Quitting Consulting to Buy a $1m SDE Agency

And so we. We thought more about, like, upfront cash requirements than potentially, like, revenue or earnings size. We. We wanted it to be above on the order of, like, $300,000 of earnings just from a, you know, like a sizing standpoint. But we had no upper limit, just sort of financing constraints, because basically, one of the other factors is we did not.

We were, we're sort of unique in that we did not, if all possible, want to use an SBA loan which added all kinds of wrinkles. Oh, you, you went into the process. Wanting to avoid an SBA loan.

I caught from a pre call that you actually wanted to avoid that altogether anyway, so. Say more. It's nothing against sba, it's just we don't love debt and I think it just as the person operating the business as well, I just didn't want to live with that weight on my shoulders and we didn't want to. Yeah, we're just kind of allergic to debt, to be honest.

Oh, it's a personal decision, of course. Because so much of this, this model is, you know, LBO leverage buyout. Great. Well we should say then that if you weren't going to use debt, you were going to need to buy the business all in cash or use equity investors, third party investors.

Which was it going to be? And yeah, but answer that first. Right.

The target, which everyone has, was cash and seller financing. And if there was a universe where maybe equity investors would be helpful or needed to help bridge the gap, that's something we considered the transaction that ended up happening were fortunate to not need to do that. Which, which worked out beautifully.

But yes, we, we did. I like, I, I love, you know, I love a self funded search model. I've invested in a bunch of people that have used, basically all of them have used SBA loans.

We were just like, we know it's a needle in a haystack, but we'd love to find something that's maybe doesn't require that. And it was interesting actually because it gave us a, a unique lens on the search where I would go to brokers and I would say which deals do you have that are not SBA eligible? Were very interested in those.

And the nice thing is that those tended to have far fewer buyers and often more reasonable multiples in terms. And so it actually led us down an interesting path. So you were comfortable with seller financing that's still debt.

Correct. We were comfortable with non recourse debt. So the personal guarantee is really what the bright red line was. Correct. Looking for an SBA loan to buy a business.

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