Host: John Hubbard is making this look easy. Veteran former cop, not a business guy John acquired a trailer manufacturing business and it's just going so well. A few things to listen for in our interview why sometimes manufacturing can actually mean fabrication and why that difference matters How John worked in a small business specifically to get the experience to then go out and buy and run his own how he raised investor interest on search funder and how his overall life philosophy of asking dumb questions enabled him to learn quickly how to buy his business. His whole search was only about six months. John was having a beer during the interview, so feel free to crack one yourself as you listen. Along here is John Hubbard of Express Custom Trail. 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. Have you signed up for the Acquiring Minds newsletter? I send it out alongside every interview and it contains a summary of the episode that you can quickly read in case you missed it or just don't have time to listen. Sign up at the website acquiringminds co. You'll see a big box to enter your email. Again, acquiringminds co John Hubbard, thank you for joining me today on Acquiring Minds.

Guest: Yeah, no problem. Glad to be here.

Host: John, you're my first guest who is a former policeman. Former military is pretty common, as you know, in the world of small business acquisition and you're that as well. But former police is a new one for me, so we are going to want to hear about that. But to set the stage, you acquired a trailer manufacturer last year, just over A year ago, February 2021 Express Trailers in Florida. And so that's the story that we're going to dive into today. So start us off. John, with some background, what was your military experience and then what did you do when you left the military? Right out of the military.

Guest: Yeah. So I spent 13 years in the military, the Army. Got out as a senior enlisted guy back in 2016, infantry paratrooper for six years and spent my last seven years as a special operations medic. Just kind of bouncing around various commands. That was a pretty sweet gig. Got out and really went into law enforcement as kind of a what I felt like a natural, gradual next step. It was kind of always something that was back of my mind, planning on doing post military. And then I think I just got too old and waited too long to chase that dream. So it didn't last very long. A little under two years as a cop.

Host: Okay. And so it Wasn't for you you found?

[3:02] Guest: Yeah, I had my first kid about a year into it. I was a 34 year old rookie and an academy with a bunch of 22 year olds, so a hairier area of town than I thought it was going to be. So car chases, jumping over fences, pulling guns, fighting guys. Had my first kid and just realized everything. I just survived for 13 years overseas. Now for me to get hurt in my own backyard in Texas would be kind of ridiculous. So I hung up the guns for good and got a real job for the first time in my life.

Host: So you were looking for the more cushy donut eating version of police work, not the one where you're actually beating up bad guys.

Guest: Yeah, actually I wanted the bad guy 1. My last couple of years in the military was all staff time, so I was dying to get back out in the field and then my old body remembered what being in the field was like.

Host: Okay, well, so you decide that law enforcement's not for you. As I recall from our pre call, some of your former military buddies had bought businesses. So you were aware of this concept. Right? So, so tell me about that. And what did you do after hanging up the guns?

Guest: Yeah, and you know, in their defense, they were trying to get me to go straight from the military to grad school into this acquisition space. Seemed boring to me. Like who wants to run a plumbing company or like a screen printing company. Doubted guys would even give me money to buy a company. So we'll get into that later. But went into law enforcement, left that was a home builder for a couple months, you know, randomly. I did some construction growing up, reached back out to those same buddies that kind of asking for career advice and decided I was going to give this a go and delve into it full force. And kind of my mentality was if these guys can do it, so can I.

Host: And so you immediately started looking for a business or you got a job in the meantime?

Guest: Enrolled in grad school at SMU to get my mba. I did the executive program though, so a couple nights a week and weekends. And then I did a like a micro search in the Dallas Fort Worth area of a company kind of the size I figured I wanted to buy and basically with cold calling and convinced them to hire me on with no experience. It was an exterior home remodeling company, doors and windows. I weaseled my way in there and kind of ran their operations, GM light mode and ran this guy's business for him and got the confidence that yeah, I could run a business. Of this size. So I did that the entire time I was in grad school, ran a small business and got my mba.

Host: And you dropped out there for just a second, John. So while you worked for that company, but you said that it was a search that resulted in you working at that company. So was the idea that you'd work there and then maybe acquire it?

Guest: No, my idea was let me find a business kind of economic parameter wise, that would be the size I'm looking for, revenue wise, headcount, geographic spread of their business. So a small family held business working just there, I think at the time, doing, you know, 10 million in revenue, not to buy the business ever, just to go and get the physical experience of running the day to day of a small company of that size. So I applied to several and finally one took hold and I worked there the whole time I was in grad school.

[6:34] Host: So you, you had kind of this, a little bit of a longer term plan to search. You were like, I'm going to get my MBA by, by night, get some operations experience in a company of similar size that I'll go looking for and do this for 2ish years and then go out and look for that company, a business to buy of the size that I've just now gotten all this experience in. Okay, and this was all in Dallas Fort Worth, the Dallas Fort Worth area?

Guest: Correct? Yeah.

Host: Okay. And so while you were at the business that you were working in to get this experience, you, you found that in fact you felt quite comfortable that you'd be able to do this, that, that running a business like that, your own business that you would acquire was something you were capable of. Kind of talk to me about what you learned in the experience working at this company.

Guest: Yeah, absolutely. And honestly, probably within the first 30 days I was coming home and telling my wife, okay, I could run this company tomorrow. Like it's, this is fairly simple. And you know, for the military guys listening the first time you go to staff as a junior officer and senior enlisted guy, you know, all these things you thought were super complicated, fancy military stuff, you quickly see behind the curtain and you're okay, this is pretty simple what we're doing at all levels here. It's the same way with the business I felt like. So within probably a month I said, okay, payroll, workers, comp claims, finding new warehouse space, negotiating leases, hiring, firing. This is all just, you know, platoon level military, you know, operations you would carry out if you were just a platoon sergeant, let alone a small business owner. So, and really at that point I was kind of kicking myself for having enrolled in this MBA program because I was thinking, man, I'm ready to search now, I can do this. But you know, now I'm six months into an MBA program, I might as well finish it. So if anything, I think the NBA slowed down my entire search process.

Host: You know, one of the things that people from outside the small business world and who don't have military experience find challenging when they buy a small business is the people aspect, specifically the hiring, firing. It might not be the mechanics of the business or the processes. Those are like you said, pretty easy to wrap your head around. But if you've never been a leader, never been a boss, never been a manager, even in some cases it's that people picture that can be challenging. Doesn't sound like that was for you at all because you, you, as many of many veterans will, will say just get tons of that leadership experience in, in the military. Is that, is that correct?

[9:08] Guest: Yeah, absolutely. Especially coming from special operations community. You know, as soon as I took over, our mentality at work was if we don't think they're worth, you know, X amount of dollars per hour, if you think that's too high for these applicants coming in, then just don't hire them. Like we're going to have a very set standard. If you don't meet it without yelling and screaming, you just tell the guys you haven't met the standard, you know, you're no longer employed here and let the new guys, when they come on, pay fewer guys, better money. So that the human relations piece of it was easy because I kind of grew up in that community in the military. And again, it doesn't have to be, you know, demeaning or life ruining because you're firing people. You can casually in a conversation just say this is the standards, you haven't met it, you know, thanks for playing, see you, see you next time, and then we hire the next guy.

Host: Really interesting. So you, so you basically set a higher standard, pay a little bit more and just lay out what the expectations are very clearly and make it kind of binary. You either meet these expectations or you don't. And if you don't, thanks for, thanks for playing, as you said. And if you do, you know, you're part of the family, you're earning more here than you will one of the competitors. And I'm not going to be breathing down your neck to, to micromanage you. Is that kind of the philosophy?

Guest: Yeah, absolutely. And you know, my workforce is hourly blue collar employees. So it's different if you're hiring a sales manager, you know, or a marketing guy, obviously. But yeah, we. I think you'll hear a common theme from a lot of veteran guys that did search funding is, you know, you have a company and then you try to morph it into your tribe like we're used to in the military. So getting uniforms and stuff in place was a big deal for us. And, and, you know, that first week probationary period, we're trying a new guy out. They don't get a uniform if they make the cut till Friday, then they get their cap and hoodie and T shirt and, you know, they've kind of been accepted into the express family. And then the only way that works is treat the guys that do hire, you do hire, you know, incredibly well, like adults, like they're part of the team. You know, treat them. Treat them like soldiers. They'll act like soldiers.

Host: Treat them like soldiers. They'll act like soldiers. Great. Well, this is fascinating, but we're getting a little bit ahead of ourselves in the story. So we're still in. We're still in Dallas Fort Worth. And you're after 30 days, you're comfortable that you can do this, but you do see out your. Your MBA program and you. So. So take us up to. To when you actually kick off your search. What did that look like? And you're not. You're not in Texas anymore. So how'd you end up in Florida? Start. You know, take me through the search itself.

Guest: Yeah, well, Covid hit. So our MBA program went completely remote, which allowed me to start searching sooner than I had anticipated. So I'm not wasting time sitting in traffic going to downtown Dallas a couple nights a week. So I was working full time Last October of 2020, working full time, going to school and then searching, doing those three in preparation of a December 2020 graduation. So I started my search in August 2020, and we closed on a company February of 2021. So it all happened pretty quick. I. I kind of forced it all to happen very quickly.

[12:27] Host: And before you answer what you mean by that, how did you. The mechanics of your search, like, how did you learn to search? It is kind of a skill, and there are, you know, best practices. How. How did you go about that?

Guest: I kept it as simple as possible, mainly because I'm just not very smart and I'm lazy. Biz Buy Sell. Once I met a couple brokers through Biz by Sell in the Tampa area. You know, it also helps immensely that I knew the one specific, like county within the U.S. i was willing to buy a business in. So with that as a search parameter, you know, within two weeks of calling Biz Buy sell ads, I knew majority of the broker network in the Tampa Bay area. Which guys were full of it, which guys were great, which guys represented businesses that were ready to close, you know, so proprietary data scraping manually from biz by sell. And then, you know, once you make that relationship with three or four brokers, they just start feeding me deals. But again, that's easy to say when you're only looking in like three zip codes. So.

Host: Yeah. And so tell people why you wanted to go to Tampa or you knew that you were going to end up in Tampa.

Guest: Yeah, we, you know, the first time in our life we could just pick anywhere on a map and say, let's move there between the military and law enforcement told where you're going to live. We were both military brats, my wife and I growing up. So, you know, at the age of like 36, we finally get to pick the city we want to move to. My wife's family's from Florida, about an hour from Tampa. I was stationed here for a couple years. Broken up when I was in the military and loved the weather, loved the beach, no state tax, bunch of benefits. So this is where we decided to call home. Big enough city to have, you know, sports teams and entertainment whatnot.

Host: Cool. So you're on Biz by sell just with, you know, one filter set, Tampa, and you're, you're looking at the listings that you're asking for more information on the listings that interest you and get to know the brokers. Did you find it hard to be taken seriously by the brokers? This is something that early that novice searchers often find is that brokers kind of give them the cold shoulder because they're not treated, they're treated as tire kickers and not serious buyers, which many of them are. You though were not. You were serious.

Guest: Yeah. So one of the things, you know, when I'm telling this kind of story is I will ask the dumbest questions. I will go into things with an irrational sense of self confidence and figure it out along the way, which I feel like expedites everything if you just ask the dumb questions up front. So I was calling brokers and they were asking for, you know, what, can I see your pfs? And I'm like, you know, maybe once you tell me what that stands for. And they're like personal financial statement. And you should probably know that. So this probably isn't a good Fit. And I mean some of the phone calls were that painful, but I'd write it down. That means this. Okay, cool. Now I know. And I just, you know, do that for three hours a day while I was supposed to be doing my day job at work and just learned a lot that way. And you can get a letter of confidence from an SBA lender, you can get letters of support from some of your investors if you identified them. And I just backed my way into those solutions just by asking.

[15:38] Host: Asking. Good for you. I love that it's so counter to how most people live, including me. I'll be the first to admit one thing I, I skipped over that I want to make sure we touch on. You had said in our pre call that a number of your military buddies that you knew that had bought companies did a traditional, did traditional search funds and you decided against that. You, you made a very deliberate decision not to go that route. Talk to me about that.

Guest: Yeah, with the two, you know, the two main reasons. One is I wanted autonomy. You know, I wanted control. This was a lifestyle decision for me, not necessarily an economic decision. You know, I would have chosen this even if I made half the money I would have made at, you know, a JP Morgan, Goldman Sachs or something post mba. So the, the lifestyle and the freedom to be the boss at work was more important to me, which I knew I wouldn't get as a, you know, a 15 owner of my company if I went traditional. And then as super hyper focused as I was geographically, I mean if I was a traditional investor, I wouldn't invest in myself.

Host: Yeah.

Guest: If I'm only looking at businesses in, you know, a 10 mile circle. So it was kind of forced slash chosen.

Host: Yep. So speaking of your pfs, your personal financial statement and investors share what you can about what your financial picture was and kind of what size of business you were looking for. And were you going to need investors to buy a business of that size?

Guest: Yeah, absolutely. So I was a. Just left the police department working for pennies at this company that I convinced to let me, you know, run their operations for a meager wage and a whole life before that as an enlisted guy in the military. So I had, you know, I had a dig for money. It was, let's assume I can put $0 into this because I just spent $150 forming my LLC and let's see if I can still make this thing happen. So it was full on in need of investors while simultaneously I wanted to maintain the overwhelming majority of the company. So I wasn't asking for a lot.

Host: Yeah, right. Very, very attractive investee candidate here, man.

Guest: I know. And I only want to search in one city in the entire US but

Host: as I know, it turns out that you were swatting away investors, so. Okay, so, but wait, what was the size of business you were looking for? If you basically had no money, how are you going to decide what size of business to go after?

[18:11] Guest: Well, the SBA put a cap at 5 million, so I knew I was going to stand you that for purchase price. And then, you know, I felt like once you dipped into the 750 EBITDA FTE range, you got away from a lot of the traditional searchers, the family PE funds, you know, the institutional money, if you will. Because now it gets you down to the threshold of, well, if I have to pay an owner or you know, GM to operate this company, it's not turning much of a profit. So that was kind of the size I looked for in that. I also wanted one that was kind of on autopilot, so something doing 750fd where the owner wasn't actually involved in the day to day. So again, I'm adding these uniform parameters to my own search. And then about 400 SD was the smallest. I was looking at something you could grow, but not something where I'm answering phones and doing the accounting and quoting the jobs and all that.

Host: Yeah, okay, well, yeah, man, you're not lacking for confidence. Unicorn looking for this unicorn deal and totally transparent about the fact that you don't have the money and it's got to be in Tampa, among other things. All right, so. But you do find, you do find a deal you like on bizbuy Sell. Actually had you found other deals before Express trailers that, that, that got. Went down the, went down the path at all toward acquisition?

Guest: Yeah. So I had, I think I submitted three, Lois. Before Express. They were all accepted in various stages of due diligence. We backed out. Some were just misrepresented by the seller. You know, I'm out of the office every day by noon. And then you come to find out they're out of the office every day at noon because they go and quote all the jobs and they work until 8 o' clock at night. So, you know. Yeah. And then others just fellow lenders didn't like a couple of them too small, you know, key employee, held too much power. So then we settled on Extra Express. Actually wasn't on biz by sale. It was an off market deal that uh, Sam, one of the local investors, I went with in Tampa, knew through a friend of a friend who went to high school, who worked for a PE firm. You know, that type of deal.

Host: And this is Sam, Sam Rosati, who people on SMB, Twitter and the searcher world will. Will recognize Sam's name. And how did you get in touch with Sam?

Guest: You know, again, me being too dumb not to know any better. I went on searchfinder.com you could probably go on there and still find my post and just said like, hey, basically, here's my background, here's what I'm looking at, my business, here's the size of the business. I need investors. You know, hit me up, swipe, right?

Host: And as it turned out, you got a lot of. Of people swiping, right. You got a lot of inbound from that one post on Search Funder, Right? Tell me, tell me what the response was.

Guest: Like, yeah, I mean, I probably got 50 emails in the first two days from guys like, hey, we like investors. Hey, I'm in the Tampa area. You know, I couldn't even get to some of them. I was. Some of them were just got blown off and forgotten about because my search was so small. I had no sort of CRM, you know, deal float thing set up for businesses, let alone investors because at most I was looking at three or four businesses at a time. So I had no preparations for keeping all these investors straight. And I kind of pared it down from a list to, you know, three guys pretty soon, and then ended up going with Samus, who's the main investor after one phone call.

[21:36] Host: So Sam Rosati saw your post on Search Funder responded, and he was one of a handful of phone calls you had and, and you decided to go with them. You liked him?

Guest: Yeah, absolutely. Kind of. I think after our initial phone call, we were pretty much set that we were going to work together. It's just, let's meet next time you're down here looking at a business.

Host: You. And you think the magic to your Search Funder post was the fact that you're ex military. So a lot of that, that just has kind of like a certain sparkle to investors and searchers.

Guest: Yeah, 100% is either that or my profile picture, but I'm assuming it was that. And it's actually funny because that's something that we struggle with coming out of the military is you don't want, you know, one hand you're glad to do these programs and another hand you're like, I don't want you to hire me or invest in me just because I'm a veteran, you know, I would like to stand on my own merits. But then you do the research into just the historical return on investment for veteran searchers, more specifically special operations veteran searchers, and it helps you swallow a little better that this reputation exists for a reason and it's not charity. So my advice to fellow veterans is lean on that leverage that it's not a handout. You earned it. Right.

Host: These are investors who are just looking at a track record of people like you and seems to check out. And so it's a, it's just one data point they're using, but a strong one. The, the deal flow that you were seeing or the, the listings on Biz Buy Sell. I'm, I'm just curious. So Tampa, let's call it a medium sized city. Like how many deals are coming on Biz Buy Sell in that kind of 400 to 800 SDE range per month? Is it. Yeah, a lot or a little? I really don't know.

Guest: Yeah, more, more than I would have thought considering, you know how I say the Tampa Bay area. Satan, Clearwater, St. Pete, within a 30 minute little window. Yeah, but you know, more than I would expect. And they came up more frequently than I thought. And I think a lot of them were actually getting snapped up by, you know, local family pay funds. So, you know, a lot of obviously hot garbage on Biz Buy Sell. The same ad that's been on there for a year and just keeps getting refreshed. But you know, there were several and I think I could think of two or three other people I know know loosely through search funding that bought businesses in Florida from Biz Buy Sell. So.

[24:05] Host: Yeah, and so Sam, this deal, express trailers Sam sends to you. So privately because you guys have basically you've agreed that he's going to be your investor. And you know this line that you said about yourself earlier that you don't want to work very hard. I mean, I say that delicately, but I think that you'll just be like, yeah, pretty much. I'm naturally lazy. Did you communicate this to Sam and the other investors that you talked to?

Guest: Yeah. You know, obviously Sam hears all these and he laughs. In hindsight, I didn't advertise myself as lazy, but I definitely advertise it. As, you know, I was honor grad of, you know, basic training in the military, but only after I found out that the honor grad doesn't have to march in the formation in July in Georgia. You get to like sit up front with the VIPs. So that was My entire motivation to become honor grad was so I would not have to stand out in the hot sun. So it's, it's super effectiveness driven by extreme laziness. So as long as I pitch it that way, it works out for everybody

Host: in the end, you know, that actually is really effective. My education is in computer science and you'll hear a lot of the very best programmers say I'm lazy, but this makes me a great programmer because I'm always looking for the shortcut. I'm always looking for the most efficient way to get something, most efficient, effective way to get something done. And this makes me really effective at what I do as a programmer. So it kind of reminds me of that. Okay, so you see Express Trailers, can you tell us the financials? So the size of the business, the revenue, the number of employees and so what the business looked like and then as well what your deal looked like if you, if you tell us about Express first.

Guest: Yeah, so express doing about 5 million in revenue that had picked up pretty significantly over the last two or three years from around a $3 million a year revenue to five and a half. Two owners that own it for the last 30 years. They had been absentee for 10 years and three years respectively. So it really was kind of on autopilot with staff in place, 35 ish employees any given day. And it's just, you know, from raw steel to rolling off the the lot. Manufacturing of enclosed trailers mostly for other companies commercial accounts.

Host: And so you have, I think you guys manufacture three different sizes of trailer. Do I have that right?

Guest: No, we so actually changed the name of the company a couple months in from Express Trailers to Express Custom Trailers. And depending on when this airs, I hope people don't go to the website until after we roll out our new website next month. But it, yeah, we hyper customized trailers for other very specific industries that you can't just go buy off a lot and do yourself. So we'll custom design a trailer for a large company and then maybe make them 100 a year of their model trailer.

[27:07] Host: Ah, cool. And so can you give us two or three like use cases or types of clients that you have just so we can just add a little bit more color to your business.

Guest: Yeah, so very simple trailer and massive quantities. Brightview Landscaping, they're the largest landscaping company in America. We manufacture trailers. Some other companies. Perma Liner is like an underground pipe repair company. They sell, we sell them our customized trailer. They put even more custom equipment in, sell it as like a franchise, you know, military Stuff they've done in the past, we'll make command centers for a sheriff's department or the FBI or something. So anything like I said, from a landscape trailer to a 50 foot gooseneck trailer that's used as a SWAT headquarters.

Host: And is this a competitive world of custom trailer manufacturing?

Guest: No. So trailer is extremely. And I actually passed on the deal the first time Sam sent it to me. I was coming from Texas, which is like, you know, the mecca of trailer making. There's so many manufacturers in Texas, good ones, had some buddies I knew that had family that were kind of in the leadership levels of these companies. And it's very cutthroat, race to the bottom type thing. But not for this. You know, that's for trailers you can go buy at a dealer for this like super customized commercial account stuff. It's really regionalized and like we're the one for southeast United States.

Host: And is there, I imagine there's maybe some nice recurring characteristics to this. So you, you design a trailer for your customer and then they're coming back to you every year for another hundred, an order of another hundred. Something like that is. That is what is the recurring nature of the business, if any look like.

Guest: Yeah, so when I bought it, it was a 50, 50 split of commercial accounts really. And then like dealership work still. So kind of living in both worlds and not doing the best that either one of them. So I cut off all the dealer work. You know, within the first month we had 15 dealers in the state of Florida. I went and fired them all. And my whole strategy was.

Host: And John, what do you mean by. What do you mean by the dealer network? Like what were these dealers? They're elaborate on what that looked like.

Guest: Yeah, making a stock type trailer, if you will, and then selling, you know, 100 of them a year to a particular dealer and then they sell them to customers. Come in like a car lot. Oh, this is an express trailer. Is not what express did anymore. And the business just hadn't caught up to it.

Host: Okay, so it's not what express did anymore. But you had these relationships in place. It sounds like a bold decision to go and fire all 15 dealers, which I think you just said is represented half the business.

Guest: So.

Host: Yeah, talk to me about. Yeah, basically talk to me about your transition. So when you acquire the business, you go in day one, you know, talk to me about the first 30 days and then get into this, this particular decision and when that happened and how you had the confidence or whatever to do it.

[30:09] Guest: Yeah, well, the day to day didn't change for the employees because the two VPs that were running the company under the absentee owners were still running the company. So I was, you know, an absentee owner in person, if you will. I threw a standing desk in between their two desks and said, I'll be here most of the time. So from day one, I got to just work on the company, you know, on the business, not in it, like everyone says. So just death by a thousand spreadsheets and cost analysis and stuff, you know, because you have to sell these dealer trailers at a wholesale price for a dealer model to work. You know, we're losing money on every trailer that sells to a dealer and then making great money on all the business account trailers. So it was as easy as, well, let's just stop doing what we're losing money on and do more of what we're making money on. And that's, you know, that's what we did to simplify a decision down to that Barney level. That's all it came down to.

Host: You were literally losing money on every trailer that you sold through these dealer networks.

Guest: Yeah.

Host: And now does that not make you the two people running the business? What were their titles?

Guest: So at the time, president and general manager. They're now both vice presidents. No, didn't make me leery. Only because through due diligence, we learned that, you know, the previous owner still controlled everything, and they were trying their hardest to get out of the dealer model for probably the last three years. But the owner didn't want to rock the boat. He was ready to sell. Probably one of the most stubborn human beings you'd ever meet. So they begrudgingly kind of did it. And the crazy part is the business was still super profitable and making money. And I'm glad he didn't change it, because I would have paid twice as much for the company.

Host: Yeah, totally. So. And did you. Had you uncovered this fact about the business that half of it was money, Was losing money, or half of the, you know, it's one of two business lines. Were losing money during your due diligence?

Guest: No. And it's funny, because the reason we are able to buy it, the PE firm that was looking at the deal backed out at the 11th hour because, you know, they said, I just can't tell what they're making money on and what they're losing money on. And, you know, my dumb infantryman take on it was, well, they're making money somehow. So if I can find out the ladder, you know, this is only going to get Better.

Host: I always wonder about absentee businesses where there are, there's management in place and you know, it's like, why wouldn't one of those managers have acquired the business? Now maybe they're, maybe they're just, maybe less entrepreneurial. Maybe they don't have the financial means to do it. But you didn't have financial means either and you made it happen. And you know, you imagine that they already feel a lot of ownership in the business. They know everything about it, they've been running it. So they just seem like the best possible candidates to buy the business. Maybe, yeah, I just always wonder about that. Maybe they don't realize they can. Maybe they don't even know the business is for sale. But. So if you could address that, go for it. But a follow on to that is like when you come in as the new guy, are they welcoming you or are they like, oh, I, you got, you know, I should be owning this business. Like what, what, what's the dynamic there?

[33:24] Guest: So actually one of the vice presidents who kind of runs the day to day office, managerial side of the house is the son of one of the previous owners. And then the other vice president was their first hire. So he's been there 27 years. But between the two, you know, the one that's been there 27 years, his only dream is just let me make trailers, give me the supplies I need to make trailers and I don't care about what they cost, you know, no interest in the business side. Just you give me guys and material and let me do my thing, which I love.

Host: Okay.

Guest: And then the previous owner son, combination of, you know, not wanting to get tied down to the family business for another 20 years, not knowing how large of a business you can buy with how little money, utilizing the sba. Yeah. And then just, you know, buying, physically buying a company from a former, a family member, you know, that could go, that could ruin a father son relationship pretty quick. Totally, totally. But you know, coming in day one, you know, besides just being very self deprecating and, you know, it helps I know nothing about making trailers because I can't get in the way and having all these new ideas to kind of drive the company forward and just letting them do all the things they've wanted to do for the last three or four years, they're happy, re energized, you know, ready to go.

Host: So the way you've kind of positioned yourself is because it's kind of like you'd. There's always this question of credibility. A new, you know, A searcher comes in, buys a business that they might not know anything about, and they probably have some insecurity. It's like, is anybody. Do I have any credibility here? I'm buying this business that I kind of know nothing about. And you didn't make any bones about that. You didn't try to pretend you knew. I mean, you were very transparent. I know nothing about trailers, but you did say, I guess I'm business oriented and I want to grow this thing, and that's where I'm going to invest my energy. And that seems like that compensated or more. I mean, it sounds like they were very receptive to that. Compensated for your lack of knowing anything about trailer manufacturing is fair. Is that. Does that sound right?

Guest: Yeah. And the way I framed it, too, is, you know, I own the company, you guys run it. You guys have been running. You're going to keep running it. And it was a lot of easy wins up front because I just said, what. What do you guys need? What have you always wanted to do? How much money do you need to do these things? Like, tell me what's your plans? And, you know, they came up with 95% of the stuff we've done. My analogy I use is, you know, I took over like a battalion commander of rock stars that have just been held back by leadership. So it's easy to be a standout commander when all you do is say, okay, you tell me what you need, I'll give it to you, and I'll protect you from everybody outside the company. You focus on, you know, you look down, I'll look outside, and you guys rock and roll. I'd rather, you know, I told them day one, I want to pull you guys back instead of pushing you forward every day. So I'll let you guys know when you need to rein it in. And so far, they haven't crossed any boundaries.

[36:29] Host: So that sounds like a dream. Did you do. Did you diligence the management team? Like, did. Did you have a. Did you realize they were all stars when you bought the business?

Guest: Yeah, so we did. And, you know, we wouldn't have bought the company if both of them hadn't stayed. And that's really hard to enforce, obviously. So it's a big leap of faith at the end. And we weren't allowed to meet one of them until the day before closing, the guy that had been there for damn near 30 years. But they both wanted to remain on, at least fill me out. So it also helped that, you know, pretty much everyone was underpaid at the company. So there was enough money there to come in the first six months, give everybody pretty significant wages, wage increases to bring them up to what they probably should have been at for the last five years. So just a bunch of T ball easy wins set up for me all around the company. I just got to smack for a home run within the first 90 days.

Host: Yeah, man, you, you really are making this seem easy. Were there any, was there any bad news? Were there any big challenges when you got in there, like, give us some, some negative stuff here?

Guest: Yeah. So this is why I almost hate doing the podcast, because it sets like unrealistic expectations up for searchers. But no, like Covid, they were able to stay open. We kept employees, we still everything. Prices went up probably 30% across the board for all of our inputs. Steel, aluminum, tires. We raised prices the same amount. And customers haven't batted an eye. We are, you know, basically our production board for this year is already full. We're taking orders for next year. Customers don't care. It's, we don't have a sales team. They never have no advertising. The phone rings and some company says, I like what you guys do. I saw you at a trade show. Can you build me 50 trailers next year? And we kind of say, I guess, I mean, we'll fit you in. So it's, it's been, you know, most people would say, I'm waiting, another shoe to drop. But you know, the way I take it is it was easy, man. Why isn't it, why isn't everybody doing this?

Host: Yeah, you know, I, I, I wouldn't want to touch manufacturing myself. But people, people ask me in my own search, like, what kind of, what kind of business would you want to buy? Will and I, and I always say, well, it often, it often is determined by who I spoke with most recently because I'm, you know, the stories are so cool. I mean, this is such a perfect example. It's like, now I want to go out and buy, you know, a trailer manufacturer given, given the experience you're having. But you actually, you too had not wanted to buy into manufacturing because generally manufacturing doesn't have a great profile among, for, for searchers. But you did anyway because you like this deal when you learned about it. But what, what have you found now? Owning a manufacturing company about, like what Any kind of, in retrospect, any thoughts on buying a manufacturing company or something you might advise, advise searchers on this question?

[39:28] Guest: Yeah, so the biggest thing I learned, if you're looking at the smaller deal size, you know, These companies below a million in EBITDA that are labeled or listed as manufacturing is at that size, probably half of them that say that are actually fabrication. So you think manufacturing and the reason you don't want it is because you have these big giant pieces of equipment that are $300,000 to do, you know, press Widget Y and Widget X. And if it goes down well, you know, that capex set aside, you need just to keep those machines up. When we manufacture trailers and our most expensive piece of equipment is probably, you know, $4,000 bandsaw to cut steel. It's handheld welders, handheld saws, it's an assembly line if you will. But guys working with a tool in their hands. So it's manufacturing, but really like mass fabrication. So the CapEx is, you know, our two BP take home trucks is honestly our biggest capex expense to keep track of. So and I saw several businesses like that during my search down here that were manufacturing businesses. It's really like 10 guys with a bunch of welding and plasma torches in their hands. So I definitely wouldn't shy away from it. I would look into the company, especially if it's at that price range. It's not going to be some giant manufacturing behemoth. And then we buy in enough bulk obviously to still be able to get steel and aluminum and you know, the inputs that scare people off from a manufacturing company. So it needs to be small enough to be affordable, but large enough to where they start putting the screws down because of supply chain customers are not supplying. And we're closer to the top of that list because we order by the truckload and not by the crate. So it's a balancing act there, but it's definitely doable and there's pretty good margins in the right manufacturing space. In small business.

Host: This distinction between fabrication and manufacturing, is that a John Hubbard distinction or is that one that people in the world of manufacturing adhere to? And like that, that's a pretty. Well, that's like an industry different, like definition.

Guest: Yeah, no, so I think that would definitely be a John Hubbardism if you just said that. But then if you explain what you meant, I think people in the small business manufacturing would say, oh yeah, you're right, you know, I get what you're saying. Okay, because I have highly skilled, you know, $22 an hour guys manufacturing a trailer versus someone that might have a manufacturing business with a hundred eight dollar an hour employees that press the same stamping machine all day long. We're both manufacturing, but you know, they're not fabricators. My guys are so, so that's the difference. And it's a great, you know, barrier to entry for me and what I do because.

[42:09] Host: Because your labor, your workers, your employees are more specialized. More.

Guest: Yeah. Skilled, skilled, talented guys.

Host: Skills. Yeah. Cool. John, we're bumping up here on time. Still got a lot I'd like to ask you but. What? Tell me the. So you cut off the dealer relationships. So this big decision, tell me what this did and so what the business looks like today versus when you bought it a year and change ago.

Guest: Yeah, I mean stay in tried and true to my no dumb questions. The worst they can say is no mentality. I said cool. We just took, you know, half of our production board for the year. I just dry erased when I fired all these dealers. So we need to refill it. Call every business account we have and ask if they want more. And you know, 50% of them said yeah. One customer, you know, went up five times their normal annual orders, you know, from like 30 of these to 150 of them. Just because we said we have the capacity. Do you want them? Oh yeah. By the way, we're raising prices 35% but if you lock them all in for a year, we'll give you, you know, a discount. So we've kind of switched to a stocking program thing. I give these guys discounts, but they give me their production orders in September of the year prior. So the goal by next year is to have our entire 2023 board full before the year starts. And we almost have, you know, 2022 full right now and we just hit April. So the goal is to be nothing. 100% commercial recurring accounts. Their trailers come off the lot turnkey. They have to worry about nothing. We can deliver it straight to their end user customer if they want. So it's great. Fire and forget business and just doing that. You know, these trailers go from a negative profit margin to around a 40, 45% margin per trailer. We have less guys. We in Q1 of this year, we have less employees, made less product, bought less inventory. So our cost of goods was lower and made more money. And we'll just keep doing that as long as we can.

Host: I love it. I love when one tweak, I mean it was more than a tweak, it was a big change to the business. But where one decision can just dramatically change the trajectory of a business or take it up to the next level like this, it's great. So what was revenue when you acquired it and annual revenue and what will annual revenue be for 2022?

Guest: Yeah, so when we required it, when we acquired it, sorry, they had just done 4.9, we did 5.6 last year. We'll probably for this year not do much higher than that. Probably right around 6, but on that 6, almost double EBITDA just because it's a, you know, I tell, you know, Dan, my, my VP all the time, like I don't care about revenue at all. I care about the two margins. Give me the gross margin, give me the net margin. If we can make you know, $2 million a year, but do 2 million in EBITDA, that's a better year than doing, growing to 12 million in revenue and still only doing 750 in EBITDA. So we'll continue to grow slowly just with our kind of soft orders and run rate we're at now, I mean we're gonna accidentally probably turn this thing into a 12 million dollar revenue company by 2024 just by increasing, increasing our margins and you know, almost firing customers to keep the customers we want. Because we set our margin, this is what we're gonna make. And that's how we dictate the price of the trailer. And they either say yay or nay. We don't do any market analysis, check our competitors because we really don't have any.

[45:57] Host: John, I gotta, I gotta let you go on that, on that note, unfortunately, but two questions. First is just any thing you'd advise other searchers out there. Yeah, you're so, you're so humble. You know what you are? You're humble but extremely confident. You're like, don't work very hard, you know, not, not a genius, but I can do anything. Yeah, you know, that's pretty an interesting combination. Go ahead.

Guest: Yeah, I told my wife, I said, you give me the CEO job at Pepsi, give me 90 days to figure it out. I'm sure I can run Pepsi. Like it's. But that's how I've, you know, that's how I got my wife is irrational self confidence. So it works. But in that vein, like just ask. I, you know, I go to these conferences and stuff still for searchers and potential searchers and stuff. And people leave not knowing so much more than they could have just because they're afraid to look dumb. You know, I'll plop down and have a beer, be bragging about my little 2 million dollar, you know, trailer company and walk away and someone would be like, oh, you know who that is that, you know, they sold their business for 250 million. And now they're an investor and it's like, okay, cool. You know, he had a terrible shirt on. Like, we're all just normal dudes. Just ask questions. And, you know, and now from asking all these stupid questions for the last four years, people call me twice a week now and searches are asking me questions, you know, so you go from the guy they're laughing at to the guy they're asking advice from, and you have to not care. Just really don't care.

Host: Cool. Well, that sounds like not searcher specific advice, but just good life advice. John, how can people get in touch with you if they, if they, if they want to be the third or fourth call of the week asking, Asking

Guest: you questions, you can. Bluecourtcapital.com I kept that up. I really only made it as my search fund vehicle and left it up afterwards just so people can get in touch with me. And eventually one day I will use it for, like, my portfolio of the seven companies I own. But yeah, bluecorecapital.com or john@ Bluecore Capital. And like I said, I, I answer anybody, I talk to anybody. People call me and ask me because I'm so open. Like, what was your credit score when you applied for your SBA loan? Like, do you smoke? Like, I'm taking a life insurance exam that's required by my lender, and I smoke marijuana. Like, what do you think? You live in Florida, right? So there's no questions, off limits. I'll answer them all.

[48:19] Host: Cool. Well, audience listening to this take. Take John up on that. As you can tell over and over again from this interview, he is indeed a very open guy. Really fun to talk to somebody so open. John, thanks a lot for your time.

Guest: Yeah, absolutely. Sam.