"I Bought a Business That's a Scam. Now What?"

A lot of times people get one idea and they just get fixated on it because, like, they don't get a lot of business ideas naturally. And so when they do get one that's good, and I do think this is a good idea, they obsess over it and they go all in on it, but they're just obsessing over it because that happens to be like their idea. It doesn't mean that it's the best idea that they should start. Corey.

Hey, Chris, how are you?

Good. How are you, man?

I'm doing pretty good.

Good. Thank you for coming on. And as I understand it, you're curious about a kayak rental business.

Yeah, just that business model in general. I was intrigued by the tweet that you posted and I had some ideas about just that business model in general. So yeah, I got intrigued by the tweet you posted.

I'm a sucker for ideas. So let's hear them.

Absolutely.

Yeah.

So there's, you can buy those pods and typically right now there's these pods that are used. You've probably seen the Amazon pickup boxes or things like that. They're used at apartment complexes and places like that. But they also have the ability to be used in other ways. They're just not, I guess, being used that way. In my current role, we sell them to apartment complexes, but the manufacturer has talked about wanting to find other ways to use those type of pods. So my idea is there's two ways you can take it. You can put things in or you can take things out. So you can put things in at the gates of baseball, basketball, football games, concerts, anywhere that they have restricted access for bag size. So for example, you go to the gate and they're like, oh, your bag's not clear, it's too big, it's whatever. Then you walk over to a kiosk, you rent a thing for $10, for example, you put your bag in it. Because I used to work the gate at football games at University of Kentucky. And at those games we would have people with thousand dollar Louis Vuitton purses and they would just hide them behind a bush and hope they were there when they came out of the game.

What? And then they would come out of.

The game and security had dogs going around the stadium the whole time. So anytime they found a bag, they would just pick it up and throw it away. So there were thousands of dollars a bag getting thrown away.

See, I thought I was crazy. I went to the, the Six Flags Water Park. I forget the name of it, but we Forgot our sunscreen. And it was like $23 for a bottle of sunscreen. I was so angry, but we didn't want to. And all of the lockers were full. They had lockers, they were full. And those were like $20. But I hit it. I hid the sunscreen in a bush and felt like a madman hiding 23 worth of sunscreen in a bush. I can't imagine a thousand dollar purse.

These would be like girls that go into the game, like college girls. And they would just be like, oh, I'll just hide it and I'll come back and get it. And I'd be like, it's not going to be there. And they're like, well, I'll take the chance. And then security would just come around, pick them all up and throw them all away. And I was like, well, I told you that was going to happen. So that's one way I would think.

That most places like that like already have lockers. Like why doesn't we. The stadium at university.

We never did. Yeah, we never had lockers. I've been to other stadiums that don't. I've been to stadiums that do. But the nice part about these is they're automated as well. Like I went to a Boston Red Sox game this summer or earlier this year and they have a truck parked in the parking lot of some third party company, like a box truck that just said store your stuff here. And then you just rented something from them. I didn't use it, so I didn't go up to it.

Where was that at again?

In Boston in the Red Sox game. And then last year I went to a Nationals game in May and they had like old gym lockers rolled out and then they had like people stand there working. So they'd walk up, you give them their stuff, they'd go put it in a locker for you, and at the end of the night you came back. Nice part about these is they're automated. So then somebody could just type in a code, find their locker, pops open, they put their stuff in it, close it, and they access it with the code when they come back.

Do you have any idea how much these, this truck or these old school lockers are charging?

I don't know. I, I didn't stop by the truck just because it didn't click with me until I got inside. And then when I came out, it was like a mad rush to get out of the place. So yeah, I haven't done too much research on what they're charging, but even if you charge $10 a person. If you take in 1% of 60,000 people that need it, then it's. You're still making decent money.

Yeah. So fans who arrive. I'm looking at the Fenway Parks website to an entry gate for a game with a non permitting bag will have the option of storing their bag for a fee with a third party locker company. This locker truck is located on top of the Lansdowne garage across from gate E. So basically any bag bigger than 12 by 12 by 6.

Yep. And every stadium has bag policies. They have things in place that need to like that. Sometimes it's clear bag, sometimes it's size. It's different by stadium, which makes it hard. But even airports, you can do an airport. There's tons of people that go through the TSA line. They have things they can't have.

Yeah.

They have to throw away. I would get out of line.

I went to an airport once where they had a box where you could put stuff in and then they would mail it back home to you. Which I thought was an interesting model, but I, I saw that that is an interesting model. I'll ask you the, the obvious question. Surely there are already pot. You work for one for pods or locker companies that offer this. Why aren't they at, at Fenway Park? Why aren't they at UK Stadium?

I have no idea. I haven't attacked them that part of the model yet since you know, I started in this role six months ago. We sell a wide variety of equipment. In the role I'm in that is just one small piece of the puzzle and not a piece that we push very heavily. As of right now, I've reached out to a couple people that I used to work with and then have begun having those conversations on is it something they'd be interested in? And it's just trying to find the right person because I worked in ticketing. So then you're trying to work your way from ticketing to operations and finding exactly who would be the contact.

But. Okay, so do you know how to source these things?

Yeah, I have. I've worked with the manufacturer on how to source them. So they come from California.

Would that be a conflict of interest with your job? Would you have to disclose that?

No, not really. Well, it's a family owned company then I work. It's my parents, so.

Oh, there you go. Okay, cool.

Yeah, we source them from a manufacturer, the manufacturer that we work. So we. It's a weird system. There's a dealer, they deal all kinds of different mail parts that we buy from them for mail machines. They work with a distributor. I would probably have to disclose it to them, but that would be a conversation I'd definitely be willing to have with them. I have a good relationship, relationship with them.

Do you think that you would have to pay someone like Fenway park to put it there? Or it's just like, listen, this is a better experience for your fans. We are going to charge them. You don't have to manage anything. There's a credit card reader on the machine. Just direct them there from that. We'll put one at every gate.

I think you do revenue share. I think if you revenue share it with them, even that'd be incentivizing. I don't know if you'd have to necessarily pay a standard.

Yeah, I'm just wondering if you don't lead with that, right? No, of course you could negotiate to that. But it's just like, listen, this is going to be a better experience for your fans. They're going to want to come back to more games. And these are really expensive, of course. So just let us put them there. And it's pretty shady to walk over to a box truck and put your thousand dollar purse in it, right? That thing could be gone.

I was thinking the same thing. The nice part is too, with these.

We can do very.

We have a company that does full custom wraps so they can wrap it and make it look like Boston Red Sox, you know.

Oh yeah, make it.

Wrap it to where it looks like it is official and not a box truck in a parking lot.

Yeah. Okay. So I think you just need to get three or four people on the phone and it's not hard to find the decision maker here. Get on LinkedIn, hop on the UK website or Fenway park, try to find like the facilities manager or whoever. And he might not be the guy, but he's for sure going to know the guy and just have a casual conversation with him. Like you have the strength of already being in the industry. You're not just like some college student that like would like to try this cool idea one day. Like you're already doing this, right? Of course. And so I would just not even make it a sales call and just be like, what do you think, man? Would this work? Would you need one at Evergate every other gate and just get his thoughts. And that could be a really, really good business. Like you said you could make 50 grand every game, right?

Oh, absolutely. I looked at, I did a couple quick numbers. If you got, if you captured like 1% the NFL, NBA, college football, MLB market, it's like over. It's like $40 million if you just captured 1% of the market of everybody goes to game every year.

And then there's also the model doing this.

Yeah, there's the model pulling things out.

What do you mean pulling things out?

Well, the kayak rental. So there's something in there that you have the pod. Oh, in my email I said about like at a campground, for example, you have a bunch of pods. There's things in there. There's a water hose. If you ever get your hose hook up to the water, there's leveling blocks. There's even things as simple as chairs, yard games. Then there's no one working at the campground. They walk up, rent it out of the thing and then they're getting things out of the pods as well.

Yeah, it's like, hey, if you don't return this, there's. We're going to charge a car for 200 bucks, period.

Exactly. Exactly. If you don't return this water hose, we're going to charge you 100 bucks or whatever.

Yeah, yeah. I travel the country in an RV and it's like, how many times did we forget X, Y or Z or firewood or whatever. Exactly. I definitely like your first idea better because there's no inventory. It's just self sustaining. You know, having to refill with hoses and firewood and all that would be a pain. Still a good business model, but I like this more. So if I were you, I would just, I would try to get a dozen people on the phone and just write down everything they say and then you'll know if this is viable or not.

Yeah, absolutely.

Yeah. And then just go for it. That's the plan. Cool, man. Well, thanks for calling. I really like this. This is, it's fun to, to hypothesize about this business because this is a good business.

Yeah, it is. And there's not anything automated in the industry already. So I appreciate you taking the time and having me on today and responding to my email and stuff. So I appreciate you, I appreciate you putting the podcast.

No problem.

It lists too on.

Absolutely.

Appreciate you. Thank you.

Thanks, man. Yep. See ya.

Have a good one.

Alec, what's up, bro? How are you doing?

I am good.

I've had this idea for a couple years now. Ironically, I know you've been in the crypto space as well. This is kind of when I got the idea to start this thing. So it's a phone case company and I already have some of that for the mobile app I already have some of the code written out but I wanted to display an LED image on the back with NFT verification on there so you can see with like multiple chains, allow you to have any picture you want, view of your family, even some GIFs as well. And the I wanted the phone case to have two other functions as well. Either like a QR code in the corner right next to where your cameras are or an NFC communications chip. So like a link tree or like a tappy card where people are like oh, what's that phone case. Oh let me scan this or let me tap your phone. Oh you have all your socials or whatever you want. Could be cash, app, whatever. And. And then to also have a little small, little like clip at the bottom of the case that allows you to charge your phone as well. So didn't know. And I've had some like, I've worked with some engineers, like third party contractors, they somewhat built some prototypes and they just didn't fall through. They were going in school and I had other founders with the project that I did and I would say the project died down but they, you know, everyone just went their own separate ways. I'm stepping out from my tent so.

Yeah.

And I've talked to a lot of people about it. They say this is like an E commerce type of thing, like where your mind goes and how you just like easily explain things. So where do you see if this was your business or your idea, how would you approach it? What would you want to do? A double ended question.

Let me see if I understand it correctly. So it would be a phone case that you develop, manufacture, sell that has like an integrated charger so you don't need to take the case off to charge the phone.

Yes.

Has an NFC chip in it and it has like. Did you say like a screen on it?

Like yeah, like an LED screen. So let's say if you had a board ape or a family of your picture or your favorite GIF or meme that like that constantly has some GIFs. It's like a little two second video or whatever picture.

Yep.

Where it's like full color, full display, you could see it on the back. Have some like a little small cooling function in there so the case doesn't overheat. Keeps your phone cool at the same time. So yeah, that's pretty much it.

Did you say it was a SaaS business too?

Yeah. So how it would work for you to even display your image, you're going to have to download the App. It's a free app, obviously, and I'm sure there's ways we could monetize that as well. So you can download the app and there's going to be like profiles, kind of like a Facebook whatever, but it's not going to be like the main purpose is not for it to be a social media thing. It's like just to connect with other users of the case, people who are into this stuff and you'll be able to change whatever image you want and you could just go there and just display your image.

Okay. How long have you had this idea? You said you were working on it with partners half heartedly, but then that kind of fell apart. Now it's just you.

I would say two years at least.

Two years. Okay.

And I just started doubling down. I'm sorry, I started doubling down more this year writing more code and I use language models to write a lot of my code.

Okay.

So yeah.

So coding the app for portion. Have you ever done any hardware product before like this?

No, I have not.

So I think that this is a viable idea. I think that people would buy this and it would work. I think it's interesting and unique, especially if you were to integrate like an extended battery pack function to it because you might need that for the LED screen anyway, unless you just leech off the phone. But there's a famous saying that goes, hardware is hard, right? Like it's really, really hard. And it's going to cost two to six times as much as you think it might cost. I think this is too ambitious of a project. I think that you, you have the, I mean, we've talked for six minutes, but the fact that you're listening to this podcast and you're calling in on your lunch break and you have this drive, I think you have what it takes to be successful at hundreds of different business ideas. And I think this specific idea is one of the few that you're most likely to fail at because of the fact that it's so ambitious and it's hardware and it's software and it's E commerce. Like all three of those things are hard and you're putting them all together. I want you to win and be successful. And I think this idea, you're less likely to do so because it's going to take a lot of money and a lot of time. I think you'll have to raise money and then you've got to make sure that you can get it developed and then you've got to make sure that you could sell it, it's a years long process. I'm not saying you can't do it. I don't know you very well. Right. You could be just an absolute killer. But I'm speaking from my own experience and when I bite off way more than I can chew, I'm more likely to get discouraged and just shy away from entrepreneurship altogether. Whereas if I bite off something much more manageable and then get a couple wins in, start a business, start a bigger business, sell that, get a couple wins in my belt, a little bit of money in the bank, I think this idea is still going to be around in three to five years and I do think it would work, but I think you're too early with it. What do you think about that?

I kind of get what you're saying. Like I think I've heard that quote before and that makes a lot of sense. Like you have to integrate all three of those things and it's like heinous. When I am like kind of like doing things, I'm like, okay, well I need to look up like hardware things and I need to see like the dimensions and how much this will cost. And this is obviously, this is. I haven't seen anyone with this before. So I have to get like a whole new mold, I have to do samples, I have to do different phones, I have to, it's like am I going to do E commerce? I can also like start like you can. I'm only one person. I can hustle a lot. I can go to like Little U Break Ifix, like all the main phone carriers or like phone repair places. And I'm like, hey, I got this product. We can, if I can give them a cut of the sales, I'm like, well people like this, if you display it, we have some displays as soon as you come in. So it is a lot. And, and like I said like everyone was half heartedly doing it and I'm just like the only one who's like really just stayed on the path, just like still working on this thing kind of.

Yeah. So yeah, it's just tough. Like it's tough when you have an idea if you're not the type of person that gets business ideas every five seconds. And that's who I am. Right. Yeah. It's a blessing and a curse that a lot of times people get one idea and they just get fixated on it because like they don't get a lot of business ideas naturally. And so when they do get one that's good and I do think this is a Good idea. They obsess over it and they go all in on it, but they're just obsessing over it because that happens to be like their idea. It doesn't mean that it's the best idea that they should start. And I'm glad you said that about different sizes of phones and phones, new phones coming out every year, because, you know, I had a, I've had a cell phone business for a decade, 2010 to 2019, and it's brutal. There's a lot of people making cases out there and you're going to be at the very high end of that market, but you won't have a well known brand to support a price like that. Right, right. So I, I feel like you're picking like of the hundred hardest things out there. You're. You've got like six of them in this one idea, you know, And I just like, I want you to win. And I kind of think what you were saying with. You've already done a bunch of research. Like that's. Have you heard of the sunk cost fallacy? What's that? It's like, it's this fallacy that people have where let's say you go into the casino and you play blackjack and you lose $1,000 and you're like, duh, I'm gonna, I'm gonna win it back. I'm gonna win it back. I'm in too deep. I'm gonna get it back. That's a fallacy. You're like, I've already spent this money, so let me just win it back. It's really no different than what an entrepreneur says. If they're like already way down the line on an idea and they're like, if I quit this and I wasted all that time, so I'm gonna keep going. Well, that's called the sunk cost fallacy. And it's a fallacy for a reason. Because you don't know how much time this will take into the future or how much money. Right. So.

Right.

Let's say that I know you're a couple of years into this, but let's say you've worked full time on it, as in 40 hour weeks for a year straight. I can't quit because that's all wasted time. First of all, that's not wasted at all. That's like an mba, that's like a very cheap MBA that you've given yourself. So don't count that as wasted. Second of all, this could take six more years to bring to market or to make a profit. So in that sense, if you could figure out, flash forward a decade and look back, if you had that luxury, you'd be like, man, if I would have quit at year one, that would have been really smart because I still had. I hadn't even tasted difficulty yet. Right, right. So I hope I'm not discouraging you.

No, you're.

I don't want to discourage you from entrepreneurship. I just want to give you a dose of reality on this idea and how hard it will be from someone who's been in that exact industry, you know?

Yeah, no, and I would appreciate. I didn't. I wasn't expecting anything. I just like, I knew you were just going to give me a different perspective. And that does. That makes a lot of sense because I'm like mid-20s now. I live in Southern California, I live with my wife. So it's like, do I just keep spending time and money onto this thing? And I'm like, oh, do I start the case with just the screen first and then build that and then keep going? And I'm like, and I don't want to marry this idea because who's to say otterbox or Case to Fight or one of these other guys see it? And we're like, they already have the resources. They're like, well, we'll just put this together and we'll just sell it and we'll just put you out of the market. And I'm like, it's like, yeah.

So, yeah, it's like a lot of times the best ideas are right in front of us and we're like looking over them to get to the idea that we already have. Yeah. I'm trying to think of an example when I've done this. But you know how to code, right? That is a sought after, rare skill that enables you to build millions of different products or apps or pieces of software or websites that you could sell for $0, cost only your time. Right. So it's like you're using that valuable skill that you might take for granted to build this hardware when it's like, what if I forget the whole hardware part and just keep working on the software to build something else? Right, yeah, that makes sense. So, yeah, if I were you, I would get. Have you ever heard of indie hackers?

I have not. I maybe.

What can you. It sounds like really familiar indie hackers. I think it's IndieHackers.com. yeah, IndieHackers.com is just like, it's a community of people like you that are mostly coders, entrepreneurial and just building stuff and it's like a forum, message board, a blog, all of the above. I would just go start consuming all the content you can on indie hackers and that is going to give you so many ideas. Like you're going to read about a guy who built a chrome extension that helps you scrape yelp for faux restaurants in Sacramento and you're going like, dude, I could do that. Wait, he grew to 10 grand mrr in three months. What if I did that for ice cream shops and in San Francisco? It's going to give you all these ideas and then start actively posting in there and building a community and a name for yourself. And then you could find like a marketing co founder or another technical co founder and it just gets you in the game and helps you start building a community of people that are doing what you're doing and thinking. Like you're thinking and you're going to get a ton of ideas from them and then you're going to give ideas to them in the process as well.

Yeah, and especially my area, like I live in Newport Beach, California, so this is one of the wealthiest places on the west coast. So I'm like, dude, I'm like all these people around here and I'm like, these people are just millionaires just by net worth in their homes, like equity in their house. It's not even what they have in the bank or their assets. So I'm like, how do I like get to them and just like connect and network and just build something for myself? Because I'm not, I don't need to be like a millionaire. If it's just like I got a couple grand like higher than what I'm making now, then like life would be amazing. Like I could buy a house, I could like just start a family. And that's just like pretty much the goal. So I didn't want to get stuck to my business or just like married to an idea where I'm just like stressing out because I'm like a, I'm a man of faith, so I care about myself, family still. I don't want to like do all these things. And that's why I appreciate like what you have to say too. Like, you just, you have a lot of knowledge in business, so. And I know you're a man of faith and you've knocked on a lot of doors. I watch a lot of your content and so yeah, no, that makes sense. I, I have to start doing more stuff like that. Just getting my foot out there, my name out there. And just connecting with people.

Yeah. I'm gonna send you a video here in the chat of this guy in somewhere in California. It's not Newport beach, it was like Beverly Hills or something. And he has a startup and he literally just went door to door at these mansions and asked the person there, will you invest my startup? And it was brilliant. And he filmed the whole thing and now he's like going viral on Instagram. And so now people on Instagram are like, hey, that guy at the door didn't. But I will. That's a cool idea. If you live in a wealthy area like that, you could totally copy that and do what he's doing. Yeah, just put it in the chat. But I. You're going to win, man. You're asking the right questions, you're doing the right things. I would just keep an open mind about what you actually launch.

Hey, no, I appreciate that because it does open my mind because I. Did you mention it? I didn't. Now that you did. Like, I was kind of close minded. I'm like, well, I'm married. This is going to work. Because I have a detailing, car detailing business on the side too. I'm like, this is going to work. I'm going to be doing this, this, this, and this is this and this is how I win. This is my ticket. And that kind of like does make sense and because I do talk to some entrepreneurs out here and they, they, it's never the same story. Like they've done a bunch of things and like you have one in some few cases where it's like, okay, they did this, they hit the, the lottery. Not the lottery, but they hit it and then they just went with it. But it's all different.

So. Yeah, okay, yeah, don't. The survivorship bias is listening to stories of people that made it and thinking like the movie Pursuit of Happiness with Will Smith. Have you seen that? Yeah. Yeah. Great movie, right? He slangs these healthcare machines. Barely makes it. He. He sleeps on the floor. I know, I know.

Sick.

I'm like, people would love this. This is going to be a great product.

It's a great movie. But they don't make movies about all the Will smiths out there 100 to 1 that fail. They don't make movies about them. Yeah, you know, so that's survivorship bias. That's like, all right, I could do that. But like, that. He is the outlier. Right? That's the outlier. So car dealer detailing is another thing you could be looking right over. Right? Like just looking right through something that could be a huge opportunity that you're already doing. Don't let pride get in the way either. Right. There's no idea that's too small, especially if you're trying to provide for your family.

So.

Okay, thanks.

All right, man.

Heck, yeah, bro.

No problem. All right, good luck.

Have a good one, man. Thank you. You too.

You too. Bye. So you are Tiffany?

Yes.

Okay. I want to hear everything you got going on. And thank you for coming on, by the way.

Thank you for having me.

Absolutely. We don't get very many female callers, so I always love it when we do.

Oh, awesome.

Yeah.

So what are you dealing with?

Yes. So I bought a business last summer. I was looking for a business for a while, like, probably a few years, and I ended up with this one that I bought. It was supposed to replace the income of my current job that pays very well. So it was supposed to replace my income. I did all the due diligence. I had a lawyer, I had an accountant. I had a broker.

You did everything right.

Yeah. We were also going through the sba. So the SBA did all their due diligence for months, like, we did due diligence for a very long time. The day after the closing of the business, we found out that pretty much everything the previous owner told us was a lie. There was supposed to be, like, seven employees. The day after the closing of the business, he told me there was no employees anymore. They walked out months ago. He never told us. He even gave us, like, documents, like, he gave my accountant documents saying, here is all the employees, Their salary, their job titles, their start date. Like, this is how many hours a week they work. And this was all after they all walked out on him. And he didn't tell us real quick.

Were you not able to validate this? Because he was saying something like, I don't want to spook the employee, so I'd rather you not meet them until after close. Was that kind of his reason? And that's a normal reason. Right. That shouldn't even be a red flag to you.

Right. So when I originally went to the business, so we were doing due diligence for so long, I believe we started in February, and. And the closing of the business wasn't until August. When I originally went to go see the business, all the employees were there. They were working. Everything looked smooth and well run, and it was fine. And then I went another time, like a month or two later, everyone was still there, so I thought everything was fine. And then he, a couple months later, he gave us all the documents for the employees, said that they still work there, and we didn't know. A month before that, they walked out. So then that was just the tip of it. That was when it started the day after, and then the day after it was officially closed. And then I said to him, well, I, like, you need to hire new people. Like, I bought a business with seven employees. And he was like, oh, no, I'm not gonna hire anyone. Like, you need to do that. And I'm like, no, how am I gonna do that when you didn't train me?

Yeah. So I don't know anything.

Yeah. And that was the other thing. Like, when we first. The day after closing, when we had our meeting, it was like the. It was supposed to start training that day, like, virtually. And the very first thing he said to me was, okay, so what do you want to know? And I was like, everything. Like, what do you mean? And he was like, yeah, but you don't need to know everything, right? Just, like, name some things you want to know about. And I was like, no. Like, you need to show me how to run the whole business. That's what you're getting paid for now. So show me how to run the business. And he just didn't have anything planned. He didn't know what to tell me. And he literally told us, like, multiple times that all the employees were there, they were running the business, everything was great, and they were not there that whole time.

So can you tell me the industry to help provide some context? I'd love to know the average, like, the. Just a range of revenue or profit, at least, that you expected, and the industry and the rough geography, and be as broad as you like.

Yes. So it's placed in New Jersey. It is a custom merch, like, promotional product business. And he claimed that the revenue was $750,000. So mind you, he gave us all these P and L statements, and. And the accountants went over it, the SBA went over it, the banks went over it, and everything looked fine. And then, obviously, the day after closing, you're not going to realize how much revenue is coming in or out. So it was probably, like, a couple weeks after. And then my accountant did the first month of the PNL statements, and he sent it to me. I'm like, this doesn't look right. Like, why is this so much lower than what his always was? And he was like, we went through it multiple times. Like, this is what you brought in, and this is, like, everything.

And they were reconciling with the bank and they had all the info they needed.

Yep. So he didn't show me how to use anything. I basically had to figure it all out on my own. And I hired three. I was able to find three employees that came on and he basically didn't train them either. Like we all had to figure things out on our own. All he did was set my email up to replace his email so that if anyone emailed him it would just go right to me. And I guess he didn't realize that means I would also have access to his old emails. So I found emails from him and his accountant. Like his accountant sent him the P and L statements to send us and they were not the same P L statements he sent us.

He changed them.

Yeah, the P L statements directly from his accountant were very in the negative and he, the ones he sent us were very in the positive.

So what did he change them from to what were they actually versus what did he show you?

So I don't have the numbers right in front of me, just a rough estimate. So he sent us in June. He sent us the first half of the year for, well I guess it was July. He sent us January to June from last year. And he said that the cash flow, like after paying all the employees, after taking his salary, like all expenses, it was positive $300,000. And then that's what he sent us. And then when I found the one from the accountant after all expenses, it was like negative $150,000.

Oh my goodness. Yeah, it wasn't even a sellable business, right?

Not at all. And then probably like a couple weeks in, I found out that he sold equipment that was supposed to be included. And then I started getting all these calls from vendors that he didn't pay. So because they're all the employees walked out. He had to start outsourcing everything. And so a lot of the customers he just was ignoring, he wasn't even answering. He was just like, well, I'm selling it in a couple weeks. So he just wasn't being bothered. But then some of them he was outsourcing. And then he never paid those vendors to for the work that they did. So then they were reaching out to me, you need to pay this like you already got the stuff. I've been keep putting my own personal money into it every month and I can't even quit my job to take over the employees positions because one, I wasn't trained on anything and two, there were still negative. So like I the only it wouldn't make sense. I wouldn't be able to take their income anyway.

Yeah. First of all, you got the lawsuit going, which was great. We won't even talk about that because you're already working on that. What are your options? What would you prefer to do in a perfect world if you could turn this around? Because you've got run away, you've got hide, you've got get a job, you've got shut it all down, declare bankruptcy, you've got turn it around, grow it. Paid marketing. What do you want to do and what do you think are the options in front of you? The most realistic ones?

Yeah, so I've tried to do some marketing, but again, like, I can only do so much because we're already negative, so I can't put out a ton of money on that. I have talked to the lawyer about bankruptcy, but we're trying to go through with the court dates and all the lawsuit before we actually go through with that to see if it's necessary. I just don't see how it's, like, realistic to raise the revenue that much in the amount of time that we would need it to be raised that much.

So if you can't, then what do you think you'll have to do? And then let's talk about how you might be able to.

So right now I'm just waiting for the court dates and the lawsuit and say that doesn't go in my favor for whatever reason. I don't really see how it can't. But say it doesn't. I think, like, my only option would be to try to sell the business and who's going to want it. The only thing I'm thinking is if I sell it to another similar business that might want, like, the equipment and the customers that we do have, and they would have to get rid of their employees because they're going to already have employees. But it's not going to. Like, someone who's not in the industry isn't going to buy the business when it's negative.

Yeah. Are you able in the chat here to message me the domain name and I'll keep it private. I would really like to look at the website just to see exactly what you do. Yeah. All right, There it is. Yep. Is it screen printing mostly or just custom merch?

So, yeah, it's specialized in screen printing, apparel, but we do everything. Embroidery. We can do pens, postcards, literally anything.

And what's up with the two locations here?

So, yeah, that's the other thing that's a little sketchy. So it is just in Jersey. He Claimed that he was opening another location at the other one. And it turns out like he wasn't. He was just making that up. And then he also claimed that he was franchising it. And then we found out that also wasn't true. So that other location does not exist. It's. We keep trying to take it off and there's like issues with the website, but it is just the one location.

How long had he been in business and how did he acquire the customers that he has?

So that's the. So mind you, I'm just getting this from him and he hasn't been truthful about 95% of the stuff. So this is just what I'm hearing from him. It was. He started it in 2018 and apparently he did no marketing or anything. He just. It was like word of mouth. His dad is in the same industry, so his dad got him customers. And that's the other. Like, they're. His dad is well known in the area. And that's the other thing. Both of them. I don't know what he's trying to do.

Yeah, so he claims he. He launched in 2018. It's always just been organic as far as acquiring customers goes. That's how he framed it.

Yeah. He told us there was no marketing, so there was plenty of room to grow and all this stuff. But I'm not sure how accurate that is anymore.

Yeah. And what does your average customer look like? How much are they spending? Is it a school? Is it a. What type of person is it?

Yeah, so we do quite a few schools and like recreation centers. You. That work with like, teachers, team sports and stuff. And then we do businesses, a lot of businesses, like landscaping, construction workers, stuff like that. And then we'll also do like smaller things where people just want like a sweatshirt for their grandson or something. But most of our stuff is like bigger businesses like ice cream shops, construction places, landscaping, schools, stuff like that.

Okay, and have you been able to. When did you close again? Like, when did this all go down?

Last August.

Okay, so you've been at this for a while then. So you started in February of 2023. Due diligence lasted six months, closed in August. Found out about all this in August. And you've just been like, trying to keep your head above water.

Yeah.

Ever since. So I'm looking at the web archive of his domain name and it looks like it was launched in 2023, 2021. It was a parked domain early 2000s. The domain was used for a tattoo shop. There was nothing indexed on the website in 2022 for this business, which is very rare. Yeah.

And I don't know unless he just. I don't know why he would just start the website right before he put it up for sale.

Right.

I guess he did one.

Honestly, it looks like he did. I'm looking@whois.com the URL on whois.com and it's so registered on in 2021. So it looked like this domain was active in the early 2000s. Someone let it expire. It was registered again at the very end of 2021. So basically 2022, and then it wasn't really. People weren't really doing anything with it until 2022. And then 2023 is when Google started indexing it. And it. Back then it looked like what it looks like now, but it looks like he just built this as a front to sell it, like, as a fraud.

Yeah. It seems like what we've been, like, finding is that, like, he seemed. It seemed like he. Right before he listed it, he put all these things in place to make it look more legit than it was.

Yeah. How many customers do you have?

Probably like a weekly basis? We might have five to 10. 10 customers on a weekly basis.

Okay.

Some of them repeat, some of them not.

And what is your monthly revenue nowadays?

Me bring that up. It varies because it is a very, like, seasonal. So, like, right now is our slower season because it's summer. So, like, schools aren't doing anything. So it does vary. So let me see what last month brought us in.

Are any drugs involved with this seller? Is he, like, addicted to gambling or do you know of anything like that?

Not that I know of, but I guess anything's possible at this point.

So my guess is, like you said, his dad's in the industry. They probably know the industry really well. They speak the language. I bet you anything that he started this business with the intent of it actually being a business launch. Didn't really go well. He cobbled together some customers. He didn't like what the numbers look like, and then just. Just being completely uncaring. Psychopath, sociopath just lied, faked everything he could to get some money out of it, and then was just totally cool lying to anyone about anything because he saw six figures coming into his bank account in the near future.

Yeah. So last month it was. The revenue was 28,000.

Owner's names start with a B.

Yes.

Okay.

The month before was like 30,000. So I guess around that this time of year.

And what are your margins like last month?

Our total cost of goods sold was 9,700.

Okay. So 65% gross margins, give or take 30 grand, top line. 10 grand in cogs, basically.

I guess so, yeah.

Okay, so then out of that 20 grand left, you're paying employees, I imagine you have your expensive rent, overhead, et cetera.

Yeah.

Okay.

Yeah. And then we have to pay like the vendors, like monthly cost and then the graphic design service, that's like pretty expensive monthly. So Payroll itself is 10,000amonth minimum.

Okay. Wow. Okay, so that's half your gross profit. How much are you paying the graphic design company?

They are 2,000amonth.

And it's like an agency.

Yes.

How many different like designs are you making? Are you having them make every month?

So it's. Our package is like 50amonth and we've never really gone over it. So it's around like 50amonth.

50 designs for $2,000.

Yeah.

It's not a virtual assistant. It's a US based company.

Yeah.

Okay. I would see if you can find someone on upwork to do it like on a per design basis. I get my thumbnails designed on YouTube for $7 each. Pretty good.

Okay.

I think you could really cut at least a thousand dollars a month. That might not sound like a lot, but it's something. Is there an option to where you could find a bigger competitor that is doing literally a hundred times the volume of you and they have much lower cost and you can just sub everything out to them and just keep your business going, but fire your employees, Just be like, not have overhead, not have rent and just basically this is a common model in the screen printing industry anyway. Just sub everything out. Just be the marketing and the sales arm. Is that viable?

Yeah. So we have a place who does like our bigger stuff now that like we can't handle in house. So I guess I could outsource everything through them. But my only concern with that is we have to, every time we do outsource to them, we have to raise our prices just to cover cost and so that I can cover some of the expenses that we have. And we already lose some customers when we raise our cost. But I guess if I, I can't get rid of all the employees because I wouldn't be able to handle that workload and work my job.

Yeah. So you still have your full time job?

Yes.

Okay. What has your lawyer said about going public about this or talking about this?

He definitely advised against it.

What about talking to your customers transparently about this situation and pleading your cause to them?

So Some of them don't even seem to realize that he sold the business. And a lot of them seem to have only been getting from, like, purchasing from the business because they know his dad. And so I don't know, if we start saying things about the previous owner, they're going to be like, well, I don't want to be involved because I'm friends with his dad, so.

Right. There's no way this guy would even have this business if it weren't for his dad. It sounds like.

Oh, there's. Yeah, there's no way.

So his daddy just fed him these leads and he's like, all right, you start a business, son. And then he screwed it up. He just sold it. And his dad's.

Yeah. And it's literally in the same building that we're in, and he's right next to us. So it's very awkward now. Yeah. And his dad definitely doesn't want to hear our side, and he just listens to all the lies that his son's feeding him. And it's very awkward now.

Yeah. I'm sorry, how much term do you have left on your lease?

Oh, it's a five year lease, so five.

Like, how much is left?

Four years in a month.

And how much is your rent per month?

2,000.

Okay.

And then we had to. And then the loan for the SBA was 4,000amonth, and we put that on pause. Thankfully, they were understanding for the time being because we could not afford it. Like, I was paying that out of my pocket every single month. And, like, I have my own bills to pay. Like, I have a mortgage on my house and everything.

Yeah.

So luckily they put that on pause until the lawsuit. But if, again, if we don't win the lawsuit, I'm gonna have to start paying that back.

Yeah. Okay. As you having two options right now, I've been involved with lawsuits with business partners, too, and they were both terrible. Just terrible. One of them ended okay financially. The other one did not. You can't just. And I know you know this, but you can't just wait it out. Right. And I know you're running the business and you're doing everything you can, but I feel like you've either got to go hard, like just jump in both feet. And that doesn't necessarily mean quit your job, because I don't want you to do that, but I feel like you just need to grab this by the horns and take some courses, learn. Because the good thing for you is the merch business, the screen printing business is very common. And there's a lot of really smart courses out there about how to grow, how to acquire customers, how to be creative, how to do print on demand, how to partner with third party logistics companies that sell T shirts. They don't want to print them and you can print them and they can ship them or vice versa. I feel like you, you could do a lot in the way of learning Google and Facebook ads. Take a $50 course, follow some YouTubers and really just try to grow hard while you wait for this lawsuit to play out. Because if you don't do that, then it's just going to languish and languish and shrink and shrink and shrink and shrink and shrink and your problems will get worse. So I feel like either you need to go all in both feet with learning how to grow this business or you need to just sever it like today and just cut ties and walk away from the lease and just swallow it and just be done with it. Or else your life's just going to be a living hell. Right?

Yeah.

What do you think about that?

We just can't afford to put like a lot of money into them and that's like the only issue. I would definitely love to grow it and then it would work out, but if it can't grow significantly and like probably by the end of the year, like, I'm gonna have to probably sell it or something.

Okay, here's what I think you should do with regards to growing it. I think you should look at all your customers. I think you should do a bunch of market research on your competitors and find out what type of customer is the best customer. Maybe it's a high school sports team, maybe it's an H vac business. I have no idea. Restaurant, I don't know. Find out that like 10 to 20 different industries that make for really repeat high volume customers. And then I want you to go to outscraper.com and it costs $5 and I want you to scrape hundreds or thousands of those types of customers. It's very easy. I've got tutorials online. I'm happy to send you a link afterwards and then and I'll show you how to do all this. So it's going to sound maybe overwhelming, but I'll email you all this info and then you want to scrub out all the landlines and then you want to send them a mass text that to the business owner. And I was doing this yesterday not for T shirts of course, but for something else and it works amazingly and just say, hey, this Is my name. Here's where I am. I just bought this business. And I would tell them, like, I would tell them in a general way, like, I'm in a really tough spot due to something that is not my fault, and I'm trying to grow my way out of it and just pitch them that story. Like, I know you're buying T shirts. I would love to have your next order. Is there anything you can do? Can I. 10 shirts, 10 hats, 50 hats, 100 hats. Like, I think you'll really be surprised at our quality, our prices, yada, yada, yada. I'll hand deliver it. What do you think? Now there's a strategic way to give that pitch. That's not like your first text. I would start the text by qualifying them saying, hey, do you still own X, Y or Z business? And. And then just try to, like, tell them your story. It's a unique story, right? Like, you can use that negative occurrence to your advantage. You don't want to go shout it from the rooftops because you don't want to get countersued or whatever. But you can tell them that you're dealing with something really tough right now due to something that is outside of your control and you're selling a commodity, right? And so usually that's looked at as a negative. Use that as a positive, right? Like, oh, we're just selling a commodity, so it's a race to the bottom. No, we're selling a commodity, which means everyone buys it, right? Everyone buys my thing. And so they're either gonna buy it from me or from someone else. So you need to have at least, if not a better story than someone else, a different story that's from the heart. And I know that some people will resonate with it. It's just a numbers game. Maybe it's 1%, maybe it's 30%, but you've got to put a lot more hooks in the water, right? You've got to put yourself out there and your story out there as much as will not, you know, get you sued.

Yeah. So I. Me and I have the employees doing it every single day, reaching out to businesses. But we haven't tried that method of just being honest about why we need to raise the revenue. I mean, I won't be, like, fully transparent about all the details, but, yeah, we should definitely try that method. And yeah, I would definitely, if you could send me that information on how to do use that website, I would definitely start it today.

I will absolutely do that. Thank you. Yeah. I'm sorry, Tiffany. That sucks. I've been there. But I just know you're going to look back on this and you're going to. I would not be here if I weren't ever there. Right. And that was terrible. And there was no good way out of that. But because of that, I learned this and now I'm here. And I wouldn't have changed anything. Right? It's like impossible to see that right now. If someone would have told me that when I was in the doldrums, I would have said, get out of my face, don't talk to me. But like, it's true. It's the most cliche thing ever. But everything happens for reasons. Like multiple reasons. Like not just one. Not just because this is going to lead you to an awesome opportunity, but a dozen different things and it sucks. But just take a long term approach to it and you're going to be more weathered, you're going to be more resilient and you're going to. This is going to force you to learn skills that you never really wanted to learn but that are really good to learn. And you'll be better off for it. But all that to be said. I'm sorry. Like, it's terrible and it sucks and I've been there.

Thank you.

You're welcome. Well, you can email me anytime, Chris co founders.com and I'm happy to help.

Thank you so much.

No problem. Have a good day.

You too.

Bye.

Bye.

But all that to be said. I'm sorry. It's terrible and it sucks and I've been there.

Thank you.

You're welcome. Well, you can email me anytime, Chris at cofounders. Com and I'm happy to help.

Thank you so much.

No problem. Have a good day.

You too.

Bye.

Bye.