Host: Sumana Sanjeeva bought an E commerce business, then sold it one year later for over $5.5 million. Five times what she paid for it. What an incredible return. And if that weren't enough, Sumana was a novice. She'd never even seen inside Amazon's Seller Central before taking the reins of her newly acquired FBA business. But as you'll hear, Sumana did make a few wise, very deliberate decisions that belied her inexperience in E commerce and proved fundament to this wild success. Another element to Sumana's story, she had owned three franchise locations before getting into E commerce. So we delve into her thoughts on brick and mortar versus E commerce, a topic that I chew on myself a lot. And lastly, this is an immigrant success story which I have a soft spot for. Sumana and her husband arrived in the US 25 years ago with $70 between them. From that to acquiring and then selling a business for over $5 million. Not bad at all. Please enjoy my conversation with Sumana Sanjeeva. 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. August Felker is a two time successful searcher, first with a traditional search fund. The second time around he did a self funded search. Today August runs Oberle Risk Strategies, an insurance firm with a dedicated practice group for searchers and acquisition entrepreneurs like you. If you've got a business under loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. A great no risk way to get to know August and team. They love helping searchers. They've worked with hundreds. Oberle is a specialty insurance brokerage for searchers by a former searcher. Check out oberle-risk.com O B E R L E- risk.com link in the show notes. Sumana Sanjeeva, thank you for joining me today on Acquiring Minds.

Guest: Hi Riol, thank you so much for having me.

Host: Sumana, you bought and grew and sold for a substantial profit, an E commerce business and part of your ability to do that was playing your cards right. As Covid started ramping up and all the supply chain chaos started happening and we're going to get into all of that, but let's start with a little bit of personal history. Sumana, so take us back 25 years, which is when you and your husband were still in India but made the decision to move to the us. What was behind that decision and where did you arrive first? Here in the U.S. yeah.

[3:05] Guest: So 25 years back, my husband actually got a job here. He got a project and I decided to follow him to the United States. And you know, just kind of, we, we started, you know, traveling from India with $70 in our pocket. We landed here with $70 in our pocket, you know, and, and landed in Atlanta, which was a lot of fun.

Host: Okay, and you're in North Carolina now. So you weren't, you didn't stay in Atlanta, did you? So Atlanta from, how did you get from Atlanta to North Carolina?

Guest: Atlanta? Actually we landed in Atlanta because my sister in law lived there. Since we didn't have a place to stay when we landed here, we stayed there. My husband actually had his project in Boston. He went there and kind of found a place for us and then I joined him there. We were there for about nine years and then, you know, again, again followed my husband down here because he, his boss moved here and he got, you know, his job, moved here and came, came down to North Carolina. Okay.

Host: And meantime you start your own career. What, what, what do you find yourself doing?

Guest: So yeah, as soon as I was eligible to work here, I found a job as a teller. I tell a position because I didn't know how, where to start, what, you know, what to do. But I found myself at an interview where I was offered a tailor position and I thought it was great. I was going to get minimum wage and I was very excited to just get out of the house and go work somewhere. And two years from that I actually became so from being a teller to, you know, in two years I was a branch manager. Did that for a good bit of about nine years or so. And it was, I think a lot of that, what I learned with customer service skills and the organizational skills and a lot of the things that I feel that I'm using today in my business, I feel like I learned through those years.

Host: So you were a bank manager then from bank teller to bank manager for. In nine years as a manager or seven years? Seven years. Nine years in total at the bank?

Guest: Well, nine total and then seven as a branch manager.

Host: Okay. And you have a child during this time?

Guest: One child I had. So before I started my career as a teller, I had my first one and you know, and she was 1 years old and I was, I was kind of like she was getting a good preschool life and I started my career there. Then I took a break because I was having my second child. So she, at that time it was, I couldn't Bring myself to kind of go back to work after, after the break and took a break then of about three and a half years. I was home with her and I spent time, I get to spend, you know, I got to spend time with my older one too. So, you know, that was a good time.

[6:38] Host: And yeah, okay, so you're a family of four at this point and then eventually you're, you're, you're on your, your track as a bank manager and then you, your. I think I have this right. Your first entrepreneurial endeavors are a learning center franchise, is that right? Tell us.

Guest: Correct.

Host: Tell us what? That. I don't, I've heard of that. I don't know what it is. Tell us what it is. And also tell us like what inspired that. What, you know, what was all that all about that story?

Guest: Yeah. So after my break, you know, about four years, I was thinking about going back to work. My younger one also was also in preschool and I felt like, okay, I think it's time for me to go back into the corporate world. And I started, you know, I started applying for jobs and my husband was like, I think you should start a business. And I was like, what makes you think I can, you know, run a business? And he's like, I think you're, you're going to do good, so I think you should start a business. And, and he always had that somehow. I think he always wanted to do it, but you know, he was like, no, I can't quit my job and do any of that, so you go do that kind of thing. So he was telling me to start a business and one of my neighbors child was actually going to a learning center, which their curriculum was really, really good. And I was like, why don't I look into that franchise opportunity? Because the closest center to this location was a 20 minute drive. So, you know, I was like, okay, there's none in this area. So let me go ahead and get started, you know, with the application process and things like that. And I do believe like a lot of that process that I went through, it was so enlightening and kind of so much of a learning process there.

Host: And so what a learning center is, is sort of an after school or weekend supplement to school.

Guest: Yep, yep. So it was a after school math and English learning center is what it was called. It was called I level learning center. And basically that, that career, you know, it was a, it was a great first step into the entrepreneurial life. But also, you know, after a few years of doing that, I started to realize that, wait, when my kids are coming home from school is when I'm actually out there, you know, running my business. And yes, I'm able to help a lot of kids, you know, can do well in school and things like that. But when it comes to my own children, I'm not here, you know, helping them, working with them, spending time with them. Because by the time I came back home, it was 8, 30, 9 o' clock in the night and they were already in bed.

[9:37] Host: Because the hours of the learning center, of course are the exact opposite hours of when kids are in school. So.

Guest: Right, exactly.

Host: Yeah, yeah. And so, and you're not doing this on the side. This is your full time thing at this point. So you are no longer a branch bank branch manager, you're doing this full time. Okay. And, but so, but as a business, curious how, how is it as a

Guest: business, it was actually very rewarding. Meaning, you know, I got to work with kids, I got to work with teachers and everything. Also operationally it was not a very taxing business. But at the same time you needed to have certain operational skills, organizational skills, you know, inventory management and things like that. Which, which was, which I think I had learned through my banking, you know, career. And I started to apply it there. And business wise, it was pretty lucrative too. It was again, we had a number one center in the state. Yeah. So when we started it, because of all the skills that I had learned from the bank, the marketing skills and everything, I applied all of that there. And within actually six months, our branch, our location was actually number one location in the state and number three in the whole country. So it, it kind of gave me a little bit more confidence to go open multiple locations. So I had, by the time I actually sold the business, I had three locations of that learning center.

Host: And each of those you started, you did not acquire an existing franchisee, buy an existing franchisee out, you sort of.

Guest: Okay, yeah, I started them all from scratch. Yeah.

Host: And so by the time you have these three learning centers, I mean, are you, are you doing pretty well financially? I mean, those are three independent businesses. Is it, is that, is it, you know, if the, if one by itself is pretty lucrative, then I imagine times three gets even more interesting.

Guest: Yeah. So it was. So to start off, you know, I invested about $60,000 and I would say I made those, I made that 60,000 back within the first six months. And then after that it was all pretty much profit that was generated that was coming from that and it was in good six figures profit. Great.

[12:17] Host: That's Great. Sumana. Okay. But you decide that it's keeping you from your kids. And, and so is that, is that the primary decision that you. The primary reason that you decided to take the decision to kind of exit?

Guest: Yeah, that is correct. Yeah. Because when I decided to do that, it was purely because my older one was going to go to college in a couple of years and my younger one was starting to kind of feel a little upset that, you know, I would. I was never home when she came back from school and just, you know, it just, it was one of those things. And my older one too was like, you know, I'm going to college in a couple of years, but I never get to see you in the evenings. And it was also open on Saturdays. So I was busy on Saturdays till 3 o' clock in the afternoon. So most of the weekends are all were also tied up, you know, running that business. So my pure, you know, the decision was purely made on that basis of I wanted to spend more time with the kids and family. Yeah, sure.

Host: So what did you decide to do? You, you, you, you knew, you knew you needed to exit. What was your plan? To exit and then do what?

Guest: My plan was to exit and not do anything. Just to kind of stay home, be a stay at home mom and be a homemaker and just, you know, kind of do that for at least a couple of years and then start to maybe look for, you know, look to do something, something else. And that's really what the plan was. There was no other plan at that time.

Host: Okay. And did you expect to be able to sell these franchise locations for a good amount of money? Like was there kind of going to be a big financial outcome here? What did you expect on that front?

Guest: Yeah, we, I was hoping for a good mid, mid six figures and that was the hope. And I started that process and I actually went on, I tried to sell it on my own and it did not work out because, you know, it was all a lot of people that just wanted information. Right. So someone that I knew, the franchise director actually suggested I go on this by sell to list the, you know, list the franchise. And really that's kind of how I tried to do that. But you know, life had different plans for me.

Host: And what plans were those? So what actually ends up happening?

Guest: So I actually went on biz buy sell to list this. And before I could get through the process of finding out how to list this, a shiny object actually caught my attention which said, and work from home and earn this. I think the SD was $350,000 and it's like work from home, less workload and this and that online sell on Amazon. And I'm like, what is this? How can I work from home and still make this kind of money? Which I was making, you know, having three locations or actually I was not making that much. Even with three locations, it wasn't that much. And I'm like, that's just cannot be. I thought it was one of those, you know, work from home gimmicks that was out there, but it was still, you know, I was still kind of intrigued. Like, what is this? What could this be?

[16:00] Host: It seemed too good to be true, but if it were true, this could be amazing. Okay, so you click.

Guest: Yep, yep, yep. I clicked on it and I filled out, you know, that, you know, fill in your information and somebody will contact you form. And you know, somebody actually did contact me and I was like, oh okay, this is for real. And the broker actually contacted me and we talked about that business. So the business that I had looked for, looked at, that was already sold. And then he was like, but I do have another very similar business that is being listed. And, and he was, he told me that it's a Amazon business, Amazon FBA business, which basically, and, and, and let me kind of go back to my background for a second here. So I, first of all, Amazon, I've been buying on Amazon for a long time. I never thought that. I always thought when products came to my house, it was Amazon as a company, had a huge warehouse somewhere and whenever I'm buying something it's coming from Amazon. I never in a million years thought it was individuals, there were third party sellers that were actually using Amazon platform to sell things. So that itself was confusing to me. I'm like, what do you mean selling on Amazon? Why would Amazon let me sell on Amazon?

Host: Yeah, no, that's interesting. I'm sure a lot of people kind of go through that process of understanding. It's a good point. Go ahead.

Guest: Right, right, right. So, and I had no E commerce background and you know, technology is not my cup of tea. So I think we kind of experienced that a little bit before we started

Host: this call before as we were getting all the logistics set up here. I think your words were I hate technology. Something along those lines.

Guest: Yes, exactly. And people laugh at me and you know, they're like, oh, okay, first of all, they, they, they automatically assume that I'm in IT industry because I'm from India. And then when I tell them, first of all, I have no connection, like technologically impaired. So don't, don't ask me any technology questions. I like cloud. When they started talking about cloud, I'm like, what's in the cloud? But anyway, so that's not, that's, that's, that's me. E Commerce. I had no E Commerce background. Only thing that I had done on computer was checking my emails and check my bank account, you know, once in a while. Other than that, I hadn't done anything, you know, anything remotely E commerce. So it was kind of like I must have asked a lot of very, very dumb questions to the broker. I don't know why he continued to talk to me because I was, I was like, what does this mean? Amazon, you know, and things like that. So he was very patient, explain things to me. And I, I strongly felt like this is something that I could do. And I, and the thought of still kind of having something to do when I'm home until my kids got back from school was, was like, oh, wow, you know, I should, I should do this because it's not like I'm going to be cooking all day long or anything, but I'm like, I do have time to do things. So, so yeah, I continued this process. Again, we didn't have all that money to buy that business. And then we kind of went to sba, got an SBA loan and the

[19:45] Host: broker kind of helped you understand that. I assume you didn't know what an SBA loan was or anything like that either, and he's kind of walking you through this.

Guest: That is correct. And definitely there was a lot of support from the broker on understanding how SBA worked. And I believe he actually found the person that there was a loan in between loan broker as well. So kind of like, you know, he introduced me to him and then I kind of provided all the documentation. But it was a very risky step that I, you know, again, I still don't know why I did that. I actually acquired the business for 1.1 million at that time. $1.1 million million dollars was not even a number that I could even think about.

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[21:42] Guest: You know, so because I mean we didn't have all that money and just the down payment itself, we had to take everything that was in our savings account to put the down payment. And imagine that conversation with my husband. I'm like, I just found a business for a million dollars that we are going to acquire and we're going to take everything we have in our savings account, put a down payment and we're going to use our house as collateral. So about, you know.

Host: Yeah, well it's funny because he was the one who recommended that you go into business for yourself in the first place. So he's probably, at this point, he's probably like, oh, what have I done? Why I've created a monster, you know,

Guest: but, but that was, I still, till today, today, you know, I still think about like what made me think that I was going to be able to do this. I think we all have an inner voice and we all have that gut feeling and if we, I think sometimes if we just follow that everything's going to be okay. I think it's going to work out well.

Host: I'm struck because you, it just feels like you really gained a lot of confidence in those years because it was your, your husband. Again, I was joking earlier but seriously, it was your husband who nudged you the first time around to start a business and you, and your reaction to him was what makes you think that I can, can, can run a business or should run a business? So it sounded like he kind of had to kind of pull confidence out of you a little bit. And then fast forward and now you're, you know, putting a, you know, putting your house up for collateral to, to buy an E commerce business. Anyway, it's, it's quite, that's quite a, quite an arc. So that's cool. And by the way, this E commerce business. So you. So, so just to be clear on the details, so you were on bizbuysell because you were looking to sell center Locations. And you happen to see this listing. And, but, but the broker was. Who was the broker for that first listing and then you ended up buying a second listing. But the broker was with whom.

Guest: That was a. His name was Joe and he was. He was with. I'm so sorry, I forgot his brokerage company's name.

[24:01] Host: Okay.

Guest: Yeah, so he was from a. He was from. He was.

Host: But not quiet light.

Guest: He. Not quite like. So he actually, yeah, he was a different broker. And when I, you know, and that acquisition, during that acquisition, he was very patient. He was good explaining things to me. He kind of, you know, pointed in the right direction for the SBA loan and things like that. So it was really a good. He was a good, good broker.

Host: And so you got connected on that. Sorry, you got connected to Quiet Light because you. Then when you sold this business, which will. We're going to get to here, you sold it via Quiet Light. And so that's how you and Joe Valley connected, which is how you and I.

Guest: That is correct.

Host: Okay. Okay.

Guest: Correct.

Host: Okay. So you acquire this business. You. It was selling for $1.1 million, I assume for the SBA loan. It was kind of the standard, what, 10 or 20% down?

Guest: It was a 10% down payment. Yeah, that is correct.

Host: And did you get any seller financing?

Guest: I did for the inventory part of it. I did get the seller financing, seller note for that. And it was a five year seller note as the same interest rate as the SBA loan.

Host: Okay. And I believe you're not comfortable sharing with us what the business actually sold. Or can you.

Guest: When I acquired it.

Host: Yeah, like what the business was selling. What was the business. Can you share what that is or.

Guest: Oh, it was. It was actually board games.

Host: Oh, okay.

Guest: Board games. Yeah, it was.

Host: And so. But it wasn't this. The. The owner of this business hadn't created a board game that they were selling themselves. They were selling already. They were other board games that were already.

Guest: Right, right.

Host: So kind of a reseller of board games.

Guest: That is correct. Yeah. So it was kind of like similar to chess boards and things like that. I can give you the exact specifics since I don't own it anymore, but, you know, but yeah, so that was board games business and I acquired it in February of 2020 and. Right when Covid was starting to be a thing. That's right. And. And yeah. Yep. And you know, to be honest with you, at that time I wasn't sure because A, I didn't know anything about E Commerce, B, I didn't know anything about the board game that, that was being sold. And, and then at the same time, it's kind of one of those things. I was not sure, wait, products are coming from China, but if China is shutting down, how am I supposed to get the products? How am I supposed to sell all these units that I'm supposed to sell to make this money? So if the supply chain was going to be an issue, then I wasn't sure if that was, that was kind of going to be my, my, my deal breaker of like not being able to get the products. Um, but somehow, you know, in the back of my mind, you know, it's, it's a, it, yes, it's a virus, but it's. How long is it going to be there? In my mind, it was going to be like a, you know, three month, six month thing. It was, I was, I never thought it was going to be this. But for me, it's, it's, it's following my instincts. My gut feeling is, has always paid off. Something in me said, you know what? You should do this. You should do this. And I continued on. I went on and I was like, you can. I'm gonna make a good plan where I'm not going to be running out of stock and let me go ahead and take this leap, is what I thought and kind of jumped in at that point.

[28:14] Host: What are you referring to specifically? What leap is that

Guest: leap of buying that business? Because I wasn't sure what future was holding with this Covid situation.

Host: Oh, Covid had started happening even before you acquired the business. So you're negotiating to buy the business and Covid is starting to pop up in the news.

Guest: Yep, yep. Because the first cases in Washington state with the nursing homes had already had started by then. China was actually going, and it was actually. They were about to shut down. There was talks about China was hit really hard with COVID and we didn't know what was going to happen. They might need to actually do something drastic to stop. So, yeah, there were conversations about all kinds of things happening. And of course, a few days after I acquired the business, that's exactly what happened, was they went into shutdown. China was in shutdown mode. So it was just one of those things that I honestly didn't know how to handle that. But then I sat and kind of, you know, did some calculations and I actually, I make it a point now that I'm, you know, doing. I've been doing this is I talked to all of the suppliers one on one, like have a video conference and introduce myself and so that's what I did for, you know, I kind of told them, hey, I want to have a call with you. And when I talked to them, I could see that on their faces that they were like kind of in that panic mode. And it was not. They were almost, you know, there. A lot of the employees had already gone back to their villages and things like that. And I asked them, I said, so what is the situation? And they're like, we. Most of our employees are gone back to their villages. Our factory is going to be shut down in the next one week. We are just finishing up some final things and it's all going to be shut down. And for me, that was very, very scary. And, you know, and two days after that, I told them, I said, okay, you guys take care. All those things. And, you know, back of my mind, I'm like, oh, my go, God. So. And I actually thought about it. And two days later, I called the supplier back. I said, so you are going to come back, the factories are going to start back up. So what is the process then? And she told me, it's going to be first come, first serve. Whoever places orders as we are out, whoever places the order as soon as we come back, we are going to start working on their order first, and then we are going to continue to kind of follow that process. And I said, okay. I hung up with her. And I sat in front of the computer and I kind of looked at. Our sales had also kind of started ramping up a little bit. Meaning because of COVID people were preparing here, they were preparing to stay at home. And already, you know, a lot of companies were starting Hitler to kind of say work from home. All these same schools were shutting down.

[31:47] Host: So is this March now or more like April or when is March? Okay?

Guest: Yeah, it's March. So kind of mid March. We're towards the mid March to end of March. And this is what's happening. And I'm like, okay, so according to how we are starting to ramp up, the inventory that I acquired when I acquired this business was supposed to last until October of that year.

Host: Yeah.

Guest: And I was told I just needed one more container of shipment to make it through holiday season. So that's all I need. I was needing.

Host: You were told this by the seller, like according to previous. Previous sales years, that's what you should expect.

Guest: Exactly, exactly. And because we were starting to kind of. The sales were actually going up, I was like, okay, if this is happening, I kind of did a calculation where my inventory was going to not Last beyond July.

Host: So the sales were. It wasn't. They weren't. They weren't just inching up. They were going up quite a bit. Like you could really.

Guest: They were. Yeah, they were starting to go up quite a bit. And I just realized, I'm like, wait, it's just the beginning. People are going to start getting bored more and more as this goes on. So I kind of did that rough calculation, and then I said, you know what? No matter what, I'm going to need inventory. And inventory is the planning of the inventory is where the payment terms were in such a way where at the time of production, you pay something at the time of shipment, and when they're shipping, you pay something. When it reaches the port, you pay something. So it was not that I had to kind of like pay all at once. So what I did was I kind of came up with a plan of placing an order with them so that as soon as they came back, they were actually going to be working on our order first. So I actually sent her eight containers worth of order the following day, and eight containers.

[33:55] Host: And historically, what had been. You'd just been. You expected to do single containers at a time. So this was eight times the traditional historical order for your business.

Guest: Okay. Wow. Yeah.

Host: Sumana, you know what this. This reminds me of is. Have you ever heard the Warren Buffett quote that, like, you should buy when there's blood in the streets? In other words, when the entire world is. Yeah. So, you know, his thing is, like, you know, you know, most people, when it looks like the sky is falling, you know, everybody gets conservative. Nobody wants to spend money. Because they're all saying to themselves, let's just see how this shakes out. Let's just see how this shakes out. Too much uncertainty. And that's when you should be really disciplined about buying. Because everything, you know, there's. There's opportunities to buy things for cheap. Now he's talking about stocks and equities, not buying inventory for your business. But the same principle applies. You know, a lot of people had E commerce businesses that were seeing the same thing in their numbers that you were seeing, and they were more experienced. You know, you were. You're one month into this business, they're more experienced, they know their suppliers better, and yet they didn't have either the courage or the mental discipline or the foresight to make a giant order like you did. So you were really buying when there's blood in the streets. And kind of you were following Warren Buffett's advice. It's fascinating to Me that you had that courage and that insight. Anyway, carry on.

Guest: Yeah, So, I mean, also the eight containers was more of like, okay, they are going to take one month to produce each container because they need time to put it together. And in my mind I'm like, okay, if we are going to be running out of this stock by July, then by the time they send it out to me and it reaches here, the first container, it's kind of like that math that, you know, like in Joel's words, you know, math and logic. Right. So it's like, think of all the things that can happen and also need to visualize and then kind of think futuristically like, okay, you know, just the calculation of if I have the product on hand, I'm going to be making $12 in profit per unit. But that, you know, it's. But at the same time, if I don't have that product in hand, which I'm only going to be. Even if I had excess, I would only be paying 7 cents a month per unit to store it in a, in a storage facility. Right. But if I didn't have that product, then I'm actually losing that 12, $12 in profit because I'm concerned about that 7 cents of storage cost, you know, So I think that's kind of where

[36:44] Host: I was like, you know, great way to look at it.

Guest: Yeah. I was like, okay, you know what? Even if I held onto that product or that unit for six months, even if I didn't sell it right away, let's say things slowed down, my calculations were wrong, and it, it's taking me instead of taking, you know, two weeks or a month to sell it, I'm. I'm selling it in six months. It's still 6 times 7 cents for that unit. But if I don't have that unit, then I'm losing 12 cents. I mean, $12 every time I'm not selling that product. So that's kind of what my calculation was. And I think it was just like, let me just go ahead and order eight containers. That was one thing. And also, you know, that kept my competitors out too, because I, I had placed the order, so they were kind of bound to like, send me my eight containers first, which was eight months. So for those eight months, my competitors were not getting in there to order products. So it was kind of like, okay, everything works out.

Host: Yeah, it was a master stroke, Sumana. I mean, this was a life, frankly, if you play this forward a little bit, this was a life changing decision that you made. Because as we'll see it set up your business for success and, and then other things happen. But so, so let me just get into the E commerce weeds for a second. So your competitors all, so your like competing products are all buying from the same supplier. So is that often how it, how it works in E commerce? Or like Amazon fba, where everybody's getting something from the same supplier and just putting their name on it? Is that how it works?

Guest: Yeah, a few of them would be doing that. A few of them would be buying from the same compute or same supplier. Yes. For each product there are multiple suppliers, but then you kind of can tell with some details of the, of your product that, hey, this person is also buying from my supplier. And suppliers in China are good about not letting other people know who they sell to. So. But you can kind of identify, you know, when you're looking at other products, because they want it or not, they have certain things on there that you can tell that it's coming from the same supplier or you might have made a change on something, you might have requested a change, and then you start seeing that same exact change on something else and then you're like, oh, that person's buying from that because they mass produce it kind of thing.

[39:21] Host: Sumana, going back to your decision to buy the business and any sort of due diligence you might have done, did you, I assume you like, went to Amazon and looked at the product listing page on Amazon.

Guest: So. Okay, no, I, I, yeah, that's, you

Host: know, we can, we can cut that, we can cut this out if you want.

Guest: I know it's, it's kind of, and, you know, almost like an embarrassing story because, and to be honest with you, when I was acquiring this business, I didn't do any due diligence, meaning I didn't even have access. I didn't look at the backend. I didn't know seller central, which is the actual backup, you know, the backend selling for Amazon. I hadn't looked at the seller central. I didn't have access to any of that. And I actually didn't even talk to the seller until the day after closing. And which is which I realized afterwards that it's very unusual because when I was actually going through the process of selling my business is when I realized, oh, wait, I didn't do any of this when I was acquiring the business. And thank God, I mean, it's just one of those things. I lucked out that I was dealing with the right people. And also my saving grace was the SBA loan to be Honest with you, because SBA did a deep analysis of the business. They did a deep dive into the business and they did a good. They hired somebody to do a market analysis. They hired a company who was comfortable with the whole E commerce side of it and they actually gave a good 89 page or report on the business. Other than that, really, to be honest with you, I didn't do any usual due diligence that is, is, is done while acquiring an E commerce business. So that is one thing that I would, you know, I would actually suggest anybody looking into acquiring a E commerce business for the first time to really watch some YouTube videos about due diligence. What all you should be doing, how to do the due diligence for E commerce, because it's completely different from a brick and mortar business acquisition or sale. This is a whole different scenario. So there's a lot of things that needs to be, that could be done to make sure that this is the right business you're acquiring.

[42:11] Host: And now that you are, you know, once you get into the business and you learn all about, all about it and the competitors. Did you buy a business that did. Yeah. Did you buy like an FBA business that was strongly positioned against its competitors? Was it one of the leaders in its category or just kind of in the middle or, you know, how competitive did you end up finding this space once you were in it?

Guest: Yeah. So luckily the previous owner of this business, he, he, he's actually, he's a, he's a, he's a creative guy and he was, he actually had launched this product first on Amazon. So, you know, we were actually positioned really well. We were number one seller for that product. So you know, like review mode and things like that. It was really good. So that was actually, that kept us in number one. And of course, you know, the inventory that was like fired. I purchased and things like that. Throughout the year, we actually did really well up and wood. You know, it went great. And I learned I actually got like a crash course in Amazon. Meaning, like, because from the day I started to how quickly it was growing and how quickly I had to adapt and how quickly I had to learn ppc. I mean, you know, they were throwing words at me like we had a managing, you know, PPC management company. They were talking about ACOs and tacos and things like that, which I had no idea what it meant. And I was constantly Googling as I was on the, you know, calls, I would be like, what is acos? And how do you, what is this acos? And they're like, you know, how do you spell that? I'm like, putting that in there and trying to, like, understand things. And it felt a little overwhelming because it was just growing so fast. And I was, I was. I almost felt like, am I doing everything I need to do? Am I missing something? Am I doing something wrong? There was no time for me to actually sit and think, am I doing something wrong? And everything was like, okay. We had logistical issues where the warehouse was in New Jersey. The time for products to come from China to New Jersey. It was taking a good two months, two to two and a half months. And I was like, in the meantime, we are going to run out of stuff. So what do I do? The next container, I'm having it come to la. I'm finding a warehouse in LA to send that to LA and switch the whole supply chain, the logistics for that to go to. So it's like I'm doing everything so quickly that it was just like I didn't have time to sit and think, is this right or wrong? But, you know, and I reached a point, I think towards the end of that year, it was where I had actually started getting calls from aggregators asking if, you know, if I was ready to sell the business.

[45:24] Host: And, and at the end of 2020 or 2021.

Guest: At the end of 2020.

Host: Wow. So. So less than 10 months in the business, you're getting calls to sell. Okay, yeah. And, and, and, but Sumana. So let's just back up a little bit to the. Your big decision. So you buy the eight. You buy the eight containers. Containers of inventory. And so you're delivering product throughout Covid. As this demand is surging, everybody's at home. You've got a perfect Covid product and you're just. You're delivering, delivering, delivering. And so business is going great. I mean, it's growing. You know, you're paying down your SBA loan fast. Maybe you're not paying it down at an accelerated rate, but you could if you wanted. Okay. And. Okay. And so was there anything else in between there or. Basically, that's.

Guest: Yeah. To that point, I just wanted to say all of the money that we were making, I was reinvesting in the inventory. I was actually not taking any money out of it because, remember, I had placed an order for eight containers. Right. So as we were getting money from the business, you know, the revenue was being generated that I'm taking, I was taking, and I was putting it towards inventory because we kind of. It's kind of like that cycle that you go through, right? So initially, you, especially since you're selling so much, you constantly need inventory. So yes, we were making profit, but I was putting it back into the business. So in E commerce business, that's what I, that's one thing I have realized is it takes a good, good few months for you to take money out of any business that you acquire because you, you acquiring because you want to grow it. The only way you can grow it is reinvesting into, you know, that business. We cannot take money out and still expect it to keep growing kind of thing. So it's kind of one of those things that I have. I quickly learned from that and I did keep. So in SBA loan, I was just paying the regular amount, but I was reinvesting all of that money.

Host: And you know, you hear this a lot about E Commerce. It's, it's one of the great weak points of E commerce, something that people complain about and, and, and so just so, so we understand. So like let's say, let's use arbitrary numbers. Say you sell $50,000 of product one month, and let's say whatever $10,000 of that is, pro is profit, gross profit from selling a product, you know, and your sales are rising. So next month you're expecting to sell $70,000 of product. So the 10, so the 10 grand that you've made, you need to put right back into acquiring enough to deliver the 70,000 the next month. So I guess the idea is that you need to grow the business such that you've got so much volume that you have, you can take out an additional five or $10,000 a month. Hopefully $10,000 a month at least to earn kind of a respectable salary that could just go right into your pocket to pay you salary to earn, let's say, $120,000 a year. But for you to have that and that excess cash that, so that every single dollar doesn't need to be reinvested into buying more inventory next month. You just need a huge amount of volume. Volume.

[48:54] Guest: Well, actually, that's the game.

Host: So you got to get, you got to get the volume of your E Commerce store. Go ahead.

Guest: Yeah, you have a bit of a delay actually building a inventory base of how much it is that you want to grow your business. Because I can, I can still take money out, let's say, let's just say I didn't order that. Eight containers of inventory, right? I said, okay, you know what? I have inventory from what I got when I acquired the business, which was significant, which was Supposed to last me until October, right? And I could just continue to do that and just say, okay, you know what, I'm just going to order one more container just to kind of keep going at the same pace. But if you want to scale it, right, without having inventory, you cannot scale it with the same amount of inventory. You cannot grow with the business, meaning you have to have more inventory. So I can kind of go into my current FBA business that I have. When I acquired it, I had inventory, but then I also did PPC campaigns and things like that, and I increased the sales. That means now when I'm as I'm increasing the sales, I need to get more inventory on time. I cannot wait for, let's say I sold one inventory work of one container worth of inventory, then I'm going to take money out of that and then I'm going to buy another container. What happens is in between, you're going to run out of stock because you're waiting too long to place an order for the next thing because you're also taking money out of it. You're taking salary out of it. So you're really not taking that and immediately placing an order. You're actually taking money out of it. And you're saying, okay, whatever the cost of that inventory that I spent for that container, that's the money I'm going to take and buy another container, then what's going to happen is in between, you're going to run out of stock. That means your rankings are going down. All the PPC money you spent on, you know, gaining momentum on that campaign, all that will be gone. So you had to restart all that all over again. So you're going to end up not making a good bit of profit in each container. But if, let's say I have this container, I take that and I take the cost of the goods that I have, you know, I have, plus my profit, and I immediately place an order even before that container is sold, and I'm getting the next container before that container is sold, then I have that, that good process where I'm not running out of stock. That means I'm staying up in rankings, my reviews are going up, my PPC campaigns are doing well. So it's kind of the flow needs to keep happening up until one point where you're like, I'm three containers ahead, four containers ahead, now I can start taking money out. Everything that's coming then is going to my pocket, except for the money for the product, right? So the cost of the product now I'M reinvesting into getting more products. So up to a certain point, you'll have to do that where you're putting the money back into the business. It's like any other business. Right. So you can open a brick and mortar business and expect to start taking salary next month. You're gonna have other expenses until you start making that, you know, that money, the profits and things like that, even that you have to put back. Like my brick and mortar, I had to buy books and tables and pencils and erasers and things like that. So each month I was investing into. Okay, last month I couldn't buy, you know, dry erase markers. This year, this month, since I have a little money, I'm not going to take that salary. I'm going to invest into buying dry eraser markers. Right. So it's kind of one of those things that you have to do to a certain point. But if I said, you know what, dryer markers are not important, let me take a profit, then your quality of service is going to suffer. Your teachers are not going to be happy because they don't have the right tools to work with. So it's kind of one of those things where, you know, there is a point where you can start taking money out, but if you start taking money out too soon from any business, I feel like the scaling doesn't happen as much as you would want it to happen.

[53:34] Host: Yeah, no, that's a great analogy because I think of E commerce. The cash flow cycle of E commerce is kind of particular to E commerce and really annoying. But in some ways it's like you said, it's kind of the sunk cost of getting a business's momentum going. And you don't take out money out of the business too early.

Guest: Yeah. And because we deal with containers here. Right. So regular other businesses, we deal with smaller things. But with E commerce especially, we deal with, we bring products in containers. And a container is a lot of product. Right. So each container, for the board games, each container would have 10,000 pieces in it. So which is a lot of pieces. Right. So you have to pay for all of that and getting it here. So we are talking big containers.

[54:31] Host: Give us a sense of what one container order would cost you. Just all in, including shipping, all in.

Guest: So for my current business, each container costs about $110,000 is what it costs. Landed here with, you know, everything. So because there's cost of goods and the container cost, the shipping from China to here, we have custom, we have custom duties that we have to pay then from the port to getting to the warehouse, from warehouse to going to Amazon. So it's a good bit of, you know, cost involved in that.

Host: Shipping cost. Yeah, logistics. Cost.

Guest: Sure, yeah, logistics, yeah.

Host: We could pick that apart. But we still have a lot more to go in your story, Sumana, so we gotta be efficient here. Okay, so let's. Because just to spoiler you sell this business, we're gonna hear that right now. And then you've subsequently bought three more e commerce businesses. So you are now a serial E commerce acquisition entrepreneur. So I just, I want to make sure we, you know, we get all of this in. Okay, so you're at the end of 2020, you've made this decision, you're selling like decision to buy the eight containers. You're selling like gangbusters and you start getting interest from aggregators. So pick us up from that point.

Guest: Yeah, so I started getting emails and honestly I had not thought about selling the business at all because it was doing so well. And it's just one of those things where it's like, wow. And this question has been asked several times, hundreds of times by people is why, if a business is doing so well, why did you sell it? Right? So that's kind of what I was thinking at that moment too. I'm like, wait, I'm making seven figure profits for a previous business that I didn't expect, so why should I, you know, so the first email I got from an aggregator, I was like, wait, why would you want me to sell it? I'm doing so well. No, not, I didn't even respond. I was like, you know, just chuckled and just put it aside. Right? So, and then I started getting other emails and at that time too, like I said, I was thinking like, wait, what else is there? What am I missing? Am I missing anything? Am I doing everything I can? Is this the potential of the business or does it have more? What can I do? So the next obvious step would be to launch more products right on that brand and things like that to make more money. But I was not equipped to do that. I didn't have the skill set to launch more products and do more things with that. And I felt like I had done like I had learned so many things so fast that I was like, okay, I think I'm going to be making a mistake if I were to hold onto this and just kind of not keep growing this. That's when in January, I was like, okay, I think it's time for me to start thinking about it. And it was kind of weary for me, I was questioning myself. I'm like, why would somebody want to buy. I just bought this business, like, last year. Why would somebody want to buy it? So I was questioning myself, and then I decided to talk to a few brokers. The first broker I called was the broker that sold the business to me. And then I talked to a couple other brokers, and Joe Welly was. Was also. I was one of them. And, you know, and Joe was like, I've stopped listing on Quiet Life because he was doing more of the, you know, ordinary things. We're podcasts and things like that. Right. So he had stopped listening to.

[58:27] Host: Oh, stopped being a broker himself.

Guest: Yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, exactly. He stopped being a broker.

Host: He's busy appearing on podcasts like Acquiring Minds.

Guest: That's right. That's right. Okay, so. And he was writing a book too. Right, so. Right, yep. And so he said, you know, Chuck talked to Chuck and ended up talking to Chuck. Chuck Mullins, Far Light. And he actually, you know, it was. It's funny because he asked questions. He asked the right questions. He made me feel comfortable. And, you know, he kind of. He talked me through the process, and he said, okay, this is what we should do. This is what we should do. And he actually came up with a good multiple. And he said, you know, I think this is a great product, a great listing. You've done everything. You've actually put everything in place right now for the next owner to just launch a new product and kind of keep going with that. So he felt confident, and I felt confident that he felt confident, you know, so we said, let's go ahead and give it a try. We listed in March. I think it was towards the end of March. Don't hold me to that. But yeah, so within two weeks, actually right away, we had a lot of interest in the business. Within two weeks, Chuck had set up about 14 something, 14, 15 calls with the aggregators. So I was. Every day, I was having two to three zoom calls with potential buyers, and I was constantly talking about the business. And it was a great experience, too. I kind of learned so much of, like, okay, what it is that aggregators are looking when they're buying a business or what individuals are looking, because I never had that experience of having that conversation with the seller, because when I acquired it, everything was through the broker, the broker. I never interacted with the seller or asked a question to the seller. Anytime I had a question, I was going to the broker, broker was going to the seller, bringing me the answer back so it was kind of like, then I was like, wait, this is, this is how it's done to me. I actually didn't realize how this was, you know, so that the whole process was a good experience. I think, like I said, Chuck kind of walked me through between calls too. He was like, okay, do you need a break? What's happening? Are you comfortable with the kind of questions that's being asked and things like that? So it was a very.

[1:01:17] Host: 14 different calls. So 14 hours, or if they were half hour calls, whatever, between seven and 14 hours of people talking to you about your, Asking you about your business, you must have just learned a tremendous amount, how valuable that was.

Guest: Absolutely. And did you feel it was not just. I'm sorry, some of the calls. It was not just one or two. Right. Some of the calls there were like five or six people from different departments. Like, one was operations, one was marketing, one was, you know, logistics. They were all like asking me different questions. And I'll like, wait, ask me in an order. Like, you guys are going all over the place. So. But yeah, that was, that was very, very intense, actually.

Host: Yeah, but I'm sure. Exciting. I mean, yeah, you know, I mean, what a, what a cool, what a cool experience. And I'm curious, like, just, just, just your general sense of that process. Talking to 14 different prospective buyers, did you feel like basically they were all asking kind of the same narrow set of questions or did you. Or is your sense that like, the range of questions that you got was all over the map? I'm, I'm just kind of curious.

Guest: So there were, I would say half and half. Right. So meaning half the time the questions were the same questions. When they were starting off, it would be the same questions about the business and the sd. How did you do this? How did you do that? But then, and then there was other half, which was like all over the place where they were, Couldn't expect what they were going to ask kind of thing. Right. Some very in depth, you know, questions to like, you know, simple questions. And it was, yeah, I would say half and half, but definitely, I would say out of all of those calls, some definitely stood out with the kind of questions they asked. And, you know, I felt more like, okay, you know what? I think they're going to do a great job with this business because at the end of the day, I was kind of learning that too. I was trying to understand that too, because there was going to be opportunity for earnouts and other kind of structures for the sale. So I, you know, I would want, I wanted to make sure that I was giving the business to the right person that was going to continue to grow it and not kind of crash, you know, the business. So definitely there were some who, you know, I felt like they valued me as, as, as a, as a person who has kind of grown this, you know, scaled this business to be a part of it maybe kind of thing. And they were also interested for me to be a part of that going forward as well. That way, you know, you know, it's always. I still had ideas, I still had a lot of things I wanted to do in that business. Right. So it was always a good. And I have done that with the previous seller too, was the owner. Right. And I would go, you know, back to him and ask for suggestions and things like that. And he would feel more like, oh wow, it's kind of like I'm still a part of this business and he was a founder of it and things like that. So yeah, a few of them definitely stood out compared to the others.

[1:04:48] Host: Okay, so from these 14 suitors that you have, you, you, you choose one obviously and, and can you give us a sense of, you know, what range or whatever you can about what that sale price was?

Guest: Yeah, yeah. So yeah, we, we had actually, we had narrowed it down to three, three aggregators and then we went with the best one for the business and, and this one that I felt like we're good people actually. And we. So I act. I exited the business for mid seven figures basically five times for what I had acquired the business for.

Host: So my quick math means so 5.5 or around 5.5 million in that range.

Guest: Yes, that is correct. And so we had some earns in the deal and things like that, which put us in a good position. And I was also, I also have some equity still in that business that was allowed to willing to ruin some equity in there too to be a part of it. And they're gonna do bigger things with that. So I wanted to be a part of that as well. So we kind of went with that.

[1:06:18] Host: So there was a cash piece, there was an equity piece and there was an earn out piece.

Guest: That is correct.

Host: Okay. And given that E Commerce has slowed down since 2020, 2021, are sales of your product, of this FBA product continuing to be where you would hope and in the earnout is unfolding the way you had hoped?

Guest: Yes. And so here sort of happens so that the, there's, there's been a lot of change with that on a positive side. So before even we could reach that earn out stage. I actually got some payout, so all those things. So I'm not very sure if I'm allowed to have that discussion about that part. I'll have to listen to that.

Host: Okay, fair enough. Now. Okay. Well, suffice it to say, this was a life changing outcome. And particularly when you look at how quickly it all happened basically in, you know, just a little bit over a year, it's just, it's just really breathtaking and very exciting for you. I want. And now you have gone on to buy some other businesses, and I want to hear briefly about those. But before, let's circle all the way back. Whatever happened to the learning centers that you got distracted from the shiny object when you're trying to sell them on biz by selling.

Guest: So, yeah, that's actually. I don't think anybody has asked me that question before. I actually could not sell that business for a while after owning. So I went to list that. I ended up buying this, having that business and this business. So I was starting to get a little overwhelmed here. I was wanting to sell that and take a break and not do anything. But then I actually had two businesses I was running at the same time, which became a little bit overwhelming. And I was not able to sell that business right away. So I was holding onto it and I felt like I was not able to focus on this business, which was taking off like crazy. And so what I did was I called another franchisee down the street, which was the other location. And since she always wanted this location because it was a top, you know, location, I called her and I said, hey, do you want this? Do you want this business? Because at that point, all I wanted was a little bit of money, like almost half of what I was listing it for, and just wanted somebody to take over the lease. And my students, I didn't want to let them, you know, I didn't want to close the place. But at the same time, you know, I was just like, I was ready to get out of it because I wanted to focus on this. So a lot of people, you know, kind of like when I. When people would know about this, they're like, why would you do that? Why would you sell it for hundreds of thousand lessons? I'm like, because I was making hundreds of thousands more here. Because if I took my focus off of this, then I would not have. If I had both of them, I would not have done justice to either one. So I was like, let me let that go. That way I can fully focus on that, so it took me a good three months after I owned this business to actually do that. And yeah, that's now run by another franchisee, but she's doing a great job. So she took those centers and she kind of went on with that. She was happy that she was going to get a great deal on that and I was happy to just move on from that. This one.

[1:10:11] Host: Well, you know, Sumana, that's another courageous strategic decision that you took, you know, to sell for, to sell these learning centers for a lot less than their market value. Recognizing that, you know, there was an opportunity cost to continue operating them and having them and thinking about them and this other business was taking off. But. And you needed to just devote 110% of your attention to the new E commerce business that you'd acquired. But still, you know, it sounds kind of, I don't know, logical or obvious to say it in retrospect, but like, like you just pointed out, a lot of people didn't share that view and they were like, wait, why would you sell something for a loss? You know, and so it, you know, it took some real, I think, I don't know, insight and like I said, courage to make that decision. So congratulations. That was another big strategic decision that you made. That was the right one.

Guest: Thank you.

Host: As a follow up to that. So now, you know, I just want to hear, you know, you, you got this incredibly accelerated education in E commerce with this great happy outcome and you'd worked as a franchisee in a, in a brick and mortar business. What are your thoughts on the two models? Other, you know, other than the obvious, you know, one, you can work from home. I mean, you know, other than the obvious is there, you've done so well in E commerce. Would you basically say to anybody, oh, E commerce is definitely better. Like just do E commerce. And I also think you said like the SDE of your E commerce business, like almost right out of the gate was higher than the combined SDE of running three learning centers. So it also seems more profitable now. You happen to buy really good E commerce business, so there is that. But anyway, yeah, just, you know, you're somebody who's done traditional and, and E commerce. What is your sense of how people should think about that opportunity? Because certainly some people in the audience are going to be asking, are going to be considering E commerce opportunities or brick and mortar, traditional business opportunities.

[1:12:14] Guest: So yeah, that's actually, I think a great question because I was thinking about it when you, while you were asking me difference between brick and mortar and E Commerce is brick and mortar. You're dependent on a lot of, of other aspects or a lot of other people to run a brick and mortar business. Right. For example, if you're starting from scratch, from construction to everything, you need permits, you need this, you need that, and then you have to have the right products and then you have to actually go and get customers into your door. You need to convince them, you need to continue to. It's a good business. Like I said, I have learned a lot from it. I don't know if I had started right off the bat with E Commerce, if I would have the same, you know, skill sets that I have today and I'd feel confident about it. But at the same time, I feel like with brick and mortar you're dependent on employees and different people to run that business. With E Commerce, you can be a one man show. I mean, right now I'm actually, even with the previous one and this one, I'm a one man. Yes, I can hire agencies, but if I don't like an agency, then I'm like, I could go to the next one or I can say, you know what, I'm just going to learn it. I'm going to learn how to do that. I'm just going to do it. So it could be a one man show or you could have other agencies doing it. So that's kind of the one major difference I feel. And also brick and mortar, you have to be there physically, you have to be there, you know, at certain times. If the, if whatever the store, if it's a store, if it's open from, you know, morning, 8 o' clock till night, 9 o', clock, you have to be there or you have to make sure somebody is always there. E Commerce, I don't have to do that. The major difference is I can literally sit in front of the computer when I want to, I can shut it down when I want to and walk away. Um, there's never, it has never been where, oh my God, again, if I'm recording, you know, podcasts or something that's. But other than that, I never have to. I don't have a set schedule to sit in front of the computer. I can just, if I have, I have everything on my phone, all the emails. If something comes up, it comes up on my email. I'm like, oh, I need to go attend to that or look into this. Other than that, I just, my days are very, knock on wood, quite free and I'm able to do the things that I planned to do with My kids, even with my daughter being in college, if she says, mom, I need you, all I need to do is say, okay, let me just shut down my computer and come to you. I don't have to wait for somebody else to come and let me kind of walk out the door. So it's, it's that flexibility is, is huge.

[1:15:21] Host: Yeah.

Guest: And I feel, I feel at this point is sky's the limit with E commerce because like I said in brick and mortar I have to go do marketing or events and things like that and convince people to come. Right. And then kind of continue to provide that service to where you're constantly like wanting to stay, to stay with you, to give you that business here. The platform, it's like the world is the platform, right. So Amazon is given or even if it's Shopify or whichever, you have that platform where you are reaching people with a click of a button. Right. So you're doing PPC campaigns and you're clicking things and people are just coming and your images and things are water selling. You're not constantly talking. And it's kind of like that the energy that you put into sales when you're in a brick and mortar or like my business, the energy that I have put into marketing and sales is so much because it just takes a lot to convince people. So that has been a huge, I think differentiating factor for me is now I don't actually have to constantly worry about, okay, is there a customer, is a customer going to walk in? Are we going to get new students this month? Oh my God, we have a few students not coming next month. So how do I make up for that lost revenue? All of those things I don't have to worry about because this is, I can grow as much as I want because I'm, I'm spending dollars on marketing, where I want to spend, how I want to spend and bringing those people right onto my site.

Host: You know, it's interesting, Sumana, because one of the thing that's a little counter to what I might have the kind of generalization I'd make because one of the things that I think attracts people to traditional brick and mortar businesses is they actually feel less, less competitive than digital online businesses. Yes. The online, you don't have to, you know, do all of the kind of in person sales and marketing, but it's, but it's also your competition is worldwide. So so it's also quite cutthroat, especially Amazon FBA and, and so, so a lot of people, you know, it's like Buying a local business, you know, they might only be competing with two or three other people in their market, two or three other businesses in their market. And those businesses could be pretty, you know, unsophisticated. And so, you know, often. Yeah. So it just feels like online is the, is the, is the more cutthroat environment offline is not. Now these are such sweeping generalizations. Obviously it just depends on what category you're in. In both, you know there are. So maybe we're generalizing too much here, but it is still kind of the reverse of what I expected you to say. But on that point about E commerce being cutthroat, you know, I, you know, especially so everything that we hear is that E commerce is really competitive. You know, you, and there was evidence in your own story where like you're, you're a supplier, you made the, you know, with your eight month purchase, you were kind of keeping your other competitors at bay, you know, that you didn't maybe intend to do that. But that's, that's pretty strong armed cutthroat stuff. And, and, and so anyway, you know, and, and, and you're always worried that like some, like if you're selling a physical product online that a Chinese manufacturer is just going to see it and undercut you. And it's just very, very competitive. And E commerce has gotten so much attention in the way during and in the wake of COVID aggregate all the capital flowing into the space. It seems like a saturated, very competitive landscape. E commerce and that intimidates me. It seems like we're kind of at peak E commerce. In our pre call you had said that you feel the opposite, that the sky remains the limit for E commerce. This is early, early days. So react to what I just said.

[1:19:41] Guest: Yeah. With consumer behavior. Right. Changing like I actually haven't stepped foot into a grocery store in so many months. Very rarely do I go to stores these days. Everything is, you know, I'm if my behavior. Ooh. I actually used to love going shopping. You know, I used to go grocery shopping all the time and everything. So now that I have done that and the switch has happened, even though things are normal now, back to normal, I'm not going back to the stores. So I don't think, you know, people are in a hurry to rush back to stores and get back to how it was. I think now it's always going to be even if they do that, there's still going to be a good part of their shopping that is still going to continue online. Right. And then Also aggregators. So that when the business is staying like that, the E commerce business is going to be, you know, kind of growing because more and more people are subscribing, more and more adults are coming up, you know, so it's kind of one of those things that I look at my own daughter who now she's, she's 21 and she has her own Amazon account. Right. So and because she's, she doesn't live with us, she has her own address. So as everybody is branching out, they're all getting their own Amazon accounts, memberships and things like that. So I feel like it's going to keep growing.

[1:21:10] Host: Sumana, I want to close out by hearing about your three new acquisitions or most recent acquisitions. So you sold the other business for a phenomenal exit and then you turned right back around and got back into the game. Can you tell us what these three acquisitions were? Just in brief, we're not going to have time to go into each of them in, in much depth.

Guest: Yeah.

Host: So start by doing that, please. What, what are these three businesses?

Guest: You start by telling you that I was supposed to take a break for a couple months after I exited out of Fed business, which again did not happen because right away I was, you know, shiny objects.

Host: More shiny objects.

Guest: Exactly, exactly. So this time three of them. But you know. Yeah. So since I kind of started having that confidence in running Amazon FBA businesses, I just decided to go that same route and not kind of go because once I'm comfortable, I don't want to. I still have a lot to learn with Amazon fba. So I have now acquired a similar size business that I acquired the first time. And I've also acquired a mid six figures and a very, very small one, actually a five figure business too to kind of see, you know, if I can apply everything that I have learned from, from my first business, the Amazon business that I can apply to these. And yeah, if I can see the same success that I saw with those, with these. The other one.

Host: Yeah. And when you say one is similar size, one is mid six, mid five figures and one, one, one is mid six figures and then the small one is five figures. You mean the acquisition price?

Guest: Yes, the acquisition price.

Host: Okay.

Guest: So I have now kind of, I have looked at, okay, I want, I don't want to go and acquire a very large business because again, I'm still in that learning process. I still feel like, you know, there's a lot to learn. And so what I've done is I just kind of acquired one in seven figures, the low seventh figure of one in mid six figures and one and like five figure. So.

Host: Yeah, right.

Guest: It's all, it's all kind of.

Host: And, and now that you're seeing into these three businesses and as you said, trying to continue to learn and apply what you've learned so quickly and, and then continue learning, do you, do you feel like, Yeah, I think what, what a listener would want to know is like, do you feel like you learned like a lot of what there is to know with that first experience and, and. Or is it like a lot of what you learned in that first experience was kind of particular to that one FBA business and now you're having to learn a whole lot of other new stuff? Yeah, I guess. Like when you do E commerce, how much of it is. Is applicable from business to business to E commerce business to E commerce business, even though the categories and products are

[1:24:28] Guest: different, I would say 75 to 80% is the same. You apply everything, and I'm applying everything that I learned from that. So I'm actually doing the same kind of, you know, almost like, you know, there are supply chain changes, be it logistical changes, the price changes, you know, making the images look different. I've added a video, so things like that. So those are all similar. But then there were individual product challenges that I would say that needed to be looked at. And that is that 20%, which is particularly particular to that product that you wouldn't learn and things like that quickly. For example, with one of the businesses that I've acquired, it was listed under the Hazmat, the dangerous goods product. And I couldn't understand why that was listed under that. Now. Because of that, we were paying more for the container. We were paying more to send it to Amazon because Amazon's partner carrier would not carry ours. So we were paying almost 10 times more than what we would send if we were to use Amazon's partnered carriers. So I looked into that was a challenge. I'm like, why is this that? And we realized it had a small tintern tube of glue that really we didn't need to have it in there, but we were having it as a, you know, part of that whole product. And that glue was what was making it a Hazmat, because it could be. It's. It's flammable. So all of it was, okay, called the supplier and said, start taking the glue out of it from not enough of the next container. And that just doing that has added $20,000 per container in profits. So it's kind of like you know,

Host: what a great decision.

Guest: Thank you. So, you know, it's kind of, it's one of those things where you have to, you'll have some differentiating, different challenges with each business that you acquire, which is, you know, kind of, I think, expectable, but I would say 75 to 80%. You're still applying what you learn. Kind of what I've learned from my first acquisition.

Host: And tell us what these three, the categories these three businesses are in.

[1:27:02] Guest: So I have one in automotive and I have one, one is a home goods and the other one is supplements. So three different categories.

Host: Totally different categories. And are they all FBA businesses basically selling kind of just a single product or a small basket of products?

Guest: That is correct. All fba, they do have websites and Shopify and Etsy and things like that. I tend not to distract myself with going into too many marketplaces because when one is working, but there's still so much scope for scaling. If we start to go into different marketplaces, we tend to lose focus on the one that's actually doing well. So I tend to focus mainly on Amazon fba. And I don't even do FBM because that's a whole different, you know, we need to have a team to ship it, do so many things. And I'm like, when I am able to do so much with FBA and there's still more to do, I don't want to be doing something else.

Host: Yeah. And for the audience, FBA is fulfillment by Amazon, where Amazon actually does the logistics of shipping your, your product. And FBM is fulfillment by merchant where you market the product and sell the product on Amazon, but you actually do the shipping, you, the merchant do the shipping out to the customer. And is there any difference you notice in size? So you've got the small one, you've got the medium one and then you've got the business that's similar to the size of the first one that you bought. How different does it feel, if at all between these different size levels of FBA business?

Guest: So I think with, with the larger 1, the 7 figure 1 I, I acquired, it is very similar to the, the previous one that I acquired. So meaning the same kind of situation. Like the challenges were similar so I was able to kind of quickly kind, you know, identify those challenges and like, oh yeah, I got this, this is, this is what I did with that. So I'm going to do the same things for this. And then the other ones I'm noticing are more of like a challenge to get the momentum going at this Point, because these were businesses that were there, but the previous owners kind of struggled with scaling that. So momentum in Amazon, momentum is where when you have just launched a product or kind of have several things happening to it. So now what I'm trying to do is I want to see how I can take what I have learned from that and also other challenges that I don't know how to do. There are some challenges that I'm facing that I have no idea how to do things and I'm learning. So that is kind of giving me more experience into doing that. So, yeah, I would say the larger business, because I bought it at that price, because it was already at a good place, but it had its own challenges, which was not very as severe as I would say the smaller ones are.

[1:30:26] Host: Yeah, yeah. And so if you were talking to the audience and somebody was interested in buying an E Commerce business and it's their first acquisition and therefore also their first E Commerce acquisition, is there a sweet spot of size of business that you would recommend they buy? Assuming they, you know, they, they kind of have the similar budget that you did, that they could get an SBA loan to buy a business up to say even 2 million, 2 1/2 million dollars? Is there a sweet spot that you'd recommend they look?

Guest: Definitely. I, and I think more than a sweet spot, I would say what to look for. Right. So if you're, if, if a buyer's strength is operations and that is where the seller was struggling, then that's a good match. Right? But if, let's say, if operations was the seller's strength and the same strength as buyers, then whatever didn't make that previous seller as successful as this business could be, if you have that strength, that's a good match. I look for businesses where the seller struggle with operational side of the business because, you know, it's, it's, that is my strength. So if they have laid a good foundation for, you know, PPC product, you know, images and reviews and everything is great, but where it struggled was staying in stock or, you know, like little things like that, or they're spending more money on logistics, you know, or the supplier's not the best supplier and you could actually find another supplier that can do a better quality job or send you more products in a timely manner, something like that. So does that match or is your skill, the marketing side and your skill is not operational, where the seller has actually laid a good foundation for operations, where he or she has set up everything for logistics wise and everything is perfectly set up but all it needs is more marketing like the PPC side of it, which is your strength. So based on that, I think that would be a good way to look for Amazon businesses rather than how much money should I buy it for kind of thing. And that's why I kind of have sort of wired now in three different levels to see that's kind of what I've looked at is okay operationally this business was weak, but other than that, everything is else. Everything else is there for me. The foundation is strong. So now I want to kind of, it's more of kind of like, you know, test for myself where can I take a business at any level and scale it with what I have learned? Or am I wrong about that?

[1:33:22] Host: Yeah. Yeah. Well, it's great. I've heard this concept described before as kind of puzzle pieces. You know, two puzzle pieces need to fit and you're, you're, you know, you're, you, you're, you have piece, you're, you're shaped a certain way and you need to find that business that where, where the two where you fit nicely because what the business is missing is what you bring and you're, it sounds like what you're saying is that's more important than the size of business necessarily that the person looked to acquire.

Guest: Absolutely.

Host: Sumana, I want to let you go. This has been, we, we've had some technical issues throughout, but it's been a blast of a conversation. Anyway, your story is utterly remarkable. You know, in January of 2020 or December of 2019, you probably wouldn't have thought in a thousand years that you'd be on the other side of this adventure. A very successful E commerce acquisition entrepreneur who had her first phenomenal exit and now owns an additional three businesses that she's acquired. So what a cool story. Yeah, I just want to congrat, congratulate you and thanks. Thank you for coming on. My audience is going to love this one.

Guest: Well, thank you so much, Will. I appreciate your patience and you know, this, this has been great. I enjoyed talking to you and you know, if, if anybody has any questions in your audience, they can reach out to me and definitely, you know, what's

Host: the best way to reach you, Sumana?

Guest: LinkedIn or, you know, the email would be great. Sanjeevasamanagmail.com is my email address. Definitely I can, you know, try and answer. If I know the answer, I'll definitely, you know, help anybody out.

Host: Great. Well, thank you for that offer. Of course, as always, that, that info will be in the show Notes. Sumana thank you very much. Until next time.

Guest: Thank you.