Host: Today's guest had already had a very successful career when he turned his sights to buying a business. Adam Goldberg had started young, worked hard and run two multimillion dollar businesses over his 30 year career. So after a significant liquidity event in his mid-50s, he tried retiring condo in Florida, walking his dog, etc. That didn't last long and when he got back in the game it was with a struggling, nearly shuttered candle manufacturer in his native Montreal. The business had been doing 5 million in sales at its height. When Adam looked at it, it was down to 1 million. This was going to be a turnaround, but even going in eyes wide open and even with decades of relevant experience in wholesaling and product, Adam underestimated just how hard it would be. We unpack why it was difficult, where he made mistakes, and how he finally stabilized the business. A fascinating story and perspective from someone who's probably a couple decades further along than you with an impressive career already and a reminder that even he found buying a small business to be a challenge. Here is Adam Goldberg, owner of Sarakon Buying a business that requires licenses to operate or is in a heavily regulated industry can be daunting, but for searchers with the right background, it can also be a great opportunity. Attorneys Bill Barlo and James David Williams return for an Office hours this Thursday, April 17, all about the legal questions related to this topic. They'll cover how licensing and regulatory issues are typically handled in deals and how to structure your offers. With that in mind, that's this Thursday, April 17th at noon Eastern. Register at the link in today's show notes or on the Acquiring Minds homepage. Acquiring Minds co Also, there is less than one month left before M&A Launchpad's spring show. M&A Launchpad is a one day event that brings together business buyers, owners and investors. Panels on the entire lifecycle of acquisition entrepreneurship, from acquiring to growing to exiting and investing. Walker Deibel, author of Buy Then Build is one of the keynotes and 30 other experts will be on hand sharing their expertise. M and A Launchpad is a single day Saturday, May 3rd in Houston. Get a $200 discount off your ticket with the code Acquiring minds. Go to malaunchpad.com and use the code acquiring minds all one word or use the link in the show notes. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. If you ask owners in the ETA and search community which insurance broker provides highest quality work, great outcomes and has a practice dedicated to searchers and acquisition entrepreneurs. One name comes up again and again. Oberly Oberle. Risk Strategies has worked with hundreds of searchers over nearly a decade and is in fact led by a two time successful searcher, August Felker, which makes Oberle a specialty insurance brokerage for searchers by a former searcher. And if you've got a business under Loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. An easy, no risk way to get to know August and the team at Oberle to take advantage. Check out oberly-risk.com that's o b e r l e-risk.com link in the notes Adam Goldberg, welcome to Acquiring Minds.

[4:19] Guest: Good to be here, Will.

Host: Adam, your story does not fit the typical pattern of this podcast guest. It's gonna give us some fresh perspective on the realities of buying a small business, a particularly small one in your case. Before we get into it, let's begin with your backstory. Adam, you were already an accomplished entrepreneur. Tell us about that career before you bought the business. That's the subject of today's interview.

Guest: My father's an entrepreneur. He's now 90 years old, but he built a business started in 1972, a business called Bucl, which was big box, 10,000 square foot, similar to a Joanne stores in the US kind of retail company. And I went to University at 21 years old. He actively recruited me into the business. He wanted some family in the business and I started in the warehouse even before that at 16 years old lifting boxes. And then I went into the business and started as a junior buyer and became a buyer and touched on all parts of the business. And at the dinner tables every night we talked about the business. My mother was in the business, my brother, my sister were in the business. And it was all retail all the time. And we just kind of knew that our destiny was kind of sealed and this is who we were and this is what we did. And we lived in business. My dad retired at a very young age in his 50s. We ended up partnering with Joanne Stores in the US who invested money in the company so we could buy out my father and my brother and I ran that company for a period of time. I was president of that business in about 1995 till I sold the business to my brother in 2000. But I kind of grew up touching everything, having infinitely more responsibility than I should have for the age that I was at and learned a lot because my father came from the school, I thought that throw them in the fire, let them figure it out. If they make mistakes, that's a great education, et cetera. So. So that's how I started.

[6:20] Host: And give us a sense of the scale of this business, how many stores, revenue, employees, et cetera.

Guest: When I left the business, give or take. I have a lousy memory, but give or take, we were about 80 stores. We were probably doing about 75 million to 80 million. This is Canadian dollars. We had about a thousand employees. That was in probably 2001. And I left the business.

Host: So that's, I mean that's. When you say family business, you know, we think a kind of a mom and pop. This is not that this is a big business. Is this a business that is a household name or. Or was at the time in Canada.

Guest: Still is. In Quebec. In Quebec, you know, we have 10 provinces. My brother subsequently took the business across Canada, had some missteps, closed a bunch of stores, etc, but yeah, most people in Canada would have been familiar with this company. That was pretty well known and curious.

Host: Adam, one thing we see, this is a bit of a digression, but I think it could be relevant and interesting. One of the things that we see broadly, but it's relevant to this podcast is that often these days the younger generation does not want to take the reins of the parents business. Don't know your family background, but a classic example of this would be the immigrant. The immigrant who started a business, an immigrant business and then, and then the kids become professionals. They don't want to go take over mom and dad's business. What was it in your case? That where it was just where. Where it did pass from one generation to the next, do you think? Because I'm sure you've heard the, the pattern that I just described where the younger generation really wants to have nothing to do with mom and dad's business.

Guest: I was making at 21 years old, one hundred and something thousand dollars working in real estate when I came straight out of university. I was leasing shopping centers and my dad called me and said, I really need you in the business. And I think I went down to a salary of 35 or $40,000 or something like that. I'm going by memory, but I understood the privilege that comes with running a business and how to create wealth. And it was just kind of part of who we were. We all understood that the path to the easiest route to getting all of this done and the things that I wanted to do. I grew up with privilege was to go into the family business because my father was not one who would gift us anything. Whatever we had we needed to work for, including the salary, which is why he started me at such a low base. So it was very appealing because there were a lot of opportunities and it was a great company and my dad gave us a lot of freedom to do the things that we wanted to do. So I kind of did my mental calculation as well as somebody in their early 20s could do and said, you know, this sounds like a better proposition for me in a path towards what I want to achieve.

[9:14] Host: It's interesting because it sounds like your dad was good at threading the needle of not doing nepotism. He didn't just, he didn't just give you your career. In fact, he actively recruited you, but he recruited you to the bottom, the bottom rung. He did, he did. Come join. Don't. You're not going to earn a lot, but if you can prove, if you can prove that you're worth it, you can have a big future here.

Guest: And by the same token, he was a difficult, is a difficult man and was a, was a tough, tough, tough operator. And part of the reason we bought him out in his 50s when we did was because we were struggling to work together as a family. Family businesses are complicated, tough dynamics. Everybody's got a big ego, everyone wants to run the business, et cetera, et cetera. So at one point we went to my dad and said, this isn't sustainable. You know, you can't, you got kids who were bright and have ambition and we want to run the world and you're still here and blah, blah, blah. So we solved all those problems. I mean, I'm really giving you a high level overview, of course, but yeah, it was complicated.

Host: So I imagine you, you watched succession with rapt attention.

Guest: Yes, they're all, you know, there's married. How many family businesses did. I have buddies of mine who have gone through similar experiences. Family businesses are tough. In the community that I live in, there's a lot of entrepreneurs who run businesses and it's a tough dynamic with controlling fathers and all that kind of stuff. It's hard, but it's a great education too.

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Guest: Yeah.

[12:00] Host: Sold your piece to your brother. I imagine that was a material exit for you. But you're in your early 30s, then what do you do?

Guest: Then I start paying attention to noise around me and deal flow starts to happen and people talk to me about a different opportunity. And somebody that I know went to a wedding in Australia and saw a jewelry store, a costume jewelry store in a shopping mall, thought it was a really interesting concept and that it could be brought potentially to the Canadian market. Track down the owners of the business. They were based out of London. The UK was a partnership of three. Australia, the uk. I approached them and asked if they would consider partnering with me for the Canadian market based on my experience at retail. They said yes. And we subsequently opened up 35 stores within 18 months. Small little retail stores of about 500 to 1,000ft. Those stores were called Diva. And that experiment was short lived and did not work. We subsequently bankrupted the business and closed the 35 stores after 18 months for a myriad of reasons that I can go over. And then from that experience, having lost that business, which was not a bank's money, that was our money through partners who funded this, I pivoted and decided I wasn't a retailer, but I was a wholesaler. And I took all of those contacts and that information that I had learned in jewelry and became a wholesaler of costume jewelry and subsequently spent the next 18 years or 20 years building a wholesale costume jewelry business across Canada and

Host: the U.S. and by wholesale, that means you'd bring in costume jewelry or you'd either import it, or you'd get it directly from the manufacturer and then basically be the distributor of that to retailers.

Guest: Yeah, we ran two models with that business. Business was split 50, 50 in the UK and in Europe. They do a lot of concession business which is where they create a shop and shop environment within retail stores. They take or it's a real estate play. Give me your space, I'll put in fixtures, I'll put in inventory. I own it all. And you pay me once a week or once a month based on which sells. That was half of our business then we sold people like Macy's, Hudson's Bay, which is a big Canadian department store chain that just filed actually this week is closing down 300 year olds. They were my first customer. So it was a shop and shop concession. Business was half and then the wholesale business was the other half and.

Host: Sorry, did you say that a department store brand chain in Canada that's 300 years old?

Guest: Did you say older than the country? Yeah, Hudson's Bay, older than the country.

Host: Oh, that's tragic.

Guest: Yeah, they just filed last week and they were trying to restructure and keep 40 stores open. But it sounds like they're going to be liquidating everything because they can't find a buyer. It's a very sad story. Very sad story. We now have no department store chains left in the Canadian market. We lost them all. Yeah. Oh, that's awful.

Host: Yeah, but same dynamic is every department store. I mean, why they're struggling down south of the border as well. I assume this is. This is a Macy's type brand in Canada.

[15:05] Guest: They've lost their edge. There's no compelling reason to shop there anymore. You know, and it's too much capex to go into them, etc. It's complicated to revive these companies. They're old and they're tired. So. Yeah, so I did that for. I built that business for 20 years over time with these partners. And there were a lot of ins and outs of the business and new customers and lost customers. But we built that business to become pretty significant before I then sold that business in 2020.

Host: Can you tell me what pretty significant means?

Guest: I think again, going by memory, because we calculated revenues a little different because the wholesale revenue was calculated one way, the concession was calculated another. But at its peak we were probably doing about 40 to 50 million dollars. Probably had about a hundred and something employees. We had reps that were on the road that would go into the stores and service the jewelry. Plus we had our own internal team based out of Montreal.

Host: And you sold it in 2018?

Guest: I sold it in 2020 just at the beginnings of COVID to a group I had bought out my. I had partners out of the UK. I had bought them out probably somewhere in around 2015 because I didn't have enough equity in the company. I think at that point I was a 25% equity shareholder. So I bought them out and became a 75% equity shareholder. Kept my Australian partner in and then I sold my business to a group out of France where I sold them 60% of the business. I had a five year earn out, didn't last the five years left after a couple of years, Covid and all of that big mess that happened. And yeah, they were my buyers.

Host: Okay. And I assume that that was a. Another significant exit for you.

Guest: It was.

Host: And so by this point you're in your late 50s and fair to say you could. Mid 50s?

Guest: Yeah.

Host: Right. You're 59 now. So in this, was in this four or five or five years. 20. 20 is five years ago now.

Guest: Yeah.

Host: So mid-50s and you could have retired easily.

Guest: I did all the stereotypical stuff. I went to Florida, I bought myself a condo, I got a dog.

Host: You did retire, Okay, I did retire. Florida. Keep going.

Guest: Yeah, Florida. And I thought I could make it to the finish line and just kind of go off into the sunset and do whatever, was very happy. But my wonderful, beautiful wife kept pushing me and kind of. And my, my peers were kind of saying, like, there's more, you know, you can do more, so find yourself and figure out what you want to do. But there's more and there's opportunity. So I dabbled. I made an investment in a mental health company where I bought 25% of a successful mental health company based out of Montreal that had about a hundred therapists in a virtual setting and were exploding growth through Covid. That was a very short lived experience that lasted a year for me. I'm not meant for the service industry. And I also figured out I'm not meant to be a minority shareholder. It doesn't work. I did not have control. I was dealing with two professionals who had a different vision than me and wouldn't listen the way I needed them to listen. So I got out of that business. I got my money back. I think everyone was happy to say goodbye. And then I went about the process of trying to find a business through my network, speaking to everybody that I knew and putting my name out there and kind of starting to kick the tires and meet different entrepreneurs and see what was out there on the market and.

[18:28] Host: And why buy a business? Well, actually, before you answer that, Adam, just curious. Your wife, your peers, when they're saying there's more, what do they mean that you're just. That they saw in you more entrepreneurial Energy, or they were just saying 55, 54 is too young, or just. What do they mean? Why. Why was everyone pushing you?

Guest: I think it's an all of the above. Number one. I had a. I have a father who's today about to turn 90, who tells me always that his greatest regret was having sold his business too young and that it aged him. So I come from that a little bit to understanding that careful what you wish for. You know, that elusive horizon if you keep. You know, I have more money now than I ever dreamt I would have in my life. But it's not about the money. It's about the journey. So with wisdom and time comes perspective, I suppose. I just. There's more. There's just more to life. And life isn't only about driving a nice car, meeting fancy meals, and being able to travel anywhere you want to. It's about challenging yourself. And for myself, being curious, being interested, being engaged, building. Those are the things that I thrive on. And I know myself well that I'm. Even though I'm in a mess right now of a business, I'm thriving. I get up in the morning and I'm excited to see what emails have come in, what orders have come in, what's new, what's going on, you know, that's what juices me up.

Host: Yeah, well, couple observations there, Adam. First of all, when your dad says that, that his biggest regret in life is selling his business, do you take that personally? Because of course he sold it to you guys?

Guest: I do not.

Host: He's talking. He's. He's talking to the buyer.

Guest: I do not. He's a big boy. He always told us, if you get me X dollars, I'm out. And we did. And one of the rules when we bought him out was he can't come back into the building because it was disruptive. And we all took a breather from one another. There was a lot of years where, you know, we were not close as a family, and we just did what we had to do to kind of. My mother, in the middle of all of this, passed away when she was 55 or 56. She died very young when I was 30. So we were dealing with a lot, and our attitude was, your big boy, dad, this was your decision, you know, and he's a happy guy, but he wishes he would have worked more. He wishes he would have done more.

Host: Well. And then on that point in. In your own experience right now or. Or a couple years ago, you'll hear people say that I never want to retire I never envision retiring entrepreneurial type people. I put myself in this category and. And it'll be like, you know, it's not about the money. It's just about the. It's. It's just about the energy that you derive from the. From building. But a lot of those people are saying it hypothetically, you know, who knows how. How they'll feel? So it's. It's great to have you in the chair and actually be somebody who is at that phase of life. They totally could retire, but are choosing not to and. And to. To stay in the game, as it were. Return to the game because you enjoy it.

[21:22] Guest: So.

Host: So when. When those of us who are a little bit younger than you say, well, I'll never retire, there's probably. I. I've sometimes wondered if, like, yeah, well, let's see when we actually get to retirement age, how much energy we have. But your. Exhibit A of somebody. No, in fact, you. You really don't want to retire, even. Even though you could.

Guest: Yep. You know, it's about. Also when you. When you have money. When I was building my businesses and I didn't have a safety net because, again, my dad came from that school of thought. It was kind of, you're on your own. You got to figure this out on your own. It's terrifying. And the anxiety was very real. And the obligations and responsibilities, building a family, needing to make a living, do all of those things. It was crushing, and it was difficult. And it's one of those memories that I have of just living in fear and in panic, always of, can I continue to do this? Will I go broke? Am I an imposter? Et cetera, et cetera. When you have a little bit of money and you're building a business, you still care. You still sweat the small stuff. You still want to win, but it's not your. Your. Your survival is not on the line. So I no longer. I still. I sleep better. When I was 30, something, I wasn't sleeping, and I was on a plane every week. I've been in Florida for the last two months running my business remotely. And that's a guilty pleasure that I have, but it's also acknowledgment to the fact that I've got great people here. They're loyal, they work hard, they understand what I expect from them. Could I make more money? Could I build it a little bit faster? Yeah, maybe. But you make your peace with some of your decisions.

Host: Okay, Adam, returning to the plot, why did you look around for a business to Buy as opposed to maybe starting something from absolute scratch.

Guest: No particular reason. I don't think that was a calculus in my brain. I'm not an idea guy by nature. I think I'm pretty good at executing a plan and making things happen, but I don't come up with original ideas. So as I used to, you know, be awake and think, oh, what can I do? How can I make money? I don't see original ideas out there every day. And nothing came to me that felt obvious. So I'm not creative. And that would be my quickest answer would be, it's just not the way my brain is wired. Let somebody else have done it for me and have the platform and then let me see opportunity within that platform to say, can I scale this business? Is this business reached its maximum potential? Do I see opportunity there? And that's what I get out of looking at existing businesses.

Host: Great. Okay. And so how. What did you look at? How did you find what you found? What's the story of the search?

Guest: I mean, I guess I searched through some of those. I wouldn't even remember the names, but some of those transactional websites where they put in a hundred businesses, it's kind of like to me, that was like a dating app. It felt it didn't get me anywhere. I did a bunch of inquiries, but it was just too tough and nothing real and significant came from it. So I ended up going to my professionals, my accountants, my lawyers and my peers and put it out there, kind of. Does anybody know of anybody who's looking for to get rid of their business or bring in a partner or transition themselves out, et cetera, et cetera? And I did that probably maybe for six months, maybe. I looked at a dozen businesses and was really, really underwhelmed, I think. I'm not sure why it was post Covid. So every business had a story that was somehow related to Covid as to why they saw a big boom in their business that messed up their valuations or a big dip in their businesses. And most of the entrepreneurs that I met had unrealistic expectations of what their businesses were worth and they wanted crazy multiples. I'm not an M and A guy. I don't understand those things. I just kind of look at how long was it going to take me to make money on this thing. And price points felt too expensive, so I was discouraged and exacerbated by a search that where the theme was always the same. Too expensive or too dysfunctional or a story that just doesn't compute with today's. Reality based on all that's going on in the world around us. You know, there were so many unknowns. So I did that for a while and then my accountant called me one day and said, I have a business, but I gotta tell you, it's really broken and it's really, it's really small. I don't think you're gonna be interested. And I, my attitude is I'll look at anything. I don't care.

[25:46] Host: Yeah, your attitude is, well, every other business I've looked at, you know, had these flaws. So yeah, I'm basically used to looking at such bad quality. Okay.

Guest: So I looked at the business and it was exactly as described. It was what I call a micro business that had a sales graph that was down probably 80% from its peak with a founder who passed away during COVID and his wife who was running the business and the business was in very significant distress. And she was. Is a lovely lady who just needed to get out.

Host: And, and, and let's get into a little bit of the. Well, first of all, what kind of business was it? What, what is this business?

Guest: It's a, it's a manufacturer of candles. That's what we do.

Host: Candle manufacturer. And of course you and I were introduced by Chad who is Candleman for a former acquiring minds guest who also bought a candle manufacturer down in Jersey.

Guest: I come to him through you. So you are the, the center of all of the connections. Well, right.

Host: That's it. You. Right. You guys met through. Through his podcast, his interview with me.

Guest: Yeah.

Host: So down 80%. So what was revenue when. When you looked at the business and what had it been?

Guest: It had been 5 million. I think she was down to 1.2, 1.3, something like that when I bought the business.

[27:09] Host: So it was a business where there was the potential for it to be a five million dollar business. It had once been at five million dollars under the original founder's leadership. I guess so. So there was potential to it, but declining fast. She needed to get out. What did you like about it?

Guest: I understand product. I understand importing, I don't understand manufacturing. I have great relationships with buyers. I'm a sales guy by nature. That's my background. That's what I'm best at. And I loved the idea of a Made in Canada. Kind of felt interesting to me. Maybe that's got some niche value in an ever changing world when buyers are saying too much China, you know, today we find ourselves in the tariff war. And how interesting that I have a Made in Canada product. Both Good and bad. So I just thought it was interesting. Okay, this is small. This is something that I can understand easily. There is opportunity. I haven't, you know, I didn't get my hands dirty at that point and look at it. But it just felt in my wheelhouse of buying for a dollar and selling for $2 and, you know, understanding what's involved in making that happen. I've done it all without. With the exception of the manufacturing piece.

Host: And. And it was manufactured. These candles were manufactured in Canada. You said main. Main.

Guest: Manufactured in. In my warehouse. Yeah. We have a 15, 000 square foot facility in Montreal, a couple of thousand square feet of office, and then a warehouse. And we hand pour all of these candles in our warehouse.

Host: And that's what you do today. What were the husband and wife founders doing? Same, same.

Guest: They have a business where half of their volume was coming from growing kits where you. I don't know if you see those ever, they'll be maybe at a Barnes and Noble or something. They sell seeds, and the seeds go into people's homes in these containers, and they can grow vegetables or things like that. That was a piece of their business. I shut that down when I came in. There was all kind of regulatory stuff involved in importing seeds, and it was complicated, and they were kind of out of it at the time that I bought the business. But we didn't do that piece of the business anyways. I didn't bring that forward. So it's candles.

Host: But the facility where you're manufacturing, pouring the candles today, that was not their facility. That's your creation.

Guest: That is their facility. I'm in their. I'm in their space now.

Host: Okay. And so to be clear, Adam, when you say it was in my wheelhouse. We talk on this podcast a lot about business buyer fit. Really what you liked about this business, it sounds like, was not necessarily attributes or strengths of the business itself, but that it. It was a fit for you and your experience and interests.

Guest: Yeah, I mean, I misjudged because I thought this was. I misjudged big time. We'll get into that. But everything I thought was gonna happen didn't happen. I. I have great relationships with many of the leading retailers across Canada, the United States from my past life, because in my jewelry business, I sold everybody. So I went out to everybody early on in this business, and I told them, I'm a candle manufacturer right now, would you buy candles from me? And the first thing I learned is everyone said, well, show me your line. What do you have? What's your brand? I don't have a brand. I'm just a candle manufacturer. So like a contract house for people who want candles made for them. So the previous owners had a very significant piece of their business with major retailers like Staples as an example. I think you have staples in the U.S. yes, or a big customer of this company. As soon as I bought the business, Staples exited that relationship. I think they were loyal to the founder. She was in her late 70s. They never wanted to leave her. I never got a season out of them from the moment that this transaction was gone. And that same thing happened with half of the volume of this company. As soon as I bought the business, the buyers abandoned us very quickly for a myriad of reasons that they gave. They wouldn't return my phone calls, and we lost a very significant chunk of the business. I also think that companies like Staples can buy it in China for 20 to 30% less. So what am I bothering buying it from a domestic person in Canada who makes it by hand and charges me a premium. So I misjudged that big time. And I think that was legacy stuff because this company was around for 40 years. So she was deeply entrenched with these buyers. And the story I tell myself is that they were probably all just waiting for the ability to say, we'll see you later. I didn't do the due diligence. I didn't speak to the buyers in advance to see if they were happy with this company. I was colossal misstep on my part. Hi.

[31:51] Host: And what. That was something you could have. Diligence. Do you believe that. That you could have reached out to those buyers and had conversations pre transaction?

Guest: The founder was very difficult to deal with. She was very, very emotional, and she was in a very fragile state. And she would get really shaken really quickly and get very emotional. So it was a terrible. The due diligence on this, but it's not the due diligence. The deal took a year to conclude, and I spent a lot of money on legal fees, even though I didn't do any due diligence just because the entire process was so painful. It was her baby. And even though her baby was very sick, she had a perception of the value of her baby and how wonderful things were. And, you know, so that was. I had to use all of my superpowers to kind of try and navigate a real minefield of disconnects is what I saw. So to answer your question, no, probably I couldn't have done that due diligence, but I could have done Some due diligence. And I chose to not do any due diligence because it wasn't a very material price to pay for the business. And I figured, well, what's the worst that can happen? And of course, I've since learned the lessons of what the worst to happen when you don't pay attention.

[33:07] Host: Well. And Adam, can you tell us what you bought it for?

Guest: I bought it for inventory, principally in goodwill, which was $300,000. And then I had to put $300,000 of working capital into it. And when I originally. So we. $600,000 was what I paid for the business, but 300 went to her, and 300 went into the company. And I did this with a partner, my oldest friend from the age of 13 years old. And I went into this business together. And that's a whole other conversation, but that lasted, I think, four or five months before we recognized that we were not well suited to be partners. So I then bought him out. But, yes.

Host: Are you still friends?

Guest: We are still friends. We are mending that friendship and putting a lot of time and energy into it because it has great value to both of us. But it was a difficult and painful process. You know, you say don't do drugs. I say don't go into business with friends. That's.

Host: Or family or in your case, you

Guest: know, we tend to make those same mistakes all the time. But yes, I should not have gone into business with a friend.

Host: Okay, and the inventory, roughly what was that worth?

Guest: Just out of curiosity, I think it was about $150,000. But again, I didn't do due diligence on the inventory. What was the inventory really worth? Nothing, in my mind. I. I ended up spending the first six months buying containers from. I've got junk or whatever that company is, when they back the container into your place and you just throw things out a thousand dollars a crack. And we just kept filling containers with

Host: garbage because garbage inventory, candles, unsold candles,

Guest: garbage, raw materials, garbage boxes, they kept everything. So if you were doing a run for staples, I had boxes that were 30 years old here from when they had an extra thousand boxes or whatever. Just an incorporation. Incredible amount of obsolete inventory that had no value. And because I never did any due diligence, I don't really know what the inventory was worth. But, you know, my inventory today is a fraction of what it was when I bought the business. Because we have just in time inventory. I mean, that's an overstatement. I'm oversimplifying. But we. When we need goods to make product. We buy goods. And when I'm finished a job and there's extra and I know it's going to be boxes that I have no value, I should throw them in the garbage. I don't cheat them.

Host: Is it. Is it?

Guest: So. So, yeah. So I bought inventory, but I bet you the inventory probably were 50,000 versus the 150 that I paid for it. I would imagine.

Host: Okay.

Guest: The rest was goodwill.

Host: So, Adam, you. Despite the fact that you didn't do due diligence, you did seem to really want the business because you suffered. The dance with her, the tumultuous negotiation with her that lasted for a year for really a tiny business. So I. It seems like at some point something clicked in your mind that was like, I'm going to get this done. I want to buy this business.

Guest: Yeah, it was. There were complete breakdowns, probably two or three times when the deal was dead, dead, dead, dead, where it was over. And nobody spoke for a couple of months. And then some coincidence of somebody saw somebody on the street or knew somebody and said, you know, she had a lawyer who used to be. I won't bore you with the sorted details, but her lawyer, who is her friend, was also a family friend of ours from childhood. And he was a. He is just a fine guy who knew that this was in her best interests and knew that I was a solution to a problem that she couldn't solve. She had been trying to sell her business for years. It was kind of like I was the last hope. She had already terminated all of her employees. She had told them all that if she didn't find a buyer, they were shutting down, and they were expected to close within a month. I think maybe by the time I bought the business. So I was her last hope. And, you know, I. It's not that I wanted it. It said it. It couldn't not happen at a certain point because it was almost free. And, you know, and she just waved the white flag and said, okay, I'm out. I got to get out of this now. She was very unhappy.

[36:56] Host: And. And just to. Because the p. Your perspective as buyer is important here. $300,000 or 600. 300 in goodwill to her. 300 to the balance sheet, plus miscellaneous for the inventory. Not a big investment for you in your station of life.

Guest: Correct. Plus, I was with a partner, so I only put in half of that money. So, yes, it was money that I could have walked away from easily. Not to say I'm cavalier about that kind of money, but it didn't move the needle where it felt significant to me. And I approached this business as, again, what's the worst that could happen?

Host: Yeah.

Guest: You know, the other businesses that I was looking at prior to this business were all in the range of 2, $3 million of EBITDA with prices of anywhere from $10 to $20 million. And you're really kind of all in. And you're raising money from private equity or from banks. We don't have any debt in this company right now. I don't even think this is a financeable business. So this is my money. I'm not pulling a salary out of this company right now. You know, and this is all wasn't a surprise to me. I kind of knew when I bought this business. Okay, you're going to have to roll up your sleeves, make it happen. You've done this before. Be patient. You're in a great position. You don't need the salary. You can afford to do these things. And subsequently, quite frankly, the thing that makes me sleep at night right now is we are now cash flow positive so I'm not having to fund losses, which I did do for the first year.

Host: Well, congratulations. Huge milestone. What do the following acquiring minds guests all have in common? Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursam. They all went through the Acquisition Lab, the accelerator in community for people serious about buying a business. But they represent just a sliver of the Lab success stories. The number of deals across the Lab's cohorts now stands at over 120, with over $300 million in aggregate transaction value. The Acquisition Lab was founded by Walker Deibel, author of Buy Then Build the book that introduced so many of you to the very idea of buying a business. The Lab offers a month long, intensive, almost daily Q and A sessions with advisors, live deal reviews with Walker deal team introductions and an active community of serious searchers. Check out acquisitionlab.com, link in the notes or email the Lab's co founder, Chelsea Wood. Chelsea buythenbuild.com Even with all of that tolerance that you had for a messy venture and rolling up your sleeves, as you said, and frankly turning something around, it's still gone. It's still been more difficult than you expected. So let's get in, let's get into the transition, your ownership, what did you, where do you want to begin? What did you find in month one and two?

[40:01] Guest: Number one, we lost half of our revenue. So we lost all the big customers. And these big customers were buying 2, $300,000 from us each. So if you lose 2 or 3 of them on a million 2 of volume, all of a sudden you're down to 5, $600,000 of volume. So you're scratching your head thinking, I've got a team of people here who make candles all day long, but I have nobody to make candles for. So first thing I had to come to recognize is seasonality of business, because this business also is extraordinarily quiet between January and May or June and gets extremely busy third and fourth quarter. So we just had no business. So I had people looking at me every day and that awesome sense of responsibility saying, I'm. I've got this nut that I've got to, you know, manage every month, and I have no revenue to bring in. So that was the biggest adjustment, was the other businesses kind of had a predictable revenue stream. In this business, you got to chase sales and there's no recurring revenue. So you're only as good as every month in which you have on order. So losing the.

Host: Adam, let me. Sorry, let me jump in the.

Guest: The.

Host: But this seasonality. So you lost half the business, half the revenue. So obviously the work that your employees are going to do is going to drop by half. But that seasonality component should be something that they were already accustomed to from years prior. Right?

Guest: They were. But they had custom projects where they might have had seasonality, but they were able to bring in certain key accounts and get a February or a March delivery for some custom orders. They were. They were doing work workarounds where they were always able to. Or they were building up inventory in anticipation of what they knew would be their biggest season. Yeah, and we were just hemorrhaging cash because we had no revenue. So it was. Plus, we had a lot of employees here. A small business, I think, at its peak, maybe. Well, when I got in, there maybe were a dozen employees. But these employees had been with the company for very long periods of time. Typically, you know, the founder had a daughter in the business, and some of the people in management had been here for 20, 25 years. Wonderful people, but not the way I'm accustomed to working and approaching problem solving. And everything was done manually, and the software was antiquated, and everything was Excel, and there were no systems and no rules. And it felt very foreign to me. I was unable to understand how these people were able to make decisions, even things as simple as buying inventory. Because a candle really is a half a dozen components that need to be coordinated and brought in. You need your wax, you need your Wick, you need your fragrance, you need your vessel. They all come from different places. Making sure that your inventory is planned properly. She was paying people late. It was just, it was not a healthy kind of environment. As soon as I got into the business, the vendor from China stopped selling us right away, where everybody kind of abandoned ship. So it was just a mess of having to literally say, this feels like a startup, even though it's a 40 year old business.

[43:03] Host: And so how did you set about of these many problems, how did you prioritize them and what did you attack?

Guest: I keep in mind I had a partner at the time and my partner, we experimented, we did a lot of things. I burned through hundreds of thousands of dollars on, on bad decision making. I hired a vp, a six figure VP who came in because that's the world that I come from. You know, you can hire away your problems, but I had a right hand working for me outside of that vp who was my product development guy. So I surrounded myself with people and I bloated my overhead and you know, came to recognize pretty soon, number one, my burn rate just on payroll was pretty significant. I think I was running at something like $50,000 a month of payroll for a business doing half a million dollars of revenue, thinking if you build it, it will come. But it's kind of like what comes first, the chicken or the egg? First you gotta go chase down the revenue and make sure that everything's in order here and then you can sell. So I approached it wrong. I just.

Host: Interesting. This demonstrates your kind of. You already said it, your corporate perspective. That's how you solve problems in corporate land. You. I've never heard that phrase, hire away your problems. Yeah, hire somebody and say, go fix this. And then you delegate it away sort of thing. Yeah. Not the case in a tiny business, I guess.

Guest: Not the case at all. And I ended up. How did I solve the problem? Well, I let everybody go.

Host: Everybody, everybody, everybody.

Guest: I let the right hand guy that I hired, who was my product development guy, go. He was making 80,000. I let my VP go, he was making six figures. And I let the founder's daughter go and I let the person who was in logistics go. And I brought my controller down to two days a week from four days a week. And I just ran a really, really, really tight ship. And I said, let me sit in this business for a period of time, see what I can figure out. The people that I kept are the backbone of the company. The guy in the back who helps me with making the candles has been here 20 odd years. He's irreplaceable and wonderful. I've got a guy in the front office who's loyal, hardworking, extremely bright and capable. So I just kind of. We had some come to Jesus moment, tough conversations where I said this is what we're doing. I gave my employees that remained complete visibility to the numbers and to what was going on in the company and to the precarious position that we were all in. I took responsibility for the terrible mistakes that I made in the business and apologized to my people and started to listen to them and say what do we need to be doing to fix these problems? At that same time, I bought out my old partner by bringing in a new partner who is my partner today. He owns 50% of this company. He is a very, very, very successful retailer in the Quebec marketplace. A high net worth guy who's done extraordinarily well, who is a friend of mine for 15, 20 years, who's one of the smartest people I know, who kind of is my board of directors. And he put in the money to buy out my original partner. And he's the idea guy in this business. Him and I probably speak an hour a month, but he's available to me more than that. And he has been beyond instrumental and helpful in helping guide the course of the business. Him and I will sit and have drinks, we'll talk about high level things. What way do we need to go, what direction do we need to take this thing? And then it's my responsibility to execute well.

[46:33] Host: And there has been a huge strategic pivot that, that we're going to hear about. But I want to just get into the messiness of that first six to 12 months. First of all, when did you close the date? So we have a timeline.

Guest: I'm thinking December 23rd.

Host: December 23rd. Okay, so you're only a year, you're only, what is that, 16 months in? Yeah, right. Yeah, yeah. And the mistakes that you made that you apologized for to the remaining employees. What mistake? You've already said that you over hired. So you bloated and then had to thin back down and in fact let go of people who had been there before. The people that you hired, like the founder's daughter. What mistake? Other mistakes did.

Guest: Were you apologizing for failing to bring in revenue?

Host: You should have been focused on sales.

Guest: I should have been focused on sales and I should have had a clearer understanding of what would be involved in me trying to generate the revenue that the business needed. If you have no sales you have no business. And I would naively kind of believe that problem will solve itself because sales for me has always been intuitively effortless. And I went on all the sales calls. I, I met everybody, I met all the major retailers across, you know, I got on airplanes and I flew and everybody said, yeah, come back to me, Adam, when you have your story. And plus, I didn't understand my business. So when a customer would say to me, well, how much would a 10 ounce candle be with such and such a wax and such and such a wick, I'd kind of stare into space, not really understanding my industry yet. I didn't, I didn't take the time to really, I can have a conversation today about candles, but I couldn't have a conversation in the first six months about candles. And I should have done a better job of understanding the retail landscape and who the players were and who my competition was and what makes us unique and what kinds of waxes and how a fragrance throws and all of those subtle things that really matter about being a master of your, of your space. So you come off when you speak to somebody with authority. I think if I look at how I must have come off to my customers, they were thinking like, wow, what happened to you, Adam? You don't know your business, you're not able to answer my questions. You don't have anything to sell me because you can't go to a sales call and sell, I'll give you a candle. It just doesn't work that way.

[48:59] Host: And were you accompanied by a salesperson who already existed in the organization or was that sales call just you?

Guest: It was a right hand kid that I hired, 25 year old smart guy who had his own small little candle business, which is another story. But I bought his company and I rolled his small business into my company and naively believed that those 25 year old wonder kids who understand computers and all kinds of fancy things could help solve all my problems. And he came to my sales calls with me, but again, nobody can do it like I can do. It was my biggest kind of take home. And I'm not the smartest guy in the room, I never have been. But I've got 30, 40 years of this. I know how to manage myself. I just think I was taking a kind of an easy way out. It felt like at the time I was doing it, it was a shortcut. And my friends were kind of saying that to me too. Adam, get your hands dirty. You can't have a successful business by disappearing to Florida. And I Was away, by the way, which I say sheepishly, it's an embarrassment to think about it. The other thing I apologize to the employers for was buying the company and then disappearing to Florida for three months and running my business through Zoom calls it infuriated my partner, rightfully so. He thought that I abandoned the business. So I apologize to him for that. Although I. When I got into this business, I made those rules very clear to everybody. This is a lifestyle business for me. I still want to go to Florida. I still want to have my cake and eat it too. But I guess all of those things were learnings for me. You know, people were depending on me and I think I let everybody down.

Host: To your point about not having the knowledge to go do make sales calls. One of the. One of the features of this world is how so many, we call them searchers. How many? So many searchers who then find and buy a business often buy business from outside the industry. They don't know the industry. And so there's always, there's always that learning curve. And there's the question of when do you start? You as business buyers, start making changes at what point in the learning curve? Because you just, you don't know anything and you don't know what you don't know sort of thing. So there's no right answer. Every case is different. It's more art than science. But it sounds like you feel time better spent would have been kind of hitting the book, being in the business and just learning, learning, learning and deferring to your staff and absorbing what they knew sort of thing. Would that have been the proper approach?

[51:31] Guest: Well, I forgot to mention that I had negotiated a compensation package with the founder. She was supposed to stay on for six months and she lasted two weeks. And her daughter was going to stay also, and she lasted three weeks. And this was me who took.

Host: They left at your behest or there.

Guest: Sorry, at mine. At mine. But it was kind of in the cards anyways. It was just simply not sustainable. It was impossible. Almost like I knew from moment one this had no chance. I was incredibly naive to believe that this, and I say this with the utmost respect. I don't fault this founder. I think this was such an emotional thing for her that she was unable to let go. And she wanted to come on the sales calls and this and that, whatever, it was just super complicated. So I asked her to leave after two weeks and never to come back. And that was the right thing to do. But it really created a myriad of problems for me. And then her daughter was left in the business and her daughter in law. I'm sorry. And that didn't feel right either because there was a certain body language every day and you know, I get it, I understand. I come from that world. So. So I lost my management team and I was alone here with my partner and the guy in the back who'd been here for 20 odd years and the guy in the front office and everyone kind of scratching their heads thinking, oh, you know, I didn't even know the names of my buyers. I didn't even know who to contact to know to do a sales call because nothing was really documented here in a, in a proper way. So it was just. There were messes everywhere where you just. I didn't know which way to kind of look or to tune.

Host: As dire as all of that sounds, I, I suppose you had a little bit of COVID because all those employees under the previous owner were told that the business was about to shut down anyway, so. So in you, while it's clear you don't know what you're doing, you're this outsider business guy, you're kind of a Hail Mary pass. So it was going to die under the previous owner. So at least you, there's the chance of resurrection. Right. So did that give you a little bit of morale, cover that the employees were like it did bad under previous owner, still bad under new owner, but maybe new owner eventually turns this thing around.

Guest: It did. And I will say that the people that we have on this team right now. It feels a little bit flowery to say this, but I mean it with all sincerity. They won't hear this podcast. I don't think they're your audience, but they are the salt of the earth and they've been incredibly loyal and they've been with this business for 20 years. And I think they are grateful every day when they have a job and they look to me, which is this awesome responsibility that I don't think I felt in my bigger businesses to, to your point, you know, they're, they're further along in their careers. They're not necessarily able to grow it and hustle another opportunity. They're artisans in their craft. So yeah, what I tell my wife when I go home at night is it's a good feeling to be able to greet all these people by name every morning, which I was not able to do in my last businesses, know a little bit about what goes on in their lives and see the smiles that they have in their faces when we've been successful in bringing in new business. There is that sense of community here where everybody kind of understands what we're trying to achieve and is really rallying in a way that I'm not used to. You know, I always kind of say in interviews, it's not just a job. I want you to feel part owner of this thing. I. The people that are here in this business behave that way. They behave as if they are owners and very invested in the success of the business. And I think that makes it very rewarding for me.

[55:08] Host: Well, Adam, it's so powerful to hear you say that because. Not because I haven't heard it before. In fact, on this podcast, one of the delights that so many business buyers find on the other side of their transaction is exactly what you just articulated. That they, that it's very gratifying to be involved in their employees lives, to make a difference in their employees lives. So many people get into buying a business for, for their own ambition, which is fine and great and entrepreneurial, but are surprised to learn that there's this deeply hum, deeply and satisfyingly human element to the relationship with their employees. But the reason I say it's powerful to hear it again from you is because. So I guess in fact that is a feature of small business that doesn't exist in corporate land. As I say that it's like, duh, like that's why nobody likes corporate land, because corporate is soulless. Not to say that your previous businesses were soulless, but you're experiencing firsthand that this, that this small business, that this small business environment is in fact more human than running bigger businesses.

Guest: Very much so. I was, I was ruthless in my last businesses. Ruthless. And when it was time to do layoffs in the company and had to lay off X amount of people because the business you hired, you called HR and HR, you said, okay, let 20 people go. And they were kind of faceless and nameless. I mean, I'm, again, I'm oversimplifying, but yeah, that's, you know, here I know these people's story. If I've got to let somebody go, that's devastating. That's devastating. They're giving 110% every day. And I'm not saying the people weren't in the old businesses too. It just, it was less personal. It didn't feel that same way. So yes, that is one of the joys and privileges of being in a smaller business for sure. When we have a Christmas party right now, I used to dread our big Christmas parties. You know, you'd have a hundred Managers come in from all across the country and you'd stay up till 2 o' clock with an open bar and everybody. And you make small talk. Here it's eight people ordering chicken, sitting around a table, you know, and learning about each other a little bit. And it's just a different feel, for sure.

[57:13] Host: Of course, you know, there's. It's not all butterflies. That comes with more of a burden. It's more on your shoulders. You can't make decisions impersonally anymore. Everything, everything. There's this other layer now, this relational layer that you have with everybody. Fascinating. Okay, so you, you apologize to everybody. You, I guess, humble yourself. My words. Putting words in your mouth. You become a student. And how do things progress once you make that big, that big change of posture?

Guest: Well, as I said, once we got. Once I brought in my new partner, you know, you'll see behind me, for those who are looking, there's like a piece of artwork on the wall that is this very iconic thing that was a big piece of Sarakon's business, which was maple syrup candles. Probably half of their volume was being done out of these maple syrup candles, selling them across Canada and in the eastern United States and a little bit in California. We really leaned into that business in a material way and said this could be our brand. Just, you know, a little kind of side story quickly is I went to a gift show in Atlanta, I think in March or April, the Atlanta Gift Show, a huge show with thousands of booths, and in five days, in a show that cost me 15 or $20,000 to set up, I wrote $700 of business over a five day period of time. So that was also deeply humbling. Understanding that nobody is listening to my story. So this pivot might seem like a stroke of genius, but it was by necessity, because you just kind of. How many times can you be told that nobody wants what you're selling anyway? So we took this artwork and we went to the owners of this artwork, who have always been partners of Sericon, and let us do maple candles with them and pitch them the idea of putting that iconic artwork onto other items and trying to build a brand around that business. And as you and I are talking right now, that's where this, that's the evolution of this business. What has gone well here for this company is first and foremost, we've leaned into the maple candles and we've seen great growth with the maple candles. So whereas my business, I lost my big customers, the staples of the words, et cetera, we've gained a lot of new business with these maple candles. And we dealt with other SKUs around them, and now we have started to bring in general merchandise that we are launching. We did a trade show in Toronto in January, and we brought prototype items of all of these new ideas that we have. And the reception was very, very powerful and very strong where everybody said, oh, great. Send me your catalog as soon as it comes out. We can't wait. We can't wait. So my experience tells me that we're onto something here. And if you ask me what my business is today, I'd like to tell you that a year from now, I would not say to somebody, I'm a tandle manufacturer. I. I mean, I sell stuff.

[1:00:11] Host: Merchandise with this iconic image, which we're gonna. We're gonna unpack that a little bit. Because you and I, on the. On the pre call, it was hard for me to wrap my head around, But I certainly appe. I certainly understand that without even recognizing that image, which every. I guess every Canadian would recognize. Recognize. It's immediately appealing. I mean, there's something just so inviting and warm about it. We'll return to that. So you. You go to this Atlanta show, and you basically recognize that candle. Your candles just aren't. They're undifferentiated. There's a lot of candle, like, right.

Guest: There must have been a hundred candle people in Atlanta, and every one of them did a better job than I did, in my opinion. Everybody's boot was nicer, and everybody's product was more compelling. And there were all these micro brands that had a great story, Be it that it was a candle in a wine glass or be that it was a candle from a farm where the guy made them with his pine. From his pine trees, or everybody had this compelling, great, fantastic story. But they were all small businesses, because I got to talk to them all. And it's a cottage industry. Candles. Everyone seems to be running these businesses of a half a million, a million, $2 million or something like that.

Host: Okay. And so you come back from that, and you really. It crystallizes that. You just. Something's got to change. And so the maple syrup scented candles had always been one of your big sellers. And you decide that strategically, we're doubling down on this.

Guest: Correct.

Host: And you. And you immediately. And so what do you do? You go back to some of your buyers, you go to some new prospects or people you know from your previous life and say, And. And come in with a story now or. And with a positioning where the maple candle. Maple syrup scented candle people and that works. Do I have that right?

Guest: Well, I, I, I hire a branding expert who is still with me now, and he created a mood board of his vision of what could be done with this brand. I then went to the company that owns the artwork and made a presentation showing them what our vision was for this brand. Because it's a, it's an elevated vision. We're not trying to sell stuff to, to the cheap and cheerful. We're trying to have a little, be a little bit more premium. They had tried some license agreements in the past, but they didn't materialize for them. So we came with a very professional presentation and a real strong vision as to what we wanted to do with their brand. And they embraced it because we've been a good partner with them on candles. And then we got busy going to manufacturers and using my network of people I know can make different products and getting a bunch of prototypes and, you know, high level. We're doing. Now we do. Our maple candle was in one size. Now we're going to have it in three sizes. We're doing two packs. We're doing three packs. We're doing maple candles with maple syrup. We're doing maple candles with maple candy. We're doing everything that one could imagine would be creative ways to elevate this brand to have a better story to say to somebody. And we're going to be the maple guys. And, you know, when I think about the future of the business, then what else could you do the same kind of thing with? You know, today it's maple. It might, it'll remain maple for sure. That'll be the backbone of the business. But there's other stories to be told probably that I haven't even considered yet that might come up. Right.

[1:03:30] Host: Well, but, and, and still, before we double click too much on where you're going, Adam, I, I still want to understand the leap between kind of being discouraged by where you are in the market with essentially kind of not much positioning to making this leap to. We're going to evolve. We're going to do this thing where we license this iconic image and it's. And we're going to license it across all kinds of merchandise, not just candles, Totally different business model. What was the genesis of that idea? I mean, that's an idea. And you said we're going after this strategy, this idea. How did you arrive at that?

Guest: I became partners with a brilliant guy who's very creative, who's a retailer, who's got a hundred stores in Canada and knows what he's doing. And it was kind of to him, an obvious aha moment where he says, well, why don't we just license the brand and do so. I'm not the idea guy, but when somebody tells me an idea and it clicks and I thought, well, why wouldn't I do that? And then you go speak to the agents who sell your product and you say, what do you think if I did? And everyone kind of jumps on and says, yeah, we've always said to previous management of your business, what else can you do for us? That was one of the underlying themes in this company was the agents who sell our candles because we use agents plus resell direct would always go to previous management and say, what else can we do? But they were very risk averse and they were very kind of set in the way they ran their business and they wouldn't try different things. So I just got a lot of positive reinforcement. Once this guy, my partner, gave me the idea and I took the idea to market. And then we created in our show that we just did in Toronto right now, we created. I don't know if you know what a sugar shack is. When you kind of like it's maple sugar and off season for maple syrup. You go to these sugar shacks across Canada and you take your popsicle stick and you twirl it in ice and then you wrap it with maple syrup. And we created a sugar shack at the trade show. It was a significant investment for me, but it had a great visual appeal. And we found hundreds of new people who stopped at the booth. Plus, you know that old Kellogg's cornflakes commercial tasted again for the very first time. People come by the booth and say, oh, I know you guys, but I haven't bought from you in years. And I didn't realize you were into other stuff. And please put me on your mailing list and when's your new catalog going to be available? And I will tell you. Well, I can't guarantee you that this will be a success. You're catching me right in the middle of this. But I've put the capital in with confidence and I've got goods on the water right now and I believe that this will work. But, you know, stranger things have happened.

[1:06:11] Host: You've got goods on the water. That means what, that you're importing a lot of inventory from China? Is that what that means?

Guest: Correct. Okay.

Host: Okay.

Guest: Yeah.

Host: All right. And this is fascinating. And so now we have to, without the benefit of a visual, except for people who are watching on YouTube for the listener. So we have to explain exactly this. This image and the. And what it represents to Canadians and how you're leveraging it. So let me. Let me take a stab at it to see if I even understood it correctly, Adam. So basically, the image is a red. Is that. Is that a cabin?

Guest: It's a cabin.

Host: Is that a cabin?

Guest: Yeah, Yeah.

Host: A red cabin in a Canadian forest. The trees are there, but they're leafless. There's snow covering the ground, and there's. And there's smoke coming out of the chimney of this homey, inviting cabin in the woods. Correct. And so. And this is. So this is. And it's this. And it's the. It evokes maple syrup. So I guess maple syrup is associated with winter.

Guest: Maple syrup is associated with winter. And I think, give or take something like 80 to 90% of maple syrup in North America is sold from Quebec. I could be wrong about that number, but that's the number that I've kind of heard that is even in the tariff wars right now. You know, when Trump says he'll do xyz, what our government says is, well, we won't sell you maple syrup anymore. Kind of is a threat. Everybody laughs. But it's. It's an important part of Quebec kind of folklore and history, and it's what we're known for. We're known for our maple syrup.

Host: Okay. I mean, of course, I. I knew that Canada was known for maple syrup. I didn't know it specific. It was so associated with Quebec. Specifically.

Guest: Specific to Quebec.

Host: Yeah. Okay. I also didn't realize that we'd be sitting right here at the. The intersection of a geopolitical war here, Adam.

Guest: Yeah.

Host: And. And so. So on. This image is French. What is the two. What are the.

Guest: What is the French say, which means maple syrup in French? Cirro de rabe is maple syrup in French.

Host: Great. And avendre at the bottom, I assume means for sale.

Guest: For sale. That's just an old legacy poster. Yes. It's not. The actual. The. The artwork on the can does not say for sale. It says made in Canada, product of Canada, etc.

Host: Okay, so this is an image that is a wonderful image, very inviting, associated with syrup and winter and warmth. But it's not the image of a. It's not a brand. Right? It's not.

Guest: It's not a brand. It's iconic artwork that. So if you go to the airports right now, as an example, we're in all the airports. It's. We're in gift shops, in hotels. We are the piece of Canada that you're going to want to take home with you.

Host: Yes. Yeah.

[1:09:00] Guest: And when you smell it, and when you smell it, just for whatever it's worth tell you know, the smell is incredible. The previous management here worked years on perfecting this fragrance. And it's this whole nostalgia thing that when you're at a trade show and we hand out free samples to customers and they watch, why everybody smells it, they all have the same reaction. Oh, my God, I want to eat this. Oh, I remember what this is. So it sells itself through the artwork and through the fragrance. It's an easy sell.

Host: And. And I want to hear about the essence in just a second. The smell, the scent. But. But returning to this artwork. So. So this image was seen on maple syrup vessels, containers from different brands. So. So Canadians go in and they get their maple syrup in this tin can, and it's got this image on the side. But this image doesn't belong to a company. All the different manufacturers of maple syrup use it effectively. So it's kind of a universal symbol of maple syrup that all that. All vendors and private companies use.

Guest: Those that choose to use this artwork, you can probably. There's a half a dozen options. Maybe there's more. More. But when you are a manufacturer of maple syrup, you get to decide what vessel you put your maple syrup in. I would assume that this vessel has a little bit of a premium to it because it's more recognizable than most. I know as an example that this company that I've purchased used to try other vessels to put their candles in, and they did not sell as well as this vessel sold. This is the vessel that people know. This is the artwork that people know. So what makes us great is not the fact that we sell a maple candle. If you do a Amazon search right now of maple candles, there'll be dozens of them that show up, but there's only one that's got this feel in this look.

Host: Yeah, yeah. And so. And so when you're licensing this look, this image, who are the owners of the. Of the copyright company?

Guest: It's a company that's been around for a very, very long time. I'm not sure when they were found. Founded, from what I understand, it's a family business. The name of the company is Dominion Grimm, and they've owned this artwork, if I'm not mistaken, since the 1950s.

Host: And so. But they. So they own the artwork, but they're not a. They're not a syrup.

Guest: They're in the maple syrup business. They sell machinery that processes Maple syrup. They sell the can. They're a huge vessel importer and wholesaler. They've got a huge facility and I've walked through it, but I can't pretend to truly understand their business other than to know that there's a lot of heavy equipment that's being sold within this facility and a lot of packaging that's being sold within this facility. And these guys have been in the business for a very long time and just have never done a lot with that artwork because they're very protective over the artwork, rightfully so it's a real responsibility to make sure that, you know, whoever does something with this artwork does not hurt the brand.

[1:12:01] Host: Yeah, well, that. So that must have been a difficult sell. So when you said you went in there and pitched them and it was as polished and professional as you could do, it was a high bar and you met it.

Guest: I have a lot of experience in my background, so my CV reads well. And my partner is a very well known entrepreneur within this market. Very, very successful. He came to the meeting with me, me. So it's two guys who know what they're doing. We don't mess around. We put the money into it. And I think they take us seriously, rightfully so, because we are serious and they're great partners. So I just think everybody kind of looked at each other and said, yeah, we're all going to protect each other. You guys understand what's important to us, treat us with respect, don't mess this up. And off to the races we went.

Host: Great. Great. Well, and so I don't want to beat this to death. So just to close out the, the image thing. And the reason I'm. I'm explaining it in such depth is because I can't even think of an analogy here. An analogous instance where there's an image that everybody associates with a product, but it doesn't belong to a particular company or manufacturer anyway. But so this, but this image has a ton of Val. Brand value in it. Or not brand value, but I guess the only awareness value.

Guest: But to your point, the only other image that ever came to mind for me. But it's different insofar as that it's owned by Campbell's is the Campbell's can image. Like I always thought, imagine if I could get the license for Campbell's Soup. Yeah, make a. Yeah, great can of soup. Smell that feels very authentic. That takes everybody. But it's different. You're right.

Host: It's not the same because it belongs to Campbell. I was thinking the, the we can do it. The woman with the making the muscle. That was the Rosie the Riveter. That's a World War II propaganda poster from the US when it was, you know, was mobilizing women to join the workforce. And. But that, you know, that's a propaganda symbol. So it's still not, it's still not a perfect fit. And I don't even know. That's probably in the public domain. No, it's probably not. Otherwise we'd see it a lot more. Anyway, we're starting to wrap up here. Adam, you had mentioned. So you just finished saying part of convincing them to do this licensing deal with you is that you're really going to put resources behind it. Can you share how much yet more capital you've infused into your business, which is now really. You're recreating this business? This is almost a startup at this point.

Guest: I'd say six figures would be the answer. I kind of prefer to give you versus specific numbers. But we have good commitments from customers. We have some very large retailers who gave me the boost of confidence because as an example, I went to a retailer and took that likeness and put it on a mug and they bought 10,000 mugs for me. And these are expensive mugs. They're not $2 mugs. Some of these were like six or seven dollar mugs that are going to retail for $20. So, you know, you start to really understand, okay, people do want. I guess the thing is, when I go on a sales call right now and I bring my bag of tricks, I see the buyer's eyes light up and there's opportunity everywhere. And if they don't like what I have, they might say, well, did you think of doing it on a scarf and a hat? Because I'm in the cold weather accessory business and I think this could real. So we're in the first inning of this exploratory journey. So the goods that I have on order right now, they're not all at risk things. I have some of these products pre sold where I took prototype samples, sent them to customers, customers ordered, and if they ordered 10,000, I bought 20,000 because I figured, okay, I'll have some extra for somebody else and then I'll layer on after that based on where I see success. I'm sure some of these items that we've done probably will not work and we'll have to, you know, pivot and start to learn about that customer and what he or she gravitates to. So it's exciting because it's all uncharted territory. I don't know what's going to happen

[1:15:57] Host: with this, but, but, but the, the game or the playbook now is basically to see what sorts of products sell, move with this image on the side, be it a mug, candles, we already know, sweatshirts, scarves, whatever. Some of those products people will buy with this image on it, some will not. And, and you're just exploring and figuring out which products sell and how much. And in kind of going from there, it's, it's. This is merchandising, I guess. This is. Is that what that's called?

Guest: It is. While at the same time, it's worth noting that the candle business remains healthy and sometimes what ends up happening. What's happened in this business is we've been able to generate a pretty significant amount of revenue now in the way we used to do business, where small brands will come to us and ask us to manufacture their candles for them. So there's been a resurgence in the candle business. So I'm, I'm as committed to the candle business as I am to the general merchandise. It's not one or the other. It's kind of let's do it all at the same time. So today, my candle business, my February numbers this year, we were off of a very small base. We beat budget by 200%. It's a small base, but we were way up because the candle business is healthy and because I'm seeing traction in the general merchandise. So my vision for the business would be focused on what's working, of course, and just lean into those things that are good, I think made in Canada and I think domestic product in a world that's gone mad, supply chain issues and threats of tariff and all that stuff, I think it's very compelling. We have a lot of customers call us right now specifically because of what's going on in the world, saying Canadian customers, saying we're not buying American product right now. Can you.

Host: Yeah.

Guest: Accept our business?

Host: So, I mean, wouldn't that be the irony, Adam, that. That Trump's tariffs were the gift that to you, that, that you needed?

Guest: I think in business, you need to be lucky more than you need to be smart. And. Yeah. You know, so I've always had a. A horseshoe at some level that I feel blessed and. Yeah, I think that good things kind of tend to happen and just, you know, make them happen, of course. But I've been blessed. I've had good things happen to them.

[1:18:14] Host: Just a little more strategic questions and then we'll. Then we'll wrap up here, Adam, the owners of the, of the, of the image, why, they're, you know, you said that they do something related to the manufacture of syrup. Why do they need you? Why did, why don't they cut you out and monetize their brand directly? Because they're not in that business, essentially.

Guest: They're not in that business.

Host: Yeah. Okay.

Guest: And I think I get the sense that they're more interested in the value of strong partners and enjoying what they do and trusting in the process than having additional headaches. They're a very successful business. I don't think they need the headaches. That's not the sense that I get of these individuals. It's two brothers that are running the business, from what I understand. And they, they're old school, which is what I like and what I value. Also, you know, it's a handshake gets you a lot. Do what you say you're going to do, and give me a firm handshake, look me in the eyes and get busy.

Host: Well, it's also, you know, when you have licensable ip, it's a, it's a. It's a wonderful business model for them because they basically have to do no work and just you mailbox the money, essentially.

Guest: It's a wonderful business. It's a wonderful business.

Host: Yeah. I just wanted to hear more about the scent. I guess this just goes to all things flavor, that just the slightest variations really matter. And so through years and refinement, you guys have this candle scent recipe that is better than the 20 others I can get on Amazon, essentially.

Guest: Exactly right. And it really is better. And I think as a sales guy, what I've come to recognize is when the product's great, the selling is. Is effortless. It comes easily because the product checks at retail. So most of the business that we're doing right now is repeat business. This. When people buy our candles, they always come back for repeats. I think 90% of my revenue is repeat revenue. So it's. So I'm blessed to have a product that smells good, that looks good, that sells at retail that people want more of and that they always say, give me more, give me more. What else can you sell me? Like, what a gift that is because I've sold in my lifetime product that people don't want. And that's a really tough slug. You can make the sale, but good luck getting the repeats, you know?

Host: Yeah. Lastly, how's morale at the company with this incredible pivot and new direction?

Guest: I think it's wonderful. I mean, it's all relative. Of course, they're still, you know, it's fastened your seatbelts because every day is a new adventure. But what these people went through in the first six to nine months, watching me have partners and ex partners and employees and ex employees and the revolving door versus the stability right now of what they all feel and the fact that if you walk through my facility right now, we're firing on all cylinders and we're busy, but we're not stressful busy. We're good busy. I think morale's high and I think everybody feels connected and everybody has a strong sense of purpose and pride. So I think it's a. It's a good time to be here.

[1:21:16] Host: Perfect. Great.

Guest: Yeah.

Host: And are you able to share what. What annual revenue is tracking to be. Just to give us a numerical sense of progress.

Guest: Our year end is end of May, so I haven't done my budget for 2025 yet. We'll probably finish 2024 because it's already baked in. It's somewhere in the 15 range. Maybe I have to put pen to paper right now. So you bring up an interesting time for me because I want to be responsible about what I think can happen here. I'd like to believe I can continue to grow at a pretty significant clip. So. But I. It's premature for me to really say where's my business going to be a year from now because I've got so many major assumptions that I have to make about what's going to happen with some of this general merchandise, et cetera. But I'd like to believe I can at least double the business in 2025. But I'll let you know, we'll keep in touch. I'll tell you how. Sure. Sure.

Host: But that is a confident prediction. Doubling in a single year. You'd like to believe that. So if it directionally, I mean, that's. That's. Wow.

Guest: You know, I've done this before, as I said, so I've. I know what it's like to take a business from nothing and build it. And it takes time to get that traction. But once you get a little bit of traction and positive momentum, then it's becomes. So the hard work, I feel is ahead of me. Sure. But a lot of hard work happens in the first year. Has been my experience when you get into these new circumstances and if you can make it the first year and, you know, I feel emboldened because I think a lot of the heavy lifting is, you know, famous last words. I'm careful to say that. But I think a lot of the heavy lifting is behind me. Sure, I hope.

Host: Adam, I do have to ask you one last question. When we got on our pre call, you'd said you were asking yourself how much of your self, your psychological, emotional self, to invest in this business. In your 20s and 30s, you worked your face off and your family felt that. So you're not somebody in his 20s and 30s who's just willing to hop on every flight and burn the candle. Haha. At both ends. Talk to me about how you think, about how much of yourself to give to this venture.

Guest: I'm. I'm all in. I'm all in, but I'm not all in with stress. I'm all in with passion and commitment. I want very, very badly for this to work. Not for the reasons that I needed my other businesses to work. As I said, it's not only financial success. I'm a proud person. I'm competitive. I've got great people here. I want this business to work. And if this business wasn't to work, I would be devastated. I take this very seriously and I'm very committed to it. So I still want to be able to go to Florida, but when I'm in Florida, I'm speaking to my office 20 times a day, probably a couple of times an hour, answering every email within a minute or two. I'm not an absentee landlord. I understand my business and I am very, very, very involved, even when I'm not physically present in the office. So I don't want to give the impression that I'm somehow this entrepreneur who's top in. I'm all in. Yeah, I'm all.

[1:24:37] Host: Adam will link to LinkedIn. Is that the best way for people to find out more, to connect with you?

Guest: Yeah, LinkedIn. I'm not very active on social media, so I have to probably update my LinkedIn profile, post this call. But yes, my general information is on my LinkedIn bridge. Sure. Or you go. Or you go to the website of my company and my information's there too.

Host: And so what is that, please?

Guest: The name of the company is Sarah Khan, so it's www.Sarahcon. cat.

Host: How do we spell Sericon?

Guest: S E R A C O N.

Host: Adam Goldberg, what an interesting story in Perspective. Thank you very much for sharing it with us.

Guest: Thank you. Well, it's a pleasure.

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