Latest / Carson's Corner: Entrepreneurship & Investing / Don't Fall in Love With the Deal: Fail Small, Win Big - How to Start a Business with David Jones

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Don't Fall in Love With the Deal: Fail Small, Win Big - How to Start a Business with David Jones · Carson's Corner: Entrepreneurship & Investing

• 0:00
  SPEAKER_00: I've definitely learned more from my losses than I have the wins.
• 0:03
  SPEAKER_00: Today's guest is David Jones, a 20-year Army veteran who has started nine companies and now helps veterans buy and build businesses of their own.
• 0:12
  SPEAKER_00: Because everybody's gonna make mistakes.
• 0:13
  SPEAKER_00: Learn how to avoid the big ones.
• 0:15
  SPEAKER_00: And if you are gonna make a mistake, you know, test assumptions, but fail small and fail early and fail cheap, so you can stay alive long enough to be successful.
• 0:22
  SPEAKER_00: Both my parents were in business, uh, and both of them ultimately failed.
• 0:26
  SPEAKER_00: I thought early on that you had to take big risks to have big returns.
• 0:29
  SPEAKER_00: My first business I went into with family.
• 0:31
  SPEAKER_00: We had bought a historic home and converted into a bed and breakfast.
• 0:34
  SPEAKER_00: We could only rent out three rooms by coke.
• 0:36
  SPEAKER_00: You can only charge so much, so why take that much risk for such little possible return?
• 0:40
  SPEAKER_00: So many times when I talk to new entrepreneurs, usually it's their first deal and they fall in love with it out of the gate, regardless of how good of a deal it pencils out to be.
• 0:50
  SPEAKER_00: You have to evaluate hundreds of these to find the right one.
• 0:53
  SPEAKER_01: $50,000 for a veteran to like use towards business, right?
• 0:57
  SPEAKER_00: VRE is veteran readiness and employment.
• 0:59
  SPEAKER_00: Any disabled veteran is entitled to go there.
• 1:01
  SPEAKER_00: There is a track for self-employment.
• 1:02
  SPEAKER_00: They can give you up to$50,000 on cash.
• 1:05
  SPEAKER_00: I want to be clear on this.
• 1:06
  SPEAKER_00: It's not in cash.
• 1:07
  SPEAKER_00: You create a business plan.
• 1:08
  SPEAKER_00: Maybe somebody that wants to get into the landscape, and they're like, I need a trailer, I need a mower, they'll buy the equipment for you and give it to you so you can start your business.
• 1:15
  SPEAKER_01: When you talk about like the price testing, I have a friend that told me about this where he puts like a generic ad out there to see what kind of bites he got.
• 1:22
  SPEAKER_00: You put out three different things on Facebook Marketplace.
• 1:24
  SPEAKER_00: One of them just took off.
• 1:25
  SPEAKER_00: He had hundreds of requests for this one thing.
• 1:27
  SPEAKER_00: He didn't own any of it.
• 1:28
  SPEAKER_00: It was a washer and dryer rental business.
• 1:30
  SPEAKER_00: I think within like 120 days, he was making like$7,000 a month in recurring revenue.
• 1:34
  SPEAKER_00: Yeah, that's how you test the market beforehand.
• 1:36
  SPEAKER_01: What's the craziest thing you've seen like in an acquisition where you said, uh-uh, we're not doing that?
• 1:40
  SPEAKER_01: I'll say more more recently, so I like I said, I have Do you not have to have a personal guarantee for SBA?
• 1:47
  SPEAKER_01: If you put 20% down, you could waive the personal guarantee, right?
• 1:50
  SPEAKER_00: Uh if you don't.
• 1:53
  SPEAKER_00: Welcome to the Carson's Quarter.
• 1:57
  SPEAKER_01: All righty, I'm sitting here with Mr.
• 1:59
  SPEAKER_01: David Jones.
• 2:00
  SPEAKER_01: He is an entrepreneur, an investor.
• 2:02
  SPEAKER_01: He is retired military.
• 2:04
  SPEAKER_01: He specializes in helping military vets with MA acquisitions of small to medium-sized businesses, helps them through the process, access to government programs such as VA programs offering$50,000, just SBA.
• 2:24
  SPEAKER_01: There's so much to it.
• 2:25
  SPEAKER_01: So there's a lot to unfold here as far as acquisitions.
• 2:28
  SPEAKER_01: He also owns uh storage facilities and um other stuff.
• 2:34
  SPEAKER_01: So we'll we'll we'll be diving into a lot of stuff and what he's learned.
• 2:37
  SPEAKER_01: A lot of it's, you know, he he's very successful, but learning a lot of his journey along the way is part of why we bring guests here.
• 2:46
  SPEAKER_01: You know, the near misses or misses kind of help us more as other entrepreneurs to learn from.
• 2:51
  SPEAKER_01: So how you doing, David?
• 2:53
  SPEAKER_00: Yeah, doing well, man, and well put there.
• 2:55
  SPEAKER_00: I've definitely learned more from my losses than I have the wins.
• 2:59
  SPEAKER_01: Yeah.
• 2:59
  SPEAKER_01: Yeah.
• 3:00
  SPEAKER_01: Some of them we don't like to talk about, but you know, it's like that's why we're here, and it's you you learn so much, and you know, you're like, I'll never do that again.
• 3:08
  SPEAKER_01: So, but um your main focus is basically guiding veterans, and you'll allow other people into your community as well, but mostly veterans because you connect well with them, uh, on the acquisition of or startup of a business.
• 3:27
  SPEAKER_01: Is that correct?
• 3:29
  SPEAKER_00: Yeah, so if you're referring to my online community there, yeah, the veteran business community is is really where my niche is, just because that's where my background is.
• 3:37
  SPEAKER_00: Uh so after I, you know, in my 20 years in the army, I probably I started my first business in my mid-20s.
• 3:45
  SPEAKER_00: I'm about to hit 50 now, but um, you know, I've launched nine companies over the last 21 years and um, you know, started my journey while I was on active duty uh during one deployment, then a few others after that.
• 3:56
  SPEAKER_00: So I like to just, you know, be able to help entrepreneurs.
• 4:00
  SPEAKER_00: I'm I'm really an educator kind of by heart, I guess.
• 4:03
  SPEAKER_00: You know, I I I just love teaching people.
• 4:05
  SPEAKER_00: Yeah.
• 4:05
  SPEAKER_00: Uh so I I if I can help somebody from making a mistake or accelerate their small business by a few years, uh, and you know, because everybody's gonna make mistakes, you know.
• 4:15
  SPEAKER_00: But my thing is just one, learn how to avoid the big ones.
• 4:19
  SPEAKER_00: And if you are gonna make a mistake, you know, test assumptions, but fail small and fail early and fail cheap so you can stay alive long enough to be successful.
• 4:27
  SPEAKER_01: I don't disagree at all.
• 4:29
  SPEAKER_01: That's really smart.
• 4:30
  SPEAKER_01: Fail small because you're gonna make mistakes, but there's certain big things that you don't want to screw up, you know.
• 4:36
  SPEAKER_01: And I actually have a book about don't get leased, and I focus on the lease, but there's so much more to it besides a lease.
• 4:44
  SPEAKER_01: And I talk about a lot of it in my book, but you know, David is right.
• 4:48
  SPEAKER_01: It's one of those the only way to learn is to do it or to learn from somebody else that has done it.
• 4:53
  SPEAKER_01: And it's not to scare you from starting a business because it's in general, it's not that hard, but I think we allow our emotions to take over, and that's why we make so many mistakes.
• 5:03
  SPEAKER_01: You're so excited about starting a business, you overlook things that you shouldn't.
• 5:08
  SPEAKER_01: It's kind of like getting married.
• 5:09
  SPEAKER_01: Is that right?
• 5:10
  SPEAKER_01: Would you say that?
• 5:10
  SPEAKER_01: I don't know.
• 5:11
  SPEAKER_00: Oh man, well, I've I've I've done that twice now.
• 5:14
  SPEAKER_01: So uh That might be a bad analogy, but no.
• 5:19
  SPEAKER_00: Yeah.
• 5:19
  SPEAKER_00: Um but no, I I think you're right.
• 5:22
  SPEAKER_00: I I think again, I I don't say these things to scare people.
• 5:25
  SPEAKER_00: And and you had somebody on your podcast a couple months ago, uh, Jed Harris, he's a good dude, uh, Air Force guy too.
• 5:31
  SPEAKER_00: Okay, but I I just had him on my podcast as well, but he's one of the only guys out there that talks about his failure.
• 5:37
  SPEAKER_00: Uh he was on the MA side, he purchased a blue-collar business and lost everything.
• 5:41
  SPEAKER_00: His personal parents lost his house, lost everything.
• 5:44
  SPEAKER_00: Yeah.
• 5:45
  SPEAKER_00: Yeah.
• 5:45
  SPEAKER_00: So again, we don't we don't say these things to scare people, but just to open your eyes because you do get tunnel vision.
• 5:51
  SPEAKER_00: We all we all do.
• 5:52
  SPEAKER_00: I mean, when when you look at hundreds of deals, um it's it's easy to get excited about an opportunity and to envision yourself, you know, like, oh, in five years it could be this.
• 6:03
  SPEAKER_00: Wow, you know, this could be a great exit for me.
• 6:06
  SPEAKER_00: But so many times when I talk to new entrepreneurs that that want to get into entrepreneurship through acquisition, uh, usually it's their first deal.
• 6:14
  SPEAKER_00: They come to me and they fall in love with it out of the gate, regardless of how good of a deal it pencils out to be.
• 6:18
  SPEAKER_00: It's they're just so excited for that kind of first crush.
• 6:22
  SPEAKER_00: And I'm like, you picture yourself like you're you're 13, you're having your first crush right now.
• 6:26
  SPEAKER_00: Like you gotta you gotta go through this.
• 6:28
  SPEAKER_00: You have to evaluate hundreds of these to find the right one.
• 6:31
  SPEAKER_01: Yeah.
• 6:32
  SPEAKER_01: And you and you were too dumb at the time to realize like, you know, that wasn't marriage material, but you know, we're on we're we're looking right now.
• 6:42
  SPEAKER_01: You know, you don't have to fall in love with everyone you see.
• 6:44
  SPEAKER_01: So no, I think it's uh great.
• 6:46
  SPEAKER_01: You know, I I didn't have it was Jed Jed Morris on the podcast, a great guest, but you know, it's one of those where it doesn't even really have to be a catastrophic failure to be a really big mistake.
• 6:59
  SPEAKER_01: Like I talk about the leases, or if you overlook certain financial things and it becomes a problem that it could take two or three years to fix.
• 7:07
  SPEAKER_01: Like if you sign a bad lease with the wrong in increases in there, it's like you're gonna either have to renegotiate before you fail or something, because you can't just let it suck the life out of you.
• 7:17
  SPEAKER_01: You know, so it's like you know, there's there's catastrophic mistakes and then there's ones that'll make your life miserable.
• 7:24
  SPEAKER_01: And I don't know which one's worse because the catastrophic ones is just over.
• 7:28
  SPEAKER_01: You know, you're like bankrupt like that, and it's like, okay, you know, so I think some of the smaller ones you have to be aware of, but you know, there's gonna be other mistakes that are easily survivable.
• 7:38
  SPEAKER_01: You're gonna make mistakes with marketing and other things and employees, and that's just part of owning a business, you know, figuring out what works best for you.
• 7:46
  SPEAKER_01: So um, what are uh what are some of the things that you've you know failed with that you were like, man, I wish somebody would have told me about, you know, or yeah.
• 7:55
  SPEAKER_00: Well, it's it's funny because a lot of people like ask me, like, how'd you get started?
• 7:58
  SPEAKER_00: Why are you an entrepreneur?
• 7:59
  SPEAKER_00: And you know, the more I do this, the more people that I interview, uh, usually it's kind of like in the blood.
• 8:04
  SPEAKER_00: They they had somebody like a parent or an uncle or somebody that they kind of looked up to.
• 8:08
  SPEAKER_00: Um, so that was my thing.
• 8:10
  SPEAKER_00: Like my role models as kids were people that were successful in business for whatever reason.
• 8:14
  SPEAKER_00: It wasn't sports celebrities or anything like that.
• 8:16
  SPEAKER_00: Like I looked up to business as being the that that one equalizer that's out there that anybody can do it.
• 8:23
  SPEAKER_00: It doesn't matter your education, your pedigree, you know, even how much money that you have, you know, if you're willing to work and find the right opportunity, you can reach whatever level of like success you want.
• 8:34
  SPEAKER_00: So, you know, that that's always been attractive to me uh when I started out.
• 8:39
  SPEAKER_01: Yeah, it it is kind of one of those, if you put your mind to it, you can accomplish it.
• 8:43
  SPEAKER_01: So but I'll just keep going.
• 8:45
  SPEAKER_00: Yeah.
• 8:46
  SPEAKER_00: So so as far as failure, so I guess that was the one thing.
• 8:48
  SPEAKER_00: So because both my parents were in business, uh, and both of them ultimately failed, and I was fairly young at the time, real young for my dad's business, um, but a little bit older for my mother's.
• 8:58
  SPEAKER_00: And it it made me realize like, could this have been avoided, right?
• 9:02
  SPEAKER_00: And in both cases, yeah, I think it could have.
• 9:05
  SPEAKER_00: And then every time I've I've met with businesses and I've consulted hundreds of business owners throughout the years, um, mostly veteran entrepreneurs.
• 9:12
  SPEAKER_00: But every time I see one that has failed, I said, Well, there was a red flag.
• 9:16
  SPEAKER_00: Oh, there's something you could have done to mitigate it.
• 9:18
  SPEAKER_00: I'm not saying that everyone could have ultimately been, you know, but you at least could have hedged against it a little bit better or taken more of a precaution, or maybe even not gotten into the business at all because it was too big of a risk.
• 9:30
  SPEAKER_01: Yeah.
• 9:32
  SPEAKER_01: What's one that you say is like a no-go?
• 9:35
  SPEAKER_01: Like if you see it, you're like, just run, you know.
• 9:39
  SPEAKER_00: Yeah.
• 9:39
  SPEAKER_00: So I mean, I I thought early on that you had to take big risks to have big returns.
• 9:44
  SPEAKER_00: Uh so like my first business I went into with family.
• 9:48
  SPEAKER_00: Um, and recently just somebody told me, like, if I was gonna give you one bit of advice, it's don't do business with family, right?
• 9:55
  SPEAKER_00: Just because of, you know, the dynamic and everything else.
• 9:58
  SPEAKER_00: And but um, you know, in that case, we had bought a historic home and convert it into a bed and breakfast.
• 10:05
  SPEAKER_00: But, you know, again, I was in my mid-20s, early 20s almost even, and uh, I didn't realize like you don't need to sink a half million dollars at a time, almost, you know, three quarters of a million dollars into a property and then have to rehab and do all these things, and then we're caps, like we could only rent out three rooms by code, it couldn't have gotten any bigger, and you can only charge so much, so why take that much risk for such little possible return?
• 10:28
  SPEAKER_00: To me, I I I would look at an opportunity like that, and I'd be like, There's no way in hell, right?
• 10:33
  SPEAKER_01: Like Yeah.
• 10:35
  SPEAKER_01: Just looking at looking back at it, yeah.
• 10:38
  SPEAKER_01: Well, I kind of did the same thing.
• 10:40
  SPEAKER_01: Well, I did like a smaller restaurant and it did good.
• 10:43
  SPEAKER_01: I mean, they were open for like 10 years and I sold one of them.
• 10:46
  SPEAKER_01: But looking back, I think I would have just I think the r main thing is I would have bought the real estate so I owned it because I paid over a million dollars.
• 10:54
  SPEAKER_01: I had multiple restaurants, so I paid over a million dollars in rent.
• 10:58
  SPEAKER_01: I said if I had to do over again, it wouldn't have been like necessarily the restaurant.
• 11:03
  SPEAKER_01: It would have been that I would have bought the buildings, you know, because no matter what happened to the restaurants, I could have exited and sold the real estate.
• 11:10
  SPEAKER_01: So Right.
• 11:11
  SPEAKER_00: Or or sold the restaurant and kept the real estate and just been the landlord, right?
• 11:16
  SPEAKER_00: But at least you're in control of your own destiny at that point.
• 11:19
  SPEAKER_01: Yeah.
• 11:19
  SPEAKER_01: I I just think it's part of the exit strategy.
• 11:21
  SPEAKER_01: You know, looking back, you know, it's one of those things you only know what you know at the time, and it's like I didn't have a lot of money.
• 11:28
  SPEAKER_01: And I said that would have been the easiest part is probably finding an investor.
• 11:32
  SPEAKER_01: I mean, I didn't you didn't need that much money to go in and you know, because I was basically going behind old restaurants, so there was a l conversion opportunity with the hood vents and some leftover equipment.
• 11:45
  SPEAKER_01: It was still expensive, but it's not like it's not like you see a lot of the dumb people going around spending half a million dollars to open something that's brand new.
• 11:54
  SPEAKER_01: I was spending a hundred thousand.
• 11:56
  SPEAKER_01: You see what I'm saying?
• 11:57
  SPEAKER_01: Right.
• 11:58
  SPEAKER_01: So that's relatively cheap.
• 11:59
  SPEAKER_01: Your odds of success are really high.
• 12:01
  SPEAKER_01: So that's probably why I was open for ten years.
• 12:04
  SPEAKER_01: If I would have spent half a million dollars and had a note on it, I probably would have wouldn't have been open more than six months.
• 12:09
  SPEAKER_01: So, you know, I did some things right, but I think I would have if I had to do over again, I would have just bought the building, you know.
• 12:16
  SPEAKER_01: But I don't know.
• 12:18
  SPEAKER_01: It's cheaper to get in on a lease, less money up front and a lot of other things, so I did the lease route.
• 12:23
  SPEAKER_00: So, you know, um Yeah, and and that's an industry that has tighter margins, right?
• 12:28
  SPEAKER_00: Like and and you know, you have your overhead, you have your employees, you know, there's insurance.
• 12:32
  SPEAKER_00: Um, and if you don't own the property though, then I mean, yeah, you could be locked into a five-year lease or something, but there's the inc incremental increases, you know.
• 12:42
  SPEAKER_00: But at the end of five years, if you're doing really well, then you're not really in the position of power, you know, the landlord is, and he knows that you're doing well, and you can't just move a business like that.
• 12:52
  SPEAKER_00: Like you've built a reputation, people know the location.
• 12:55
  SPEAKER_00: You you you don't have as much leverage.
• 12:58
  SPEAKER_01: You you could, but and I I've had to do that before.
• 13:02
  SPEAKER_01: I've had to renegotiate some leases mid-stride, but and it's not easy.
• 13:06
  SPEAKER_01: Um, I think one thing if you've owned a business, one thing on anything you do in business is word of mouth travels and people's reputation.
• 13:15
  SPEAKER_01: Whether you're hiring a manager or buying a business, I think one of Judd's things he said that I really think is really good is talking to other businesses in town about the reputation of the people behind it.
• 13:28
  SPEAKER_01: Because if they're shady, you know, but I I don't think I don't know, man.
• 13:34
  SPEAKER_01: I just think it's one of those where I hired a manager that stole like 12 grand from me and we caught them pretty quick, and it was like just taking deposits out the back door, and I'm like, you know, like so we put protocols where the deposits were checked like every day after that, you know, but I was only checking them like once a week.
• 13:57
  SPEAKER_01: But if a restaurant's doing good revenue, it doesn't take long to get away with that, you know, it's like okay, that's gone.
• 14:02
  SPEAKER_01: But you know, if I had uh, you know, just talked a little bit to people around town, I wouldn't have hired them.
• 14:08
  SPEAKER_01: You know, people are like, yeah, I was gonna say something, but I wasn't sure.
• 14:12
  SPEAKER_01: And I was like, you know, the guy, and I was from out-of-town owners, you typically what you're doing when you're acquiring is you're like, okay, even if it's not really out of town, where do you live?
• 14:23
  SPEAKER_01: Are you in the Dallas area?
• 14:25
  SPEAKER_00: Oh no, up in uh Newport, Rhode Island.
• 14:27
  SPEAKER_01: Oh, you're in Rhode Island.
• 14:29
  SPEAKER_01: But even say, like, if it's in a suburb of the town you're in or like 30 minutes away, you don't know everything that's going on around there.
• 14:35
  SPEAKER_01: But if you talk to the locals, they can tell you real quick, you know, like, oh, dude, don't do that.
• 14:39
  SPEAKER_01: Yeah.
• 14:40
  SPEAKER_00: Yeah, yeah.
• 14:40
  SPEAKER_00: But there's always skeletons.
• 14:42
  SPEAKER_00: I mean, with with any MA deal, like you can do as much due diligence as you want, but there's always something you find.
• 14:48
  SPEAKER_01: That risk, yeah.
• 14:50
  SPEAKER_01: I don't know.
• 14:51
  SPEAKER_01: But I would do some asking around.
• 14:53
  SPEAKER_01: Everybody has a few enemies.
• 14:54
  SPEAKER_01: Like, if you go talk to their competitor, I think you got to be careful there.
• 14:57
  SPEAKER_01: It's like, okay, well, of course they're gonna talk shit about them.
• 15:01
  SPEAKER_01: Right, right.
• 15:01
  SPEAKER_01: You know, so anyway.
• 15:03
  SPEAKER_01: But uh back to y'all's business, I mean, y'all are very like you you you take the veterans, there's a lot of things that everybody doesn't know.
• 15:12
  SPEAKER_01: Um, one of the biggest benefits that I think I've discovered by talking to you is fifty thousand dollars for uh veterans to like use towards legal, towards remodeling or whatever in a business, right?
• 15:28
  SPEAKER_00: Yeah.
• 15:28
  SPEAKER_00: Yeah.
• 15:29
  SPEAKER_00: So the the VRE program, so for service disabled veterans, um, they can, you know, and this is like in addition to post-9-11 or anything like that, actually has nothing to do with it.
• 15:38
  SPEAKER_00: But VRE is veteran readiness and employment, and any disabled veteran is entitled to go there.
• 15:43
  SPEAKER_00: Now, most of the tracks, there's five different tracks, most of them just send you back to some form of education, either traditional schooling to get a bachelor's MBA, like I had done, you know, or a trade school or just employment help to get you re-employed.
• 15:57
  SPEAKER_00: That's the point of the program.
• 15:59
  SPEAKER_00: But there is a track for self-employment.
• 16:01
  SPEAKER_00: And for self-employment, basically you just say, listen, in order for me to get employed, I want to work for myself.
• 16:06
  SPEAKER_00: I want to start my own business.
• 16:08
  SPEAKER_00: And the local office, whichever office that you work out of, they can give you up to$50,000 in the office, and not in cash.
• 16:15
  SPEAKER_00: I I want to be clear on this.
• 16:16
  SPEAKER_00: It's not in cash.
• 16:17
  SPEAKER_00: Yeah.
• 16:18
  SPEAKER_00: But you you create a business plan, you say, here's what I want to do.
• 16:21
  SPEAKER_00: So maybe somebody that wants to get into landscaping, and they're like, listen, I need a trailer, I need a mower, I need, you know, weed whackers and diggers and trenchers or tools or whatever the case.
• 16:31
  SPEAKER_00: They'll give you that equipment.
• 16:32
  SPEAKER_00: They'll buy the equipment for you and give it to you so you can start your business.
• 16:36
  SPEAKER_01: So that's a huge deal.
• 16:37
  SPEAKER_01: Like, say you were starting a garage door repair business or landscaping or all kinds of how do those garage door uh repair businesses do?
• 16:47
  SPEAKER_01: I saw a friend post one the other day.
• 16:49
  SPEAKER_00: Uh ironically, I just took on a client that's a garage door repair business, and they're expanding into other states now.
• 16:55
  SPEAKER_00: So they they can do well.
• 16:57
  SPEAKER_01: Yeah.
• 16:57
  SPEAKER_01: Like anything, it's got to be managed right.
• 16:59
  SPEAKER_01: It's like you, you know, you see HVAC and everybody's like, they all make money.
• 17:03
  SPEAKER_01: It's like, no.
• 17:06
  SPEAKER_00: You know.
• 17:07
  SPEAKER_00: Yeah.
• 17:08
  SPEAKER_00: Yeah.
• 17:08
  SPEAKER_00: I mean, H yeah, I don't know a ton about HVAC.
• 17:11
  SPEAKER_00: I I know a lot of people look at that, you know, as like, you know, what when they talk about like laundry mats or something like that to get into the acquisition space.
• 17:18
  SPEAKER_00: But yeah, garage doors are pretty basic contraptions for the most part, right?
• 17:23
  SPEAKER_00: And they they break, they wear down, or people just want them replaced, uh, whatever the case.
• 17:28
  SPEAKER_00: And, you know, done right.
• 17:29
  SPEAKER_00: Uh, it doesn't take a lot of tooling to do it.
• 17:32
  SPEAKER_00: So it's really just the human capital and sending people out, but incentivizing them on like the upsell.
• 17:37
  SPEAKER_00: That's the biggest thing.
• 17:38
  SPEAKER_00: Like these people, they're not just technicians, they're kind of salespeople too, right?
• 17:42
  SPEAKER_00: To say, hey, I could do this and this, but I'm also gonna add this, or I suggest this for you.
• 17:47
  SPEAKER_01: Yeah.
• 17:47
  SPEAKER_01: I think um there's a lot of different businesses vets wouldn't think about that can be very fulfilling.
• 17:54
  SPEAKER_01: But like anything, you have to manage it right.
• 17:57
  SPEAKER_01: And then if you do scale, you know, that's probably gonna be a business that starts out out out of your garage.
• 18:04
  SPEAKER_01: I mean, honestly.
• 18:05
  SPEAKER_01: Then you get an employee and a shop as your next fet's phase.
• 18:08
  SPEAKER_01: You know, no matter what the business is, like you kind of have like a you have a framework where, you know, you kind of tell start talking to people about how to buy a business, you know.
• 18:18
  SPEAKER_01: Um, and then you go into, you know, different levels of where they're at, kind of like almost like a training program of, you know, different not coursework, I hate using that term, nobody likes hearing that.
• 18:32
  SPEAKER_01: But you have a community to basically guide and support people through it, but you have different phases of where they are.
• 18:38
  SPEAKER_01: Like, is this person at a phase where they need to access capital?
• 18:42
  SPEAKER_01: Because if you're looking at car uh starting a garage door business and it's out of your house, which I've started a lawn care business out of my house, you know, and you know, there's other businesses where you actually need space, you're gonna need some capital and need some loans.
• 18:56
  SPEAKER_01: So, you know, your program walks people through that, right?
• 19:00
  SPEAKER_00: Yeah, I mean, it kind of you have to meet them where they are, right?
• 19:02
  SPEAKER_00: Because some people are just in the idea phase and they don't even know if this is a decent idea or not, but they don't have anybody that they can bounce it off.
• 19:08
  SPEAKER_00: They don't have friends that are entrepreneurs or family that were whatever the case.
• 19:12
  SPEAKER_00: So, you know, to have a community of people that have been there and done that is huge, you know, because it a lot of it is you start with all assumptions, right, with a new business.
• 19:21
  SPEAKER_00: Like even if it's a proven business model somewhere else, you still have to see if it one will work for you and two if you can execute it as well, because it's all about the execution.
• 19:31
  SPEAKER_00: And then, you know, to to not make those risks, to mitigate some things, to find out a way to scale organically so you don't have to go take out, like, you know, like now I'm confident with certain things.
• 19:41
  SPEAKER_00: Like if I was gonna buy another cell storage facility, I I can leverage the equity in my home.
• 19:45
  SPEAKER_00: I I know the returns I can get in that industry because I've been there.
• 19:48
  SPEAKER_01: Yeah.
• 19:48
  SPEAKER_00: Right.
• 19:49
  SPEAKER_00: But I wouldn't tell someone if you've never run a business before and you think you have an idea of something that you want to try, there's ways that you can always try something on a small scale, like just test some things, learn, learn your customers, you know, try to learn some more about the business, get rid of as many assumptions as you can, even if you prove it at a small scale.
• 20:07
  SPEAKER_00: I don't even care how profitable you are, just prove it at a small scale.
• 20:11
  SPEAKER_00: And then if that's the case, okay, then pour fuel on it and and go from there and grow.
• 20:15
  SPEAKER_00: But yeah, that that's always my thing.
• 20:17
  SPEAKER_00: Like I use the example of my daughter.
• 20:20
  SPEAKER_00: She came to me with a business plan um year or so ago, and she wanted to start to get into the you know Airbnb market.
• 20:27
  SPEAKER_00: I was like, Yeah, I'd love to hear that.
• 20:29
  SPEAKER_00: And she had a nice written business plan.
• 20:31
  SPEAKER_00: Uh, I was happy to sit down and have lunch with her and talk about it, you know, proud dad kind of moment.
• 20:36
  SPEAKER_00: But you know, but I'm like, but you've never worked in this industry before.
• 20:39
  SPEAKER_00: I said, yes, and just because it's worked for other people out there, in order for you to commit to doing this, you're gonna have to buy a half million dollar home and you're gonna have to, you know, put some time and effort into this.
• 20:49
  SPEAKER_00: You're gonna learn the software, you're gonna have to learn to manage the cleaning crew that's there, unless you're gonna do it locally yourself, and you're gonna have to learn a lot of this stuff.
• 20:56
  SPEAKER_00: Why don't you just be a co-host, right?
• 20:58
  SPEAKER_01: And then you can learn, yeah, do a couple of things.
• 21:01
  SPEAKER_01: Then you can learn that whole side.
• 21:02
  SPEAKER_01: Yeah.
• 21:02
  SPEAKER_01: Yeah.
• 21:02
  SPEAKER_01: Yeah, go offer to work for somebody for you know 20 hours a week and see if you like it.
• 21:07
  SPEAKER_01: Because that's one of the nightmares my friend had.
• 21:09
  SPEAKER_01: He did Airbnb and he's like, he said, Carson, you have no idea.
• 21:13
  SPEAKER_01: He's like, you know, I'm sitting here and it's like 50 questions for like a three-night weekend, and I'm like, I just don't have time for it.
• 21:20
  SPEAKER_01: And it's like, okay, if they don't rent, they just wasted 30 minutes of my time.
• 21:24
  SPEAKER_01: And it's like, I'm basically working minimum wage to try and rent this thing out.
• 21:28
  SPEAKER_01: He said, Really, if you're gonna do it, you need to have a ton of them in one area and scale for it to be worth it, because you can hire somebody to sit there.
• 21:37
  SPEAKER_01: But he said the problem is they have to know everything about these properties.
• 21:40
  SPEAKER_01: And I mean, I'm sure with AI now that it's a lot easier and you can kind of take some of that out through chat stuff.
• 21:47
  SPEAKER_01: Some chat bots you can sit there and train over a couple months, you know.
• 21:52
  SPEAKER_01: I experimented with that, but you know, the part of the problem is people know it's fake and like it kind of hurts your your uh conversion.
• 22:00
  SPEAKER_01: rate.
• 22:00
  SPEAKER_01: So it's really tricky nowadays, I think.
• 22:02
  SPEAKER_00: So you got to take the good with the bad, right?
• 22:06
  SPEAKER_00: Realize that it's going to turn some people off, but you know, on the other side of that, it also frees you up to do other things for your business or to help market it or things.
• 22:14
  SPEAKER_01: Or it's saves$50,000 and hiring us assistants and real people to do it.
• 22:19
  SPEAKER_01: You know, I think you, you know, when you have the real people involved, it's got to be pretty big, you know, and it's I hate even saying that.
• 22:25
  SPEAKER_01: It's like I'm almost saying they're not even worth hiring.
• 22:28
  SPEAKER_01: But a lot of times you put so much training and effort into them.
• 22:32
  SPEAKER_01: You know, I had a friend that's like, you know, two or three years into an employee and then they quit and it's like, oh gosh, you know, I mean it's just devastating how much time you spend, you know?
• 22:42
  SPEAKER_00: So no, that's that's a real thing.
• 22:44
  SPEAKER_00: So I mean you have to look at that business model and say, you know, okay, maybe with a full-time person that knows this and can and is really good at communicating with people, I could have a 95% occupancy here or something like that.
• 22:54
  SPEAKER_00: And it might be 80% if I use, you know, some sort of AI bot or something like that.
• 22:59
  SPEAKER_00: But then you build it in there and you say what makes the most sense for the business.
• 23:03
  SPEAKER_00: Right.
• 23:03
  SPEAKER_01: So I think AI being utilized in the best way possible is one thing that y'all do with your community.
• 23:11
  SPEAKER_01: And I think that probably the most value your community offers is being able to talk to other entrepreneurs.
• 23:17
  SPEAKER_01: Because I think it's like what's worked for some people and what's w hasn't worked.
• 23:22
  SPEAKER_01: Like I've used AI in certain circumstances and I think it's a disaster.
• 23:26
  SPEAKER_01: I think it depends on what industry you're in and what clients.
• 23:30
  SPEAKER_01: Like it's like there's certain circumstances where I don't want AI talking to them.
• 23:35
  SPEAKER_01: It needs to be me on a video call or in person talking to them.
• 23:40
  SPEAKER_01: You know I'm asking for a million dollar plus property to sell or a business to sell.
• 23:46
  SPEAKER_01: Whether I'm brokering or I'm in vet uh as an investor it has to be me at some point.
• 23:52
  SPEAKER_01: So you know I got rid of the bots off my um website where they pop up.
• 23:58
  SPEAKER_01: I said you know if it's different if you're on the leasing side and you're talking to somebody wanting to rent an apartment.
• 24:04
  SPEAKER_01: I think the bots are necessary because you have to have lead capture and you can't be there full time.
• 24:09
  SPEAKER_01: So on my site I just say text Carson.
• 24:12
  SPEAKER_01: So I think it really and and I've I I wanted the call to action to be like hey you want a human just text me you know and it's actually worked you know I've gotten you know some random text that I didn't want to hear but you know I've gotten other ones that have been good.
• 24:27
  SPEAKER_01: I don't know but just hearing people what's worked and stuff I think is is a huge deal about your program.
• 24:34
  SPEAKER_01: I mean it's just it's changing so fast.
• 24:36
  SPEAKER_00: I mean honestly so yeah I mean there's a there's a couple things to touch on there.
• 24:40
  SPEAKER_00: So I mean if you're not leveraging AI you know in today's age at some level and and I'm not saying to replace people per se but just to make you more efficient right so it's it kind of you know is that force multiplier that I can say like I tell people like don't have AI write your whole business plan for you because we can spot that a mile away right us in the banks like we can see that.
• 25:01
  SPEAKER_00: But that doesn't mean don't use AI to help you write the business plan or don't use AI to help you generate things or I've used AI to say hey scrape my platform read through all these comments because I can't read through hundreds and hundreds of comments right but scrape it through and tell me is there a concern out there is there a question out there that I'm missing is there something else I can do to you know help give more value to the community members because it's it can't just be in courses right like people don't want to just buy a course anymore.
• 25:28
  SPEAKER_00: They they want the hands-on that they want the mentorship they they want that kind of community around them and support so it it has to be like a hybrid it has to be a 24-7 access basically to certain information but also that hands-on customized approach and that human element to just be like hey let's just talk about your business let's be the sounding board yeah yeah I think that's really important I I actually had a networking event and I stood up and I said you know it's great to have everybody I'm probably the first human I've you've talked to in three weeks.
• 25:58
  SPEAKER_01: This is the second podcast I think I've said that on but I thought it was funny you know I was trying to be funny and it you know it's it's kind of true you know it's like golly talk to so many robots but it it what you're saying though I mean it's like so you know I'll have AI generate like a proposal you know and you're talking about a three to five million dollar property I'm checking that before that goes out.
• 26:21
  SPEAKER_01: You know if you put your name on it and it's uh on something important you definitely need to read it.
• 26:26
  SPEAKER_01: That doesn't mean you can't use AI to give you some ideas and give you a base model you know and that speeds up the process like hey get me to where we're right there and I can kind of polish it, you know?
• 26:38
  SPEAKER_00: So yeah and and I mean even outside of that just on you know finding the opportunities right you can use AI to start scraping things and working for you while you're sleeping to uncover opportunities that aren't listed out there.
• 26:51
  SPEAKER_00: Yeah sometimes to be like okay well this is going to be an off market deal like put together a list of a hundred people people for me to reach out to and maybe it does the first look maybe it does the initial intro and it reaches out and then you do the personal follow-up and you do the the the final evaluation of all the deals to see what's worthwhile.
• 27:08
  SPEAKER_00: But again it there's something it can do for your business to to help improve it.
• 27:13
  SPEAKER_01: Yeah.
• 27:13
  SPEAKER_01: How do you uh feel I want to kind of transition and I'll I'll go back to AI a little bit.
• 27:19
  SPEAKER_01: It's just such a huge part of people's businesses.
• 27:21
  SPEAKER_01: And I use what you're talking about like I have like follow-up emails that are just basic you know like hey invite them out you know for a phone call or something like that.
• 27:30
  SPEAKER_01: Yeah definitely automate but eventually if you're gonna have you're gonna have to eventually pick up the phone and stuff like that.
• 27:37
  SPEAKER_01: But um let's talk about like capital and funding you know I like your philosophy on starting small you know there's a point where you do probably have to go all in and risk more but I don't think it's without testing the waters at a smaller level.
• 27:56
  SPEAKER_01: You know and you see it in real estate it's like you're at a point because you've already done self-storage that you're feel comfortable okay now I can risk my house because you're there.
• 28:09
  SPEAKER_01: But you know five years ago that would have been a dumb decision to risk your house on self-storage not knowing anything about it.
• 28:16
  SPEAKER_01: You know, I mean agreed?
• 28:18
  SPEAKER_00: Oh w without a doubt yeah and and you can only do so much research that's the thing right like perfectionists do not make good entrepreneurs because you can't plan everything.
• 28:27
  SPEAKER_00: But you know I when it came to self-storage I read every single book you could read like there isn't a book on Amazon I didn't read you know and and people I talked to and things like that.
• 28:36
  SPEAKER_00: But then it got to a point where I was like okay well I'm gonna invest a couple grand and become of this cohort kind of mastermind of people who have been there for 20 or 30 years and know the ins and the outs and can share with me what to look out for so I don't make that one big mistake when I'm doing my due diligence or whatever the case.
• 28:50
  SPEAKER_00: And I mean that's that's paid itself hundred times over easy.
• 28:55
  SPEAKER_00: Just just what I was able to invest in that versus what I was able to save and weed out from possible bad deals.
• 29:01
  SPEAKER_00: But you know so now it's like but I I like what you're saying as far as like you get to a certain point but then you're gonna need some sort of infusion of cash in order to scale it right and like in in some of my cases it was finding the off-market deals one that was the difficult part.
• 29:15
  SPEAKER_00: Find something off market get it at a good value show that you can do this value add.
• 29:20
  SPEAKER_00: So these kind of mom and pops that are you know in those kind of second tertiary markets there where you know they don't have a website or a social presence or you know rankings or the kind of an absentee owner like that they do something else and they just happen to have this property on the side and they've owned it for 40 years.
• 29:37
  SPEAKER_00: They they don't do active price increases they they don't do a lot of these things right or they're at 100% capacity and they have three more acres they could build on and they just never expanded right so well let's go test the demand.
• 29:48
  SPEAKER_00: Let's go test the market let's go test the pricing.
• 29:50
  SPEAKER_00: If you can acquire the property at the right price and you're profitable right out of the gate, you know, then all you got to do is say okay well now let's test the pricing market.
• 29:58
  SPEAKER_00: Like let's see if my assumptions are right that this thing's undervalued.
• 30:01
  SPEAKER_00: And then you start you know getting out those price sensitive people the people that are just storing junk in there.
• 30:06
  SPEAKER_00: Like you know if we go do a rent raise when we come in somewhere, people are like oh aren't you scared that people are going to leave I'm like I plan on people leaving.
• 30:14
  SPEAKER_00: That's the point.
• 30:15
  SPEAKER_00: I want those people that are going to complain every month or be laid every month and and not that you know nothing against them but it's like I need to run a business here.
• 30:23
  SPEAKER_00: So I want to get the people that are getting junk.
• 30:26
  SPEAKER_00: Go ahead.
• 30:26
  SPEAKER_01: Yeah when you talk about like the price testing I have a friend that's told me about this where he puts like a generic ad out there to see what kind of bites he gets you know like storage or whatever product you're selling for this amount.
• 30:40
  SPEAKER_01: And I did it when I started I had a mobile app and I did like a little Google ad just to see what kind of clicks I'd get and I had a few some calls I said there's debit I just wanted to see the demand.
• 30:50
  SPEAKER_01: You know do you ever do stuff like that?
• 30:53
  SPEAKER_01: I think that's what you're kind of referring to.
• 30:55
  SPEAKER_00: This is you know going back to what I was talking about like knowing your customer base.
• 30:59
  SPEAKER_00: So uh guy that I have coming on the podcast next Monday uh he he he pre-sold this book that he had um and this book is is kind of unique it comes out in instead of the book itself it's a book but it's 12 chapters and each month you get one chapter but you get it in a box and the box comes with these things that actually immerse you into the reading like the candle that they're using in there or you know a tea that they're drinking in there so you become part of the story.
• 31:24
  SPEAKER_00: And he's like I don't know if I I don't know if there's a market out here for here.
• 31:28
  SPEAKER_00: So we advertised it he pre-sold all all these things and he's like well I guess there is a market so now I gotta start building these things and get them out to people.
• 31:37
  SPEAKER_00: But uh I saw a kid oh damn what the hell is it um the guy's name's eluding me right now but um when I hate that man you're like oh I'm terrible I'm freaking terrible with that but get an older man I'm kind of like you I'm like in my late mid to late forties.
• 31:54
  SPEAKER_01: Yeah I hate admitting it we're not supposed to admit that on a podcast but anyway.
• 31:59
  SPEAKER_01: It is what it is what's that guy's name?
• 32:00
  SPEAKER_00: Yeah I just talked to him 10 minutes ago yeah but this ain't I mean you know he almost has like a Carson's corner kind of you know deal there where but so so anyway he he had a kid come on and the kid had three different business ideas and he's in like Arizona or something.
• 32:14
  SPEAKER_00: I don't know but he was a young kid he was like 19 at the time um and he he put out three different things on Facebook Marketplace and one of them just took off he had hundreds of requests for this one thing and he didn't own any of them he just wanted to see what it was and it was a uh washer and dryer rental business and he had hundreds of people saying yeah I want to rent them and he's testing the price points with these things then he's like well I guess I got to start buying these things somewhere right so he'd buy one install it somewhere turn on a monthly lease I think within like 120 days he was making like 7,000 a month in recurring revenue.
• 32:47
  SPEAKER_01: That's crazy.
• 32:47
  SPEAKER_01: I've heard of that I you know there was a guy that uh Brendan knew and he had it out in his yard and he just started renting yard equipment and then there were certain ones that were selling really well so he got rid of all the ones that didn't you know and there were just certain items that were just always renting out like you know crazy stuff.
• 33:07
  SPEAKER_01: So I don't know.
• 33:08
  SPEAKER_01: I I I think that's that's kind of seven grand a month.
• 33:11
  SPEAKER_00: You know and he's grown since then that was just in the beginning.
• 33:14
  SPEAKER_00: I mean he's much bigger than that now but that's kind of nuts man.
• 33:16
  SPEAKER_00: Yeah that's how you test the market beforehand.
• 33:18
  SPEAKER_00: But again like you know when my when I bought my first self storage facility one this is before I could get like investors because I had to prove that my business models were going to work in the real world right not just concept so you know bought the first facility increased the prices still had those those high leases like 90, 95 100% lease up.
• 33:37
  SPEAKER_00: So I'm like well now it's a supply-demand issue where there's there's just not enough supply in the area but I have enough acreage here where I can build out so now that we're profitable I can take on a construction loan and within 10 units of leasing up the the new uh you know facility it's already covering the cost of the construction loan and then anything else over that is gravy we would have never gotten before anyway.
• 34:00
  SPEAKER_00: So there's small ways that you can do it.
• 34:02
  SPEAKER_01: I know I I think part of it is is you know you see people and it's the SBA you're personally liable there's a time for it and there's a time not for it is you know what I gather.
• 34:15
  SPEAKER_01: And you know Jed talks a lot about it and it's you know the stress in going into a business knowing that you know even if you have a good test model like you're saying you still got to work and perform.
• 34:29
  SPEAKER_01: You know you still have to lease those out you still have to deliver them.
• 34:32
  SPEAKER_01: It doesn't matter what you're selling you still have to build the business.
• 34:36
  SPEAKER_01: So you know there's going to be some pain points and some growth pain you know but growing pains along the way and I think part of it is is a lot of people just go in with the idea that they saw a video online they could just go to the SBA and start a business tomorrow morning and be fine and it's just not wise, you know there's dangers in it.
• 34:57
  SPEAKER_00: So you know Yeah yeah just because they would lend to you which I mean and a lot of times that's even a struggle people think like it's just so easy.
• 35:03
  SPEAKER_00: Oh the bank's just going to give me half million dollars for me to start a business.
• 35:06
  SPEAKER_00: I'm like it doesn't work like that.
• 35:08
  SPEAKER_00: You you need to put money down too you know even with an SBA you still need 10% cash down.
• 35:13
  SPEAKER_00: So where are you gonna get the hat they want the skin in the game.
• 35:16
  SPEAKER_01: Let me let me ask you this while we're talking about the 10% down another misconception is they make it sound like finding the investor is going to be easy.
• 35:25
  SPEAKER_01: And it can be if you know what you're doing.
• 35:27
  SPEAKER_01: You know if you have an outstanding track record but for somebody that's just starting out you know it's really actually pretty hard to find an investor.
• 35:36
  SPEAKER_00: Your first one like anything I mean you know yeah without a doubt and especially outside of friends and family but even the issue with that right so now you have this increased burden of your friends and families money that you're investing too.
• 35:49
  SPEAKER_00: So yeah so like in in my case the first facility I have a couple business partners we put in our own cash into the first deal and it was a small deal like it was only a half million dollar acquisition.
• 35:59
  SPEAKER_00: Uh it's on the market now for like three times that but wow it's good yeah it was it was a quick turnaround it was a concept play anyway so the idea was that we could do this add our strategies to prove that they worked and then the next deal is when we would bring in the investors after we were able to prove the returns that we could get for ourselves in the multiples.
• 36:18
  SPEAKER_00: So that's exactly what we did.
• 36:19
  SPEAKER_01: The second the second facility I got we got with all investor money pretty much so it was it was a lot easier that time to prove that how do you um you know talk to your guys about finding investors you know that's at some point that's gonna be a part of it if you want to grow.
• 36:35
  SPEAKER_01: You know that you're gonna reach a point you know we're talking early phase like hey do your research you know get get the proper tools use AI where you can to be more efficient you know but eventually they're gonna have to step out and you know find investors.
• 36:50
  SPEAKER_01: It doesn't matter if you're raising a hundred grand or 10 million, you know, are you coaching them on like to go out and start building relationships and stuff like that or network.
• 37:03
  SPEAKER_00: Yeah I mean it's it really comes down to your network.
• 37:05
  SPEAKER_00: So you have to find like minded people and you have to find their appetite even even with banks not every bank is the same right like as a small business owner if you think you're gonna go to you know Bank of America and they're gonna give you money even if you want five million you're still too small for them basically right so so you have to find out like where where are the lenders in this area and where are the investors in this area who are the people that have the appetite for something like this and it's like am I going to go you know scratch together a bunch of people that have 10 grand to invest but that's the only 10 grand they have to invest and now you're they're always like hey where's the return?
• 37:38
  SPEAKER_00: Hey where's the dividend hey where's this like usually the smaller investors are the biggest headache ones.
• 37:42
  SPEAKER_00: Yeah.
• 37:43
  SPEAKER_00: Right?
• 37:43
  SPEAKER_00: So 100% yeah yeah so I mean there's real estate investment groups out there like you know communities where they have like monthly um you know you know a lot of these people were like multifamily deals or commercial real estate but they they're groups that get together and they they talk every month and they just you know have some presentations talk about the industry have a couple of beers and then network with each other.
• 38:06
  SPEAKER_00: I mean bigger pockets like there's platforms out there that you can meet people but like are you going after credit investors?
• 38:13
  SPEAKER_00: Are you going after friends and family?
• 38:15
  SPEAKER_00: Are you going after you know I mean the easiest thing are people that know you so for our deals a good chunk of it was people that we had in our network somehow somehow right like even if it was a second degree connection and I'm not I'm not talking like second degree linked in connection but like a real world connection like hey I know this person trusts me and they have a friend that has money and they're gonna introduce us.
• 38:38
  SPEAKER_00: So you have a little bit of you know good faith in there and and then you talk about the deal but it you have to prove what you know what you're doing is what it really comes down to anyway.
• 38:50
  SPEAKER_01: Yeah I I I don't disagree and I think talking about what you do no matter how small it is even if it's like your first storage facility but say hey we're doing a great job looking to grow but you know not necessarily like you're going for the ask.
• 39:06
  SPEAKER_01: You're not out soliciting people on investing with you.
• 39:09
  SPEAKER_01: You got to tell people what you do.
• 39:11
  SPEAKER_01: Right.
• 39:11
  SPEAKER_01: But I think a lot of it is is early on I was a little bit embarrassed about the size of the deals I was doing.
• 39:17
  SPEAKER_01: So I'd go to events and I'd was like embarrassed to talk about them.
• 39:20
  SPEAKER_01: You know what I'm saying?
• 39:22
  SPEAKER_01: And I shouldn't have been because it it was like what I was doing was very smart.
• 39:26
  SPEAKER_01: You know it's like okay that's a small deal.
• 39:28
  SPEAKER_01: Like you said a half a million dollar deal to a big investor seems really small but at the same time if you just talk about it say hey we're starting small for bigger things because we want to learn as much as we can about not only about operating the mistakes we're gonna make we're gonna operate as efficiently as possible before before we start taking those steps to the next level you know I think you know not being afraid to talk about you know where you're at in the journey.
• 39:56
  SPEAKER_00: So and I would say like you know you don't look at gift hosts in the mouth or you know don't always judge a book by its cover.
• 40:02
  SPEAKER_00: I wish they were better examples now.
• 40:04
  SPEAKER_00: I'm sure there are I just don't know them.
• 40:06
  SPEAKER_00: But you know there's you know PE groups out there that have access to hundreds of millions of dollars and they are looking for a$50,000 investment to just test you to see.
• 40:17
  SPEAKER_00: Oh it's almost throwaway money for them but they want to see what it is.
• 40:21
  SPEAKER_01: I've talked to people that you know they bought this guy like a million dollar dog food thing and they just wanted to see how he worked they liked him.
• 40:31
  SPEAKER_01: They said I just want to see how he operates and that you know and and they're out there you know with stupid money to throw around so I think no matter how big you are don't be scared to put yourself out there for sure.
• 40:41
  SPEAKER_00: Yeah without a doubt so like we go to sell storage conferences and the great thing about those is yeah you learn some stuff about the industry but you'll learn people trying to get into the industry.
• 40:49
  SPEAKER_00: I remember one of the guys I met a couple of years ago he had just exited a billboard um sale so he owned I don't know how many locations but it it was yeah it was a it was a fairly large you know nine figure deal eight figure deal and a minimum but he wanted to you know reallocate some of that money into something more passive like self-storage and he knew nothing about the industry so he was just looking to meet people that knew the industry that were willing to just teach him a little bit and use his money.
• 41:16
  SPEAKER_00: Yeah so it's those are the those are the people that you can meet at these things.
• 41:21
  SPEAKER_00: Yeah because they're all like minded people.
• 41:23
  SPEAKER_01: I I think a lot of you know the value of your community is talking to people that are at different points in their journey because everybody's kind of like at a different point.
• 41:32
  SPEAKER_01: You know I think if they're a little older they might be a little more aggressive about you know how they come in you know depending on their financial situation.
• 41:40
  SPEAKER_01: But just talking through people that are at different phases of raising capital I think is a huge deal.
• 41:45
  SPEAKER_01: And then I think one thing you talked about is the first bank you go to is probably going to shoot you down.
• 41:51
  SPEAKER_01: And a lot of people just kind of shut down after that.
• 41:54
  SPEAKER_01: And it's like I don't know if it's something like you weren't meant to be an entrepreneur if you quit at that point, but some people just start they start planting negative seeds in their mind like oh nobody's going to finance this when it's like well you need to be talking to like eight to twenty banks before you get alone.
• 42:12
  SPEAKER_00: You got to understand how how the system works right and I I tell people to this all the time and it this took me years right to figure out is like you go to a bank you think you're you know you go to some meet and greet out there you go to some you know thing and you know you talking a small business and you meet somebody that does like loan application stuff and you think you're developing the relationship.
• 42:32
  SPEAKER_00: That has nothing to do with whether or not you're going to get funded with the bank doesn't matter how friendly that guy is he's just the front end right you have to understand how the underwriters work.
• 42:40
  SPEAKER_00: You have to understand like does this bank actually work in this industry?
• 42:44
  SPEAKER_00: Do they have an appetite for it?
• 42:45
  SPEAKER_00: And even if they are like say you're in multifamily housing and they do multifamily housing you're like oh great they'll lend to me they might be overleveraged in that industry already and they might be looking to diversify.
• 42:55
  SPEAKER_00: So even though they have lent to it in the past doesn't mean they're looking to lend to it now.
• 42:59
  SPEAKER_00: So you have to understand where the bank's at really before you have to start and and it just might be a timing thing right so you're right you you do need multiple relationships with banks but you have to understand like what the underwriters are going to look for because if you think that I'm gonna start the process I'm gonna do the application and you're gonna go through this for six weeks, eight weeks and they're gonna pull your credit and they're gonna do all this stuff and it gets to underwriting and they shoot it down then you're like what a waste of time.
• 43:23
  SPEAKER_00: And it is and yeah you'll you'll waste years of your life doing that if you don't know how to speed that process up you know faster.
• 43:31
  SPEAKER_01: The the the lenders you always meet at the conference they're like so nice.
• 43:34
  SPEAKER_01: They're like your go-to guy but in reality you need to have like five of them you know or I don't know or or or one that has a good enough relationship like if they can't finance they'll say hey take it here or tell you where to go you know so that's not really for us you know maybe here or here give you some ideas of who would finance it.
• 43:53
  SPEAKER_01: But you know there's the dark side of lending too I think a lot of entrepreneurs that have trouble raising Capital and being in a community like yours would kind of steer them clear of like SBA loans and stuff.
• 44:06
  SPEAKER_01: You know, I mean if you're getting into a situation where it's like five or ten grand, that's one thing.
• 44:11
  SPEAKER_01: But I've seen it where it's like hundreds of thousands of dollars and you're like, this is just an astonishing amount of money, you know, and they're at like fifty to a hundred percent interest, and you're like, what in the world happened, you know?
• 44:23
  SPEAKER_01: So I mean, I don't know, you know.
• 44:26
  SPEAKER_00: Yeah, I mean you you have to pencil your own deal too to see what makes the most sense for you.
• 44:30
  SPEAKER_00: And yeah, if you don't have enough, you know, money to put down, then maybe it's not the right deal for you at this time.
• 44:35
  SPEAKER_00: And yeah, there's a lot of opportunities.
• 44:38
  SPEAKER_00: Like some of the things that I teach people is how to start a business for almost nothing.
• 44:42
  SPEAKER_00: Like, what businesses can you start where you can just start generating revenue with almost no risk?
• 44:46
  SPEAKER_00: And they're out there.
• 44:47
  SPEAKER_00: Like that there's affiliate companies that you can get started with, there's communities you can start building with almost no overhead, like there's ways to get into business to set yourself up for the future where you don't have to take that that overhead risk.
• 45:00
  SPEAKER_00: Or just the other way, like one of the one of the logistics companies I had, I worked my way into it.
• 45:06
  SPEAKER_00: So I was just getting off of active duty, I think.
• 45:10
  SPEAKER_00: Um I was finishing up my MBA program and there was a small startup company, and they needed a chief operating officer.
• 45:16
  SPEAKER_00: They were starting to expand through multiple territories, and then they needed someone that understood compliance and managing people and other things.
• 45:22
  SPEAKER_00: And I had already had a logistics company at this point.
• 45:25
  SPEAKER_00: So they didn't have the salary to pay me, you know, because they're a startup.
• 45:29
  SPEAKER_00: So we did a deferred salary.
• 45:30
  SPEAKER_00: They gave me a smaller salary and then the rest in stock options.
• 45:34
  SPEAKER_00: So then I became like a 25% owner of that business by kind of a little bit of sweat equity, but I also got paid to do it.
• 45:40
  SPEAKER_01: So there's ways you can get in, you know, to ownership that aren't just 25%'s a good amount, man.
• 45:48
  SPEAKER_01: You know.
• 45:50
  SPEAKER_01: So if somebody was gonna join your group, you know, no matter where they're at in their journey, whether they're in the startup phase, I think even if you're a company, I have businesses and it's always good to talk to other entrepreneurs.
• 46:05
  SPEAKER_01: You know, that's part of the purpose of my podcast, so I can talk to David and other entrepreneurs, and you know, before and after the show, I'll say, hey, what are you doing for this?
• 46:13
  SPEAKER_01: You know, and we get to talk and kind of share things, and that's probably the biggest value of your community and the stuff you teach and all that.
• 46:22
  SPEAKER_01: Um, you know, what how how how do people get uh find your community and all that to get in touch with you, man?
• 46:29
  SPEAKER_00: Yeah, I mean the simplest thing is just veteran business community.com.
• 46:32
  SPEAKER_00: That will always be an active link that'll reroute you to wherever we are.
• 46:36
  SPEAKER_00: Um, but yeah, that's that's the easiest way to do it.
• 46:38
  SPEAKER_00: You can join the community, it's risk-free right now, and there's a 30-day money-back guarantee regardless, but you get a seven-day free trial.
• 46:45
  SPEAKER_00: Um, I I always put my money where my mouth is.
• 46:48
  SPEAKER_00: If you don't like it, that's fine.
• 46:50
  SPEAKER_01: Like, nobody's gonna nobody's gonna ask for a refund, man.
• 46:53
  SPEAKER_01: You know, that you have to offer that because you're a good business, but they'll get so much value.
• 46:58
  SPEAKER_01: If they're if they're using it and talking to other entrepreneurs, you know, it's worth every penny.
• 47:03
  SPEAKER_01: So um, you know, I I love talking to business people.
• 47:07
  SPEAKER_01: Just it's just different stuff you learn from them.
• 47:10
  SPEAKER_01: Like, golly, I got screwed on my taxes and ways to avoid different stuff and just lessons that take decades to learn.
• 47:17
  SPEAKER_01: You can learn in like 10 minutes, you know.
• 47:20
  SPEAKER_01: So I think that alone and you know what what not to do and stuff.
• 47:24
  SPEAKER_01: Um, so what you're also on LinkedIn.
• 47:29
  SPEAKER_01: Um, and then um what's the craziest uh thing you've seen like in an acquisition where you said uh-uh, we're not doing this?
• 47:37
  SPEAKER_01: You know, if you can remember, there's probably been a hundred of them, but you know not doing this.
• 47:43
  SPEAKER_00: Well, I I I'll say more more recently.
• 47:46
  SPEAKER_00: So I like I said, I have a little portfolio that I'm selling right now in my self-storage facilities.
• 47:51
  SPEAKER_00: Uh, and we had a deal basically asking price.
• 47:53
  SPEAKER_00: It was 50k off, but basically asking price for the deal.
• 47:56
  SPEAKER_00: But uh every deal has its own terms, right?
• 47:58
  SPEAKER_00: And we were offering some owner financing.
• 48:00
  SPEAKER_00: Uh, and they wanted like a million in owner financing, and we kind of I don't know, that's kind of the upper limit of what we'd want to do based on the terms and how long I want to tie it by cash, and you know, uh but you know, it really came down to I said, well, that's fine, but if we're gonna do this, then you guys need to put in X amount of cash.
• 48:18
  SPEAKER_00: We don't want you over-leveraged because if you default, you know, then my owner financing doesn't mean anything.
• 48:24
  SPEAKER_00: And then I would have to try to buy back the business, you know, and the property from the bank, and I'm not going to buy it back for more than I already owe in debt.
• 48:33
  SPEAKER_00: So we tried to cap them on how much they were allowed to borrow, and that ended up killing the deal, which which is tough because it was going to be a good exit.
• 48:40
  SPEAKER_00: Um, but we we had to walk away.
• 48:43
  SPEAKER_01: I I think that's a really good subject, though, that you brought that up.
• 48:47
  SPEAKER_01: Because in certain areas, so when the stock market, just on a broader economic stance, when the stock market soars, it's harder to raise money for uh real estate in businesses.
• 48:59
  SPEAKER_01: But like the dot-com era, when that bubble burst, which it'll eventually will with the AI, then capital floods back into real estate.
• 49:07
  SPEAKER_01: But in that interim, you know, there's kind of like these businesses that you could purchase with owner financing.
• 49:13
  SPEAKER_01: You know, how is that structured and all that?
• 49:16
  SPEAKER_01: I mean, that's a huge value that you know all that.
• 49:18
  SPEAKER_01: And how do you well, what do they try and call it creative financing, which it is, but there's a lot of deals out there that you can get into, like your deal that you're talking about, for not a whole lot of money down.
• 49:30
  SPEAKER_01: I mean, it's a deal that's worth over a million dollars, you know.
• 49:34
  SPEAKER_01: When the owner financing it finances it, there still needs to be money down, but you know, I don't ever advocate zero money down.
• 49:43
  SPEAKER_01: I love it when I see somebody acquire businesses with zero money down and you're like, that's awesome.
• 49:49
  SPEAKER_01: You know, you're kind of almost jealous, you're like, that guy's a badass, you know.
• 49:53
  SPEAKER_01: But at the same time, as an owner, it's really scary to offer owner financing.
• 49:59
  SPEAKER_01: I sold a business owner financed, and we we asked for a considerable amount down, either from the bank or them.
• 50:05
  SPEAKER_01: It could be either one, you know, but I think there's got to be some skin in the game.
• 50:10
  SPEAKER_00: Oh, yeah.
• 50:10
  SPEAKER_00: Without a doubt.
• 50:11
  SPEAKER_00: Yeah.
• 50:11
  SPEAKER_00: Yeah.
• 50:16
  SPEAKER_01: I mean, I don't know.
• 50:18
  SPEAKER_01: Yeah.
• 50:18
  SPEAKER_00: I mean, in that case, if if it was just owner financing, that was it, then it'd be a little bit easier because then you'd be like, fine, then I'll take the company back and I'll keep all the money that you gave me.
• 50:26
  SPEAKER_00: But in this case, you know, there was a lender involved and there was cash in the deal.
• 50:30
  SPEAKER_00: So and and the cash covered our debt, you know, and and whatnot.
• 50:34
  SPEAKER_00: We would have walked away decent.
• 50:35
  SPEAKER_00: But again, I look at it as opportunity costs.
• 50:38
  SPEAKER_00: Like it's gonna take years to get that money back.
• 50:41
  SPEAKER_00: Basically, we almost have to match the bank's terms with the owner financing.
• 50:45
  SPEAKER_00: They don't want some huge, you know, five-year balloon payment due on the business that could bankrupt the business.
• 50:50
  SPEAKER_00: So, you know, or how much could I do for that money down?
• 50:53
  SPEAKER_00: Like if I got it now, I can 1031 exchange debt into another like property, you know, and get three of these facilities for that amount of money and not have a tax, you know.
• 51:04
  SPEAKER_01: The bottom line is owner financing you can get a better deal, but it doesn't mean free.
• 51:09
  SPEAKER_01: You know, that's yeah, definitely not free now.
• 51:11
  SPEAKER_01: It's it's still borrowed money.
• 51:13
  SPEAKER_01: But it's gonna have to pay an interest too.
• 51:15
  SPEAKER_01: Yeah.
• 51:15
  SPEAKER_00: Yeah, without a doubt.
• 51:17
  SPEAKER_00: But uh, but it it can close the deal sometimes.
• 51:20
  SPEAKER_00: Uh it can lower the bank's risk.
• 51:22
  SPEAKER_00: Um every bank values it differently too.
• 51:25
  SPEAKER_00: So um, but there's certain things too, like SBA, like they don't allow like you know, buyouts or or earnouts, I I guess I should say, not buyouts, but like earnouts and other things.
• 51:34
  SPEAKER_00: So it can it can muddy the waters a little bit depending on the structure.
• 51:38
  SPEAKER_00: But yeah, uh the funny thing is when I always see like these businesses for sale and it's like SBA approved.
• 51:44
  SPEAKER_00: I'm like, there's no such thing as SBA approved.
• 51:46
  SPEAKER_00: It just means it's not one of those couple categories that you can.
• 51:48
  SPEAKER_01: Who underwrote it?
• 51:49
  SPEAKER_01: You gotta underwrite it based on the buyer.
• 51:51
  SPEAKER_01: It's just kind of funny you said that, like SBA approved.
• 51:54
  SPEAKER_01: I can't I probably couldn't put that in one of my listings.
• 51:57
  SPEAKER_01: I I I wish I could, but you know, I thought about having a banker, like, you know, how they do on the residential, putting it on commercial, like, but it's you can't really price out a loan.
• 52:07
  SPEAKER_01: It's impossible, you know, on on commercial.
• 52:10
  SPEAKER_01: It's like, okay, who's buying it?
• 52:11
  SPEAKER_01: How much money do they have down?
• 52:13
  SPEAKER_01: There's just so many factors.
• 52:14
  SPEAKER_01: It's like it's it's really silly.
• 52:16
  SPEAKER_01: You can put plant the seed about SBA and they have really good payment terms and say, you know, based on approval, you know, or something in there.
• 52:26
  SPEAKER_01: But yeah, I don't know.
• 52:27
  SPEAKER_00: I mean, the the the SBA, you know, having that guarantee for the lender, you know, your traditional lender, whatever bank institution you're going to, uh it can close the deal because it lowers their risk.
• 52:37
  SPEAKER_00: Oh, is what it comes down to.
• 52:38
  SPEAKER_00: There's a certain amount guaranteed, almost like a VA home loan.
• 52:41
  SPEAKER_00: It works in the same way where they're they're guaranteeing the bank that you won't get totally hosed for the whole amount.
• 52:47
  SPEAKER_01: So no, I've had uh buyers where I said the the you the bank they go to is gonna make them go through the SBA to guarantee it.
• 52:54
  SPEAKER_01: You know, the bank leverages the SBA.
• 52:56
  SPEAKER_01: They're like, okay, which lenders will we take on their own?
• 52:58
  SPEAKER_01: Which ones do we want guaranteed by the SBA?
• 53:01
  SPEAKER_01: And the ones they can get the SBA SBA to guarantee they'll do, you know, the it it's almost like I I don't know, they don't want to go through SBA because the SBA is taking so long to close.
• 53:12
  SPEAKER_01: Some of them are like taking like six months, you know, to get through it.
• 53:16
  SPEAKER_01: So anyway.
• 53:18
  SPEAKER_00: I was just in an SBA conference where they were talking about this, and like, oh, it doesn't really add any time like Mel Ben through there.
• 53:23
  SPEAKER_00: It definitely adds more time, and uh there's definitely more paperwork involved, but whatever.
• 53:27
  SPEAKER_01: So I haven't done an SBA loan in a while, and I ran into a friend that's doing R V parts, and he's like, when's the last time you had somebody go through?
• 53:36
  SPEAKER_01: I said, It's been a couple years, man, and he was like, you know, it's like six to seven months, but that was probably eight months ago I talked to him, so maybe the times have gone down since then, you know?
• 53:47
  SPEAKER_00: Yeah, it's well that that was also probably when there was the whole government shutdown thing going on and these programs were unfunded, and people were like, like the SBA specifically was cut back and they were told don't come to work like they were furloughed and got it.
• 53:59
  SPEAKER_00: So there was a lot going on at that time.
• 54:01
  SPEAKER_00: So I I'd say that's a one-off.
• 54:03
  SPEAKER_00: That's that's almost like saying something about COVID.
• 54:05
  SPEAKER_01: Is it like closer down to like 90 now?
• 54:08
  SPEAKER_01: Is what I would say.
• 54:09
  SPEAKER_00: Yeah, it's it it'll it'll add more, a little bit more headache, a little more paperwork.
• 54:13
  SPEAKER_00: It might add a little bit extra time.
• 54:15
  SPEAKER_00: And usually here's what happens is sometimes the lenders blame the SBA for something like, yeah, oh yeah, well, uh, would we would love to do that for you, but the SBA is requiring us to have every single uh investor do a personal guarantee, even if they don't own 20%, and you have to know enough to go back and say no, that's not an SBA requirement.
• 54:38
  SPEAKER_00: And that's too much.
• 54:40
  SPEAKER_01: Do you not have to have an uh uh personal guarantee?
• 54:44
  SPEAKER_00: Uh if you don't own 20%.
• 54:47
  SPEAKER_01: So if you put 20% down, you could waive the personal guarantee, right?
• 54:51
  SPEAKER_00: Under 20%.
• 54:52
  SPEAKER_00: You gotta say under 20% to not have the personal.
• 54:55
  SPEAKER_00: Yeah.
• 54:55
  SPEAKER_00: So if you're 19, like we we we have some investors, we call them 19 as a nickname because they're under the 20% threshold.
• 55:02
  SPEAKER_01: Yeah.
• 55:03
  SPEAKER_01: Yeah.
• 55:03
  SPEAKER_01: Wow.
• 55:04
  SPEAKER_01: That's crazy.
• 55:06
  SPEAKER_01: Yeah, all that's interesting, man.
• 55:08
  SPEAKER_01: I just kind of like it's I don't know, it's wild.
• 55:11
  SPEAKER_01: So um look forward to doing a deal with you someday or, you know, meeting up.
• 55:16
  SPEAKER_01: Um I got a networking event going on in the Atlanta area.
• 55:19
  SPEAKER_01: I just got it locked down today.
• 55:21
  SPEAKER_01: It'll be with small business owners at a co-working place, you know, a lot of entrepreneurs and stuff.
• 55:28
  SPEAKER_01: It's really for investors and entrepreneurs and you know, looking forward to it.
• 55:32
  SPEAKER_01: We just locked the owner of the building's an entrepreneur, they own a hospitality company as well, and you know, doing food and beverage and stuff like that.
• 55:41
  SPEAKER_01: And you know, it's all all people that either own apartments or businesses or storage or RV parts or all kinds who knows what the crazy stuff we get into.
• 55:50
  SPEAKER_01: Uh mobile apps was that one of our other ones.
• 55:54
  SPEAKER_01: Um guys started a little app where that's uh like tipping for bands and stuff, really cool app, uh just all kinds of crazy stuff.
• 56:02
  SPEAKER_01: There's uh also opportunity zones where you can come in and in with a capital gain and then exit tax-free on the growth of the business.
• 56:11
  SPEAKER_01: We're gonna have a speaker for that.
• 56:12
  SPEAKER_00: And that's that's a confusing thing and misunderstood quite a bit.
• 56:18
  SPEAKER_00: So it's it's good if you know somebody that does it.
• 56:21
  SPEAKER_01: I know somebody that does.
• 56:22
  SPEAKER_01: I have all my properties are in opportunity zones right now.
• 56:25
  SPEAKER_01: The ones in Kingsport and Memphis both.
• 56:27
  SPEAKER_01: I got a data center site, but it if you simplify it and just stick to the like the high-level rules, you gotta add money to it.
• 56:35
  SPEAKER_01: It's gotta be like a redevelopment or a business that goes in where you put a certain amount, and a certain amount of it has to be a capital gain.
• 56:42
  SPEAKER_01: Keep it for 10 years, you know, and then hire a consultant for a little compliance.
• 56:48
  SPEAKER_01: And that's it's not that hard if you simplify it, but it's just gotta involve a gain on the front end and all that.
• 56:54
  SPEAKER_01: And you know, I I can't give advice on it.
• 56:56
  SPEAKER_01: I'm not a licensed attorney, but you can hire one.
• 56:58
  SPEAKER_01: See if I'm right.
• 57:00
  SPEAKER_01: I gotta give my disclaimer, man.
• 57:02
  SPEAKER_01: We're gonna get in trouble, David.
• 57:03
  SPEAKER_00: Yeah, I know.
• 57:04
  SPEAKER_00: It's it's funny.
• 57:05
  SPEAKER_00: I I interviewed a lawyer a couple months ago, and then afterwards, like, oh crap, I never gave the disclaimer.
• 57:09
  SPEAKER_00: I'm like, I'll I'll put it on there before I edit it and post it online.
• 57:12
  SPEAKER_00: It's fine.
• 57:13
  SPEAKER_01: That's that's hilarious, man.
• 57:14
  SPEAKER_01: But yeah, great having you, man.
• 57:16
  SPEAKER_01: Um I'll uh I'll cut it at that.
• 57:18
  SPEAKER_01: Y'all, David's on uh LinkedIn.
• 57:20
  SPEAKER_01: Um what was your website one more time, man?
• 57:22
  SPEAKER_00: Yeah, so on LinkedIn there's 800 million David Joneses, so David Jones214.
• 57:28
  SPEAKER_00: So type in 214 after my name and you'll find me.
• 57:30
  SPEAKER_00: And then the website is veteranbusinesscommunity.com.
• 57:33
  SPEAKER_01: David Jones214 on LinkedIn, and you just got his website and all that.
• 57:38
  SPEAKER_01: We we love it.
• 57:39
  SPEAKER_01: Appreciate you coming on and all that and helping veterans and entrepreneurs out there with some good advice, man.
• 57:44
  SPEAKER_01: So appreciate you.