Escaping the J-Curve in a $700k SDE Ecom Business

Right. To come up to speed on that kind of stuff takes years. And so I think it's outrageous for most people to think that they can just jump in and do that. Right. What's likely to happen is they're going to toil away at it poorly for a long time before they finally come to grips with the fact that they, they're going to need to hire somebody.

So in the end I think the question is well, am I in a position to be able to manage people that I would hire to do these things right? And I think my general thought going into it was absolutely as we'll get to in just a bit. I think the results did not quite bear out the same way.

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Let's hear how you structured the deal for this. What you were kind of estimating or pegging at $700,000 of earnings. Business.

Yeah. So we ended up agreeing to a purchase price on the business itself of 2.75 million. So it ends up working out to like just below a 4 multiple on SDE at that 700. And then there was another 850 which was about was composed of 530 in inventory and another 320 in networking capital.

So that put our Total, you know, purchase price at about 3.6 million. And I brought about a little bit more than 20% to the table for that. And then the loan ended up being about 3.2, which included about 125 in fees and whatnot.

Great. Thank you. Chris. On this point about the inventory and networking capital, oftentimes we see businesses that for sale that act as if that's apart from the business and, and kind of segregated as, as a separate item to buy.

And first of all, you're paying for it anyway, so it doesn't really matter if they consider it part of the purchase, the full purchase price or not, but, but because it is effectively working capital inventory, and not to mention the, the cash networking capital. It is the, it is the, the gas in the tank that you need to operate the business on day one.

So it's really, and it doesn't sound like you're saying anything different, it really is the full, true cost of the business is all of that as a package.

Yeah, 100%. I mean, if you, if you're, if I had half of that inventory, I couldn't have run the business in the same kind of way. Right. It's, it's table stakes for running that business. I will say, however the inventory ended up becoming.