Inside the Search — Warren (Last Name Withheld) on ETA, Ownership & Building the Right Way

video version: https://youtu.be/P0FzyLwwZF8

This episode marks the official beginning of our Entrepreneurship Through Acquisition (ETA) series — a four-month deep dive into one of the most practical, misunderstood, and powerful paths to ownership and wealth creation today, leading up to the ACHIEVE Summit.

Our first ETA conversation is with Warren (last name withheld) — a deliberate choice. Warren currently holds a full-time executive role while actively pursuing the acquisition of a small business. His situation reflects the reality of many high-performing professionals: capable operators who are quietly preparing to step into ownership without burning bridges or taking reckless leaps.

Warren’s background spans engineering, theology, sales leadership, and entrepreneurship — giving him a rare blend of analytical rigor and people-first leadership. In this conversation, we explore why ETA is not a financial shortcut, but a leadership decision — one rooted in patience, discipline, and long-term thinking.

Together, we unpack why buying an existing business can create leverage that startups and corporate roles can’t, what Warren looks for in “boring but beautiful” service businesses, how operators create value through systems, people, and trust — not financial engineering, the emotional and psychological side of searching while still employed, and how to honor legacy while still driving meaningful growth. 

This episode sets the tone for the series ahead. Over the next several months, we’ll be following ETA buyers like Warren in real time — alongside sellers, advisors, lenders, and ecosystem builders — to demystify what it actually takes to find, fund, acquire, and operate a business.

If you’ve ever felt constrained by titles, compensation ceilings, or the idea that entrepreneurship requires starting from zero, this conversation is your entry point into a different way forward.

Ownership isn’t reserved for founders.
Sometimes, it’s earned through intention, preparation, and the courage to search.

Transcript

SPEAKER_04 0:00

Good question. There's nothing changing your life in the next class. Are you okay with that? No. You don't need more motivations. You need to need it off. I can use the life design master class to keep the lighting. I think it's just a stuff. In 15 minutes, I'll walk you through it step by step with that. Go to lifedesign.com at L-I-S-E, E-E-S-Y-N.com, and grab your spot today. Welcome to the first million is always the hardest. I'm your host, Bo Camp. Over the next four months, we're pulling back the curtain on one of the most practical paths to ownership today: entrepreneurship through acquisition or ETA. This series isn't theory. It's real people searching, buying, and stepping into ownership while still holding full-time careers. You'll hear from buyers, sellers, lenders, and advisors as we follow deals from intention to execution, all leading up to the Achieve Summit. If you've ever thought ownership was out of reach, this series changes that conversation. Well, welcome to the first million is always the hardest. I'm the host, Bill Kemp, and I'm here with Warren, who is one of the folks who's out here, like many of you, looking to buy a business and move from his current W-2 into a position where he will be an owner and operator of a business. And we're really excited to have an opportunity to speak with you, Warren. So just tell us a little bit about you and tell us a little bit about your background and your interest in buying a business.

SPEAKER_02 1:42

Sure. Bo, first of all, I want to thank you for this opportunity to share and tell my story. So yeah, I've been uh in my career early on an undergraduate. I have a lecture engineering degree. Um, and then uh after that, I went into technology sales. One of my passions is technology and technology. And then from there, uh I had a call to the ministry after that, after some success there. So then I went and got a PhD in Witness Ethics. What I decided to do then was I started a business where I could buy my interest in community and technology. Started a sales and marketing business for about 10 years or so while I was working with minority businesses, did some consulting, and now I'm in a position where I uh do some consulting for sales in a technology company.

SPEAKER_04 2:24

And when you say sales and technology, can you kind of explain that a little bit just for the those of us who are not in that space? What does that what does that mean? What's that on a practical level?

SPEAKER_02 2:33

Practical level, um, think about early in my career, it was computer chips. And so I was selling to smaller companies that would leverage these computer chips to make products. And so that sales is a business-to-business sale. And so you're going to a lot of smaller businesses, talking with the technology people, talking to their leadership to see how your product can help them uh go to market.

SPEAKER_04 3:00

Um, and what is it that drew you to the interest of ETA or entrepreneurship through acquisition?

SPEAKER_02 3:09

It's been an itch of mine for for quite a while. Early in my career, I read a Harvard Business School Review case that a friend of mine shared on, they called it leverage buy-out at that point. Um did a number of things in my career. And so recently, about a year and a half ago, it came up again. It's something that I was very interested in. I ended up going to a uh boot camp where they teach you about how to buy a business. And the reason why I want to do it now is number one, uh really interested in having my own business again. Number two, when you buy a business of a certain size, let's I think the the size like there's very few businesses that are have over a million dollars in revenue, for instance. I think it's going to be four or five percent. When you buy a larger business, you're able to step in at a much a business that is much further along than starting from scratch. And so it has some different opportunities, and you can grow it usually a little more quickly than you can in a very small business. And I think the third piece is there's some advantageous uh loans from the government, SBA 7A program, where you can put down a down payment almost like a house and able to buy a larger business. So you can actually have that leverage. So the opportunity is there to buy a business. And there's something called the silver tsunami, you probably have covered in the past, where a lot of people who have solid businesses that they've owned for a long time, they want to retire, they don't have children who are available to take those businesses. So these are solid businesses that need someone to continue to stewardship them into the future. And so those are some of the big picture reasons financial interest, passion, and opportunity.

SPEAKER_04 4:44

You know, um, just to kind of work backwards, the silver tsunami is a major issue. And just for people who are listening and watching, the baby boomers, which is the largest generation of people, population, are retiring, and they're retiring roughly at about 10,000 people per day. They also are the largest single business owners of any population in generations as well. That group is actually right now typically only selling one out of every 10 of the businesses that are actually available for sale for lots of different reasons. In some cases, those businesses have not been prepped for sale. In many cases, as you mentioned, they don't have family that are interested or family available uh to sell those businesses. And what happens is they, in many cases, they shut those businesses down. They move away to wherever they go to retire, and those businesses just cease to exist. And it causes all different types of problems. So it's a loss of money for the municipality, it's a loss of jobs. And many of these small businesses are the ones that are hiring locally as well. So they're hiring people locally, lots of times, people who've been there for long periods of time. So those jobs get lost. Um, they also often disrupt the supply chain that exists in a market in many instances. So there is a policy issue, I think, for the United States to do as much as we can to promote other people buying those businesses. And that sober tsunami impact is kind of what you're speaking to. And the 7A program from the SBA, Small Business Administration, is one of the tools. It's been around for a while, but it's one of the tools that actually could help specifically address that issue. But there are other issues that you mentioned that I think are fascinating. And one thing that you and I have talked a little bit about offline, which is kind of your calling. And I'm interested in hearing a little bit about how you think of your experience in moving into this entrepreneurship through acquisition space and how it dovetails into your calling.

SPEAKER_03 6:41

Sure, Bo.

SPEAKER_02 6:43

Foundational for me is my calling from God. Um I see that calling in a number of different aspects. Number one, uh personally, being a husband and a father, uh community member. What I've come to understand about myself is that when I think about like my passion and my calling, it really starts from me learning something new and then sharing with someone else and some other group of people and seeing that instantiated in the world. So I've done that in a number of different places earlier in my career. It was, hey, I have a hypothesis about how I can go to market as a salesperson. Or later on, it was I have a hypothesis about this business and how I might be able to grow it and move it forward. And so uh I see myself now with this passion for wanting to buy a business, and I see that as integral to my calling. And so that's sort of how that sort of plays out with my calling and wanting to buy a business. I see it as a sort of a the next field or a larger place where I can have a hypothesis about, hey, I think this is a great business for various reasons that would benefit from my stewardship. You know, and I think that uh in terms of sales, I think that the business may be growing on one level, but I think I can go in there and kind of bend the needle. And so being able to have a hypothesis, take some risk and see that play out into the world, and then also, by the way, uh make some money doing it. Yeah, I'm really excited about that as a future opportunity.

SPEAKER_04 8:16

You know, one of the things you also mentioned was that you decided to go to a boot camp and you decided to reach out and identify resources that would help you get smarter at this. Now, you had already been an entrepreneur, you've obviously been in business, you're an engineer, so you've got a lot of technical training in lots of areas, um, but you chose to go to a particular boot camp. Um, and one of them, it's relevant to the work that we've done. You are part of the acquisition lab, which is out of Missouri and St. Louis, um, and run by Walker Dybell and Chelsea Wood. Uh, Walker Dybell actually spoke at our Achieve Summit last year, 2025, and did a fantastic job. We're hoping that we're going to get Chelsea to come back this year. So, um, but tell us a little bit about how and why you chose to be part of the Acquisition Lab and a little bit about what that experience was. One of the things I'd love for the audience to get a sense of is there's a community of people that are out here learning just like you and trying to figure out like how do I effectively buy a business. And that was part of what you got to experience with the acquisition lab.

SPEAKER_02 9:21

I did, I did. So I mentioned that I had my own business for eight to ten years and enjoyed it successful. One of the things that I recognized was that, you know, it was it's being a business owner can be a lonely endeavor, or it can be uh, you know, yeah, lonely endeavor. So one of the things that I recognized is that as I was looking to go back into business purchasing business, I wanted to do it in a community. The second piece is, you know, whenever you go into a new area, you know, you study up, you get up to speed, you learn different things. One of the things that's different from starting a business that I did versus buying a business is there's just some various skill sets that you can have that you should have or awareness, you need a team to put that together. So I said, you know, I can do some reading, read books, but I said, you know what, I would love to go through with the community on an ongoing basis. And I'd also like to kind of understand from someone who's expert what are the different areas that you should get up to speed on. And so the acquisition lab was excellent because it at the end of that lab, I had a good sense of the direction in which I wanted to go, leveraging my skill sets and how that might play out in the marketplace. I also was able to start putting together a team, you know, being a lawyer and an accountant. Right, right. Right, right. And so going to that lab, I left that lab with that team. And then thirdly, about 800 people have gone through the lab, about 200 people have bought. And so uh I'm in a fraternity, and I just recall there's people who are trying to pledge, and there's people who've crossed over. And when you cross over, it's so fantastic, you're so excited. And so the people have bought, like those people are already in, and you're sort of pledging, and it is like pledging, looking for a business, but it's it's it's such a great resource. So that no matter what type of business you're going to want to go into, there's usually someone in that lab who has already bought a business in that area or is looking for a business in that area. And so really being able to journey alongside a group with that expertise has just been tremendous and also gives you that sort of positionality and confidence. And the last piece I will say is that as I've been on my journey, I've looked at a number of different businesses. And purchasing a business is sort of like, you know, when you, as you move into like getting married and making a major decision, right? It's great to have expertise to turn to to say, am I crazy here? Because none of these businesses are gonna be perfect. They all have what you call hair on them. That's sort of the slang, right? And so you're gonna have to get comfortable with one of these businesses that have a little bit of hair, but do you have some specific expertise that you think you can drive it forward, that you can compensate for the hair map? So there's a lot of small decisions you need to make, and it's good to do so much.

SPEAKER_04 12:01

Yeah, you you're never gonna make these sorts of decisions at 100% information or confidence, right? And you're gonna have to learn to get comfortable with 15% of unknowns or maybe even more unknowns, but having a community like that that you can go back to often helps you at least circle around other people and kind of constrain those unknowns to a number that is manageable, right? And by the way, I don't want to gloss over this, but you're welcome to explain to the listeners the uh unbelievable fraternity that you are a member of, um, that I share as well.

SPEAKER_02 12:36

So yes, yes. Well, um, it's about the black and gold fraternity.

SPEAKER_04 12:42

Incorporated, just so we uh that's right.

SPEAKER_02 12:44

That's right, that's right.

SPEAKER_04 12:45

Um and I crossed so long ago, I will not say on camera how long ago it was, but I think Reagan might have been president, I'm not sure. Well, you know, it's really interesting because lots of times people have so much fear about this process. And sometimes people wallow in a level of comfort, and that comfort can also be struggle, meaning that people kind of think, hey, being an entrepreneur is struggle. So, hey, I when I'm struggling as an entrepreneur, that's the right place I'm supposed to be. And it feels really comfortable, as opposed to thinking that there are other ways to actually make this thing happen. And one of the things we've talked a little bit offline is the difference between when you start a business and you're using your own capital, um, versus when you buy a business and you're using part of your own capital and borrowing that money. How different the experience is of simple things like how do I pay myself, right? My ability to hire other people, um, my ability to just do almost anything is radically different. I I would love to get your perspective about what in your mind changed because you did start a business from scratch. You went through all of that struggle, you did 10 years, so you figured it out enough to do 10 years at that and take care of yourself and your family. But when you had a chance to go back and do it again, you thought, you know what, I should buy a business. Just talk about what you saw and your perspective of what that difference was.

SPEAKER_02 14:13

I think as I think about it, you know, starting a business it's really about that hypothesis. There's there's there's no systems in place. You need to start from scratch, put in a certain amount of money and you need to grow that. And then, you know, I mean, usually 18, 24, 36 months before you start to get some traction to really get that going. The advantage if you're able to buy correctly correctly with leverage is that you can step into a situation where if you buy a business that's over a million, two million, three million dollars in revenue, the businesses already have some product market fit. The business already has systems in place, the business has customer relationships, right? And so the opportunity then is to come in, be humble, learn, and then build from that base. The second piece is which is just very interesting, um, you put down a down payment, and if you're able to buy correctly, you do come in with some income. Now, of course, you're not gonna be making you know tons of money, but there is some income from the start when you're buying that business. So the and one other thing I wanted to mention why this was very attractive to me, which I didn't realize, right? So I I've grew up in technology, and so I could take that technological background and try to grow a startup. The success rate of startups is pretty low. Yeah. One, two, three. I mean, it's pretty low to be successful in a startup. Alternatively, I can take technology. It was one of the things that I've done. You know, when you with the technique, think about the technology curve. When technology first comes out, you typically need someone that can sort of help you figure out how to get your product market fit. It's not exactly right. But then there's a point at which it works, but nobody knows about it, yeah, right, before it gets mainstream adoption. I love taking technology in that place, give my technical background, and pointing it to niches that are underserved in that area. So if you can come in.

SPEAKER_04 16:15

That's another forced source of leverage. Separate from financial leverage, there's a technology and operational leverage.

SPEAKER_02 16:21

Exactly, exactly. So being able to take my technical background and applying it in underserved niches, whether it be uh disaster recovery, being able to apply that in that area. And the final piece I would say in terms of comparing it to a startup is that when you buy a business that's over a million dollars in revenue and you're using an SBA-backed loan, the failure rate is very, very low. I mean, it's less than 10%. So even though you are taking a risk because you're taking on a loan of a million dollars, two million dollars, it's a very different type of risk because you've you sort of have a floor because the business is already in motion.

SPEAKER_04 16:57

So talk a little bit about those economics because I think this is a really important point that you basically said if I start a company from scratch, the likelihood that I am successful is less than 10%. If I buy a business with a SBA 7A loan, the likelihood that I fail is less than 10%. That's complete inverse of each other. Um, but what I think a lot of people are thinking to themselves is well, how the heck am I going to be able to afford a$3 million business? Right? So break down kind of what that economic looks like. When I go to the SBA and I want to borrow$3 million to buy this business, what do I have to put up? And how do you source the capital that's necessary?

SPEAKER_02 17:37

Right. So let's start with a business that's right at that million dollar range. One of my buddies who's ahead of me, he's already in the fraternity. This is what he did. When you buy that business for a million dollars, the SBA is gonna ask you to come up with 10%. Almost like buying a house. So you need to have some capital,$100,000 in capital to buy that business. Then they're gonna say the seller should have a little bit of skin in the game, the seller should put up, say,$100,000 in terms of a loan, and the SBA will give you$800,000 in loan. So you're coming in to uh with$100,000. That million dollar business probably makes around$300,000 in profit all in. It's usually about yeah, about$3x. That's typical. Typical sell rates is about$3x, maybe it's 3.5, right?

SPEAKER_04 18:26

3x the operating uh earnings.

SPEAKER_02 18:28

Yeah, they call it cell discretionary earnings, which is basically the profit of the business plus what the owner is paying him or herself, right? So$300,000, you can buy that about a million dollars. So it's a very fascinating thing. You can put down$100,000 and immediately you have an asset making$300,000. So that's sort of like, wow, that's some interesting math because you have the leverage of paying back that loan over 10 years. The next piece that you want to think about is that to pay that loan back out of that$300,000, about$150,000 that every year is going to go towards the loan. You have$150,000 left over. So if you wanted to pay yourself$80,000,$100,000, you have about$50,000 in cushion, which is why typically what the lab would suggest is that you want to buy a business that has, and this is the acquisition lab, right? Uh uh a business that's five or six or seven hundred thousand dollars in sell discretionary earnings, because then you've got$350,000. If it's$500,000, you got$250 for the note, you got$250,000 left over. Let's say you pay yourself$100,000, you got a$150,000 on a cushion, the business goes up or down. And so that's typically about me personally,$500,000,$600,000,$700,000 in SD. It's a little bit larger the better, um, because then you have cushion.

unknown 19:40

Yeah. Yeah.

SPEAKER_04 19:41

And that that cushion matters in this spa process. So talk a little bit about your choice of what kind of business. How did you, whether on your own or through the work you did with the acquisition lab or kind of in your your you know, you know, you're thinking now, narrow the window of what is possible? Because, you know, what I have found, uh, and unfortunately, you didn't go to the acquisition labs conference this year, which was fantastic, by the way. But um, you know, when you talk to people that are in the space, they're mostly agnostic. They're actually looking for um uh a lot of things. They'll they'll consider all different types of businesses that could be radically different. How did you narrow that window and think about what you wanted to do?

SPEAKER_02 20:23

Lab was incredibly helpful in that place. And one of the things that you definitely recommend when you go in is that you sort of have a hypothesis about the type of business that you want to pursue. Very similar to buying a house, you know, but when you go out there, you just kind of look around if you sort of know what kind of neighborhood, the schools you want, sort of the walkability. You want a Starbucks, right, right, right? Similar when you are looking for a business. And so, big picture, you know, you think about it, there's manufacturing, there's distribution, there's service. My particular skill set is what you're what you want to bring forward to the businesses or service operations and B2B sales. I've done internet marketing sales for about 10 years as well, but those are my three areas. And so I said, you know, I'm not really manufacturing, that's not really my, I didn't grow up in manufacturing, plus, you need a lot more capital there. Uh, distribution, not as interesting to me. So I was looking for a service business to leverage my background. Um, and then also two bonus would be if it's B2B sales. Yes, I can do internet marketing, but really my best expertise is B2B sales. The thing that I learned from the lab is that really what you want to do is you want to look at a business where you have an unfair advantage in the marketplace. Right. And so you want to look at your skill set and think, what could I do with this business to kind of bend the needle in terms of growth, keeping it successful. And so for me, looking for a service based business uh where I can leverage my B2B skill set. Like I have long interest and passion uh also in internet marketing, Google ads, all sorts of things, but really B2B marketing, or if there's a B2B marketing component. So I was looking at a handyman business. Mostly consumer, but there was an underserved B2B component. Service business, B2B, local business. And for me, because I'm in the Chicagoland area, most likely in the Chicagoland area. And then what's we'll see. We'll see.

SPEAKER_04 22:16

With some negotiation, perhaps. Right, right, right.

SPEAKER_02 22:18

Because you know you have family, you have kids, and those sort of things. Chicagoland area. And then the next piece was how big or small. So that's when you look about that earnings looking something above 500,000 plus. So that's how I sort of thought about the the the my what they call the buy box. And in terms of the type of service business, I'm very open. I mean, I've looked at line strapping, I've looked at handyman businesses. I've looked at there was a business where they had like crates for mood, right? So sort of a little bit agnostic, but then as I get into businesses, I do learn about myself. So I was looking at an HVAC business, and where it was interesting, I just didn't find myself having passion as I was walking through the back office looking at all the different things you would need to run this business. And so I just the passion just wasn't there for any exact business. Um the other piece was, I recognize now, that for a lot of these businesses, I would love it for to have a journal manager. If it's a very simple business, not necessarily, but the general manager piece to come do the day-to-day, that's also something that would be very helpful and interesting.

SPEAKER_04 23:22

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SPEAKER_00 23:56

Your listening to the first million is always the hardest. We are now returning to the show.

SPEAKER_04 24:03

One of the things that I know I've thought about on my own is uh we talked a little bit about this offline too, partners, right? But partners can mean a lot of different things. So I've started a lot of businesses on my own, I've started businesses with partners. When I have started a business with a partner that was a good partner, it accelerates everything. But when I've started a business with a not so good partner, it is the worst uh of all scenarios. Sometimes that partner is not just a financial partner, it's an operating partner, like a manager. And if you can find the right business to acquire, where you've got a manager who's really been running the business anyway, but never had any equity, has never really had full decision-making authority, and kind of elevate that person, that's I find the best of all situations. Um and when you were describing a manager, that's immediately where my mind went. But I don't know if that's what you were thinking about, or if that's what you've been looking at, or what your experience has been when you have looked at businesses, and finding that person is kind of the diamond in the rough who just given a little bit more opportunity could actually help substantially increase the performance of your business.

SPEAKER_02 25:13

So, one of the things when they call these uh mainstream businesses, main street businesses at this level of business, you will often find, let's say it's a plumbing business or HVAC business. So I was looking at a septic business, there will be an owner who's also very technically savvy. He started it, he's hired, he or she has hired four people to work for him. That person is critical to the business because they have most of the expertise. So if you take that person out of the business, it's gonna be very difficult for it to succeed. So you really sort of need to be a septic expert or HVAC person, right? So that's what I've learned in this process.

SPEAKER_04 25:53

Or keep the owner involved, or keep them right, right?

SPEAKER_02 25:56

And so typically that person, Silver Sonale, they may want to go more to Florida, right? They ran a go, right?

SPEAKER_04 26:02

But the snowback here, I'm sure you're all thinking about Arizona or Florida right now, right?

SPEAKER_02 26:08

Right, right. And so there's the question of whether is there someone in the business to your point that either is in place or that you can grow that can operate the business technically. If it's a line streaming business, you can get the speed pretty quick. But if you're it's a septic business, there's a gap between what I can do and that kind of so that's the question. So is there a general manager in place? And that is uh that either that person being in place or not is a big part of the evaluation and a big part of whether there's hair on the business or not. And then you can look at your skill set to see what you feel comfortable with, what you want your role to be in the business form.

SPEAKER_04 26:47

Yeah, I found that when you are talking to that manager, it's uh it's an interesting dance, right? Because in order to acquire the business, you may not need to talk to everybody. And a lot of owners will be like, I don't want you to talk to any of my employees because I don't want them to be afraid. But typically, you will have to talk to someone in that organization, and that someone will typically be that manager. And the dance that's interesting is how much can I get that person to tell me the truth without them jeopardizing their relationship with their existing owners in hopes that they're developing a new relationship with new owners? And I'm just curious, how have you managed, have you run into that situation and how have you managed that?

SPEAKER_02 27:29

To this point, so it's a very you hear a lot of stories in the lab about so here's here's sort of the challenge. When you buy a business, the day you buy it, all the employees, which are the whole business, their anxiety level both weigh up. Because now they're like, oh, okay, what's gonna happen new? And so the new owner's job is to as fast as possible, make everyone feel comfortable, talk to them, give them assurance, maybe say nothing changed the night. So that first move there is very important. So you as the buy, and I'll tell you another story uh from the lab that I heard. A guy was moving to buy a plumbing business or some sort of business, and word got out a week before he went in, and some of an employees like scattered quick. Yeah. So so there's a big risk, right? And so to this point, whenever I've been talking to owners, it's typically just been with the owner. It has not been with that general manager. As I move further along, it might be one of those cases. And I think the other thing you want to think about too is has that general manager been offered to buy the business, and why or why did why or why not did they buy the business? Is there something you're not gonna do?

SPEAKER_04 28:43

Or why why we're not offered?

SPEAKER_02 28:44

Yeah, right. So those there's there's just in each one of these situations, it's gonna be unique. To this point, there have been a couple of businesses that I looked at, I was looking at a handyman business that had a general manager in place. And so in that case, they were very confident in that person's ability. Pricing wasn't right, so I ended up passing on that particular business. But to your point, if there is a general manager, there's a number of different pieces that I would look at to see to become comfortable that I wanted to move ahead.

SPEAKER_04 29:14

You know, it's interesting. Um, you had started our conversation a little bit about leverage buyouts in the case that you had done at Harvard, and I actually have read that case as well. You know, it's it's leveraged buyouts and buildups. You know, there's a lot of history behind this that people don't understand. But essentially, when you are doing and leveraging the SBA loan, what you are doing is a leverage buyout, but you're just doing it on a main street scale versus a Wall Street scale, right? Um, and the reason that people are so interested in the buyout is because A, you get to use other people's money to do it. In the case of the SBA, you're kind of using the entire United States people's budget to do this in part. Um B, the leverage that comes from that is what gives you a return. And so in most instances, people are looking for ways to leverage the business to juice their returns. Now, in your instance, you've already discussed the financial leverage, which is the um uh using the debt essentially as a form to increase earnings. You've also talked about operational leverage, like your knowledge and understanding of technology and how you can apply it to an existing business that scales that business quickly. You know, one of the areas that we haven't had a chance to talk a lot about yet is around human capital leverage. How do you leverage people that you bring to the table? Um, and in that vein, there is another kind of LBO leverage buyout that they used to call a leverage buildup. The difference between the two is that the leverage buyout was essentially based on I'm gonna buy this company and I'm gonna leverage its earnings to borrow as much money as I can, and then I'm gonna grow it and pay down the debt as soon as I can. And once I've paid off all the debt, now I own the business outright, I've made a lot more money. A leverage buildup is predicated on the idea that not only am I gonna buy this company and I'm gonna use leverage to do it, but I'm gonna then, on top of buying this company, I'm gonna buy other companies and I'm gonna use people that I brought in to create a world-class management team that allows me to actually extract more value out of the additional businesses that I buy than those businesses could achieve on their own. It's a mixture of economies of scale, but it's really also leveraging the team to operate at a different level. I give that as an example basically for viewers, but also for you, because I'm really curious to what degree you've been able to even identify opportunities where kind of human capital leverage is available to you.

SPEAKER_02 31:52

That's a great question. As I've been searching, I think the way that I think about that human capital piece goes back to, I think I mentioned that, I don't know if I mentioned, so I have a PhD in religious ethics, and I looked at uh Martin Luther King's writings and speaking uh in my dissertation. And so he has this idea of the beloved community. The beloved community is a place that where systems operate according to justice and people treat one another with love. And so that's my framework for thinking about how I lead organizations or even organizations I want to be a part of. And so we can think about that in a secular uh uh format where you're gonna have an organization where the systems are going to treat people fairly. Um, and then when you think about having justice, it's really about accountability, right? You want to have rules in place that provide some guardrails so that people have a space in which they have that freedom to operate without getting encroached upon. And so, also another piece of accountability within this organization is we have some financial goals. And so that's also another piece of that accountability. And so, as I think about that human capital, what I love to do is to be able to identify what people just inherently enjoy and are good at. They may not even recognize it, and then be able to build them up in that place and grow the people in the organization. And so that's sort of how I think about the human capital piece. So creating organizations, beloved community that has that accountability, and then be able to grow individuals within that, within that piece. In terms of you also sort of referenced, hey, what does it look like to be able to buy one business, have that foundation, and kind of bolt on others? At this point, my main goal is to get into the game.

SPEAKER_04 33:40

You want to get the one business first, get into the game. Right.

SPEAKER_02 33:45

My other, my buddy, who like I said, bought that business for a million dollars, he's already bought another business. So I definitely have interest. If if I buy a bespoke business, where it's a business like let's say there's a business movie business where you're getting people crates, there's probably not a lot of other those kind of businesses. So, but if you buy a plumbing business, or if you buy a disaster recovery business, or if you buy a franchise, once you're in that franchise system, it becomes a lot easier. A lot of those franchises don't even come to market because you know everybody knows each other and they've trusted that you will be successful and they'll be able to buy, you can grow that way. So I definitely have interest in growth. What that growth looks like, whether it's internal growth or through acquisition, will depend on the type of business that I purchase.

SPEAKER_04 34:28

So one of the interesting things that happens is even in the case where you've got the SBA loan and you're only putting up 10% of whatever the um total purchase price is, 10% could still be a lot of money. You know, if you're gonna buy a half a million or a$5 million business, which you can with the SBA loan buy a$5 million business, you got to put up a half a million dollars of cash. Um, and you may not have it. So even in those scenarios, people are often raising capital to do this. So they may put up$100,000 of their own money, maybe they only put up$50,000 of their own money, and they go and they raise$400,000,$450,000 from outside people. Um the same is true if you're gonna buy a bigger business, right? You're still raising capital. The advantage of the SBA program is that at least you know you're going to a bank that is part of the SBA program, you have to convince the bank that you're worthy of doing this deal with. Uh but it's a different conversation than if you're going to the private market. The reason I even bring all of this up is a weird thing that I found is that if you wanted to raise money, it's a lot easier to raise$50 million than it is to raise a half a million dollars. You would think, because of the size, oh no, it must be easier to read the half a million dollars. But it's hard because the people who are willing to give you either all or a portion of the half a million dollars, they're typically not people whose job it is to make investments. This is something that they do kind of on the side and it's separate. Um they may have a more conservative lens of what they invest in. Um, that dollar amount is probably a larger portion of their entire self, uh, their net worth. So they care differently about what happens to that. Whereas somebody who's putting in$50 million, this is what they do for a living. They invest money. Um, and uh, I'm just curious what your personal experience has been when you're out raising capital, of the difficulty of raising small amounts of capital versus large amounts of capital, and has that influenced your decision about types of businesses to buy it all.

SPEAKER_02 36:35

First, talk about my experience and choices to date, and then I'll talk about uh the ways in which I've seen capital be available in this space. To this point, I have sought to use personal funds to buy a business. You know, I've talked earlier about the fact that I love to have a vision and see that instantium into the world, and so I've sort of been pursuing, you know, being the sole owner of the business. And so that's been one of the things that uh uh has been important to me. But if a larger business was to present itself, I'd be in a position to raise some capital. So there have been some times when I've called friends up and sort of sought soft ways in which, hey, could I raise this money?

unknown 37:21

Yeah.

SPEAKER_02 37:22

In a more systematic institutional basis, I will say something that's very exciting, um, particularly with the acquisition lab and other places. When you buy a business with 90% leverage, the and the the typically these businesses only fail at 10% or less, you're able to provide some pretty nice returns. And so there is a burgeoning industry of individuals who are putting up checks in$25,000 increments. And there's various reasons why that number is important. We don't have to get into it's if you buy too much, you have to put a personal guarantee on basically. So$25,000, you can put it in, but you don't have to guarantee the loan. And so the acquisition lab, for instance, is one of those places where if you buy a business successfully, you're end the wealthy somewhat quickly. And so people have been very willing to, hey, I need to raise$300,000. People in the lab will come up. Yep. There's also other groups that uh that I've been in contact with a relationship with that are starting funds because they see the returns are there. And so, insofar as that, you know, you have a good credit score and you can present yourself as a credible owner of a business. You know, you probably have run some things in the past, or maybe in corporate, you've been a director or manager or something. There are people, if you pursue it, who will be willing. Hey, you put down 50,000, they'll give you 450,000. And you'll end up with depending some good portion of the business. You can look into the math. Um, but there is there is an industry growing now uh to provide those funds.

SPEAKER_04 38:57

It's interesting. You know, I have used my self-directed IRA um as a uh vehicle to in fact make investments and opportunities. One, because I can't I can't access that money for anything else anyway. It's basically a 401k plan, an IRA plan that um has to be set aside until I retire. Um, but the rules have now allowed for us to make direct investments, provide loans, direct in capital and the like. And there was just a recent law passed that uh will actually allow you to do that from your regular 401k in the future. You're not able to do it quite yet, um, but it's been approved already at the federal level, and it's gonna open up a path for people to use their 401ks for that investment. Now, in general, that does not help help the regular person because you still need to be in that deal flow and yeah, you still have to make a decision about what you want to do. And most people who are relying on their 401k to retire will not be able to do so anyway. But if you can be strategic, it could open up. And and I mentioned this all in line with what you said. There is a uh burgeoning industry of people that are doing$25,$50,000,$100,000 investments in smaller deals like this that are doing it out of self-directed IRAs to support other opportunities like you buying an SBA loan-backed uh business. But I think that industry is going to significantly grow. It's important that it grows because it speaks to the policy issue we started with in the silver tsunami. How do you transition generational wealth from baby boomers to other generations effectively and quickly in a way that you know continues the foundational growth of the country? But it's just a fascinating, you know, uh part of what I think is happening uh right now that is uh of interest. Um, I want to transition a little bit to talking about personal fulfillment. You know, this show is called The First Million is Always the Hardest because it is about financial well-being. Um, and for most people, they really don't want to be wealthy. They want to have financial security. Um, for some people that requires true wealth, for others, it requires much more income. But what most people really care about and what's driving them, and the reason they want that financial security is they want personal fulfillment. They want the freedom to be able to do and live a slow life, as I like to say, right? You know, people who are really wealthy, one of the things you notice about them is that they often don't have to move quickly. You know, they can actually move through the world at a very slow pace. They read a newspaper and sit down and drink coffee and they move at that pace because the systems around them, because of that wealth, allows them to be slow, be present, and be in that moment. Um, but that's really a you know, for a lot of people, that's where they're trying to get to. And that kind of provides the personal fulfillment. It touches spirituality, it touches relationships, it touches your own self-esteem. It's not just about money. And because you have both been an engineer, you've been a business owner, um, you've gone to divinity school and really studied a lot of these sorts of issues that dovetail together, I'm really interested in kind of your read on maybe what it means to you and what you see happening in the world broadly.

SPEAKER_02 42:24

You know, as I think about the question that you ask, the frame that I think about is I call human flourishing. What does it mean to live the good life? What does the keep the good community look like? And so as I've thought about that, I'll go back to you know what I've said earlier and kind of put the money piece and secret with that.

SPEAKER_03 42:50

So, what are you passionate about?

SPEAKER_02 42:55

You know, what brings you joy, and not just on an individual basis, also, what is it in your skill set that you have that can offer to make the community better? And so for me, I just love learning. I love learning new things, and I love sharing it with people, and I love seeing it instantiated in the world. And so as I look back over my career, I look for places to do that, and so I've been led to different sort of environments and places where I am able to express that in different ways. Another thing about me is that whenever I've sort of become successful and become somewhat easy, I sort of like, what's the next thing? What's the next thing? What's the next thing? I think the financial piece, and I've I've gone back and forth and I've sort of thought about. So in my 20s, I had a very specific financial goal that I wanted to reach and I was shooting for it. Then I got to call it a ministry. I was like, oh, I'm putting money before God. So I put God first, and then Shifted. And that's what led me to calling, divinity school, um, those sorts of pieces. Now having family, not to say that I put money back on top, but money I can't just drop it away, right? It has to be there in terms of financial right. And so what I'm as I move forward now, it's really about okay, what is that financial foundation that enables you to be able to do? So, like the goal is to be able to have a firmer and fruit and firm financial basis, such that my the the place where I can play, the places where I can have my vision be instantiated in the world becomes larger and larger. Uh, in a way that's gonna provide a foundation for my little guy to go to the school of his choice and college and pay for his school, and then also to have a uh a nice retirement. And so to your point, it's not the money itself, it's really the foundation for how you how me, my particular anyone can live out uh that passion such that they can flourish.

SPEAKER_04 45:02

Yeah, yeah. Well, you know, part of what you're doing in the process of buying a company is also establishing a legacy. Um, and the legacy is multiple multiple and in form, right? It's a legacy of experience to share with your family and friends and people that know you that this is a possible thing to do. It's obviously a financial legacy potentially for your family and your children, your son, uh, and others that are gonna come uh behind you. Um, it's a legacy in terms of your commitment to the community. And one of the things I've had a chance to talk to people about, I had a person who asked me, like, why should I he had just sold his business and I was trying to tell him, hey, let me help you buy another business. And he was like, Well, why should I buy another business? And I said, Well, the best part about owning a business is that you get to hire people. You know, you actually in hiring them, you pay them and you get to help them put food on the table for them and their family. I said, To me, that's one of the best aspects of what it means to be an entrepreneur. And as I hear you describe kind of the legacy and the dovetail in the community and the elements, it's one of the things that just jumps out at me.

SPEAKER_02 46:14

It's true, Bo. It's true. You know, my previous business, it was very explicit. I very explicitly had recognized that uh wealth is an important foundation for, and I was very concerned about minority community. I am rich about minority community. So I wanted to help build wealth in minority communities, and I recognized that minority entrepreneurs are often good, all American, they're good at what they do, but oftentimes they don't do marketing. So the whole business was hey, let's build some wealth through entrepreneurship. In this current round, I still have that same general passion.

SPEAKER_03 46:51

Yeah.

SPEAKER_02 46:51

Um you think about legacy, you think about uh employees. I've one of my skill sets is being able to identify what people are great at, growing employees. Uh so that's very important to me, and I love doing it, providing opportunities for people. The other piece for me is I'm an evangelist for this entrepreneurship through acquisition.

SPEAKER_01 47:15

Me too.

SPEAKER_02 47:16

And if you think about me, what I said, I love when I find something I love to tell people. I love to share it, love to instantiate it. So I've been waving the flag, a buddy of mine, attorney's brother of our line brother, he starts at the lab on Monday.

SPEAKER_03 47:29

How about that?

SPEAKER_02 47:29

Yes. And so I'm really excited. Another butter, you know, we have a friend in common who he's sort of journeying with me, right? So typically when I go into something, I usually bring the folks with me. And the main one of the main people who I want to witness this is my son. He's eight. And so I want him to be able to see his dad in these roles such that he says, Oh, I can get a job, or I can be a business owner, or I could be a pastor, or I could, you know, I can do these different roles, and I've seen it in action. And so I have a variety of choice in terms of what I'd like to do on the world.

SPEAKER_04 48:01

So that's no, that's wonderful. And people walk to what they can see. So for your son to see you do this, it makes it easier for him to walk in that path. You know, one of the things uh this particular show I was interested in doing because you're an example of someone who, although has a calling, is in a job and looking to go buy a business. Yes. There are a lot of people who are in jobs that they're not fulfilled. Um they um want to escape. Um, they don't like their boss. They there's lots of things that are about, you know, that are different than it is for you. Um, you have a calling. Um, but one of the things we've been developing is something called the Breakout Blueprint, which is essentially a course to help people figure out um what industries or what types of investments would I like to make that might either be a side hustle and provide me supplemental income, or might in fact become a full-time job that allows me to leave what I do. I believe so strongly, just because you were talking about recruiting people and this concept of entrepreneurship through acquisition, investment in real estate, all the things we talk about on this show. I actually took my staff and I offered my staff a six-week course for free that I gave them two hours every week plus two hours of office time, where I sent them down and showed them how you should think about what opportunities could exist for you as either as a side hustle or as a full-time job. Um, one of the reasons I wanted you on the show is as an example, and we hope to have many more of you as examples of people that are looking to make that transition into that space. Um, because everyone will have a slightly different reason of why they want to do it. Might for you be calling, it might be legacy for your children. For others, it's I hate my job, I hate my boss. For others, it's that I've always wanted to do this, I've never had the opportunity, now's time to take advantage of. But what we hope we are doing in part with the show, The First Million is always the hardest, and our efforts with the Achieve Summit, which is our conference that this year will be June 4th through 6th, in uh Win Creek Casino in the Chicago area, is really lay a foundation for people to hear stories of others that are on the same path, learn how they've actually taken advantage of that opportunity and hopefully pursue it themselves. So I just wanted to end with that and say thank you for spending the time with us. It's been great. We're gonna follow you and your process. Um, I'd love to be able to get updates on a regular basis that we can share with our listeners and viewers about where you are and your process as kind of an educational and promotional tool. So thank you. I appreciate it very much.