Managing Your Business – Ryan Sandburg

Ryan Sandburg:
Yeah. What I really like about pre search right now is I would wake up and then be done, and all I would do was that, like, none of the stuff I’m doing right now, it’s important, but it’s not important to today. I cannot work today. If you said, hey, Ryan, let’s do a 16 hours call, I’d have the time. It wasn’t always that way. I didn’t have the time for it, say, two years ago, two years ago, I’d be like, man, if I don’t work for a day, I’m kind of screwed. I’m too valuable as an employee. So then it came down to, like, restructuring, getting the employees that I trusted to where I could do that.

Dana Robinson:
Exit Plan is a podcast for business owners and those who want to be business owners. I’m always in search of the lesser known stories of entrepreneurship. In the exit Plan podcast, you’ll hear stories from startup to sale and hear from the professionals who helped business owners achieve their exit. Hosted by me, author, and private equity manager Dana Robinson. Along with my co hosts guests, you’ll hear real stories, tips, and tools that will help you plan for the exit you want, whether you are still working at a day job or running a business. Let’s get started with this episode of the Exit Plan podcast. Hey, everybody, it’s Dana Robinson coming to you with the exit Plan podcast and a longtime friend, colleague, Ryan Sandburg. Ryan, thanks for joining me today.

Ryan Sandburg:
Thank you, Dana.

Dana Robinson:
So, most people that are following the podcast at this point are old fans of Nate and Dana when we had the opt out podcast. So I dare say that a number of people listening remember my podcast partner, Nate, who has chosen to only podcast with me when he really feels like it, partly because he has boys who play baseball that are so good at the sport that they got promoted to a league called 365. And do you know, Ryan, what, what baseball 365 is?

Ryan Sandburg:
I don’t, but that’s because I have daughters, and I’m trying to stay away from that.

Dana Robinson:
It’s every day. That’s it. They call it 365 because there’s 365 days, and apparently that’s how much they play baseball. So, Nate is how I met you. So that’s why I’m talking about Nate. I’d love to get, you know, I know some of your story, but I don’t know how, what you did before you landed at Nate’s first company and what happened through that journey and how you ended up being the entrepreneur you are today. So talk me through the early entrepreneurial journey for you.

Ryan Sandburg:
Yeah. So what I did before is kind of what led me into working with Nate.

Dana Robinson:
It’s.

Ryan Sandburg:
It’s mainly that I was working in construction. My degrees in construction from the University of Minnesota and 2010 in the midwest was not time to do construction. So looking for something else to do. Found. I found spread effect, which was Nate’s company, born out of where he was working before doing links on Craigslist. And I went and had lunch at the place beneath the office with Chris. Like, wore a shirt and tie, probably the last time wore a shirt and tie. And basically he kind of talked to me about what they were doing.

Ryan Sandburg:
And to me, it was completely foreign. I did not. I mean, I came from my dad’s dad was a hog farmer and a pastor. Like, we didn’t really have this understanding of what entrepreneurs did other than on my mom’s side of the family, there are successful entrepreneurs. So I had this sight of like, oh, they’re wealthy, they go on vacation and stuff, which is not something we do and really know much beyond that. So I went into construction because my wealthiest uncle was a design builder. And I was like, well, that is how you do it. So I’m going to do that.

Ryan Sandburg:
And then market was bad. Found Nate, started working with him.

Dana Robinson:
Yeah, he was doing SEO long, long form SEO content link building as an agency. And did. Was that complete gibberish to you as well? I mean, did you come into this with some understanding of the technology?

Ryan Sandburg:
No idea why Google worked the way it did. Other than the better companies are on top, the worst companies are beneath. Why? Because Google said so. So kind of learned it all working there. I started out just doing like, blogger outreach and new task was get more people in the database. And so I remember the first week I worked there, I got our emails flagged for being a spam account, for sending too many.

Dana Robinson:
Oh, you’re working that hard. So that’s sort of a good sign. Except then you’ve got to get a new email account, right?

Ryan Sandburg:
Yeah, exactly. So, yeah, I worked there and just basically figured work hard enough, figure it out later and took on more responsibility. Visited San Diego one time and we all kind of, me and Chris and Charlie were like, okay, let’s live there. Instead of St. Louis. San Diego has a beach. St. Louis has an arch.

Ryan Sandburg:
So we moved out there and just continued to grow it. The biggest opportunity I had in that was when Nate and them were kind of looking for something new and Danny looked at buying them. And I was able to be party to that deal just by trying to make myself as invaluable as I can, not so much with the goal of I’ll get equity in it. But it kind of came hand in hand with, we better give this guy equity if we want it to do well. So did that for a year until we sold it again.

Dana Robinson:
Then it was like, fantastic.

Ryan Sandburg:
So I don’t have a job, and now I don’t want a job. So what to do from there is where I ended up, where I’m at now.

Dana Robinson:
I love that. I’ll self promote for just a minute. The book I just published is called the King’s Flyswatter. It’s a parable along with real stories of entrepreneurs who worked at jobs and were really ambitious and extracted relationships and skills and knowledge and learned what they didn’t know they didn’t know and really did these things that a lot of people think just benefit the employer. Dana Robinson here. Quick plug for my book, the King’s Flyswatter. You can see it here behind me. If you’re watching this, I’ve got it in my hand.

Dana Robinson:
It’s a beautiful hardcover book, printed to make it giftable, something that you can share with a family member buy as a gift. So this latest book, it’s a fable about a person who has a really crappy job. Let’s just start there. This is a book that most people can relate to because we’ve all had crappy jobs. This is the story of Ubar, a servant in the court of a babylonian king who masters his boring, monotonous job and then learns to listen to the king, hearing him rule the kingdom while quietly swatting flies behind a cane. Eventually, Ubar becomes the wisest and most successful man in the kingdom. The story is fun, and it’s easy to read, but it’s not mythology. It’s my story.

Dana Robinson:
And as I shared the idea with colleagues and friends, I learned that it was their story. And guess what? It’s your story if you’re at a job of any kind, one that you love, one that you hate, one that’s just enough to get by. This little book gives fresh perspective on how to leverage that job to get you something greater than a paycheck. The lessons in this parable are entrepreneurial lessons, but not what you might think from the current entrepreneurial zeitgeist. If you or someone you know are looking for a real pathway to entrepreneurship, here’s the secret. Your job is the way out of your job. It’s counterintuitive, but once you see how it works, you can’t unsee it learn the way of the flyswatter, from the parable of Ubar and from the stories I share from my 30 year business journey. You can get a free copy of the King’s Flyswatter by going to www.danarobinson.com.

Dana Robinson:
And then that’s how people become entrepreneurs, right? You can’t become an operator by sitting around and waiting to do the minimum. And I just found, if you think of everybody we know that’s an entrepreneur, they didn’t have some crazy idea that they got funded by VC’s. They learned a thing at a job and, and Nate’s a good example of that. And then they go, I think I could do this. And then you’re almost unemployable because you realize you can do these things and then you go do them. So you did that. And along the way, I mean, you got a double because you got to get your first equity transaction as well as all the skills. And that’s interesting because you’re learning the thing that the business does, but you’re learning the business of the business as well.

Dana Robinson:
I mean, you build this thing to sell it, and now you know that plus the underlying skills. Now you’re SEO expert accidentally. And now an entrepreneur knows how a business could be run and sold.

Ryan Sandburg:
Yeah, I was also fortunate in the sale of it, too, because the thing that I didn’t know to that point was the highest level of managing the business. And when we had the year together with Danny, I got some insight into that. And then post, I worked with the guys we sold it to for a while. And the main guy running the operations came from BCG, Casey, and was extremely helpful in not like intentionally, but teaching me the ropes of what he’s doing on the higher level of business. I mean, BCG, they’re obviously doing it like Uber NBA style. But for me, I could see like this overall top level down. This is what they’re doing. Insight into kind of once you know it, it’s not hard once you’re at level three, you know, level three, but it’s a matter of just getting there.

Ryan Sandburg:
So that was extremely helpful. It helped me get to then where I’m at now.

Dana Robinson:
Yeah, you get the why and the how at the same time. And a lot of people are. They tune out, I think. I mean, you probably worked with people that tune out and they probably still have jobs while you’re off running the business you own.

Ryan Sandburg:
Yeah. Yep, exactly.

Dana Robinson:
So you get an exit, you help a transition, which is always part of an exit. You’re stuck with some new guys, while you, you know, try to ensure there’s no hold back, claw back attrition, that sort of thing, then you’re unemployed. What did you do after that?

Ryan Sandburg:
Yeah, so after that, the idea was I was going to help Nate actually look for deals with private equity.

Dana Robinson:
Oh, that’s right.

Ryan Sandburg:
Yeah. Yeah.

Dana Robinson:
So let’s pause. I forgot about our era of links. Right. So both Nate had a relationship. In fact, I did, too, with the principal of Lynx in Canada. I happen to have. He happened to have stayed in a guest house I rented at one point, and Nate and Brandon came across him. And between them and Nate and Brandon’s contacts in Missouri, they were trying to find bird dog deals for basically a private equity acquisition.

Dana Robinson:
Right.

Ryan Sandburg:
Yeah.

Dana Robinson:
And so I forgot you were involved with that. So you jumped. You threw your hat in the ring with that for a while.

Ryan Sandburg:
So there was an interesting point where I could have gone one or two ways that I was interested in with that. One was I didn’t really know what I was doing in that world. I was able to, at that time, see some deal memos that links guys shared with me and stuff like that and see kind of how they operated to have this look at what’s the end of a business, what makes them attractive to buy, and what makes other ones not attractive to buy. I was fortunate where they let me go meet with some business owners and interview them and qualify or disqualify them. So it helps me right now understand if at some, like, the businesses you want to buy are good businesses. So set yourself as a business that someone wants to buy, whether or not you want to sell, it’s a good way to. If I don’t know what I want to do, I at least should work towards that, because that’s a good place to be. One, there was two guys that I talked to at that time that were fairly important.

Ryan Sandburg:
One was the guy that owned pre search, which is the company I ended up buying myself. The other one was this guy named Stan Sedgwick, who is at WD 40, and he wrote a book about getting out of entrepreneurship into corporate. So I kind of looked at that as, like, maybe that’s what I should do. Maybe I should look at that. Maybe there’s something to. There’s some happiness in that. And he. I ended up doing a number of calls with him.

Ryan Sandburg:
He was really helpful. He was really insightful. He made it sound cool.

Dana Robinson:
But was he the founder of WD 40? I mean, I’ve heard the name.

Ryan Sandburg:
He was. He was a high level vp. There he had some other entrepreneurship in Denver’s that he did well at. You know, he was easy to go straight to the top at a not small company, you know, major, you know, worldwide company. But in any case, I saw that as like, oh, this seems cool. You’re wealthy. You know, all of it’s always a little bit like, look at the rich guy. How do I get there? But I had reached out to the company back home in my hometown.

Ryan Sandburg:
They were way too small for links, like, beyond too small, and forgot about them for probably six months till they reached out to me, like, hey, this probably isn’t going to work out. Do you want to come work with us, get some sweat equity, you know, and help us, you know, get out of where we are? And so that’s how I got involved with it.

Dana Robinson:
That’s fantastic.

Ryan Sandburg:
Yeah.

Dana Robinson:
So pre search, I mean, that you bird dog this for private equity group, and, and they declined because it was too small. Tell me just a little bit about the business to help the listener.

Ryan Sandburg:
Yeah. So to give an idea of their size and where they’re at at the time, they had four people working basically full time there doing what came to, I think it was something like 20 ish searches a day. Okay.

Dana Robinson:
Research is background check company. So they’re, they’re manually 20 searches a day.

Ryan Sandburg:
These are background checks, you know, helping people get hired. Right now we do several thousand a day with twelve people. Like, the, the system didn’t work then. And I could see that it was like, okay, I know people that own businesses. Those are the people that are your clients. So I have a sales in there, and I also can see, like, huge holes in operations here. Like so many manual things that were being done, so many processes and systems that were just, they weren’t broken. They were just never built to where I thought, okay, I’ll make no money.

Ryan Sandburg:
I’ll do sweat equity. I won’t take a salary, and I’ll just see if I can build a working company out of this, I guess, build a job out of this. And that’s kind of where I came in. Over time, I ended up buying that rest of the equity that wasn’t sweat. That was, had to pay money for that.

Dana Robinson:
Yeah, yeah, yeah. Well, but you knew the business at that point.

Ryan Sandburg:
Mm hmm.

Dana Robinson:
Right. You de risked that. By the time you put in cash, you’d been hat you had your hand deeply immersed in that business and knew what you could do with it if you owned all of it. So it’s worth the risking your cash at that point, right?

Ryan Sandburg:
Yep. So I used kind of the last amount of what I got out of the spread effect deal to buy the. Buy my first partner out. There was. There was three partners at the time, excluding myself, so four total. Bought one out. Later on, me and my partner bought the other one out because he kind of wanted to get out and stick to his other company, that he is way bigger. And then a year and a half ago, I bought the original partner that I started working with on out of it.

Ryan Sandburg:
So now it’s just me, which has its positives and negatives.

Dana Robinson:
Yeah, well, talk about that. What are some of the positives and negatives?

Ryan Sandburg:
There’s that. John Dunn. No man’s an island. It’s hard to be an island. It is. It is hard to deal with hard things alone. I recently let go of a sales guy probably a month too late. Like, not a month too late.

Ryan Sandburg:
Like, it hurt anything. It’s just I kind of knew a month ago that, hey, this probably isn’t a good idea. Until I just. I didn’t know who to talk to about it. I talked to Liz about it, my wife. And, yeah, she was like, yeah, you’re right. Like, we had. You have to be done with that.

Ryan Sandburg:
And so it’s hard not to have a business partner to talk, like, the really intimate details of business about.

Dana Robinson:
Yeah, yeah, yeah. Sanity check and accountability. Accountability. Like, why do we have this person that’s not a fit or why, you know, why are we keeping this customer that we’re losing money on? These are decisions that a partner can sanity check you on. And you’re missing that now.

Ryan Sandburg:
Yep. So the last partner, Travis, who he. It was kind of a mutual thing. He wanted to get into church ministry, and I wanted to take over more of the business. So it was, like, a really good time to make that change. But I still talk to him about that stuff a lot. That’s. I’ve actually let go of a number of clients as part of my streamlining the business, and he’s helped me, like, second guess, like, dropping certain clients.

Ryan Sandburg:
I mean, it’s nice to be able to drop clients. Like, not that you want to drop clients, but it’s nice to be in a boat where that’s allowed, and so that’s helped a lot.

Dana Robinson:
Yeah. It’s super important part of building a business. As you say. You want to. You want to have a business that is sellable, where you’re in those meetings that you have, you are on the other side of the table, and you’re like, I want to own a business. That is a yes to the people that come and shop and look and want to buy. Even if I don’t sell, I want to own that business. To do that, you have to make a lot of hard decisions.

Ryan Sandburg:
Yeah, yeah. I had a client that had a lot of promise of future possible revenue. But I also knew if tomorrow I sold this business and private equity guy, which I know a lot of them, I know what they would ask, and they would ask, like, how do you service that business? So how does that work? I mean, they would be disgusted at how much time they took. So I was like, why am I doing it? Like, it’s my business. Who’s gonna stop me? So I gave him a letter and just said, hey, end of Q one, you’re done. Like, I don’t dislike you guys. I just dislike working with you. And so there are some other reasons for it, too, that were helpful.

Ryan Sandburg:
But anyways, yeah.

Dana Robinson:
All right, so the streamlining of the business is a big deal. I mean, I’ll use an example for my own current business. We do. One of our assets is commercial landscape maintenance. Our operator said, hey, these residential accounts that we acquired aren’t, aren’t the average ticket we need to be. And we run by the numbers, so we need to divest these. And so we found a great other business that only did residential so that we could keep good rapport and not feed a competitor and worked out great, you know, but. Right.

Dana Robinson:
Sizing was one of those things that the business owners we bought from just couldn’t do. Right. They just couldn’t let go. It was like, I’m going to let go that revenue and then what? Then I’m going to be out of money. So there’s a lot of fear that you have to come in and be objective and say, yeah, this is not a profitable piece of the business. No one else would keep this if they bought my business. Why am I keeping it?

Ryan Sandburg:
Yeah, I like to. I think that the value in doing something hard is that it’s hard for someone to beat you at it. If it is hard. However, if that’s not, if that’s not a benefit there, then I like to do the easy thing. I max out on the easy stuff. Why build out a new funnel of, like, servicing a type of company we’re not the best at now because we don’t have the whole market of small hospital clinics across the US. Just keep selling that thing. We’re good at selling.

Ryan Sandburg:
It’s easy. Build the easy, easy to service. We know what we’re doing. Every question they come to us, we already know the answer. Versus if I start servicing some, you know, say a company that hires people that draw blood, I don’t know what it would be. But if identified as hard, I usually try to think like, well, we’re not maximized on what we’re good at. Why do the hard things?

Dana Robinson:
Yeah. And you’re building a superpower in the sort of space where you have some authority. It’s not, it’s not just easy. It’s that in some ways becomes a strength for your clients, keeping you. Yeah.

Ryan Sandburg:
Yeah. It wasn’t hard to. I mean, it wasn’t easy to get into, but now that we’re set in what we are, I want to keep doing what we built. Yeah.

Dana Robinson:
Yeah. I think that’s, that’s super important. And so many businesses I’ve been part of, we, we get a shiny new object. You know, it’s very entrepreneurial to be like, you know, someone. This is where partnership can actually go. Go south or, or help you got a great idea. You need someone who’s like, yeah, we all, we want to listen. This is really what always will listen to great ideas.

Dana Robinson:
And then someone will remind us, let’s shoot that down, because we don’t do that well. Yeah, that’s not. Not our competing competency.

Ryan Sandburg:
Yeah, I definitely don’t think what we do is easy. I like to think I can tell anyone pretty good details of what we do, even behind the scenes, and they won’t be able to just come in and do it if it was that easy, that if you just knew the ingredients, you could beat us. Probably shouldn’t do it. Well, I shouldn’t be doing it if it’s that easy to beat.

Dana Robinson:
Yeah. So I love that.

Ryan Sandburg:
I don’t think what we’re doing is easy, but I do think I take the easy path now that I’ve kind of laid the framework for it.

Dana Robinson:
I like that. I think that’s a good way to look at it. You and I have been talking about our mutual friend and colleague and someone who also worked with you at spread effect. Charlie. Quick commercial for Charlie. If anyone wants a great web developer, email me hello@danarobinson.com. I will connect you to our secret weapon, who is only available on a referral basis, Charles Bolger. So we got Charlie.

Dana Robinson:
You have deployed Charlie on a software mission for your business. And I want to call out on it because it presents a sort of entrepreneurial journey. Crossroads. You’re going to build software for your business, and there already is software that exists. And I want to get at the why and whether that is always a good thing, or whether it just happens to be a good thing in your space.

Ryan Sandburg:
In my mind, it’s always a good thing because of what I’ve seen. The automation, the system side of software, forget the front end of it. But what having someone that’s competent in solving problems with software can do is. One of the biggest things I learned with working with Nate and crew is, yeah, sure, we could have done everything we did with Excel spreadsheets. It would have been a nightmare. And you have this really low ceiling versus. There’s so much inside the world of what I do. Reporting court data is all data based, obviously.

Ryan Sandburg:
So to build out kind of automation software that takes away as much back office stuff as you can, so you can just focus on the stuff that is hard. I don’t see a way from us getting away from being, you know, a say, 6 million ish, six to $10 million company to 50 to 100. Without solving that piece. We’re just gonna. We have this hard ceiling of our scalability will exactly mirror our growth in cogs if we can’t take control of automation. Okay, I don’t have all the answers for it now. That’s part of like on growing ongoing project with Charlie of figuring out, identifying what’s the simple level of doing this and then growing beyond that. But I know that’s at least I’m going to take the risk that that’s the integral piece I’m willing to.

Dana Robinson:
Yeah, well, yeah, let me draw an example from my own experience. So in HVAC plumbing, we use Servicetitan and it’s a lot of friction to get it up and running, but it becomes a unified operated business operating system. Once you do all inbound calls, outbound calls, customer service, everything’s tied intimately into this, into the system. I’ve met HVAC and plumbing owners that have bootlegged together their own software, or, you know, kind of like invented ways to have Quickbooks create dispatch or something like that. In the landscape business where we are now, it’s Aspire, which actually got bought by Servicetitan and one of our port cos had custom software built in the late eighties, early nineties that they were still using until last year. And in some ways they held themselves back. By not just getting on the. The main software kind of ERP that everybody uses in your space, you’re attacking the software as solving a problem that lets you scale it must be because there isn’t a SAA that’s unifying the industry in a way where you just go, everybody uses this.

Ryan Sandburg:
Yeah. And it’s a big enough opportunity that I thought, like, what about going into that space which went back to, why go after this thing that I don’t do right now when I can do this? That’s why I don’t do it. But yeah, there’s a need there. I don’t wholly dislike the software providers, but when everyone that gets big moves off of them, it’s a good sign that it’s hard to be big on them.

Dana Robinson:
Interesting. That’s a great observation. So then you’re stuck with incumbent software providers that actually limit your growth.

Ryan Sandburg:
Yeah.

Dana Robinson:
And all the bigger ones get ahead of it.

Ryan Sandburg:
Yeah. And it kind of goes into that world of like, I want to, I know who I am now. I, I’m not a hundred million dollar background check company, but if I want to be that, I have to model myself that way. The framework of who I am has to fit that. Otherwise, when I get there, I’m gonna have to constantly be breaking and building things. Like as soon as I identify, this is where, this is what I’ll need to be there. Well, how soon can I start that? I mean, I knew this before, but I didn’t have the money yet because everything’s bootstrapped. I mean, not that it has to be, but it is.

Ryan Sandburg:
And so have enough money to pay Charlie. Okay, start paying Charlie. And that’s kind of what, where it’s at is. I know I need to get there. I could see that’s where everyone goes. So do it now versus do it when I need to later. I don’t need to. None of my clients are like, I need you to do this now.

Ryan Sandburg:
Could I win more sales right now? Yeah. I mean, I’ve had, I’m fortunate enough to be able to build relationships with a few Fortune 500 and some Fortune 100 companies that have said 2025, 2026, solve these problems. We can look at maybe using you guys. None of those are easy sales. None of those are easy to close. But if I know I need to do this, to be able to do that conversation in two years, I mean, two years comes up quick, so.

Dana Robinson:
Yeah, it does.

Ryan Sandburg:
Just trying to do that. I mean, I love that integration stuff, all that.

Dana Robinson:
Yeah, well, and again, like the drawing from my stories, we, with an audiobook business that took us over a decade to grow before we sold its private equity, we experimented two or three times with different directions and they became a distraction. The software, turns out, wasn’t. We had great partner who was a programmer. But I think a lot of people might get into your space, and then suddenly everything they make goes into the software. In your case, when you and I were talking about it, one point, you said, look, I’m spending a bunch of money on software. If all this does is serve my business better, then it accomplishes and costs less or the same that it accomplishes a lot. You’re not using this as an opportunity to become the provider of the software, but that software might add a lot of value to an ultimate exit as well if it solves a problem other people have.

Ryan Sandburg:
Yeah, yeah. I see internal software when it solves a problem that the acquirer doesn’t currently have solved. Because most of the acquirers in my space are in my space. Even if they’re private equity, they may already own businesses, and they’re just building synergy, like.

Dana Robinson:
Yeah.

Ryan Sandburg:
To have software that solves something one good, like, one arbitrary, is. I’m not building this out right now, and I think there’s an opportunity. There’s a couple of really large background screening companies that don’t have a fingerprint solution. Fingerprint solutions are incredibly difficult to build out. You have to have physical stuff all over the nation or some network of your own built hardware to send to these places. Could you invest $50 million and build that network and then immediately turn around and try to flip it for 75? Like, I think that there’s something there to that. Like, so if I can build my software to do a light version of that, something that they don’t have solved yet, it serves the same purpose. The software creates value to them.

Ryan Sandburg:
Just, it’s like, oh, we can. We can now use this platform and sell it to our clients that fit this. We’re not doing it from now. There’s value there or future clients they don’t have. But, yeah, yeah. Try to keep that in mind as we’re doing it and not just build a generic copy of everyone else is kind of helpful in direction and also future value.

Dana Robinson:
Yeah, I love that. Well, in terms of thinking of your business as an asset, a lot of people have the problem that their business is a job. They’re always stuck in it. I know that for you, you’ve got a business that enables you to spend a lot of time in California with your wife’s family and with friends like me. Talk about how you are able to run a business and not necessarily be in the business.

Ryan Sandburg:
Yeah. What I really like about pre search right now is I can easily spend, as soon as I wake up, like, Liz was out of town for a month. I would wake up and then be done, and all I would do was that. And I could easily, like, none of the stuff I’m doing right now, it’s important, but it’s not important to today. I cannot work today. I can do this call. If you said, hey, Ryan, let’s do a 16 hours call, I’d probably say no, but, like, I have the time. It wasn’t always that way.

Ryan Sandburg:
I didn’t have the time for it, say, two years ago. Two years ago, I’d be like, man, if I don’t work for a day, I’m kind of screwed. I’m too valuable as an employee. So then it came down to, like, restructuring, getting the employees that I trusted to where I could do that, and that’s where I’m now. If, if I needed to take a week off, I wouldn’t be sweating at night wondering what they’re doing. Like, if. If things are going okay, if I set my email forward on, I don’t double check that it’s getting handled. Um, and so it’s a good spot to be, but that just comes down to accepting the cost and good employees.

Dana Robinson:
Okay.

Ryan Sandburg:
Yeah.

Dana Robinson:
I was just going to say how, how? Because this is so many people’s problem. This is, you can’t sell the business until it doesn’t need you. You can’t make the money and live the life until it doesn’t need you. And in two year period, you accomplished it. Like, so.

Ryan Sandburg:
Yeah, in my town is like, $14 an hour. We’re in northern Wisconsin. It’s not expensive. I don’t pay anybody less than 20. And I’m not to say, like, I’m this, you know, benevolent giver of lots of money. I don’t think $20 an hour is a huge amount of money. I’m just saying, like, that is enough that my worry with employees isn’t. Are they, is there any animosity towards me of raking in money? I mean, they know I make good money.

Ryan Sandburg:
I don’t hide it.

Dana Robinson:
Like, I don’t have a Ferrari, but.

Ryan Sandburg:
It’s not like I’m pretending to struggle. So there’s a mutual respect there. I think just overall, respecting employees goes a long ways, and respecting them is like a real act. You can’t pretend it. So if you’re really doing it, it removes a lot of stress. There’s still problems. They get mad. They mad at me, they mad at each other.

Ryan Sandburg:
But it at least helps to keep things sort of. Even when I was an employee, I always liked to think I want to make just a tiny bit less than I’m worth because then they owe me. Having employees, I just want to pay them just a little bit more than they’re worth because they owe me.

Dana Robinson:
Yeah. Yeah. Well, and I love that because I talk about, again, some of these subjects just strike a chord for me with, with the latest book I’ve got. But this sort of truce or standoff between employees where they do the minimum, then I get fired and I’m going to pay you the minimum so you don’t quit. And you’re saying, as a great employee is ambitious and says, I’ll work a little harder, so you owe me. And a great employer is like, I’m going to pay you a little more. So you always owe me. So you’re actually raising the bar to each other.

Ryan Sandburg:
I like to joke, the first time I ever meet someone I like, when they’re 15 minutes late, I start off on top. You owe me. You know, I like there is always a balance, not like a conscious battle balance, but there’s some subconscious of, you know, who’s, who’s sorry to the other person. It’s rarely equal. I don’t like to be the person that’s sorry to the other person because it doesn’t feel good to me, but, yeah. Okay.

Dana Robinson:
So we got good, good people. Pay them, pay them more than everybody else. So you’ve got people excited. Their morale is high. I mean, how do you get to the point where they are not making you do the work? Like, how do you train and then ensure that the training is there so that it’s propagating itself.

Ryan Sandburg:
So it always comes down to, I like to think if it’s not my fault, then I can’t control it. So I have to accept, you know, to any degree, is like that stupid thing, like everyone’s at fault in an accident just for driving. But training is the biggest thing I recently read, and I had never read it before. Ben Horowitz’s book, the hard thing about hard things, he talks about it in there, too. Whereas if the employee’s not trained right, that means if the lowest level employee is not trained right, then the mid level employee didn’t train them right. And if the mid level employee didn’t train them right, then the higher level employee didn’t train the mid level employee right. And if they didn’t do that right, then I didn’t train them right. And so it comes all the way up to me, like, I didn’t make it clear enough that you have to train them.

Ryan Sandburg:
I didn’t make it clear enough that these rules aren’t PDF’s that exist in case someone ever asks. They’re like real. This is our process, this is why we do things. And if we don’t do these things, I don’t have a good answer for a client on when something went wrong. I tell clients things will go wrong, but there will be an answer for it. But if I don’t have an answer for it, it’s kind of my fault for not having these safeguards. So everything works better when people know what they’re doing and if they’re not trained, it ultimately comes to me. I didn’t have the right training for them.

Ryan Sandburg:
At some hierarchy of this chain that makes things so much easier, I lose my mind.

Dana Robinson:
Yeah, two years ago, you’re working hard, you’re doing everything. You start creating some sops and some PDF’s and some loom videos, what do you do to start making it so that you can begin to like delegate the training and let people begin to pick up the slack?

Ryan Sandburg:
Simple, simple beginning of like Google Drive spreadsheets and word docs to eventually. Now we’re at a point where we’re building out kind of this network of all the training we have into help juice, which is I tried out some software, that’s the one we decided to use as having help juice.

Dana Robinson:
I haven’t heard of it. Is this like a train? You will know.

Ryan Sandburg:
Yeah, it’s just knowledge based software. It has pretty good search functions and building out new stuff and it’s kind of like just word docs essentially, but inside of a knowledge base, great. And training isn’t done. You don’t do, you don’t train a new employee, you just are always training. So I make sure that at the very minimum we do an all ops because I’m very much an ops person and I’m not great at sales. And the only way for me to solve than being not great at sales is to build a really good product. Product. And then it’s easy for me to sell.

Ryan Sandburg:
I can’t sell a bad product, not because I have a moral thing against it. If I could figure out a way to sell a bad product, then maybe I would, but I’m good enough at.

Dana Robinson:
It to pitch it.

Ryan Sandburg:
So we do a weekly training and if we don’t have something specific to train on on our weekly ops call, and it can last an hour to 2 hours, you know, it could go longer if we wanted kind of eventually.

Dana Robinson:
To it’s like, we got to be done.

Ryan Sandburg:
If we don’t have something, we’ll just say, hey, you know, Natalie, you sit there and do your job for an hour and we’re just going to watch you on screen share or in person, and we might learn something or we might suggest something that we see you’re doing, like slower than we do it because everyone builds like their own internal tricks to getting stuff done, but they don’t think to share it because it’s like, that’s just how we do it. I don’t know why you wanted to see that. I didn’t know you wanted to see how, like, I like to use link clump. It’s like a browser add on where you can hold down the letter z and you drag, and you drag a box over a group of links and it opens them all in tabs. Okay, simple little thing. But with the way our software works, it can save a ton of time. It turns 50 clicks into one click. Just stupid little stuff that’s like you don’t think to share unless you’re kind of shadowing someone else.

Ryan Sandburg:
So just ongoing training.

Dana Robinson:
I love that. So you got this business now you’ve got the flywheel spin in. It doesn’t require all of your time. And you and I, whenever we get together, start talking about other businesses that you hover around because you’re an entrepreneur and you’re looking for opportunity. The, you know, and you sort of like the entrepreneur’s never not interested in looking at deals. And you and I a little while back, talked about a business and whether it was a, you know, good for a roll up. And so I figure in today’s edition of would you do this deal? Or if you would, how would you do it? I found a biz buy sell listing, not in your neck of the woods necessarily, but a southern Indiana building material supply store asking $2 million, cash flowing $367,406. Got $4.4 million in revenue, $1.2 million in inventory.

Dana Robinson:
This southern Indiana building materials store sells high quality building materials. It sells hand tools, fasteners and hardware, paints and sundries, automotive and sporty goods, housewares, pet and farm supplies, lumber and cold weather items. They have a store that serves 5000 customers. Talk to me about your opinion. A deal like that, you’re an entrepreneur looking for opportunities. What would be the things that you’d want to know or that would go into your analysis of buying this Indiana building materials supply store?

Ryan Sandburg:
So the inventory versus asking price is pretty close. I’m curious how bad is the inventory, like, is it just your 20 years of built up stuff that you didn’t sell? Because building supply companies have big yards and so you might not need to age out the stuff that doesn’t sell. I mean, do you have a bunch of tan siding that no one puts up anymore? So, like, I think that inventory is an interesting thing. Also, the value of inventory in building supply, are they valuing it? Like what’s the number they’re putting on that? Is it based off when they buy it? Bought it. Because if they bought it in the last two years, building supply values have gone down so much. Like not so much in a long term average, but there was a huge COVID spike. Did you buy it during COVID And do you have it on the books for that wholesale price? Do you have it on the books for the retail price? Like where, where do you have that? That would be my biggest question of like, if I like the answer to this, I’ll look into it, and if I don’t, it’s a quick nevermind.

Dana Robinson:
Yeah, yeah, I love that. The thing that, the sizing, I mean, I know it’s in a small town and so money goes a long way in a small town, but you got a cough up $2 million for this and your cash flow, which includes usually an owner discretionary component, $367,000. If I had $2 million, I could probably do a lot of different things that would throw off $350,000 in cash flow. That might require less risk and time than owning a whole hardware store.

Ryan Sandburg:
Yeah, I think there’s a huge risk. And also if you’re in a small town, Home depot, Lowe’s, those places are in every major market. I don’t know the answer, but I’m guessing the only expansion they’re doing is in growing outside of metro areas, or at least that’s got to be a component. Is there one nearby now? And is the market big enough to justify one in the future? Because if there’s not one now, that’s scary. If there is one now, that’s because they’re already exactly.

Dana Robinson:
They’re already dealing with some competition. I’m going to drive to the next town where I can get to this home depot and I’m going to buy cheaper there or I’m going to buy here local when it’s quick and easy and I just need a couple of two by fours. Right, so. Right.

Ryan Sandburg:
And then the 5000 customers means, I’m curious, are they just counting people in the door? That’s not contractors. I mean, they probably don’t have 5000 contractors. So my bigger question would be how many contractors do you have? Because I see that as if you’re good at building supply. That’s where you can make your money, is building a contractor relationships. Maybe they’re bad at that and that’s an opportunity to come in and say, hey, I can build contractor relationships. That’s my bad. I mean, that’s my background. Yeah.

Dana Robinson:
That’s one of the reasons. Not only have you and I talked about whether you could get into business like this, but it is your background. And you’re right, that that’s a key customer that might not be really developed because with that little revenue, you don’t have the salary of a biz dev person who’s going to be taking contractors out golfing, right?

Ryan Sandburg:
Yeah. That realistically would be like two commercial buildings in the year. Like, that’s not a lot. That’s depending on. Maybe there’s no commercial development there, but those are interesting businesses because they’re so, so tied into the success of the community.

Dana Robinson:
That’s true. That’s true. So they’re sticky. So there is the possibility that the longstanding local hardware store has loyalty that outstrips and allows you some elasticity and price so you can charge the margins you need to.

Ryan Sandburg:
Yeah. So here’s one thing I thought about with those companies when I looked at them once, is the town that I looked at them is not developed town. There’s a lot of houses with old roofs and old siding. How much marketing would you have to do into, hey, move to this town to get some people with money and need to buy your remodel supplies? I think that small enough deals allows someone like me to actually do something on like a micro market scale to build customers.

Dana Robinson:
Right. So you actually think you’d attract some fix and flip shops that have some capital and say, maybe work with.

Ryan Sandburg:
Yeah, work with the city and like help fund some marketing. So I live in northern Wisconsin in a town that is 8000 people. We’re on Lake Superior, we’re surrounded by forests. There’s hunting, there’s fishing, there’s a lot of stuff that’s like all I have to do is convince 800 people from Minneapolis and Milwaukee and Chicago to move up here and I increased population by 10%. Maybe I should just buy some houses and go do a little marketing towards look at the fishing and hunting you can do raise property values and sell them like.

Dana Robinson:
Yeah, you needle in a small town. Yeah, that’s interesting.

Ryan Sandburg:
Yeah, I joke with the guys because when we moved in, Liz is hispanic, and the, the average hispanic income actually has a bump when we join the taxes of the town of like average income because it’s such a small town. There’s like ten people that are hispanic. Like, small markets are kind of fun in that way as long as your business isn’t focused on it, which mine isn’t. So.

Dana Robinson:
Yeah, love that. Well, that great observation on the would you buy it? Interesting deal. The one thing you and I also, we never researched this when we were talking about whether there was a few of these on the market at the time two or three years ago. What’s a roll up look like? Is one question. Could you have think of people who run fitness centers that make 350 per branch? If they get ten branches now, they’ve got critical mass. They can kind of run a simplified branch and a shared services and maybe have an owner that’s really pulling some profit out of the business at that point. I don’t know. You’re from a small town.

Dana Robinson:
We’re talking about a small town hardware store. Could you get ten small town hardware stores and centralize your organization?

Ryan Sandburg:
That’s the real opportunity actually, with those is because why does Home Depot beat them? It’s not because people like Home Depot more. Home depot simply just sells two x four for less. And when you’re remodeling your house, it often comes down to price. You go to the yard. Maybe. Maybe Home Depot has more curved two by fours. You just grab the straight ones like, yeah. Then Home Depot throws out the bad ones.

Ryan Sandburg:
They have massive purchasing power. So if you roll up, you start to build your own purchasing power by rolling them up. And I think that that’s the way that you can compete. I prefer being somebody that has a house and remodels it and stuff. I prefer to go to the small shop. I don’t prefer to pay for the small shop. But there’s, the benefits of the small shop is I don’t know what the heck I’m doing. I can ask somebody for help.

Ryan Sandburg:
You can’t do that at Home Depot. So I think there’s an opportunity with building supply to build purchasing power with roll ups while keeping them smaller, local entities. Maybe a centralized warehouse.

Dana Robinson:
Yeah, centralized bird. Yeah, definitely economies of scope and all of the benefit of that. Fun, interesting times. Ryan, thanks for coming on the exit plan podcast. A lot of people come on here, tell people how they can connect with them. You don’t need any new friends. But are you on LinkedIn or any social platforms where people can.

Ryan Sandburg:
Yeah, I’m on LinkedIn. I have a Facebook. I haven’t used it in forever. I have a, I don’t, I have a Twitter and an Instagram that never logged in. Yeah, I have it. I have a LinkedIn. I don’t, pretty sure I have a LinkedIn premium one. I’m sure if you message me, I’ll see it.

Dana Robinson:
Excellent. And then pre search the people looking for background check services. Is it pre search.com?

Ryan Sandburg:
Presearchinc.com. It is a search engine that you generate crypto tokens for. And we have a mutual trademark which somebody helped me secure.

Dana Robinson:
I don’t know.

Ryan Sandburg:
But anyways, so pre search inc.com, most of the info is on the site. You reach out, you’ll get somebody that they’ll probably forward to me. And yeah, we do background checks primarily for employment purposes. We don’t do them for like, let me check my girlfriend, that kind of thing. You hire an employee, you have employees, you have volunteers, you run a church, that kind of stuff.

Dana Robinson:
Yeah, it’s a, it’s a bit business to business service, not a consumer service. So any business people on here looking for background checks for employees and whatnot, great. Great service. And don’t forget, get on my newsletter at www.danarobinson.com. And always hit me up with questions and things that I can bring to hours in the podcast. Danarobinson.com. You can hit us up at hello@danarobinson.com. Thanks.

Dana Robinson:
Thanks for coming on. Ryan.

Ryan Sandburg:
Yep.

Dana Robinson:
Thanks for joining me on this episode of the Exit Plan podcast. I’d love to hear from you. Feel free to hit me up with questions or comments by emailing me at hello@danarobinson.com. Or leave comments and questions by calling, calling 858-252-7785 call 858-252-7785 and leave a message.