[00:00:00 - 00:04:45]

Will Smith: Today's guest bought a business that does not fit the typical criteria cited by many searchers. But the frame shop that JD Hasley bought in April of last year has already returned all the equity he put into the deal and then some. His year one levered return was 139% cash on cash. And yes, that does account for paying himself for his time in the business, which was substantial.

JD ran the shop, learned to frame and even fulfill jobs himself, but that was temporary. His goal was not to buy himself a job. He since hired a shop manager who's been transformative. JD has grown the business from around $600,000 in revenue to a run rate of $900,000. How has he pushed revenue 50% in a single year?

Believe it or not, simply responding to emails promptly has been a big driver. To be sure, this is quite a small business. Revenue is lower than many searchers would consider and the headcount is extremely low. It only takes a couple people to run a frame shop, and many shops are actually just one person businesses. So key person risk is structural, almost unavoidable.

But from an ROI perspective, and more importantly a life perspective, so far it's been wonderful for the 26 year old JD as one example, he was able to spend a lot more time seeing his infant boy grow than he would have otherwise. It's been one of the best decisions I've ever made, he says. And here he is, JD Hasley, owner of Uptown Frame There's a reason that entrepreneurship through acquisition is sometimes referred to as simply search, because the search itself is one of the most difficult parts of buying a business. Now, one path that isn't talked about very much, including on acquiring minds, is outsourcing your search or buy side advising, as it's sometimes called.

Well, this Thursday, June 5, Athena Simpson of AquaMatch will lead a webinar to help you evaluate this alternative path to finding and acquiring the right business. Athena will cover what buy side advising means, what different models and fee structures look like, the hidden cost of a slow search and full time searching versus keeping your W2 and how the right outsourced support for your search completely changes the calculation. Here you'll leave the webinar with Athena with a clearer understanding of your options and and how to speed up your path to ownership without quitting your job or going it alone. That is this Thursday, June 5th, noon Eastern. The webinar is how to outsource your search understanding buy side advisory Register at the link in today's show notes or on the Acquiring minds homepage Acquiring Minds Co See you Thursday 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. What do the following Acquiring Minds guests all have in common? Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursum 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 buy then build.com JD Hasley welcome to Acquiring Minds.

[00:04:46 - 00:08:09]

JD Hasley: Man, I'm stoked to be here. Thanks so much for having me on. JD A year ago, almost to the day you closed on a frame shop. It has been a very strong investment and set you off on a career as an entrepreneur. Start us off JD with why did you turn your attention to buying a business in the first place?

Sure, I guess like with most stories you can probably start in early life. But I will briefly I don't come from a business background. My family didn't really have the family business. I didn't really have that to go off of. My parents were educators, so my mom was my principal and my dad was my PE coach during elementary school.

I wasn't gunning up and ready to take over the family business. Um, quite the opposite actually. It informed me I did not want to be in education whatsoever. So I at least had that to go off of a big relevant kind of turning point in my life. And why I go this far back is it was the summer before freshman year of high summer before I started high school and I had this distant family member.

You know, he's basically like an uncle and he, I knew he owned a business, a printer copier sales company out in lck and I asked him, I wanted to learn from him and he let me come shadow him for a week actually. And it was a really, you know, kind of, kind of set me on my path. It was kind of an ETA deal he did, before it was even called that, he bought this printer, copier sales company. You know, mind you, this is the age of the Internet peak Internet papers dead kind of thing. But he saw right through that, got a great deal, grew it, professionalized it even more and more.

You know, eventually went on to have a very successful exit as well. So. Oh, I, yeah, no, he would be, he, he'd be a good one. I, I tell that because I guess it, that kind of set me on my path. So I knew business and finance was my path going forward.

Had that entrepreneurial flame kind of sparked in the early days. I ended up graduating from the University of Texas at Austin with a degree in finance. And right out of school I went into commercial real estate. First job, not as relevant to this story. I was lending to more institutionalized capital.

Think you're big marquee names like your kKRS, invescos doing core jumbo mortgages. Essentially the more relevant experience was my last role that was at a private credit shop called Crestline Investors. And they're, you know, they're based out of Fort Worth. And that's really where I got my first interest. Insights into what I would call like the main street kind of borrower, not your blue chip name.

You know, it's high net worth individuals, small local family offices, things like that. And I got to really see the nitty gritty side and entrepreneurial side of real estate and a common thread of those folks that I was, you know, reviewing their bios and, and reviewing the pfs. Right Is you know, they owned the assets that we were talking about and at one point they had to bet on themselves. So you know, with that flame, getting fanned through that experience and coupling, you know, getting exposure to various social media personalities in the ETA space, that kind of pushed me to, push me to start, you know, start a search, I guess. And we will say that the social media media personalities that you were exposed to in the ETA space did not include me.

[00:08:10 - 00:10:13]

Will Smith: You already had this business. That's true. What was it? Under LOI or. Yeah, under loi before you found Acquiring Minds, actually.

So I am not doing Cody's as good a job as Cody is getting myself out there. But you, you are a very reassuring voice because I was getting a lot of looks and a lot of self doubt. But, but hearing the story and over and over from your guests, you know, kept me, kept me sane a little bit through that process. Well, good. Well, you know what's interesting JD about this pre story is it fits a Pattern.

Usually the pattern is somebody works in private equity and they see a founder, seller, owner of a business on the other side of the table and that's the one, you know, the money is moving in the direction of that owner. And so they say to themselves, huh, well maybe I'm in the wrong on the wrong side of the table here. And etc. We've heard that pattern many times before. This is similar.

Not exactly. You weren't private equity. But the point is you were seeing the potential of this small business, Main street entrepreneurial career. And it's such a pattern on acquiring minds that it's almost like everybody's like, yeah, yeah, yeah, I get it. That's, that's everybody's realization.

But, but when you, but really you were you in your office were alone in, in that realization or at least in that being enough of a motivator to cause you to, you know, leave your corporate path and go buy a business. And so for all of my guests who have a similar pattern, even though, you know, it's a self selecting audience on this podcast and they, and it feels like everybody follows that pattern or so many people follow that pattern, you're still very much the outliers in the world from which you come because all of your colleagues could have had a, that could have lit a similar fire in them that it did not. Sure. And, and I, and I want to also, you know, I guess give a special shout out to Crestline. It was the firm I was at.

[00:10:13 - 00:12:40]

JD Hasley: I mean there was an entrepreneurial spirit in that team in and of itself. Like we were a relatively smaller private alternatives asset manager, I mean, 16 billion. So when you're compared to the hundreds of billions, like you're still a smaller, relatively small fish. And I mean the leadership and the partners there, you know, they all had their careers that they were at big banks with and they took the risk as well to, you know, grow this to what it is today. And so I don't want to, you know, it's not a disparaging thing, I guess, but point out the fact that it wasn't just the deals themselves that gave me that exposure.

But I mean, it was a great learning experience. They approach deals in entrepreneurial fashion. We are much more higher octane kind of higher risk lender of sorts. So you kind of had to have ownership mentality, if you will. And the last thing I'll say is while I was mo.

Working mostly on real estate, you know, I was on every single investment committee call and we were industry agnostic. So I got Exposure to all different types of industries and similar stories more in the operating company level of borrowers who or folks who started out small, grew something and eventually were tapping the capital markets to either do dividend recaps or you know, refinance the loans. They, you know, things like that. So kind of a. It was a really great environment I think to foster this, you know, what I'm doing now.

So. Great. Well, good qualification, good call out. Thank you. Crestline.

Yeah. On Onward. Okay, so you. So social media ETA grabs, you take us from there. Yeah, so I probably started my search.

I was still working full time at the beginning of 2024. I was looking with my brother. He as we'll talk about. He's a minority investor with me, but it kind of just manifested in us sending, sending screenshots of listings. And he'll be the first one to tell you he's more of a high level kind of guy and I'm the one actually doing the numbers and diligence and analytics and whatnot.

So, you know, ping ponging a couple Biz by Sell listings, you know, getting some initial inquiries and meetings done. And he kept sending me listings from this brokerage firm called Trans World Business Advisors. And I found a lot more success in a hit rate going through their site as opposed to the third parties. And sure enough, you know, it was the second listing we really looked at through them, looked at it hard, ended up being the frame shop. So.

[00:12:40 - 00:13:12]

Will Smith: Well, hold on a sec, JD this point about going through transworld. So transworld is one of the biggest brokerages. I think they have a franchise model. Don't quote me, I may be wrong. Okay.

Well, they have a presence one way or the other across the country. So one of the biggest names, I just would have assumed that all of their listings just immediately go to Biz by Sell. But you're saying if you submitted the form to request more information, you'd have more success if it came from the transworld website than via Biz by Sell. Is that what you were saying? Yeah, and I think it's a couple things.

[00:13:13 - 00:14:03]

JD Hasley: I would say most of their listings do make it to the third parties, you know, but I will say they probably also have a, an enclave of sellers that maybe want to go more of a. More of the confidential route or air on the side of more confidentiality, not blasting it out to the masses. And I guess the way it works is they have a, you know, obviously a fairly robust buyer and seller network. So to the extent that they can just publish on their site and they also have all these buyer profiles of which I filled out myself. They can kind of match, you know, match you to the deal.

While that didn't happen in this instance, I did scroll and find this one. They do regularly send me deals that you know, they kind of own. And I would say I didn't find. I didn't see every single one of their deals on biz by sell. And I was interestingly checking both.

[00:14:03 - 00:14:11]

Will Smith: Yeah, interesting. Yeah, that was going to be my question. Do you know if the frame shot made it to biz by selling? I don't think it did interest. I could.

[00:14:11 - 00:14:18]

JD Hasley: I couldn't find it, but I very well could be. I don't think so. Yeah. Yeah. Okay, carry on.

[00:14:18 - 00:14:30]

Will Smith: So what do you like about this frame shop? Yeah, so you know, my parameters going into the deal. One of the things I promised my wife is, you know, the cash flow would at least replace what I was. What I was currently making. And what was that?

[00:14:31 - 00:15:48]

JD Hasley: So the cash, you know, and I guess I should stipulate what my base was. So bonus is a big part of compensation in this world. So we were talking kind of in the 130 to 150 and then if you have a good year, you go up from there. But I was mainly focused on just like replacing. Replacing vase and this did that.

As we can talk about the numbers, the cash flow was sufficient. I was looking for a simple business, ideally a, you know, good reputation. If it had to be retail, the location had to be impeccable, which this one is. And we can talk about that. Needed to be able to capitalize it.

I needed to be able to get debt. So having the SBA as an option was certainly a big, big point of mine. And yeah, I mean, I wanted one that had the proof of staying power, particularly in an industry as maybe not as an intuitive an industry to. To jump right into, given the underlying trends. But this had staying power through a lot of.

Through a lot of stuff. Gfc, Covid, all the things. So those are a lot of my big, big check boxes. Okay. And just back to the needed to replace your base salary of 1130 to 150.

[00:15:49 - 00:16:13]

Will Smith: So the napkin math there would be. Let's double that to get. To call it 300 and then a little bit more than that for other, you know, J curve and what you might invest into the business. So we're talking a 3 to 400,000 SDE business minimum. Did I, did I calculate that right?

[00:16:13 - 00:16:17]

JD Hasley: 250 to 350 is kind of 250 to 350. Yeah. Okay. Okay, great.

[00:16:19 - 00:16:49]

Will Smith: Okay, great. And so this obviously fits a lot of the criteria that you just named. Talk to us about the, Talk to us about the fact that this is a retail business. Sounds like you were open minded to that. But the location had to be impeccable.

Many people though, many people listening will just dismiss retail out of hand. They won't look at it. Put it up there with the coffee shops and the restaurants and the nail salons. Totally. And it's a, it's a very valid concern to have my brother be.

[00:16:49 - 00:18:22]

JD Hasley: My brother will be the first one to tell you about the risks of owning a restaurant and you know, a retail centric business. Not to throw him under the bus too much, but he had it coming. No, the, you know, the retail business. Yeah. Like if I were through and through, like I use the example of like a, you know, boutique department store or boutique clothing store or something where really your only two main sales channels are in person and online.

To the extent you have an E commerce platform, yeah, I would probably stay away from it. But what I did see here was the potential for B2B expansion which is not typically thought of with frame shops. You know, customers like designers, artists, galleries, auction houses, things like that, they'll just look for services, you know, for a local frame shop and if they find one they like, they'll use them continually. But there's no real outbound marketing done in this space and that was an area I thought there was potential and it's panned out so far of actually marketing your services, putting together a portfolio of things you can do, providing concierge type service so you can expand your offerings and expand your potential clientele just beyond your immediate submarket. 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.

[00:18:23 - 00:19:21]

Will Smith: Oberle. 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 which 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 oberle-risk.com that's O B E R L E- risk.com link in the notes. Interesting. JD Counterintuitive to hear you characterize the business as B2B or at least that there's a heavy B2B, heavy commercial component. Most retail is consumer focused. So it's, it's, it's unusual to think about a retail business that's B2B.

[00:19:21 - 00:19:23]

JD Hasley: Of course there are exceptions. I digress.

[00:19:25 - 00:20:07]

Will Smith: What, what so, so we'll probably get more into that. The opportunity here for outbound to, to build that commercial business which is really the, the reoccurring business. But what of the Internet and just general buying practices of frames? How does that look? We probably all think this would be a very vulnerable business, but if we think about it, you know, I don't like if I'm going to get a custom frame, I'm probably not going to do that online.

Although I know framebridge is a brand that it does exactly that. So anyway, what's the lay of the land there? Totally the. As with most, most products and services, right. There's a spectrum of quality and price.

[00:20:07 - 00:22:35]

JD Hasley: Right. And at the low end you have your hobby lobbies, your Michaels of the world. You go buy a ready made frame that, that fits, you know, pretty cookie cutter size and you know, there's no real customization to it if you're not super concerned about the preservation of those items that you're displaying. We even tell people like this is, this does not fit everyone's budget nor does it fit everyone's needs for the services that we offer. So you got that on the lower end.

And yeah, you certainly have online entrants who have come into the market. Framebridge is one. They just opened up a store in the Dallas area. I would say a similar kind of dynamic is that we, we have experienced and feel that we have a large enough, you know, cohort of the population, if you will, that wants the personalization, wants the thousands of options as opposed to maybe like just a hundred or so. To be clear, the frame bridge, the options are limited.

That's right. The types of. Yeah. Continue similarly with the other online names. So when you walk into our, our stores like our walls are just covered and samples and we also have a tool online that you can visualize your artwork being framed with the thousands of samples that we have access to that can't fit on the wall.

Nevertheless, you know, we, we cater to a higher end clientele and that's why our location is, is, is we're as fortunate as we are to be where we are because we're in and adjacent to very affluent neighborhoods in, in Dallas. And that's just that's the reality of it is folks, they prefer the finer things in life. They like quality. We also have a stellar reputation and you know, having a reputation as a small business, I think if you look on the Gallup polls or whatever, small businesses are, you know, one of the top trusted institutions or whatever in the country that we still have. And so coupling those two things together and just like a local feel, people want to keep coming back.

They like using our services is exciting. The design consultation, you know, I, I, I'm not on the counter very much these days, but I've hired experts who love what they do love. The customers have a really great taste and a keen eye and people really value that. So yeah, I guess long winded way of, of saying, you know, we feel good about where we sit in the market, but there's a place for all players, I think. Yeah, yeah.

[00:22:36 - 00:23:28]

Will Smith: Well, I will say to the kind of the enjoyment quotient of the, or the enjoyment coefficient of this business, it would be high. Just and I speak from personal experience, like whenever I frame something other than getting over the sticker shock, it's always more expensive than we want it to be. Sometimes more expensive than even the, the thing you're framing. That's right. But, but it is, it is, you get excited to go back and see your piece beautifully framed.

I mean it's, it's other than the, other than the breaking out the credit card. It's a, it's generally an exciting and fun experience. And so if you're providing that service to people, I can see it being very gratifying for both you and the employees. Well, it also, just to quickly summarize the point, it also, there's just so many things people have or collected in their lives. They never think of being able to make a display.

[00:23:28 - 00:25:17]

JD Hasley: Right. Like you have a box of stuff up in your attic and really concrete example is, you know, a customer came in and, and they had this antique baseball equipment from like the 40s. I think it was like their grandfathers or something who played early on and they just always had it in a box and they had the insight maybe I can make a display out of this. And we made like a beautiful acrylic box display with it all, you know, panned out nicely in the ball in the old style mitt and they kind of were like, you know, you would have no idea. Right.

Like so basically moral of the story is get the stuff out of the closet, get it out of the box and you know, get creative. So that's Another, another thing people like being able to do. And so to be clear then it's frame shops. A good high end frame shop will do not just a two dimensional square item but something that is in three dimensions that you're really building a case for, a display case for. We're framing a five foot long Trident right now for a local charity.

Um, it's like a steel, you know, really heavy. We've got to do all the crazy mounts. But yeah, you can, you can basically if it can fit through the door. That's kind of our mantra. We can, we can frame it for you.

Cool. Really cool. Okay, I'm, I'm liking this business, but let's hear numbers. Sure. So we purchased this business.

It was April of 2024 when we closed for a purchase price of 645,000 that was on a multiple of about 2.6x. Got an SBA loan for 600,000 and our total equity at close ended up being just, just under about 120,000 when you, you know, include closing costs. We capitalized our initial investment in the website, you know, and things like that. So happy to. One more time.

[00:25:17 - 00:25:28]

Will Smith: So the purchase price. 645. Yep. The multiple 2.6 ish. So the, the SD would therefore be.

[00:25:28 - 00:25:46]

JD Hasley: Have been what, almost 250 to 40. 250. Great. So that's a, by the way, great margin. Not something that you expect to see in retail either.

Yep. What's. How is that, how. Why are margins so good in this business? I guess because you can charge a premium.

[00:25:46 - 00:26:02]

Will Smith: Because you're in an upscale neighborhood, you. Can charge a premium. I mean this business, once again, like, it's not a recurring revenue business. Right. While we are targeting the commercial and B2B space, it's not the revenue mix that I want yet.

[00:26:03 - 00:28:54]

JD Hasley: So we are heavily dependent on, you know, what walks through the door. Right. So the intent there is, you know, kind of, you know, our, the gross margins on the products are, are fairly decent. It is a labor intensive business. But we, I would say we, we have some, we have, we make pretty good margins on the, on the back end given the effective use of our labor.

That is one of our biggest costs. But I think we've worked out a really good, really good system to stay, you know, really consistent with production. We rarely deviate from our two week turnaround time. Right now we're about two and a half weeks. But market standards like four to six weeks.

Really? Yeah. Oh wow. And so that, that's another competitive advantage. I think we have when customers do find out it's, it's that quick of a turnaround.

But yeah, I don't know. We, we're pretty efficient with, you know, with, with how, how we use our labor, our rent. You know, if you look at our occupancy cost, our occupancy ratio, if you will, I mean it's very strong. What is that? What's occupancy ratio?

So like total, total income over the cost of, of what it would or excuse me, your, your cost of rent, like your location, whatever it takes to be there over your, your total revenue. Another metric, you know, is your sales per square foot, which probably more familiar with. But for a frame shop, I mean we, I would say we're probably in terms of sales per square foot, probably one of the better performing shops in the state, if I had to guess. And, and to that point then, JD it sounds like you have acquired a diamond in the rough that people hearing your story shouldn't think that they can go out and roll up frame shops because many of them are in perform far inferior to this one.

Location, location, location. Yeah. So yeah, demographics are destiny and we're an extremely dense and growing area. So dfw, you know, it kind of always seems to be a fairly bit more insulated than maybe the national. You know, it seems to always maybe perform a little bit better than if things are going wrong nationally.

And I think a big part of that is like the area that we're in specifically. It's just a lot of consumers who, who, who are always willing to spend and keep businesses, keep businesses going that way. But yeah, I would not employ the same tactics or go as full tilt for a frame shop that was in like a secondary or tertiary market, for example, but that didn't have a dense affluent demographics all around us. Yeah, I mean it is fundamentally a luxury service or good that you're selling. I mean not just because you're in a luxury market, but in general paying for custom framing is, is expensive as we keep saying.

[00:28:54 - 00:29:39]

Will Smith: And so a lot of people just aren't going to do it or they're going to, they're going to go to a Michaels and get a off the shelf sort of frame. So. So it's almost like a frame shop could only exist in a premium market anyway. I'm sure I'm wrong. I'm sure there's frame shops everywhere.

But anyway, okay, and so back to the numbers. You had told me on the pre call that that SDE number actually included management. So how did that break Down. What does this look like in terms of people that work there, your projected necessary involvement or not? Yeah, so and this tails back nicely into the structure.

[00:29:39 - 00:30:44]

JD Hasley: So after going to the deal, talking points, the other, it was a really simple, straightforward deal. The only other real structured item was around the training period. So elephant in the room. My brother and I did not have framing experience. So a big, most important, you know, the, the linchpin in this deal was getting the, the manager who was with the business and did come with it to stay on.

So we negotiated a six week training period and the reason we had a bit of an offset in the SDE and it was kind of like how I backed into it is I kept what I would have consumed, considered his more base salary as a cost. Like I didn't give the credit of the full add back despite him, you know, being an owner at that point. It was a part owner at that point. So that's kind of how I lowered the sde, maybe artificially but just for my purposes since I knew he would be a big component with training which would eventually turn into paid. That was, that was the, the backup there.

[00:30:44 - 00:31:06]

Will Smith: The manager was going to train you, not the owner. That's, they're two different people. The manager was the son of the owners and he was far more involved in the day to day and was still going to be. He wanted to work part time only after the deal was done and training was finished. He had been working like six days a week for I don't know, 10 years or something like that.

[00:31:06 - 00:31:25]

JD Hasley: So he was, he was more than ready to, to take a step back but, but still wanted to, to stick around and, and work on a part time basis. And so, so the SDE number that they reported initially did not include added back. It did, it was higher than his 250 that, that we're talking about. Yeah. Great.

[00:31:25 - 00:32:03]

Will Smith: And you of course wisely said no, but what is this SDE number when I'm owner. And so you basically factored in what some like manager would cost. So it really gets you to kind of an adjusted EBITDA number at that point. It's, I think it's hard to distinguish between SD and adjusted EBITDA. So that250 or that245,000 number is a number that, where the business could run itself.

I put that in quotes. Heavily caveated. Small businesses don't run themselves. But in theory it's without your daily or even maybe weekly involvement. At the beginning.

[00:32:03 - 00:32:07]

JD Hasley: Yes. Now it's a different story. But yeah, yeah, we'll get it, we'll get to that. Yeah. Great.

[00:32:07 - 00:32:26]

Will Smith: And so, so this is so, so Basically you bought $250,000 of cash flow for 2.63 the D. That that multiple was low because it's a retail outfit, a small business, just not a lot of buyers for something like this. Yeah, I would say that's right. Yeah. And you know, there was some motivation, motivation to sell too.

[00:32:26 - 00:32:53]

JD Hasley: And you know. Yeah, yeah. Probably not very few buyers who are willing to buy this who have no framing experience. So it takes extra, an extra enterprising person to buy this business without any framing experience and then embrace learning how to frame, which you have. Although you're not, you're not a, what's the word?

[00:32:53 - 00:33:47]

Will Smith: A craftsman, a technician. You're not doing framing today, but you have done it. We're going to get there. Right. So frankly, yeah, so not a lot of buyers for a business like this, even though it, it really, it seems to have really good, really good numbers and really good economics.

Okay. And so your total, your total equity at close was a little shy of 120, you said. Yep. And that was for the down payment plus working capital. You cat in the new website.

You knew that was going to be expense, right? An expense right out of the gate. That's right, yep. Okay. Okay, great.

Anything more to say about that? Well, I mean, on the working capital, just since we touched it, it was completely unnecessary. It turns out the cash conversion cycle of this business is extremely attractive. Folks pay for their orders before we order the materials. So it's a true negative cash conversion.

[00:33:48 - 00:34:03]

JD Hasley: And you know, we, we did not need to, to pad the bank account. It was good to have, you know, made me feel better. But it turns out the cash flow dynamics of this are, are very strong as well. So that's, that's phenomenal. It's again, maybe a little counterintuitive for a retail business.

[00:34:03 - 00:34:35]

Will Smith: You'd think in, in many retail situations where somebody walks in, gives you their credit card and walks out with the thing they purchased. Well, that, that, that retail establishment is carrying all this inventory. So it's not the not good cash flow dynamics in your case. You, you collect the money and then start spending. Spending.

Wonderful. And, and so you hadn't caught that initially that, that's been this, this happy realization on the backside of the transaction. No, it, they, it, it was, it was something I, I, I, you know, keyed.

[00:34:37 - 00:35:34]

JD Hasley: But they normally, I guess what they had done was collect 50, 50% deposits and I guess that was more industry standard. And so framing is not a priority for people. Like at the very, at the best, maybe it's like the fifth thing they have to do on their to do list over the weekend. And so they're not going to always come pick up their pieces, which when you would collect, you know, the other 50% of your order. So we just started telling people what the price was at checkout and got very little resistance to just giving everything up front.

So we've lowered our receivables almost by, you know, 80, 90% on what we keep on a recurring basis. And so it was good dynamics before, but I think we've, we've improved it even further since we, since we got smart on, you know, what resistance, if any, we would find on that. Amazing. Yeah, so, so that, that's so good. What a lever to pull.

[00:35:35 - 00:36:37]

Will Smith: So you are, your cash flow, your working capital got only a lot better with this move. But also you probably are collecting more because there's probably the occasional job where they just never come back where they, that that happens. Somebody would pay you 50 to frame their thing and then they just never show up again. So you've done the work, but don't collect. All of your, all of your profit's going to be in that second 50.

So you probably lost money on those or that's broken even. The receivables were a big part of the. Not a big part, but something we had to cover at the end of the deal because there was probably 45, $50,000 in receivables that were, you know, earned prior to us taking over. So just to make it simple, you know, we thought about buying it out, a discount or whatever, but just to make it simple, we just kept their payment processor system in place. And I think we, we let them, you know, for the first 180 days, we'd be able to, you just give the receivables back to them into their account and anything after that.

[00:36:38 - 00:39:21]

JD Hasley: And yeah, there was probably like 10, 5 to 10,000 worth of people who just never came back. You've mentioned labor. Now, obviously this business is a service business like so many of the businesses that we talk about here. What does that look like? Yeah, let's, let's get into that because that was probably the key consideration in this business.

Absolutely. So just walking through the process, right. Of when you get something framed, it's a pretty easy walkthrough. Someone walks in and you're immediately greeted by someone on the sales counter. So sales and knowledge of this craft are paramount.

Being able to Communicate to customers. And that's something I was looking for immediately when looking to hire and fortunately found. But you need to have a knowledge, you need to have an eye for it, have tastes, sense of design, what can work. And when an order's placed, you put it in the system. And now let's go back to the back of the shop where fulfillment actually happens.

So we follow all methods and principles of conservation framing. I'm not the right person to give you the exact specifics of what all that entails, but essentially, if you want your items to be taken care of and last forever, follow this method. And that's what we do. So that's a big part of, you know, the way you mount certain art pieces onto the backing board. For example, using linen tape as opposed to acidic, you know, ATG tape.

These are all the things that people who frame for a while just. No. And you know, I guess another element is having experience running a shop and being so organized and optimizing your production is probably another important piece where all of these boxes are checked by the, the first manager that I hired, she's absolutely incredible. She's the reason this business is as passive as, as it is now. So very grateful to her.

And, and she spent 20 years working at one of the big box framers, running their frame departments and working with mat cutters and working with all sorts of, you know, samples and, and molding types. And so just very, very experienced. That combined with the manager who was the son of the sellers, they owned the shop for 20 years also great experience and coupling that with me, letting them, you know, me stepping back and letting them go and working on the business to bring in more folks through the door or more V2V relationships has really been, you know, at, at a 30,000 foot view, the key to our success. Okay, so previous manager, son of sellers, still in business, works the front desk. Is the salesman.

[00:39:21 - 00:39:36]

Will Smith: Do I have that right? He, he actually is more in the back of the shop. Oh, he's more in the back. Yeah. And then this hire, your hire from big box with 20 years of big box frame in experience is at the front.

[00:39:36 - 00:39:46]

JD Hasley: Yeah, mostly front. But will. Can and will do go in the back when, when needed. Yeah. And we have another gentleman who we just made full time and he can do both as well.

[00:39:47 - 00:40:01]

Will Smith: Okay, now that's a, that's a lot of key person risk. I mean, everybody is a key person because there's only three of them. That's right. And what did the headcount look like before you bought the Business, son manager. Who else really?

[00:40:01 - 00:40:32]

JD Hasley: Just parents doing, you know, they would, they would be oh the, you know, at the counter sometimes and, and running admin stuff as well behind the scenes, making sure the bills are paid, that kind of stuff. But for the most part, the manager was, was doing both front and back for a lot. So it's almost like a one person business or one and a half person business. That's right. You know, it's funny, I recall a frame shop I used to use in, in D.C.

[00:40:32 - 00:41:03]

Will Smith: and now that you mention it, that's what it felt like. The guy who would, who I interacted with also seemed to be the guy who would do, do the framing. That's right, yeah. So talk to me about that risk. Yeah.

And how you thought about it. That, because, because that, that really here is, is of course course the, the, if the, the biggest weakness of the business. Absolutely. How did you think about it and how did you think about access to talent if you, if you were to lose somebody? It was 100.

[00:41:03 - 00:41:30]

JD Hasley: The biggest risk of me getting stuck with this business on my own. I mean I would have figured it out. Like I'm, this was something I was like, I'm leaving my great job, great career, but failure is not an option. Right. So.

And I was figuring it out. I mean for the first six months, my manager, he shifted to part time. So I was running the store for 50 to 60% of the time by myself. And so taking orders, doing fulfillment in the back. The big problem.

[00:41:31 - 00:41:39]

Will Smith: Doing fulfillment. You were doing framing? Yeah, yeah, Killed it. Killed it. Well, I was trained, I was trained by the best.

[00:41:40 - 00:42:59]

JD Hasley: So I, I give a lot of credit to, to, to my manager who was really like my hands on training. But we also, you know, prior to the deal, part of our diligence was, was learning the foundations of framing. So we found this guy up in Long Island, New York who, who taught people how to frame either for hobbies or for starting businesses. And he at least laid the groundwork for us. And you went up there?

Yeah, Brian and I, my, my brother and I, we went up there for four days and it was also his, his shop was also his home. So he was an very interesting fellow for sure. But anyways, yeah, I was doing it in the, I was doing framing. You know, it was a very much a. I would do it and have my work checked at the beginning.

And then I got, he, you know, it started looking good. We would have him be more in a quality assurance role. And then after, you know, two months or so, I was, I was pretty solid and understood know what needed to be done and how. I just wasn't fast at it. So that was the big thing is just efficiency in the back.

Couple that with when you are working and someone does walk up or you do get a phone call. You pause everything, lose your mojo, lose your momentum. Yeah. So it's a little tougher when it's just one person in there. Yeah, yeah.

[00:43:00 - 00:43:31]

Will Smith: And. But you couldn't frame, you would frame the easy stuff there. As you made clear. There's degrees of difficulty here. You couldn't Frame A whatever five foot trident.

Trident or, or you know, an old 1940s baseball mitt with a ball in it. That's right. Yeah. We, I mean for the special stuff, you, you, you do need multiple sets of hands. And I mean, for example, when, when the manager was running the show by himself and he did have like, you know, a six foot by five foot canvas that came in, you know, he would have his wife come in and help.

[00:43:31 - 00:43:40]

JD Hasley: Like you have to physically lift it. Right. To get it into the frame for just as an example. So there are things you do need. But back to your question about the it being a risk.

[00:43:40 - 00:44:12]

Will Smith: Yeah. Yes, it was. But that's also where we saw opportunity because, you know, like what this frame shop was doing, it is the case for most other frame shops as well. And that doesn't enable for growth or really any sort of like growth engines to occur if you're exclusively focusing on the front sales and fulfillment themselves. And that's why I think the industry is maybe as sleepy as it was, is because you didn't have someone, I guess, like me to work on the business they're, they're only in.

[00:44:12 - 00:45:02]

JD Hasley: And that's, that's where we saw a big opportunity to, you know, start marketing ourselves and kind of, you know, professionalize the business. We became extremely responsive on emails, for example. That's just unheard of for your mom and pop store. So we get a lot of email inbound. This is a big part of the B2B.

Like, you know, we'll get executive assistance from, you know, financial companies who'd be like, hey, my boss was mentioned in this newspaper, you know, can you get me a quote? And we're emailing within 30 minutes. Other frame shops, it'd be like three days if they even have an email address at all. The team at Aspen HR recently published a short white paper targeted at searchers Entitled A New CEO's Guide to Human Resources. It lays out the key items you should be thinking about as you transition into CEO and owner of the business you bought.

[00:45:02 - 00:46:46]

Will Smith: The link to download it is in the show notes. Aspen is a professional employer organization or peo run by a searcher for searchers. Search fund veteran Mark Sinatra runs the company which provides HR compliance, flawless payroll, Fortune 500 caliber benefits and HR due diligence support for your acquisition, all for a fraction of the cost. Go to aspenhr.com or contact Mark directly@markspenhr.com that's all well and good, JD and you're doing it.

So not to, not to sound skeptical but you know, it seems like what you need is enough margin in the business to be able to support you working on it. We've gone through the numbers and I guess the answer is yes, there is enough margin here. And, and plus we haven't even talked about some of the operational improvements that you've made. So there was, there was more cash flow to be generated from the business and then you, you can reinvest that. I just in, in so many of, in so many really small businesses, it'd be great to be able to work on the business.

But another part of the reason that that doesn't happen is just because there, there, there isn't the free cash flow there to delegate. So sometimes it's because the, the owner is the, is a technician themselves and doesn't have the business sense to do that. But oftentimes it's also because there's just not enough money in the business anyway to do that even if they had that sense of delegation or, or growth mindset. But I guess in this case you had looked at the numbers before buying this business and that there was, there was, there was going to be the room to do that. And that's what you're doing.

[00:46:46 - 00:47:31]

JD Hasley: Yeah, I mean it's certainly like a chicken and the egg kind of scenario. Right. It's like if you focus on growth and bringing in more business then you can get the margin to then work on it. But you have to, you know, stabilize first. And you know, the things that we were doing at first I was still working in the business, but in the background, you know, we were brand new website, SEO, Google Ads, started to do social media and you see the uptick in traffic.

There's, you know, and that's what kind of gave me the confidence, you know, five to six months in to start, start looking for our next full time hire. But no, it's, it's a great point. And yeah, it's not a, it's not a rut. A lot of people can get out of, but that's where you just go back to the location and you know, the reputation the store had and the business they had built to date. So yeah, yeah.

[00:47:31 - 00:47:59]

Will Smith: And your vision for this business? Working on it, building it in a way that the previous owners couldn't. So many frame shop owners don't. Do you have a big vision or was it more like I'm just want to get in the game of being a business owner and stabilize this business and have it generate enough cash flow to replace my salary and then I'll decide what's next or no. Are you, are you planning on rolling up, you know, fancy frame shops around Texas?

[00:47:59 - 00:50:13]

JD Hasley: At the beginning, I think it was more the former of you know, doing maybe like vertical integration type play where you know, some of my suppliers have been in the game for a long time. Other, you know, similar dynamics of, of not really, you know, reaching scale with their business. And so I thought maybe I would, you know, vertically integrate, you know, you know, get some even, you know, better margins on deals. If I'm, if I'm owning the production process. I think now I'm probably more in the latter camp of looking out there for, for you know, the next thing outside of framing.

Outside of framing. Not outside of though of like owning another business or you know, doing a turnaround. Maybe not turnaround but like, you know, taking it and growing it to the potential. It could be because this has become more passive than I, I, I certainly thought would have happened by, by now I thought I'd still be in, in the back of the shop grinding away, but I don't know. I, I do still think the vision I, I mentioned on a pre call, you know, I, I want to get the revenue mix even more tilted towards commercial and having not recurring revenue but just very established relationships with high volume clients.

Interior designers are a huge, huge area that we're targeting and they're great clients, right. And you know, we're trying to give them services and that really free up their time. So an example is, you know, we want to be the one stop shop for delivery, pickup, framing and installation. Right. And that saves the designer from having to reach out to three or four different vendors and coordinate amongst all of them.

Right. Whereas we can just be, you know, give us the project, tell us the date, we'll make sure it's there and that it gets hung up on the wall. Because, because traditionally a decorator, an interior designer has to. Somebody else is going to hang the piece, somebody else is going to, they or somebody else is Going to move the piece from the client's home to the frame shop, then out of the frame shop to back to the home and then hang it. There's all these steps and you could offer full service, you could do the entire thing.

[00:50:13 - 00:50:26]

Will Smith: So basically they press a button and the thing is hanging, hanging, framed beautifully on their client's wall. That's right. And those are also high margin businesses. Oh yeah. And customer acquisition cost would be extremely reasonable.

[00:50:26 - 00:51:02]

JD Hasley: Right. If you're thinking about the frame shop as your engine. So anyway, I guess to answer your question is we have those, we have that kind of vision, if you will, for the shop. And it's still going, we're still working towards that, you know, but I'm also still very much evaluating, you know, what, what, what could be next outside of framing. And JD isn't the, isn't the model like the scaled model here to move the actual fulfillment to some cheaper real estate place?

[00:51:02 - 00:51:47]

Will Smith: I think this is how Framebridge does it. They, they ship off all the pieces and, and, and then so you have the actual framers are in some nondescript location, non retail location, cheap real estate, more room, lots of, lots of people. Then you have lots of framers. So you're not so dependent on the single framer. That is basically the physical, the physical capacity of the store kind of constrains you to basically one or two people.

Is it, is, is that not where this model eventually goes? If you want to kind of big. League it, you nailed it. Yep, that's exactly right. And you either have it on an off site or get a large enough facility where you can have both, but you're not in as an easily accessible area like the retail store.

[00:51:47 - 00:53:00]

JD Hasley: So in my mind, perfect world, you know, we have the retail location, we can limit the fulfillment coming out of the back and maybe even expanding to having like, you know, another area for the sales counter. Maybe have three, you know, know, sales counters to get more inflow for the retail, still do some production, still hold projects there and then yeah, get, get an off site to, to have, you know, dedicated framers who are exclusively working on fulfillment.

That's certainly in the plan. If we keep growing at the rate we are, we're going to have to, we're just going to run out of room. I mean, we're only in 912 square feet, you know, but we're the last two months we're doing almost $90,000 worth of orders per month. So it's just strictly from a capacity standpoint. We need more room.

We already Have a storage unit, but I think it makes sense to. And then you can hold more inventory, hold more materials to do more faster turnarounds. But yeah, you nailed the model. You do have more overhead at that point and that's certainly a risk. So yeah, I would say if we, if we probably grew another 15 to 20%, call it, I, I'd probably start evaluating flex industrial leases around DFW.

[00:53:00 - 00:53:12]

Will Smith: Exciting. And I heard you say $90,000 a month. That, that's a nice, that's always a nice milestone because that translates to a million bucks a year. That's right. We, yeah, that was, that was last month.

[00:53:14 - 00:54:12]

JD Hasley: We seem to keep having our best months ever, which is, which is great. But you know, this was, this was a business that, you know, 60,000amonth is still a really good month, but we're consistently hitting over the 75 mark now. And yeah, it's, it's really exciting. And you know, I feel good about the team now. Like I said, the second full time hire, we just made it official like a couple weeks ago.

And so we're, we're full steam ahead. And if you look at it from a seasonality, like the historical seasonality, these months are actually supposed to be slower than the latter half, but these are outlier months relative to the other years that we have data on. So really excited to see what's in store for when summer rolls around. Folks coming back from European vacations. You know, kids are maybe getting back in school around September, then holidays.

Those are, those are really peak times. Wow. So it's a seasonal business. We're in the off season. And you're having your record, you're having.

[00:54:13 - 00:54:29]

Will Smith: Showing record numbers for any month for, but it's actually, for the whole, but it's actually an offseason month right now. Congratulations. And so, and so, so sorry, what is run rate then? The, the business was doing $600,000. Yeah.

[00:54:29 - 00:54:43]

JD Hasley: Run rate right now is a little over 900. A little over 900. So 50% growth in a year. And that is all the outreach that you said you've started. That is the.

[00:54:43 - 00:55:01]

Will Smith: In more social media. What, what else, what else did. Have you hit on everything that you've done to actually grow the business by 50? Have you hit it on, Hit on everything? We, I just think a real big part of it too is, you know, saying yes to everything and then figuring it out.

[00:55:01 - 00:56:55]

JD Hasley: We, you know, a lot of framers, you know, they, they won't, they don't have the time to take on like complex or more tricky projects. Or really big items, fast turnarounds. You know, I always told folks like if a customer wants something like we should try to do everything we can to make it happen. So we, we have a say yes first mentality and also our responsiveness on emails. I can't emphasize enough how, how much business that has generated for us and responding to our inbound leads.

Our new website I think is a big part. We can showcase our gallery of work. We are doing Google Ads. I'm seeing, you know, pretty good success on that for conversions. I mean just to give you some numbers since I know you like them.

You know, our average ticket size is a little over $550 but I can go on Google Ads and my cost per conversion there is closer to like 27, 28 and I'd be okay with a CAC of you know, 100, 120 bucks. Right. Like the math. It, yeah. So there's a lot of like it's not a very high search item.

It's not like plumbers, electricians or whatever who have to pay. It's not a super saturated ad market. And so to get noticed digitally was another area of the lwhinging fruit. But long went away th, those things kind of bundled I guess are big drivers of our success. Plus I can't give enough credit to the team.

Like the customers love them and they shout out them specifically in reviews. So they've, they've helped foster just incredible reputation, hospitality centric, you know, customer service and yeah, a lot of credit to. Those guys and I credit to them and it's, it's wonderful. The, the team that you've built and have the key person risk never quite goes away. I mean until you have some giant off, you know, bustling off site facility with 10 framers and the key person risk is always going to be there.

[00:56:55 - 00:57:05]

Will Smith: That's just a risk you live with sort of thing. Yeah, but I, if I don't try to mitigate it as much as I can. Right. I mean my manager is a full salaried position. It's not hourly.

[00:57:06 - 00:57:53]

JD Hasley: Just to give you an example, the store that she had come from, like after 20 years, they were cutting her hours and jerking her around and, and treating her bad. And same story with you know, other employees. So I, I tell them, I'm like this is y' all store. Like I'm, I'm growing it and I'm just going to get out of your way. And so any ideas that they have, they can come to me.

They get implemented, you can ask them probably within the week if everyone agrees and there's consensus. So it, I don't know. I try to really empower them and make them not want to work anywhere else. That's, that probably sounds maybe obvious, but I think it might get overlooked a little bit. And they just literally speaking understanding their experience in this world for some reason, despite how important talent is, they, they haven't gotten always the best, the best shake.

[00:57:54 - 00:58:18]

Will Smith: And you see that and you see that as a, as a, is a pattern that the Michaels of the world's the big, the big box places where kind of the low end normie framing happens or mass market framing happens. The people working in those frame parts of the store not treated well, not paid well. She'd been 20 years there. Yeah. And I mean they're not aligning incentives.

[00:58:19 - 00:58:59]

JD Hasley: You know, I mean we, a big component of our composition is discretionary bonus at the end of the year. I, I come from the finance world, you know, like that's a big piece of it. And if we perform well, if we do well, I, I instill in them like, you will be rewarded for that because you'll be a big piece of why that that happened. So I make that very clear at the beginning. And, and I, I share, I'm transparent with how we're performing too.

So I can, I can tell them like, guys, we just had our best month and here's what it looks like. If we keep doing this for the rest of the year, I mean, there's going to be a big pool at the end of the year. Right. Like, my goal is not to extract every single dollar from this company. To your point, it's such a risk that I want them to never want to leave, I guess.

[00:58:59 - 01:00:28]

Will Smith: Yeah. I want them to feel like they have a stake because they do, you know, have that ownership mentality. Yeah, yeah. And just generally about talent in this world. How hard is it to.

To come by? I mean, how many people are equipped to. To frame? Is it very thin? I mean, basically you got to just look around the frame shops in town, the other frame shops in town, which of course there's probably many more than I, than I think, you know, I think there's probably, you know, a small handful, but there's probably dozens in any major metropolitan area.

And as a second part to that question, it actually sounds like the CR. This craft, sort of 80, 20 in the craft isn't that difficult. I don't want to take away from the craftsmanship of these folks, but if you were basically doing frames after, not that long. You weren't doing the most advanced stuff, the most sophisticated stuff, you were slow, etc, but you were basically in there doing real fulfillment after not that much time. Seems like you could.

Even if the talent pool for this type of technician is really, really thin, in some future version of your business, you actually can train people off the street to do it. Not people off the street, but you could train people with an interest to do it. Absolutely. So to answer your first part of your question, we two of our employees that we've hired, one of them is no longer with us. Not for bad reasons, he just moved.

[01:00:28 - 01:02:38]

JD Hasley: He was fantastic. But two of the employees that we've hired literally walked in and gave us our give them, gave us their resume because they were in search, they had the experience and they knew there was such a finite amount of places to put those skills to work. And so I, I would never expected that. But we've had multiple people who've come in with their resumes looking to work for a place like this. I.

This probably isn't a norm in the industry, but I just made a profile and job posting on Indeed. But beyond that, I went and searched for candidates myself so I could go in and see who had framing experience. And the manager I ended up hiring, my first one, she was an outbound from Indeed that I sent her a message first saying, hey, we have this job posting. And you know, she responded and was like, I'm actually know my dream has always been to own a frame shop. And you know, managing one like this is probably a good first step.

I was like, absolutely. So there's that component of it, you know, and, and you know, with the training part of it. Once again, another way we're trying to mitigate this key man risk is we're developing SOPs for all different aspects of framing. We kind of think of it across the spectrum. So like, you know, fast casual, if you will, medium, and then like really in depth, conservation museum style.

And we're creating kind of a system to bucket each project into those and then create standard operating procedures for how exactly you do this to accomplish what this bucket deems this piece is worthy or what the customer wants. So we're working on that in real time. And so if we do hire someone who's a little more green, you know, we should have a pretty, you know, pretty detailed way. It's not like you're having to do this in five minutes. Like you have some time to sit there, read the instructions, you know, have someone looking over your shoulder and, and, and work with it.

So really cool. JD you, you, you may be the most progressive frame shop in the country here. Now just going back to something we've, we already touched on but just to, to totally dial this question in this industry isn't going anywhere. Framing isn't going anywhere.

[01:02:38 - 01:03:13]

Will Smith: It's just the, the biggest threat is I guess new models like the likes of Framebridge which is now A you know, seven, 10, maybe more year old startup. And oh by the way, yes they're, they were kind of the e commerce digital answer to framing but notably they've, they now have all these, all these brick and mortar locations around the country. So it's one of these where they, they started as pure, pure play e commerce thinking they were going to disrupt everything and then actually went physical after all. I don't really know the story there. I may be speaking in turn, but.

[01:03:13 - 01:04:07]

JD Hasley: It'S, it's pretty close and, and that's a common theme. I think one of your guests even talked about this too. Like there was a pendulum right that swung. Folks were almost exclusively doing E commerce but then they found a happy medium right with retail and online. And you know, to answer your question of is this going away.

Probably not. It's the most discretionary of discretionary spending though. So in downturns, you know, you may have a little more volatility with, with who can sustain through the low periods. But I mean I think we, we. Look I mentioned this earlier.

I think we found our, our little carve out in the niche in, in our target demographic that we'll pretty much always need these services pretty much always be willing to pay for it. Banks on high reputation, you know, great quality, excellent customer service. That that's really our, our bread and butter. We don't see that going away anytime soon. And, and the, the mix between retail and commercial.

[01:04:07 - 01:04:24]

Will Smith: What is that? I need to have this number more dialed. If I had to guess, we're probably 2080 commercial to retail. I would, I would really like to get up to north of 30, 35%. You know that would, that would probably put us over the million dollar threshold.

[01:04:24 - 01:05:10]

JD Hasley: You know Cetera's paribus. Assuming retail stays at this grows at the same clip or stays the same. Um but yeah we, we, we have a couple campaigns we're looking to start. Um you know example, our website now is equipped with a tool that you can visualize, you know, projects being framed. So instead of a designer having to bring in 15 different pieces of their clients, they can upload pictures to our site, select from the thousands of options, matting glass frame, different styles and then have us send us that and we can generate a quote over the computer and send them an email so they're not having to spend three hours in the shop and maybe they don't find anything they like or it's too expensive and we can just kind of cut, cut a huge time element out of it.

[01:05:10 - 01:06:52]

Will Smith: Yeah. So making instructional videos on how to use that tool is one of our outreach campaigns that we're probably going to start here. Here this month. Yeah. Exciting.

You know, jd, I'm, I'm starting to feel like this business is a little bit like sign businesses. Every town has them, they're local, they're, they're reoccurring at kind of at best. But their high ticket items. Signs are going to be a lot more expensive. Signs are going to be pure B2B but basically, yeah, like light manufacturing, if you want to call framing very light manufacturing.

Less skip, far less skilled than signs only because signs require there's, it really is light manufacturing and there's electrical work and all kinds of complexity there. It's kind of interesting because, because people do in our world do look at sign businesses. So if they're open to sign businesses, maybe they should consider frame businesses. Now the revenue, these are going to be smaller businesses. There's just, I assume the tam of framing is far, far less than, than signs.

But again they kind of, if, if you're, if you can hand. If the motion of a sign production business is something that you can imagine yourself in, it's just going to be a similar motion here. Yeah, I think that's right. And with owning, you mentioned this a little bit. But what you're creating is unique.

[01:06:53 - 01:08:00]

JD Hasley: Everything is custom. Right. So it's literally a one of a kind thing that you're creating and framing. Fortunately for us, it's hard to be in a bad mood when you're bringing something in to get framed. We're not a rehab and restoration company where all customers you deal with are just pissed off immediately.

Like we don't have to. Fortunately, it's like there's no framing emergencies unless there are. And trust me, people think there are. But generally they're happy to be here. They like the items obviously enough to hang it on their wall.

And so it's also just like a very pleasant experience when in this line of work. Whereas like with other businesses and sign. It's funny you mentioned it, our sign just got damaged. We changed the logo of the store. So we're actually getting a new sign so I'm very fresh on, on the sign process.

But yeah, it's, it's, it's, you know, less personable. But I mean from a customization standpoint, you know, getting the specs in and you know, having a deep understanding of what the customer needs and things like that. Yeah, I think there's a lot of similarities there. Great. No interesting comparison.

[01:08:03 - 01:08:53]

Will Smith: JD we're wrapping up, but I just want to, I just want to make sure people have a sense of the, the trajectory of your ownership. We've, we've glanced off it many times. But let's just quickly go through the timeline. You buy April 30, 2024, which was April 30, 2025 was two days ago. So it was really fun.

On our pre call was literally your one day, your one year anniversary to the day. So you buy in April and then just quickly just take us through the last 365 days just so we, so we understand what it looks like to go from buying a very small frame shop to essentially it being now semi passive and throw some numbers in there on the returns that you've seen. Yeah, absolutely. So you know, bought, bought the frame shop in April like you mentioned. One month later my, my wife had our, our first son, had our child.

[01:08:53 - 01:09:49]

JD Hasley: So, and he was one month early. So it was a very chaotic first three month period, let's call it. Fortunately my brother was there to help give me some paternity leave just like a week or so. But that three month period was just an absolute bear to get my heads wrapped around, hands wrapped around everything. You know, taking ownership, moving all the vendor relationships and you know, things like that over into our name under our card, doing the framing.

I mean we were still busy thankfully. So I was at the shop until 11:30 midnight after doing everything I could do during the day and the days that manager was gone. So it like that first three to six month period was an absolute bear haul, whatever you want to call it, very involved a lot of time consuming and I'm in Fort Worth currently and so we bought a business in Dallas. So that's an hour away. It's an hour.

[01:09:49 - 01:10:02]

Will Smith: I thought the cities were kind of. They call it next to each other. Yeah. But everything's bigger in Texas, so we're pretty far apart. So anyways, you know, that was, and I knew that was going to happen.

[01:10:02 - 01:12:46]

JD Hasley: Right. And I had actually budgeted for about 12 to 18 months of that. Just like chaotic, super hands on experience. Flash forward to September. We hired our manager who I'VE referenced many times.

She was phenomenal. Had a ton of experience coming in that first month of training her, getting used to our, you know, systems. I was pretty hands on introducing some, you know, longtime customers came in making the introduction introductions so they, they had a face they could recognize in a name to go with it.

She caught on really fast and I told her to do this, but she made the store her own. So she completely reorganized and refreshed the front of the store. You know, made the moldings and samples look way more aesthetically pleasing that when we, when we bought it. And I would have run it the same way. It was pretty disorganized.

You know, you had pieces kind of strewn out all over the place just from a simple like not having time to organize. But she makes it a priority. I tell you all this because she had that thing up and running where I could be really hands off by November, December, call it, you know, I would monitor the emails, you know, kind of coach her up. She, you know, she didn't do responding to emails obviously at Hobby Lobby. So I was like coaching her up on how to respond to an email, you know, practically and to the point.

Right. Generating quotes, things like that. And then yeah, we hired, we hired another gentleman. I guess it was November, November, December, somewhere around there. And that by that point there were just, you know, too many cooks in the kitchen.

Me being there was really just me being in the way. Now, you know, I, I stop in probably like once a week, maybe twice, depending on if someone's sick or something like that. I really just help on like special orders, telling them what the numbers have been, where, where things are going, you know, what our goals still are, reminding about the customer service, things like that, you know, just very high level. But then get out of the way. And you know, throughout our first 12 months of operating, if you look at kind of like our levered cash on cash, if you will.

I mean we're, we returned all of our equity that we put into the deal. So I mean north of that 120,000. You'Ve take, you've gotten back out. Yeah. So north of like 120%, call it levered cash on cash for the deal.

And coming from real estate, when people get excited about 10 caps or whatever, 10% kind of yields, I mean it's just, it's just night and day, the world. Not that the risk is the same, but yeah, it's, you know, it's, it's been really great. Let me know if I missed anything there. If you had Any other follow ups though? That was, that was great.

[01:12:46 - 01:13:04]

Will Smith: JD just to double click on the number the, the, the you put in 120 in your cash on cash levered cash on cash return has been more than 120%. Yeah. So. So 120% of 120,000 is whatever that is.

[01:13:04 - 01:13:11]

JD Hasley: Yeah. We're like 1. 135 or something. 130. 140 I think is what I, what I saw the other day.

[01:13:12 - 01:14:30]

Will Smith: 130. 140% percent. Yeah. Incredible. And that.

But does that include pay your time? Did you compensate for yourself? You compensate yourself for the, the time that you put in or. No, my, my salary is netted out of that number. So that is, that number is like what true distributions were to myself and my brother.

True pure distributions even after paying yourself for your time. That's, that's phenomenal. Yeah. Very, very, very fortunate. Very blessed and yeah, I'm super grateful.

So and, and so how many you, you said you gave us a picture of how often you're swinging by the shop but put that into number of. Hours per week excluding driving. Probably like 5 to 10. 5 to 10 hours. Good for you.

I mean given. Why are you distracted by maybe buying a business outside of framing and not pushing this as as far as you can go? It just seems like there's a lot of, of meat on the bone here and it's an overlooked industry and a joyful industry. I don't think it's completely off the table. I have approached other frame shop owners to.

[01:14:30 - 01:15:01]

JD Hasley: Yeah. To buy their businesses and not met with a ton. I mean I haven't really done a full search but I've had to talk to a handful. Haven't been met with the most reception. Not that they were dismissive or maybe dismissive is the right word.

Not rude or anything but just like no, not interested, that kind of thing. And so. And the owner profile of these businesses is typical. Kind of boomer, male. Yep.

[01:15:01 - 01:15:14]

Will Smith: Style. Yeah. Is this pretty much. And so like it's, it's not necessarily for a lack of trying or interesting. I do know I would have to be a lot more involved again.

[01:15:14 - 01:16:37]

JD Hasley: And so having the luxury of being able to take a step back and this business be growing like it is. It kind of maybe instead of inorganic growth just focus on more organic stuff. Right. And then tacking on the tangential services like we mentioned like installation I think could be a big tack on that. We add, call it up uptown art and installation.

Right. And have like a, an umbrella of Brands or whatever. Not. Maybe Holdco is the right word, but specific to this category. But yeah, I mean, I, I got a kick out of doing my deal.

Like, I thought the deal part of itself was really fun being on the, being on the sponsor or borrower side, as. Since I'm mostly for my whole career been on the lender side. Right, right. And I'm, I'm, I'm asking for the diligence, but, you know, I'm, I'm, I already know what lender's going to ask, so I was like, anticipating there, like it was a, it was a really cool experience. So I like that element of it.

Maybe I'm, I'm going into it too naive. Like this one's just to your point earlier, it's a diamond in the rough and maybe I should just, you know, enjoy what I have and not, not get too, too aggressive. But yeah, I'm kind of evaluating a wide array of options right now. Well, and to be clear, jd, I didn't, I didn't mean to suggest inorganic growth like that. You go and roll them up.

[01:16:38 - 01:17:31]

Will Smith: But just leaning into this business, be it inorganic or organic, because you have all these ideas how you can grow this business as opposed to going out and looking for just something outside of, outside of framing altogether. But you've answered the question. Yeah.

Last question for you, jd. How do you reflect on. Just kind of reflect on your decision to do this? You know, coming, you know, leaving your W2 getting strange looks to buy a little frame shop now essentially crushing it, getting all of your equity back out in a year, really liking what you're doing, having all these options. Leading question.

Because I'm just making it seem so rosy. Yeah, exactly. But, but, but seriously, do, do reflect. Yeah, no, it's, it has been, besides marrying my wife, you know, one of the best decisions I've ever made. And speaking of which, she does.

[01:17:31 - 01:19:53]

JD Hasley: She does deserve her own very special shout out. Reagan, I love you. And without you and you having your big girl job, this, this would not have happened.

She, she's been super, incredible, super supportive. So I was talking about my, this interview, coming up with her and definitely made it a point to thank her for this. And she had our son immediately one month after we did this. So anyways, other reflections, though. That's great.

Thank you. Yeah, no, I was very fortunate in all the jobs that I had leading up to this. And I really do think, specifically my last one really prepped me for this role. They trusted me a lot. They enabled me to run with deals on my own, even as associate type, you know, seniority and, and yeah, I don't know, like, I just feel really lucky, really blessed to to found this opportunity, have a, have a partner and a brother who was so willing to just go, go with me despite having a pretty rocky track record with our other brother on the, on the business front, looting back to the restaurant.

But yeah, I just. And then also I, I couldn't have gotten luckier with the sellers that we had. Um, the people that have been involved. You know, without the manager staying on board, this wouldn't, this would have. This whole thing would have fallen apart.

And that's one of the lessons. You know, having identified that risk, I, I probably went into the deal trying to over structure that too much. But at the end of the day you just, you have to trust people. Like you can't have a contract basically saying, you know, indentured servitude or whatever. Like you can't force people to do.

They're going to do what they're going to do. And so had to kind of get over my lender downside, downside, downside background and, and just trust people for the hour and, and it really has worked out. It's been an incredible crowd experience. I last thing I'll say is I never thought I'd get to watch my son grow up as much as I have, you know, in the world I was, I was working in. You pretty much see him after they go down for bed at this age.

Um, but I've, I've gotten to be able to spend at least one day per week just watching him here at the house. And it's that that's really been one of the most amazing things about this whole experience is what it's allowed me to do at. On the home front. So. Well, the business ownership is.

[01:19:53 - 01:20:34]

Will Smith: Is usually more hours more of a responsibility, more on your shoulders than a W2, but it is more flexible, which is of course one of the primary reasons. One of the words we hear most commonly on this podcast, the flexibility, flexibility that it affords you is hard to beat. So wonderful that you've taken advantage of that to hang out with your. With your boy. Yeah.

Good stuff. JD the name of the shop is Uptown Frames. Uptown. Uptown Frame.

Uptown Frame. And I'll put a link and we'll put a link to your LinkedIn in the show notes. A link to Uptown Frame. Anything else? Any way you prefer to be contacted?

[01:20:35 - 01:21:11]

JD Hasley: No, LinkedIn's great. If people do want to do an email, I'm just jhazlieuptownframe.com but LinkedIn usually works great. JD Hasley Congratulations on a successful acquisition. Thanks for sharing it with us. Thanks for having me.

Will. This was fun. Hope you enjoyed that interview. Don't forget to subscribe to the Acquiring Minds newsletter. We send an email for every episode episode with an introduction to the interview, a link to the video version on YouTube, and soon key takeaways, numbers, and more essentials from the interview.

[01:21:11 - 01:21:37]

Will Smith: For those of you who don't have time to listen or watch it, subscribe at acquiringminds Co. You'll also find all our webinars there on the website, both those we have coming up and recordings of past webinars. At this point, There are over 30 webinar recordings, a wealth of information on all the technical nitty gritty of buying a business. Acquiringminds Co.