Q&A: Home service vertical integration, quit job to start a biz, bandit signs, bookkeeping biz and 50/50 partnership advice. Ep. #007. Small Business Ideas and Entrepreneurship

Hey, everyone.

Welcome to Kerner's Corner. Episode six Today. Honestly, I think this was our best one yet. It was our first time live streaming and it was our first time with prepared questions beforehand. All I knew going into it was about one or two lines about the generality of the question. And then they just kind of let me have it. And so we went over five things today in this order. The first one was a landscaping biz about a three million dollar company. And the guy was asking, should I vertically integrate, like, what other services should I add? Second guy was like pondering, should I quit my job, what should I start? Which is a question I get all the time. And I think he really liked my advice. Number three was a guy here in DFW wanting to put bandit signs out, which are like those yard signs to help grow his wife's cleaning business. And I gave him some advice there. And I'd actually had a cleaning business in the past. And then the fourth one was a guy that wanted to. He's a financial guy and he wanted to start hiring some virtual assistants to offer bookkeeping services to a very specific niche. So that was a fun one. And then the last one, which I think is one of the best, was a guy named Ryan asking about a partnership that he's about to start with a friend. He wants it to be 50, 50. He had just read my newsletter where I said, don't do 5050 partnerships. So I asked him a bunch of specific questions about his partnership and then gave him some very specific tactical advice on what he should do in his career. So I hope you like this episode today. Let me know if you do or if you don't. And we will see you next week. Adam, I'm going to let him in and he is going to talk about home service vertical integration. Adam, can you hear me?

Yes, I can. Thanks for having me.

Absolutely. Thanks for coming. I would love to hear about your business and your question. Yeah. So a couple parts to the question.

I don't ask.

Business.

And really we're focused on growth right now. I took the company over in June of 23, obviously trying to grow the top line, but really a strategy question when it comes to verticals. And we're interested in investing in verticals, obviously they're capital intensive. But just wanted to get your thoughts on vertical integration in contracting. Would you recommend going into different verticals like a nursery or a landscape supply company?

So let me ask you a few questions first. When you said you took this over, did you buy it or what did that look like?

That's right. I started an LLC last year and then just acquired a DBA from a small business owner.

Okay, so how many employees did this business have when you bought it? And are you comfortable sharing revenue? I don't have to say the name of your business or anything, but.

No, that's okay. I had 34 employees, revenue of 3 million a year.

Awesome.

Our revenue goal for this year is 4 million.

Okay. And I. I have your site pulled up. I'm looking at your services. What is like the 80, 20 of your revenue? Like, where's everything coming from? And where do you want everything to be coming from?

Yeah, it's almost like a 99% construction design, build, landscape contractor, and then small maintenance portion, small snow removal. And that's an area that we want to grow, obviously, for more recurring revenue. But yeah, primarily we are fully construction right now.

Okay, what's your average ticket size?

Average would probably be around 100k.

Okay. And are you doing like, neighborhood entrances or mostly residential or commercial schools?

Most mostly residential. Upscale residential.

Okay. Outdoor patios, fireplaces.

Yeah. Hardscape. Hardscape. Softscape.

Yep. Okay. And do you have any idea what the market's landscape looks like? No pun intended. Like, how many competitors you have? Like, how much of the market do you have in like, a geographical radius that you're comfortable traveling to?

I actually don't know that market info right now. Working with. Actually working with some students at a business school on a project. They have to get more of that info.

But I haven't paid for the market info.

Okay, first of all, you don't pay for it. You could find out probably within an hour or two. The 80, 20. Right. It won't be as extensive as what a team will do, but I talk about this company so much, I. They really need to pay me. I get nothing from talking about this anyway. But Outscraper is amazing. It's four bucks. And you can figure out within minutes how many competitors you have. And then you can back. You can back end into it with keywords. Like you could only search for hardscape or only search for landscaping. And then you could just look at their website, be like, oh, I know this guy. He doesn't actually do hardscapes. Or, oh, I know this. Oh, that. Who's this guy? Huh? Then you can yourself or an employee or a VA can look at their LinkedIn or their website, how many employees they have. And I bet there's like an industry kind of average of employees to revenue. Right? Like, you seem to be 100 grand revenue per employee or so.

Yeah.

So I would just assume that's similar and then say, okay, if this is the whole market, if everyone in this part of my state is having their needs serviced with hardscaping, then I own, let's call it 13% of the market. Right. That number's 83%. Then it's going to change my answer because I'm going to tell you, okay, yeah, let's start doing some serious market research into what other high margin, high ticket verticals you can expand into. But if it's 5% percent, 20%, then it's like, why not figure out how to do more of what you're already doing to get more customers? Because I would assume that if you, I know you want to lean into the recurring side, but let's ignore that for a minute. If you want to lean into the high margin stuff, you're already doing these hundred thousand dollar jobs. I assume you want to just. The ideal is just to keep doing that and just keep copy pasting.

Absolutely.

Looking at other verticals as a way to grow. Kind of assuming that it's getting harder to get the same types of customers.

No, I, I wouldn't say it's getting harder. It's more of just a curiosity. Entrepreneurial type desire. I certainly want to grow our contracting business, but I just wasn't sure if maybe locking down a vertical would create more cost savings on the material side but also grow that business.

I would think the cost savings would be fairly minimal. I'll tell you the kind of the thought process I had about six months ago in our tree trimming business. I was having all kinds of shiny object syndrome. Regretting, not looking at fences, regretting not looking at paintings. Okay. And then we had started raising money to franchise this concept. What's that? What do you hear? Are those ads? No, you don't hear ads. You don't hear ads for me, I don't do ads. I don't do ads. You know what I do? I do beg you to like and subscribe to this because that feeds my ego and my insecurities. And then we had started raising money to franchise this concept because there was only one nationwide franchisor and we thought, let's compete against them. And then one day I hopped on outscraper and I ran a search for all of DFW and it was a little, it was a little tedious because I had to put all the zip codes in there. It took about an hour. And I wanted to know how many competitors do I have in dfw, assuming that I can market better than they can. And so more competitors equals good because that's more market share to steal. And so I found out there's 950 tree trimming businesses in DFW just listed on Google Maps, which is like 1 in 9,000 residents, which blew my mind way more than I would have thought. And then I back of the napkin math thought, okay, some of these are, they have full time jobs, this is 50,000 a year. Some of them it's a couple hundred thousand a year. It's a normal distribution curve. There's probably a few eight figure companies, maybe one nine figure commercial tree trimming company and then a bunch of low six figures. And so even at that math, it's a half a billion dollar with a B market just in dfw. And then I, I actually paid for a report that kind of showed me the industry of tree trimming and nationwide and it was like 26 billion or something. And when I took the population of DFW and divided by the country, it was like right at 500 million. And so two different data sources telling me, wow, this is a half a billion industry just in dfw. So then I thought, okay, like why am I going to raise a million bucks and franchise and sell franchises and get legal documents that are hundreds of pages in every state and, and go through all this headache when I could be $100 million business in DFW and only have 20% of the market. So that hour I spent researching completely changed the trajectory of our company and now we're just going deep. It's still tree trimming. It's only dfw. We were going to open in Utah, we're going to open Alabama. We canceled all that. We're just going to keep stealing market share.

You know, it's, that makes a lot of sense.

So thank you. Yeah, yeah, so I would do that and then see what you come up with. Awesome.

Thanks so much.

No problem. Have a good day. All right, you too.

Yes, I'm here.

How are you?

Chris, can you hear me okay?

Mike? Yeah, hear you. Great. How are you?

I've been doing well. By yourself?

I'm great.

Love that.

Let me see here. Your question was about which business to pick. Ask my note. Why don't you add some more context to that?

Sure. It might be easier to understand where I'm coming from if I start with just a hair of my background. I did a venture backed startup. I went that route several years ago. And it's One of those things that went really well until it didn't. Learned a lot, but ultimately was not a financial success or anything and it was consumer facing physical product. And since then I've been getting back on my feet for the last couple of years now working as an engineering manager and context. I've been renovating a house I've been living in kind of at the same time. As a former entrepreneur, I certainly want to get back out there and reading a lot of the content that you and others like you put out, reading a lot of great ideas, a lot of inspiring stuff. But right now I'm suffering from analysis paralysis big time. And I can see it, I can feel it. So where I'm at now is at a pretty good W2 job. I wouldn't call it extreme or great or anything. I'm sure a lot of people would probably be happy with it though. And there's just so many good options right now and it's hard with the full time job to really explore every one of them fully test them out so that I could know for sure. Okay, that's where I need to dive in. And that's the basis for my question. There's all these different, what I'll call for right now verticals. Whether it's keep the W2 and you know, do an E comm business on the side or something to start a something from scratch that's in maybe home services, maybe go the franchising route. Do I buy a small or medium business? Do I buy something? You know, I work in engineering and do a lot of manufacturing, but I buy more a factory. And even within service, like you were saying, there's so many different great verticals, flooring, roofing, building homes, landscaping, way too large of a landscape, good options. And we're just. I'm sure I'm not the only one in this position. Just wondering if you have any advice for someone like me who is currently suffering from this kind of analysis paralysis. Thank you.

Absolutely. Let me ask you this. Are you the type to normally suffer from analysis paralysis? Is that kind of your Persona?

That's a great question. I hadn't really thought about it that.

Way over engineering or is this just such a big leap?

I think this is such a big leap because other things in my life, my career, usually when there's not as many options, it's easier for me to just pick a direction and go. So I wouldn't say this is typical for my personality. There's just so many good options.

Yeah. And do you like your Job. And do you mind if I ask how old you are?

Sure. I am 33. And I would say I. I like my job. I don't love it, but I like it.

Okay. Wife? Kids?

Not quite yet. Soon.

That. That's a. That's on the. That's a goal then.

Absolutely.

Okay. You like home services specifically? Or are you just coming across a lot of content so you're naturally gravitating towards that?

I think it's both. I think the way my. My brain works, the things I enjoy doing, renovating my house in my free time, I found I'm good at some things. My dad has worked in that area in the past as well. I think that combined with all the. There's a lot of content on that, on Twitter right now. That's why I'm looking at that avenue.

And you. Would you consider yourself good at sales and good with people?

I'm good with people I'm good at. I haven't worked like in sales, but I've found myself, my personality. I can convince people of things. Or I think I could be good at sales, but I know I'm not good. At least currently is, like marketing or product marketing, something I want to get better at. But I know I'm not just. I'm more of an engineer than a marketer right now. I know that.

What would you say your superpower is? What makes you completely exceptional?

What makes me completely exceptional is my ability to. I am very good at a lot of different things. I'm not a deep little expert in any one thing, but I am, I'd say, competent enough in a lot. So many different things that I can put it all together and move an organization in a direction.

Nice. Okay, this sounds like. Sounds like myself, a generalist. Not super good at anything.

That's why your stuff's so relatable to me, Chris.

Love it. All right, on a scale of 1 to 10, how much like fire, passion, enjoyment do you get from your W? 2.

6.

6. Okay. You don't hate it. Doesn't excite you. Pays the bills. It's good for now. Exactly how long have you been looking around thinking about this seriously. And how much money do you have to invest in something?

Call it 2ish years now. And a lot of that other free time I haven't been purely analyzing. I've got an Amazon store. I just opened UP1 on TikTok. I've been trying that route first. I haven't obviously haven't quit the job and bought a business or anything yet. I'M sorry, what was the second part of that question?

How much money do you have to invest in a business either starting or buying?

Is that assuming I would cash out any kind of taxable accounts?

I have just amount of money that you're comfortable putting in a business?

Call it a couple hundred grand, more if I needed to.

Have you ever managed people?

Yes, I manage a lot of people right now.

And. Okay, how are your performance reviews like.

For me personally or the people that work for me?

You personally?

They're always great.

Okay, so your superiors see you as a good manager and you see yourself as one?

Yes.

Okay.

All right, so you're 33, you've got a couple hundred grand, you want to do this. You've tasted this lifestyle before. Right. You had the venture backed startup, which was probably a hybrid between corporate and otherwise because I assume the investors put some pressure on you. They had some say or.

No, they did. Not as much on the day to day, but on the general direction of things. And I would say it was a good thing. We had good investors, they were helpful.

Okay, so I don't think it's like analysis paralysis. I hear that word on a daily basis and I find that more of a signal than a red flag. And what I mean is, it's just, it's. This is going to sound like the most woo thing I've ever said. It's the universe telling you that it's. You haven't found the thing yet. Okay, Right. And that directly contradicts things I've said in the past. And I say that very knowingly. But if you're 33, you've got money, you don't have a family yet, there should on paper, there's nothing holding you back from quitting your job and starting something. And so I feel like you're like you're actually going to do this. Whereas a lot of times I talk to people that say all the same things. Maybe they're a little older and I don't know what it is about them, but I don't feel like they ever will. They're just playing business, Right?

Right.

They're playing house. But you've already done this and you've tasted that and sounds like it wasn't the best exit. Which means that you've seen the downside of this already.

I sure have.

Only upside, especially in if you were to start something from scratch in home services, there's very little downside to doing that assuming you get good insurance.

So I think the downside for me on that is more Opportunity cost than anything of like keeping the easy W2. My flexibility.

Okay, so this is my next question is how many hours, if you're being completely honest with yourself, would you say you commit to your job? Your actual W2 per week?

It's, it's lumpy some weeks where say I'm traveling or something. It's, it can be, including a Travel time, easily 60 now I would say maybe a little more. Other weeks they could be as low as 25, 30. Okay, so it's been lumpy in my kind of analysis or the things I do kind of goes in spurts.

Okay. So safe to say 40 is pretty, pretty accurate as an average, but it's lumpy.

Yeah.

Okay, so you don't have to quit. Like there's. Have you heard of the wing walker's code? Have you ever heard of that phrase?

No.

So if you picture those guys that walk along the wing of like a flying aircraft, they never let go of a railing until they're already holding on to the next railing. So I absolutely encourage you to quit your job once you feel like whatever you're holding on to has the potential to replace your income. At least it doesn't have to be replacing it, but has the potential. And that's basically any business. Like I can't think of any business that can't scale anything can scale to six figures, especially in this Internet connected economy. I like that you like home services because I'm a huge proponent of that. There's probably hundreds of opportunities out there that you didn't even know existed. Right. And so I'm going to do something a little untraditional and encourage you to keep researching, but also to encourage you to put some money into something. And what I mean by that is, for instance, go buy a bounce house or something. Okay. Something that seems silly and can't scale, but just something that you could resell at break even or a small loss if it doesn't go well and just throw up a website, 10, 20 bucks and just get a taste of some Internet money and just see how that goes and do it long enough to have some headaches to where you rent out a bounce house and it goes flat and the mom's pissed and you need to. She's threatening a one star review. Like, like you just gotta taste that side of it. Because if you quit after you're only tasting the good, then you've got a very inaccurate and bad sample size.

Right.

But don't try to pick something that's going to be the thing. Pick something that costs a hundred to five thousand dollars. Where your pot commit. And it's a thing. It doesn't have to be the thing, but it's getting your feet wet without quitting your job and getting some income in the door, hopefully, and just giving you a taste of that. And then you're going to be shocked at how many different ideas that getting in the game gives you. Right. It's you're handcuffed right now, sitting at a W2 thinking of ideas. It's you're only using 10% of your business brain. Whereas absolutely, when you throw that bounce house in the back of a truck and start driving, you're going to be thinking about the job you're going to about the job you're about to go do. You're going to be thinking about your Facebook ad, about this and that. And it's just going to unlock this world of other opportunities that will likely be nothing. Like the bounce house business, for instance, or whatever you're doing in.

Right.

What do you think about that?

I love that.

I think that makes perfect sense. That's actually one of the things I've been considering is whether it's a bounce house or a little skid steer or running out of dumpster or a dump trailer, whatever it is, that's something I can sit there and chill. I'm glad to see, glad to see the push in that kind of a direction.

Yeah. And maybe it's just recency bias. We just spoke to Ryan and he's doing the wedding trailer business. I've done that business. Like, I've done that. I love the rental business because you start with one thing and if it does not go well, like you buy a stump grinder and then you put an ad on Facebook marketplace, they're two grand, you can get them used and you go grind some stumps yourself. And then it's. Huh. This is actually really fun. I like cutting down trees. I don't with my tree trimming business. But at home, like, it's a, it's. I'm a man. Right. I like starting fires. That's why I want to own a barbecue business. So I can smoke barbecue all day. But do something like that. Where. Because let's say you, you rent a stump grinder, you buy a stump grinder, you go do a job and then you're like, okay, there's only so many jobs direct to consumer that I can do. But what if I start reaching out to tree trimming businesses that outsource their stump grinding? Huh. Then one contact can Bring me five jobs a week. Instead of Karen in the house, bringing me one job every five years. It'll just get your brain going. So that's what I would do.

Awesome. This is great advice. I appreciate it, Chris.

Absolutely.

Hopefully I'll call back in six months with the problem with that business.

I hope you do. We'll have a follow up call.

Okay. Thank you, sir. I appreciate your time.

All right, thanks.

Thank you.

How's it going, Chris?

Art. Good. How are you, man?

I'm good, man. Thanks for taking my.

Yeah, absolutely. Are you here in dfw?

I am in the dfw.

Okay. And you have a question about Bandit Signs?

I do. So I started a home cleaning business originally. Started it for my wife. She was dealing with some health issues, but she still wanted to be active and contribute to producing. I'm working the nine to five thing and I have a background in marketing for the most part. She got trained up on that. And then I said, I'll take care of the marketing piece, I'll do the SEO for you, things like that. But it's been a challenge for her. So now I'm like, okay, I'm gonna have to try to step in and maybe even end up taking over the thing if we're gonna keep it going. And I spent a lot of time watching guys talk about their cleaning businesses and their home services businesses. One of the things that I haven't really gotten anyone to give me a good answer on is how do they manage the bandit signs piece? Because some of them are like, oh, call your municipality or whatever the case may be and see. And everybod call, they're like, no, we can find you, you know, through the nose if you do that. But I then continually see people saying Vanden signs and killing it with band signs, blah, blah, blah. So I was just like, you know what? Chris has the pulse on businesses. Let me see if he has an answer to this or if it's just what everybody's. What the municipalities are actually saying.

Yeah, I saw a band assigned tweet like two days ago. You probably saw the same one, maybe. Now, are you willing to say, like, what municipalities you're looking at specifically?

So I'm on the south side of DFW, Waxahatchee, McClothy and Mansfield around there. And I reached out to a field run and they were all like, no, can't do that. We're gonna come get you. I'm gonna find you. And then everybody's, oh, get yourself a call rail number or whatever the case May be. And I'm like, yeah, if they're looking for you, they're gonna find you. Like I said, we're bootstrapping things. And I'm like, I would like to do this. I don't have a problem putting in the sweat equity health costs of Titus in regards to running paid ads and things of that nature. So on bootstrapping it with just sweat equity in the free time that I have, and I'm like, I don't want to put myself at risk of getting hit up with a bunch of signs if I find. If I have a bunch of signs out there and whatever, I forget to pick one up in the morning before cops come around or whatever the case may be. I might be overthinking it, but I figured it'd be nice to bounce it off somewhat.

And this is for the cleaning business, for your wife's business?

Yes, we're doing a residential cleaning business. It's funny enough, we're getting more retail science, then we are actually getting residential. So now that's also another thing. It's got me thinking, should I just focus on commercial cleaning instead?

So, yeah.

Like just a retail store.

Yeah. Like, we get. I'm assuming that these are guys who are. Some of them have actually been in Florida, and they're just calling me up out of the blue, and they're like, hey, can you do this job for us? And I'm like, yeah, we can do that. And we've gone out and we've got a bunch of retail locations like this. And then it's been like a chain of people just calling us from different states saying, hey, I've got some customers in your area. Can you take care of this? And I don't turn them down. Because you're trying to build it up.

Yeah. So this is a remote cleaning business, then?

Yes.

Okay. And did you get into this by buying, like, a course or some program?

Yes. Originally it was Rohan Gilkes. Saw him about three years ago. And then when we started dealing with this health issue, and it was. It's taxed our. Our finances greatly. And so I said, you know what? You're home. You're dealing with this thing. How about you take this course? And she really enjoyed it. I was like, let's do it. You don't have to really be out there at a nine to. Or anything like that. And talking on the phone with people, that's not that hard.

So that's how it all started.

And she likes it. Something that she wants to scale.

She does. She has the Interest. We have three boys in dentistry school, and as you can imagine, it's pricey. And so the idea being we would eventually really like to be closer to them. And this in its full fruition would give us the ability to do that. But we're not there yet.

Do you see a path to this providing enough income even if bandit signs never work out? Do you. Can you see that? Do you have a plan for that?

Yes. I'm not. I'm not. I've done enough businesses in the past that I'm not on the whole, I'm gonna do this in six months training anymore. So I'm look, if we're gonna do this, it's gonna be 10 years to 10 million. That's how I look. So I'm committed to see it through. This is just something that there's a lot of stuff, I understand a lot of stuff. I know it's gonna take the buildup, but part of it was like, this is the one question I can't get asked answered. And this is the thing that I don't really know whether or not it's even worth my time. So I was like, here's a. Here's an entrepreneur that's on a higher level than I am. Let me ask him.

Okay, so you. Who's going to be placing these bandit signs, if they're going to be all over the country?

It would be me and my nephew, for the most part, going out there.

You're trying to put them up in dfw?

Specifically, yes, for the most part in south dfw, just in the area where we are located, maybe a little about 30 to 40 minutes out is my. Is my kind of distance limit.

And what is your churn. Like, what is my what? Like how. What percentage of your customers are recurring?

So far, we're not having a lot of luck with the recurring customers. It's been low and things. Like I said, things have been slow because of the 9 to 5 and all the other stuff that's going on. It's mostly evenings when I'm hitting this.

Okay, so let's just say theoretically, you were to put out a bandit sign. They cost a couple bucks plus your time, and it brings in a customer. That customer is going to have a $200 cleaning and you're going to make half that or so, give or take.

Yes.

Okay. But then they're probably not going to renew.

I would say. My understanding is that your first year out, you're going to get about 20% recurring. And then as the years go Forward. It starts to double from there.

Okay. All right, so two pieces of advice. First of all, I. I know Rohan Gilks. I didn't have a Launch 48 or Launch 28. Isn't that the name of it? Or was it.

I think it was launch 27.

Yeah, that's it. So I did. I did that eight years ago.

Did you really?

Yeah, I started. It's so funny because I get all these random questions, and so many times it's. Oh, not only do I know about that, but I've started that one. Yeah, I've started that one. And all of these ideas work. If you, like, go all in and want to go all in. I did not go all in. It was called Halo Maids and not go all in because I just. I hated that business. It was so ticky, tacky. Like, I'll just never forget that. Realtors cussing me out because there was a hair on the sink, and I was just like, what am I doing? There are other ways to make money. So it's just. That's my. It's not advice yet, but I know that program. I know it's a good program. It really is. He gives you, like it sounds, and I think there's, like, dozens of those at this point. I think you got the best one. So I think you. You got a good foundation. As far as bandit signs go, I've never been fined for a bandit sign.

Really?

You don't never. We've put them out. We don't put them out actively right now because we found more efficient ways, which I'm happy to talk about. Yeah. Back when we did, like, you just got to put them everywhere. And I know that makes you nervous, but calling a city, like, I just. I have no good stories about ever. They're usually calling me, but I. I'm sure they. I'm sure they find people. I'm sure it's been done. I don't know Waxahachie, so I don't want to be flippant about it, but, yeah, I'm not familiar with that happening. I'm not surprised they told you that they would find you. I'd be surprised if they did. Do you know what the cost would be?

I think it's 500, bro. Signing.

Oh, geez. Okay.

That's why I'm concerned. But you're saying it's never happened, so.

That'S never done in Waxahachie or Midlothian or any of those. I'm talking Allen.

I see them everywhere. So I'm like, how is this working. Everybody's saying, this works. And then the places, they're like, no, we're gonna fight in debt. And I'm like, I see signs everywhere I go. How's this work? You know?

Yeah. Two things as well as anyone. A lot of people are just probably BSing it, and some people just. They're in a completely different city. But I will say you can have better luck with bandit signs in the more rural areas because they don't care.

Okay.

I. My friend. When I first started. My friend. Help. When I first helped my friend start his tree trimming business six years ago, we did bandit signs. And to this day, I drive around Allen, which is 100,000 people, and I see his signs all over.

Wow.

And it works. And he's told me that was like his number one lead source. Nice sample size of 1. We don't do it because we like. Our primary lead source is texting realtors for referrals.

Okay.

I. I think you should try that as well. I think you should scrape a database ofrealtors, search bug, dot com and search bug will tell you which phones are cell phones, which phones are landlines. And then you can use a tool like Porterhouse that's like a personalized SMS tool that's fully compliant and it will even send them in with blue bubbles so it looks like it's coming from an iPhone.

Nice.

And you just. If you're willing to play the long game, which I'm glad you said that because, like, just because the home cleaning business didn't work for me doesn't mean it doesn't work.

It works.

I was not. I wasn't willing to play the long game. You could start a trickle of referrals from Realtors. Like, realtors are touching different homes all day, every day, and they are always in need of cleanings and they're always, always in need of people that are reliable contractors. So my first piece of advice is try more rural areas for the bandit signs that just don't care about stuff like this. Or try areas where you're already seeing bandit signs because they're probably not getting fined. Spend a couple hours driving around. My second piece of advice is start looking seriously at different acquisition sources for your leads, specifically property managers, landlords, and real estate agents, because, like, if a realtor isn't recurring, then they will bring you recurring business because they're always touching different homes. Yeah.

I've been cold calling property managers for about a month now, and last week I just started a cold email campaign to realtors.

Yeah, yeah. Cold emails works both. Realtors texting works better. And calling, they always answer their phone.

Yeah, I've heard you say that before. Thank you so much, Chris. I appreciate it, man.

Absolutely. Best of luck to you. Good talking to you.

Thanks. Bye.

You too. Let's start blinking. Yep, let's do it. Oh, perfect.

Hello.

Hey.

You might need to close your other tabs. I'm getting a pop up that says if you have Riverside open in two tabs, go ahead and close it. Or Twitter or whatever you have.

Yeah, I have all that open. I was watching the episode on Twitter.

Okay.

Is it better now?

Thanks for joining. Yeah, it's perfect.

Awesome, man. Hey, let me get situated here. Appreciate you doing these. Super, super helpful. I've watched the whole episode and it's all been obviously pretty great stuff. I had a little bit of an interesting question. So I worked in my father in law's sign company and he brought me on. I was a teacher, a science teacher over at Lovejoy. Over in your area. Yeah.

Yep. That's very familiar to me.

Right. So we. I got out of that when I met my wife and obviously he owns a sign company over here in like Saginaw Teller area. And so I did some financing stuff, some like strategy stuff for him. And so I'm QuickBooks, like certified pro advisor or whatever to do bookkeeping. So I'm watching my first million one day and they have Syed on who did all the WordPress stuff.

Yep.

And he's man, this like labor arbitrage play for specifically. They're doing it for like web design. But he was like, I like bookkeeping for the TAM. And then he said, specifically reaching out to CPAs is like white labeling your service. So if they don't offer bookkeeping, then you can offer my service with a markup.

Right.

And it got my wheels turning about bookkeeping as a service and all of that. So I have a couple of questions. I guess my first one is labor arbitrage because I was thinking, go to shepherd, get somebody that's good, they can manage, I don't know, 30 accounts, just doing, filing the transactions, printing the reports at the end of the month, blah, blah, blah. And then I could just scale it like that and maybe do email marketing to these smaller CPAs and just go to town. So that kind of labor arbitrage model. Do you have initial thoughts on that? And then I'll dive into the other stuff.

Yeah. So you're saying you already have a CPA brain. Right. You're QuickBooks certified. You know the world, you don't necessarily want to do it yourself. But you speak the language, right?

I'm not a cpa, but like I. I did that for my father in law.

Yes.

Okay. And you like the business? It's something you would enjoy working in that.

Yeah, absolutely. For sure.

Okay. Yeah. I. Yeah. From. Based on everything you've said so far, it's labor arbitrage, everything Syed said on the podcast in total agreement with you. Okay, great.

Perfect. And then so I guess now my question is like getting somebody from shepherd and then what would you do to initially get customers? Should I do outreach to myself, to small business owners? I guess the main question I have is I love this idea of a vertical niche, like specialty think like dentist. Right. So I do SEO services only for dentist and I'm just the best at it is in this realm is that necessary, like to get like, is there something that you gain by categorizing transactions for a dentist as opposed to an electrician? Do you even think that's necessary, specifically in bookkeeping? And then if so, should I go down that path?

I do think it's necessary because bookkeeping is such a commodity and what makes you different?

Okay.

And so I think you should go even more niche than dentistry and find something completely random and off the wall. Bookkeeping for gutter cleaner, bookkeeping for fencing repair companies. And just test them and just plug and play whatever industry that you come to the top of your head and see what resonates. They like. There's no market too small in bookkeeping. There's 32 million small businesses in America. They all need a bookkeeper. In fact, most of them probably don't even have one. And so, yeah, I would definitely go niche. And as far as how to find someone to do the actual fulfillment, I would just use upwork.

Honestly, it's simple enough that we don't even get to.

It's so simple. You can find someone like, don't look for an agency on upwork. Look for an individual on upwork and it will tell you in their profile if they're an agency or an individual and just find someone that has availability and a ton of five star reviews and that's very responsive. And if those three things match ton availability, good reviews, hyper responsive, then the chance for them being a killer bookkeeper is like 80%. I had this conversation just yesterday with Nick about one of our businesses. We're like, all right, we need a bookkeeper. What do we do? And we're like just a specialized role. And it was like, I have of all the things I've hired help for overseas, I've had the best luck with bookkeepers. I don't think I've ever hired a bad bookkeeper overseas. And they've all been from upwork. Okay, so what do.

When we think about scale. Yeah. So I, I guess do you think just put it up on, I don't know, card or something and say bookkeeping for whatever out scrape all of those people and then just see if it works. And if I get. If there's 500 fence companies in DFW, then, you know, just hit all of them and see what's up.

Or I think you should hire another virtual assistant from upwork to do the cold calling. Oh, cold calling. You should do cold calling specifically. Yeah, I think you should. Yes. Do outscraper. Find out which ones are cell phones. That's probably going to be a one to five man show and have the VA just make cold calls. And it's just a very clean offer. It's just. You're just playing a numbers game. We offer bookkeeping. Maybe even think about a flat fee. It's. Listen, here's our value prop. We offer bookkeeping for gutter. Clean gutter cleaning companies. It's 400amonth. That's all we do. That's it. Like just the pre. Just pull back the kimono right there in the pitch and just see how they react after talk. After they talk to a hundred people, open a Google sheet, have them rank like the yay. Nay on a one to ten scale. Right. One is just pissed and hung up. Ten is I took his credit card information over the phone and after 100 gutter cleaners just go from there or whatever and then we'll.

That's like enough to say, okay, gutter cleaning kill. Let's like really scale this up or let's scrape this and try Finn's repair company.

Okay.

Yeah. And you can also say we're so cheap because we know exactly what we're looking at. Like, we know what? Like when we see this transaction for Bob's Cleaners, we know that your gutter cleaning solution or whatever, like, I'm BSing as I go. It's just we know what to look for when we look at your books. It like we can immediately translate it. That's why we're so cheap. Whereas that is one reason. The other reason is because you're using offshore talent.

Cool.

All right, brother.

You killed that man. Thank you.

Thanks. Yeah. Let me know how it goes.

Yeah, for sure. Thank you.

Yep.

What's Up. We're here.

Ryan, how are you, man?

Good.

Ryan, why don't you introduce yourself?

Yeah, not very good at this, but I'm Ryan Sneddon and I go by the local newsletter guy on Twitter. That's what I made my life into over the last three and a half years. Starting to local newsletter, just emailing people what was happening in my town. Started once a week, switched to three times a week and now we do it five times a week. It's my full time job. Gonna do more here soon. And I started writing about what I'm doing, teaching other people how to do it. That's media is my thing and I'm announcing it. Oh, sorry, announcing another media thing here. I was trying to do it this week but having some technical difficulties getting something set up so it'll be next week. But yeah, I like media. That's my thing. I'm not training or anything, I'm an engineer. But that's what I figured I'd like to be good at.

Yeah, it's been fun following you and the growth of Naptown Scoop and everything else you're doing. So I'm excited to meet you and hear your question.

Yeah, it's fun to get you on here and actually talk to you because we've DM'd a lot, a lot. And even talked about starting a little media thing together. But yeah, it's fun to actually be here. So should we just jump right into the question?

Yeah, let's get into it. All I know is you're exploring a business partnership and you want to know what I think about the structure. So let's hear the details.

Yeah, man, I feel like I'm on like the Dave Grant to show right here. We're about to. You're about to come in and yell at me on the air. But so I. One of the things that I always thought I was going to do through the local newsletter was start other businesses in town because I have almost half the town reading our thing every day. We have 18,000 people reading in a 41,000 person town. So I always figured if I ever did anything, I'd have an unfair advantage on marketing and advertising. Could also unfair advantage, block out any competitors from advertising. So that's always what I wanted to do. And one of the things I've always liked the idea of to do is a portable restroom trailer business. I know that you like this business because you wrote about it a couple months ago and I have been looking at it a year before you wrote that and then that was Part of the thing that re ignited it. And I was always thinking about doing it with this one partner who is a great operator, great business operator, got this great business mind. But I think a lot of people are afraid of him right now because his last business failed. But that's because he just chose the wrong thing. Like he was trying to reinvent greeting cards and greeting cards don't need to be reinvented. It was like a little classic startup that raises a bunch of money that should never even been started kind of thing. So he had wind that down. But he's got this awesome business mind. And so we're going to do this thing together. These portable restroom trailers and so long story to say we were thinking about doing a 5050 partnership. And then basically that same week that you were talking you and discussing that part of it, you sent one of your Chris Garner newsletters which are awesome and basically said don't ever do that. I've done it before and here's why it went bad and I would do this instead. And so I asked him like what, what would you do here in this case, considering we're doing equal money invested for both of it, we're both going to be working on it pretty part time. He has a full time job. I've got that John scoop my business and I'm doing other ones as well. So pretty similar workload for each of us, exact same investment financially with cash. But then I'm going to be giving some advertising from our newsletter into the business which if you want to quantify a cash value of it is an additional half of a dozen thousand out of there, like five to ten thousand dollar extra contribution. That doesn't actually mean I'm spending five extra thousand dollars, but I'm losing that revenue potential in the business and it isn't. If anybody else wanted to advertise, that's what they would be paying. And asked you an email and you said why don't we ask for the show? And so here we are.

Okay, so 5 to $10,000 is the value of the audience that you bring and then in addition to that you're putting in, you two are putting in the same amount of money, is that right?

Yeah.

So we put that a little bit to get the deposit and actually buy this trailer and then we're going to finance a little bit of it and then use some zero interest credit cards as well. So not a huge actual financial outlay for either of us. But whatever we do outlay, it'll be the same for both of Us.

So are you roughly saying that your bulk of your value is going to be from the audience you bring with your newsletter and the bulk of his value is in the operations piece?

Yeah, that's how the workloads are going to be split up. He's good at that part. I'm good at marketing. And then everything else we're either going to figure out ourselves or hire other people to do.

Okay. And you guys live nearby. Will you be meeting together in person regularly for this business?

Yeah, he's about 20 minutes away from my house.

Okay. So I had to pull up my newsletter so I could remember what I wrote. So this is. I'm going to read verbatim what I wrote. I said how to split the pie up. Here's what works best in my experience. Two partners at 50 50. This only works when one, both are working physically side by side, no remote. Two, both are all in on the business, no side projects or other jobs. Three, both have contributed the same amount of capital. Four, both have similar amounts of value to add. They don't have to be the same type of value however, like we're talking about here. If one is an engineer and one is a marketer, great. If all four of the above aren't true, don't go 50 50. 5050 is the easy fallback, but it's really a good idea. Remote partnerships can really suck. Just like long distance relationships can suck. They don't have to, but you have to be much more intentional to allow them to thrive. Whereas a 5050 in person partnership just flows. So with that, obviously I'm saying generalities, there are exceptions to everything. How often do you guys think you'll be meeting in person about this business? And does he have other businesses or other side pro projects like you do and will continue to have?

He does not and I don't anticipate that he will. The understanding between us is if this goes well and we end up making it into what would be a full time business for somebody, then he'll be leaving his job and doing that because he's a pretty part time consultant right now anyway. So that's there. I think we'll be, I don't know how often we'll be meeting in person. Probably pretty often in the beginning, every week maybe just to see how things are going, if there's actual jobs to be discussed. But I don't know how often we're going to meet in person for it. That depends on how many bookings we get because I think in the beginning we're Going to go deliver this thing together. So we both have a really good understanding of how we're actually operating and when we eventually pay someone to deliver it for us. We want to make sure that we really know the process so that we can train them up to do it the way that we want. Because everything that I do, I want it to be a really creative, great product. So I want, I want to know that backwards to forwards before I trust someone else to do it.

What. Who was the, who came up with the 5050 idea in this case?

That was his idea.

Okay. And did that. What was your gut reaction when you heard that?

My gut reaction is no. Just because I like the idea of there being somebody who is at the end of the day, ultimately responsible. It's not so much a, a power hungry, I need to be in control kind of thing, but it's. At the end of the day, I like the idea that one person, whether they're the right person or not, and hopefully they're the right person. But somebody at the end of the day can say, what we screwed up, that's my fault. I'm, I own the majority of this. I, I take full responsibility. I'm going to fix it. Or if we're stumbling around in the dark, somebody to just say, you know what, guys, we're going to go this way. And we might not be going the right way, but we can adjust later. But I have the right to say this and we're going this way. That's just like my life experience. I've been that person who. It's like in college, I ran our friend group. There was that sitting around Friday night, nobody knows what to do. I'd be like, all right guys, we're gonna go do this. And even if it's not the most fun thing, we're at least gonna, it's gonna be better than sitting around. And then in business, I just, as somebody, I don't have any partners in that town. Scoop. I read it all myself. It just, it is easier. But there's just one person is at the end of the day, responsible for the good things that happen in the bad.

You know what I hate more than Hitler as a baby? I hate ads. You hate ads. We all hate ads. That's why I don't have ads. That's why all I ask you to do is to leave a five star review like, and subscribe. That's it. That's all I want you to do. Maybe tell your friends or 10. And how long have you known him?

About two years now.

Okay. And I assume you trust him pretty well?

Yeah, trust him completely. 100. We worked together at his other business. His startup was a client of mine.

Okay. Has he done anything successful in business before his last attempt?

Not as an owner.

Okay, what about as an employee?

Yeah, great salesperson, great operations guy. He's been working at high, very high paying tech jobs and mostly software tech stuff for the last 25 years.

Okay. Do you think that this business, just knowing what type of business it is, has enough work to be a full time thing for him? And if not, how long do you think until you can get to that point?

I think getting into a full time business probably takes three to five years. And you, if you think about delivering these things, they're mostly on weekend rentals. If you're delivering 30 weekends a year, that's far from a full time thing. Also managing the bookings of that is far from a full time thing. But if you're on the side when you're talking about four trailers, five trailers, and then you're delivering over a hundred a year, then people, other people are getting involved. You're managing those people. Maybe you're still able to jump in on your own side. But yeah, probably that three to five year before it would actually be anybody's full time role.

If this is his only thing and you have something else going on, what will he be doing in his spare time if it's part time?

Right now he would just be doing his consulting gig for his main, main source of income right now.

Okay, so in a sense he is doing something else. Right. Like theoretically he could get a big consulting client that could pull his attention away.

Theoretically, yeah.

Yeah. Okay. And what was I gonna ask? The, the number one reason why I don't like 5050 is because it's, it's just so easy. Hi. 50 50. But you can't. Most businesses last what, one to five years, right. You have no way of knowing what this business will look like in four years. Maybe in four months. It's not even a, a trailer rental business anymore. Maybe it's something completely. Maybe you found out that there's so much demand for wedding chairs and so you went and bought a bunch of chairs and no one wants your trailers. And that could change the dynamics in a small but meaningful way over time. That's my number One beef with 5050 is like it's never actually 5050 effort. It could easily be 5050 money. It could easily be 5050 effort in the beginning, but over time that number is going to Drift one way or the other. And you could also make the argument that it's never actually 60, 40. It's never actually 73, 27. Right. You just don't know. And so have you guys ever discussed the possibility of the equity being different? 60, 40 to one of you, but the operator draws a salary at a certain trigger point?

Never discussed. We discussed different equity splits, but we never discussed salary like that.

Okay, and how will the distributions go? Will they just be 50? 50?

Yes. The clear grade. We're talking about it.

Okay, so that was my beef with 5050 in general. My potential concern with this business is that you're writing a newsletter. It's pretty public. You sit at home. It's great. It's fun. I'm generalizing here. And he's out there, you know, attaching trailers, hauling them all over town, gets a flat tire. These little things really add up over time. And even if you're at home, like hitting Facebook ads, driving a ton of sales, driving a ton of value, in his mind, you're out of sight, out of mind. And it's, oh, gosh. And he might be doing the lowest value thing in the company, right? Grunt work. Minimum wage grunt work. But even so, he's, ah. What's Ryan even doing? I've just. He's just sitting at home. And you could be doing a ton, but you don't know. Right? You're in person, but at the same time, you're not running it together in person. Like, for instance, a software product where you each show up at the same time, you work in the same room, and. And you're just talking, you're looking over each other's shoulder. Okay, let's do this. Let's try that. That's what I'm referring to when I say a 5050 partnership can be beautiful. But even that, over time, as you hire employees and roles change and one guy becomes an executive, but the other guy is bad with people, so he just keeps engineering. Like, then problems can arise there too. But I've just. I've been in that boat where you start 50, 50, and then even if you were to put in all the equity, it's just a different dynamic when the guy is out there operating kind of a physical manual business. Does that make sense? I just think that you should probably confront that right now and say, here's where this could go, right? And just talk about what happens when. Or if that happens. I would also suggest that you find a neutral third party that really doesn't know either of you too Someone that's truly neutral that can be that tiebreaker. I'm not going to say, like, you for sure have to do 49, 51 for sure. It needs to be 60. 40, 50, 50 can work. Because there is no perfect partnership structure. But I definitely recommend that you schedule in monthly or quarterly, like, hard conversations. It's like, how are we feeling? How are we feeling about this?

Or.

And. Or keep track of your time, each of you. Honestly, it's really annoying, but it works. I had a partnership meeting years ago, and we all sat in the same room, and we were having this conversation in person, and it was awkward. And me and this other guy came up with this brilliant idea, and then we proposed it to the other guys, and we were like, hey, we're just going to keep track of our hours and we'll make pro rata distributions based on what our hours were. And we. We had this idea because we suspected that we would be putting in most of the value, and they hated this idea. Why? And they were like, value isn't time like time? Like, I could come up with an idea in five seconds and on an hourly rate. That's nothing. But that idea could change the whole cup. And, like, value and time are not the same thing. And yada, yada, yada. And so we didn't do it. And guess what happened? They didn't add any value, and it blew up in our faces. So I'm not saying that will happen to you, but I'm saying now I have one of my partnerships, and we track our time. We're 50. 50. We're remote. This isn't Nick. And we track our time, and it works. And last month I put in two and a half hours, and I got paid, like, 200 bucks in distributions, and he put in 100 hours and he got paid, and we're both thrilled about it. It's annoying. And we have to guesstimate. I'll go days without tracking my time and look back maybe 20 minutes. And it's not perfect, but I trust him and he trusts me, and it's directionally accurate. Does that make sense or you have any thoughts, as I say all that?

Yeah.

No, I think it makes sense. I think tracking the time will probably be important. I think at the beginning it will be a lot of together time, and then after a little bit of time doing this thing and kind of getting things figured out, it won't be together time anymore. And then tracking the time will be more important. It's not that I'm the right person to Talk about this, because I never happened, but I like getting married.

Right?

It's super easy on the honeymoon. And then you gotta figure things out a couple months later, weeks later, however long it takes, years later, I don't know. I'll let you know when I get married. But I think that's what it's like right now. It's all fun and it's a new business and it's cool. And we think we see an opportunity in the market and we think we have a way to do it better. And it's just fun right now. It's easy. So I think it's good to talk about and think about what happens if this goes well? What happens if it goes not well? What happens if I do all the work or you end up doing all the work? I think it's really important. I think you're like this story dice. I'm doing another business, which is a little bit easier, all on the Internet at the same time as this, which I was hoping to tweet about today, but I have some annoying issues that prevented us from launching today. So you listen to this, Cliff. I'll tell you why later. But we did it on the phone. We just decided to do this thing together. It's like a small project, not putting any money in. It might turn into something fun big. And we literally just flipped a coin for the majority stake. And I think it's a great idea because I won, but I don't know.

That's hilarious. No, it's. It's much easier to have hard conversations when things are fun and light and then it's fun. This is what. This is why we have these conversations. Because just in case. But it's much, much harder to have those hard conversations when things are hard. Right. So it's. If you intentionally sit down and you just get ahead of it and it's gonna be awkward and I don't have anything in mind. I just. Let's just cover all these bases and I'm gonna put this in an email and send it to you. That way there's a record of it. Maybe you get it formally written up, maybe you don't. Yeah. If I were to summarize everything. Fit50 is cool. Just work in hard conversations. Have the hardest conversation now. Have a third party tiebreaker. Talk about things. Because this is. Sounds like a capex heavy business. Talk about right now. You're putting the money. So maybe in three months, if this is blowing up, hey, we need two more trailers. It might just be understood that you're the money guy. But you might be like, if I'm the money guy, then I need more equity. And he might be like, I thought that's understood. You're the money guy, I'm the hands on guy. Talk about what happens if you haven't already. You might have already when you do need more trailers and have to put in significant capital. But I think you're, you've got a good thing going and you're going to, you're going to be successful.

Yeah, I think it'll, I think it'll be good. And if it's not, the great thing about it's buying these things. And as long as you rent it a couple times, you're not going to lose money on your resale because they don't appreciate that much, especially if they're brand new like this.

Put on Facebook Marketplace.

Are you, did you end up buying one? Are you gonna buy one for your, Are you doing your gym business thing?

I would, I should, I want to, but it's like idea number 32 right now. So that business, that building is a hundred thousand feet behind me right now, but it's just sitting empty.

And aren't you like moving, Are you moving to the ramp?

Maybe. Probably for the summer. Probably not long term. So.

Yeah, sticking around in Texas.

Yeah. Ryan, thanks for coming in, man.

See y'.

All.

I'll keep listening.

Yep, thanks. Well, thanks to everyone for joining. I hope you learned something. And I will upload this to all the podcasts and YouTube channels in a few days and we will see you next week at the same time. Kerner's Corner out.