Speaker 1: Hey, looks like we're live. So welcome back to the surges of income podcast, and the surges of income podcast is all about how you can create surges of income in your life leveraging owning businesses and acquiring businesses and getting business profit distributions, also from the sale of a real estate property. Learning more business growth strategy, digital marketing and how to build these businesses up, do big launches, events and more. That's where surges of incomes come from and surges of income is so necessary to really get to the next level in life as an investor financially to unlock lots of income at big and big quantities right away so you can have that more money to invest. So what we talk about a lot on the surges of income podcast is around business, business growth strategy and how to have businesses so they can run without you, so you can have a business that's more built to sell. So when a business is built to sell, it does not need the owner as an operator in the business. It operates without the owner as well, as it's built in a way where it's going to be a lot more attractive to financial and strategic trade buyers and different companies that are looking to acquire you, where you can get a lot more income and a lot more of a big payday at exit.

Speaker 1: So today I have Angelo on the call with me. He's in Arizona and one of our Facebook groups. I offered to mentor people live, right here on the podcast, and Angelo raised his hand, told me he wants to talk a little bit more about finding and hiring people for the businesses that he's looking to acquire, as well as businesses that he's already a part of, both at the low skill, low wage level, management level and very skilled, even specialized level. So we're going to dive into that deep here today over the next 35 to 45 minutes and Angelo, welcome. Thanks for coming on with me and why don't you introduce yourself?

Speaker 2: Thanks for having me. Chris, appreciate you. So yeah, i'm an entrepreneur here, based out of Arizona. I have a few businesses I'm currently working on and, you know, when I saw the opportunity to get some mentoring time with you, i just jumped all over it. You know, i think you bring a lot of value to protégé, dealmaker and just anybody around you, so I'm super excited to be here and get to pick your brain a little bit.

Speaker 1: Man, excited to have you In context, wise, somebody who may be watching this, whether it's today or maybe two years down the road. I am the COO and partners with Carl Allen at Dealmaker Well Society and we teach business acquisitions, creative financing around that, and how to buy businesses that are actually cash flowing, where you can buy a business with middle management layers in place so you can be a true owner, investor of that business. And that's how Angelo and I know each other from that. He's also big in the real estate game. So just to give you some clarity on that, that's Dealmaker Well Society.

Speaker 1: Dealmaker Protégé is our inner circle mentorship group. That's what he's referencing. So, 100% man, i love teaching, i love providing value. That's why we're here. So let's talk about you. You have some businesses that you're looking to acquire. I think from our conversation, you also have a business that you are about to start and you have some questions about each one of those around finding and recruiting the right talent and operators. So the floor is yours, the mic is yours. Tell me what you need, thanks, man.

Speaker 2: Yeah, so I'm working on bringing a franchise sort of concept from. You know, in other parts of the country they've already have a few locations and a few locations already operating. So this would be new to Phoenix, new to Arizona and really it's pretty awesome. There's really nothing like this in this market. So I think we're gonna be first to market this, this concept So I'm super excited about it and building a team.

Speaker 2: You know this isn't a very high-skilled position, you know it's it's more or less sort of an entry-level position and, you know, just trying to look at different strategies to attract the right people, keep the right people on and, and, yeah, just make it, i guess, sharpen up my leadership skills. I think I'm a natural born leader, but you know I can always do better, it can always learn more and I know that you have several businesses and you experienced a lot through them. So just looking for some guidance and some, you know, tips and advice on how to attract in this particular organization. It's kind of like a low level, low skill type of position. And then in the other business that I'm looking at acquiring, it's more specialized, with the general contracting license. So you know, I guess we could start with the, with the entry-level sort of position, and then kind of work out to the, to the contractor type 100%.

Speaker 1: So let me ask a clarifying question around the franchise. So are you buying a franchise or are you teaming up with someone who already owns this chain and you're helping him, as a part owner, open a new location? Which one is it?

Speaker 2: Because my answer is different.

Speaker 2: I got you, so it's it's sort of it's a, it's a partnership. It's not necessarily a franchise. He just has other proving concepts throughout the country. But it's not a franchise model where you know you're paying for the rights and you're paying a franchise fee and that sort of thing. We've built a 50-50 partnership where you know I'm gonna operate and get the business off the ground here locally and he's gonna provide the infrastructure, you know the ticketing website, marketing, advertising, bookkeeping and everything else. So so I guess it's a not really a franchise but but a partnership more or less with the proving concept they already have.

Speaker 1: Okay, perfect. Well, the reason why I ask is if you're buying a franchise, often there's things in place that help you with your talent acquisition and they have SOPs and job descriptions and job titles and they have ads they've run in the past that work really well. So that's why I asked that question and this type of thing imagine it's a small group of businesses that's maybe not even a big chain. Probably not all of that stuff exists, but probably some of it. So part of what I would do right out of the gate is definitely have a lot of in-depth conversations with the person you're partnering with around how he found, or she found, the talent that is currently operating and working in the business. What's worked better? Has it been mostly in D-Dads? Did you hire a headhunter? Did he go within or did she go within his or her natural market to find people? So I would look at that. But beyond that, imagine all of that is off the table and it's all on you. It's your turn, it's your job, your responsibility to find and hire the right people.

Speaker 1: Okay, step one is you need a blueprint. You need to know exactly what roles you need to hire for and what the business and with the projections and what the P&Ls are going to look like. What can the business afford? Number one, number two, with this type of business and I would leverage his brain, the person you're partnering with at the end of the day what percentage of labor of the total revenue? what should that look like? right, is your goal to keep the labor percentage below 20% or below 30%? And I think that's going to be good for you to know, kind of your staffing par levels, of how many people you're going to need to staff. That's what I would start with to begin with.

Speaker 1: The thing is, with those type of entertainment businesses, usually the number one and number two expense on your entire P&Ls is always going to be labor and maybe even the facility itself. Sometimes, if the rent is a premium rent because you're in a commercial one district, lots of foot traffic, because you want to get a lot of walk-in traffic for that type of business and a lot of visibility, you got to look at your total margins that you're trying to project and trying to go after and make sure that you're not overspending. So you would always want to know that before you go out and hire. So let's just assume you've done that before. I can't break it all down for you because I don't know everything there is to know about this business, the area, what your rent's going to be, and I don't think we have to go over that in detail.

Speaker 1: But when it comes to finding the right people, after we've made a plan, we know exactly what we're looking for. So we need a general manager. We need maybe like a shift leader who has a key, who makes more per hour than the rest. We need to look at how many of just regular employees do we need. Is there different classifications? Is there somebody who's maybe? Can you tell me just briefly the nature of the business so we can maybe be more specific around the different types of employees you need?

Speaker 2: Yeah, so it's. I'll just go ahead and say it. It's a spin art studio, so people can come in They booked their time online and come in where coveralls, gloves, goggles, everything So they don't have to worry about getting paint all over their stuff. And then we'll have a few different options. So the first option is just a standard spin art table where they get their canvas, they pay by the size, and then there's like a lever sort of cubicle where you design and make your different artworks with different colors and stuff like that.

Speaker 2: There's another concept or another way to do the spin art, which is using a bicycle, so like a stationary bike that does the spinning for you. And then we're going to have a splatter room which is more for, like the adults, where it's like an enclosed room. There's a black light, you can pair your phone to the speaker in there, and then there's some power tools in there to really get messy. You really make a mess and create your own artwork using like glow in the dark, paint and stuff like that. So that's kind of like overview of it.

Speaker 1: Quick question unrelated to staffing. Do you know what the average price per person is?

Speaker 2: Yeah, so the average is between $35 and $40 per person.

Speaker 1: It's about an hour.

Speaker 2: Yeah, it's a little bit more, depending on whether they want us to dry the piece of artwork for them. That's an extra charge. Otherwise they could just take it with them and they can dry it at home or pay an extra $10 to $15 to use our dryer, our machine, there.

Speaker 1: Sure. So part of it for me is looking at, kind of, what players would you need to have on the team, right? Is there any special skill sets for a spin art? Do these people need to be artistic? Well, probably not, because they're really not doing any type of art, they're not really instructing at all. So I'll give you an example like, we own a Ninja Warrior gym Very different concept from this.

Speaker 1: The people that we hire, even at the lowest level positions, have to have a fitness background, interested in fitness, and then we require them to either be pursuing or already have a personal training license, right? Even though it's not a very high wage position, it does have a high skill level requirement. So I guess the questions I'm asking are around that. So at this point, really any 18-year-old to 25-year-old would probably do just fine. Even somebody older, maybe even someone a little bit younger, could be taught the skills necessary and the stuff they need to know to be able to facilitate these people and your guests as they're in your facilities. Is that correct? That's 100%, spot on, perfect. And then, beyond that, i mean going after a manager for this type of business. I think, going back to projections and budgets, you have to see how much of your percentage of revenue do you want your labor to be, and you kind of got to fit that together like a puzzle, right? So we used to create par lists, par levels And when you run schedules. So when I was younger this was between 15 and 16 years ago I started restaurant management And I was staffing a restaurant of 100 people and it's like a giant puzzle. I had a par level where I knew exactly how many people I needed per day, per shift, per type of job. So kind of simulating that out is huge in the hiring process, because that gives you the total number of people you need to hire, what players are on the field at any given time, and then it also tells you about the managers and what are they actually managing, right? So when you hire a manager, are they managing people and managing processes? Are they managing customer experience? Are they managers over just specific departments or specific things?

Speaker 1: But in a smaller business like this, it's not going to be a gigantic facility, probably less than 3,000 to 4,000 square feet if I'd imagine. Right, it's 3,300. Right there, right in the middle. So being a guy who owns two entertainment businesses, i'm familiar with the concepts, right. So I would really look at staffing it with knowing the number of people it's going to take during each shift and also being able to project how many people you're gonna be getting in through the door, depending on the shift. Or you're gonna have peak periods or you're gonna have days that are slower, days that are themed Are.

Speaker 1: Is it take more people? Like maybe the staff to guest ratio? does that go up and down based off of certain things like the number of people coming in? Is there a sweet spot? Maybe you do a kids night or you do Maybe like a teen night. Do you need to have more staff to be able to manage that? So I look at all kinds of stuff there.

Speaker 1: In general, i don't think that's gonna be a very hard thing to staff for the lower level, just normal employees, because it's sexy, it's fun, it's exciting, it's an experience right compared to working at the alternative in that, that labor market, which is probably the $16 an hour and lower type businesses. What are the other alternatives Right? if they don't want to be in the alternative job market doing uber, instacard or door-dash And they actually want to work at facility, they go work at a trampoline park. They could work at a fast food restaurant. They could be waiting tables, the people and grocery stores. Those are the type of people who are gonna be working for you And you're gonna be able to pull from those talent pools and give them something that's a lot more fun and enjoyable to do And I think that's not gonna be very hard to get people to come and work there, because it's fun, it's exciting and it's new and it's never been done before. If it was like the fifth of the concept that has come to Phoenix and let's say, every one of them has failed, it may be pretty hard to staff that, but something new, exciting, fun, sexy, i think you'll have a hard time with that. Whatever, we're gonna get to employee retention in a minute.

Speaker 1: Back to the manager. I've staffed things like this before. I like managers who have experience in either grocery, retail Or restaurant. Those are my favorite three to pull from for entertainment businesses Not for fitness, but for the entertainment businesses and the reason why I like them is they. They know how to put up a bullshit. That's number one. They know how to deal with customers. I like retail and I like Restaurant and I like grocery, for three different reasons retail I like the, the focus and the emphasis on Lost prevention and I love the idea that they know how to understand inventory and things like that, because in the type of business You're talking about, there will be a level of inventory of supplies and things that you have to be taking, you know, focus on and I think there can be a lot of waste if done wrong And your average cost to fulfill a customer entertainment experience could go up if people aren't following right policies and procedures.

Speaker 1: I like restaurants because it's a high transaction value and it's a fast-paced for most Restaurants as well. As they're dealing with and no offense, anybody watching this usually Some of the lower level, the totem pole if you're outside of fine dining, where there's a lot more like drug abuse and substance abuse and Addiction to cash and things like that. So they just I think they've seen a little bit more and getting out of restaurants is a very liberating thing for a restaurant manager. You're like I would do anything to get out of restaurant management. There's a lot of people like that and, talking to guy, i've only managed 11 restaurants, so what do I know? but I'm not serious. But I'm telling you it's a big day when you don't have to be the person in The restaurant working and you can just be the person eating. So it's a really liberating thing to be able to cross over and a lot of them have been making very little.

Speaker 1: A lot of those casual dining restaurants And those chains, even in bigger cities They don't make very much money at all. Usually your best server, your best bartender out Out make more money than the manager, so it's a really easy pickings. I like them a lot. I like grocery store management as well. It usually has a higher level of professionalism. When you get somebody from like a Publix or an Albertsons or one of those nice chains, you actually find a higher level of professionalism. That come from that and a little less rough around the edges is from what I've found And I've hired many people from grocery stores. So for me, if I'm looking at maybe a sub $60,000 a year salary position Running a team of people between the ages of 18 and 30, i'm looking for someone with very specific, relevant experience Which all three of those concepts I gave you would give them that experience, which is restaurants and even things like Panera and fast casual restaurants Same type of thing they used to managing people and processes and they also have an understanding of inventory and loss prevention. That's where I would go.

Speaker 1: First, you put an ad out and indeed I want you to think like a marketer. When you go out and you're trying to attract customers, i want you to think like a marketer. And how would you carefully and intentionally craft a beautiful marketing message around what you're selling? because you're selling an Opportunity. So when I post something on, indeed which is where I like to really hunt for these type of things I like to really market the job title and description Around a way that really weeds out the people that I don't want really highly, attracts the people I want and it really Makes it look like a very attractive opportunity And I also make it very relevant to them.

Speaker 1: I call out who I'm looking for attention restaurant managers, retail managers, grocery and fast casual dining. We've got an opportunity outside of food and outside of your industry that I really think you'll love. Here's the opportunity you've been looking for to get away from what you're doing now But get into a more fun, uplifting, exciting environment and something brand new that Phoenix has never seen before, with competitive wedges. You know that that type of thing, that's a very something that's really helpful. So, like when I was in the medical marketing industry, we were hiring people to be on the phones for Point and selling and like patient coordinator style services. I was like attention, patient coordinators and aesthetic practice managers I have an opportunity for you to do what you love without having to go to the office and without having to deal with patients. And then that means just boom, they just all loved it.

Speaker 1: I said what attracted you to this job Opportunity, specifically this posting. You're like you. You spoke to me, your words spoke to me. I wanted to be in the medical industry, i wanted to be in the aesthetics, but I wanted to get out of the practice. It spoke to them. So I think, speak to the people, understand who your perfect Candidate for manager is and speak to their ambitions and desires and you'll get better quality and you'll get more. So that that's what I got to say there. I just were bombarded on you, but that's that's what I got. No man, i love that I was.

Speaker 2: Taking notes, so, and we're recording this, so yeah that's true.

Speaker 1: Any clarifying questions? on what I just told you, because I'm actually going to expand upon it just a little bit more when you're done. So what are your thoughts? No, i mean it that that absolutely makes sense.

Speaker 2: You know, first of all checking with the The other partner that I have and how they attract a talent for their current locations And just really understanding who my ideal candidate would be. So I can, you know, cater a message to them specifically and attract that person, and I love that. You know I was thinking retail, but you make a lot, of, a lot of good points with. You know restaurant and grocery store management like they would actually be a really good fit for this role. So I love that 100%.

Speaker 1: Couple other thoughts to think about hiring in general, we always hire culture first and we don't settle right. I'd rather wait an extra week and find the right person, then settle for someone else's role. I'd rather wait an extra week and find the right person, then settle for somebody who's good enough, and then culture first. I really want to look for someone who's going to jive well And I want to talk to someone and give an offer out to someone where I feel like I could trust them like a family member, because when you give someone keys to your kingdom and you're allowing someone really to have access to your cash register, they're the ones that are really managing the customer experience. When you're not there, it's a very serious thing. So I'm going to go over a couple things that you can do to make sure you find the right person, as well as to keep the right person in a second. But I think culture is really big. Integrity is really big. I also look at past history, like hey, tell me where else you've worked. I love asking questions in the interview process around, like tell me about your last position and why you left. I'm always looking for landlines in that. I'm always looking for. Oh yeah, you know, they just didn't get me and it wasn't good, or you know I wasn't appreciated, or, yeah, you know, just wasn't really good job for me. Or I'm looking for people who've had 13 jobs in the last 10 years and I stay away from those people Because they're opportunists or there's always something that happened to them and their victims and I wouldn't hire those people. Just save yourself the time. But I think there's a lot to be said with not just attracting the right people but understanding the interview process.

Speaker 1: There's a book, and actually I think I can share my screen on this fancy software. But there's a friend of mine. His name is David Long. He owns a company called My Employees and that company is in North Carolina and he wrote a book called Built to Lead. I'm gonna see if I can share my screen. Maybe tell me if you can see this. Can you see it? We'll just pull up for just a second. Can you see this? Yeah, this is a fantastic book and David's not like a world-renowned author. He's a very sharp guy. He's definitely had a lot of success. We were in a mastermind together Todd Brown's mastermind But I really like this.

Speaker 1: Even as an owner. I want to see how could I be the best leader I can be, and I think reading this book before you go through this hiring process is going to be huge for you. He talks about specifically why people come to work and why you manage people a certain way, and I really, really resonate with that. All my leaders have to read that book because it's really that important, so I really encourage you to read that book as well before you dive too deep into this entire process. So I hope that's a good recommendation. Anybody watching this as well. Obviously I'd recommend you read that book. You can find it on Amazon. It's pretty inexpensive but very, very powerful, right When it comes to who you're putting in charge of your revenue bus and charge of reducing expenses and loss prevention and your cash register and your customer experience.

Speaker 1: Like I was saying a second ago, i love focusing on integrity. I love looking for someone that I feel like I can trust, like a family member, somebody who has a positive track record, who stays at a job for long periods of time. The reason they're leaving is more about the ceiling that they've hit and how their ambitions want to take them to the next level, or if the way that they're being led in their current position is maybe not aligned with their integrity. That's a good candidate most of the time. But someone who bitches, complains, makes excuses, everyone's out to get me And there's always something that happened that you're like, was that even necessary? That's somebody I'd stay away from And I think this is pretty normal stuff that you probably already know. But somebody listening may not, but that's how I would focus there specifically. So if you wanna pivot to the next thing around the same concept, if I know I'm going after a specific type of manager candidate out of retailer, restaurant, grocery stores, one of the biggest things you need to understand and study is the compensation models that are normal in those industries. You can go to glassdoorcom and you can go and look at how much does a blank make.

Speaker 1: If I'm trying to pull somebody from an assistant manager position at Publix and bring them in to run my business here, that's probably not gonna work. Their management tracks are ridiculous. They have great benefits. They have all these things they offer. They don't lose employees. They've never laid off an employee in their company history. So that tells you probably not my perfect candidate, but maybe Panera is a great place to go find people who are really hustlers. They can handle fast-paced environments. They can handle stress. They know how to write schedules. They know how to handle inventory. They deal with customer satisfaction. It's a great company. They've got structure. Maybe that's your perfect candidate.

Speaker 1: But if you can only offer, let's say, $50,000 a year for this position and everything you're learning on glassdoor is saying they make more than that, you gotta know that stuff in advance. And when you're negotiating salaries, you also need to understand what kind of benefits would it take to require or what would it take to really recruit the right person? That's what I would be looking for, right. So I know, to not only recruit the right person, but retain them. What other type positions could they get? What would they get? Would they get insurance? Would they get paid time off? Do they get sick days, like? try to match that and make sure that you're offering somebody to write benefit package. I know I'm just doing lots of stuff actually.

Speaker 1: One more thing I'll tell you and I think we should move on to your questions is I also like to look at what's important to these people besides money. We do this in seller negotiations all the time real estate and in business acquisitions same thing with hiring people. So let me ask you this Angelo, it sounds like you're a great fit for a position. I love your experience, extremely relevant. I feel like you'd be a great part of our family and I feel like your integrity levels and your culture align with what we have and our values. Let me ask you a question. Forget compensation for a second. Forget how much money per year on the salary. What else is important to you in a position like this? That's gonna be very telling. A lot of that's covered inside that built to lead book, and actually it'll feed you the different options. But let them tell you what's most important to you, because this is where you can run into a landline.

Speaker 1: If you're talking to someone, this happens a lot in men. I'm gonna be real, happens a lot in men, some in women as well. They're gonna be more ambitious than the role And you gotta flag that up front because they say well, i really wanna be able to move up in the company, i really wanna be able to consistently make more money. You know my five year plan. My three year plan is to make $180,000 a year and I'm working on it. You're gonna know real quick if this is gonna be a long-term fit or you're just a stepping stone and the best option they have on the table right now.

Speaker 1: Without asking these type of questions, you can find yourself one year later trying to find another manager again. So ask those questions up front. Try to see if the ambitions that they have in their next three to five years align with what you're able to give them. You find somebody who wants to climb. Where the hell are they gonna climb? We've only got one location. Unless you're saying, hey, i'm hiring this role. We're about to open five more locations in the big market and I want this role to potentially have the opportunity to move up to an area manager. It's a totally different conversation. But until you have that, you don't wanna promise that up front, right? So I think that's huge as well.

Speaker 1: Also and sometimes it's a little bit of an older candidate which is perfectly fine You should hire people depending on their ability and their skill sets, not just their age, right. But sometimes you gotta keep an eye on that, like if they're 63, and they wanna retire in two years and this is somebody you wanna put in place for five years, that's something you should pay attention to. You also look at their appearance. If their appearance does not look like it reflects the values in what you're trying to put out to the customers into the world. Not a good fit.

Speaker 1: You also look at the gravitas. You understand gravitas. I love that, schwadiviv. The gravitas, the authority, the implied authority Somebody's got a little bit of age on them, somebody who's got a little bit of implied presence where they can lead people and they won't be stepped all over. Or what happens if you're in a restaurant business. At 21 years old I was a manager, 23 was a general manager. 23 opened two restaurants as a general manager. If I didn't have the gravitas that I have and I'm not bragging, i have it I would have been walked all over. Half my employees were over 40. I had, i mean. So you gotta find somebody who people want to follow as well, and when you have that presence it does make a difference.

Speaker 2: You can't put a mouse in charge of alliance.

Speaker 1: It's not gonna work, true? Yeah, woo, i just threw a whole bunch at you, man. What's your questions on that?

Speaker 2: Have you personally ever like, like you were saying, a Panera are one of these places? Have you ever personally handpicked someone out or kind of you know, poached someone to come work for you? And you know how did that go.

Speaker 1: So I was looking. I tell you a story. I was at a restaurant a couple of days ago Don't remember what it was, but I walked in. I didn't have a now hiring sign on the front door. It says we're always hiring great people. That was powerful, right. So, and what we're doing? I'm always looking out for great people, always And I'm talking to people planting seeds a couple of years in advance And I'll tell them like hey, i'm gonna be real, i think you're doing an incredible job And obviously I'm not seeing everything you're doing, but from what I can see, it looks like you're a great value to this company.

Speaker 1: If you ever find yourself looking for an organization to join or a team you wanna be a part of, or you wanna do bigger things and what this can allow you to do, give me a call. I get people my number all the time around that A lot of those people come to work with me and stay with me in any business I'm in. So I'm always looking for that. So if I'm at Panera and I see somebody who's absolutely crushing it, i don't care, i'll pull them aside and I'll chat with them about it. Yeah, and just give them my number. And just when you're always looking for people. When you have as many businesses as I do, i'm always needing people. So for me, i'm always hiring great people And I thought that restaurant putting down their front door was a really cool culture. One thing I wanna talk to you about as well before we move on to the next thing is the entrepreneurship.

Speaker 1: Whenever somebody like yourself or like me, i'm just not satisfied working for somebody else. I'm not. You need to look for that. So when you're staffing out besides the lower skill, lower wage, like normal labor, when you're looking at leadership, look for that. Ask them, say, hey, do you ever thought about starting your own business? Ask them that question, just nonchalantly, nonthreatening, not like a interrogation, and just let them tell you because they're like, yeah, man, i have this hustle, this hustle. They're not a good fit, but if you don't ask that question, you won't know. That makes total sense, man. Just some thoughts, man, because what I look at is, hey, i want someone dedicated to my business. I don't want to compete for your attention, i don't want to come in second place, because I'll tell you, when you got two focuses, someone always loses The moment. When my focus is not aligned with yours, then I don't know how we're supposed to accomplish great things together. So cool, that's it. That's the whole thing on that business. So tell me about the next scenario.

Speaker 2: So the next scenario is a little more specialized. It's in the general contracting space, remodeling space. So personally I don't have a whole lot of experience in the general contracting space, but I feel like it's a good sector to be in because of the real estate investing that I do and the portfolio I'm trying to build, and I just feel like home services businesses are recession proof. So with this I'm looking at a potential deal.

Speaker 2: The owner has his GC license, so one of the thoughts I have is to offer him minority ownership in the company to keep him on and keep him with the GC license within the company. But in our first conversation that we had, he also said that there is someone within the business that is worthy and capable of stepping up and kind of replacing him, but that person doesn't have their GC license. So have you been in a situation like this, where it's a very specialized trade, specialized skill, where you have to buy out a business and either get your own GC license to make the business move forward, or have you partnered up with an existing owner to kind of keep their GC license under the business And, if so, how you approach it and what kind of results you got?

Speaker 1: So right out of the gate? no, i have not, but we have advised. A lot of these conversations inside Dealmaker Proterge A lot of people going after home services. It happens everywhere plumbing, hvac there's usually a professional license that's needed to check a box to be able to operate. Just like when I was in medical aesthetics, a lot of states for a medical spa didn't need a doctor to operate it, but they had to be part owner for it to be on the team of the medical advisory.

Speaker 1: So, having someone checking a box for you, there's lots of ways to do that. Could it be you getting your own license? Sure, i'm not sure if that aligns with your ambitions and that's also not very easy to do. Right, i'm not a very good person at fixing stuff and building stuff. That would be a very big lift for me. Also take a lot of time. Could you do an earn out or do some sort of advisory role where the owner keeps on some level advisory shares and lets you piggyback off of his contractor's license? absolutely usually, even today, you can go out and build a house, rent somebody's builder's license, let them oversee the project. They take a five to 10% pass through and then you can do your own GC and SUPS. That exists already in today's world all the time, so I think there's lots of ways to do it beyond that. So, yes, you could get the license yourself. Yes, you could negotiate with a seller to allow him to stay on at some level of ownership, maybe even without voting rights, but using his contractor's license. You can go find somebody else who has that license that doesn't have their own business. Make them a partner and have them come in and be your operator. Maybe they just do the contracting stuff and you run the business outside of that or hire that out. You could find somebody who's already retired that's keeping their license active, and you can ask them if you could have them on their ownership team maybe a class B shares with no voting rights. But allow them to get some sort of passive income from being able to have them use their contractor license.

Speaker 1: But keep in mind there's gonna be a level of liability for them as well. So you'd have to be able to balance that and make sure the compensation's good enough for that as well, as I think understanding that liability upfront for you would be really smart going into negotiation. So I would start studying and talking to general contractors around what that privilege license really means. What does it allow them to do that other people can't? I'd understand. What does it take to keep that license? I'd understand. What type of liability do they have when they put their name on a project? And I think the more you understand that, the more that you can really be more empathetic with your negotiations and more tactical, right? Because and I'm not gonna tell you, i know I don't know much about the general contractor license, especially in Arizona, but I'm wondering when someone's the general contractor on a job maybe permits were filed with the city and all that stuff what kind of liability is on them? I wonder, what kind of liability insurance does the license holder have to hold to be part of operating a business? Like I'm gonna be real, i have no clue, angela, but I think you should know that before you make those type of negotiations Because before you go in and put someone's license on the line, i think you need to know the ramifications. And then also, is there a path that's less risk for one of these general contractors for you to be able to piggyback off their license and maybe make them part owner? Is there some sort of indemnity bond or something that you can ensure them so they're not really putting themselves at risk, which makes it a bigger no-brainer. It's like free upside, just using my professional license without any liability. I don't know if that exists or not, but I would learn that right.

Speaker 1: I talk about this all the time with Dealmaker and Proterge is the people who understand the ins and outs of the business model that they're going after are always the ones that get better business deals Like. I understand how roofers make money. I understand the insurance adjusters. I understand the difference between cash pay roofs and working through the insurance companies. I understand how they get customers. I understand how they market. I understand how they deploy their sales teams and how they train them and the different ways they do gorilla marketing and door-to-door. I understand that. So if I was going after a roofing company, i'm already speaking their language. I already get it. I already know the areas of weakness. I already know what they could be doing that they're not doing, based off the conversation.

Speaker 1: So I think for you, i'd also encourage you to be a really good student and understand the business model of what a general contractor or maybe a remodeling company is what you're talking about. How did they make money? Where do they get their customers? How could they be doing it? Who's doing it really well? What are they doing different?

Speaker 1: And then I would also look at is there anybody else out there who owns a general contracting company or remodeling company that doesn't have a license? Is this a business that people invest in constantly? Like maybe look at Pace, does he have his own company for this? How did he do it? If he does, like he has his own escrow company and different things, like I would go find people who are already doing it and try to pick their brain a little bit and find out what roadblocks did you hit? Number one. Number two what do you wish you would have known when you started that process that you know today? And number three what advice would you give me around this process? Kind of like you're asking me now. Unfortunately, i haven't done this exactly, but I'm hoping this kind of helps you a little bit.

Speaker 1: No, definitely, but this happens in everything HVAC, plumbing. I have a buddy named John over here where I live who has a builder's license, right. So he has another friend that he has that does all of his roofing jobs and they do them together and John makes money from pastor Like it's fricking ridiculous. So there's people out there that have these licenses and they're like bring me revenue, bring me revenue, And that exists, that's there right, Use my license with the right intentions and the right measures in place for risk. But just, I mean, bring me free revenue. I would love that 100%. My mom wants to build a new house. She has two builders that she runs with that they can go build it and they could make a pass through. And mom already has her own sub, She just needs it to check the boxes And it's free money. Why wouldn't they do that?

Speaker 1: I also look at looking at for talent pools. I like to go to associations. Imagine if you went to the Builders Association in your area and you go and look and become a vendor or a partner at some level and get a roster of all the different people. You can even become friends with Ms Glenda at the front desk and flirt with her and be nice and then kind of find out, hey, who was retired recently from this business Or who do you know that maybe had a company and sold it or shut it down, but they're still licensed and still active and try to get those direct referrals from somebody already inside the know. So just some thoughts.

Speaker 2: Oh yeah, that totally helps. I didn't even think about joining organizations and stuff to kind of learn and kind of be in the day to day and just pick their brains while I'm in the association. So now that's the great advice.

Speaker 1: Yes, if you're going to go fishing, you go fishing where the fish are. I mean, they're all there, kind of like. Have you seen my Consulting for Equity training? Yeah, we talk about that in the Consulting for Equity training where, if we know, our perfect prospect is this why not go where they're congregating in masses? So if I know I need, i want to buy remodeling companies, i know that I'm going to need to use a beard of a general contractor or builder.

Speaker 1: Go join the Builders Association, show up to their golf tournament, make friends, hang out with those people and start learning the business. See if there's a way you can add value to their life in a different direction. There's all these different things. Can you refer them business? You have all these people you know in the real estate investing game that are probably hiring remodellers for flips. Like, can you help refer them business? How can you add value and then become friends with them And then a lot more opportunities may arise. So let me ask you a question If you had a good buddy, or two good buddies, that were general contractors, would you be asking me this question right now? Probably not, no, so go find some friends and make them. No, that's true, like Sarah, one of my partners, sarah's hilarious. All of her friends are attorneys And a lot of the stuff that we do business-wise they just do it Like, yeah, so it just makes strategic friendships. That's another thought.

Speaker 2: Yeah, that makes total sense, man.

Speaker 1: Cool And we can keep talking. We've been doing this for about 40 minutes I probably. If you think about like a football game time of possession, I probably had the possession of the microphone 35 of those minutes, Yeah, So let me know. Is there anything else that you think? while you have me here, you have my full attention. Is there anything else you want to talk about? Could be more business acquisition side. It could be marketing, Anything else.

Speaker 2: Yeah, i mean kind of on that same deal. So if I'm, because I've had a first seller call with him and we had a really good connection. We built great rapport. I was in the military, he's a veteran as well, so we really had that connection And his business model actually is really catered to helping the veteran community. So I feel like you know we built an amazing connection and we're going to meet in person next week. So you know kind of some advice if, if if we are rapport and the relationship looks like it could be something more long term And I do I can't convince them to stay on as a minority partner and keeping his GC license under underneath the business.

Speaker 2: I guess this would be more or less structuring. You know, if I'm going to have him retain 10 to 20% equity in the business and you know we're buying essentially 80 to 90% of it. I guess, as far as structuring this because I'm also thinking like he, it was a broker deal that and I know we just had this conversation this morning about broker deals and you know not to get deal fever Because a lot of times five to six months down the road they're going to be a lot more motivated than they are today. But the broker's actually been pretty cool and you know he's led us talk and I've mentioned seller finance and he said he'd be open to it. And when I spoke to the seller, you know he, he, it sounds like he is pretty open. I think more or less he's looking for that safe pair of hands to, you know, to hand over, because he even said he's been in business for 23 years. He has an outstanding business And you know he's like this is my baby. I've watched it crawl, walk and now it's up and running.

Speaker 2: And you know I feel like if I can build more rapport with him and build a better connection, i can potentially, you know, keep him on as a minority partner and just give him equity. So if I'm, if I'm giving him, he's retaining 10 to 20% equity. But I do want to sell her finance like a good portion and maybe use a finance broker for the rest of it, because from what I'm, from, from my knowledge, if it's an SBA deal, it's not going to work because they the SBA wants him out of the business within 12 months. They want him completely dissolved in 12 months. So I know there's like some ways around that potentially, but let's say I don't go to SBA route and I find you know some type of finance brokerage that can help fund the deal. You know how would. How would you potentially structure that? where I'm giving him, he's retaining some equity. I'm going to sell her finance the rest, you know a portion of it and then use traditional finance for the rest of it.

Speaker 1: So I may not answer this exactly how you're hoping. I may go around it a little bit. First thing I look at in negotiations outside of deal structure is is how do we make it a win for the seller? That's one of the biggest things, and I talk about kind of a pre-offer conversation I like to have, where I talk about hey, i really interested, i want to bring you an offer. I'm kind of structuring it. What would really be helpful for me to know is, beyond money Forget the money for just a second What's the most important thing for you in the sale? I love that super simple question. I did this in real estate too. Hundreds of transactions in real estate, same question. I'm trying to figure out what's most important to the seller And he's told you some of it, kind of reading between the lines, but ask him directly. And to me it's more about the way that we structure the offer outside of the money. That leads to what they want to accomplish and then helps them accept it Right. So that's number one.

Speaker 1: I think when it's a broker deal and it's really been on the market for a long time, it's a very different game because there's a lot more motivation, maybe urgency and distress compared to something that just hit the market. It's just like in real estate Same thought, like well, let's see what else the market brings to me. There's lots of people out there that probably want this Right, so I think part of that comes into play. But I want to find out, besides money, what's the most important thing. And then for you, it's just being very open and honest and saying my goal is to help you be able to transition this business to me. I want to continue your legacy, i want to continue serving clients. I love the mission. I'm also part of the mission being a veteran And I'm going to try to figure out how to make this work. So there's a lot of different options I can go to for financing, for the deal as well as there There's a lot. You know I can pay and you can say this plant the seed. I can pay you a lot more for the business if I can do it. Most of the owner financing, and I'd love to have that kind of conversation. But help me understand what's most important to you and get that And, before you go back to them immediately with an offer, sit on that for a couple of days and go through that and start putting together different scenarios that could work option one, option two, option three and start trying to get your ducks in a row and talking to people, and maybe go talk directly to coach or reach out to Abraham and shout with him a little bit about it.

Speaker 1: Maybe how did you do this before, when this type of business came along? Talk to Carl a little bit about, talk to somebody else about it and start looking at, now that you know the full picture. Now, what type of equations can we put together, offers that the sellers most likely to accept? That's part of it, right, and a lot of that comes down to the month score. We always talk about month score. Carl talks about it. Motivation, urgency and distress. Mud talks about RLEV, as well as another fancy acronym we use in protege around legacy driven, employee driven things like that. So I think the more you know about that before you get into offer, sequencing allows you to do it better and kind of create a win-win environment.

Speaker 1: I don't know if I would do a specific way and already predetermined say I'm going to offer this, i'm going to offer him that. Also, ask him if you were me, what would you do? Right, i don't have a general contractor license. I'm a business acquisitions investor. I'm a real estate investor. I think there's a lot of synergies. But if you were buying this company, flip the table. I asked him this if you were buying this company and you didn't have a general contractor's license, what path forward do you see? Is there a way for maybe you to stay on as a part owner? Is there a way for us to bring in an outside person with a general contractor's license?

Speaker 1: I love letting sellers be a part of the solution And that's a subject that a lot of people haven't really taught. But when you find somebody where you have rapport, they want you to have the business. They want you to have the business, not somebody else. Having them as part of the solution is a big, big opportunity. Give you an example Will, who's in our protege program.

Speaker 1: We were in Vegas last in September. He stood on stage. He did that and guess what? The seller ended up being the co-signer and funds the loan for him to get bought out. It's crazy and it's just because he let the seller become part of the solution. He says he'll do transparency. I'm hitting a roadblock with financing. They need me to do this before I can move forward. The seller goes I'll co-sign. And he co-signed on his own freaking loan and took the money and ran, and then the business is running and doing really well. So I think there's a concept there, but the missing ingredients will make it tough. So if there's not really good rapport and they don't want you to buy it, that's going to make it tough. If it's just money, i want to see what the market will bring me. Like you're kind of going the wrong direction, swimming upstream at that case. Does that help?

Speaker 2: Yeah, definitely, man. That really puts in perspective. I kind of knew I'm a little early into the deal structuring So maybe I was just getting a little bit ahead of myself. But thanks for bringing me back down. And I do need to have more rapport and find out more of his reason. We had an hour of phone calls, a great conversation, and it sounds like he's just ready to spend some more time with his family And it sounds like he's been buying up properties left and right. So I think when we get to sit down and talk more, i can connect with him on the real estate investment level a little bit more and connect with him And, like you said, try to make him part of the solution. I think that would be huge.

Speaker 1: The other thing for me, though, man is safe pair of hands is so important, like we talk about. How much do you know about that business, that business model? Can you speak to him on an intelligent level? That's a huge part of it, man, because no, like and trust is three different things. No, like and trust, no, as familiarity, frequency of exposure, like is. I feel like this person is like me. I like this person's attitude. I feel like this person is my best interest at heart and that trust is all about expertise. You got to have all three. You can't have two. So for trust, i need to trust that I'm not handing this off to somebody who's going to squander my business and my opportunity. A lot less open to conversations, if that's it.

Speaker 1: So I'd study the business model. I'd talk to contractors. I'd talk to builders. I'd talk to people in remodeling companies. What problems do they face? What kind of issues are they constantly coming across? What type of software are they using? What is the quoting process? like? How many employees do they have? What's their employee turnover? How? what kind of insurances do they have to carry? What kind of liability comes along when they write their name as the contractor for that job Like if you don't know that, it's really hard to build the report the level you need to.

Speaker 1: So for me, my due diligence on the front end is, if I pick a niche like this, i'm studying the crap out Because you ever met somebody or like this guy's sharp, you want them to feel like that about you And if you can't speak their language, it's going to be difficult, very true. So that's why when I talk to people and people in protege, i talk about why they chose what they chose the buy box And one of the things I'm checking for is I'm checking their knowledge. You're going to be tested constantly by these people, but if you know it, you study it and you can learn a lot from just doing YouTube searches. You can go watch YouTube videos, the Contractors Institute, you can go Google. You can learn a lot just from doing that And you can call contractors and you can talk to them.

Speaker 1: You can have three of them come to your house and quote you on your remodel and try to talk to the business owner, tell them you want to remodel your kitchen in your bathrooms and just pick their brain. You know what? how's that process like? Interesting? How did you come up with that quote. Do you use a specific software? Or when you do a job like this, do you come to the job site daily or do you have somebody else that you hire? You know at what point? if your business like a $3 million contract remodeling business, what would that look like? Would you and you can just talk to people and learn so much?

Speaker 2: So, yeah, love that, yeah, i think, i think a lot of these answers are going to be, you know, a lot of these questions are going to be answered when I meet with them in person next week. And, yeah, i mean, i'm probably going to lay off the structuring and the deal terms and the numbers, more or less just kind of getting to know him and getting him to trust me and getting as much information I can about the industry while I have them, you know, there in front of me.

Speaker 1: So well not just ask him about the industry. I'm telling you, go study it before you talk to him. Yeah, go study it. You could binge watch for three hours and take notes and probably learn a lot. Well, if I want to walk into a dog groomer business and about to buy it, I'm literally I could go research and learn everything. there's no that I can find on the internet quickly about dog grooming, So at least I speak the language. I need to know how much they charge. How often does a dog get groomed? What kind of training or certification do employees ought to have? What's the average size of retail space for someone who has a dog grooming business? Why would the benefits of doing a mobile dog grooming business be a part of it? How do they get customers? How do they keep customers? who are their competition? If I know those things, I can have a great conversation.

Speaker 2: Awesome.

Speaker 1: Yeah, that's why I'm a business guy. I do like I study business. I know a lot of business models, but that's where I think success comes from is your opportunity and your knowledge intersected at the same time. So didn't mean to cut you off there. What were you thinking?

Speaker 2: No, no, you're good man, i can talk shop all day and you know I now I'm like I got homework, i got I got to get to study and and got to get to, you know, learning more about this industry before I have this conversation with them. So so, yeah, man, thanks for thanks for the great advice.

Speaker 1: My pleasure, man. You never know what to expect on doing something. This is all live, so I'm glad you got it value out of that. Anybody watching this in the future hope you can get value out of it. Just to recap, you can go back and rewind it. We talked about staffing for two different types of businesses. We talked about business acquisitions, seller psychology, offer sequencing, how to really come off as a safe pair of hands. We covered a lot in this last 53 minutes. So, pleasure, i'll see you, i guess, coming up in Vegas for a little meetup We're doing and looking forward to many more conversations like this in the future, and thanks for trusting me.

Speaker 2: Hey brother, thank you, Appreciate you so much and looking forward to seeing you in a few weeks here.

Speaker 1: Yes, sir, surgeons of Income podcast. Please tune in for future episodes. Please like and subscribe. Of course, i've got a lot of knowledge to share a lot of people. What I want to do on this podcast is not just talk about ways to get wealthy, but ways where you can really position your situation as a business owner, as an investor, as someone who's got really valuable skills that pay a lot of money in any economy or you can create large surges of income at one given time.

Speaker 1: For me, investor, business acquisitions I get quarterly distributions from all my businesses And then I go and take it and buy real estate. I've niched in digital marketing as well, so I can do big product launches and big events. That unlocks lots of money at one specific time, rather than just trying to make more money each month. It'll never get you rich. Your income will never get you rich. You need to be a high earner to tap into investments. Yes, go learn the skills, become a high earner, but I'm telling you, surges of income is what you should be going after. Keep following me, like and subscribe. We'll see you in the next video.