David Pere: What's up, military millionaires? I'm your host, David Prey, and today we have an exciting guest. But first, I'd be remiss if I didn't say we do miss Alex while he's off hiking around in Spain or Portugal or wherever he is right now doing his pilgrimage, but we don't miss him enough to not podcast. So I'm here with Mike Demo, who is a Marine Corps veteran, small business consultant who's helped over a thousand small business owners. He does funding for businesses. He runs acquisition-based funding. He does funding of all sorts. He's done some really freaking cool deals. And now he's gonna be, we'll talk about this here in a minute, he's gonna be running even a collegiate level course on acquisition-based funding, which is like, for those of you who read the book, Buy Then Build, it is that style of getting into business. So. way cooler in my opinion than having to play the startup game because that fucking sucks. And yeah, so this is gonna be a lot of fun. And Mike's been in the Facebook group for a long time. And he and I really just kind of started talking because he's always adding a ton of value. And I like that. So that's where we are right now. We got on a phone call what month ago and
Mike Demo: Some
David Pere: I was
Mike Demo: like
David Pere: like,
Mike Demo: that.
David Pere: holy shit, you're doing some cool stuff. We should jump you on the podcast. And here we are.
Mike Demo: Hey, I'm glad to be here. Um, took us a little while to get that set up for the second time, but you
David Pere: Yeah,
Mike Demo: know, it happens.
David Pere: I was down in Austin. I went a little too hard in the paint, kind of lost my voice. And then, honestly, probably a good thing because the hotel internet was terrible, so it probably would have been a garbage recording anyway, but yeah, this is much better set up. So, it's all good.
Mike Demo: That's right. And when I get down to Austin after this one deal closes, we'll connect, we'll get some nice barbecue and do some things.
David Pere: I do love me some Austin. I'm always down for an excuse to go to Austin. So I've probably been there three times this year. So I think I'm going in two weeks. So yeah, anyway, it might be down there in June as well. I don't know, who knows? I do, I'm gonna end up moving there one day. It's gonna happen. Who knows? Anyway, so all right, so let's see. We're gonna jump right in and ask you why acquisition-based rather than startup-based funding?
Mike Demo: There's a couple different levels to the why. And based on our earlier chat, one of the reasons is I think it's absolutely jacked up what our government did over the last couple of years with just really hamstringing local small businesses in favor of those bigger ones. I'm not some like wokey kind of person, but like I care about my community. And I come from a background where typical big Italian family and they all own their own businesses. Like in my hometown, you had a plumber, you had somebody who drilled wells, you have an electrician, a mechanic, like name a thing and somebody in my family did it. And none of those businesses transitioned to the second generation. And you know, if you go on a site like bizbuysell or wherever it is, you see all these listings, 80% of them don't sell. In general, those businesses, they usually end up being an asset sale. something in that range. And it's not that they're bad businesses. It's just that they didn't have the parts and pieces in place to have continuation. Like being in the military, you know, we have our SOPs. And like when I was over in Iraq, I had the crew chief binder, it's like an inch thick. And if somebody was basically trained in my job, they might not be able to do it as well as I did. But they could execute and prosecute the air war. Like it was possible. So on the one side, when those businesses close, it's not like another local business steps in usually. Somebody from one of the bigger ones comes in and takes over and we lose that asset in the local community. So that's part one. Part two is, you know, we talk about 80% of businesses not going to the next generation and 85, 90% of businesses that start up don't make it five years. reasons they don't make it. Sometimes their ideas don't work, their processes don't work. Getting that first dollar is a lot harder than getting money when you've already been in business for 15 years. These are basic things. And at the end of the day, it doesn't cost much more to acquire a cash flowing business than it does to start up. Like if you're gonna be in construction. need to buy all the tools, all the equipment, all these other parts and pieces, or you buy a company where they already have all that stuff. It's not rocket science to see. I had that asset sale thing happen with my stepdad on my website. I tell the entire story. Best builder in Southern Fairfield County, Connecticut. They call it the Gold Coast. The house is ridiculous, dude. My house is decent. It would be the guest. house for some of the houses we were building. Yeah, it did ridiculous. And then he died on the job site. And we had to asset sell everything didn't have the right insurance policies in place. My mom ended up having a ton of issues financially after that. And the same reasons 30 years in that his business had to be sold are the same reasons all these other businesses have to be sold. And it's not hard if you have good fundamentals to turn those things around. Like it's not fucking rocket science, but you need a process. And that's what I help people with is let's find a business in your space that you want to go into. We'll adjust it to your vision of things, but we're also going to standardize some processes, make things repeatable. So you're not working a hundred hours a week. I did that in my twenties when I ran my first marketing company. It sucked and it. you know, just having a breakdown after three years. And it was fucking terrible. So I decided to learn from that, not do that. And that's what I'm helping folks do now.
David Pere: Yeah, I love it. I love it. So, okay. So how did, I mean, I guess that kind of gives you the why. How did you get into this when you left the military? So I know you in your bio, you talk, you mentioned, you started your first business when you were 24. You
Mike Demo: Mm-hmm.
David Pere: were in the Marine Corps for eight years. So that tells me there was some overlap in there. How did
Mike Demo: Yes.
David Pere: that work out?
Mike Demo: So this is the unintended consequence of a recruiter lying to me.
David Pere: Oh, what?
Mike Demo: No, I know weird.
David Pere: I was I was a recruiter. We don't
Mike Demo: And
David Pere: know.
Mike Demo: you're a dirt bag. It's fine.
David Pere: You know, actually, it's funny. I always tell people the reason that I was the recruiter of the year and the staff and so I see the year is because I was too honest. Like I would sit down. My recruiters would be bullshitting with kids and I would be like, hey, dude, my recruiters going to find someone to enlist today. So either that's going to be you or you need to get the fuck out of the office so he can find someone to enlist. So are you going to shit or get off the pot? And the recruiters freak out and then the kids will sign the papers. And I'd be like, all right, cool. Thanks.
Mike Demo: It's solid. So I was supposed to be an air traffic controller. And so I live in Southwest Connecticut and this is back in 2000. Like there's a hundred thousand dollar a year jobs back then doing air traffic control at any of the major airports. This is going to be dope. I could do
David Pere: Yeah.
Mike Demo: it as a reservist, make a hundred grand a year. Like sweet. So we get done with combat training down in Lejeune in March of 2000, when I was about to say 2021.
David Pere: Hehehehe
Mike Demo: And You know, they've got you, you get your orders and you're all going in line to the different buses because you're going to different places and I'm supposed to go to Pensacola around spring break time. This is going to be dope.
David Pere: Oh yeah.
Mike Demo: I look at my orders. I go to the NCO go, um, corporal what's 29 palms. He
David Pere: What?
Mike Demo: just laughed at me, laughed at me. So I had a different MOS. Evidently having a high 90 ASVAB guarantees the first two digits, not the last two big difference. And it's a very specialized field, air support operations. It's basically being a battle space manager and they don't do it every day. So they asked me to go active and I asked them how often do we do this? Like how often do you actually get to do your MOS? It's like one week a month, which to an E1 means so I'm gonna be doing field days every day and playing fuck games. That's not really my speed. So I stayed on the reserve side. So I got back from Iraq in 05, that's with a little certificate back there as forced from doing that. And couldn't get a job like going back to working at Hallmark and stack beanie babies for seven dollars an hour. So I said, fuck that, I'm going to go paint houses for ten dollars, whatever. And dude stiffed me on my paycheck. So one of my buddies was selling coca-cola and was like, you know what, I did that over winter break years ago. I didn't do great. because I wasn't committed, but like, I know that I can make that path work. And I sat down with the division manager, I was like, dude, the guy's name is John Wasserman, I'm friends with him to this day. I wanna do what you do, like be able to impact people. Like even as an NCO, I was really big on helping develop and look at the future of my Marines and help them grow. So it was a natural transition for me to help these young adults to. learn the different skills they needed to successfully present themselves in sales, build their lead, you know, base and do all these parts and pieces. So that's what I did. I opened up my own branch office after a couple months. I was president's club top 5% in the nation. Ran his office while I was in school, 18 credits a semester. I was on the go because I didn't want to stay in this one place. So how did I get into it? It's always been a thing for me. It comes back to some of the issues with like, and I go deep in this on my podcast, but like when you've been abandoned and feeling that abandonment as a kid, you want to serve and help others to empower and grow. So I took that feeling that I had lack in and have created a business through being able to empower others to be successful. And that sounds really woo woo, but that's really it is I enjoy doing that. And I'm pretty good at it, so why not continue? But yeah, that's how that all started. I wasn't great at it. It takes repetitions. When I moved into working with the veterans again was 2019. My personal coach at the time, who's still my mentor, I have a habit of keeping good mentors. He
David Pere: Good
Mike Demo: helped,
David Pere: habit to have.
Mike Demo: yeah, I started doing personal development training for transitioning veterans, which means something different nowadays, I think, but. That's okay. But helping
David Pere: Only
Mike Demo: people that were.
David Pere: it's only for the Navy
Mike Demo: Rob O'Neill
David Pere: Maybe not maybe
Mike Demo: might
David Pere: not only
Mike Demo: argue differently, but that was the things, like I started helping those people and I realized, you know, charging a hundred bucks a month, a thousand bucks a month, I wasn't gonna hit my goals for impact doing it that way. And my mentor had transitioned to, instead of individual consulting, business consulting, and I had the same skillset and I made that pivot. Like you mentioned, I've worked with a couple thousand financial offices, really got into the weeds with a couple hundred that have made a massive difference in their revenue, bringing a couple hundred million dollars for them in additional business. And I took all those things, because they're not really any different than another business, marketing, operations, sales, and service. Those four things with a little bit of different flavor. It's not rocket science. So took that and then took the financial background I've had being a registered financial advisor for the last 10 years. And caveat in case Finner's listening, I'm not technically the one raising the money.
David Pere: Hey.
Mike Demo: I'm just guiding them on options that they can use. Yeah. It's an interesting line. You have to walk with some of that stuff.
David Pere: Yeah, yeah.
Mike Demo: That's, that's how I got into all this stuff is like, I understand both sides of the equation, I can figure out where the arbitrage opportunities are and my LLC, the Delta Enhancement Group, it's a financial term. The Delta is the difference between where you are, where you're going. So that's everyone
David Pere: I just
Mike Demo: always
David Pere: figured
Mike Demo: asked.
David Pere: you like weed.
Mike Demo: No, that would have been the Delta eight or Delta nine
David Pere: Hehehe
Mike Demo: enhancement group. And I think the THC levels are like 90% already. So what more is there to do? Um, yeah, I'm going to leave that to them. So that that's where I got started with all this, Dave. That's pretty much it.
David Pere: I got paranoid for a second. I thought I heard someone walking around the top of my unit here as an Airbnb. And I was like, I'm not supposed to have someone checking in until Friday.
Mike Demo: Well,
David Pere: And
Mike Demo: that's
David Pere: I thought
Mike Demo: why
David Pere: I.
Mike Demo: I keep something over there for those situations. Fair enough.
David Pere: That's not what I was paranoid about. I was just paranoid that my Ducati is in the garage and the door between the office and the Airbnb is not secured. So I'm like, I don't know. I'm going to have to like run up there and be like, hang on. Let me lock this door and pull the bike out of the garage so you guys can actually use the Airbnb if there's someone I didn't know was checking in today.
Mike Demo: Yeah, that and you don't want to have little holes in your drywall. It
David Pere: Hey,
Mike Demo: gets unfortunate.
David Pere: yeah, no, actually I had a really funny idea for a short today. I'm trying to do more comedy stuff. And so I think I'm definitely going to like buy blanks for this and do a, do a desk pop in one of my
Mike Demo: I'm going to go ahead and close the video.
David Pere: shorts at some point and see, I know Tik TOK will ban it, but I don't think the other platforms will. So we'll
Mike Demo: Yeah.
David Pere: see.
Mike Demo: Some of those, when people pop themselves in the leg, they get a lot of use.
David Pere: Well, I mean, you know, a blank.
Mike Demo: Well, I know, but I mean, they didn't take those down. Yeah. Do you think that he's really
David Pere: Well,
Mike Demo: cool?
David Pere: we shot
Mike Demo: Yeah.
David Pere: my most viral video on TikTok is me and my buddy Hugh touring his missile silo in Kansas. And the same day, like literally we ended that and before it was even posted, we filmed another video where we went back down the tunnel, grabbed his M4, came down and basically shot a round off into the abyss that goes like 18 floors down. And Basically the clip is Hugh going, I wonder what this will sound like. Oh, we gotta make sure there's no bears down in that thing. No one's been down there in years. So make sure there's nothing down there. You know, that thing didn't last five minutes on TikTok before it was gone. And I'm like, dude, we shot this thing literally 18 stories into the ground in a decommissioned missile silo bunker. Like. You can't get much more safe than into four stories of water, 18 floors underground. But nope, not TikTok safe. Whatever.
Mike Demo: No, no, the algorithms don't really work for that kind of stuff. They're focused on other things. So that's all right.
David Pere: Yeah, anyway, so I digress. Um, all right, so, um, all right, here's a, here's a, we're gonna take this in a weird direction. I'm curious. Somebody like me, I run a, we're not gonna talk the real estate stuff cause that's easy, but somebody like me who has a super abstract business that has recurring revenue through online education stuff. Are there funding options available for something like that? And I'm curious, not necessarily because I'm actually looking for funding, but just because I've always thought, like, I don't even count it on like my net worth tracker because I'm like, I don't even know if I could sell this thing with a multiple. I know what my revenue is, but, uh, like in my head, it's like, how do you sell a brand? You know, it's just like a online platform with a Facebook group. Like, but if I disappear, then. then what? And so I'm just curious your thoughts, if that's even a thing, like if you've seen anything like that.
Mike Demo: There are people that are gonna buy something like that. And this goes for all businesses. I'm looking at buying this trucking company. It's probably gonna be somewhere around 40 mil. For everything that the owner does, I subtract money. So if he's helping in the marketing, that's one more marketing person at $100,000 a year. If he's helping with sales, that's two salespeople at $70,000 a year. I back all of that out. to see what the real value is and what the cost of replacement is. So if it's a cult of personality business, that's hard to sell. Like if the MRR is based on you, it's much harder because you'd have to still be there. Now, could you sell it and then be signed on to continue to do your fuckery? Sure, you can do that.
David Pere: Hehehehe
Mike Demo: That's possible. But in general in a business, and this is where the ability to acquire versus start up really becomes cost effective is if you can do the things that that owner is doing and potentially have somebody like me to help you standardize the process to remove you from those processes, that's when you start to look at what kind of multiple would I get. Because frankly in your case, your email list is value. So is there something that you could sell? Absolutely.
David Pere: I got $20,000 on the email list.
Mike Demo: Is it going to be... Yeah. But is it going to be generational wealth? No. But there are people that buy like those small websites, think of like Flippa and a couple other places where they do that, but it's not gonna generate like a massive revenue stream unless you standardize those operations and make it so that you're not the face of the brand.
David Pere: Make sense. Cool, figured it'd be a fun question to ask. What a.
Mike Demo: It's really relevant. Like people don't, like they think, like you see all the gurus in their businesses and all the stuff. I'm probably the worst person at promoting my own business. Like just massively inefficient with it because I don't actually advertise. Like I've clients that are like, Hey dude, can we work together? I've never advertised. It's all referral based, which that's how I ran my marketing company too. So it makes sense. And eventually I will start to do that. But I'm not going to do that until I have a team in place that understands the process. And I'm not a guru. Um, the EOS model, there's a book Traction by Gina Wickman. It's right back there. There you go. Why,
David Pere: on my VTO right now, my new one.
Mike Demo: why create something? Yeah. Why create something? It doesn't make sense. So I'm one of those people like, I'll give you the answers to the test. I don't really mind. Um, In the financial side of the house, we'd have contests for driving revenue. And the other people in the office, I would hold a little webinar like this. I'm like, all right, y'all, so here's what I'm going to do to win this competition. And it was like, wait, you're going to tell us exactly how you're doing it. Like the points you're going to make and how you're going to do that. Yeah. Why would you do that? Well, cause I want you to be successful. And I know that I'm going to. produce at a higher level than you do anyway. So I know I'm going to win doing this, but I want you to be successful as well. Because a lot of people think of things where it's a zero sum game, where in order for you to win, I have to lose. That's not true. It's a very blue water, blue ocean approach. I can win and you can too. As we progress through these things, going back to like Maslow's hierarchy of needs and spiral dynamics, as you elevate up a level, you can bring somebody with you and help them elevate themselves as well. And that's kind of my model for what I do is I know that I can execute at a high level, but I also know that I can teach you to do that too.
David Pere: that. Yeah, yeah, because you're right. If you can scale that person out of a job, like those are the people who if you look at like Alex Formosy, right, like he's basically scaling. Yeah, I love his stuff. But he's essentially that's what
Mike Demo: Great. His book's right back there too.
David Pere: he's doing is he's scaling skill sets. He's not buying into a company or joining in for equity and then saying, I'll do everything for you. Like, no, that's not sustainable. But
Mike Demo: And his model, by the way, is very similar to mine with some of the stuff. So for that trucking venture, I've got an open invitation from a search fund where as long as it fits their mandate, if I'm staying on as a equity owner and consultant in that business, they'll stroke a check for the down payment. They get an equity stake too. That's how they reimburse themselves. But that's what I'm doing with that. My other partner in that business, he's a veteran as well, he's gonna be the CEO, and I'm gonna be the person helping to get all the systems in place so this family-owned business can move away from being focused on the individuals and have the systems and processes to continue to grow. Fun fact is I'm gonna have maybe $500 into that acquisition of a $40
David Pere: Oh
Mike Demo: million company. Mostly just to make sure the contract's good.
David Pere: I love it. Yeah. And that's kind of where, when you and I were talking, I was like, oh shit, this is awesome. Cause that's some of the stuff that I would like to try to get into. And I obviously not, I'm not quite operating at your level, Bob, I didn't say quite operating at your level. Like I don't have the experience to operate at that level yet, but I've been playing with that idea with local businesses where I'm just like, dude, I look around and I'm like, God, some of these guys are so bad at just the marketing and ops. And I'm like, even something as simple as automating how they take payment and marketing, and I could double your revenue, give me a quarter and I guarantee you prime example, and I'll go on a podcast and say it because I've tried to pay these motherfuckers for two years now. So I don't even feel bad just blasting them. I don't even know the name of the freaking company. I probably got his business card around here somewhere. my fucking lawn care company at this house. I have owned this house since July of 2021,
Mike Demo: That is such a struggle.
David Pere: and I have not paid him once because he doesn't know how to take my money. He has invoiced me and I've replied to the email
Mike Demo: So.
David Pere: and been like, hey dude, there's no address for me to send the check and there's no payment link. How do you want me to send you the money? Nothing, every time, no response. when his guys come through, like the first time he came by, they were like, hey, we'll do this for free. And then after that, it'll be 40 bucks a week. I was like, sweet. And that was the first time I met the owner, the only time I've ever seen him. And I was like, hey, how do I pay you? Like, I'll just set it up right now. And he's like, oh, here, write your email down on this piece of paper and I'll send you an invoice. And I was like, can I just set it up automatically right now? Like, I'll give you my credit card info.
Mike Demo: Dude, I hate checks. Like, I have the
David Pere: He...
Mike Demo: same checkbook for the last 15 years.
David Pere: I kid you not, man.
Mike Demo: I don't use them.
David Pere: His guys come through to mow my yard and I flag him down for like the first six months and I'm like, hey, I owe you guys money. And they're like, oh, you gotta talk to the owner. And I'm like, and so I reply to the email, no response. After like six months, I'm like, you know what? This fucking dude can just find me when he wants my, I probably owe them three grand in mowing my yard.
Mike Demo: Yeah.
David Pere: And at this point I'm like, hey, free grass.
Mike Demo: our guy was the same way. Shameless plug. Shameless plug, my podcast Intentional Disruption. Episode 109, I literally talked about this because my landscaper,
David Pere: I'm out.
Mike Demo: he's a young kid, God bless him. Jesus. Like there's just some stuff, so like I don't live in a poor neighborhood and I don't want that to come off the wrong
David Pere: Dude, this is a Class A? This is the nicest house that I own.
Mike Demo: way. Like, yeah, but
David Pere: Yeah.
Mike Demo: like the, and I live in the poor part of my
David Pere: This is a 4800 square foot, like six, three and a half duplex.
Mike Demo: neighborhood. Like my house is only like. Yeah,
David Pere: Not really a duplex.
Mike Demo: you've got me. You've only got me by like 1000 square feet. It's funny. But like, I'm in the poor part of my neighborhood because there's $20 million houses down the road.
David Pere: Oh yeah, well this is this is like a 400,000. So yeah.
Mike Demo: This is Connecticut, like
David Pere: Yeah, yeah. This is Springfield, Missouri.
Mike Demo: everything calls. But yeah. So like in the front yard, my wife wanted to get rid of the gravel that was here when we moved in, she wanted River Rock. Ironic because the dude's name is River, but we'll
David Pere: Yeah.
Mike Demo: leave the rest off for that. So our dude like pulled everything out, put down fabric, put in the River Rock, it's like three inch rock. And just do it. He was like, so we got it done and it was thinner than a jibushin and like, What do you do? Like, dude, I can see all the fabric. Oh, well, I didn't want to do two truckloads. Just get the fucking rock. I've come, like, my time is valuable. I charge people hundreds of dollars an hour just to have a conversation to help their business. It's actually more than that. Now, but like then, like, dude, just order two loads of rock. And then like, with those things, like, and then he didn't bill us for months and months. I actually told him, like I gave him the exact thing I mentioned in episode 109. It's not rocket science, Calendly, Stripe, even though I'm not a fan of them, but like for simplicity and then QuickBooks. One, two, and three, they all go together and you can bill for the service ahead of time and do all those things. But how many small businesses don't have something like that? And all of those are basically free. They cost a percentage, but like, there's not like a retainer. I think QuickBooks
David Pere: stripe it you can set up a recurring payment on the spot while I'm standing there on your phone
Mike Demo: makes it up. Yeah, I do it with my clients.
David Pere: like hey dude you want me to do your lawn great here we'll do it one month one week free but then we'll set your information up right here and next week it'll start it'll be recurring all you got to do is go here and hit cancel whenever you want me to stop coming great
Mike Demo: But
David Pere: Bingo.
Mike Demo: again, like something like that, there's so many businesses like that. And, you know, say you're a vet and you wanted to get into landscaping, you could buy one of those companies and have all the stuff you need. Like the reason businesses fail is because they don't know who they're talking to and they don't have a process. That's 90 percent of it. Like people will say, oh, well, it's the economy and this and that. Look, I sold high end kitchen cutlery during the 2008 recession. So my first branch office was in 06 after I got back from Iraq the next summer, opened up a branch office because I was in college. 07 I deployed to Djibouti. Got back in 08. That's when I transitioned out and it was a shit show. Again, no jobs. I didn't have a degree. I'd run a war, but no degree. So you can't get a job in like a company. So I went back and sold Kucko and I did 50% more business than I did in 2006. In 2009, when like everything was really bad, I doubled my result from 2008. I didn't do it the right way. I worked a hundred hours a week and I burned myself into the ground. But like, I made more money than my parents do. And I was 26.
David Pere: Yeah.
Mike Demo: But I had, I hadn't learned the lesson about properly delegating some of the different systems in business. And we were at a different point in time where you can have fractional work. But my mentor, one of the most important things he told me is, you know, know your worth, and if you can pay somebody else to do that job for less than what you make per hour, pay somebody else to do that job so you can be more productive. Like I used to edit my own podcast. I did it for a hundred episodes.
David Pere: Let's move me in.
Mike Demo: Now I pay this dude in the UK, 25 bucks a pop and he comes up with all the description he edits out the long pauses I have because I don't talk quickly.
David Pere: I'm out.
Mike Demo: Um,
David Pere: Bye.
Mike Demo: it's fine. I explained, I do it for a reason, but you know, people
David Pere: No, nope, nope, you gotta...
Mike Demo: don't have any attention span nowadays.
David Pere: Yeah, no, for sure. Yeah, I edited my own shit for like 30-40 episodes, so I get it. Yeah. Although, to be fair, I didn't really edit it. I just cut the ends off and called it a day. So...
Mike Demo: Well, and then you add your intro, your outro and all that stuff.
David Pere: Yeah, even that was.
Mike Demo: It's, you know, it's not rocket science, use Libsyn or something like that.
David Pere: Yet now they've got, I haven't tried it yet, but they've got this thing called AirPod, which is like AI built that supposedly will go in and chop it all up. Supposedly, you might want to try this. Because if you're only, like, if you're not doing shorts and everything and you're just doing the podcast, supposedly you can take your podcast, drop it into AirPod, which is AI based, and in like five minutes it'll cut it back to you, perfectly edited, and for like two bucks an episode.
Mike Demo: It's not bad.
David Pere: Yeah.
Mike Demo: I do need to do some of the shorts and all that stuff. I just, yeah, I'm not following all the traditional social media things where like you need to post every day, you need to do this, you need to do that.
David Pere: Six time.
Mike Demo: It takes time and I mean, I'm up at 430 already, do the work that I need to do for the business and then, but I'm committed every day. I, my son gets up at six and he spends a half hour with me. We go on the back deck. He has his milk and a banana or an apple or whatever he's gonna have. I have my second cup of coffee and we share that connected time with each other. And I'll be fucked if I'm not, I'm going to skip on that to post on social media. I'm
David Pere: Yeah.
Mike Demo: just not doing that.
David Pere: Yeah.
Mike Demo: So eventually later this year, like we were starting to talk about some of those things. I'll just pay people to automate and do all that stuff for me. Cause it just doesn't make, it doesn't make sense to do that.
David Pere: Yeah, I agree. So, okay, so you mentioned the biz buy sell earlier.
Mike Demo: Mm-hmm.
David Pere: Is that kind of your, like is that a go-to? If you're, so if you're me and you're like, wow, this is a cool idea, would that be something that you would look at for buying one of these businesses or would you just like walk around your street and talk to some of these guys who own landscaping companies or like, because I. You know, in my head, I'm like, if I'm looking at buying one of these smaller companies, then I would just need to find an owner and talk to them about Stellar Carry and, you know, whatever, unless you're talking bigger businesses. But like, I guess, two part question, I guess, where would you recommend someone look and is it easier for someone like me who's thinking about getting into this game? You know, in my head, it's like easy by the landscaping guy who sucks. But is that making the mistake? And I say this. I reference a lot of times on the show that when I bought my first duplex, I wish I'd bought a fourplex. I shortchanged myself because I thought, well, we'll just play it safe in case this isn't the right idea. Is it easier to buy like a business that's doing 50 to 100,000, 200,000 in revenue or to go to like non-recourse debt size, 5, 10 mil full on actual legitimate multiple employee bank finance SBA? business where you can jump in with like a search fund and go big where you can. Cause I, in my head, I think that might actually be the easier route if you know what you're doing, but.
Mike Demo: So it's an interesting question because there's two answers.
David Pere: Perfect, I like that. Let's confuse everybody.
Mike Demo: So, I'll break it down Barney style. So a biz buy sell means you're using a broker, which means it's like buying a used car.
David Pere: Mm, yeah.
Mike Demo: There's margin built in, usually 10, 15% that the broker's gonna have. So the seller's already essentially discounted their business by 15% and nobody wants to sell their baby for cheap. They're also being told that their business is the most amazing, beautiful baby, just like everybody thinks their kids are. Like that. So it's harder to transact, but at least like they've started some of the process of making sure it's not a clusterfuck. And I say that, so this room right now, the windows are open because I haven't done HVAC in here because you can buy a house for over half a million dollars in Connecticut and not have central air. So the question is, it's going to be 40 grand to do
David Pere: It's amazing how different fucking markets are.
Mike Demo: HVAC in my house.
David Pere: You couldn't buy a mobile home in Springfield, Missouri that doesn't have HVAC, I don't think. Like that would just be like sacrilege.
Mike Demo: Yeah, well this, when I bought this house in 20, this, my office is about 800 square feet and it was just studs. Just unfinished space. Um, you know, if you're listening in Connecticut, there was a permit pulled. Um, I just used it because that's the law.
David Pere: Hey
Mike Demo: But like the rest of the house doesn't have it. Like never came with central air. It just didn't do it. Um, so I was looking at doing that. I was like, give me like 40 grand. I was like, fuck this. I can buy. a company that does that for less money than it would be to get that installed.
David Pere: Hehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehe hehehe hehehehehe hehehe hehehe he he he he he he he he
Mike Demo: That's stupid. So I looked at one that's a town over really good name, been around for 20 some odd years, had good contracts with like, um, municipal businesses and then individuals they would work on too. Got one 700 grand. That's 70 K upfront, you know, 10% down. You know, not too bad. Um, but you could have structured the deal. So it was basically the same amount of money. Um, but he did everything. He was still involved in the sales process. He would still do the estimates. He would still do, and then we got to the vehicles and this is where this trucking deal is getting a little complicated too. So the guy is like, oh, and it comes with my trucks. Motherfucker, you owe $50,000 on your three trucks and you already took the 179 depreciation on them. So they're not only worthless,
David Pere: You're gonna have to repay.
Mike Demo: they're actually less than worthless because you have a liability attached to them.
David Pere: Yeah.
Mike Demo: You'd have to pay those off for me to buy the business. Didn't want to do that. And I talked to the broker. I was like, dude, I mean, he, he shouldn't be selling this business right now. It's not ready. This is an asset sale right now. And the guy, the broker actually agreed with me, which I don't think he was supposed to.
David Pere: Yeah, the broker's like all they're thinking is commissionize.
Mike Demo: Yeah, well, he even said it like, no, and that guy ended up buying or hiring a consultant, so I don't know how that went. But if you're looking at a smaller business, here's the way to look at it. How organized and how well run is that business going to be?
David Pere: Yeah, yeah.
Mike Demo: Maybe, maybe not. Now that doesn't make it a bad idea.
David Pere: Yeah, it might be the opportunity.
Mike Demo: And especially if you can, if you can do earn in equity, like what, like you just mentioned, you're really good on the marketing side of things and setting up all like the payment processing. If you can start off, Hey, I'm going to fix these parts of the business. Make sure this is a viable business. You give me 25% of it, you know, earn your equity and then buy out the owner. You could do something like that and have basically no money down. It's possible. Um, there's 10,000 gurus out there with a course on how to do it. Um, Roland Flasier's is actually pretty decent, but he doesn't talk about the nuts and bolts. You had the VTO up. So, you know, the nuts and bolts I'm talking about to actually make the business run smoothly. But like with the deal I'm doing that's, um, for a hard sell to our company. And. I'll leave the name out of it, but if you're in the veteran community, you probably know who the owners are.
David Pere: Yeah.
Mike Demo: We started talking last year because it mentioned on their podcast, you know, they're trying to raise a couple of million like money for their seltzer company. It's like, so I sent the guy a message because one of my clients is also his doctor. Um, so I was like, Hey, man, I need to get ahold of him and just talk as a dude, what's going on? Like, how much do you actually need? It was a couple million dollars, like no bigs. This is before the fed went absolutely ape shit with the rates and fucked everything up for everybody for some time. And I learned a valuable lesson because I have connections in family offices, different funding opportunities. It's easier to get eight figures and it is seven or six,
David Pere: Yep.
Mike Demo: 10 times out of 10.
David Pere: Yep.
Mike Demo: Like if you told me you've got a business with a 40% margin that you wanted to buy, you're going to probably pay 20% interest. You might be able to do for a little bit less, but probably not, but I can get you. that money in 90 days. Like I know the people to talk to and they'll take care of it. Cause again, I don't technically raise it for all that
David Pere: Hehehehe
Mike Demo: others, but like it's easier to do that. So the question for you would then become, if you understand the process of running a business, why not look at the more expensive business, one that's doing over a million dollars in EBITDA or profit if we're keeping it simple. And then start to buy up those smaller companies with your earnings.
David Pere: for anyone listening who you just blew their mind. I'm gonna mess this up. Earnings before interest, taxes, and appreciation.
Mike Demo: and for anxious appreciation.
David Pere: Yeah, so just in case anyone's confused as fuck, but yeah, basically profit.
Mike Demo: Yes. Well, that's why I simplified it to profit. I just
David Pere: Yeah.
Mike Demo: realized those. We're
David Pere: No, I know.
Mike Demo: in the middle
David Pere: I just wanted to make sure I actually said the acronym.
Mike Demo: of it. We're used to acronyms. Yeah, we do acronyms a lot. But in general, dude, it's just that simple. It's complicated, but simple. But that's one of the things like at UConn this year, I'm going to be teaching. Because I was one of the guest judges for their business pitch competition at the Entrepreneurial Bootcamp for Veterans. And I saw some of these ideas. And a lot of them are good, but they're not unique enough where you couldn't find a business that's already doing that and has revenue and then bolt on your idea to it and create another vertical. So why not do that? And like, I don't get anything from UConn to do that stuff, but just making people aware that there's a different way to go about it. If it helps more of our community start owning these local businesses. And, you know, I personally think that veterans are a very good source or pillar in the community. We might be a little bit dirt baggy at times, but we tend to have good ethics and like really stand up individuals. And I don't see how it doesn't help a community to have somebody from our tribe own the local business, sponsor the soccer team and all that other stuff versus having some, you know, large cap corporate that puts another location in and all those money gets sucked out of the community. Doesn't make sense to me.
David Pere: Yeah, absolutely. All right, let's see, a couple questions we always ask.
Mike Demo: You said we're gonna get spicy. This is
David Pere: Oh, no, I just meant that I was going to ask you a question right out the gate without
Mike Demo: mild salsa. Mild salsa at best.
David Pere: jumping into your story first. I don't know about spicy spicy.
Mike Demo: Oh. Fair enough.
David Pere: I got to keep it to where all the listeners know what's up.
Mike Demo: Okay, fair.
David Pere: We don't talk small business or business enough to dig way, way, way in. We just might have to do a part two where we go much deeper into business once Alex is back. He's, I know, well, he's doing a.
Mike Demo: Damn it Alex, what's going on man?
David Pere: A pilgrimage. She's doing the, what is it? Santiago de something, something day Camino. I don't remember from.
Mike Demo: There's a few up out that way, like where
David Pere: from Portugal to Spain. He's doing a part. He did part of it last year, like 80 miles.
Mike Demo: there's like these magic screens.
David Pere: He's doing like a hundred and something this year. Super cool. Living his best life. So, alright, so. I guess, well, we'll just, we'll roll this piece up. Somebody who's looking to get into the acquisition side of business, what would you say is like your favorite resource that they should look at for learning about that?
Mike Demo: That's going to depend on if they intend to run the business or if they intend to hire somebody to run the business.
David Pere: I'll let you answer both.
Mike Demo: So if you're going to run the business yourself, first you need to learn how to run a business. The stuff that you know about, the EOS model, that's very good for that. Scrum by Jeff Sutherland, a very good book on the agile mindset. Built to sell by John Warlow, so you have an understanding of how to really focus in on the key competencies of the business. Very good things to learn. And I mean, I mentioned like there's Roland Frazier, Sebastian Alveda. There's a lot of people that talk about how the process of acquiring a business works. You know, there's some finance involved with understanding does this business actually cashflow? Cause a lot of people say, Oh, the business makes $300,000 a year. Okay. But if you have to pay somebody to do that job, you know, to run the company and then you've got debt service, does the debt service actually cover it? Like, Is it actually going to make enough money? So on this trucking deal, just to go back to it, we're talking probably $40 million. There's $35 million, roughly worth of vehicle assets and their profit somewhere in the $3 million range. Well, the problem at that number becomes debt services about four. So it can look like a really good business. And
David Pere: So you're at a 0.75.
Mike Demo: That's great, but you're actually not going to make any
David Pere: Yeah, you're under 1% DSCR.
Mike Demo: money. And that's actually what my partner is talking to the owner about. You
David Pere: Yeah.
Mike Demo: know, cause you know, and that's at a 7% interest rate. God knows what the actual number is, but, and that's what 20% down. So there's some financial, so you'd need to find somebody if you're not like really good at that or geek out on that stuff. Um, again, I'm going to say Roland Fraser, cause he'll give you a deal flow chart that you can use. Sebastian, he does as well. I can give you their Facebook profiles. If you need to link it over for people, I don't have an affiliate link with them. Again, Blue Ocean, I don't really care.
David Pere: No, it's all good. I'm looking up their books right now. So I'll link them in the in the good old Show notes
Mike Demo: Yeah, so there's just two different sides to it. Because if you're going to actually run it, did you just buy yourself a job? I mean, cool if that's your goal. And if you want to be in that space and grow and develop it and make it great, do it not not saying not to. But for me, I'm going to help with this trucking company. I don't have long term goals of being a trucker. Like, they're really cool, but that's not my job. My goal is to make a couple of these acquisitions and have a partner that is going to be a partner in the business and is going to be the operator. I'm going to be the one helping them grow and scale. And I can handle 10 of those acquisitions and essentially be the, you might call it a COO, but the consultant to help them operate properly. My long-term goal then is to not be the bank, but identify businesses that can be bought, identify people that can be the operators of the business. I can find the funding. Amazingly enough, that's not the hardest part in this process. But finding people that are going to be competent operators that understand things like the VTO. That's that's the slowing down point. But eventually, I want to create it where these smaller businesses you're talking about. We keep an equity portion. But in my portfolio, we've got the people that are your CPAs. We've got the people that are your marketing people. You've got your SEO master. You've got your web guy. You've got. all of those parts and pieces and you just leverage the resources of the central hub, make life simple and operate your business. And we keep an equity stake in your business, more interested partner. That way I can go to part two and three, which is really going to be helping veterans in transition and transition them into business ownership instead of going into corporate America because no offense to corporate America, but it sucks. You
David Pere: Yeah.
Mike Demo: know, for 10 years, don't like it.
David Pere: Yep. Awesome. All right. Well then, what is, we always try to ask this question, what do you think is the top trait that makes veterans successful in the business space?
Mike Demo: If you'd asked me that question in 2008, I would have said perseverance. I think that's actually the critical flaw in a lot of ways. And I say that because I was dealing with being improperly diagnosed by PTS because they didn't talk about that back then. They diagnosed it as bipolar because, oh, well, you didn't see somebody get shot so you couldn't have it.
David Pere: Mm.
Mike Demo: Doesn't really work that
David Pere: Eh.
Mike Demo: way. And that, so like that whole thing fucked me up for a little while. Um, but I thought, you know, I'm a Marine, I'm tough, I'm strong. I'm just going to push through, push through, push through. What makes you successful is understanding yourself and being able to ask for help. And I don't like the idea that we hear nowadays where, you know, oh, veterans, you know, 22 a day and we're all broken. And then fuck that. That's not the case. We need a new mission. I think our biggest strength. It's still probably perseverance, maybe structure, but only if you're self-aware enough to realize, hey, you know, raise my hand, I need a hand. And that was really hard for me to do because when I asked for help from the Navy corpsman, I got completely fucked. But now I can see and understand that. And I created a tribe around myself where I can go to very smart people and say, hey, I'm having this question, this problem on business. Like my mentor said, I'm gonna think on Voxer, hey, these numbers aren't making sense to me. How should I properly factor? And here's your answer and go. Old me would have said, no, fuck, I just need to drive my numbers, drive the numbers. When really I just need to be smarter about how I do it. So. That was an interesting answer because I said that it was our biggest weakness but also our biggest strength but that's also the duality of man. So enjoy.
David Pere: true. I like it. Well, Mike, where can people get a hold of you?
Mike Demo: Easiest way to go to hold me growwithdelta.com
David Pere: Easy.
Mike Demo: and you might notice it'll take you to my Calendly.
David Pere: Perfect. Ta-da!
Mike Demo: Practice what you preach.
David Pere: Yeah.
Mike Demo: I'm on LinkedIn, Mike Demo. I'm on Facebook, Mike Demo. If anybody goes to Instagram, I don't really post anything business related there. USMC 3782. Yeah.
David Pere: And you're just going to let me go like the entire fucking podcast. Having said demo, because I just assume that there was no reason to ask you to say your last name and.
Mike Demo: Dude, 41 years in, it's not your fault, it's Ellis Allen's fault, so...
David Pere: I mean if it makes you feel any better I never correct anyone on my name because I just gave up like years ago I'm like, dude. No one knows how to say my last name
Mike Demo: pair.
David Pere: Yeah, no, it's parade. Although it's actually hell But you know fuck nobody knows how to say my shit
Mike Demo: Man, they had too much pre-old down there. Yeah, I mean, I'm just, you know, all these years in, I'm pretty much
David Pere: My own family doesn't even know how to say my shit,
Mike Demo: used to it.
David Pere: because they changed it when they moved from France to try to fit in. And so the French people don't know how to say it, and the English people don't know how to say it, and the fucking Americans are like, fuck you Frenchie, and then here I am.
Mike Demo: I'm just proud of you for joining a military that wins sometimes.
David Pere: I tried. Yeah. Nope, nope, you know, I carry my little white flag in my pocket, but I haven't had to use it yet.
Mike Demo: Yeah.
David Pere: So it's in my, it's in my beard.
Mike Demo: It's a handkerchief, right? Yeah.
David Pere: So, I just wave it.
Mike Demo: Fair.
David Pere: Oh my gosh.
Mike Demo: I don't have that option.
David Pere: Oh man, Mike, this has been a lot of fun. And I think we should do a part two and go a little deeper into some of the weeds and some of the numbers, but I definitely am going to have you come talk to the mastermind and we're going to deep dive there. And so. My shameless plug, as always, is for those of you who want to get the deep dive type stuff, this episode is sponsored by the War Room Mastermind. So you got the deep dive and the real, the good stuff. That's where the good stuff happens, right? The people with the skin in the game. So come join the Mastermind. But Mike, this has been awesome. Really glad we finally got to do this.
Mike Demo: Yeah, man, it was worth the wait.
David Pere: It wasn't that long of a week.
Mike Demo: Half a month. Whatever.
David Pere: two weeks. Half a month sounds so much longer.
Mike Demo: That's half a month. Well, it's what guys do, isn't it?
David Pere: Yeah, most guys are pretty short-lived. Hehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehe
Mike Demo: Amen. That's a new problem. Absolutely glorious.
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Ever wondered how to turn life's stumbling blocks into stepping stones? In this episode of From Military to Millionaire, Dave brings you such an intriguing journey through an insightful conversation with Mike Demo.
A globally recognized podcaster and seasoned business consultant, Mike's career is brimming with remarkable achievements. With a stellar track record of training over 500 sales reps and consulting with upwards of 900 financial advising offices, Mike's impact on the corporate landscape is undeniable.
Navigating from the Marine Corps to the corporate world was no simple feat for Mike. Yet, the challenges didn't deter him; they shaped him. These pivotal experiences became the cornerstone of his mission: aiding Veterans in their transition to business ownership. What's unique is Mike's vision of business ownership. It's not about letting work rule your life. Rather, it's about having flourishing businesses that serve the community and allow the owners to enjoy their peace.
In this conversation, Dave probes into Mike’s approach, the lessons he has learned, and how he uses them to elevate businesses. Mike's innovative strategies have bolstered his financial clients' assets significantly. And the best part? He's here to share how you can apply these principles to your journey too. Irrespective of your trade, Mike has the wisdom to share that can help you optimize your operations.
Before we sign off, we'd like to remind our listeners that creating a successful business isn't about working 60 hours a week or allowing your work to disrupt your family life. It's about creating an organization that thrives, serves the community, and doesn't follow you home. As Mike beautifully puts it, “Owning a business shouldn't be stressful. It should be something you're proud of.”
Remember, you don't need to disrupt your life to cause intentional disruption in the business world. Tune in, learn, grow, and let's make the journey from military to millionaire together.
What You'll Learn:
- What does the journey from military service to corporate America and then to business ownership look like? And how can you navigate it successfully?
- How does Mike approach work-life balance in business ownership, and why does he believe it’s crucial for success?
- How have Mike's innovative strategies led his financial clients to grow their assets by 9 figures? And more importantly, how can you adopt these strategies?
- Mike has tips for small business owners across various trades on how to optimize operations, increase revenue, and strike the right work-life balance. What are these tips and how can they be implemented?
- And so much more!
“There's no magic wand in business, only well-executed processes.”
– Mike Demo
How to Connect:
If this episode resonated with you, don't hesitate to reach out to Mike Demo.
Don't forget to tune into his top-ranking podcast, The Intentional Disruption. Available on all major podcast platforms, the show is a treasure trove of practical advice and thought-provoking discussions.
Ready to take that first step towards your transformation? Connect with Mike today, and let's navigate this journey together.
The links are below:
Real Estate Investing Course: https://www.frommilitarytomillionaire.com/teachable-rei
Finding Off-Market Deals Course: https://www.frommilitarytomillionaire.com/teachable-off-market
Recommended books and tools: https://www.frommilitarytomillionaire.com/kit/
My name is David Pere, I am an active-duty Marine, and have realized that service members and the working class use the phrase “I don't get paid enough” entirely too often. The reality is that most often our financial situation is self-inflicted. After having success with real estate investing, I started From Military to Millionaire to teach personal finance and real estate investing to service members and the working class. As a result, I have helped many of my readers increase their savings gap, and increase their chances of achieving financial freedom!
Click here to SUBSCRIBE: https://bit.ly/2Q3EvfE to the channel for more awesome videos!
THIS SITE IS INDEPENDENTLY OWNED AND OPERATED. ALL OPINIONS EXPRESSED HEREIN ARE MY OWN. THE VIEWS EXPRESSED ON THIS SITE ARE THOSE OF THE AUTHOR OR THE AUTHOR’S INVITED GUEST POSTERS, AND MAY NOT REFLECT THE VIEWS OF THE US GOVERNMENT, THE DEPARTMENT OF DEFENSE, OR THE UNITED STATES MARINE CORPS.