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EP352 How to Buy a Profitable Business Without Starting From Scratch · Profit With A Plan

• 0:09
  Marcia Riner | Profit Booster®: Millions of profitable businesses are owned by baby boomers who are preparing to retire, and many do not have a buyer lined up yet.
• 0:18
  Marcia Riner | Profit Booster®: This creates a rare opportunity for entrepreneurs who want ownership without starting from zero. Yay!
• 0:25
  Marcia Riner | Profit Booster®: In this episode of Profit with a Plan, we're going to share why business acquisition may be more accessible than people think, and how an SBA financing can help lower the barrier to entry.
• 0:38
  Marcia Riner | Profit Booster®: And what first-time buyers absolutely need to know before making the move. Because sometimes the smartest path to growth is buying what's already working.
• 0:48
  Marcia Riner | Profit Booster®: So join us on today's Profit with a Plan podcast.
• 0:53
  Marcia Riner | Profit Booster®: Hey entrepreneurs, are you working too hard for too little profit? Well, welcome to Profit with a Plan Podcast, the podcast where we help businesses grow smarter, increase profitability, and build a company that's worth more, whether you plan to keep it or sell it.
• 1:07
  Marcia Riner | Profit Booster®: I'm Marcia Reiner, Business Growth Strategist and the Profit Booster behind Infinite Profit.
• 1:13
  Marcia Riner | Profit Booster®: Each week, I share practical strategies and expert insights, and real-world steps to help you grow revenue, improve margin, and build a stronger business.
• 1:23
  Marcia Riner | Profit Booster®: Today's episode is sponsored by Infinite Profit, where we… where strategy turns into profitable growth.
• 1:30
  Marcia Riner | Profit Booster®: But before we jump in, I have something special for you.
• 1:33
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• 1:39
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• 1:43
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• 1:51
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• 1:58
  Marcia Riner | Profit Booster®: Now let's get into today's conversation!
• 2:01
  Marcia Riner | Profit Booster®: My guest today, I'm excited to bring on Corey Parchman. He is a former NFL player, entrepreneur, real estate developer, and business acquisition specialist with more than 20 years of experience building, owning, and operating businesses.
• 2:18
  Marcia Riner | Profit Booster®: As the president of CorePar Development, Corey has led real estate projects, managed investment opportunities, and helped entrepreneurs to understand how to evaluate and grow profitable ventures.
• 2:30
  Marcia Riner | Profit Booster®: Today, he helps entrepreneurs, athletes, and aspiring business owners see business acquisition as a real path to ownership, wealth building, and long-term opportunity.
• 2:41
  Marcia Riner | Profit Booster®: He's also the author of Already Built, a new book coming out that shows how first-time buyers can buy existing businesses from retiring owners instead of starting from scratch.
• 2:53
  Marcia Riner | Profit Booster®: Corey, welcome to Profit with a Plan! I'm excited to have you on today.
• 2:57
  Corey Parchman: Marcia, thank you for that amazing intro. I was like, who is she talking about? I was listening to it, like, me?
• 3:03
  Marcia Riner | Profit Booster®: Yeah! You've got all that behind you, you're somebody!
• 3:07
  Corey Parchman: Thank you for having me on, I appreciate it.
• 3:09
  Marcia Riner | Profit Booster®: Yeah, so I gotta ask, you know, coming out of the NFL, you know, there's lots of opportunities, I'm sure, that shine their lights on you. Why did you pick business and business acquisition?
• 3:21
  Corey Parchman: Well, you know, I would love to say the honest answer is because I thought I was gonna play a million years, and I was gonna retire, and then start businesses, but the NFL actually means not for long.
• 3:33
  Corey Parchman: So… and people would ask me all the time, like, when did I start the plan B, or think about my retirement? And I was like, after the first day of practice.
• 3:41
  Corey Parchman: I realized then that I might not be in the NFL for long, so I knew then I had to start thinking about Plan B, which was starting a business, and kind of go from there. So, really early on in my career, I started the business process. It took about 2 years before I actually opened my own business, but in the meantime, I did a lot of research prior to it.
• 4:00
  Marcia Riner | Profit Booster®: Excellent. Well, I love the topic of business acquisition, because shortcuts are so much nicer. We all know that, oh my gosh, trying to build your business from scratch.
• 4:11
  Marcia Riner | Profit Booster®: is a lot of work, and very tough, and the probability of success is slim. So, why not take somebody's business that's already built and ready to go? I mean, I just… I love the concept on it.
• 4:27
  Marcia Riner | Profit Booster®: So, thank you for bringing this to light for… for the audience and listeners today. But, so how does one go about finding
• 4:35
  Marcia Riner | Profit Booster®: A business that's ready to go, let alone one that's gonna be a good set for them.
• 4:40
  Corey Parchman: Good question. Well, I think, to answer your first statement about why it seemed… wasn't a thought process lots of people have, is because I think that people think they gotta spend a ton of money to own a business or buy a business. I think that's the concept of who buys businesses. You always hear about, like, large equity firms or large holding companies, but you rarely hear about individuals purchase them.
• 4:58
  Corey Parchman: But it happens all the time. It just so happened now, it's gonna happen a little bit more than normal, because there are a lot of businesses that are gonna be for sale.
• 5:05
  Corey Parchman: But, you know, you gotta do your research. You have to know what you want to get involved with, and what you want to own. I tell my people that talk to me all the time, consultants, figure out what you want to do, what you want to own. Don't go by any trends, or what sounds good, or what in theory. Find out what you want to own, and make sure whatever it is, it's somewhere near your hometown.
• 5:23
  Corey Parchman: That way, you're able to be the real-life, in-person owner. And if you just talk to people in your local town, you can find out who's looking to sell, who's, retiring, and you can find it that way. And the best way I've found businesses is by doing the research, by building relationships.
• 5:41
  Corey Parchman: So I would tell someone that there's a number of ways. Of course, there's brokers online, that's a process in its own, but I would say, you know, build relationships, you know, do your research on what business has been around for 20, 30, 40 years, and kind of go from there. So that's where I would start. Look at what you want to own, and then do the research of what business has been around for a while.
• 5:59
  Marcia Riner | Profit Booster®: I like that. I love the fact that it's building a network of people and getting involved in your town. I know you, I know you do a lot in a smaller town, so I think that's fantastic. But let me ask you, so, do we want businesses that… that…
• 6:14
  Marcia Riner | Profit Booster®: we're gonna be hands-on in and actually, you know, turning the wrench and answering the phone, or do we want businesses that we kind of lean back and manage and oversee, yet, you know, not be heavily involved?
• 6:30
  Corey Parchman: I think in certain aspects, certain worlds, that is a process of owning a business and sitting back, but you and I know, if you're a business owner, you're going to be in there doing something. You know, I think it's important to be able to understand what you're buying. I think it's important to understand what you're going to be doing, because you want to be able to
• 6:49
  Corey Parchman: know how to grow the business, and know what the business needs and doesn't need. So I would think that your first year or so, you need to be in there doing those things, learn about the business. So you can, and your employees will respect you more if they know you know what's going on, and you're able to make better informed decisions if you're in there.
• 7:06
  Corey Parchman: you know, working and figuring things out. And maybe later on, get to a point where you're looking back and, you know, you're,
• 7:13
  Corey Parchman: looking to sit back, but I'm working with people who want to be hands-on, who want to own those businesses, because I think it's important for those owners who are selling that business to know that person who's buying is vested.
• 7:24
  Corey Parchman: So, if you're gonna buy a business from Retired Baby Boomer, most of them want to know that you're going to be there and continue to grow that business, because they knew what it takes to grow it, so they wanted to turn over to somebody who had that same commitment to take it even further.
• 7:35
  Marcia Riner | Profit Booster®: Got it. So what do you think about the trades businesses? Like, you know, where you need to have a certain skill to be involved in it?
• 7:43
  Marcia Riner | Profit Booster®: You know, such as a plumber, a contractor, gosh, even an attorney, or a medical practice. I mean, those need… those need hands-on and skills, and sometimes even licenses.
• 7:56
  Corey Parchman: Yeah, so a lot of my clients that I have a consulting service to help people buy businesses, come to me, and that's the first thing they say, because they've had heard online, that I want to buy an HVAC company, or a plumbing company, things of that nature. And I never, you know, discourage anyone from doing anything they want to do, but I want to give them as much information as possible.
• 8:13
  Corey Parchman: So they can be informed on what to do. And the one thing I talk about is, just like you stated.
• 8:18
  Corey Parchman: With those trades, you're going to license, you're going to need some kind of formal training, so if you don't have it personally, you're going to be holding to someone else
• 8:26
  Corey Parchman: who has that license and training. So I never, ever discourage anyone, but I tell them that this is something you gotta think about. If you buy this business, who's going to work for you who has a license, and how much leverage will they have? Because they're the ones holding the license.
• 8:40
  Corey Parchman: you may have to give up a little bit of equity in the business. So, you gotta be creative if you're gonna do it, but think about that, if you're looking to buy a business, if that person leaves, then where are you gonna be the next week or next month? So, I don't discourage anyone, I just give as much information as possible, and then make the decisions they make.
• 8:55
  Corey Parchman: But trades is the one I hear about a lot, but I tell people all the time, hey, make sure you have someone in mind that's going to be able to run that.
• 9:01
  Corey Parchman: They have a license, and I know personally, working in construction a lot, the trade industry is very, very tough right now, and it's very, very thin, so even finding someone, that's gonna be a challenge, but it can be done, but that's just one of the things I advise.
• 9:15
  Marcia Riner | Profit Booster®: Yeah, because, I mean, you also have to understand the nature of the business you're getting into, and if you're not a plumber, or something in the trades, then you're going to come in and go, well, I know business, right? I've got my business degree, or I've experienced businesses, or, you know, I worked in some form of business before.
• 9:35
  Marcia Riner | Profit Booster®: But then that's different. I mean, you gotta know the lingo, you gotta know, you know, what's going on and what to expect.
• 9:41
  Marcia Riner | Profit Booster®: Really.
• 9:42
  Corey Parchman: Yeah, so I inform and I educate my clients on learning about the business first. And, like, once again, let's say they do want to own a plumbing company. Well, learn as much as you can
• 9:54
  Corey Parchman: about the business and how it's ran, so when you do hire someone, you know, have an idea what's going on. So, it can be done like anything else. You have to do your research. Just because it's not a startup, you still have to put in a certain amount of work, and I think the advantage of this is, owning the business is tough.
• 10:09
  Corey Parchman: But if you only have already started, that's one part of the toughness, is you've already got it out of the way. So now you learn how to operate and run the business. The startup aspect, you're learning everything going on, how to get customers, marketing, what works, what doesn't work, but if it's already started, now you're working on how to take it to another level, and I think that's the key of acquiring a business versus starting one up.
• 10:30
  Marcia Riner | Profit Booster®: I love that. Yeah, to get rid… to get past that first hurdle, I mean, my goodness, that's… that's the best thing. And then they've got… they've come to market, right? They've already got clients that are lined up, or customers.
• 10:41
  Marcia Riner | Profit Booster®: You know, they've already got experience and visibility in the community. Now you're just fine-tuning, and you're tweaking, and you're making minor adjustments, not big, heavy shifts.
• 10:50
  Marcia Riner | Profit Booster®: Like you often do when you're starting a business. So I like that idea. So what kind of industries, are you seeing right now that are attractive
• 11:00
  Marcia Riner | Profit Booster®: And, create great opportunity for business,
• 11:04
  Marcia Riner | Profit Booster®: I wouldn't call them business owners yet, but those seeking to become business owners and buying someone else's.
• 11:11
  Corey Parchman: I think it's a wide variety. It's depending on what you want to do, what you want to get into. It can be from owning a restaurant, to owning a pest control company, to owning a window cleaning company, to owning a flower shop. There are a lot of baby boomers, only 6 million jobs or companies that are going to be up for sale.
• 11:26
  Marcia Riner | Profit Booster®: So, Mr.
• 11:26
  Corey Parchman: depending on what you want to do, and we talk about what's called a buy box, and I'll talk to my clients about that. What does your buy box look like? What are the industries you want to be in?
• 11:34
  Corey Parchman: how much cash flow do you want to have? How much can you actually spend on this business? So, we go through a whole process, when it comes to, to buying a business, and we call it the buy box. We can get an idea of, okay, what are the things that you want to take off the list of the business?
• 11:49
  Corey Parchman: and figure out what you want to do. You don't want to go in randomly and just pick out any random business. You want to have a strategy going into it, and I help the clients create that strategy so they can stay within that framework in order to find a business.
• 12:01
  Marcia Riner | Profit Booster®: Love it. Yeah, it's so important. Yeah, you definitely want to be in the zone and understand that piece on it. All right, so let's talk about that. You kind of sprinkled something in there and said, you know, you don't… you gotta know how much you're going to spend, right? How… what are we talking about investment-wise, when someone wants to buy an existing business?
• 12:19
  Marcia Riner | Profit Booster®: I know that there's opportunities to find financing, but what do we need to have? What should the future business owner have available as funds?
• 12:28
  Marcia Riner | Profit Booster®: To operate the business.
• 12:31
  Corey Parchman: Once again, it depends on how big of a business that you want to own, and how you want to run it. And I'll get into it a little further, but, you know, one of the programs we use is called S… about SBA, it's called 7A Loan. And basically, what happens is the SBA
• 12:45
  Corey Parchman: will give you 90% of funding. You have to bring 10% of that funding in, so depending on where you want to be at, if you want to own a $500,000 business, you bring in $50K.
• 12:54
  Corey Parchman: And then you have to have some reserves for yourself also. And what happens is, the SBA is going to help you, walk you through that process at the end of it, to make sure the finances line up.
• 13:03
  Corey Parchman: But for the most part, you want to figure out how much you can invest into a business, but have reserves also. So, for example, if you want to buy a business that costs $500K, the FBA says, okay, as long as the business is cash flowing, check all these boxes.
• 13:16
  Corey Parchman: you know, we'll find that it's 90% of that. You bring in $50K. So now your 50K is in there, and business is purchased, but then you want to have a little bit of cash reserves.
• 13:24
  Corey Parchman: as that business is cash flowing, you still want to make sure that you're able to stay afloat and go from that point on to keep it established. So, I would just say where you are financially, and do the math, and we do the whole breakdown. We take your whole finances and look at where you are, what you can afford, and then what that looks like on the outside of it. So, we walk you through that entire process of, hey.
• 13:43
  Corey Parchman: How much can you actually afford?
• 13:45
  Corey Parchman: How much does the business cost? Is that business cash flowing? Is it cash flowing enough to where you want to get into this business? So we walk through that entire process, because, you know, there's steps to getting there. It's not like buying a car, and like, oh, I like that red color.
• 13:58
  Corey Parchman: There's a lot of due diligence you have to do.
• 13:59
  Marcia Riner | Profit Booster®: Absolutely not. You need to act… you absolutely need to go in there with your eyes wide open and your pocketbook wide open. So yeah, so, you know, the thing that you brought up about cash flowing, just because it is positively cash flowing, when you change an owner, and the primary owner, you may have a hiccup along the way.
• 14:23
  Marcia Riner | Profit Booster®: You know, especially in the first year where the customers feel a little maybe uncertain about the new ownership or, you know, market changes, or whatever, so you've got to have that slush fund, in your back pocket for just in case to keep everything flowing. You could even lose an employee or a key employee, God forbid, you know, that would get, get out of there.
• 14:48
  Marcia Riner | Profit Booster®: So what kind of reserve, percentage-wise, or like, you know, if we continue with this $500,000 purchase and the $50,000 down payment, what kind of reserve would you expect somebody to have in their pocket?
• 15:02
  Corey Parchman: I would say about $10,000 to $15,000 in reserves.
• 15:05
  Corey Parchman: That's all? Yeah, it's not much, because, once again, the business is already cash flowing.
• 15:10
  Corey Parchman: And what you've done is, you look at the numbers, and you make sure, okay, if it's cash flowing, how much of the owner am I making on this business already? So you're already going to have cash flowing in your pocket for you as the owner. So we look at what's called EBITDA, and what happens is, basically, I say to myself, I want to buy a business that's cash flowing enough
• 15:26
  Corey Parchman: to where I'm paying myself $80,000, $100,000.
• 15:30
  Corey Parchman: That's gonna… a lot of numbers, we have to research on that, but that's kind of going into it. So day one, when you own that business, you're making money already as an owner. We put that in the number process, the purchase process, to make sure it's cashed on enough to make money for you. We always want to make sure it's cashed on at least 45 cents over each dollar.
• 15:48
  Corey Parchman: So basically, we don't want to buy a business that's cash flowing one-to-one, where, you know, you're making $100, but you're going out $100. We want to make sure it's about 45 cent over. That way, that also covers your salary going into it. So day one, you're making a salary on this business. The main thing…
• 16:03
  Marcia Riner | Profit Booster®: Which is completely unusual in a startup, right? You know what I mean?
• 16:06
  Corey Parchman: It's possible, that doesn't happen in this startup at all. It happens in this. And these are the things we talk about when we're buying a business, is making sure it cash flows enough to cover what you want as a business owner. Sometimes you be strategic and say, okay, I'm gonna take a little bit less.
• 16:20
  Corey Parchman: and grow it in the next couple years, or I'm going to take it all up front and keep it going? But you want to make sure when you buy the business, it's cash flowing enough to where… because you're going to commit a lot of time and effort to this once it's purchased. So you want to say to yourself, can I commit enough time and effort to take care of this business? At the same time, pay myself enough
• 16:38
  Corey Parchman: take care of my family. But as any business owner knows, whether you're a startup or whether you're acquiring a business.
• 16:45
  Corey Parchman: it's going to take time to get to where you need to go to, and be smart about it. So, we talk about all these things when we talk about buying a business. You know, everyone will think a million dollars, I get that, but what's realistic? What can you really make on acquiring a business? So, we go through all that process also.
• 17:00
  Marcia Riner | Profit Booster®: Exactly. Okay, so, this is that… this is actually sounding a lot more easier than, you know, I expected coming in, because with the SBA loan, with your structure and support that you offer, you're really giving, potential owners a strong foundation to build off of.
• 17:19
  Marcia Riner | Profit Booster®: So, with that foundation, what other skill sets should they have? Do they need to know how to market? Do they need to know how to do bookkeeping? What other skills should they know when they're coming in, so they're prepared?
• 17:33
  Corey Parchman: Good question. So, a few things. So, once again, I recommend that you, you know, start a… or acquire a business you know about.
• 17:41
  Corey Parchman: But, once again, everything's already in place. If that business has been cash flowing, you just take out what they've already done and start duplicating that over and over again. The other thing we talk about is.
• 17:51
  Corey Parchman: Creating a deal with the previous owner.
• 17:54
  Marcia Riner | Profit Booster®: Hmm.
• 17:55
  Corey Parchman: to…
• 17:56
  Corey Parchman: do a little bit of owner financing, so they still have skin in the game, but so they'll also train you as you go through the process. So we recommend that we talk to our buyers, to talk to the sellers and say, hey, do you mind staying on 6, 8, 12 months until I get this thing going? I know you mentioned before about sometimes losing customers.
• 18:13
  Corey Parchman: This is where you want to have a relationship with the owner, to say to him or her, hey, do you mind sticking around as we develop and grow?
• 18:20
  Corey Parchman: To make your customers feel comfortable.
• 18:22
  Corey Parchman: with the new owner. So, these are the things we talk about of when you do purchase a business, is build a relationship with the previous owner.
• 18:29
  Corey Parchman: So you can have that smooth transition with the employees, also with, you know, the customers. The first 90 days, you want to sit and just learn the business.
• 18:38
  Corey Parchman: So, what you want to do is keep that seller, that seller there, the business owner there, there, so they can teach you as much as possible. So, it's a smooth transition. But once again, it's about building relationships, and they know you're not some big equity firm coming in.
• 18:52
  Corey Parchman: You're a person who wants to keep that business going that started, so build a relationship with them, and learn as much as you can. In the few months, they're willing to be there and help you out with that process.
• 19:01
  Marcia Riner | Profit Booster®: That sounds amazing. So, what…
• 19:03
  Marcia Riner | Profit Booster®: probability would we expect the business, the current business owner, the seller, to want to stay on? So sometimes it's either they're selling due to a health issue, or they're selling because, you know, they're just done, you know? I mean, things could be in the way. A lot of times it's uncontrolled situations like health, or, you know, finances, or, you know, they have to move, or something that required them to sell that.
• 19:28
  Marcia Riner | Profit Booster®: But how do we… how do we really get them to… to stay on and be an active participant and not…
• 19:35
  Marcia Riner | Profit Booster®: You know, do that head-butting of, hey, this is my business now, we're gonna, you know…
• 19:39
  Corey Parchman: You too.
• 19:40
  Marcia Riner | Profit Booster®: Sounds kind of messy to have the business… the old business owner on, even though there's great benefits.
• 19:45
  Corey Parchman: Yeah, so I would love to say in a perfect world that every business owner wants to stay until you are ready to go. I would love to say that it's not possible. And I would love to say that it would be great
• 19:55
  Corey Parchman: if you had the business owner there working with you. But as you are the new acquirer of the business, you gotta figure out what works best for you. You're now the owner of this business. You're now controlling, you're now responsible for the business. So I think you have to, once again.
• 20:07
  Corey Parchman: Build a relationship with the previous owner, but figure out where you want that relationship to start, and you want to end at, because you're responsible for it. So you are the business owner, you're not going into this thing blind. I would never consult anyone or work with anyone who's going into this thing blind, saying, hey, it's gonna work out by itself.
• 20:21
  Corey Parchman: Before…
• 20:22
  Marcia Riner | Profit Booster®: No way!
• 20:22
  Corey Parchman: Brilliant.
• 20:23
  Marcia Riner | Profit Booster®: Before…
• 20:23
  Corey Parchman: take on a client, I'll do a due diligence with them, because I don't want to waste my time or their time, so I don't want to take on any client. I have to know they're committed to owning a business.
• 20:32
  Corey Parchman: And once I know they're committed, then they're willing to do the things it takes to keep that business going. Once again, if it's build a relationship with the previous owner, and that owner says, hey, I don't want nothing to do with this place, they have the capability and the education to understand
• 20:44
  Corey Parchman: you know, what's going on. And that happens a lot. You know, you have business owners say, hey, I'm retired, or you have someone that…
• 20:48
  Marcia Riner | Profit Booster®: Done.
• 20:49
  Corey Parchman: Or some have health issues, they're out the door.
• 20:52
  Corey Parchman: So you have to do your research. So it's not, once again, it's not as easy as, you know, once again, I'm…
• 20:58
  Corey Parchman: I own a business. Now, put my hands up. It's work.
• 21:01
  Marcia Riner | Profit Booster®: It is work, yeah.
• 21:02
  Corey Parchman: work.
• 21:03
  Marcia Riner | Profit Booster®: But it's rewarding work. I mean, you know, from a fellow business owner, I mean, you know, to me, it's rewarding. You're building something, you're building a legacy, you're building your wealth, you're taking care and…
• 21:16
  Marcia Riner | Profit Booster®: and nurturing the family that are your employees and team, you're nurturing the family that is your customer base, and for me, I love that kind of stuff. So you have to, like you said, you have to be in the right mindset of wanting to own a business and really, truly
• 21:32
  Marcia Riner | Profit Booster®: caring about the new community that you're stepping into, and I think that that's, that's really important, but,
• 21:40
  Marcia Riner | Profit Booster®: Yeah, so if we got in there, right, and things were going well for a little while, how do you start to really engage? I think you mentioned earlier about, you know, that key employee, and sharing some equity with them. What does that look like?
• 21:57
  Corey Parchman: So that's some of the strategies I do personally, because I still acquire properties myself. Even though I have clients that I can sell to help out, I still own myself. But I'm not an owner-operator. I'm not there every single day. So my buy box is, when I purchase the businesses, I try to find a business that has a general manager already in place.
• 22:15
  Corey Parchman: And then the key with that general manager in place, if they're really good, they've been there for a while, is to give them part equity in the business. Now they're invested because they have equity in the business, they want to see it grow. Because, once again, I'm a little different. I own several businesses across the country, and I can't be at all of them, right?
• 22:30
  Corey Parchman: But… and I know the world employees, that employees are dedicated, and they're not.
• 22:36
  Corey Parchman: It's just the reality of it. But if I have someone who has equity in the business, who's been running it, who's a general manager, now I can put that trust in them. They're gonna keep it going, because now they have a stake in the business. So that's my buy box, and once again, I talk to each one of my clients on what their buy box looks like. What are their…
• 22:52
  Corey Parchman: model looks like. My model says, I find businesses who have general managers already in place. I've turned down deals that were great economic deals, but there was no general manager in place, and I can't be there. Now, if this was… if I was the owner-operator, it would have been great, because I could have stepped right in and developed it, and then started it, and kind of
• 23:09
  Corey Parchman: hire a general manager, but it didn't, so you just gotta figure out what works best for you, but I had to turn down deals because it didn't fit in my buy box, and you gotta be disciplined as an owner to say, this is my criteria, I'm not going outside of that, because sometimes things look good, like, oh, I shouldn't, like, stay in that buy box, and you'll be okay.
• 23:27
  Marcia Riner | Profit Booster®: It makes great sense, because, you know, when… when you are buying multiple businesses, and you want to be an investor, and you want to be involved, but you don't want to do the day-to-day, right, as the owner-operator, that's a fantastic model.
• 23:40
  Marcia Riner | Profit Booster®: And when you have that key employee and they stay on, then that gives the strength to the other employees, as well as the customers.
• 23:49
  Marcia Riner | Profit Booster®: That this business is going to continue the way it was. It's just got a new name, behind the scenes.
• 23:55
  Marcia Riner | Profit Booster®: And, you know, the front of the store still looks the same and acts the same, so I like that. That's, you know, that's also a really great, way to ensure that the, that the key employees don't leave.
• 24:12
  Corey Parchman: Yeah, yeah, yeah. So, you know, my buy box, first, like I said, when I say buy box, it's a set of criteria that you're going to create in order, when you purchase a business. Like, this is what I need in order to buy a business. It goes from cash flow, to style of business, to region, and all that, so that's what I mean by that. And mine is, I only do commercial businesses, B2B businesses.
• 24:31
  Corey Parchman: I don't… I want to stay away from, you know, the businesses that the customers come because of the owner, like you just said, personally, that's not what I can do.
• 24:42
  Corey Parchman: But that's my discipline. So I've had companies that, once again, the cash flow, they were amazing profits, but they were customer-based businesses. I'd say, no, that's not my buy box. I'd stay within what I want to do. I can't go over here, because this is what I do.
• 24:56
  Corey Parchman: So, I only buy businesses that are commercial businesses, B2Bs, like commercial cleaning companies, pest control companies that do commercial work, because now that customer base is another company, not an individual.
• 25:07
  Corey Parchman: And then, even with that being said, I still look at the customer saturation.
• 25:11
  Corey Parchman: I look and see the top 3 customers that business has, and if one of those customers is more than 40% of the revenue, I'll walk away from it. Because if I lose that one contract, it's done. But these are the things you have to think about when you're going to buy a business, is the buy box. What are your hard yeses and your hard no's? And that's what we do, we look at that. So that's my buy box.
• 25:30
  Corey Parchman: So how many…
• 25:31
  Marcia Riner | Profit Booster®: How many items do we really look at when we're, you know, because you just rattled off a handful that, you know, sparked interest in me, how do you really look at that? What are you looking at when you're buying? What are your criteria, right? Because you said it's up to you, but yeah, there's still a framework you're gonna follow.
• 25:48
  Corey Parchman: Yeah, of course, the number one is cash flow. You want to make sure the business is cash flowing. That's number one. And you look at the 3-year tax return, I advise people to look at a little bit more than three years, because in 2020, a lot of business got a big injection of cash flow because of, you know, COVID, so look at past 3 years and prior 3 years.
• 26:07
  Corey Parchman: But you want to look at what industry you want to own in, what type of business you want to own, then geographically, where do you want it to be at? I recommend nothing no more than 90 minutes from your house.
• 26:17
  Corey Parchman: Those are the two top things, and after you look at the kind of industry you want to be in, and then geographic, now you want to look at what kind of business. Do I want to own a customer-based business or a commercial-based business? Those are the things you have to think about. Then when you go from there, you gotta think about, okay.
• 26:32
  Corey Parchman: Where do I want to be an owner-operator, or do I want to hire a general manager?
• 26:36
  Corey Parchman: So all these things we check off when we have our initial conversations about what you want to do as the owner, because everyone's going to be different. So it's based off, once again, what you want to do. Do you want to be an owner-operator? Do you want to own something within 90 minutes of your house? What industry you want to be in? How big you want it to be? Those are the things we break down to see what's the best fit for you. And then once we kind of get that criteria, then we kind of go to the next step.
• 26:59
  Corey Parchman: of searching for the Dobbs article, I'm sorry, the companies in that industry that you picked out.
• 27:05
  Marcia Riner | Profit Booster®: Nice. And then, we're not… we're not talking franchise opportunities here, we're talking individual standing businesses that are running and working, so you're not having any of those extra.
• 27:15
  Corey Parchman: No.
• 27:16
  Marcia Riner | Profit Booster®: These are rules or regulations that you have to follow by by having a large branded name.
• 27:22
  Corey Parchman: Yeah, we stay away from franchises, yes. Yes.
• 27:25
  Marcia Riner | Profit Booster®: Those can be, those can be quite.
• 27:27
  Corey Parchman: Yeah, yeah, I've never ever investigated how that works. You know, you hear about things about, you know, just… I know I do know you had to pay, like, you know, franchise fees, you know, this is totally different. These are individual owners who built their businesses from scratch and now say to themselves.
• 27:42
  Corey Parchman: I'm either retiring, and… I'm done. My kids don't want it anymore, or don't want it at all, or I don't have any kids, or… it's like… but think about the people who are up under them, that work up under them, they're gonna lose their jobs.
• 27:54
  Marcia Riner | Profit Booster®: That's.
• 27:55
  Corey Parchman: why I'm really committed to, you know, individuals that are looking to be owner-operators. They're going to take that business and keep it going, because, you know, small business is the heartbeat of America.
• 28:06
  Corey Parchman: And if these small businesses go out of businesses, we're not going to have anything here. So, this is why my goal is to teach people how to be owner-operators within their own area, and grow that business, so your town, your city, whatever can keep thriving, because once again.
• 28:22
  Corey Parchman: These retirees are older, and they're retiring, they're leaving, and they need someone to replace it.
• 28:29
  Marcia Riner | Profit Booster®: And I think that's part of it. We spoke about it a little earlier, the community, right? It's the community or your new family of the employees. Whether there's 3 employees, or 30 employees, or 300 employees, they're still your family that you are now responsible to take care of.
• 28:45
  Marcia Riner | Profit Booster®: But I always like to say it's the community that the business supports that also becomes your family. And, I think that that's something really important that you want to keep going, right? Because that business supports
• 28:59
  Marcia Riner | Profit Booster®: the town, because you're paying people, and it supports the town because they're somehow using your service. Even though you're a business consumer, there's still other businesses are still using your services. So I think that that's a real, a real value.
• 29:14
  Corey Parchman: It's pean.
• 29:15
  Marcia Riner | Profit Booster®: overlooked for something that could be kind of turned and burned, like, as you mentioned, the HVAC or the trades that are, you know, kind of popular. But.
• 29:24
  Corey Parchman: You're that quick. To your point, this is why I've had, and personally had it happen to me, and also with other people I've sold, where business owners actually took less from the individual
• 29:34
  Corey Parchman: been from an equity firm that wanted to buy it. I've seen it happen where there's been a business for sale.
• 29:40
  Corey Parchman: And the equity company offered them a certain amount that was higher, but they'd rather sell it to an individual they know is going to be there, and take care of their employee, and take care of the business, because that owner, once again, that's their family. That's people they've had
• 29:54
  Corey Parchman: They've seen their kids being born, they've seen, you know, surgeries, all that. So they say to themselves, I'd rather tell it to an individual.
• 30:01
  Corey Parchman: than a big corporation who's going to earn and burn it. They're gonna take it and sell off the parts. So that's why it's a good opportunity for people who want to be individual owners to say, okay.
• 30:10
  Corey Parchman: this is a great chance, because owners want to sell to other owners, not the big corporations, and I've seen owners take less money to sell to an individual. It's happened in my case, too. I purchased a business where it was a… it was a tool company, tool manufacturing company. I purchased
• 30:25
  Corey Parchman: And the equity firm offered maybe 2 times what I offered.
• 30:29
  Corey Parchman: But they're out of New York, and the owner was like, hey, I'd rather sell it to you because you live in Indiana. I know you're going to take care of the people here, and the people who are community. So that's why it's a good opportunity for individuals that want to own businesses right now.
• 30:42
  Marcia Riner | Profit Booster®: I love it, I love it. Corey, this is so fun. You've opened up some ideas for the opportunity to get into business. Business is…
• 30:51
  Marcia Riner | Profit Booster®: like, number one, number two with real estate for long-term wealth accumulation, it's a great opportunity, coming from two business owners that are saying this is a great opportunity to be in, and… and skip the headache of the start.
• 31:07
  Marcia Riner | Profit Booster®: Buy something that is already going. So, this is fantastic, and I love the idea of it. So, while we're here, and I know we could talk forever, but where can listeners find out more about you and how they can start buying some businesses from companies that are already going?
• 31:23
  Corey Parchman: Of course, you can go to my website, it's, CoryParsons.com, and I would tell you, do your research on me. Hey, you know, look at my website, also go through, you know, different…
• 31:32
  Corey Parchman: you know, Google searches about me, and not the ones that I wrote, of course. Other ones, because I think if you're serious about business, it's about having credibility, and I want to make sure that people know I have credibility, I've done the work. There's a lot of stuff on the internet now, and everyone's selling something, everyone's doing something with no credibility, but, you know, do your research on me.
• 31:48
  Corey Parchman: You can go to my website, and look me up. Also, any social media, same thing, Corey Parchman, look me up, and kind of go from there.
• 31:57
  Marcia Riner | Profit Booster®: Love it. Well, you know, thank you so much. I think this is a valuable service.
• 32:02
  Marcia Riner | Profit Booster®: It's an option, right? Because there are many ways that you can get involved, and I love your grassroots way of going, get involved in the community, and look around, build a relationship, and that's how you buy a company, rather than…
• 32:17
  Marcia Riner | Profit Booster®: Potentially. And I'm not bashing brokers at all, or…
• 32:20
  Corey Parchman: Not at all, not yet.
• 32:21
  Marcia Riner | Profit Booster®: other opportunities. That's just another way, and…
• 32:24
  Corey Parchman: By the way, yes.
• 32:25
  Marcia Riner | Profit Booster®: This is a great way as well, so thanks for joining us.
• 32:29
  Corey Parchman: Thank you, Marcia, I appreciate it.
• 32:31
  Marcia Riner | Profit Booster®: Yeah, alright, listeners, thanks for tuning in today. I hope you're walking away with a few practical ideas that you can put into your business, whether it's a new business or adding to your business. Maybe you're gonna buy a competition, or maybe you're gonna buy another complimentary business to your business.
• 32:50
  Marcia Riner | Profit Booster®: And, this'll help you make some… make your businesses more profitable and, potentially even more valuable to sell in the future yourself.
• 32:59
  Marcia Riner | Profit Booster®: Alright, before we go, if you want a clearer path to more revenue and a stronger profit, you can now go grab your free Profit Booster Growth Map. It'll quickly show you the top strategies to grow revenue and stop those profit leaks that might be holding your business back.
• 33:15
  Marcia Riner | Profit Booster®: You can go get it now at ProfitBooster.biz.
• 33:19
  Marcia Riner | Profit Booster®: And if this episode gave you value, be sure to subscribe and share it with other business owners who just may need to hear it.
• 33:26
  Marcia Riner | Profit Booster®: I'll see you next week with more strategies to help you grow smarter and profit stronger. So until then, make your plans and profit with them. Thank you so much, Corey.
• 33:36
  Corey Parchman: Thank you.