Carl Allen and his guest explore the fascinating world of niche moving companies, focusing on a unique opportunity based in San Antonio, Texas. This business specializes in high-end interior design logistics, providing white-glove delivery, storage, and setup services for furniture and decor. With an impressive client portfolio, including estate moves for prominent individuals and multifamily developers, this company has carved out a distinct niche in the moving industry.

The episode unpacks the business’s operational model, emphasizing its value in catering to premium clientele. Unlike traditional moving companies, this business acts as a logistical partner for interior designers, offering a seamless experience that includes receiving goods, managing storage, and coordinating precise deliveries. The team discusses how this approach not only differentiates the company from competitors but also highlights its scalability into adjacent markets like in-town moves and multifamily property support.

Carl and his guest outline the company’s current state, including a modest $533,000 annual revenue and $125,000 seller’s discretionary earnings (SDE). They explore the seller’s motivations—a desire to step back from operational duties after running a successful branch for over three years. The creative deal structure proposed involves an annuity model, ensuring financial stability while allowing the buyer to focus on scaling the business.

Key growth strategies are presented, such as targeting San Antonio’s military and assisted living markets, enhancing digital marketing, and expanding into volume-based moving services. The team highlights the potential to significantly increase profitability by leveraging cost-effective customer acquisition strategies, improving operational efficiency, and exploring bolt-on acquisitions in the moving or warehousing sectors.

However, the podcast doesn’t shy away from challenges. Carl and his team scrutinize the valuation, emphasizing the need for robust financial forecasting and scalability analysis. They suggest alternative approaches, including consulting-for-equity or exploring larger platform businesses that could incorporate this niche as a bolt-on service.

For aspiring entrepreneurs, this episode is a masterclass in evaluating niche business opportunities, structuring creative deals, and crafting actionable growth plans. Whether you’re looking to invest in a niche market or understand the dynamics of the moving industry, this episode provides a wealth of insights and inspiration.

Full Transcript:

Leslie, the floor is yours. Let’s see what you call.

Alright. Great. So we’ve got an interior design focused moving company in San Antonio.

This is not something I was searching for. This found me, so here we are, looking at a moving company.

So a little about me. I’m a seasoned IT professional, passionate for helping others.

This moving opportunity showed up. It’s a niche moving company. They focus on interior designers.

There’s an established business in Houston, and this is a branch office in San Antonio.

The owner is looking to sell.

We’ll talk a little more about that. San Antonio has a lot of military. There’s a lot of other options, assisted living moving, and I’ve got a data center background as well. So that kinda ties right in with, with you there, John. That’s why I was asking about Smart Hands.

So the the goal here to be to get this thing, build it up, and then grow it to a ten million dollar EBITDA with bolt ons, etcetera, and then sell it off in five years and go on to the next thing.

So this particular moving company focuses with interior designers.

They have a warehouse, so they receive stuff. They put it up on shelves and got a forklift, and so they’re basically storing it, and then they are taking it, white glove treatment, delivering that to, the location for the interior designers.

So fewer customers overall, not really much of a storefront in that perspective.

Furniture storage, they’ve got good relationships with the local furniture dealers. If something gets delivered damaged, then they’ll work with that so they don’t have to, so they can get that all done before the interior designers get the equipment.

And they’re they’re specialized in, you know, moving pianos and antiques and all kinds of stuff like that. They’ve done several moves, and they, they mentioned they actually moved the estate of president Bush, former president Bush, at some point as well. So they’ve done a lot of cool cool things.

We’ve got a marketing strategy, to drive this to four million in two years. So the focus here would be to take what we have with interior design. The current owner is gonna stay in the business and keep that piece going, and then we’re gonna focus on in town moves. Again, we’re, like, fifteen minutes from only the Lackland Air Force Base.

And there’s some, you know, quite a bit of military in and around San Antonio. So there’s a lot of movement, a lot of growth in that area.

He’s got very little digital outreach because right now, it’s it’s mainly just he’s got the sign on the truck. He’s got a website, but it’s really just a form that brings it in to, you know, have a call and and go from there.

But we wanna grow this, and we’ve got a a plan that takes into consideration the cost of the truck, the hours, the move, and all those costs and then cost per customer as part of that process.

So this is a creative deal structure.

The basically, the entry cost to get in is the cost of the truck and the forklift, to get in.

A Cam Lewis.

And then everything else is, is pulled out from, the business itself. This branch has been in operation for three and a quarter years.

And, last year, they hit revenues of five thirty three with a hundred twenty twenty five k SDE, and we’re looking to investment.

Back relationships.

So the current owner is staying on board. We had a nice talk yesterday.

Had several conversations with him. He’s looking to grow and build this. He’s of the age. He’s tired of driving back and forth. He’s got his twenty two year business there in Houston, and he’s looking to bring somebody in that can actually accelerate this because he’s splitting time between locations.

Recently, he had a knee surgery, I believe, and so he’s also, you know, a little bit hobbling around as well. So that’s making it more of a a challenge for him.

So he’s in for ten percent, looking to help us grow and be part of that exit strategy as well. He has systems in place. He’s working with interior designers. He’s got, scheduling. He’s got, you know, phone support. He’s got admin support with accounting. He’s got a, third party that will do the staffing for him, and guarantee those folks to do all the vetting so we’re not having to, you know, have folks to do that.

Part of this team we have, includes an accounting, accounting, marketing, and, the dealmaker that actually brought it to me, not part of our group.

But all the things we talked about were very in line with what you teach, Carl. So it was very, very cool to, you know, to make that connection.

K.

So each of those are in for five percent equity, as part of it, and then we’re gonna be taking it and grow it from there. They have the marketing plan already in place, what was presented to me, as well as the deal structure.

So this is the deal structure. The two sixty k is the asking price. It’s one eighty plus cash in the bank plus eighty percent of the AR, with fifty fifty thousand at close.

And then we’re gonna build up business credit as part of this process, pay a seventy thousand dollar on a zero interest for twelve months.

Then following that, we’ll start a a zero interest twenty four months for the one forty after that.

So that gets us into the deal worth fifty k for a hundred and twenty five k SDE moving company.

And what I’m seeking is a hundred and fifty investment.

So with the hundred and fifty investment, that will get us into the company. That will give us some marketing pieces, closing cost, and also some some cost for general management so we we can get this thing up and running and really focus on growing the business through the marketing strategy.

Looking at a, a fifteen percent, equity and then a clawback, after we pay back with interest on a three year balloon, claw that back to three percent with an estimated value at, three sixty five at the end as well. So cash on cash return at two point four four, interior, in, internal rate of return at nineteen point four nine, based off of the numbers we projected.

So looking at the deal itself, this is just kinda look at the forecast, and we will jump into this from the spreadsheet, but kinda showing you what we have in twenty twenty one, twenty two, and twenty three.

Some potential estimates for twenty four. We’re down to the last four months. So that is taking the marketing plan they put in place with the scaled up marketing spend to achieve those numbers. So little bit dip on the free cash flow because we’re spending that money in marketing.

And then a significant piece going from there, you’ll see it’s a it’s quite a quite a growth in twenty twenty five. And just to make sure this is even reasonable, I I put in the number of customers based off of an acquisition of five hundred dollars per customer. We think it’ll be less than that, but that’s what we’re using as our our guide here.

So seven hundred and twenty seven customers, not including the interior design folks we already have. That’s that’s separate from this. This is just the in town move side.

And then looking in financials, here’s the asking price. Here’s what we’re seeing.

With his salary, he mainly gets paid out of the Houston office, so this is more of a token salary coming out of this this branch.

He started in November of twenty twenty, bought the truck and all those kind of things. So those aren’t actually showing up on here because they were fully depreciated, that first year. And you can see that’s it has built up, ramped up, and he needs somebody else to take the reins and drive it forward.

Alright.

From there, I will go into the one sheet.

Questions, comments so far?

Yeah. So couple of things from me.

So just so I understand this business model correct. So so what these guys do is they work with interior designers. So an interior designer goes, picks a project, and they basically they, you know, the interior designer goes and buys all the stuff. They store it in a central location, and then, when they’re ready, the the stuff’s moved down and put into the house.

Why why the like, I I’m just trying to understand, like, what the need for this business is. Like, why wouldn’t the designer just order the stuff directly from the manufacturer of the store and have it delivered directly to the property? Like, why does it need to go into a a a separate location? That that’s what I’m struggling to understand.

Yep. And I I I get that. So just giving them the white glove treatment is what it really is because they’re handling it all. They’re doing it all the way to delivery and set up. The the designer is just there to say this goes here, this goes here, after they’ve, you know, as part of that process. So it’s more of a white glove, you know, professional treatment in that respect.

So and the other thing is I think part of this is see, when our on our call yesterday, I talked to the seller.

He’s also doing some stuff for he’s got a customer that’s multifamily. They’re they’re building out an apartment complex. Right. They’re actually using him to house the equipment.

So they’ve got flat boxes of cabinets and whatever furniture, and he’s storing it for them so that way when they’re ready, you know, they’ve delivered. He actually delivered, he said, the lobby. They started setting it all up and said, no. We’re not ready, so I had to take it back.

So he’s gonna deliver it again.

So it gives them a time element. It’s available now, right, versus waiting for that delivery or or damage and stuff like that. It can all be Yeah.

Got it. I understand it now. Yes.

Kaboom. Really.

Yeah. I understand it now. Okay. Cool. So, like, one of the cool things about this business is it it you’re you’re dealing with a very high end section of the market.

And I love the fact that there’s, you know, there’s there’s VIP clients on the one side, and then you’ve got more, you know, multifamily, more volume clients on the other. So I really like that. My my biggest issue with this deal though, Leslie, is it’s I don’t think it’s worth anywhere near what the guy’s asking.

You know, this this thing’s been losing money.

It’s just gone into profit this year.

I think two hundred and sixty thousand dollars or whatever the ask is, even though you’ve put an annuity deal together, I I think it’s too much. And with so little cash flow already coming through this business, by the time you factor in an annuity payment and the the cost of the people that, you know, you’re gonna wanna come in and do it. I just think it’s a bit too small. And then on on the valuation side, you know, you mentioned you’re buying it for two sixty in a creative way, but you’re selling equity at a million dollar valuation.

So you’ve you’ve got a an instant four x bump on what you’re valuing the business at, which I understand because you’ve got some pretty huge growth kind of forecast in there. I I think to to to even have a chance of raising capital for this, you’re gonna have to have so much substance and depth and rigor in those forecasts and and exactly how you’re gonna do it. Right? And all the metrics, that you’re gonna have to do.

And you you know how to do that. Right? So I would definitely do that. But, like, for me, I I I I think this is a an earn out deal, personally.

I I would literally, I’d be offering them a dollar down on this deal.

I’d I’d raise a small amount of equity capital, to get you started. And I I think for me, I’ll I’ll let Jeremy chime in. But, yeah, I wouldn’t be I would have paid two sixty on this for an annuity deal be because I don’t think you’re gonna have the cash flow, unfortunately, coming out of this business to to sustain it. But, it it’s it’s a really interesting business, really unique. I have no doubt you can blow this up to the moon.

It’s just a shame it’s so small, and I think the amount of equity you need to raise, you you know, to to set you up for huge success, I think investors are really gonna struggle with that million dollar valuation unless you really, really, really got some rigor around, you know, how you’re actually gonna do it. So I’ll I’ll let Jeremy chime in, then we’ll go to David Jewell. Jeremy, what are you thinking?

Yeah. You know, I was I was thinking the same thing. Very, you know, I very little cash down if if anything.

You know, maybe a little bit of skin in the game, but I think the balance of it has to be some sort of annuity basically where you’re just splitting profits at a certain agreed upon percentage over a period of time and and set the price at, you know, until that that person actually gets paid back that that amount. So, yeah, I I just think any any business that has a loss of, you know, two years and now they’re just getting into profits. I mean, what I would look at is, you know, it’s almost kind of a startup situation. What would it cost you to just go out and start a business similar to yourself and go lease a truck in a warehouse and, you know, just start it on your own versus, you know, paying the person three hundred thousand dollars to to to do it. So that’s kinda how I’d look at it.

Yeah. One of my other ideas, Leslie, is I think this deal might fit more as a consulting for equity deal. You know, may maybe you can sell the guy on your vision and your growth and what you’re gonna do. Let him have you half give him half he gives you half of the business, and then you have an option to buy him out for the two sixty at some point in the future.

It it’s like a mini Alan Bronson deal this. Right? It it it’s like the value he’s placing on the business, it’s not worth that, and you’re the one that’s actually gonna have to create that value in the future. Right?

So all all that risks on you. So I I would do this as a consulting for equity deal, personally. I I think if if if you can really, like, blow this thing up revenue wise as per the forecast, and he just doesn’t have the chops or the energy or the vision to do it himself, that’s how I would do it. And then sell him on, you know, say, hey.

We’ll we’ll we’ll buy you out for the full two sixty, you know, within, say, the next two years. If you get anywhere near those forecasts, you’ll have so much cash flow. You could fund the deal, you know, just from that. So that’s that’s what I would do.

I think they’re really hard to raise that kind of equity to do that deal, and and I just don’t think there’s enough cash flow coming out of it to to to kinda pay everybody.

What do you what do you see just from what we have as far as raising the equity right now? What what kinda number do you think that would work?

I I I I don’t know, man. I I think it’s gonna be really tough. I think it depends on the deal structure. I think if you can do a fifth if you can do a consulting for equity deal, and then, you know, maybe get fifty thousand dollars or something like that for somebody to come in and just partner with you, you know, and and really have a punt.

I I just think the million dollar valuation you set for the, for the the equity rates, that’s all based on the future valuation. So, yeah, I’m just just if I’m understanding it correctly, yeah, I think that’s gonna be a tough ask. I I think a consulting for equity deal is is is the way to go on this. That’s what I would suggest. But let let’s go to David Gerol, and then we has got a question. We missed him last time, so we’ll go to him next. David?

Yeah. I I, yeah, I I I struggle when we’re looking at businesses that are that are below, you know, certainly below a hundred thousand dollars in adjusted EBITDA, but really below two, three, four hundred thousand in adjusted EBITDA. There’s just not a lot of meat on the bone.

You know? You don’t have, you you you don’t have the cash flow to invest in growth. You’re looking to basic I mean, you’re you’re looking for the equity to fund the the the growth plan because the business doesn’t throw off enough cash flow to fund its own growth yet at this point.

Right. So I you know, that I I’d I’d rather see something that that that’s more established that that you’re you you’re really buying a foundation. Because the reality is here, you’re really buying a startup, that that that’s got a little bit of traction that that that you’re that you need to build on, but it still it still needs that start up type capital structure, because you’re still gonna be burning You’re still gonna be cash flow negative or burning cash in order to invest in the marketing to try to scale it.

And and then the other question I didn’t know. I know I think Chris answered it.

You know, my other question is how scalable is this? You know, at some point, you know, more more trucks and and those are cheap.

You know, more warehouse space and that, depending on where you’re at, isn’t cheap. So, you know, in looking at at at that scaling, at at at what point, I I think you’re gonna hit realistically, you’re gonna have kind of fits and starts, in in your growth trajectory. It’s not gonna be a a straight line because you’re gonna have some significant CapEx, for warehouse space, for for equipment, and things like that, and you’re gonna have to buy that capacity out ahead of the growth or else you’re gonna cap out.

So part of that strategy is just focus on in town moves so you don’t have the storage Right. To cap it. And then the the man hours and the trucks and the mileage and the fuel, all that was gonna take into consideration into that. And a thirty five hundred dollar move less all those pieces and a five hundred dollar cost of customer acquisition on marketing would net us fifteen hundred.

Yeah. Yeah. So so what what is the average what is the average ticket right now on on this business? What is the average move?

I don’t have that because it’s they’re not really focused on in town moves.

Yeah. So I you know? And and I checked with chat GPT, just kinda run through, hey. You know?

This scenario that scenario. And and that seemed to range probably more like twenty five hundred to thirty five hundred, somewhere in that range. But the thirty five hundred is, like, packing, packing material, all that, not just showing up, grabbing some boxes, and taking them somewhere else. That would be a a lesser expensive move.

So so it seemed that thirty five hundred seems fairly reasonable. I talked to my buddy over the holiday weekend, and and he thought it was high, but he realized he spent, like, twenty five hundred dollars for the people in the truck. He spent a thousand bucks to have somebody else pack the material, and then he spent another, I don’t know, seven, eight hundred bucks on on on packing stuff, whatever. So, so he ended up, I think, with, like, forty two hundred with his move is what it ended up being.

So, you know, I’m I’m kinda taking on that. So it’s just hard to tell.

Yeah. But, you know, but I’ve been taking, you know, maybe say, you know, twenty twenty five hundred for for for for an average in town move. I know, you know, like, my daughter’s two bedroom apartment a couple years ago, I wanna say it was, you know, fifteen hundred dollars or so for for an in town move. You’re basically you know, you’re look you’re looking at a tied up the truck for the day. So so that truck can produce one move a day doing in town.

So if if you’re moving five days a week, fifty two weeks a year, you get a hundred percent utilization, that truck, it can produce six hundred and fifty thousand dollars of revenue.

And and and that’s it. You you that truck never produces more revenue than that, unless you can get into, you know, some somehow get a value add to it. So that would be my concern. It’s just, you know, how, really understanding that model of how it scales and when you need to add you know, how long do you rent a truck before you buy a truck, etcetera.

Yeah. Yeah. David, get that factored in there as well, the truck rental. So Yes.

Okeydokey. Let’s go to the questions. Look. We we got, and then I think Mark, had a question.

So we’ll spend five minutes on that, and then we’ll go to deal number three. So, the floor is yours.

More of a comment.

So, Leslie, just to just to consider, though, I’ve been looking at a deal, that’s in the deliveries appliance delivery and installation space. So, basically, what you guys are building is a so when you think we call growth strategies and bottlenecks and growth. So if you have a if you have a delivery, infrastructure in place around trucks and people, this gentleman has contracts with, like, a lot of big box stores around appliance deliveries and installations, and he’s doing about six million dollars a year.

His bottlenecks are getting people. So the bigger contracts you get, the more people he needs for the for the work. So that’s a bottleneck for him. But, that’s certainly an area where he’s gotten a lot of traction and built up a pretty good business. So something to consider.

And there’s a funny funny anecdote. I have a friend of mine who’s an interior designer, and she specializes in moving divorced men who’ve never lived alone into their apartments after divorce.

So she basically helps them move and set up a new apartment. So maybe that’s not it’s a market you should, you should consider.

Awesome.

Cool. Cool. Did, Mark, did you have a question? I saw Mark’s hand up earlier.

Yeah. It was more more brilliant observation. You you you certainly seem to be passionate about, you know, the potential for this deal, but maybe maybe I could just lodge a thought in your mind and and ask you, you know, for this is a smaller deal, and it is restricted from cash flow for investment and other things for sure, and I agree with everything everyone else has said. Would you get there I look at it and think of it as like climbing a ladder, and this deal is towards the bottom of the ladder, and you got a lot of runs to go up as you start to grow that business over the coming years.

Perhaps you’d get there faster if you found a business that you were also passionate about that was six runs further up the ladder with more cash flow, like at least half a million in cash flow or something like that. It’s an easier deal to do, believe it or not. It just gives you more options going forward, to to grow it and, gives you a bit more of a safety net if things don’t go quite your way. So I’m not saying yay or no, that yay yay or nay to this. Well, I just wanted to offer that parallel track to say, is the juice gonna be worth squeeze for you compared to other bigger businesses, more profitable businesses that you might be able to buy? That was all.

Yeah. Mark, I I think you’ve absolutely nailed it. Right? That that that’s my overarching thing here, Leslie. You know, you’re you’re such a smart guy and, you know, the pitch you put together and the passion you’ve got for this deal, like, you know, you should be focused on, you know, stuff at least half a million dollars of EBITDA.

And then, you know, imagine buying a half a million dollar version of this or even just a removals company or storage company where you can quickly add this service in with the customers that you’ve already acquired. You know, there’s some truth to what Jeremy said about that I I agree with him. I wouldn’t buy this. I I I think you can set one up. But then, obviously, you’re not gonna have a customer base, which I think with your marketing chops, you could quickly build. But imagine buying a storage or a warehousing company or a transport company and then, you know, plugging this in. The only other idea I had for you on the equity side, even though I think this is too small of a deal, like a a a transportation company that would get a lot of the, you know, follow on revenue as well as you scale and outsource that, They might become a potential investor, but then you you’re running the risk of of them, you know, turning around and just buying it, underneath you.

So Which which outlines, Carl, exactly where this deal, you know, kind of naturally seems to fit in your mind and mind as well.

This is a good business to buy as a bolt on.

Yeah.

It’s not necessarily the business that you wanna buy as a platform because you got no leverage to do anything else. You’re gonna be dragged into it as an operator to do a lot of the work, which you might be planning on, to be fair. That’s where you wanna go, then that’s cool.

But while you’re doing that, you can’t find other things too bolt on the side of it. So I don’t think necessarily at the price that’s being asked that it sells anytime soon. So I won’t be surprised to find it in fifteen months. It’s still available for you, if necessary service starts driving it.

But that would allow you to go and find a better platform business and then come back and bolt this on the side because the cash flow from a half a million EBITDA business would pay for this quick. Yeah. Maybe. Just an idea.

So let’s, yeah, no. You’re absolutely right, Mark. So, Leslie, do the do the annuity do deal challenge in Protege this quarter. Go go and buy a transportation company or a or a big storage facility or a warehousing company. Go do one of those deals on an annuity deal basis, then just bolt this on.

That that’s what I would do. Like, yeah. I I think that this is too small of a deal for the first deal in this space, but, you know, would be would be an interesting bolt on, for sure.

If that doesn’t work, you’re dealing with the complexity.

My personal challenge is I’ve been focused on this, and I’m to the point where I’m out of runway and I’ve gotta get a job or some sort of income.

Yeah. But I’ve really enjoyed this. That’s why I’m trying to figure out a way in this one.

Go and do an Leslie, go do an annuity deal within the next two to three weeks that will give you cash flow, and then you can bolt this on and then execute on the scale.

Like, you you you are one trillion percent capable of going and doing an an annuity deal. Like, you’re so smart at this stuff and putting these things together. Like, it it’s just a little bit of deal origination.

Go go follow the exact annuity deal challenge framework that I put out on Monday. You will crush it. Go go buy a company that you can then bolt this into. That’s what I would do. Awesome.

Appreciate it, guys. Thanks for the call, buddy.

If you if you’re at the point where you have to go get a job, go and but also, as a parallel strategy to Carl’s, go and look at some consulting for equity things that you could do in a broadly similar space where you can get some cash flow coming in each month to stop you having to go w two or at least you could do w two part time because it still gives you time to focus on what you’re passionate about. But do not do this deal because of your pending w two because that’s deal eight, and you will regret that to your dying day if it’s not the right business without a doubt. That I’ll be very firm on, I would say.

Very firm.

Hope that’s hope that’s not too aggressive for the Brit.

No. Love it. That’s what I’m here for. Appreciate all the feedback, guys.

Okay. Thank you very much, Leslie. But great presentation. Like, absolutely amazing.