How2Exit: Mentor Mini Series Episode 1 Arturo Henriquez of businessactionnow.com

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 and welcome to how to exit. I'm here today with Arturo Henriques our curl is a serial entrepreneur who has successfully started bought and sold over 55 national and international companies across 18 industries, personally from his own portfolio primarily in the small business space. He's a sought after consultant coach, two time best selling author, and public speaker for over 25 years, he's been involved with well over 130 business purchases, transaction engagements, and business deals over the course of his professional career career. He's author of buy yourself into entrepreneurship, bypass the startup risk and buy into business ownership, and the dirty secrets to buying a business everyone is afraid to tell you, you don't need experience, or to risk your own money to buy your first or next business. So welcome, Arturo, thank you for being on the show today.

Arturo Henriquez  1:28  
Thank you, thank you, thanks for having me.

Ronald Skelton  1:31  
So what I always like to start is just kind of get the audience to know kind of who you are, what you stand for, and how you got into this business. Do you mind to give us just a tiny bit of an origin story of kind of how you got here.

Arturo Henriquez  1:42  
Sure. So, you know, back back when I didn't know anything, back when I was 2223, you know, fresh out of college, I had a great corporate career job up from Mexico, originally, I'm dual citizen, and NAFTA had just came on, you know, and for a lot of people that haven't, don't know what NAFTA is, it's just a free trade agreement between Canada, Mexico, in the United States. But basically, I was in the banking industry, opening up Bank of America in Mexico. So for a 22 year old, like my career path, the corporate path was going, you know, like, like, like a Learjet going straight up, right. However, unfortunately for for me, I had that entrepreneurial itch, I needed to you know, my dad was an entrepreneur, my grandparents were entrepreneurs. And I thought I just, you know, I can make a lot more money. And so, me and a couple friends and a cousin, we decided to go into the tequila space. Why? Because it's kill it got the denomination of origin in this NAFTA Treaty. And so only tequila could be produced in the United in Mexico, in certain regions of Mexico. And we thought that was just, you know, the perfect opportunity not to get too involved into how we got into it, we got into it. And we had a tequila, we created a tequila company, a brand and we started getting some headway. And creating a brand is, you know, you know, very well, it's very difficult. And so we packaged it, we designed it, the name came from a famous poem that Mexicans know, so we got instant brand recognition. And we were ready to literally take over the tequila industry. Until we were not right until the Jose Cuervo is of the world, the sounds of the world, the era tourism, or these are the main tequila players, you know, other you know, aside from Jose Clairvaux, which is the big elephant in the room, said, Who is this little company that's making this little noise, and they just threw money, they muscled us out. And we had no idea what to do. And after about a year, you know, seeing our product on shelves, seeing customers biotics, so having a product that was, you know, being accepted by the market, we suddenly find ourselves out of a business. I mean, there's a lot more to it, but long story short, we didn't know what to do, how to react, we didn't have a business plan. We didn't have a marketing plan. We didn't know much about anything. And, and what was going to be an amazing, you know, journey, you know, came to an abrupt end, even though you could still find our Tequila event, you know, in some tourist places in Mexico, that that business, you know, had a one year life was just kind of kind of came to all the startups statistics, right? Most businesses fail. 90% of businesses fail within the first year. Well, we are now part of that statistic. And so that got me into the entrepreneur game. Right. And then we started a couple other companies, someone well, we went into the important We went into nightclubs, for all for the wrong reasons, again, because I'm a 25 year old, who doesn't know much about anything was a little, you know, was it, you know, was a shaker and dealer. So but I was doing it because I wanted to the nightclub because I wanted to have the best see at the house and be surrounded by beautiful women, right? That was my motivator, wasn't making money, it wasn't business plans. It was just again, just in an experience naive guy who got lucky.

But we started these businesses and the sweat and that the resources and the emotional toll. With this one nightclub, it's capital intensive, when you build the nightclub, all this build out all this equipment, and we ran out of money, I put all my money into that. And I called and I got lucky because I was able to bring a partner in, but the stress and anxiety of that, even at that age, you know, it all comes with what what it what it means to start a business. So long story short, I decided to you know, a couple years later to start buying businesses and let somebody else take all that risk, let somebody else, you know, get emotionally attached, let somebody else use their capital, let somebody else, you know, use their time and you know, all those risks that are not just financial, let them do it, I'm going to mitigate. And once I find a business that's up and running, and that's stable, and it's profitable, then I go in there, and I'll pay, you know, two, three times earnings. And most of the times, and this is key most of the times, I'll pay less financially than what the original owner, you know, actually ended up investing, again, without all that emotional and time. Risk. And so that's how I started getting into the game, you know, over 55 businesses later, 18 industries later, you know, I'm still actively involved.

Ronald Skelton  7:05  
That's what appealed to me in this in this space is, you know, I'm 49 I'll be 50 In a few weeks here in February. And I don't know if I've got another Startup Grind in me, right? I did the.com Boom, back in California. I've been part of some of the you know, when 2000 Let's say 2000 ish came around, I worked for some of the bus companies, right? I was in defense contracting, all my buddies are making a killing in the.com world, I thought I'm gonna go join the.com world and become rich, I know computers better than most. And so I'll go do that. And I caught the bubble burst. So I got really good at like selling equipment laying people off. It was it was kind of a miserable existence. And but I we would you know, even after that I stayed in California for a little bit. You know, what, from startup to startup made some money with some of them, but no, like huge homeruns. But the 6080 hour weeks, I just don't have that enemy at this age. When when I've tried to figure out what to do next. It was It wasn't Hey, go come up with an idea build a team pull 60 to 80 hour weeks bootstrap it put every penny and every asset you have into it and see if it works. I was looking for something better. And I really believe this is this is their right? You've got a proven business model, you've got revenue, you've got a team you know, kind of where you're at sort of building it. And I've had mine I didn't do it tequila company. But uh, I tried to I built an online dating site that cost me, let's just saved six figures in the high six figures. And everything I had in 401k I liquidated everything to build this online dating service to only find out that they have a chicken and egg problem, right? Nobody wants to be the first lonely soul in a chicken in a dating service. And without anybody there nobody signs up, right? So you got the, like, who comes first the audience or you know, somebody signing up? So that was a you know, and I nobody, nobody would loan or nobody would, the VC route wasn't interested in what we were doing. They just put out $125 million to eHarmony at the time. And when I went I mean, I spent a lot of money flying around and pitching VCs. You know, they love the concept. I love what we're doing and but it just didn't work. So I learned a very valuable lesson there too is there is a need in the space for startups and ideas and people to go out and cut us you know, cut a cut a new space in a particular market. But that's not my space, my space is to go out and find something up running and working and, and work with that. So let's jump right into kind of what have you what are the things that you've picked up? I mean, you've been doing this now I think the thing that 25 years is that right?

Arturo Henriquez  9:50  
If you count the you know the tequila days, right 25 years I mean really buying businesses and you know owning three to five businesses that anyone time probably about 15, 16 years now,

Ronald Skelton  10:03  
what would be one thing you wish you had known at the beginning of this that, you know now like, like, what's the? Like? What's the when you first decided to buy your first business? You know, what did you not know, at that time? That you You're, you're pretty skilled at at this time?

Arturo Henriquez  10:19  
The mystery, you know, it's the mystery of the unknown, right? So, so, think about it. I've been in 18 different industries. So of course, I don't I didn't know anything about any one of those industries prior to me buying a business into them, right. So had I been scared or feared the unknown the mystery of I don't know anything about this industry. Right. So the first thing we bought was a restaurant, right? And I, you know, I'm not a I'm not a cook. I'm not a chef. I remember the first week when we had just bought it. I had a panic attack, because I'm like, Well, how do they? How do they possibly come out with 100 dishes in a 15 minutes span when this restaurant is full? How is that done? And everything perfect? Right? Meaning how does the production facility which is their kitchen, you know, produce all this in this timing with the the cinematic quality. And I was scared to death because I didn't I didn't know, of course, the process was already in place, you know that the the cooks in the bussers. And the prep people were already in place. So the skilled labor was already in place, a system was already in place to allow that to happen. Right. And so I didn't, I didn't, I didn't look at it that way. I looked at it as plates. And that was a big, you know, that was the biggest probably, aha moment to me is I don't need to understand this. I need to understand that there's people that understand it, I don't need to be the expert. You know, and I just need to concentrate on the actual business side of it. And now was a big catapult in because it took away that mystery. Right? And I've since gone into theater companies. I've gotten into oil and gas. I've gone into metallic fabrication facilities. I've gone into pest control. I know you're you know, you own or you didn't own a pest control company. I've gone into the wildlife management side of pest control, which is a whole different ballgame. Right? I've own pool companies. I've owned real estate companies I've owned, you know, so many different other companies that I had no prior knowledge in. Just like tequila. i How do you produce tequila, right?

Ronald Skelton  12:36  
Probably, right. I got that. 

Arturo Henriquez  12:39  
I was just fearless back then. Right? I was fearless. So the biggest one is, anyone can do this one too. Don't let your lack or your what you think his lack of experience, you know, detain you and understand that you're going to buy something that's already running prior to you buying it and we'll be running after you play.

Ronald Skelton  13:01  
Yeah, one of the things that happened on that big project I was telling you before we launched the podcast today is we got introduced to Dan Solomon's book who not how right and this though if you've read that one or seeing that one, but he's got a book called who not how in any one of the beauties inside of those anytime you hit one of the things he says inside others, anytime you find yourself procrastinating, or in fear of not knowing something, it's probably because you're not the right guy to be doing it. You probably should go find yourself a who. And the newsy inside of that book is I was listening to it in the car and I I'm hearing impaired so I always have headphones on. And my daughter was wearing the other set of headphones and I didn't know I had them synced up so sometimes I actually have my bone conduction on and the over the ear ones on. But she had my over the ear ones on I had the bone conduction ones on I didn't know they were synced up to play the same thing is she she's she was four and a half, five at the time. And, and she said Mommy said, Daddy's listened to Dr. Seuss. You know, I said Dr. Seuss. And he says, yeah, he's listened to the album, whoo hoo, hoo, hoo, hoo. Right. But anyway, the beauty of that book is at time now I figured out like, wait a second, I don't know this industry very well. It's like, Who do I know that does? I don't have to know these industries. I don't have to be the expert. In something I just need to know. Like, you know, is there already somebody on the team that knows that's gonna stay? Or do I know somebody from outside of that looking for a cool project that wants to come in and be part of this? Right? So I'm a big fan of that. Like, just find out who for that. And I love learning. So this really appeals to me in the realm that one day I'm looking at video production and crypto and not crypto as the coin or anything with crypto is in NF T's and all this other stuff. And the next day I'm looking at market aid agencies and you know, that it appeals to the add in me

Arturo Henriquez  15:00  
You know, the key here is not you don't have to be the skilled man, you don't have to be the or woman, you know, you don't have to have those skills. And I, we had an oil and gas company, you know, this was a $70 million oil and gas company that did secondary and tertiary recovery, trust me, I had no idea what that meant when I was buying, right. And all that is, is that they're going in into older wells that have been, you know, clogged in and they're re stimulating, that's all that means. Um, I, you know, it takes a lifetime, really full career, to understand geology to understand oil to understand the equipment to understand the different players involved. There's absolutely no way even even while I owned the business for a couple of years, that I was ever going to be an expert in that and that wasn't my role. My role is to understand the key, you know, the KPIs, or the key indicators, what goes into those key indicators, making sure I have the right management team, and the right people in the right seats, right. And then lead the Strategy

Ronald Skelton  16:09  
It's interesting, one of the guys I spoke to on either on the podcast, or one of the mentors I've hired, he mentioned that, you know, a lot of people think business is a marathon or a sprint, and you got to run the whole race yourself in order to get the ribbon at the end, he said, it's not, it's a relay. And what you really can do is just pick up the baton from somebody who's run three quarters of a mile and run the last part of it for him and still win. And that's what we're doing, when we're buying an existing business you're taking, you're taking that baton, or you know, that little wood or whatever they call that thing, I'm not a runner. But if you're taking, you're taking over that, that responsibility, that company and taking it to the next level, and you don't have to be the guy who has a lifetime experience of the industry a lifetime of knowledge and oil and gas, as you say, you could be the guy who just knows how to combine, you know, 15 other companies into it, or five other companies into it, make it you know, four times, you know, how to scale it a different way. And, you know, I've met quite a few people who have gotten into industries, they had no idea about, and got out of them and making, you know, life changing amounts of money. Like we were talking a little bit earlier, I've done real estate, you know, you do a real estate deal, you've got comfort money, you can make pretty decent money on that if you do three or four deals a year, you can be really comfortable. You do three or four of these business acquisitions and mergers deals, you know, in a short period of time, you could absolutely change your zip code.

Arturo Henriquez  17:35  
Right. A lot of people, you're absolutely right. A lot of people, you know, you hear that, you know, of course, online learning right now is on the rise. And there's a lot of courses out there and programs and teaching you how to get into different types of businesses, right. And they all they all talk about creating wealth, right. And that's key wealth. And I know none of them understand the meaning of wealth, because one thing is to make money. Another thing is to change, you know, have a life transformational experience, right? And when you make wealth, your life transforms, right, it's not just about making money, making money doesn't transform your life, you know, achieving wealth. And yes, buying and selling businesses has that capacity, you know, I'll give you, I'll just use some simple math, if you get into a company that you buy at two and a half times, it's called a three times multiple, just, and it's making $100,000, right, in free cash flow to the owner , you know, just for our for the audience, so that the price tag on that will be $300,000. That's how much it's gonna cost you to buy that three times $100,000, right. But if you're able to scale that, to, you know, 200 or $500,000 in net profit, well, two things happen. One, you scaled it, so you're making more money, right? But then multiple is no longer three, it's now four or five. Right? So now it's four or five times 500 or 300. You know, and so what cost you 300, and now you're selling for, you know, 1.5 to 2 million. See, that's wealth. That's real wealth. You know, that's life changing wealth when you do that. And if you're able to do that a couple of times, because it's a simple formula, it's rinse and repeat when you buy a business. And I've done this in a couple of different formats, but, you know, you're you're, you're changing your life, right? This is definitely if you're listening to this, this is definitely something that one anyone can do. That's a tried and true statement. And I know that because I've seen hundreds of different students from all walks of life come through our program. Anyone can do that. And yes, they have transformed their life. Life, you know, forever in buying businesses so.

Ronald Skelton  20:05  
So as you were picking up this, did you go out and read certain topics Did you study the different models that are out there like leveraged buyouts, bank loans and stuff you came from the baking industry? What strategy did you start with inside of that realm?

Arturo Henriquez  20:20  
Yeah, well, it's it's, you know, the the best type of structures is the LBO right, the leveraged buyout. And so but there's a lot behind what LBO could be right? It could be a combination of seller financing, it could be a combination of seller financing, and asset based lending, it could be a partner, it could be so many different other things, you know, an SBA loan, or a combination of all of the above and others, right? You can buy a percentage into the company have control without having majority with a purchase options, so you can get real creative, but it's all leverage, right? At the end of the day, everything that I just talked about is is some sort of form of some form of leverage, right? And leverage allows you to multiply your earnings multiply the value. So I started, you know, with LBL, right, I started using other people's money, whether it's a bank or the owner, or an asset based lender, hard money lender or just another investor now, because I've done so many of these deals, some some deals, I do cash, some deals, I bring in an investor and we and we do cash, or we do a combination. So it's not it's not always, you know, no money down, right? No, no, no, not no money of my own down. Let me rephrase that. I'm not risking my own capital, right. Sometimes I am sometimes I'm not.

Ronald Skelton  21:45  
A lot of people don't understand that when you say no money down, one of the mentors I hired was that Jeremy Harbor, he says, $1 down what he does, what he's not saying is the owner doesn't get $1 check, right? The owners getting a check. Sometimes that's from a deferred payment. Sometimes it's from selling some of the assets there sometimes it's from doing a sale leaseback on the real estate that's underneath that there's just all these different ways, but the owner gets a check. So when when, when business, when you hear that there's no money down about a business for no money down, doesn't mean the owner walked away without a check. It just means that money didn't come out of your pocket necessarily. Right. So I was working on one. Last year, I guess I was working on one last year where at the beginning, we really thought before due diligence, we thought we're gonna have to come up with about 150 200k. Well, it is in it was in the construction space, I reached out we found a gentleman who had grown a similar business 100x, from when he started to when the when he left the company, and he now he wants to be his own CEO, and he wanted to buy something, we were working with him to put in that money to have him run this business, do what he did with the previous one, right, and do a work for equity type of thing to where he starts off with little equity. And over the years, if he hits his performance go, he had owned substantial piece of that business, before we got to an exit and sold it. And fortunately, you know, doing the due diligence, we found lots of problems and there wasn't going to be any money required. Unfortunately, we found so many problems that the IRS block the sell of the business because they owe the IRS nearly $960,000. And we're we're going to court they had this court mediator, they told the they told the IRS that we owe the offer we made we were going to buy the business no money down basically $1 deal and take over four and a half million dollars worth of debt on a construction company in the construction space. Oklahoma small enough, I don't want to say what industry it's in. But uh, they built products for the construction construction industry. And they had four and a half million dollars of debt. We were going to take over that and take over this 60 year old company. The IRS said, n o, not until you pay us off. You're not transferring assets or anything. So I don't know if that deal will ever come back around. But they have to straighten out their IRS issues because sure, though, yeah, during due diligence, you'll find a lot of things there. So one of the favorite questions I always have is what is kind of a myth inside of this industry that you just wished it? You know, you could dispel right now like there's there's a common every industry has on there. Like there's things that people believe that are not necessarily true. Right? Yeah. So yes. The buying and selling businesses.

Arturo Henriquez  24:36  
Yeah, two of them are direct. One is you need money. You don't you don't necessarily need money. No, you don't. Now, is it harder? Of course it's harder, right? If you can, you know, whip out a check for $100,000 Well, of course it's easier, but you don't need money. And most of the students that have come into my program don't have money. They don't they don't have a A bunch of savings, you know, tucked away on. So they, you know, they have to be creative, and we teach them how to be creative. So they can buy businesses. So that's that's one. And the second one is you have to have prior experience, right in business. And again, that's, that's, that's a big myth. What I'll use the restaurant example, again, I didn't know how to manage a restaurant, I didn't know how to cook a sandwich, make a sandwich for myself, in my own kitchen, let alone manage a restaurant. So I didn't know what prepping meant, I didn't know, you know, the different terms, you know, you have the morning and the, and in between, you had this prepping so that, you know, they're making, you know, food or raw material for those plates that you see. That may be naive for me, but they're making it for the week. They're ordering two or three times a week in certain products. And so these little things that go in, you know, into, into running a restaurant, I had no idea No, no way of knowing and why would I know, the point being is had I had I, you know, fall in, you know, into the fear, or the mystery, I will never bought my first business, I've never bought my first restaurant, and we wouldn't be having this conversation. And so I didn't have prior experience, you do not need prior experience. And here's the key, that fine tuned Symphony symphony, which is what it takes to run a business, you know, we talked about starting a business to start a business, you have to have so many variables, you know, come together in place at the same time, like a fine tuned symphony, right. And if one of those variables, you know, messes up one of those instruments hits the wrong note, and that that music is gonna sound terrible, right? Well, same thing with a starting a business, if everything doesn't fall into place, then that business is not going to be successful. Um, when you buy a business, you're buying a fine tuned symphony, it's already all the instruments are already playing beautiful music, can it be improved? Absolutely. You know, can you put a little oil in the trumpet? Or, you know, get a better drum set? Or? Absolutely, you could do things like that, can you get a better, you know, musician? Absolutely, you can. And that would make the symphony better, that will make the business better, right. But all of those pieces are already in place. And that's why you don't need experience. Because that again, I mentioned that before that business was running before you bought it. And that business is going to be running after you bought it because processes are already in place. The product and service are already accepted in the market. Right? The the people that need to run the various different aspects of the business are already in place. Right? There's a brand that's already established, there's market share. And here's the key, it's profitable. If you're looking for profitable businesses, which is what I do, I stopped doing the distressed assets. And we can talk about that here in a second. But I buy good, solid, profitable businesses. And so I don't need the experience of restaurant, I don't need the experience of oil and gas, I don't need the experience of a theatre company. I don't need the experience of Pat fabrication or pest control. Because somebody is already if it's a business that's in place I do once I buy it have to understand, right? But again, you know, you know, nothing's for free in life, right? So you do have to, you know, roll up your sleeves at some point. But that's none of those are impediments to buying a business

Ronald Skelton  28:31  
interesting as one of the industries I avoid our restaurants just because they historically have a high failure rate and a low profit margin. Knowing what you know, now, would you buy another restaurant?

Arturo Henriquez  28:43  
Absolutely. So my even even up that my best deal has been a bar. So if a restaurant is risky, a bar is riskier. Right? And had I gone into it with that mindset of I don't want to be in this industry. Right? So we teach we teach our students you have to have a deal criteria, right? You can't be throwing darts kind of in the dark. You have to know why. What kind of business you want, what industry and the whys, right? What are your objectives? What do you want to do? You know, it's a whole objectives and deal specifications. So a lot of people put industries as industries they don't they don't want to go in and we challenge them. Just like I challenged myself, would I go into the bar industry? Because you know, bar means alcohol bar means late night bar means, you know, things that most people don't want to be involved in. However, we found the right bar with the right management team that had the right longevity, meaning it's been in business for over 9, 10 years, a good management team in place. We bought the bar and the real estate and we sold it 15 years later I made my money back within nine months. Right in one of the best deals financial Ever, it's been probably one of the deals that I've been most absentee from. We put in a couple of minor processes in place little tweaks. And we have not weekly monthly meetings. And again, this is one of these high turnover high, you know, these industries that so I try not to I try not to have these limiting criteria now, because I have a depth of knowledge, of course and experience. But I would also challenge a lot of people to look past the idoe synchronises of what you think in industry has the good and the bad. And look at the deal. Look at the deal more than the industry, you know, and you're probably going to get a lot of duds in industries that tend to be difficult. Okay, so you know that upfront, but you may find a couple of gems, like I

Ronald Skelton  30:55  
said, they're sitting as a never owned a restaurant. My wife has a degree in hospitality management. So what she was going through there were, you know, I have a master's in, in marketing, when she was going through their study in that. And she was telling me that, well, the average restaurant has a profit margin of three to 5%. I was like, I already decided that I was like, I'll never own a restaurant. Now bars are better if you actually can put a bar inside of your restaurant. That's a lot of times that's your profit center. Right? The alcoholic beverages have a much higher profit margin and the the food.

Arturo Henriquez  31:27  
So we own we own we own a bakery, right? Yeah, right. That's one of the businesses we own. We bought this in 2015. It's a restaurant. We added, we added beer and wine, it's a French bakery. It's a very well known brand. It's a stable, stable, stable business. Right. So that's why we bought it right. So other restaurants may be up and down. Right? The beer and wine aspect to it didn't do much to it. Right? The people are going to that bakery, because of its core business, which is baked goods. And it's got to be a bistro toy. Yes, the beer and wine is going to add a little bit more marginal profit. But it's not going to change the business. Right. So when you make that statement, if you add things will transform that that was my interpretation of the statement, right? You You should buy it for the court. Right? whatever business you buy, whether it's restaurant or not, you should buy for the core product that it has. And you can obviously make it better, right. But we've done this and we fail miserably. We turn a bar into a restaurant, and we lost half our patrons.

Ronald Skelton  32:45  
It's interesting, I was looking at a brewery because you know, I don't even like beer that much. I like wines. But breweries are kind of the hip thing. And I think it'd be cool to own it. And this This facility was really cool. It had all the stainless steel gear, it was a brewery with a bar in the front of it. So you can see the you know, the breweries behind the lash, you can see everything. Unfortunately, the where they put this thing it had it for for Oklahoma, it had a crazy lease, I think the lease was like 15k a month, and the math just didn't work out. That's reason they actually the reason they're even selling that was they set up a bigger brewery that they could sell their their microbrew to or I mean, they could sell their bottles and stuff out of but they didn't have any interest in running the restaurant operation side of it and the big visible, you know, piece, but the numbers that were so I'm of the mind that like I look at the numbers before I look at anything, right? There are some industries where I avoid just because of the regulations of profit. I'm in Oklahoma, right? Cannabis is huge here. There's a dispensary on every corner. There's more dispensaries on the way home than there are gas stations and stuff. It's just crazy. I live out in the I live out in the middle of nowhere. I just 27 miles from my office, I live out by a lake, I cross from the time I leave the latest place to get groceries like a Walmart to my house I crossed 123456 dispensaries before you can get groceries. Right. So but I don't touch that just because of the federal regulation around it. I think they're a little oversaturated it might be a place to do some type of roll up, combine them all do like a 711 of them where everything's in the same place or whatever. I have no moral obligation to are against the industry. I just I'm concerned that still federally, it's not okay. And you know, considered I play on some projects that are big international stuff. I can't have that risk boiling over to the other teammates that I have on those bigger projects because I decided to do something that's only okay in a few, a few of the states. So

Arturo Henriquez  34:53  
yeah. And that's, you know, I'm glad you mentioned that's important for you to have your do criteria right There's no right or wrong, there's no right answer or wrong answer, that's your deal criteria based on your objectives, you know, your, your, you know, your risks, you know, profile, your, you know, your experience, you know, whatever comes behind that deal. And that's fine. That's great. What I do tell people though, like, we've had chefs, for instance, come into our program to buy a business, right? They're chefs, they, so they're dreaming about owning the restaurant. And so they, you know, they, they're convinced that they're not not going to start a restaurant, they're gonna buy with it, they come into our program, and we, you know, they're dead set on buying a restaurant. And we challenge them through this deal criteria deal specification exercise. Why? Because when you start prioritizing you the reasons why you're buying a business on, you know, to scale to, you know, have more freedom to, to use my experience to, you know, whatever, you know, some of them are going to come into conflict, right? Hey, I want more freedom, you know, more time with my, my family over the weekends, well, don't buy a restaurant, because that's your busiest times. Right, so, so pick me, what's more important. And so most of the chefs that have come in, or, you know, restaurant, restaurant tours, have said they want to scale a business. And immediately we say you understand that a restaurant. And retail, in general, by capacity by two types of capacity by physical capacity is limited. And by production capacity, there's only so much kitchen equipment and kitchen space to produce x. So you, you know, by the two senses of the word, you cannot scale a restaurant, you can't, you can maybe grow revenue a little bit or make the profit a little bit by being more efficient. But that's it, the only way to scale it is to open a second one. And that's starting a new business, you're going to fix your brand or whatever, it's starting a new business. And so once we take these chefs through this exercise, I'd say 90% of the ones that have come here end up buying something different. So they they come in here prioritizing their skill set and their passion as number one, and they end up buying something completely different. Because scaling now becomes number one, right? time with my family becomes number one, or number two, or number three, and that's using your skill center, your passion is not as important because everybody's number one, whether they admit it or not, is to make money. That's why they're buying a business.

Ronald Skelton  37:37  
You know, the entrepreneur in me says that there's a missing in that in the industry. But I'll never start it. So I'm going to share there's like I don't like to share ideas, I'd like kick off in the next, you know, year or so. But because this would be starting a business not buying one I'll share it. I personally think there's a huge opportunity for personalized chefs like house cleaning services, right. It's not as communist housecleaning, but if you really look into it, it's not that much more expensive to actually have somebody come to your house, cook your meals for the week. And I think if the right person got behind that, they could actually grow that scale that and kind of have I don't know if you're familiar with like the seeking sitters model that was a local Tulsa company that just created a national franchise out of babysitting because they did background checks and did marketing for them. And they would show the sitters that show up with their T shirts, I think you could do something similar like Mary made or a C considers for personal chefs, you could normalize that, but that's a startup and that's 60 hours a week and I'm not doing it. But uh, you know, for your, for yourself, people are just determined to be in that space, I think is a missing there. I think that uh, I got exposure to it. When I travel. I used to travel to Dallas all the time to do this self development program, and we'd be down there for three or four days at a time. And they really don't give you time to go out and eat. So you're always like getting stuff at Chick fil A and fast food. And my health that does that's just not good for my health. I'm not a healthy guy anyway. So I started hiring a personal chef to make me food for the weekend. Her name was cinnamon and she was amazing. And but it wasn't that it was cheaper, I think to actually do that. Then they go, they try to run out to a restaurant real quick. When you add in the travel time, the gas, the tips, the everything. It was cheaper to have her prep my meals for him for me. And once she learned what I liked, she was awesome, right? Like, you know, I'd have you know, my meals, we're going to market really Tupperware things. I throw them in the microwave, they're ready. And it was gourmet chef quality. I think there's a huge play in that. I don't know if there's something to buy in that space and turn it you know, turn it into that but I've always kept my eye open because it's I think there's an unmet unmet need, but I think it would be expensive to market. Don't just go out and hire 100 personal chefs and start marketing because that's a startup right? That's a

Arturo Henriquez  39:59  
I've got I've got I want to add to that, but we could do this off off the interview. Okay?

Ronald Skelton  40:05  
Because my ADD, I took us into the entrepreneurial realm, So, alright, cool. Um, so let's, we brought this up a couple times, I know what my criteria is, right? I know, I want companies that are older than five years, I want, there's a certain revenue model, I lean towards recurring revenue, like, once I land a customer, I want them to come back to me, that's why I like pest control is every spring and fall if you've got ants crawling off the side of your wall, I can take care of them. But chances are a new colony is gonna move in next spring, and you're gonna call me back because I did a good service. Right? I like to win a customer over and have them over and over again. So there's, that's the type of stuff I look for. That's just personal preference. I think they're easier to grow in scale. What What Would You Do you know, for, you don't have to give your program away, but kind of give us the high level of what is the thought process of developing out that buying criteria is something that you know, you would you would think would be a good business for somebody to buy?

Arturo Henriquez  41:04  
Yeah, so So, um, you know, there's the personal aspect as to why right? The, why are you buying a business is obviously money is one that is, you know, to get out of your corporate job, is it because you're a freelancer Is it because, you know, like yourself, you were in the real estate game that you wanted to, you know, up your game and buy, you know, so there's the Y, right, so you have to be clear on that. But that y also has consequences, right? If I, if I want to buy a business, and I'm in a corporate job with a nine to five, you know, nine to five, you know, Monday through Friday, and I want to buy a business and I want to spend the same amount of time with my family, then it's going to limit certain certain businesses, right. So that decision, you have to be under you understand that that's going to some businesses are going to fall into that some aren't. Right? So that decision has its own consequences. Right. So you got to get clear on the personal side. And there's a there's a whole whole exercise we do on that. And they get clear on the actual business side, right? So once I'm clear on the why personally, well, am I willing to travel 10 miles by willing to travel 30 miles? Am I willing to get on a plane and travel to another city or state? For instance, am I willing to go into this industry or that industry? Right? Do I want to use my skill set? Do I have a certain passion that I want to pursue. And these again, these are all you know, the chef scenario is, is was a perfect example, they wanted to use their skill set and do something that they were passionate about. But they also wanted to scale a business, right and so so that that conflicted, and so it's it's these types of things, and my personal one is price to earnings. And that's because I understand it right. A lot of a lot of guys that come into a lot of people that come into our program, they're not too clear as to what price to earnings are multiples and whatnot, and we teach them that. But um, I know that I'm not going to pay, you know, more for a business from a multiple standpoint, because I'm, I'm industry agnostic. So if, if I see and I get 10 to 12 deals a day, that come across my desk in some fashion. And I the first thing I look at is price to price to earnings, and if it's in it's in my range, I'll look at it more if it's not there next, I don't care because there's no personal emotional attachment to an industry. There's no personal emotional attachment to a passion or a skill set. which liberates me to look at good deals that I probably would not have seen had I had those, you know those those conditions so to speak.

Ronald Skelton  43:49  
etc. I really liked that. I used to teach the guys that would come and want to learn how to do real estate as like quit fallen in love with houses. I've never seen a house that gets me excited. I'm not excited by bricks, mortar sticks, nails and glue, which is what houses are and some glass right stone. That doesn't excite me at all right numbers, right a business side of it. That's interesting to me, I'll pay attention to that. And I you know, I've had so many people, even mentor students that would come to me and go, but I love this house I so would like to live in in ESSEC Yeah, you're gonna pay the wrong price for it then. Right? I like that I need to I all adopt that, as I'll do my best never to fall in love with a business. Right? Like, it's really cool. It's really exciting. It's sexy, or whatever the word you want to use the numbers or what you should be, you know, in my, in my world, the numbers are what should make me excited, right? Does it make sense? Does it make money? Right? Does it make dollars at that point? You know, the other thing I really liked what you said in there is like the time requirement, one of my personal criteria is that I don't buy anything that needs me. Meaning that I'm going to have to work, you know, 3040 hours to turn this thing around or fix something. You know, I like things that I could add that you know that would benefit fit from my presence. But not that absolutely. Like, I'm going to have to go in and do XYZ, myself. Don't buy, I have a wife and two kids, they'd like to see me occasionally, I'm not looking forward to buying another job, I did that with the pest control company. By the way, I bought that as a favor to one of my relatives. And it's another job, it was way too small. So now I'm looking for a bigger one local. So if you're in Tulsa, and you have a pest control for a company for So, give me a call. Anyway, that was not meant to be a commercial. But hey, um, I like the idea of like, the business would succeed. And it could be managed, even if I wasn't there, my job is to improve it. Right. So that not buying myself another job is important to me, it may not be important for a lot of other people, especially if you're single, you don't have two kids at home at that, you know, I have a five years now I'm getting them wrong. December's birthday month. So now they're six and 11. So I have a six year old, an 11 year old and still cool in their eyes, right? Not so cool to 11 year old anymore. But you know, he's getting at this stage where he'd rather play his video games and hang out with daddy and go fishing. But uh, the six year old, I'm, you know, I'm the king of the world to that little princess, so I don't want to waste any of that time. So not looking for any type of business requires me 50 or 60 hours a week, that's just not gonna happen. There are a lot of opportunities out there that would run better without you. Right? You get to put the input in, you find the who's the people that can run them better than you. And they would probably just do better if you stay out of their way. That's what I'm looking for.

Arturo Henriquez  46:28  
Right? So. So if you go into the small business space, right? Most companies are owner operated, even if they're 5 million $10 million companies, right? They're still the owner still very much involved. We have a program that teaches owners how to, you know, go from being an operator to a CEO, right, working on the business, not in the business. And here's the thing, though, if you go in into it looking for absentee run businesses, which is what you're kind of describing are semi absentee run businesses, there's, there's going to be very few that you're going to find, right most because most of them are owner operators, that's just the reality. But here's the key, can you take a business that's owner operated, and make it into a non owner operated business? And thereby creating more value? Right when you exit? And absolutely you can, and that's what we do. You know, we'll take an owner operator business, you know, we'll find a management team, we'll make it more efficient, we'll find that extra cash to pay them and step out and be strategic. We do that all the time. And we again, we teach people how to do this as well, right? Owners of small businesses and so that way, you're not limiting yourself to a very, very small, a small amount of businesses out there, they're, you know, currently being run absentee or semi absentee, right.

Ronald Skelton  48:03  
Yeah, I identify that early on. So the first thing I look for is, is there somebody there like a general manager, is there somebody there that's like, technically could run the business, it should be running the business, you know, could probably do a better job than the owner. It's a fresh set of eyes. That just needs a little bit of a promotion and a little bit of guidance, or is there a often a smaller business that's competing, that's run better, like in that construction space, when we were looking at it, it was very, it was third generation. And forgive me, if you're listening to this is very poorly run. The two young ladies young ladies are older than me, the two ladies were looking to retire that were running it was the daughters or the granddaughters of the original founders. And they just weren't doing a very good job of keeping it market all this other stuff. There's lots of excuses. But it wasn't me and ran very well. Yet, there was a company that did the exact same product line 40 miles away for sale, for a third of the cost, it was run incredibly well, right, we're talking a company was their company was generating 10 to $12 million a year. And their net profit was 30 to $40,000, they were pissing away every penny and they got their hands on. All right, the other company was generating, you know, a 30% profit margin. So my job was my goal is I was already in discussion with both of them, I was in a bar, get them both to you know, to sell, and then have the guys run on the very well ran one, run the whole operation over time, like, integrated in, but uh, that's what I look for is like, you know, find something that's really well run and then find something that needs a little help and then kind of put them together and make them work better. So I think there's opportunities to get around it without giving myself a 60 hour job. Now I say that I've still put lots of hours and I would be willing to do it for the first few months but my objective would be to as fast as possible find somebody could do that better than me.

Arturo Henriquez  49:53  
Yeah, get yourself out. Right? Don't correct. Absolutely. I mean, that's that's what we do. You know, when I by business first couple months I'm involved on definitely involved because I, I two things need to happen one I need to find make sure that the management and the processes are as good as I need them to be. But also I need to understand the pulse of the business and the KPIs of the business so that I can monitor it remotely as an as an absentee owner. So you need but right,

Ronald Skelton  50:23  
I call that development, my BS meter, right? I need to know enough about the business and everything to know what how it's going and how that's, you know, I need to know enough about the business industry and everything to know if some BS is going on, right? There's a meter like KPIs and all that stuff. But you got to know enough about it to understand, is it on track? Is it not is the owner is the management telling you the truth, there's something that just doesn't fit. And if you don't get in spend some time, I can see where it'd be really hard to develop that meter that, that gut instinct about the company. So I'm on board with that. We've been on the call now for on the podcast now for 50 some odd minutes. One of the questions I want to get before we wrap this up is I asked a lot of questions. And we talked about a lot of topics. But if you were sitting in this seat, and you were asking questions, and I was answering them, what questions should have asked, What have I missed here?

Arturo Henriquez  51:17  
Yeah, um, I think the big one is how much you know, how much knowledge do you need technical versus the art of the deal? Right? You know, what weighs more? And, and the answer to me is the art. The art by far is the most important aspect of buying a business itself, the technical stuff, you know, how to write an LOI, how to value a business, how to perform a due diligence, you know, the technical aspects of it, how to structure it simple, they're not that hard, how to read financial statements, you don't need to understand accounting, you just need to understand how to interpret that, you can find a bunch of YouTube videos and get that it's the art, right? It's the psychology of the seller, it's the psychology of the intermediary, the business broker, whomever is in, in the process, the psychology of the lawyers, from the seller, sighs lawyers from your side, the accountants that you're going to eventually use the psychology of the management team, if you're able to meet them. And most importantly, it's the psychology of the seller in the intermediary, that's going to guide whether you have a great win win awesome structure, or whether things are going to fall apart if you don't figure that out. And that's art. You know, that's, you know, that that's experience. You know, you don't you don't get that from a YouTube video. You know, you don't, you know, it's not like revenues minus expenses equals net profit. I get it now. No. So the art of the deal has been really the, the reason why we've been so segno successful across the years. So if you're thinking about buying a business, you know, get someone that's that has that sense that understanding, because that's the real crux, that's the real magic sauce right there. It's not, it's not reading the financials, or valuing a company or doing the due diligence, or reading, you know, financial statements, or any of the technical aspects. It's the art.

Ronald Skelton  53:17  
Awesome. So I've heard you say a few times about mentoring and what you teach and stuff. Do you currently have a program going on?

Arturo Henriquez  53:23  
We do we do. We, we launched it back in 2080.

Ronald Skelton  53:28  
Cool, how I've got a couple points of contact for how would somebody contact you, if they wanted to learn how to do this, you know, how to be in this space from you? What's the best way for them to reach out to you?

Arturo Henriquez  53:39  
Sure, sure. Sure. There's two websites. One is called Business action now. So www dot business action now.com. And the second one is Arturo henriques.com. So it's my first and last name, and though there's a link there as well, and then there's contact form. So either one is a go, you know, good way to, you know, reach us in and start learning about this journey.

Ronald Skelton  54:07  
So for those you guys are watching this on the video version, I put that up on the screen, I get verify I have that right. Is that right? That's correct. Yes. Awesome. And then the other one I have here too, so just so people can see it. It's simply his name. That one correct? Yes. Correct. We'll leave that up for a few seconds there. And so I appreciate having you on here. We are going to wrap up the show hang out when? When we get off here, will you and I will chat for a couple of minutes after the show. Is there any parting message you want people to hear? Or to know?

Arturo Henriquez  54:38  
Um, no, just you don't need experience. You don't need capital and buying a business. You're going to save yourself a lot of headaches in starting a business. You know, I'll leave I'll leave those parting words. They're

Ronald Skelton  54:53  
awesome. Well, thank you and we look forward to hearing from you again in the future. So thank you The investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that traditional peer to peer mastermind introduce first in Napoleon Hill's 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 entrepreneurs professional mastermind