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Jan. 13, 2022

How2Exit Episode 12: Jeanette Holm - an award-winning entrepreneur with 15+ years of experience.

How2Exit Episode 12: Jeanette Holm - an award-winning entrepreneur with 15+ years of experience.

With 15+ years of experience in starting, growing, buying and selling businesses, Jeanette is passionate about building value in a business through innovations, systems and empowering people so that a business can run itself. And, she has successfully...


With 15+ years of experience in starting, growing, buying and selling businesses, Jeanette is passionate about building value in a business through innovations, systems and empowering people so that a business can run itself. And, she has successfully done so with all of her previous businesses in Sweden.

During her time as an entrepreneur Jeanette has created almost 10,000 jobs and at the same time had over 1000 employees in a single company. Her core strengths are strategy and vision, leadership, creating systems, order, and healthy finances, increasing shareholder value and preparing a company for exit. She is currently a founding Partner of Advantos - a small investment firm who buys and rolls up SME Companies in Europe. www.advantos.com
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Contact Jeanette on
Linkedin: https://www.linkedin.com/in/jeanettegorosch/
Website: www.advantos.com

If you’d like additional ways to support this podcast, you can become a patron here: https://www.patreon.com/bePatron?u=66340956
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Reach me to sell me your business, be on my podcast or just share some love:
Linkedin: https://www.linkedin.com/in/ronskelton/
Twitter: https://twitter.com/ronaldskelton
Facebook: https://www.facebook.com/How2Exit

Have suggestions, comments, or want to tell us about a business for sale call our hotline and leave a message: 918-641-4150
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Watch it on Youtube: https://youtu.be/rOPUL_3K_Qw
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Other interviews:
Zoran Sarabaca: https://youtu.be/OLqszNP7yHY
John Andrews: https://youtu.be/vmGWbd2y5x0
Chris Daigle: https://youtu.be/jHWzFGRbpD4
Arturo Henriquez: https://youtu.be/uwN7y8AE4EQ
Joe Valley: https://youtu.be/ZQLdybxcZKs
Christopher Wick: https://youtu.be/xhIf9ltgedA
Jonathan Brabrand: https://youtu.be/oC82Ls54CXo
Carl Allen: https://youtu.be/VIU2Lqj_FY4
Klint Kendrick: https://youtu.be/eJ2GICCj2TA
Walker Deibel: https://youtu.be/xoUH_Ixeook
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Ronald P. Skelton - Host -

Reach me to sell me your business, connect for a JV or other business use LinkedIn:
Ronald Skelton: https://www.linkedin.com/in/ronskelton

Have suggestions, comments, or want to tell us about a business for sale
call our hotline and leave a message:  918-641-4150

 

Transcript

Ronald Skelton  0:06  
Hello and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.

Hello, today here I am here with Janet Holm. I said Janet and earlier after I told her we talked to Jeanette Holm, Jeanette is an experienced award winning entrepreneur with 15 years experience starting growing and buying and selling businesses. Jeanette is passionate about building value in a business through innovation systems and empowering people so that the business can run itself. She's also successfully done that with all of our previous businesses in Sweden, during her time as an entrepreneur, and that has created almost 10,000 jobs at the same time, over 1000 employees at a single company. Our core strengths are strategy and vision, leadership, creating systems order and healthy finances, increasing shareholder value, and preparing a company for exit. She's currently a founder at Adventos, a small investment firm who buys and rolls up small to medium companies in Europe. Welcome Jeanette. I'm honored to have you here today. 

Jeanette Holm  1:34  
 Thank you. How are you? 

Ronald Skelton  1:37  
I'm doing good. Sorry about that. We just did that I have that. I guess it's a theme I for some reason, I butcher everybody's name no matter how simple it is. So one of the first things I always like to do is kind of get people to kind of know who you are, and where you're from so so just tell us a little bit about your kind of who you are, where you're from what you stand for. And let's just start with that.

Jeanette Holm  2:03  
Sure. That was a small question. Well, I am 42. I live in Sweden. I have a beautiful family, husband and two crazy energetic boys that are eight and five. So they take up a lot of my time and energy right now. I started my first company well actually the first company I started was when I was 19, actually, because we had to take a class in school that basically taught you how to start and run a business. And what we did was that we decided to go to Paris, to an area outside Paris called Les outils. We could buy clothes really cheaply. So we went there we partied. We had tons of fun, we bought clothes. And then we came back to Sweden, we sold them for like twice the price. And we were like, wow, this is fun. So we did it again. So few times. So we had like a huge fashion show in business. And that was my first encounter with being an entrepreneur. And it was also probably the most fun class I had in school. So I think from there on, I decided that I'm going to be an entrepreneur because this this is just way too much fun. And then actually lived in the States for five years, I did my whole university degree in Santa Barbara and San Francisco, studied international business. And then I worked one year in San Diego. And that was a huge experience. Because I think what you get your Americans are very good at is to push people forward that wants to go places and give a lot of positive reinforcement. And I started reading all these books like you know, Rich Dad, Poor Dad, and yeah, tons of tons of books of people just making it and being entrepreneurs and being Yeah, fulfilling their life's dreams and stuff. So when I came back to Sweden, I would say that my confidence had grew a lot. And from there on, I decided I was just gonna be an entrepreneur and make it big like you guys do in the US.

Ronald Skelton  4:11  
It's interesting, we kind of have a little bit of a similar path. I've never been to Sweden. But I lived in California for a little while. When I got out of the military. I got an offer to work for Lockheed Martin in California. And being in tech, that's just a place to be right. So I stayed in California, until I and I've worked in San Francisco, I worked in Redwood City and stuff. But uh, I stayed there until I realized I didn't want to be a tech anymore. And then it didn't matter where I was. And I had family here in the middle of middle of United States in Oklahoma that needed my help. So I moved here, you've had you've had a series of successes, right? You're this is it you know, you didn't jump into mergers and acquisitions and start buying and selling companies. Right away. You built some significant companies to let me share a little bit about the entrepreneurs Journey journey and kind of what led you up into built buying and building as opposed to just building from scratch?

Jeanette Holm  5:08  
Yes, I started my first company when I was 27. And at first I thought I needed to go into tech, like everybody else in Sweden. So my first idea was very advanced and hard to get going. It took, I wrote like a 50 page business plan, I talked to investors, I had a lot of partners. And after about six months, I realized that, you know, this is this is, it's not doable, right now, I don't have the skills, I don't have the money, I don't have the knowledge. And it's too hard to get this going. It will take me years before I see a dime. So I actually found this book that changed the way I look at how you build your first business. And it's an American woman, Laura Lang Meyer, probably heard of her. And the book is called The Millionaire Makers Guide in creating a cash machine for life. So probably the longest book title in the world. But basically, what she said is that the first business that that you start has to be something that you know, and that you can start making money of in a month. And then your job is to learn how to be an entrepreneur, because that's the hard part, to learn all the skills you need to grow a business. So I did, so I went back. And I thought, Okay, what's the easiest idea I could think of. And she also said that you should look at what you've done previously, when you were a kid and that kind of stuff. So. And the second part of the idea is that there has to be an opportunity. So it has to be a simple idea, but also an opportunity. And right there in Sweden, and this was 2007, right here, somewhere around that. God is so long. Now I've kept forgetting that the government came up with this tax deductions for all services in the home, like cleaning and gardening and construction and babysitting. So the government pretty much paid half of the fee that the customer paid. And also, there was really no competition, it was a new market, the VAT was zero at the time, and the employer tax of young people had also been cut in half. So it was like a lot of opportunities there. So I gave myself a month to start this company. And it pretty much just exploded. And I think yes, in the first year, we did like a million in sales. And I was pretty much by myself half that year. So you can imagine how much I worked. But it just grew from there, up until we were over like 1000 nannies and had pretty much half of the market share in Sweden. And I focused a lot on learning to build businesses, which meant I focused on building structure and building a strong culture and making sure my people could work without me and that the business could run without me, which we're going to talk about more later. And after three years actually put a CEO in place. And then I was pretty much free to do whatever I wanted to. So we didn't lose much revenue, but it just felt like we were hitting our head against the wall trying everything and the business wasn't growing anymore. And that's when we first started a cleaning company. And also I figured that either we just gonna kind of dwindle or die now, or we grow ourselves out of this crisis. And we decided to grow. And I decided that we needed to start finding companies, even though I had no idea how you did that. So I pretty much posted on Facebook and LinkedIn, hello, I want to buy companies. And then I had like a lot of people reaching out to me. And one of them was was our biggest competitor in the nanny business. And we bought that company. And I think that experience was probably the biggest aha moment I had in my entrepreneur career. Because overnight, I pretty much added 25% of revenue to my business. I almost had more cash in the bank that I paid for the company. And the company was doing about 100,000 Swedish kronor in profit per month, maybe that's like around $12,000 or something. So it was so easy. It was so fast to grow, and so cheap.

After that, I'm like, Why haven't I done this before? Because growing organically takes a lot of time and energy and effort and resources. And this was just like a snap and you were you were a lot bigger and a lot more profitable. So then I started to really get into learning about how you buy businesses, how you build and roll up businesses and create bigger groups and then join the harbor club training, also to call Alan's training and We bought two more businesses, too. So the first two deals I did was very successful. It was the babysitting group. And it was also gardening and Construction Group, and it fitted well into our group. So we now had nanny cleaning, gardening and construction services. But then then I don't know if I got cocky, or just was high on self confidence, or I don't know, but I decided to buy a toy company. And it wasn't just being cocky, because I didn't want to be completely immersed in this political risk that we had with other companies. I wanted to branch out to other businesses that didn't have the political risk. But I wanted to have a business that our customers still could buy from so toys, we had a lot of kids families, of course, so toy company made sense. The only problem is I didn't know anything about selling toys online. And the company about was way too small. And pretty much everything went wrong. Like the computer went on fire, we had to move the warehouse twice. And after six months, I was so fed up with this company that actually sold it again. And and even though it was, you know, probably not such a good deal. And I didn't lose that much money, but I lose a lot of time and energy in it. I think I learned the most from it. So I think you have to make some mistakes too, in the process to become like good at what you're doing. But then in 2000, I think 17 or 2018 or 19. Okay, yeah, I'm losing the years to check. When I did things actually sold all the five companies I had left to my two CEOs, because I felt that I've done this for 12 years, and I want to do it in different areas, and different industries and learn new things. So Solid to them. And it was a very fast deal, because I wasn't, I wasn't part of any of the daily operations, they got super happy, I get super happy, the staff was super happy. So it was a really good deal. And since then, I'm pretty much been reading books like crazy taking courses and figuring out, you know what to do next, I want to take a year off first years to completely relax. But now we're up and running again. And I've joined forces with some other people. One guy from Norway, two from the UK and one from Germany. And we come together in the Advantage Group. And since everybody wants to do the same, like buying and building groups or companies, we figured that we could just do it together. And we started looking at companies together before this summer. And I think this fall when I closed our first deal, which was an a pretty big HVAC company in the UK. And then there's some other deals that's going to close I think now in January and February. So it's pretty exciting. But I think I thought was a really good entrepreneur, when I was running my first five businesses. But I realized after taking the break and reflecting how much more I could have done. And I also realized when I started to, to look at buying businesses, what a huge gap it is between the entrepreneurs, how they will view the value of their company, and the people that are trying to buy the businesses and we pretty much look at values completely differently. But for me, it's an advantage to have been on both side. So I started thinking about, you know how to bridge this gap. Because the reality is that 80% of our businesses for sale, they don't get sold. And that's a shame for all the entrepreneurs that have been, you know, working like crazy and sacrificing a lot to build this nice businesses, but they don't understand how to build value.

And from that I kind of created this is my own kind of definition is I call it the POCSS formula. Because it's the five areas that create the most value in a business. And POCSS stands for profit, owner dependency, cash, size and structure. So POCSS formula. And I've started to write and think more and more about this. And I think if people understood this, that it could breach the gap, you could sell the business but you could also get more value from the business.

Ronald Skelton  14:38  
So you went from like creating businesses. Yeah, sorry. stumbled into what they are, they even have a phrase for now. Yeah, I think he might have been doing it before they named at the Aqua hire, right where you acquire that to increase revenue you're required to hire better, but you know, another, you know, staff or whatever. So you did act you know If you do acquisitions to grow, before, it was kind of popular at that level, like big companies have been doing it forever. But the small to medium companies are just now kind of making that, you know, popular at least, you know, publicly, you know, going out and talking about it. I'm sure it's been done on some scale for a long time. And you took what you learn from that. And, you know, built what you built, sold it. And sounds like you actually put together your kind of your own little how we call it a venture capital or your little venture company where you're teaming up with other people. You're now you're buying businesses to to grow them. Are you going to do the Aqua hire to bolt on things? So though, man,

Jeanette Holm  15:41  
yeah, sure. I think I mean, the P and E and the venture capitalist industry, they've been doing this for such a long time. And it kind of pissed me off when I realized that they're the ones making all the money. We're the ones like the entrepreneurs, that creates all the value. And that's another gap. Yeah, they're close. We, I think the entrepreneurs, we need to learn how to how to think smarter and build value. So we can actually get paid for for everything that we're creating. And it's just a mind shift, that I realized when I was at the Harbour Club, how you think about businesses and value creation. And you work from there. So I'm hoping that we will see a lot more entrepreneurs doing this in the future. And Sweden right now. It's, it's crazy with all these PE funds coming out. And even in the stock exchange, like there's one company that started buying construction company 11 months ago, and they're valued at like 16 billion, the stock has gone up 8,000% in like a year. And these buying companies not even doing that much in another company that used to run to the stock exchange in like one of the biggest IPOs ever. They have just bought companies for five years in different industries, like nothing related. And the stock is valued so high. It's like, it's crazy. I mean, yeah, there are some has to be some bubbles here right now. But the truth is that, that we have to, we have to understand this, like the entrepreneurs have to understand this and use this to our advantage. And it could be so much easier for us to build businesses. And to get to the next stages. If we just also learn how to buy businesses as a growth strategy.

Ronald Skelton  17:26  
I think it's a huge sorry about that, I'm still clearing my throat here from a cold. I think it's a huge advantage for a couple reasons that gap is there between like What do PE firms and the institutional buyers are doing, but they're also ignoring a lot of businesses, the small to medium businesses, that would be very valuable to something you and I would build and stuff. So that 1 million to US dollar 1 million revenue, you guys call it turnover, at least they call it turnover in Europe. So 1 million turnover to $10 million total turnover doesn't even open up a P&E firms or investment institutional investors eyes, they can make a significant difference to you know, your HVAC company or one of my companies to bolt on or, you know, merge with or buy one of those things. So it's a huge opportunity that the small to medium business owners out there, you know, need to need to be aware of and the second side of that is least here in the United States, we have a, an aging business owner population, there's a huge amount of baby boomers who are in their 70s now still set it up to see the CEO of their business. And they don't have a succession plan. They don't know what they're gonna do. And if they don't work with other businesses, other small businesses and work in this mergers and acquisition space, both you and I are in, there's a huge chance that not only did they go you know the business go away, but the jobs that they created go away the legacy they created goes away. Those employees are out scrounging for something else to do. So I think there's opportunities all over the place inside of this kind of why jumped from being a real estate investor to do an acquisitions and mergers is I see a huge unmet need. And that's a need to to maintain jobs. Mm hmm. Small Medium Businesses here in the United States. And I see that that's, that's everywhere. So

Jeanette Holm  19:25  
and then us you also have, you know, Barack Obama set up this program where you can borrow money to buy businesses for sale, because I think he saw how many businesses are for sale and they're not getting sold. So you can actually borrow money from the government, with the government kind of backing it up to buy businesses. I wish we had that in Sweden.

Ronald Skelton  19:46  
Yeah, they do that 80-20 here so if you got 20% down, the Small Business Administrator administration will guarantee it so it's just it's kind of weird. Does the bank still loan the money, but it's federally backed by the Small Business Administration. So, you know, you could go to one bank and they tell you no, and then go to another bank with the SBA. And that's it. And they would do it. So there is some local bank, say, in the acquisitions and mergers process for using SBA, but I haven't done it. So that would be referred to as a leveraged buyout LBO. Yeah. And that's just one of the strategies I'm not interested in.

Jeanette Holm  20:30  
Yeah, I mean, there's several ways to buy businesses. And also, depending on what kind of business you bought, I guess, how you would do it. But Shall we talk about the the POCSS formula, because I think if I explain each, each area, people will understand what actually drives value. And

Ronald Skelton  20:49  
I think that's a great place to go. Business owners. Really, I think there's a huge disconnect there as as what they think their business is worth, and then how to get, how to get it to how to get what they want out of it. By aligning with what you or I or any other, acquire somebody who wants to buy a business is actually looking for. So let's, let's go through the, your model there. Let's let's talk about it.

Jeanette Holm  21:17  
Yeah, so So I think to understand where this is coming from, is to understand what buyers of  companies are actually looking for. And there's two main things, they're looking for opportunities, but they're mostly looking to to reduce risk. So we look at buying companies, and we look at risk factors and see if there are a lot of risks that we can't,

that we can't mitigate or change. And that could be potentially really fatal going forward. And so the so the first, the first area is, of course, profits you want to buy? Well, you can also buy businesses that are not profitable. But that's kind of like another area, I think most buyers look at a profit of businesses. And the value of the business is usually set by a multiple of profit. And this multiple depends pretty much on you know, the size industry, what you're doing, how fast you're growing, but it's going to be some multiple of profit. So the first thing you want to do is make sure that you are as profitable as you can be. And I think it was in called Allen's course, I've also seen this formula and all kinds of different core books. But there's basically seven level levels levers, I think it's called a business growth and profitability. And if you just increase each of these levers by 10%, you will increase profit by 158%. So small improvements in each areas will yield a lot of profits. So I'm just going to go through them fast. And if I was a business owner and I had a business, you know, I would jump in and I would see how can I improve each of the levels? Levers you say levers levers, right? 

Ronald Skelton  23:11  
Levels, right? Are you on my levers and like lift to like to to get leverage? 

Jeanette Holm  23:18  
Yeah, leverage, 

Ronald Skelton  23:19  
Yeah, okay. Lever  yeah.

Jeanette Holm  23:22  
for each component. So the first component are, of course, leads, how many leads are coming into your business? And the second component is conversion rate, how many of these leads are being converted into customers? The third lever or component is average transactions per year. So how many times do your customers buy from you per year. And the fourth one is, what is the value of each trans- transaction that the customer buy, like the sales sales amount, and number five is gross profit, profit margin, which is pretty much revenue minus cost of sales or cost of goods sold. And number six is operational overhead as percentage of sales. And number seven, is the lifetime value of your customer. So pretty much how much is customer worth during the entire time that is buying from your company? So say that you take those seven areas or levels levers, and you increase them by 10%. So 10% more leads 10% better conversion 10% better profit margin, then that will actually yield you 158% more profit. And just doing 10% on each of these areas isn't super hard. And I think everybody can do it. And there are even books, I think it's Bradley sugars. He has even written books about how to, like sick, I think he has like 60 Ideas for each of these levers. How you increase them, I think is just coming down to is brainstorming, sitting down and brainstorming, how can we increase this? How can we increase this. So increasing profit is not only about, you know, revenue minus costs, it has a lot of other components. So that's the first thing I would focus on as an entrepreneur. So not just focus on growth, but actually focus on having a really profitable company, especially as you come close to wanting to sell your company. And it's not enough to have really good profits the last year because most buyers look at the last three years. Because you don't want to, you want to have like normalized Hibiya. You're not just you don't want to buy something where you have called dress the bride in the last year, to get more money from it. That feels very weird if you have like profit like this, and then the last year is like, super high. So the last three years, I would really focus on profit before you sell your company. And now the second area is the O, cents. It stands for ownership dependency. And I'm so surprised when I've been looking at all these companies that I haven't found a single company where the CEO isn't the entrepreneur.

The entrepreneur is still the CEO, still the most important company, person in the company, which pretty much makes your company unsellable because you, the entrepreneur are gonna walk out the door. And it's going to be huge risk for anybody who's taking over. So it's really important that you have built yourself out of your company and that the company runs without you. How you do this, we're going to talk a little bit further down in structure. And but you need to put a management team in place and you need to put a CEO in place. If you haven't done that your business is almost unsellable. I would say,

Ronald Skelton  27:03  
Yeah, I got run into that one too. And one of the biggest concerns I have is, is there's a, it takes time, the three years you're talking about that three years could be used to separate yourself away from that. The biggest problem is, if I've got a business that is making, I don't know a million $2 million a year, and I've got 60 key customers. If you're in there running a day to day operations, and you sell it and leave, there's a huge chance a large percentage of those customers are still there because of the relationship with you. And that's how they see it. So now if you separate yourself away from that, and you run it at a distance for a while, they'll actually learn a lot of people worried about this. But I think in most cases that the other owners, the customer, the owners of the customer companies, the customers will learn. They're not there because of the owner. They're there because the value the business provides to them. So you got to dispel that myth. It's there that as on the other side, your customer believes he's there because I want to do business with you know, Jeanette, and, and it's not the truth, like I want to do business with, you know, your business. So, yeah, I think that's huge. And it's I'd say I was just laughing when you said that, because I just went through an ordeal where we talked over 200 business owners in less than six months, probably less than four months. And even inside of those some of these are doing five, six $10 million a year. The only one or two cases was the owner even trying to separate himself. And almost every case they were in the mix.

Jeanette Holm  28:40  
Yeah. And I looked at businesses where where the whole business was the owner and his wife, that was it. They and if they sell, then they're gone. And there's like there's nothing left, there's no value. And the risk is huge. So there you really have like the risk is going to take over and people are not going to want to buy a company that's that risky, it doesn't matter how good of a profitable, nice company are built. The risk is too high. So So yeah, when we come down to structure, I'm going to talk about how I did a tie built myself out of my businesses. And there's a lot of good books out there that I used to do it. So we'll come back to that. But C is for cash. And this also has to do a lot with risk. But cash is involved. Usually when you value a business, then the excess cash excess cash will go out to the entrepreneur, but you have if you have a business that tying a lot of up a lot of cash. If it requires a lot of working capital to grow, then that's a pretty risky business because that means that you need more and more money. The bigger you get and what is working capital then it has three components. It has to do with accounts receivable. So how fast the customers are paying you. So if the customers are paying you fast, then that's really good. If they're paying you slow, that means you're tying up a lot of cash in the business. And it gets even worse if the next component accounts payable is, is large, too. So Accounts Payable is is money owed out to your suppliers. So if you have a situation where you're paying, you get paid very slow, but you pay your suppliers very fast, then you pretty much the bank, where your customers and your suppliers and you're tying up a huge deal of capital in the business.

Ronald Skelton  30:33  
And I actually had a roofing company called me up and say, Hey, are you willing to invest in roofing? And I'm like, what are you gonna use the money for? And I said, he calls it the float. I was like, well, what's the float he goes, I have to make, I have to pay for my supplies, my labor, and everything away for insurance companies to pay me. And he currently has a company's doing, he's doing about three, three and a half million dollars a year in revenue. Because small kind of local roofing. You know, he ties up anywhere from 500 to $800,000 in cash, waiting for that transaction, and he can't and right now he's at a state where you can't do the next roof because he doesn't have enough cash to go get supplies and pay labor. Because he's waiting on a payment. So I can see where that's critical. So

Jeanette Holm  31:15  
yeah, and it has to do with the risk and also has to do with you know, you having to put in more and more money, the larger the business gets. And the third component of the working capital is of course inventory. So if you have a lot of inventory that you bought, but it's not moving, then you're tying up a lot of cash. So a lot of times where, where a lot of the colleagues I have by businesses, this is the one of the first areas to go and look and see. And usually they can they can improve all of these three areas and, and release a lot of cash again. So it could be an opportunity, if you see that, you know, this company's not doing this very well. But we think you can improve it, then it's an opportunity. But if it's not, it's a risk, and it's going to devalue your company, or make it a nobody wants to buy it. So it's definitely something to look at, like how much cash has been tied up? And how and what's the cash flow? Like because it comes really dangerous to buy a business and then you don't have any cash flow. And I think most businesses go bankrupt because they don't have any cash, not because they're not profitable. So

Ronald Skelton  32:23  
yeah, I agree most most, most entrepreneurs fail because of cashflow not because of profitability. I agree with that 100%.

Jeanette Holm  32:32  
So so the next area is size. And this is really, this was one of the things I thought was really interesting when I started learning about building groups of companies, because I can take Sweden, as an example, I think in the US, you have different levels that you get to but in Sweden, basically, if you have a company that is doing between zero to 50 million, so 0 to 5 million in revenue, and it's not a tech company, so regular company, then it's usually valued around three to five times profit. If you get above 5 million, and in the US, maybe it's 10 million, then then all of a sudden, the institutional buyers, the financial buyer they, they get interested. And just by crossing this line, all of a sudden, you're worth eight to 12 times profit. So the size. So basically, if you would buy two companies that are worth $4 million each and put them together, or maybe three of those, then even if you did nothing, you would have double or triple your money, just by becoming bigger. And this is what a lot of the PE firms do to this and this company that went public that I talked about, they just want the size, because then the multiples increases. And that's why I think a lot of small business owners should really start buying companies to get above the level where the institutional buyers are getting interesting, because then you will get a lot more money than if you try to sell below this line. And that's kind of what you were talking about earlier, too. So this is very interesting. And the fastest way to grow is to buy other businesses. And it's actually really easy to buy a company. I mean, most of us have bought a house, it's not that much difference. You know, you you make a map. Like what can companies can buy? And it can both be, you know, like I did I bought in the same same industry as complementary services that I can cross sell to my customers. But it could also be you know, similar companies like we're only buying HVAC companies or only buying software companies can also be like, for example, we're buying this gardening company right now. And they're really good at anything green. It's called like green jobs and gray jobs. So gray jobs are like the rebuild the stone walls and the stone in the gardens and stuff. And they are doing the green jobs. And they're turning down a lot of gray jobs because they can do it. So if we would buy a great company, a great garden company, and then, and we have the green card and company that we can cross sell those services with them. So I think you just have to get creative, like, what kind of business do you want to create? What kind of services does your customers want and need? And how can you help them and use go and buy that, and with that you can buy you can buy your future CEOs and your new company. So you can, you can build yourself out of your companies, and you can buy more profit and cash flow and reduce your overhead. So it's, there's a lot of things you can do.

Ronald Skelton  35:51  
What are the other? What are the other plays in that as your suppliers, right? So if you're, maybe I may go back to what I was looking at, about a year and a half ago, if you're a concrete company, and you make hinges and doors and stuff like that, that a welding shop, right, or the rebar, even like the supplier that you have your rebar, you know, this one concrete company we're looking at, they owe the rebar company a million, million and a half dollars. And that owner was aging, too. So my game plan plan was to once I acquired one is to reach out to the other investor, you know, are they interested in doing something, now you've got a whole nother line of business, you could sell to other people, but you often have one of your, your key suppliers, you know, to boost your revenue and stuff. So I think that that's an opportunity too.

Jeanette Holm  36:38  
that's also going to grow, you know, your revenue and your profit, because you have same customers you can sell more to. So it comes back to the seven levers of profitability. And it's fun, like you can create your dream company and you just pick the parts and you buy them, put them together. And after that you reach out to you know, you make a list of your dream companies that you want to buy, reach out to the owner and say, Hello, I want to buy your company, and we start talking. And then it's a matter of getting to right terms. And then you do due diligence, where you it's kind of like when you buy a house to that you, you check that everything is is working. And this as the owner says, and after that you're closing and you're signing contracts. And it's not that much harder than that, actually. And there are a lot of courses and a lot of books and a lot of podcasts about how you do this. So I think it's just a matter of changing the mindset of what is possible, and then go out and do it.

Ronald Skelton  37:41  
Awesome. So we were on size. 

Jeanette Holm  37:44  
Yeah. And then the last one structure. And this is about building a system instead of a company that is dependent on you. So I think there were three books that I used to build myself out of my business. And the first one is a myth, revised by Michael Gerber. And that was pretty much has to do with how how do you build the McDonald's? Like how do you build the business that you can copy and copy and copy with the systems and the structure and everything. And that was really good book. And now I think Mike McCallawits has come up with a similar book, but a little bit twist on it, that's called clockwork. And that's also a fantastic book, How to build a business that is not dependent on you. And then another important according called, you need a structure, but in order to be able for the structure to hold, you also need a very strong corporate company culture. And, and I think the best book on that is called built to last by Jim Collins. And the reason you need a strong culture is, in order for the entrepreneur, to have the guts to release or control you need to be sure that the people you are that you have there in companies think like you act like you have the same values as you and will represent the company in the way that you do. And I think once you have that in place, it's a lot easier to can release the reins and let the other people take over. So for me, the culture and the structure go very much hand in hand. And once you have that, it's not as scary to let go. And on top of that, I think another thing that's really important is to start measuring everything. So you pretty much you meas- ,measuring your processes you mentioning the flow the business, and you're not just looking at the balance sheet and income statement because then it's pretty much too late. Like we were measuring you know how many people visit our website, how many people call us how many people booked an appointment, how many appointments became actual, you know, babysitting and customers starting, what's the average invoice and all that kind of stuff. So we could pretty much in the end see that if 100 people came in through a website, that meant this much money in the end. And when you have that kind of measuring flow in the business, you also feel a lot more in control. And it's very easy for the CEO to run that kind of business because they're gonna see, okay, all of a sudden, the people that book appointments, they don't become customers, there's something wrong with the quality here, okay, then I focus on that, or all of a sudden, we don't have any leads coming in what's wrong, and then you focus on that so. So you can, you can very quickly see if something is going, going in the wrong way before you actually see it in the money in the income statement at the end. And that also creates a lot of, like calmness for me as the entrepreneur because I know that I can get weekly reports how the business are doing, I can see all the KPIs key measuring points. And I can see that the business is running smoothly. So I think if you have, if you're measuring everything, you have it in place, you have structure, you have the culture, then it's time to find the CEO. And I trained all my CEOs, from pretty much the bottom up. So my CEOs had pretty much been on every area of our company. And it's also recommended in the bill to last book that that's how you should do it, because you want your CEO to be a culture bearer. So and they need to understand all facets of your business. And it has worked, it worked very well for me. I tried once to take take in an external manager. And it was awful. Like he couldn't help anybody couldn't answer questions, because he hadn't been there on the floor answering questions, talking to babysitters and customers and that kind of stuff. And also, it's fun, it's fun to take young people and mold them into becoming really good at what you're doing.

Ronald Skelton  42:09  
On your babysitting business. It's interesting. There's one here, and they probably did it after you that really came. I think they're a national franchise. Now. It's called seeking sitters. So I don't if you've ever heard of that one, but it started here in Tulsa. And it was a same model. So I'm wondering if they read an article about you and what you did there? Because it might have been something where like, one of the good the reason I bring this up is this is a great thing for all our entrepreneurs listening, if you watch articles from other countries and see what's really working there, a lot of times you can apply that here. Right? So it's very possible that they seen something like, you know, article or something what you did in Sweden, and ran with it, right. But they were very successful. It was I don't know if they're even public know or not, but they did really well was he considers. And it was the same model. It was, you know, doing background checks, verifying the babysitter, making sure they're safe. And they even had I think they did some run offs on it, meaning they think they even had like health sitters and dog sitters that they would do on top of baby sitting. Right? So yes,

Jeanette Holm  43:21  
cool. But I think actually, you guys were a lot earlier, like most things like Sweden look a lot. We look a lot at US. And the ones that are trending in the US will come to Sweden a few years after. 

Ronald Skelton  43:34  
It works both ways though. 

Jeanette Holm  43:36  
Yeah, yeah. Except the tech world is really popping right now in Stockholm. So here, we're at the forefront. But I think babysitting has has, I mean, when I lived in the US, I worked as a babysitter. And so it has been along for a long time. I think in Sweden, it wasn't really an industry, because it was so expensive, because it's so much taxes on services in Sweden, that it wasn't feasible until the government stepped in, and kind of reduced the tax burden on on these kind of services. And then it was, you know, booming. I mean, it was before, but then you can pay the babysitter under the table and that kind of stuff. So it wasn't really professionalized until this incentive came.

Ronald Skelton  44:20  
Awesome. So we're at 45 minutes. Let's talk a little bit about what you're looking for now, and how people reach out and find you.

Jeanette Holm  44:28  
Yeah, so I don't know if you're gonna post somewhere my LinkedIn profile and email and that kind of stuff. Or if I say they're, like, yeah, there so I think the best way is just to reach out to me on LinkedIn. Right now. We are looking at you know, HVAC companies in the UK, for sure. We're looking at software companies in the UK as well because we're buying a software company there. We're looking for we're buying another software company in Norway. So there we're also looking at software Companies and information management system companies, I think they're called. For me personally, we're gonna buy a gardening company here. Now, not only landscaping, they actually have like 45 machines that are plowing snow and like building whole gardens for like, bigger building projects and that kind of stuff. So this is more b2b Landscaping stuff.

Ronald Skelton  45:24  
Land prep-, commercial landscaping then Right? Yeah, it's like preference stuff.

Jeanette Holm  45:29  
Okay. Yeah. Yeah. Hi, my previous company that was more like taking care of people's gardens at home. This is bigger. And it's quite fun with the machines and stuff. I've never owned companies that have machines, but they look fun. But But, but we're also looking at, of course, opportunities, we want to do roll ups, we really see like, the leverage is incredible. When you do roll ups, the value just go up like crazy, like we talked about with the size, but also using, you know, across synergies and that kind of stuff. So we're looking at all businesses that that we see opportunities in, of course, oh, also looking to JV, joint, joint ventures with really cool people that want to do the same thing. And just have fun. I think, my first business ventures I was a little bit too serious, you know, it was like, life or death. I was young and it really exploded too fast for me in the beginning. And I was very just overwhelmed. Like 10 years. Now I'm like, I hopefully, I'm a little bit smarter and more mature and have more like experience. So I just want to find really fun people, fun, businesses and just pretty much have fun doing it. That's how it should be. Otherwise, it's not worth it.

Ronald Skelton  47:02  
So one of the things we were talking about this whole conversation is buying businesses to grow your business, buying businesses to merge them together and, and create a space in industry. One thing we didn't mention is it doesn't necessarily have to be expensive, right? You've bought and sold some businesses, it's very likely you have some money put away and investments and stuff. It's not common. And I don't know about you, but it's not common for acquisitions or mergers, guys, we're not writing checks out of our own bank accounts. This, right? Usually it's yeah, it's either creative, like very creative structure thing where the owner is financing it or it's a bank backed or, personally, I'll reach out to other investors or raised money before I would liquidate assets or you know, take money out of, you know, stuff I've already invested in other stuff to acquire another business.

Jeanette Holm  47:59  
So yeah, and I think that's another misconception that it's really expensive. And it's not because we are you leveraging the owners, money seller financing, leveraging banks, investors, and other creative things. So it's, and I think that's why the PE firms have made so much money, they using leverage on everything. So that's why Yeah, it's a mind mindset shift you can do. And if you want to go into the route of buying distressed companies, then I know people that are getting companies for free pretty much because the entrepreneurs are so tired and just want to get rid of their company. So I know a lot of people have bought companies for pounder or nothing, and just pretty much taken them over. Of course, that's that's another game, like, you know, roll rolling, or turning around distressed companies. I think we are looking, we're looking at really profitable businesses. But I think that's also a very lucrative way to go. And if you already have a profitable, profitable business, then I think it's easier to buy distressed businesses as well.

Ronald Skelton  49:07  
Yeah, I would venture into saying that be very cautious buying a distressed business if you've got a profitable one, because it doesn't take a very big hole to sink both ships. Yeah, right. Right. But you can also acquire something really affordable, and grow, you know, you were talking about 10% increase on on the levers, you could really do a much larger increase on those levers by by somebody primarily for their customer base, their asset list, and, you know, you're not necessarily having to turn them around as much as just offering their clients a different solution with your product. Right. So,

Jeanette Holm  49:46  
yeah, but another tip, I think, one of the mistakes I did with buying the toy company and I think one of the most important lessons is to start with something that you know, it was the same thing when I started my first business so When you start buying your first businesses, start with what you know. That's like really, and then focus on being good at the skills you need to buy and roll up businesses. And once you buy a business don't change too much in the beginning, like people want to go in, and they just want to change all this kind of stuff, and you're gonna scare off everybody, and then you're scared off the whole value of the business. So yes, take it really slow, charm the pants of everybody, give them some Christmas holiday party or something and take it slow, otherwise, it  will not be good. And I think most people fail not buying the business, that's very easy. But actually, after you bought the business, because that's when the real work starts. And you want to make sure you you're not just ruin ruining the whole business afterwards. Yeah, it's

Ronald Skelton  50:53  
good. You could be really disruptive in a heartbeat, right? And it's, uh, it's interesting is a few of the businesses I've evaluated, you get any start meeting some of the other I'm gonna call it operators, the employees. And, you know, I was talking to a guy on from the Harbor Club, he acquired something that he did a long time ago. But he acquired something. And he went in and cleaned up a little bit. And he let go of the office manager. Well, turns out the office manager was kind of the general manager, she ran everything, right. So nobody could do any more travel. I mean, everybody was lost without this person. And he was thinking, we don't need somebody sitting at the front desk, answering the phone, I've got a call center, we're gonna, you know, put in place. So you already own this other thing was a call center. And the phones will just be routed there. But they didn't realize all the other stuff that lady did right? Order the office supplies range, everybody's traveled, she was pretty much an Executive Administrator, or system for everybody, you know, that needed to travel needed to do sales calls needed everything. And it was very disruptive. And when he went to get her back, she already had another job and when it come back, yeah. So I agree. Be careful what you change until you really know what's going on. Tell us. Is there anything like what's one key point you want? If you could leave everybody, which is one key point, what would that be?

Jeanette Holm  52:19  
Well, that, that is the POCSS formula, like focus on profit, the company not being dependent on you, the cash, the business, not taking up too much, so much cash focus on growing the size by buying other businesses, and the structure so that it's like a well-oiled machine. And I think you will do very well. And I'll be happy to help you reach out. I love helping entrepreneurs. And if you have a business, you want to discuss them. Yeah, just reach out. Awesome. Well,

Ronald Skelton  52:53  
thank you for being on the show. I'm going to end the stream now. Hang out with me for a minute we'll chat after and I thank you very much for having you, for being here with me. All right, the investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that traditional peer-to-peer mastermind introduce first in Napoleon Hills famous book Thinking Grow Rich, with accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale blow past roadblocks and achieve success faster than you might think is possible. I suggest you take a visit over to tiepm.com that's tiepm.com and check out the investors and entrepreneurial professional mastermind