Back from Bankruptcy | I tweet about babies and business. | Acquired 4 businesses for $3.8M | Christian Father
West Palm Beach, FL
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Here's the timeline towards bankruptcy:
HINT: Don't do this. Give your lessons time to simmer.
Mar. 2019: Quit job at Facebook
May: Joined largest client
Sep: Got fired
Oct 2019: Went down Warren Buffet rabbit hole. The idea of Impact Industry was born.
Jan 2020: Found search funder community (should joined Twitter)
Feb 2020: put together documents to buy a business.
Mar. 2020: COVID happens E-commerce blows up.
April: Start taking on new client's full time at Impact Industry marketing.
May 2020: Have second child
August: landed first 5-figure client.
October: Go under contract to buy first company.
2020: Impact Industry Marketing: $250K Rev.
Feb 2021: Close $1.2M deal for e-commerce furniture store. 10% down 10% Seller Finance. 6.5% interest. Agency at $35K MRR.
Mar 2021: Freeze in Texas, main foam chemical supplier looses power. Massive foam shortage in industry. Lead times go from 14-16 weeks to 28-32 weeks.
Apr. 2021: Everything going as planned.
Aug 2021: Cracks start to appear in E-commerce business we bought, things are softening google traffic down.
September: Agency hits $60K MRR.
October: Go under contract for $2.6M on two furniture delivery businesses.
End of 2021:
E-com closes at $1.2M
Agency closes at $562,000
Jan. 2022: Bring on a biz partner, this was the beginning of the end for me.
February 2022: Transaction closes for $2.6M, 10% down, 0 seller finance.
Now there are three businesses and I'm trying to spend time in each.
March 2022: Biz partner gets really sick, loses control over his life, but still tries to work.
April 2022: Lose $750K account.
May 2022: Demote General Manager.
June 2022: Accounts receivables balloon from $150K to $600K. Should have died here as we didn't have enough working capital.
July: Heavy customer concentration is starting to form. went from 10% to 50% of the business as we grew the account. Didn't support with enough additional sales.
August 2022: Shipping business needs full attention but we now have a floundering ecommerce website, the agency is still humming but starting to see cracks. Interest rates rapidly rising.
September: Land a public company as client after working on them for a year. Mid 5-figure monthly contract.
Nov. 2022: Biz partner no longer can work, given up a lot to him. Have to pivot and put someone else in place.
End of 2022:
Agency: $775K (Covered losses and expenses)
Ecommerce: $775K (Huge Loss)
Delivery Company: $5.7M (Serviced over $300K in debt)
January 2023: Interest rates continue to rise, servicing about $40K a month now soon to be $45K by summer.
February 2023: Major cracks are starting to form in all businesses. I don't have enough time to fill them and resources are getting constrained as i've had to personal supply working capital into shipping biz.
March 2023: Things feel stable at shipping business for once but Ecommerce is getting into a cash crunch as overall demand as slowed. Churned a couple of clients on agency.
June 2023: -Lost our largest client at the agency
-Largest shipping customer owes us $400K and contemplating bankruptcy.
-Ecommerce sales almost non existent.
July 2023: We reach an agreement with shipping customer and get paid a large amount.
-Agency loses all revenue and employees
-E-commerce continuing to suffer.
Third child born.
August 2023: Mitchell Gold Bob Williams shuts down. Owes us $400K, Other businesses cease to exist at this point.
September 2023: Working with bank to liquidate. Have a little over $2M in personally guaranteed loans.
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My idea of a guys weekend:
Surf, sit in the hot tub, and solve all of the problems in our businesses.
Helps when your best friend is a gigabrain 9 figure founder that no one knows about.
So freaking fun
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Small Business owners love to commit fraud
Something something something about - I just don’t want to pay taxes.
I think it’s about to get a lot harder.
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Hunter Durham - West Palm Beach retweeted
Buying a business was the least risky thing I’d done by the age of 26
- At 19 I made the decision to get married
- At 21 (senior college) I walked away from $60,000 consulting job working on the Microsoft account for sql databases
- At 22 we moved cross country to Austin for Facebook job
- At 24 we had a baby and invested into a $400,000 duplex.
- At 24.5 I walked from Facebook with $400,000 in debt (see above) with a baby and didn’t have a clear plan.
- shortly after I joined a team based out of Canada and got fired.
-25 I burned $15,000 of capital trying to sell laughter.
- 25.5 the agency started this time. Grew to $60k/month with 2 people
-26 we had child 2 and I moved the family to Puerto Rico
- bought first business, with capital from selling the investment property and agency.
My point is that I have an insanely high tolerance for uncertainty and risk.
And built the capacity for an insanely high tolerance of stress.
And I’d recommend you build that first before you buy a business.
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This applies to soooooo many things in life
Business will always be ran by how likable you are with partners and vendor s
The best way to win Black Friday that nobody does is to use it at a time to become your vendors favorite customer.
There is so much alpha in being likable.
All it takes is intentionality and using your words and appreciating people’s work. Yet most people, we’re so in the grind. we’re so focused on the numbers, we’re not doing it at all.
You know what people remember? They remember people who were kind to them and good to them during stressful moments.
Pull out your phone, just send a text. “I know you’re busy right now, but we really appreciate you. We appreciate everything you do for the business. Let me know if there’s anything I can do to help you.”
Do that with your key agencies, your 3PLs, your manufacturing partners.
I think about it like this: credit is free.
You can give credit for the success of your brand to as many people as you want to.
The reason why we don’t is our own insecurity and our own arrogance. Be generous with credit. People love being able to be associated with something that’s going really well. They love feeling appreciated.
And it’ll turn up in all kinds of unexpected ways that it comes back to you.
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No it’s not like marketing.
you fire the agency and move on with your life.
When you buy a business :
You fire families who counted on you to succeed .
Your banks and vendors hurl expletives at you
People say they are going to show up at your office and hurt you.
You can’t just walk away
This can be said for every part of every business.
If I don’t know anything about marketing should I not hire a professional to handle it for me?
They’re incentivized to sell me their services or get me to hire them as an employee. Maybe the risk isn’t as high, but the logic is the same.
If you can’t make rational decisions and understand risk/benefit in the face of competing information and emotional influence internally and externally, you likely aren’t well suited to pursue most activities that involve critical decision making.
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Plane to New York.
3 hours - ask me anything.
New faces around here - welcome. It’s an honor to have you. I built this account for myself to write through the glass chewing of the last few years.
Marriage, kids, life , business, partners, friends. Everything is fair game
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If 10 friends jump off a cliff and survive.
Then are rooting you to jump off a cliff.
But you know you can’t swim.
Just maybe though you can make it to the beach. Maybe
Yeah exactly the problem is if you can’t figure out the information for yourself for free - you shouldn’t buy a business.
Humans add an emotional layer to convince you or weigh in on a decision are are financially incentivized to do so.
Then you have the emotional aspect of the community rooting you on to take massive risk.
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Hunter Durham - West Palm Beach retweeted
Palm Beach County,
I left Puerto Rico, because I was depressed and lonely.
When we left I made a commitment to build in person and in community.
In the city where my relationship with my wife began and where our kids will now grow up.
Took another step today.
Hunter
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Hunter Durham - West Palm Beach retweeted
Listen - I went bankrupt.
I take full responsibility for that.
I over levered.
And had a customer go bankrupt, owing us close to $1M at the end.
Selling your business should be celebrated
But shame me if I have a course or a community on buying a biz.
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If you are a W2 - read this.
You likely don't know your own personal risk tolerance yet.
Buying a business is like that guy that jumped out of a plane without a parachute hoping to land in the net.
Buying a business is accepting a high degree of uncertainty.
Most people don't know themselves or their tolerance for risk especially where general W2 culture tries to derisk all of life - health insurance, 401K, Benefits, severance.
"Come work for us, don't take the risks"
Likely your mind is not wired for risk.
When I bought a business - I had quit Facebook with a 4 month old baby without a plan, then went and joined a disorganized business run by 25 year olds like myself - failed a CPG product business selling laughter - and closed hundreds of thousands of agency contracts - invested in real estate duplex.
Not bragging but I had taken on RISK - if you haven't ever done that, buying a business is the worst risk to get your feet wet
Every small business acquisition is an inherently high risk situation. It is made more so with the addition of:
* High multiple
* No industry experience
* No entrepreneurial experience
* No transition plan
* No ability to read / interpret small business financials
* High customer concentration
* No sales process
* All processes / procedures undocumented.
Without extensive available capital (in excess of the purchase price), there is a period of high potential failure during the transition and shortly thereafter.
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Listen - I lost investor capital, also.
I own that.
I think about them daily. These people believed in me and put their money behind me.
I speak to them, anything I can do to provide value to them I do.
I'm 31, and plan to do the same for the next 3 decades.
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Listen - I went bankrupt.
I take full responsibility for that.
I over levered.
And had a customer go bankrupt, owing us close to $1M at the end.
Selling your business should be celebrated
But shame me if I have a course or a community on buying a biz.
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