Do you want to know one of the best feelings in business?

Its when you hire someone & they come out of the gate like a rockstar (A Player)

Just hired someone 2 weeks ago as a "Business Development Associate"

Here are 3️⃣ way you can tell if you hired a A player 🧵👇 1. First off, why does the first 2 weeks matter

I've noticed that Rockstars (A+ players) are often A players right out of the gate.

They seem to never start off as B's and turn into A's. You could have a downside from an A to a B....but rarely have a B turn into an A.

Whether you are buying a business or growing a business, you need to know what to focus on.

A tool I use is called "Price's Law" & it helps me know what to focus on. It has helped me go on to buy many businesses & scale a company I founded.

Here are 12 examples on it 🧵👇 1. First off, what is Price's Law?

It states that 1/2 of the output of any domain is attributed to the square root of the participants.

If you have heard of the Pareto Principle, this is a derivation of that. You can isolate the 50% of the 80%.

Buying a business is the easy part (37 closed, 2 this year, through 7 platforms). Integrating and growing a business is much tougher.

Knowing what KPIs to track, how to track it, and when to track it is tough.

We use the Crawl, Walk, Run Framework

10 Takeaways from it 🧵👇 1. First off

Most people know, "what gets measured, gets managed"

But when & how to get started, & tracking?

Day after close rolling out an ERP for the first time is asking for trouble. Tracking data , measuring and rewarding results is often a culture shock to businesses

When you buy multiple companies and make decisions on the fly. It helps to be able to quickly model out in your head what the MOIC and IRR is for investments.

Here is a printout that I have memorized a few so I can quickly model things in my head.

3 Takeaways 🧵👇 1. First off, here is how to orient yourself to it.

Images shows the:

1. Different MOIC levels (2x , 3x , 4x etc) MOIC stands for Multiple on Invested Capital. So 2x is doubling your money
2. You can line up the MOIC and Time to get the IRR without doing a model.

For those wanting to know about non-recourse loans (NO PG) , this newsletter by SPP is a good monthly overview of what is market of what is market in the LMM

This is useful for SMBTwit to understand as eventually you need to bring on some debt to grow with no PG

Few ideas 👇🧵 First off, I'm not a debt guy nor expert. We have all-stars on our team that have worked on the lending side, and I lean on them. My perspectives here are for the SMB guys looking to scale and starting graduate from SBA lenders

Many have asked how debt works

1st thought below

My partner @whynotgrowth just got on twitter. I had a thought looking at what he choose as a profile pic

It’s a map of the 2022 states he visited for biz (14)

I posted about buying 20 businesses in 2022 recently & many DMed me that they want/plan that

The purpose of this.. Tweet is to just show that it takes a lot of travel and sacrifice . We all try to be home at 5 for dinner /family, but there are times we have to sacrifice

Have to go to tradeshows, board meetings, visit prospect companies, portfolio companies

My advice is if you have not..

We are living in a golden age of being able to create wealth for those that are in the SMB space

This chart highlights the opportunity well

4 thoughts on why this is the golden age for certain buyers/builders over the next decade & how you can make an 8 figure net worth 🧵👇 1. Dry Powder

While down from 883 Billion last year, there is still 773 Billion in dry powder in 2022 in USA funds (1.26 Trillion worldwide)

Dry Powder is money raised and committed to private equity funds, that they have not yet deployed.

A couple of people have asked me recently how we buy so many businesses.

We closed 20 last year and plan on closing on 9 this quarter and 40 this year.

Here are 🔟 thoughts on how we pull this off, which has principles that you can apply to buying your first business 🧵👇 1 . First off, its worth saying that I could not do this alone. We have a 7 person team.
Our 7 portfolio companies do almost 300M in revenue, and there are over 1000 employees.

There is no way I could integrate that or even our 7 person team.

Those 1000+ are the secret

Here are 7 recent deals I found last night that could be a fit for the right business buyer. We will buy 40 businesses this year, so we can't buy them all 🧵👇

1. Here is a recurring water delivery service in West Texas with 3M in SDE. 2. Here is an Ambulette & Medical Transport Business that could be the base for a buy-and-build platform in the space.

We like to stay in the Southeast for the most part and personally don't like the idea of having to fly to NJ, but this could be a good for the right buyer

Here are 10 businesses for sale right now that could be good targets for a searcher, ETA, or micro PE firm.

🔟 Businesses 👇🧵

1: Tree Service Business Here: I bet that SDE is whack. Noway those margins are real. However, get them down on price, it could be a nice one. 2. Commercial Plumbing with a focus on Sewers and Backflow

This is a good niche.

Here is a good framework to set your 2023 goals 🛤

If you want to double your results then you have to double your activity if you keep your effectiveness constant

A X E = Results

A= Activity
E= Effectiveness
R= Results

I use this framework to help set 2023 goals 🧵👇 How can you 2️⃣❌

3 Ways

#1: If you doing 10M in sales, what activities does the company do to generate the 10M in sales.

Question: How can you double the activities to get to 20M in sales

If you're in the SMB sphere or Micro PE, John Huhn is an interesting guy to track

Over the past few years he has:

Purchased 100 companies doing over 1 Billion.

Built and sold a company for 825M to ADP

And prior to that, was a corporate executive in 2017

Overview👇🧵 First off, I don't know John. Met him once briefly.

One thing I think is super interesting is how much he has done since 2018, and does not appear to have a PE/IB background. He was in the corporate world in 2017 and was consulting prior.

Why is that interesting👇

Has anyone seen this youtube channel @finaius

Want to give the creator a big shout-out.

He animates business figures with some deep fake AI tech & makes a documentary.

Watching a few as the kids are playing with their new toys.

He is going the extra mile, hustle💪 Here is the creator, good work!

SMB, if your looking for a book to read over the break, I would recommend one of these 3.

Each have been helpful in us building a portfolio (7) doing around 300M in revenue

A quick recap on each and why I like them 🧵👇 Winning Moves is great book on value creation useful to anyone buying a business. Especially micro PE and searchers

It provides a good framework in value creation that we like to deploy to create a plan to get to 3x-10x+ MOIC

An interesting company to follow is JAB Holdings.

It's a hold-co on steroids & went from 100M of managed capital in 1981 to 50 Billion today.

(1/6)👇 JAB has been led since 1981 by Peter Harf

(2/6)

On Thanksgiving, I look over at my sister & she is dying laughing. I asked her what it was, & she showed me this ad

A product named @HostageTape , helps you breathe through your nose as you sleep to reduce snoring

Silly name, but this could be a 100M business

How👇 1. High Gross Margins

I bet it costs 2 cents to make a strip. Could be more. Assuming 5 cents its still a 90% gross margin at the yearly plan.

High gross margins, Low Capex, and Negative working capital makes my mouth water.

Most business owners or creators are wanting to grow.

Many get tied down in the details and don't focus on what matters most.

Here is a simple formula to use to grow your business.

A X E = R

Let me explain below👇 A = Activity

How many calls are you doing
How many X are you doing

Basically, what is the inputs that goes into producing the outputs you want.

Its good to look at this A as a weekly critical number

Here is a huge productivity tip and gratefulness tip.

Get a Life Calendar from @waitbutwhy

It has all the weeks of your life until your 90. When you look at it, its not that many weeks. You see all the weeks as checkboxes.

Benefits are.... 1. You are willing to take action b/c you know that you don't have many weeks left. Why not make it the life that you want to live.

.....

Business Buyer Beware:

When you buy a business, always be prepared for sellers to retrade you on price at the last minute.

Often this is b/c EBITDA has trended up, or maybe they are having cold feet.

Here are some tips we have used buying 31 businesses to fight it

🧵👇 #1: Calculate FCF and compare it to EBITDA.

Often FCF is less than EBITDA. Let's say I went under LOI at 900k of EBITDA and TTM is now at 1M at the time of purchase, but with cap ex and AR issues its only 600k of FCF. Say something like this.

#1 continued.....

Hot Take:

Twitter will be more valuable than Facebook & TikTok combined in 36 months.

How?

Let me tell you🧵👇

@elonmusk #x.com #x #vine #1: Payments through X.com. I think something big is brewing with https://t.co/UMSchznvhk where Elon is going to add payments through Twitter.

Payments are in his blood and he had big plans for it with Paypal, before they sold it. See cards here

If you're starting or buying a business. Remember these four letters.

QSBS

This stands for Qualified Small Business Stock, and you can save millions in taxes if you do it right. You get up to 10M-500M in tax-free gains.

I've used this before and here is why I love it👇 #1: If you sell your business, you get 10M in tax-free gain or 10x your basis, up to 50M.

So if you put in 5M, you can get 50M tax free....