. And so you're even if. Yep, you had to replace a third of the fleet here. But we know exactly where to go and what the prices or whatever. Just being up front about that actually can build a lot of confidence.

00:33:05:22 - 00:33:19:23
Speaker 1
And I'd be willing to be like, okay, that's still fair. Yeah. Thing to pay as opposed to going, I think I got to do something with those 25 trucks. I have no idea. So my my offer is going to be a lot more conservative because a, I just don't know what I don't know.

00:33:20:01 - 00:33:38:21
Speaker 2
Yeah. And the flip side of that is like a inexperienced buyer comes in. They don't realize that. Right. Like for for the sellers perspective, they got a better, you know, better deal as a result of it because they didn't make that in the outcome of that. Is this business could go on or. Right. That's a hard truth of it.

00:33:38:21 - 00:34:12:05
Speaker 2
All of a sudden you need to outlay hundreds of thousands of dollars. You had no idea. Right. The biggest reason that these businesses falter and fail and get shut down is a lot of times, not enough cash in the bank and unexpected, you know, very large, replacements. It can, you know, can kill a business. So even if it works out and they, they don't realize if you really care about, like, the longevity of the, of the company, it'll put them through at least, a couple years of very hard times.

00:34:12:05 - 00:34:22:18
Speaker 2
They'll probably have to slim down. It'll mostly be as a result of one side didn't realize it was an issue, and then the selling side didn't really share that this is going to be a.

00:34:22:23 - 00:34:42:19
Speaker 1
Is going to be a problem, dude, as we kind of, around the bases here, I mean, to them, credit will always enjoy talking with. Yeah. I'd love to flip sides to the operator side. The new owner side for sick. What are the what are the key attributes that you have seen when we are kind of making that match, you know, with a great business and a great new owner, a

00:34:42:19 - 00:34:52:13
Speaker 1
great new operator, what are you finding are consistent characteristics of these operators that just really make it work?

00:34:52:15 - 00:34:57:21
Speaker 1
Yeah. Barring any kind of like domain expertise, of course, if that's what the plumbing company should be, probably be a plumber.

00:34:57:23 - 00:35:15:06
Speaker 2
Yeah, yeah, yeah, yeah. You need to understand the industry very well. Yeah. But like, I would say that there's a couple things that you're generally looking for. One is like true intent. Like why are you why do you want to do this? This is where you'll see a break down where folks like the idea of a title.

00:35:15:08 - 00:35:39:12
Speaker 2
Right? They like the idea of, controlling their own calendars and having this, like, luxury of being able to make their own decisions. Right? Sure. That is one aspect of it. But if that's the core driver, what happens when you really get stressed, right. So where my head a lot of times goes is trying to understand, like how do you handle pressure, right?

00:35:39:12 - 00:36:00:12
Speaker 2
And have you really handled the weight of, you know, 30 and 30 employees that rely on you 100% for their livelihood? Right? A community that has like known this name for a really long time, you have a lot of, you know, there has to be a lot of like respect for the owners that built this as well. Right.

00:36:00:12 - 00:36:08:16
Speaker 2
And like when all of that in a bank and, you know, investors are pressing you because things aren't going well, how do you react.

00:36:08:16 - 00:36:19:12
Speaker 2
Right. This is where you usually see two things. One is someone is gonna be very calculated, thoughtful. Okay. Let me look at what is causing the most amount of pain and how do we go solve that?

00:36:19:14 - 00:36:37:23
Speaker 2
Others are going to be very impulsive. Right? Okay. If if the world is collapsing, we're just going to fire in every single direction. We don't know if any of them are going to hit, but we're going to be adamant that this is the approach to take. Right. So how do you actually handle some of these stressful scenarios? Have you really dealt with them before?

00:36:37:23 - 00:37:00:06
Speaker 2
I think it's really hard for anyone to say, hey, I'm really good handling stress unless they have been pressure tested. So learning those stories, how they got through it, right? Do they seek advice? Do they go and try to figure it out all themselves? We're definitely looking for folks that are, you know, unwilling to lose alone is like a huge aspect of this, right?

00:37:00:06 - 00:37:15:21
Speaker 2
We provide, you know, just from our perspective for the world in general. Like there's a lot of people that can provide you advice, support if you go seek it out. I think some people are like, yeah, I would rather just lose my own corner and all this. Try to figure this out and we'll see what happens. Yeah.

00:37:15:23 - 00:37:37:20
Speaker 2
And then others are like, I understand where I have some gaps. I'm running into this scenario. I think this is the direction I want to go, but I want to get like some expert opinions on I'm always going to root for the that second person that is looking to make sure that, hey, we're going to make some major decisions, and I want to make sure these are, sound is definitely important to like.

00:37:37:22 - 00:38:06:12
Speaker 2
And then the last kind of characteristic is like most businesses do not fail because they have inefficient operations, right? I think that there are aspects that are really important. If you just have, a shop that is like, no organization at all in like there's no, SOPs or process, of course. But needless to say, it's mostly because you can't, find new customers.

00:38:06:13 - 00:38:37:19
Speaker 2
So, growth mindset and, you know, sales marketing is unbelievably critical, right? The owners of these businesses should be the best at convincing customers to use their services, use their products, and actually build out teams, build out systems to drive revenue. Is is generally where I've seen more success, because you can't really create a system to save yourself.

00:38:37:19 - 00:38:52:15
Speaker 2
When you're losing customers, you can save a little bit of money, but it's too marginal compared to a, oh, okay, we're going to go land a bunch of new customers that will generally get you out of trickier situations faster.

00:38:52:19 - 00:39:15:16
Speaker 1
Yeah, yeah. It's, it's a hard spot to come in when you're the second chapter of this business, because I think you think about the business, the operational efficiencies right off the bat because you get to see them. But you can almost put yourself back to the original founding of that business from that owner. Oftentimes, these guys and gals were selling their services with like, no truck, no nothing.

00:39:15:18 - 00:39:36:03
Speaker 1
They were like getting the people to pay them first, and then they would use that money to go get the parts they need to go do the service, that salesmanship or that ability to develop business in your community, I think is something that will often, I guess it's human to go, like, I guess it's already set it and forget it, that that doesn't need to be a thing I need to worry about anymore.

00:39:36:03 - 00:39:44:10
Speaker 1
And in fact, it might be the most important thing as an owner and as a person who's going to be at the helm of any business. Yeah, yeah.

00:39:44:10 - 00:40:00:09
Speaker 2
Yeah, absolutely. I mean, like we're working on buying a business and like the, you know, the two owners still do ride alongs. They were just telling us the other day, you know, they just hired someone and they for the whole week they're going in, they're pitching customers, they're doing demos, they're showing them this is how we do it.

00:40:00:09 - 00:40:26:15
Speaker 2
And they've been doing that for 15 years. Yeah, right. And they're definitely the best at it. Right. So now they are getting their new employees up to speed. Right. So like understanding how they go about presenting their, their product, their service, what people actually care about. Like, you know, we're always very intrigued about that. And then can the person that we back be able to actually go follow through on at all.

00:40:26:17 - 00:40:48:19
Speaker 1
Anything else on that front that just strikes you as just a really either important or maybe just a critical fail, like something that like, hey, I've noticed when a potential aspiring owner has this about them, typically it doesn't work out well for the owner type role. They might be a great number 2 or 7, but not a great number one.

00:40:48:21 - 00:41:08:05
Speaker 2
I mean, a lot of it comes down to taking ownership and responsibility over, all of the different situations you're going to run into. I think, you know, if if folks aren't willing to take on all of those challenges, regardless how small or large they are, are really going to struggle, right? Yes, there has to be delegation.

00:41:08:05 - 00:41:28:19
Speaker 2
And that can help, like folks learn and elevate themselves. But, you know, push comes to shove, you have to be ready to tackle all the problems and you have to look at it more of like, enjoying that journey of it, versus, you know, there's just a bunch of headaches all the time because, like, the reality is, it is.

00:41:28:21 - 00:41:49:16
Speaker 2
Right? Like, you have folks that are suing you. You have some of that left, like a raving review on you that's like, not fair at all on Google, but like, you got to go deal with it because other customers are going to look at that and and think poorly about your company. Right. Maybe you have to like discount them and like you don't want to, but like you have no choice, right?

00:41:49:16 - 00:42:03:06
Speaker 2
You can't really pawn off a lot as much as you probably would assume. So like someone that takes it like an ownership mentality is like, is definitely in the reverse, any of that is going to be a problem.

00:42:03:08 - 00:42:15:12
Speaker 1
Dead mean you're the. But anything else we can close out on or whatever. I mean, that was I mean, I could go very long time asking pro tips on, on just kind of things that you're saying, man. But anything else that's top of mind for you as we close out.

00:42:15:14 - 00:42:37:00
Speaker 2
I think the I mean, it's just, it's positive to see that they like the market even with everything kind of, you know, and people are worried about the financial side of things that, you know, small business owners, are doing super well. Right? So it's very positive to like, see those things and exciting, especially as like we're we're looking to, you know, help acquire, help place new operators.

00:42:37:00 - 00:42:56:20
Speaker 2
And it is a, you know, regardless of what people say, that there is a lot of positive aspects that are happening in, yeah, we're excited to help folks navigate either from how do we find great successes or how do I, you know, take this, you know, step into ownership. Either way, the timing is great.

00:42:56:22 - 00:43:15:02
Speaker 1
Yeah. I mean, yeah, you're the best. And for those of y'all tuning in out here, just, if you're an owner and you're considering it or if you're somebody who's considering getting the ownership seat jet team, we all want to talk to you. No matter where you're at. It's five years from now, five months from now, whatever that is, just send us a note.

00:43:15:02 - 00:43:35:19
Speaker 1
I know Jet and Team are standing by, and they are. I mean, you having guest jet is that, one of the smartest businesses humans to speak with me. And he is, an absolute joy. And so, please fired off our way. Let us know how we can help. I mean, and, you get your own private podcast for jet if you wanted to, you know, just hand out the horn there.

00:43:35:19 - 00:43:38:03
Speaker 1
So. Yeah. Thanks again, man. Appreciate you being on.

00:43:38:06 - 00:43:40:09
Speaker 2
Thank you. Yeah. Enjoyed it.

00:43:40:09 - 00:44:06:15
Speaker 1
Thanks for tuning in to the American Operator Podcast, where we celebrate the backbone of America small business owners and operators like you. If you've enjoyed today's episode, be sure to subscribe so you'll never miss out on more of these stories and insights from people who keep our community strong. Until next time, keep building, keep operating and keep America moving forward.