Ep 390: What Kills An Online Business Deal in the First 10 Minutes with 8 Figure Acquirer Neil Twa

The deals that are good going and you're six months into it, seven months into it, and you're like, Man, this is good. You sign an LOI, you're already down to what feels like the last mile of due diligence and paperwork and negotiations and do we match each other's, you know, profile and life and goals and purpose and all these things that you know really kind of drive that conversation and then they ghost you.

And you're just like you can't get an idea. Why are we being ghosted? No phone calls, no emails, no returns, no thing, you know, even sent letters, nothing back. Like they just ghosted us.

Hi, I'm Jaryd Krause, host of the Buying Online Businesses podcast. And today I'm speaking with Neil Twa. He is the CEO and co-founder of Voltage Holdings, where he and his clients have generated over a hundred million in e-commerce sales since twenty twelve.

Now he's a former IBM executive and Neil's launched, scaled and exited multiple eight figure brands and mentored over a thousand operators using his train equipment activate framework.

And he now focuses on building generative businesses engineered for margin and exit readiness from day one. And he helps buyers spot the difference between a business that actually looks great and one that actually is great.

Now he's acquired over five deals. And last year, we talked about this on the pod. He looked at five hundred deals and knocked back all of them except for two. And then we talk about what were the ones that he knocked back and why mostly.

And then we also talk about what were the two that he did acquire, what how much they cost him, what were the multiples, how do they finance them, what type of deals were they?

And who are the operators and how do they operate that? We do talk about why he turns down deals and why, what he's learnt through due diligence. He has a few different examples and stories of due diligence that he's been through and where he's lost deals and then where he's won deals.

And in that he shares a bunch of his due diligence traps and what he looks out for and what you should be looking out for when you're buying a business. And then we move on to talking about what to do in the first thirty days after buying a business, and then from the thirty to the sixty day mark, and then from the ninety day the 60 to 90 day mark all the way up to 80 days to make sure you're making the business as efficient as possible and profitable as possible with minimal input from yourself as the owner. Now there's so much value in this podcast.

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It's what my clients use and it's not only made people millions of dollars to just save people millions of dollars and it's free. There's a link in the description. Also, lastly, you guys have been asking for a long time, and I've been building. Finally, our full due diligence stack and service is here. It's finally live for deals from $100,000 and up.

And every pack includes a personal MA strategy with me, which is not offered with other due dull services out there. Now, if you're finding a great business, make sure you get great due diligence done by a professional. And you can head to buyingonline businesses.com forward slash due diligence to see our packages. Let's dive into the policy.

Neil, welcome back to the pod.

Yeah, so excited to chat.

You've had so much experience in acquisitions, scaling and exits. You've already been on the pod. So people can go check that out and I'll put a link in the show notes to your first episode for them. Reviewed so many businesses like in acquisition. How many acquisitions would you say you've done now?

Sure. Good to be here, man.

Absolutely.

We are on, I don't know, four we did our fourth, fifth one. Yeah, fifth one last year. Yeah. Which we're in the process of operating and managing. The second we did two last year we found they were really, really good in terms of the way the business structure but looked at five hundred plus businesses. So we might want to unpack some of that the way last year was relative to the opportunities that were in the market.

Yes.

So you've done five now and like you've looked at over five hundred. Was it f over five hundred for those last two? Last year, do you think you looked at it?

Five hundred companies that basically came down to the two we ended up purchasing last year. One of them was easy, one of them was a referral, which ended up being easier because we knew the owner and we knew what the deal was. We knew it actually turned out to be a pretty good thing in a relationship with our membership actually.

And the other one took quite a long time to get the table. And it was a pretty good size acquisition and it's working out really good. It's one of those things, you always think it's just gonna be real easy. And then you remember as you get into the process, no, it's always gonna take longer.

Something's gonna get screwed up, someone's gonna do something stupid, the bake is gonna take six weeks longer than it should have, and this one task you asked them to do, and then the whole process feels at times like it's just gonna fall apart or is hanging on by a thread, and you're just waiting for somebody to say something stupid and the whole thing to fall apart, right? It's a very fascinating process, but it certainly isn't it isn't point A to point Z.

Yeah.

If only it was cookie cutter like buying real estate, but it is pretty kind of I would say somewhat wild wild west where there's so many elements that can change things, which makes it a pretty cool thing as well.

Yeah, with AI now everybody's out there ripping off like their attorneys, making up their own documents and stuff.

Well, that's right. I mean it's crazy. It's I mean it's so scary to do that because you don't understand law and you don't know what you know, if it comes down to it and you need that legal binding document to protect you.

Yeah.

That's it.

Yeah. Or verifying the documents dollars but it's just crazy that it could cost you tens of thousands to hundreds of thousands or more with getting one little thing wrong.

Well, and if the deal goes good and it's done, well, you may find out six or twelve months later you get sued, or something between the seller buyer falls apart, which you think, Well, that can't happen, the deal's done. What could possibly happen? Well, it can happen badly. Things can go bad after the deal is done.

Yeah.

It can happen real bad. We just finally found out that just talking about time, like you said before, things can take so much longer. We have been waiting on exhibits from the seller on the seller side for the APA asset purchase agreement for like an extra few weeks than we wanted.

And the bank has come back to it and said it's like this is our closing date, which is really good because it's given us a timeline for them to work towards. So we're hopefully closing on one at the end of this month, or we should be closing on one at the end of this month.

Yeah.

You're great. Now, when you've looked at five hundred deals to narrow it down to two acquisitions and congrats on those acquisitions and I'd love to dig into them. When you look at five hundred of these, what kills a deal for you in the first ten minutes of looking at it? What's a clear walk away? And then what's I need to find out more about?

Could usually be right, right. I mean we structure ourselves in e-commerce, so we're always really staying within our e-commerce channel first and foremost. So it's pretty easy to identify very quickly who has their stuff in order and who does not based on the kind of package they present.

It doesn't take very long for you to realize that if the package is as disorderly as some of the ones we get, we can kind of just discount that as a you know write off of time and move on. You know, the deal either looks better the farther you go or it looks worse and you turn you know try not to spend too much time on things that start looking bad, thinking they're gonna get better the longer you look at it.

That's like going to a bar expecting to get drunk 'cause you're wanting to pick up a girl only because you know she's gonna be ugly, but you're gonna keep getting more drunk just because you think he's gonna get more beautiful. It's never gonna work out well for you.

So yeah, we can see pretty quickly if they don't have the right financials, the package, the pro forma, the business plan, the exhibits, disclosures, side deals, side agreements, anything that's in full transparency and we see certain things that indicate that they don't have that or that they should have provided it and it didn't come in the package, we'll automatically go, that's probably not a deal for us.

What are some of those things like if we can get specific, like what would some of those things be that you're like…

Yeah. Lately it was full business plans written by AI. Just blatantly, stupidly obvious, right? And I don't have a problem with the use of AI. We'll talk about that because we use it, we operate under it.

It's a part of our infrastructure of how we manage the 30 brands we control. But there's AI for the sake of AI, and then there's just laziness, and then there's inexperience mashed with laziness.

Yeah.

And just blind trust that people like us are not going to pay attention to that or don't care about. And I think when you see some of those and you're looking at it and you're going, okay, this was clearly not written by somebody who understands the business, we'll quickly skim through those documents and find out how bad they are.

The tricky parts of those, if you get over that component or you see it's written and you're like, okay, this this is okay. You know, maybe they used AMA that didn't, maybe they had some time to spend. You can see the nuances and you're kind of, I can pick up on this. This had some human touch. This had some interaction. Then you get to the pro forma side.

You start looking at the numbers and the way they presented the numbers and stuff, and immediately it doesn't read right. It just doesn't look right, not formatted right, doesn't look like it was put together right. Looks like they copied and pasted from some other document that wasn't organized right.

And you can tell very quickly that it wasn't presented by somebody who actually knows the difference between cash and accrual basis. And you're like, what? How did you not know that in your business? And it becomes fairly obvious in the numbers that they don't know what they're talking about.

And then that the third one is when people are so good at both of those things that you get months into the deal only to find out that you can't due diligence your way through their bank or the accountant or the numbers only to find out that everything they created was vaporware.

Yeah, absolutely, it's one thing to get a P N L that is semi accurate and it's different to get a P and L that's created by AI that hasn't been verified and looked at. And you like to hang on a second, as soon as I'm doing due diligence on this and I'm just reconciling things from either bank statements, reports from your merchant account, stripe PayPal, whatever it is, like it falls apart. It disintegrates very, very fast.

Very quickly. Yeah. Yeah. Go ahead.

Yeah, I'm just saying it's just such a shame that you lead so many people, even great buyers down the garden track, down to find that's a big pile of mud, you know. Yeah. It's just ruining reputations and wasting their time and other people's time versus hey, get your books right and make it look good because it is good. Not make it look good because you can use AI to make it look good.

They just spend the extra money to hire the accountant and have them put their name on it and prove that it was done through a third party audit. That's not rocket science. It's something that takes a little extra time. It requires you to be in the details and audit what you should know about your business and make sure that's you know correctly put together.

And you know, you can get MBA graduates on Fiverr or Upwork now to help you write your plan because they need the extra money. Cause that doesn't really work anymore in the business world if you have an MBA, but they can write a business plan.

You know, we've done that before. Or just hired lawyers at times to go through and do quick due diligence for us on a case by case basis.

And you can even hire lawyers like great lawyers on Fiverr and Upwork as well, that are like they're just getting a little bit less work now and they're just so good and they've got so much business experience.

And they got time to do it, right?

Yep.

And they're hoping you'll push for the deal. There's that opportunity too. So again, I think AI for AI sake is the problem if you're trying to scam people. But you know, you look at enough of these and you just see the pattern of behavior and the numbers, the data, and the packages, and you can very quickly see which ones you just need to toss aside and which ones you need to go, you know, do more due diligence on and which ones look too good to be true.

Because there's those two, right? And here's what happens on at least a couple of those deals that are coming to mind as I say that out loud. And there was one in particular, we were really excited about this product.

I did a great job. The guys had the good DTC channel done well. He had the Halo effect going on. The social media was on point. And we kept going through this diligence. And as we get through it and we're kind of, you know, let's say salivating over the deal a little bit. We're getting to the conversations.

We're having multiple chats. We're like, let's fly out there and meet each other. We're getting real serious, you know, about putting a ring on this thing as we're discovering whether or not we should marry this deal. And he decided that we made him look so good that he didn't want to leave the company. He decided to not sell it.

Because right. So we got through that whole period of time and thankfully we weren't down for, you know, a letter of intent yet had not been signed, or he would have violated it and been fined fifty grand for wasting our time. But we right up to the point of signing the LOI, he backed out.

Now, thankfully he covered ten grand of the cost on it as you know, here we're sorry, here's ten grand, I'll throw that to you. You know, you didn't sign the L O I but it wasted your time and you paid for this stuff and you know, here's some money just to kind of make it better, which was good.

That was nice. However, you know, it was one of those that looked so good that once we were really excited about it and got excited about it, it got him excited about it and made him double think as to whether or not he wanted to even sell the business. And so that's what got him so excited, he backed out of the deal.

Wait, so that's crazy.

We signed an LOI right before the night before he backed out. So yeah, we put due diligence, we put money, we were ready to go to market, we were ready to do the deal. We were intending to do the LOI. He had as if he had signed the LOI the next day, decided not to back out that evening before the deal was done, he would owe fifty grand for backing out of the LOI.

So you'd put some money into a big backed out just before it, which I in some ways was the right time to do it, although we had expenses and time and months into this process that we were expecting months more going through.

But you know, that's one of those things again, there's a little bit of time every once in a while where there's a diamond in the rough. It looks again too good to be true. You get into it and it starts to look really, really good, and then you realize it is really good. And then the other person who was selling it thinks it's really good too and goes, No, I'm just gonna keep it.

Yeah. Yeah.

You're too honest, Neil. You're too honest, Neil like you've gotta you've gotta you've gotta give praise to the seller on what they've built.

Yeah, no hard feelings. I think it was smart.

Yeah, but it's also at the same time it's difficult because you don't want to share too much of like, Hey, we can do this to the business and this is where we see the growth. Yeah. I mean, to share a bit, but like it's like a game of like you need to you don't wanna keep all your cards too close.

You wanna be real and upfront and honest but you just hadn't signed the LOI thing.

Yeah, and your point is extremely valid. And just to clarify, we hadn't been in any of those meetings that were like, Well, here's what we would do with the marketing, here's how we would open the channels or something. It was just the realization that we knew we could do all those things and it was a perfect fit for where we could go.

And that level of excitement without details was just enough for him to go double, you know, question everything he was doing, which is fine. And I'm crushing it. I hope it's bigger and better than it was before. More power to it. But it's just frustrating.

Five years and you're like, Hey, do you wanna buy it now?

Yeah.

The other one is the deals that are good going and you're six months into it, seven months into it, and you're like, Man, this is good. You sign an LOI, you're already down to what feels like the last mile of due diligence and paperwork and negotiations and do we match each other's, you know, profile and life and goals and purpose and all these things that, you know, really kind of drive that conversation and then they ghost you.

And you're just ridiculous, isn't it? You can't get an idea. Like why are we being ghosted? No phone calls, no emails, no returns, no thing, you know, even sent letters, nothing back. Like they just ghosted us. And I was dumbfounded.

There was one of those last year. It doesn't happen very often. It's kind of rare actually that you get that far in the process and somebody ghosts you. That's usually way beyond the etiquette of a normal business deal. It's another thing for them to be pissed off, yell at you, call you names and say this whole thing.

Yeah, which is fine, they can do that and be angry, be mad, get in the face. We don't care. We're doing the you know, figuring out the deal, let's do it. But just to flat out ghost us, just disappear for whatever reason. And they're not a small company. So it's like you didn't just crawl behind a bush somewhere and disappear, dude.

It's like you know, it's like you didn't wander off into the outbook back, you know, and and and fall off the face of the earth. You literally know where you are. Like, what the heck is going on? And you don't want to be creepy and like to fly out to other places of business and get in their face, of course.

No, that's too much, yeah.

Nope, too much. But you're also going, That is really strange. I mean, I'm sorry, but sometimes people can be really strange too.

It's true. I haven't heard of this being ghosted after LOI months into me.

I have never had that before and no one I've ever talked to has had that. So I'm glad to be proud to be one of the first ghost age business deal people I've ever talked to.

Just too good at D, Neil.

No thankfully I wasn't the lead communicator on that one. I was in an interior tertiary position of the two who were having the primary conversations and I was being looped in as we were having other conversations as a part of it. But yeah, just very strange how that whole thing just went.

But you know what? It's okay, you know, like n there's no such thing as a loss deal, right? There's plenty of deals to be made, plenty of opportunities to go, and you know, we don't marry those businesses until they can prove their longevity, prove their worth.

And every business you acquire has some turnaround component to it, even if you didn't realize it because you get into it three, six, nine months down the road and you find the ghosts, you find the things they didn't exactly tell you, you find the things that they're like, by the way, and you're like, Well, why didn't you tell me that sooner?

Or, Hey, we negotiated this contract for this wholesaling or this, you know, manufacturing and then they required us to do all these things and we forgot to tell you, so now we owe, you know, half a million dollars in inventory that weren't it wasn't on the books and we probably should have kept that money when we do the deal and we kinda pulled it out of the account and gave it to the buyer or seller, excuse me, and and now that money's not there.

And so now we gotta go get capital of hey, where's the half a million coming from? Where's the eight hundred thousand coming from? We thought we were gonna have it's like, crap, you know, this kind of stuff happens, right?

In every single deal. In this last one we got just a notice realizing that they had gotten a demand letter sent to them and we're like, hang on wait what? Like we didn't know this like up until now and we're so close to closing. And then we have to, you know, restructure things and make sure it's not something that we're gonna legally take on.

And the risk to business isn't too great for us to bow out. And so these things can just pop up and it's I mean it's so far and it might have happened like six months ago for the seller and they've just forgotten about it and they've just Yeah, it's not their fault and it's great they brought it up, you know, before it before it was too late as well. Right. It's just a just a thing that, you know, that happens.

Yeah, wait it does. I mean the horror stories right and left. There was a deal recently I was on with my lawyer today and we were talking about a deal he had just worked through as we were updating on some other things and he's just like, Yeah, so the seller goes back and decides after he's got his money for he doesn't like the way the buyer's running the business.

So because he's a percentage owner, he ends up sabotaging it, putting the owner literally out of business and into bankruptcy. And I'm like, Man, that just means flat out mean. You got your ego and your attitude all wrapped up in it.

And so you got your money and he didn't care about the twenty percent. So when you do these holdbacks, of course, when you do the earnout periods and that kind of thing, you gotta be careful how you structure those cars and know the people you're gonna get into bed with. In this case, he had a twenty percent earnings over a couple years. And a business was handling its business, servicing its debt, doing okay, wasn't doing great.

So owner the previous owner just had a note or an earnout, but I'm sure did they have some authority to work in the business or what they actually had still had twenty percent ownership of the business and it turns out they can't sabotaging it a bit and causing it to go down until it eventually ran out of money and couldn't pay its debts and went into bankruptcy and caused the person who had the personal line against the SBA loan to go into bankruptcy too, because now we're back to him.

Yeah, I was gonna say that if they had a seller note or an annoyance, then the seller shouldn't have any authority to work in the business. So it's not just it's more so the equity that he had, which allowed some involvement in the business.

Yeah. I wanna ask about your two deals, Neil. Are you open to talking about what they were, how you found open finances price, open to whatever you're open to sharing?

Tell me about the second last one and then we'll talk about the last one. So this the second last one, where did you find it? What type of business was it? If you're open to sharing the multiple the price, the structure.

Yep. It was about three points and we ended at about three point two X on it because it was primarily an Amazon channel. It was a smaller deal, around three hundred thousand. It's on pace to do double that amount when we finish our year to date this year.

So we've already done a lot to increase that business. additional product lines, etcetera. We know we blew it up faster after we took over than we thought we were going to. So we ran out of inventory faster. So now we're in a re-up inventory because we ran through the inventory or we are probably at that eight hundred thousand six hundred thousand already in that business this time of year.

So that's just, you know, that's the way it goes. We just got a tiger by the tail. We kind of knew it and we went a little fast and ran out of inventory. So we got some 10,000 units coming in right now.

So we should be okay in the next round. And that was yeah, about a three point two deal. We left it because it was inside of our membership in this deal and we happen to know the previous owners.

We were able to kind of insert ourselves in between the deal a little and make sure the due diligence, the paperwork, the transition, that all the you know things were done correctly, legal up, papered right, helped them both make sure that they were there.

We acted like a broker without a broker fee because we were acquiring it. So we made sure that it was done very well for both people. They didn't have to pay more than they needed to to get, you know, get the deals done.

Everybody was very happy with the way the deal's done. The reconciliation period was ninety days. That went off really well. We had a true up that had no problems whatsoever with everybody getting their true up you know taken care of in the business. And now we're, you know, fifty-five percent of the ownership in that company.

He stayed on as 45% ownership. We maintain growth and operations. And when it hits about five million, we'll exit it. And it's gonna be well. It is now in the TikTok shop and we'll have Shopify next. We're moving into Walmart with it as well.

So we're omnichanneling it out of each of those primary SKUs, so we'll see it take off pretty well. I give it about three to four years before we're ready to exit that brand and we're gonna shoot for a million in EVITA before we take it out to market.

Congrats. That's so good to be Yeah, to find something, you know, to work with somebody that wants to stay involved and you've worked with them for a while before selling it. That's really cool.

My favorite kind of I put other people together. I just never got in between on the ownership side. It's kind of we'll just can sometimes just put members together and let them sort of hashed out and because they know us and they know them, there's a trust relationship. In this case it made sense 'cause we really liked the brand to say, Hey, how do we insert ourselves in here and also work, you know, the deal over here? And it worked out in everybody's favor to do that.

Yeah, that's great. What about this second second deal?

The second one was a lot larger. Yeah, the second one was that we were about ten million, ten point five somewhere in there. Top line revenue about two, two and a half, about two point two bottom line. And so we were happy with that. Omni channel, really, because they had Amazon and retail. Surprising, this is not always the combination you see.

They had Amazon and retail operations, had three, four big box retailers when we purchased this one and they had Amazon. No Shopify, no DTC, no real social media, no other games.

You know, they had an Etsy store that wasn't doing much. They really just focused on the Amazon channel, which led them to the relationships to get into the big box retailers and they took their capital and, you know, risked it to get into those stores. And that was a good match. You know, it actually ended up showing us a different way to consider omnichannel expansion. And that's one of the things we really liked about it.

Because now, my strength has been in digital marketing and online marketing, my connections and networks are in that space. And so, you know, immediately I'm like, well, there's no social presence, there's no DTC channel, there's no real Shopify effort, there's no TikTok, there's no Etsy, there's no Walmart, there's no other channels.

I'm like, we're just gonna go down the line and you know, just fire off all these channels. And so, you know, having the retail operations in your business, people don't always understand the complexity. So this deal came with a different level of complexity.

For sure.

In the relationship to the retail channel side and the, you know, intricacies and nuances of running net ninety or net one hundred and twenty on payables, which is not, you know, everybody complains about the D D plus seven on Amazon, which sucks. But try waiting for 120 bucks and you have to put a half a million dollars out, right?

That makes me a little bit more of a butt pucker than everybody's you know, I'd love to go to retail and then they hear the things and they're like, Well, I can't go to retail right now. Yeah. take a while to get there.

Yeah, it is a big challenge.

But that deal, you know, that deal took about 12 months to get done. It came with a few points where I figured it was going to come to an end with some personality types that weren't, you know, getting things figured out. It came with a kind of a partner structure that ended up being more of a liability than anything else, and they tried to sabotage it, but unsuccessfully did that because they axe you know, in the way that they handled the deal, they were getting cut out of the deal. And because of that, you know, they thought they had some legal precedents. And like I tell everybody, if you haven't been sued in business.

Once, twice, or for some other reason of either some possible justification or just out of frivolous, you probably aren't trying hard enough in business at all. You might want to try a little harder. That didn't work because they had no case. So they tried to make the whole thing just fall apart and it didn't.

We ended up with a seller note on there on a five year arrangement for the current person that was the buyer, and he's got a position in the company and he's actually doing really great as a more of a creative lead kind of back in, you know, where he loved to start things and do things. He's doing a very good job of that.

And we brought in the additional operations team and DTC side of the house and really opened it up and brought on it turns out Target Plus c was coming, you know, we didn't know that, but about four months after we took control and we're in the you know final stages of trueing up the business and getting things done, Target Plus shows up and it's like, Hey, we're here now, you know, three years later. And that's like, well, that's cool, let's get this done. So Target Plus is something that is finally getting reconciled. It took about five months. It's one of the slowest channels I've ever seen to get opened up and moving.

But I'm hoping it has great possibilities for us. as we get that moving now, it's great to see that on board and it's a kind of a unique way that they do it. And I'm, you know, our brand and market for this product type being in the arts and crafts space to do very well, I think, over there.

And then the deal with Michaels that was kinda hanging out in the background also came to fruition and we helped negotiate that deal and bring it to the table. And so Michaels is on board as of about two months ago.

We signed our first POs and got our first shipment out the door, and they should be hitting stores any time soon as we come into the busier time of season for this kind of business model. So that's opened up. So there's six big box retailers now.

That's cool to expand the retail. That's really what about how you finance that and structure it if you open the GN?

We got involved because the buyer came and really realized he'd bit off more than he could chew when he got into the SBA side of things. And the way that the seller you mean or the buyer?

You Okay, so you worked with the buyer?

Fire.

We ended up working with the buyer as the senior management of record because he realized he'd bitten off more than he could chew, both experience financial and a whole lot of other things.

And he came to us through a mutual relationship and said, You guys, you know, I know where you are and what you can do and we spent about two years getting to know each other and one year was it that was going through this business deal with him to basically be an outsourced voice to get into the, you know, due diligence and make sure it was done correctly on his behalf.

And because of that, you know, we ended up owning the bag, unfortunately, because of that partner deal I mentioned earlier that went south. But he said, you know, I'll make you whole, I'll make this right and we have to strike a deal that I think will work and at some point in the future, where we'll be able to help him control and manage that under a full charter agreement.

But at this point he is, you know, seeing the business turn around, he's seen the growth of the opportunity, he had an SBA loan attached to it. And we've been able to, you know, service that debt, grow the company, advise him through the process and make sure that he's on the up and up.

And yeah, I'm excited to see where that one goes. It has huge subside and potential. We're just now cracking the right structure of offer for the DTC side. So that's really starting to gain traction, which is great. And it's got some, you know, really large competitors on the upside.

It's number four in market share for this style of brand and product. But you know number three and two are fifty and seventy five million and the number one's over a hundred million.

So we got some hills to climb and some opportunities to grow and some market share to keep tackling, so there's a huge upside to it. And that's what we're really busy working on right now.

Curious, I think you said it was a ten point five mil acquisition. So with SBA, I'm sure he had a lot more finance. I'm sure he just had a small portion of SBA because SBA can typically get you max, like seven or eight mil.

Yeah.

Yep, so we have a three year write off deferral on the additional difference in order to meet the SBA requirements.

Right. Okay.

Cool, awesome. That's yeah, congrats. I congratulate him. about the relationship and congrats for you guys on making it through and and working together to you know been fun, man. It turned into a little bit more of a little different structure than we anticipated it to be.

Of course every deal ends up being like that. But it helped us, you know, it helped us focus on our place in this. You know, there are kings and there are king makers. And I think what Voltage and my partner and I have discovered in thirteen, fourteen years together in business and the way we've done our operations and stuff, that, you know, we're okay being king makers.

We're okay.

Helping other people succeed at greater levels. We're okay being the guys that not everybody knows about. Don't have to be so grandiose. I like podcasting for some reason. I enjoy people like you, but for the most part I'm an introvert. And I don't. I just like to stay focused on the business and do what I know.

I'm not a golden retriever by any means. And I think that you know, that's finding our place, finding our purpose in these kinds of deals, finding where we fit the right way to do it, and really staying in our lane. You know, we are not trying to be braggadocious, but we're very good at our operations.

We're very strong in what we do. Our systems and processes are extremely good. And they've only become more enhanced with AI in the last couple of years. You know, we've run so much into SOPs and skills and building connections and we've got certified as a solution provider with Amazon.

So one of the handful of people who has actually, you know, what's called SP API access to that system. So I can read and write. We built our own MCP. And so we can literally handle all of our brands through skills and tools that are managed on loop engineering now, that really creates so much automation. Literally, we can't. I wrote the book on one level of automation two years ago and boy has that changed a lot in two years. It's becoming a self fulfilling prophecy.

Yeah.

Crazy, isn't it? Yeah, I agree with you and I feel very the same in being a kingmaker. It's nice to just know how to like and stay in your lane and be good at what you do and not need to rush into trying to be this amazing entrepreneur when you're just great at making other people insanely good and successful as entrepreneurs.

And you don't need to have much fun online. There is I mean, when you g in a world of social media where there's so many people that do want to be kings and queens and and look at me, la di da sort of thing, then on the inside that you know, there's a lot of people that are doing that that are introverts that are really struggling to to keep up that image.

Can't bank likes. You know? Yes. Likes. I can't bank likes. And I put out podcasts in every day and they're very tactically operated and I laugh at times that I keep going because you know, they get like five or twelve views on YouTube and I get hit up a hundred thousand times a week by people going, We can help you with your YouTube marketing and I'm like, Well, I don't really I don't really care.

Yeah.

He can't.

The podcast does well on its own but and and it's it's going out continuously and I take gip don't keep gas but that's really just to keep the conversation rolling at the level.

Honestly, you know, a client to you is worth so much more than any client for an influencer. You really don't need that many views.

And I'm not looking for thousands more energy to do that. We are running a full operation as it is. I've kept my membership very small, three hundred and something people in town since twenty nineteen. So I'm very selective about who I let into my community.

Everybody signs an NDA and then we all keep it on the down low and we only share what we're sharing. That's why I knew two years ago what AI workforce and automation was going to do in the business and that's why I know it's coming in the next two years as we're already building and growing because that's how we're going to keep ourselves ahead of the curve.

And selling programs and courses isn't going to be the way to do it officially and I wanna come back to the financing of acquisitions. You've structured deals with veteran backed financing before instead of just cash, right? Is that correct? How does the first time buyer find capital partners like that? The veteran backed.

Partly through networking. You know, some of that has helped through the kind of groups and the circles we run in to find those who understand the business enough, understand what we're doing, or have a relationship that we can tie into to make sure that that's structured correctly.

That was a veteran back situation that occurred with the business, the last one we purchased, and it will probably be the next one we do. And it is really meant and intended to create operational partners who have more purpose and drive in their life than just business and finance.

And so in that structure it gives the opportunity for them to teach and learn and we can build other, you know, veteran operators into that. Give them an opportunity as a veteran to come in.

So how does that work, Neil? Does that mean that they have a bit of cash and they just wanna invest but also be operators as well?

No, they come into the business ownership position. It is our goal to again as the kingmakers empower them to become CEO operators. So they become trained, mentored, coached over years that we work with them and and build them through the process of understanding the corporate component of it, the financial component of it, the management and daily operational components, the forecasting and inventory planning, and the specifically, you know, cash on cash basis of a financial operation, what it takes to churn three or four times a year, and really understand the finances of that and what's required to capitalize it.

And then we hope they bring the networking connections they don't have while training and mentoring them on it so they understand exactly what to be, you know, what to do. And their responsibilities grow with the goal of getting them into a CEO operator position and ourselves into just a subjective position into areas where we find we're focused. I stay on the marketing side. Reed stays on the financial operation side as more of the C CFO CEO falls to that operator. But we don't start them there. We train them there.

Yeah, of course. We give them, you know, we give them a sounding board. We become a board of advisors in the business. Ones that have control and authority to ensure things are not screwed up. but also give them a capability to to lift them up and grow them up in that process by training them and mentoring one on one.

I love that. I love that. And at least like you said, this is just through a network, like this is just through some people in your community.

It's a pyramid, man, and not a scheme. It's the pyramid that where you start out here in business, it's a long, wide lane. And the longer you go and the farther you go, and if you're watching me on the podcast, you see I'm making you know, I'm making a pyramid.

Then it just gets smaller. And the community gets smaller, the group you get smaller, the next level of people you get smaller, you know, and you get introduced to the guys who know the millionaires and decamillionaires and the decamillionaires are like, Hey, we know you, and then it's like, well, here's my friend the billionaire, and pretty soon you're in these groups where you know the period just goes up and pretty soon you're kind of setting in this area within your niche.

You can kind of move lateral across that network to different locations of business types. And, you know, maybe this guy's in real estate over here, and this guy is in oil and gas over here, and this guy runs a huge series of franchises over there. And you start making those relationships and you find out very similar, you know, backgrounds.

You find family, you find purpose in what they're doing, because they're not at the same, you know, level as the people who are struggling to get there anymore. So their drive and their purpose and value are more about how they move their life forward, move their family, move generational wealth forward, you know, keep more of what they have and less in taxes and you know, similar kinds of conversations across the board.

And then it's just making sure that you keep your nose clean, and walk in integrity. It's there to get this you know, groups get small. It doesn't take a whole lot for you to screw it up if you're not careful.

You know, you have to stay up on a business and you have to be verified to, you know, show what you do. And that's one of the things, you know, it's easy for us to do now with our systems and connections is verify the data.

Not a lot of people in our position can say, well, this is how much we actually do, and here's the business we run, and here's the P and L that this is this, and you know, it's all verified data because we actually do it.

And is a very critical part of it. and it becomes trust. And I try to instill this in my people I speak to, and of course my kids, right? It really is true. It takes a lifetime to build that reputation and you can destroy it in thirty seconds.

Yeah. So you gotta be very conscientious.

It is so important to have good trust. Yeah. Like yeah, you can run off and cut corners and grab deals and money and stuff like that, but you know so much more important the higher up you go.

Yeah, it's so it's Yeah, you don't last you you don't last long at the top. No. Like you said, if you think about kings, like the king can't cut corners, they have to be elected the king and that's because of reputation and trust, right?

So with these now you're the e com e com guy. With an e com brand, once you've bought a business, what's the first ninety days look like once you've owned it once you own an ecom brand and what do you do, what do you not do?

That's right. That's right.

And then what do you look for, like what are your typical first steps to getting scale after.

So the first thirty of that ninety, we don't change a single thing. No one's right fired, no one's removed, no one changes banks, no one changes passwords, no one changes things that are not within control during the LOI period when some of this structure of the ninety day handoff is going to occur.

My same specific advice.

Yeah, don't touch anything for the first thirty days. Your specific outcome is to learn the names of everybody that's involved and the connections for every system person, agency, VA, and anyone connected to the business that maybe you didn't have a time to spend with farther than questions on the LOI call, especially if it's remote or other, and a time to get on site. You should go meet people if there's a location to go to and get you know, shake their hands, find out who they are, get in FaceTime with them. That's the first thirty days.

Right, take it easy, go slow, don't come in like a wrecking ball. So the next thirty days are really, okay, we've mapped, we're now mapping out things that we think can improve, things we think we should forward. What does it cost to forward it?

What are the gotchas we didn't see now that we're inside all the accounts and you know, what are the things we didn't get that we should have gotten control of? Where are any potential skeletons that we need to map out or change or address?

Right. And then the next 30 days into that first ninety is what do we actually change? What's most important to change at that point?

We always want to be very cautious. A lot of people want to run in and say, well, we need to do all these things and fire up social and get our paid traffic and do this thing and go, you know, bang on more doors and et cetera, et cetera, et cetera.

And you're just simply not going to know enough about the nuances and who has that intellectual capital in their head that wasn't written into an SLP and who knows particularly intricacies of the business that weren't described or because the conversations never went on enough times during the you know LOI period that this is that chance to kind of start fleshing out some of those things.

So that'll really be the goal of the first ninety days is just to kind of weed, you know, yourself into a non threatening position with anybody who's involved, you know, no coming in mass firing and all this nonsense. if there's employees, there's always not a lot of employees in some of these businesses at the level we run because they don't need it.

They don't have a lot of employees, which is pretty awesome. And then, you know, that last particular ninety is just like what are the most critical impactful changes we should be making?

what we could be making, but what should we be making? What should we be doing? And really that's planning for the next 90 days, right? So up into 180 days. It really gets down to what are the things that we would really impact in this next quarter of business based on time of year, based on when we took control of the business, based on the business's run potentially at seasonal periods of time.

If it has any of those effects, we want to get control of that. You know, e-commerce, it's around mapping out the manufacturing, the redundancy in manufacturing, the timelines for shipping, how are they doing their forecasting and planning beyond what they told us and showed us, what is actually happening in the movement of that product, and then really making a plan to see how we optimize that.

And that becomes the next 90 days of clarifying things. And just in scope, we're nine months into that post acquisition and the first person is getting let go. Because as we've mapped this out over nine months, we see one role that it has created some redundancies that other roles we're not doing and people are very strong in what they do and there's more work that they can do that should have never been, you know, positioned in another person at all in the first place.

So this one individual has to go. And they're contractors, not employees. So we end up kind of terminating the contract. But that's it. But there were no knee-tractions and we didn't do it on the, you know, right up front. And we've taken enough time to figure out how we map out all the roles and now we're mapping efficiencies and, you know, it's a slower process.

But the whole point is to keep the business rolling, keep things stabilized, keep the, you know contracts right, keep everybody going in the right direction, and only start changing the processes of efficiency or the SOPs as we start seeing where they can have maximum impact. And those things are just now, you know, rolling out into the business nine months later.

Yeah. I love that. I'm all about just learning the business and seeing what's working really well, what's not working so well, pour more resources into what is working really, really well. And like you said, cutting out the inefficiencies. Yeah. It's just a resource allocation until then you get to a point where you kneel, you're like, Okay, let's we can we're optimizing and humming in this fashion.

Do we start doing some tests and opening up some other channels like and be more omnipresent in some because we can actually track it now. Right. We've actually got, you know, internal dashboards and data pulled together and you know, with our MCP connections and Cayman data we use within our enterprise, we can now see and map out how those different channels are being impacted, how the Halo effect is impacting different pieces of the channels.

And as we start ramping particular initiatives like TikTok shops right now, how is that going to be affected? You know, we're just passing the first six thousand. We know there's, you know, six million a year in opportunity there. We're just passing the first 6,000.

So we're like, well, how do we make that difference between here and there? And what's working, what's mapping, what can we control? How is it affecting the other channels as we push this out?

Obviously, being conscientious not to eat all profit into growth at this point, although we're very growth centric. You know, we're gonna get to a point, I think, where we might in the first year, you know, take that first two million and push it all back into the business.

For growth. And that's kind of how the PL is going to end up working right now in our cash flow plan, which we structured very strongly in an actual driven cash flow plan that now operates, it wasn't there, now operates within every unit and every piece of the business. We can have full transparency in every movement of the cash in our business, thanks to the way my partner structured that.

Not what your ROI is.

What are we actually pushing out, right? What are we actually pushing out on the initiatives we're doing? Are we actually, you know, tracking the real numbers? And in this business at the bottom of that line, it's the long term value, it's LTV, the lifetime value. What can we see as a person who consumes our products and comes back and how often they come back?

Did they come back to the same place twice? Did they go to another place? They go retail here, but they bought on Amazon here, or did they end up in Walmart over there? Now can we track that view and a lifetime value and come up with a really solid number?

We're about to literally do that. So I can come down and say, okay, an average LTV customer for us is four hundred ninety-two dollars and thirty-three cents. And I got my team working on this right now because it's like I want to know what that number is. You have to get that number as a halo of the company, not just as a channel.

Yeah.

So we're really close to kind of pulling and consolidating that data together. And that may seem obvious to some people listening to this, but it's not obvious in an operation that has been this disjointed and it has a level of complexity to it, that it's not normal thanks to the retail operations to get all that kind of figured out.

Retail is so different to online and it's got some different operational complexities that we've been looking at and acquiring with clients.

Absolutely.

I swore I wouldn't own a warehouse. Right. And now I have a ten thousand square foot warehouse. So yeah. It's smaller than we had a twenty one thousand square foot warehouse in the past. We don't have that anymore. And now we're looking at it going, Why do we even have a ten thousand square?

We hate this. Like how do we get out of this thing? So now we're interviewing for cost and and just operational efficiencies or interpreting things like three PL and and things like that.

So we're on right now.

Absolutely. Yes. We've integrated with Ship Hero, which is great. We really enjoy their team and we really enjoy where they're taking us. The online and connectivity to the warehouse along with channel and retail operations is bringing in a very good level of simplicity into the product and inventory management levels that we have not been able to get previously without the systems that they didn't have in place that are now in place.

And so as we look at three PLs and stuff, we can quickly see how we'll be able to look at efficiencies, movement of product, and of course profitability of product, cost of goods, much better look, faster look at our unit economics, which is really gonna help us grow this business because we can see where we're going. And yeah, three PLs.

Yeah.

Yeah. You got a business that you're looking at acquiring and it's got some warehouse or some owner involvement in the warehouse, the value add is like can you how like where in the country are you? Is there the ability to maybe go there for a month and then learn it for a bit?

And then step out for another few months whilst you look at three PLs and then go back in for another month and make a transition and that's your value added. Like you're buying something that's semi owner operator dependent and then you come in and you can make it not operator dependent, which adds your multiple can increase if you do just go to market again.

Well that's exactly right.

Then have a business that you're like, well hang on, like this is great to own because it's I've got more control, it's more systemized with a three PL that actually knows inventory better than what I do. It's a really good value ad.

And you these systems like Walmart has their own and Fulfilled by TikTok has their own and Amazon is FBA, of course, and they have all these multi distributed and now there's a AWD for that as well, which can do third party. And so we're looking to not like to change so much of that because we have warehoused inventory in those locations, but we also have multi million dollars of inventory setting in the warehouse in California in one location, but not distributed for retail operations or even in some cases in a temporary drop shipping when it's all located on the west coast.

So we're looking at three PL going, Okay, you know, we have other distributed warehousing through these other partner channels that are going to allow us to get to fifty or a hundred million in sales without having to re-up our infrastructure, which is a huge component of economies of scale.

And so we're looking at that going, okay, so now what? Well, we get the rest of that warehousing into the different locations that it's going to be shipped ref relatively to in different locations around the country and split that inventory out of one warehouse and into maybe two or three or four with p you know p three and a three PL partners, excuse me, that we're looking at right now who have that infrastructure and will allow us to do that. So our inbound and our outbound shipments to retailers won't be as long or as difficult as they are in one location right now.

Yeah. Especially the time duration and and and get more profitable as well.

Tell me about this book of yours. You're giving ten books away to the audience, which is awesome. Tell me about the book and then I'll let them know where they can go to get it.

Free.

Sure, man, in in simple terms, it's taken twenty years of business after leaving my IBM career in two thousand and seven, both offline and online businesses, digital, marketing, physical, et cetera, and combining them into the strategy that we've used to really build our e-commerce company over the last 13 years. And that is a five step process that we use in our business.

That's what's outlined in this book as a strategy of building your business to the exit. It's really keeping a focus on everything we've talked about today on the MA side in your business from the ground up all the way through to the exit, where the businesses are very much worth more than they are at any time during the business building phase.

So we can get paid, you know, while we're building the business, we are really going to get paid with generational wealth opportunities when you do it right at the time of exit. And so the book really goes over that. And I talked to other experts in the podcast and stuff that helped contribute to the book on the different levels and areas of our playbook.

And that's baked into it. And it really gets down to how do I remove components of complexity? How did I do it in the 20 years of business? And what did I learn in both highs and lows, including being bankrupt at one point and having to figure my way out of that, to teach you what it really takes to have tenacious business principles that lead you through a strategy that creates generational wealth. And it's packed into that book.

And one of the things that I incorporated was workflows, processes, and optimizations and even what are called OKRs, objective and key results to ensure that your operation could do that. And that was pre A and the book was published in twenty twenty four. So I'm laughing because I'm literally seeing the book become a reality as our systems with K-n data now that we run have created exactly that.

The ability for us to run thirty brands with three operators. Our AI agents and operations now run twenty four seven and report and monitor everything from inventory to level to retail to tracking to omni channel all the way down to the ledger.

And it's run, audited, and maintained by our operations team who can literally prompt, question, and put loop engineering into the systems that literally make it almost automated income. and that is pretty crazy because I have one employee. Guess where he's located? He's located at the warehouse in California.

We have one employee, right? Everyone else is an operator who owns part of the business.

Neil, that's so good. Guys, to get that I'll put a link in the show notes. It's info.com for slash podcast free books. There's also a code, so this is only available for the first ten people, which is B O B V O L T G A G E. So you can get that from the link in the description. Neil, thanks so much for coming on. I really appreciate you.

My pleasure. Anybody who does pick that up, I'm appreciative. You'll get other information about how the AI stuff snaps onto it later in terms of expanding your thought processes as to what AI can do in your operations. So thanks for having me on, Jaryd. It's been a fun conversation.

Yeah right. Thank you.

Absolutely. I appreciate it. Everybody that's listening, thank you for listening and I'll see you on the next one.