Ep 368: Buying a Business While Working Full-Time & Raising 7 Kids (No Margin for Error) with Michael Simpson

Tied to that platform, you know, you can get all the traffic and have all these customers, but they can just flip a switch, and you're dead. And your whole business has gone in an instant if they decide that we don't like what you're doing, or somebody does something you're listening to,g and it's just all gone.

And I'd read the book, Buy Then Build by Walker Dybold. And that really just kind of changed my whole perspective on, yeah, you can just buy a business. You don't need to have hundreds of thousands of dollars. Can you know, 10, 15% down, and you can buy a business that's, you know, paying you a full-time salary and covering the debt service.

Everything is set up with option A, you get a 12 % rate of return, and with option B, you get a 15%. Which one do you choose? In reality, anybody who's in business says like, well, option Ad be anywhere from 10, know, negative 10 % to plus 40%. And option B could be from negative 100 % to positive 100%. And there are 50 other variables, no idea. And so all those book problems in college are just almost entirely meaningless. Business is so much harder in the real world.

Jaryd Krause, I'm the host of the Buying Online Businesses podcast, and today I'm speaking with Michael Simpson. He is a business owner, acquisition entrepreneur, and National Guard serviceman who has successfully bought a business using the SBA while balancing a full-time military role and raising seven children.

His acquisition journey included a near-deal-ending due diligence process and the challenge of replacing an SBA lender mid-transaction, which Michael shares in the podcast. Now, Michael brings a rare real-world perspective on resilience, risk management, and executing an acquisition under extreme personal and financial pressure.

And in this pod, we talk about warts and all how he went through the search phase, how he got the money to buy a business, why he had to change lenders, who he went to how he went through due diligence challenges, how he went through challenges with the broker and all these things that he had to deal with to get this acquisition done and why it was quite a successful acquisition.

And then why, in some forms that maybe weren't as successful as he would like, he shares what he would do differently. He shares what he would suggest somebody do if they're looking at buying their first business and being realistic with their numbers, really being realistic with what they want to achieve, and maybe even waiting a little bit longer than they may necessarily want to or feel like is right for them. So we also talk about growth plans, what are the next steps for Michael? So this is a fascinating podcast on an acquisition story that you should listen to. Enjoy.

Michael, welcome to the podcast. you for your time. Yeah, absolutely. Now, congrats on your acquisition.

Thanks.

Thanks. Yeah, it's been a few years, but that's why I'm excited to chat, because you've bought this and you've owned it for a few years. You've got so much to share. A lot of people are just looking to buy and are wondering what's going to look like year one, year two, and how that works. But firstly, let's discuss why buy a business and why buy an online business? What was the decision behind all this?

So it started back in about 2019, 2020. I had started an online business, an e-commerce business selling on Amazon, back in 2017. I kind of get on the reseller thing with clearance stuff, found out, oh, you can go to Walmart and the clearance aisle and find something, and list it on Amazon and sell this thing you bought for a buck for 10 or 15.

Pretty quickly realized that wasn't sustainable. So I kind of switched to a wholesale model. I would just take my phone and be scanning stuff at the grocery store, and I found this bag of chili powder that was selling on Amazon for 15 bucks. And there it was at Walmart for like $5.

And it's kind of a local regional product. So I got a hold of the manufacturer and said," Heyy, can I buy a case of this? Can I buy a palette? And pretty quickly they're like, yeah, sure. Come down to the warehouse, and you can pick up a palette of this. So I did that for a little while, and I grew that to like 50,000 a year in revenue, making a few thousand bucks in profit.

Then, around 2019, I decided that I didn't really love the business. It wasn't something I was really passionate about. And I was thinking, well, should I try to grow this to a full-time thing or go buy an existing business that's already found product market fit, maybe has a lot of other aspects and is most importantly not on Amazon because even back then, I just saw all the issues with Amazon and being tied to that platform that, you know, you can get all the traffic and have all these customers, but they can just flip a switch and you're dead. And your whole business has gone in an instant if they decide that we don't like what you're doing, or somebody does something you're listing, and it's just all gone and poof. So, I'd read the book, A Buy Then Build by Walker Dybold. I think it came around around that time, 2019, 2020. And that really just kind of changed my whole perspective on.

Yeah, you can just buy a business. Like you don't need to have hundreds of thousands of dollars. Can you know, 10, 15 % down, and you can buy a business that's, know, paying you a full-time salary and covering the debt service. So that was kind of where I started.

Yeah, cool. Yeah. So you did start with a startup route similar to mine. Obviously, you had more success in the startup route than I did. I did not. And then I reverted to buying, and yeah, you don't need hundreds of thousands of dollars to buy a business. You can start a fair bit smaller, know, 10 by 10, 15 grand business as I did with my first business.

And so why did you move to, why did you start an online business at all? In fact, were you already an entrepreneur? Yeah, I've always been an entrepreneur at heart. I even majored in entrepreneurship in college. In retrospect, it probably wasn't the, it was basically business administration with a couple of other classes thrown in, immediately.

We're now being an entrepreneur, like just being like doing the work versus…

Yeah. The thing about college business, college classes is everything is set up with like, Oh, option A, you get a 12 % rate of return, and option B, you get a 15%. Which one do you choose? And in reality, anybody who's in business says like, well, option A could be anywhere from 10, know, negative 10% to plus 40%.

And option B could be from negative 100 % to positive 100%. And there are 50 other variables. I have no idea. And so all those book problems in college are just almost entirely meaningless. Business is so much harder in the real world. like you don't even know what question to ask or what data to look at or what's important.

Yeah, all these things are just given to you in a textbook. That doesn't exist in the real world, especially not if you're an entrepreneur and you have a small business. If you're in a huge Fortune 500 corporation or there's some data you can rely on or other things, but for an entrepreneur, you don't have anything.

Wouldn't it be lovely to have that luxury? choose 15 % over 12%. No risk. It's good in theory. Yeah. So you reverted to, well, I don't have to start these businesses. I can buy them, and they're already making money. Pretty cool. It's a massive game-changer. I'm sure it helped you scale a lot faster. What did your original search look like and why? Was it okay? I understand Amazon businesses, but I don't like them. I'll go for something completely different.

What shaped your search, and what was your criteria?

So I still liked e-commerce. I still just like something where you've got a physical product, you can touch and feel it. It didn't feel like that was going away anywhere, just continuing to grow. So one of my first criteria was it needed to be either completely off Amazon or the majority of Amazon. The second criterion was that it had to be, you know, selling a product that I cared about.

Like, I didn't want to sell women's clothing. I didn't want to sell some snake oil supplement that I had zero confidence in, and I didn't want to sell makeup, or you know, there are so many things out there that, well, it might be a good product to sell. You can't do that for years on end.

A third criterion was that I was really trying to avoid businesses that were basically just like one or two products sourced from China and kind of completely reliant on labor arbitrage from China.

Two reasons there, one, I just saw that eventually that's going to go away. I didn't see tariffs coming, you know, four or five years ago, but I just knew that eventually that was going to go away. Either the Chinese sellers were going to go direct and cut out the American middleman, or it was just going to get more expensive.

And so I didn't want to build a business around that. The second part is that I'm in the army and the national guard, and have security clearance. So, like wiring $50,000 to a factory in China was probably not going to look good on my next reinvestigation, or you know, flying to China to go visit a factory was completely off the table. That was kind of my criteria, which unfortunately weeded out about 90-95 % of e-commerce businesses out there.

There are a lot of Amazon businesses out there for sure. A big portion, and that's Chin, is involved. Some are US-based, and then, you know, it is challenging to find a business with most of its revenue coming from, you know, non-Amazon, especially in the e-commerce realm. And those businesses, they sell fast and for a good multiple because it's typically less risk involved. And it's a more general statement than the others.

the ladder, right? So I love the search. How long did it take you to find, or how many businesses did you look at? I would say, and I've started my search in about 2020. It probably took about a year before I got on a couple of email lists. So Quiet Light was a big one.

Empire Flippers, I looked at Kipa, but there was really never anything on there. Just, you know, tiny stuff for the most part. A few others, and you know, everything I'd look at, I probably looked at 20 businesses where I downloaded, you know, got the signed NDA and got the package and looked at stuff, and I could pretty tell, you know, pretty immediately tell, okay, yeah, this thing sources from China. Okay.

That one's not going to work, or look at the product and be like, what are they selling? Yeah,h no, I don't want to be selling that. And so it was in February of 2021, I got on,e and it just hit all my criteria. It was, you know, another one I didn't mention was size.

Like, I did not have the cash to go buy a million-dollar business, $2 million business. So I was looking for something that was probably, you know, quarter of a million to half million dollars.

Price-wise, that's about how much cash I had to be able to buy something. So yeah, I saw a discount on Catholic products, and it was like, this just checks all the boxes. I'm Catholic, and you know, it was off Amazon, and it was about the right size. And it was like an 18- 19-year-old business, which in internet terms is like ancient. It started in 2003. It's like, well, if it's still going from 2003, like they must be doing something right. It's probably not going to go to zero next year.

So it was listed with Quietlight. I was on the email list, came across it, and yeah, I immediately told my wife, and it's like, Hey, look at this. This, this might be the one I'm looking for, and download the package or look at everything.

They do a really nice package where it's like 50 or a hundred questions with the seller and an interview with the seller, kind of talking about more stuff. So I contacted the broker, I think that day, and said, Hey, I'm interested.

Right. Where did you find that one?

I'd like to set up a meeting with the, uh, with the seller, right?

And did you have, so you bought with SBA? Did you have San BA pre-approved before you started your search?

No, the listing was not SBA pre-approved, which is a bit of a misnomer because the SBA doesn't pre-approve anything. They have a list of, well, if it's like money laundering or not money laundering, but money lending or certain vice businesses, they're completely disqualified, or if it's owned by a foreign entity, it doesn't have U.S. tax returns, just qualified. Then everything else is sort of, well, this might work. It's not immediately disqualified.

Although this one, I did actually run into a little issue with that, where they had to do an extra legwork to make sure it wasn't disqualified because it was like teaching religion, that would have been a disqualified business.

But because we're just selling religious products, I was able to convince them that no, this is a different thing. This isn't like a school or anything like that, just a store selling products.

Yeah, absolutely. Yeah. Cool. Awesome. Well, yeah, it's only been the last few years, probably before you bought yours, brokers would be listing businesses that are kind of SBA pre-qualified. Yeah. They do the, you know, I was speaking to a lender, now that's a lot of the businesses that are SBA pre-qualified, you know, they look good, and they might not actually be SBA.

Like you might not be able to get qualified, finance qualified for the acquisition. So you need to take that with a grain of salt. It's a really good way to get a bunch of deals, push the price up for the acquisition, and try to get people in with finance, and it may not work. I've been a part of a bunch of these things that just don't work out, and that's a waste of everybody's time.

Yeah, because it's ultimately the business, but it's also the buyer, and you could have an amazing business, and any lender would want to lend on it. But if you, as a buyer, have, you know, a felony or you got, you know, terrible credit, like, sorry, they're not going to lend you, no matter how good the business looks.

Yeah. Typically, my buyers don't have that problem, and we are able to build a really good plan, a business plan for it. It's the businesses that don't stack up the financials or something. Talking about lending you mid-deal, you lost, you lost a lender. Is that right? And what did that look like?

I started with a local, like a regional bank, for my other e-commerce business. So I reached out to my banker, said, " Hey, I'm looking to buy this other business. She put me in contact with their SBA division. At that time, I didn't really realize the difference between, you know, they're like most banks can do an SBA loan, know, thousands of banks can do an SBA loan, but there's only a small handful, relatively speaking, that actually know how to do them.

Everybody can do them, but very few do it all the time and do it correctly and have the institutional knowledge to do that, especially when something like online businesses goes back a few years. Westart got hold of the banker. said, yeah, yeah, we can do this. This business looks fine. No red flags. Let's get started. We put in a letter of intent, talked to the broker, and talked to the seller. Immediately had a good rapport between my wife and me and her.

Later, she told us that after that first like meeting, she was like, I want them to buy the business. That's what she told the broker. Now we had no idea at that point. We thought we were still in a competitive, you know, kind of bidding process. So we made an offer at full price, you know, it was like a three X multiple at the time, which seemed fair. You know, this was an Amazon aggregator that was going crazy.

So multiples were relatively high. Money was very cheap, you know, in 2000, and 2021 interest rates were about the lowest they ever got. So there was a lot of competition. figured, okay, we'll make a full price offer.

And that will guarantee that we'll probably have a good chance of buying this business. We accepted our LOI. I had to get my banker on the phone with the broker to say, yes, he's pre-approved verbally. But that was enough to get the broker to accept the LOI because before that, he's like, well, we don't really want to do SBA. We want an all-cash buyer. And just because they knew that it was going to take a few months, even the fastest SBA loan is going to take two to three months.

So we, we started down the path, started due diligence, and then we were about a month or two in and, you know, talked to my banker and he's like, well, yeah, even if you get us everything, it's going to take us two months to even start underwriting because they were doing all the PPP loans back then and all of their SBA division was just doing PPP loans. So he's like, it's going to be two months before we can even look at this. He's like, I can't wait two months. This is going to fall apart.

I had to start scrambling. reached out to my network and started trying to find another banker. And I was in a Facebook group for buy then build. So I was able to find one person through there. They referred me to a banker, and then the banker with the regional bank. actually said, Hey, I feel really bad about this.

I've got a buddy at, know, Bank of America, and I'll send this deal over to him and see if he's interested. So I ended up getting two banks, US bank and bank of America and you know, had them compete for my business so that's awesome yeah i love that i just told them both like hey whoever can give me a term sheet first you know you're gonna win the deal and they were both pretty hungry went with that and and just kind of continued and there was a lot more roller coasters along the way before we closed.

Let's talk about those roller coasters. What are some of the challenges that you had during due diligence? Actually, before we even get to due diligence on this one, how many businesses do you think you did do DD on, or did you do DD on any businesses before this?

I downloaded the package, and as I looked at financials and things for maybe 10 or 20 businesses, but almost all of them, I was able to disqualify them within a few minutes. It was, I just saw that, okay, this stuff's made in China, or it's too small. It's too big. It's, you know, this, the cash conversion cycle doesn't look great, or just the whole business model. It wasn't very confident in. So I really didn't get too deep into that. There were maybe one or two other ones that I even spent more than probably half an hour on before I disqualified them.

Cool. So your first LOI and first full DD. Awesome. Yeah. So what are some of the challenges that popped up through due diligence?

A big one was that I did not know what I was doing. know, it's like, you know, most people never buy a business. There was some information out there. Like I'd read, they built. was in the Facebook group there. I was able to get a few questions answered there, but I just felt this huge information asymmetry. The seller had a broker and he had done this before. He knew what he was doing. And so I just felt like.

I was learning everything on the fly. didn't know what I didn't know. I kind of muddled my way through it, but it always felt like I was just thinking of falling apart in a minute. And the seller's broker was kind of a jerk in retrospect. He came off as not the nicest, always, and he was protecting his client. He's working for the seller. He wants the deal to close. doesn't want to waste, get a buyer is going to waste time, and we already signed the LOI.

We were kind of locked in there. So there were multiple times where I would talk to him and feel like this whole thing's going to fall apart. And then I'd get a hold of the seller. She's like, yeah, that's fine. No, we can extend the closing date. That's no problem. You know, or yeah, we can work through his due diligence thing. What do you need? And it would just be like night and day.

And so that was where the real roller coaster came in. And then, especially when we had to switch lenders in the middle of due diligence, I basically said, Hey, I feel really confident that this is one of those lenders that's going to come through. So I offered a $10,000 non-refundable deposit on the business that, if for any reason other than, we don't get the loan, yeah, you get to keep this money. and that, I don't know if that was really necessary, but I felt like this is a good way to show that I'm serious and make sure that the deal didn't fall apart.

And ultimately, that would just go towards a down payment. If everything worked out, I wouldn't be out anything now. If I couldn't get the loan, then I'd be out 10 grand, but that wasn't going to kill me.

And when I did get to working with those two bankers, so another thing that took a long time, I spent way too long on the business plan. I spent probably a hundred hours on the business plan and the projected financials because you had to have monthly financials for the first year, annual for the next three years. did have some help from a, there's a group here in the US, forget the name of it, but it's basically like retired business people that volunteer to do consulting, I think they're kind of associated with the SBA.

And so I have his guy, who's like a retired comptroller, CFO, and he gave me a lot of advice and feedback. So he was kind of the closest thing I had to a buy-side advisor. He looked at my financials, looked at my business plan, and gave me some feedback. But even though I'd taken all those accounting classes in college, I'd like to relearn. Okay, how does this income statement match up to the balance sheet?

And if this is doing this, like these things aren't balancing and the cashflow, and I had to recreate all that stuff from scratch, and I kind of just built my own, you know, three model thing from scratch, and had to keep fixing it because stuff wouldn't match up. In the end, all the bankers I submitted to were like, " Wow, this is amazing. This is way better than we normally see on multimillion-dollar deals. So I think that helped that it was very detailed, and you know, the financials looked good, and I wasn't doing crazy projections.

This is before ChatGPT. So I had to do it; I wrote every single word of that myself. You know, if I were doing that now, I probably would have thrown in ChatGPT and said, a marketing summary, write a SWOT analysis.

Absolutely. Then, yeah, mean, Chatchai BT still has its flaws, and I definitely use it with part of the process. But you know, this is all why I've got a job. You know, people come to me with money wanting to buy a business, and then I take them from that position to link them up with finance brokers, lawyers, and then obviously me advising.

If you were to do it again, how would you do it differently? Like the acquisition, would you get a finance broker instead to help you with a business plan and getting finance that has access to many lenders? You, yeah, what would you do?

Yeah. So I did try to go down that road. There were a couple of finance brokers at the time who were recommended. can't remember their names now. They charged like $5,000, but I thought that was reasonable at the time to help me find a lender. The problem was that the deal was too small. They said, the banks we work with, most of them won't touch a deal with a loan under $500,000. They might have one or two that would go to $350,000.

And my loan was going to be probably closer to 300,000. I ended up calling, you know, I called five or 10 banks on my own. called local banks, and I called national banks. I looked at the list from the SBA of who their top lenders, know, Live Oak Bank, think was number one at the time, and a few others. I called all of them, and they'd all tell me, know, 500s are minimum, or 350s are minimum. Even though I say, I got a complete package. I've got everything. You know, I can have it ready to go tomorrow.

I've already done all the legwork for it. So yeah, I ended up just having to do it all on my own. Same thing with most of it. I did hire a company for due diligence, Centurica. And because I waited a month, their price had risen; they increased their price from like 3,500 to 5,000. Sure. It's a lot more nowadays. You know, I had to find an attorney. So yeah, there was just a lot of it. If I do it again, now I know all those things, and I have those connections. So I feel very confident.

In retrospect, yeah, I definitely wish I'd had somebody helping me out there because it was a lot.

So, like, just getting finance is one part, and then choosing the right lawyer is a challenge. And the due diligence is a challenge. So, you bought the business for, you got a 300k loan roughly, and how much of the business in total?

It was about So 10 % down, a 5 % seller note, and then like 85 % SBA loan. And I got really fortunate. We were able to lock in the rate for five years when rates were really, really low. So five and a half percent, you know, for the first five years of a 10-year loan. expires here in a few months. You know, they'll reset to like nine and a half percent, whatever the current rates are, but really glad I locked that in time.

Yeah, absolutely. That's really cool. Debt was cheap when you purchased it, that's for sure. And as like, I'm sure lawyers were and DD and all that stuff, it's definitely a lot cheaper. It's bought up for like 3X as well, right?

Yeah, I think I probably see.

Yeah. Now that was, yeah. Like a lot of e-commerce businesses, it was priced at a three times multiple plus inventory. So yeah, we negotiated down the inventory. So if you count that it was probably close to like a three and a half X, which in retrospect was probably overpaying by quite a bit. We, but that was just the market at the time, with money so cheap, and there was a lot of competition with all the Amazon aggregators. Just drove a year or something.

All the multiples were driven up at that time. We didn't buy; maybe it was pretty darn close to the peak. And then the other thing wathat s the SBA was offering a lot of free money back then. So if we closed before September of 2021, they were going to pay the first three months of our loan, and there was no SBA funding fee. alone between those two things was like $20,000, $25,000 of value. So I was really pushing to close before the end of the fiscal year.

Unfortunately, we did, and that was very helpful to not have to pay the loan for the first three months' fee. Which is really cool. Yeah. I mean, for people listening, you know, this is a couple of years ago. Now you've got your SBA fee. You've got a lot more challenges with SBA. Also, even in terms of multiples, I'm seeing e-commerce brands sell for more than a 3X and then plus inventory.

And it really depends on the business. It's one thing to just say, " What's an average multiple for an e-commerce brand, but it doesn't work like that. It's more about the risk involved with the business, and the smaller the risk, the higher the multiple, which is also because it's determined by what the market will pay for it.

A market will pay more for a good business. Just like your business, the market would pay more for it than a business that was an Amazon, well, maybe not in the Amazon aggregator space, but at times, it is more valuable to buy a business that is making more most of its sales off Amazon compared to Amazon because of the risk factor.

Yeah, I figured that was really what I was buying, which was I was buying 20 years of customer history. You know, I had an email list with 50, 100,000 emails on it. It was getting 60, 70 % open rates, you know, had customers that were coming back frequently.

So it's like, at the end of the day, that's really what I was buying. know, supplier relationships, customers, like that repeat customer base. Wasn't that, you know, anybody can go start up an ad account and try to drive traffic, and you know, maybe spend a bunch of money there, but it's those repeat customers that are real.

You know, that's where the value is. One thing I definitely underestimated was the technical debt, though. So it was, the business was on Shopify. It wasn't on WooCommerce. It wasn't on BigCommerce. It was on this platform that I'd never heard of before, and almost nobody has heard of since.

And I just assumed I couldn't migrate this to Shopify. Like I've heard people, you know, they buy businesses, and they migrate to Shopify, and like, yeah, it might take a few months, six months a year, but like, yeah, I can, I can do that. I'm pretty tech savvy. Here we are, four and a half years late,r and still have not made the migration.

I wasted about $30,000 on a migration that I had to pull the plug on. So, I definitely underestimated how hard it is to change. That is the one downside of buying a business: you're getting it all. You don't get to change the name. You can make some changes, but a lot of structural things, that's what you're buying. So it's there, good, bad, and ugly.

Especially for a 19-year-old business, know, Shopify didn't exist when this came out. And so there are pros and cons to buying a business that's four years old and can be all five years old and can be set up on Shopify. But it's not a 19-year-old business with a hundred thousand email lists.

So there are definitely pros and cons. I'm sure that you would say, even though you had that tech stack and some challenges, you probably still bought it because, I mean, it's been a couple of years now, and I'm sure it's doing well. Now, the next question I have is the business plan. How often did you stick to the business plan versus changing it?

I'm sure I looked at it at least once or twice after closing, but that was probably about it. I did look back a couple of years later just to see, like, well, what were my financial projections? Like how close was I? I think we probably grew about 15 % year over year for the first couple of years. That was another thing that came with being a 19-year-old business. This thing was never going to double or triple in one year.

It wasn't like we were just going to turn on meta ads and it was going to rocket to the moon. was, you know, demand capture on Google. So it was always going to be kind of a slow, steady thing. weren't going to drop 20%, you know, 50 % a year, but we probably weren't going to go up 50 % a year. So it's still gone up, but it's not as fast as I would have liked.

Well, better to go up than to go down and have a 19-year-old business that's stable with minimal risk. This is my opinion. Some people want to grow faster and will take a higher risk and have a different risk tolerance. I believe it's better to buy something slower-moving, even though it has less growth. Congrats. What were some of the things that you did to grow then?

So, I mean, I did; there was an Amazon account. It hadn't been used in years. There was like $13 still sitting in the Amazon account that hadn't been dispersed for five years. So I reactivated that. Didn't really add that much. There was just so much competition. We're a reseller.

So, you know, selling other people's products for the most part. So they're just, it was hard to compete on there. And with sales, we have thousands of products. So that was another thing that I really underestimated. Just the complexity that comes with having thousands of SKUs.

We do a little bit of drop shipping, 10, 15, 20%. Underestimated what kind of issues come along with that, especially as we're still dealing with the repercussions of and all the supply chain challenges. Our suppliers are in Europe. There are some areas, and so we're buying from distributors in the US, and they couldn't get stuff from Italy or China or wherever they sell something, and then found out that our supplier is out of stock for six months.

Hey customer, do you mind waiting six months for this to come back in, or, you know, do we need to cancel your order and refund it? Um, so that wasn't fun. Um, you know, email, uh, kind of sent more emails to the previous owners, doing okay with that. Just doubled down on that, you know, increased ad spin on Google, uh, cut out some products that were not performing.

I think when we bought it, there were 10,000 products in the database, maybe 11,000. Some of those had been turned off because they were discontinued, but I kind of slowly whittled that down. We're down to about four or 5,000 today. Added some new products over time, but you know, really, it's just kind of keep doing the fundamentals.

Just keep ramping up, spend on Google, keep sending emails. know, unfortunately, there wasn't like a lot of magic bullets, it's just, you know, do the simple things, just repeat them, do it over and over again, take care of your customers.

Get them to come back and provide good customer service. That's really about all you can do. I love the growth of being just you, focusing internally on what's working and doing more of that and doing less of what's not working. And then you can run experiments on the side. Like, do I put a little bit of ad budget into remarketing campaigns on Facebook and Instagram?

Fortunately, the downside of selling Catholic products is that Facebook and Google will not let you remarket. There's no retargeting. There's no customer data sharing whatsoever. Being in a restricted category definitely makes things a little harder. Google's black box can still find our customers and everything, but we just can't explicitly target them.

Like in the old days on Metta, you could say, yeah, show my ads to people that like, you know, this page for the Pope or something like that. Nope. Can't touch any of that. Can't target anything that way. I mean, they can still target it internally. You just can't be explicit about it.

And what advice would you give to somebody who is starting today, looking to buy their first?

I would say be realistic about your timeframe, about how much you can actually buy. Post-closing liquidity is a term you need to become familiar with. It's not enough to say, I want to buy a million-dollar business. have a hundred thousand dollars. Great. Okay. Then you need another 30, 40, or $50,000 for the closing costs.

And when you close on the business and fund that, the bank wants to make sure that you're not going to bounce your next check, your very first payroll check, because you're now broke.

So you need 10 % down and then another five or 10 % left after that. And then you still need to be able to fund your closing costs and, yeah, working capital. should have included some working capital. I was able to get by with only like $15,000 of working capital and fusion in the business.

In retrospect, I wish I'd doubled that or borrowed some of that to put in there and got a line of credit set up earlier. I did get one set up in time before I needed it. That's super critical, you know, but it would have been much easier to get that line of credit set up at closing than a year or two later because the thing about banks is they only want to give you money when you don't need it. As soon as you actually need the money, that's when the door is closed.

So it definitely gets a lot more challenging. Great advice. Absolutely. Also, think and share that the dream of having a hundred grand and buying a million-dollar business is that you can do it. It can be done theoretically. You've got to realize there are other people in the market.

These are conversations that I'm having with a lot of my clients. It's like there are other people in the market, and most people start in SBA with the 500 to $1.5 million range. Then you've got, because you've got the people in the market, they're probably wanting to do 10 % down as well.

But because competition might get hot, they might put 12 % down or 15 % down. And so you've got to do these things to win the deal. And you've got to have some margin to put a little bit more in or have a little bit there, like a line of credit working capital infused into the loan to be able to ensure that you can buy the business based on a level of competition in the market, and also run the business safely and not put yourself in a tough financial position. Like you don't want to spend every single penny you have because you've got no margin for error, and there are always errors in business and life.

Yeah. I would say another thing is that I definitely bought too small. I didn't really have an option. This was the first business that came along that actually met my criteria, but man, I really wish it was like 25 to 50 % larger because by the time you pay the debt service and then try to pay yourself something, I had seven kids, I had six kids at the time.

So I had to take a salary from the business on day one if I was going to work in it full-time. And quite frankly, there was really never enough in the business to pay the debt service, pay for growth, and then pay me. So eventually I had to say, okay, the business has to stop paying me, and went and got a full-time job to kind of pay the bills, whether the business is healthy or not. So I definitely think like 150,000 SD is probably the absolute bare minimum you want to look at if you're looking for something full-time, unless you have a…

If you're single and you have a low cost of living, but if you have family support, you kind of have to go a bit larger.

Very good point. And that might mean people save a little bit more money for a year or two or three before they can get to the point where they're like, I'm going to buy this size business. it's that after, like you said, you went back to work and you, don't know how long you've worked for, but like, could you just have worked an extra one or two years and bought something a little bit bigger versus buying something and then going back to work for maybe a little bit longer and who knows, it might look like you can sell this business, like grow this business, sell it for a little bit more than you bought it for and add your savings from your work into it to buy something larger. Is that something you would consider or think about?

Yeah, there are parts of the business I really like. We have amazing customers. Our suppliers are great. We've had customers just pay for things that arrive broken, or we reship something, and they find the original, and they call us up to say," Well, I found that thing that I thought was lost that got stolen off the porch.

Here, can I pay you for that? There are so many stories like that where people have just been really amazing people. I don't think you find that in every business. If you sell a vice product, your customer base is probably not going to be the kind of, you know, people that are going to do that. They might be the kind of people who say, " Well, I don't care. You know, I'm going to scam you or claim this is missing. Amazon customers are notorious for that. probably get more returns on, you know, a tiny bit of Amazon business than everything else combined.

Even though it's like 5 % of sales, it's probably more returns than a regular business. So, but I would definitely like to have a larger business, whether that's growing this one, know, doubling or tripling it, selling it and buying something large, or kind of open to either one. Cool.

Yeah, well, I think exciting times are ahead for you, for sure. You've definitely got some things that you are able to grow and work on and build on, which is awesome. Great foundation and congrats on your success for sure. And thanks for just jumping on and being able to share, you know, what's in all, and yeah.

I like to share that not everything is a raging success. For every person you hear who, yeah, they doubled, triple, quadrupled in a year, and ever mentioned that, by the way, we had this investor who brought 500 grand in cash or had VC backing or something like that.

Or, oh yeah, well, I didn't have to take a salary because my wife makes $200,000 a year, and I was able to run the business for three years, no salary. The vast majority of people are kind somewhere in the middle, not failing, not crushing it, but just kind of slowly growing up.

Yeah, absolutely. You know, slowly chunking their life up over time. It may not be massive like in droves, but it still progresses either way. And I think it's worth proceeding on progress like that. Yeah. Thanks for being real, Michael. It's been so good to have you on. You want to reach out, should I send them to LinkedIn, or where do you want people to reach chat?

Michael underscore in underscore biz BIZ got on there pretty late. So, all the good names are taken,n but the website is Discount Catholic Products. We do ship worldwide, even to Australia, so shipping is a little expensive, not gonna lie, but it would be more expensive where I live because of the tax. I live in Bali and Indonesia, so it would be quite expensive there.

Guys, I will link to both Michael's site, Discount Catholic Products, and also your Twitter or X. But yeah, thanks again, Michael. Really appreciate you coming on. Everybody who's listening, thank you for listening, and speak to you soon.

All right. And I just want to say thank you because I did use your guide back, you know, I used to listen to your podcast years ago when I was in the buying business, and I used your guide to help me kind of look at some of the things for SEO and other stuff like that. So I definitely appreciate that.

Awesome. Thank you. I'm glad it helped. That's so good to hear. Cool. Thanks, Michael. See everybody.

Bye.