Transcript

One Question Friday: To Raise or Not To Raise?

Yeah. I feel like I can rule the world, I know I can be what I want to I put my law in it like my days off. On the road, less travel, never looking back. Hey guys, producer Ben here. I wanted to introduce this new Friday episode that we're gonna be doing. You probably remember that on Fridays we were doing best of the week. Well, it turned out No one really liked that. Everyone thought it was filler, everyone thought it was fluff, so we're cutting out the best of the week Friday episodes.

But we still wanted to do something for Fridays that was Short, sweet, got you going for the weekend. And so what we're doing is called one question Friday. So you can submit a question. And the fellows will answer it. So for this first question.

Uh, it was about a guy's business and whether he should raise money. But it can be about anything, it can be about life, it can be about Sean's Workout trainer. Uh it can be about anything. So if you want to submit a question and you want to hear your voice on my first million, just go to mfmpod.com. It's like my first million, mfmpod.com. And in the lower right hand corner, you'll see a little circle with a microphone in it. Click there. And then you can record uh voicemail and leave it for us and

If we select your question, then you'll hear yourself on my first million. So again, this is just a short Friday episode. One question, one answer. Um, let us know what you think. And uh if you like this replacement for the best of the week. All right, so without further ado, here is this week's listener. Question.

Hey guys, this is Matt. I left my full time job February to grow this business full time. Uh, since then we've had some really great growth and we're up to uh three locations right now. Things are pretty smooth other than the normal kind of Day to day chaos that happens when we're in the business. Um

We're shooting for six locations by the end of this year, and then the year after that, we'd like to double it, you know, around twelve or eighteen locations. Uh my question comes with growth. You know, uh I've gotten a lot of different pieces of advice from different people. You know, right now this is a bootstrap startup. Uh I'm the only founder and I'm twenty four is my first business running full time. So is it better and these are kind of the different piece of advice I've gotten, is it better to run it bootstraps, grow slowly, grow controlled. Is it better to take some money on and grow as fast as possible to get as big of a market as fast as possible? Or is it better to maybe bring on a a a partner or a co founder who can uh

sort of help you grow faster and maybe bring some capital or expertise or advice in at the same time. Uh love to hear what you guys think and love the show. Thanks. Alright, so we got a question here from Do you know you remember his name? What was his name? No, I don't even remember his name but that's okay. Uh nice guy from uh South Carolina. Is that where Raleigh is or North Carolina? North Carolina. All right, so he's got this business. It's called yeah call him Steve from South Carolina, even though his name is Doug from North Carolina. All right. So he's he's got this business motor boat. mechanics uh which is basically a modal motor mobile

Motor boat. mechanic business where he'll get, you know, the website says, Let's get you back on the water fast. So I guess if your if your boat breaks, they'll fix it for you. Uh he said he's got three locations and he's Thinking about growth. Uh, what did he really want help with, Sam? What is what's the question what's the actual question he's asked? He wanted to know if so he has some r uh some results. He goes, Should I bootstrap or raise money?

And that's actually a really Bad way. Yeah. That's not the right question to ask. And uh let's start with like raising money versus not raising money and then this guy specific example. So I think that like raising money versus not raising money You have to figure ask yourself, A, what type of lifestyle do you want? And B, what type of business do you have? There's this great blog post that I like and they say that raising money is it's for two different things. One

Um, there's Ben and Jerry's and there's Amazon. If you're Amazon, you wanna raise a lot of money and you wanna get really big really fast because it's almost a winners take all market. I would say social media is like the best example of a winners take all market where it's like you just gotta get big quickly because once everyone's using your product, everyone else continues using your product. And that's like one of those things where it'll last a long time and be big, whatever. Or there's Ben and Jerry's, which is like, well, you can actually have like loads of different types of Ben and Jerry's and different types of ice cream, so it doesn't really matter, you know, like you uh one Friday they'll go to your place, another Friday they're gonna go to another place. You all can survive. So in that case it's it's okay to kind of go slow. And so you have to decide, do you have that type of business? And the second thing is when we talk about what type of lifestyle you want, are you willing to sign up for like this rocket ship lifestyle? So basically I heard this great analogy where they said VC is kinda like rocket fuel. And what that means is that rocket fuel is meant for rockets that want to go fast or blow up. It's not meant for cars. regardless if that car looks cool or if that car is a fast car. Rocket fuels for rockets, not great cars. And you have to ask like do I want a car or do I want a rocket? Me personally, most of the time I want a car.

So th those are those are two ways of thinking, I think, about raising money overall. What do you think? Yeah, I think y you you nailed it. That's like saying, Hey guys, um tool or wrench. Like you know a hammer or a wrench. It's like well, I don't know, those are just tools to do stuff. And so you first gotta answer the what am I trying to do here question. And then you gotta ask, do I need a hammer or a wrench or something else altogether, right? Like Let's say he's like oh you know what, like Yeah, I agree. Let me I'll tell you right now.

Mobile motorboat mechanics is not a rocket. It's a car. And um that's okay. There's no that's not a disrespectful thing. That's like just What it is, that's okay. Cars are awesome. And so

Within that, okay, you could raise money from you know friends and family to open up more locations or go to the bank and get a loan and open up another location. So really the question you gotta ask is like I'm saying like How fast and aggressively do you care to do this? Like how how important to you is growth versus you know, n not having tons of stress and your lifestyle. Now let's say you do want to grow. Okay, if you want to grow, then the next question you ask is, So walking down the chain, we said, Is this a rocket or car? It's a car.

Okay, do I wanna grow or do I wanna go kind of steady and kind of Not not overextend myself. Oh no, I really do like to grow. All right, cool. Within growing Is money what's holding you back? Or is it something else that's holding you back? May a lot of times it's not money that's holding you back. Maybe it's

Well if I open up another location, who's gonna run this one? It's like actually I need to hire And so my operations can, you know, withstand another location. Or it's You know, I need to um

you know, scale, you know, our product offering and a I just need to add, you know, more And you expand from boats to, you know, like different types of uh uh other vehicles and stuff like that. And so, you know, you gotta figure out is money your bottleneck? So if you decide all right it's a car, I do want to grow, and money is my bottleneck. Then go raise money. Now you'll know exactly

How much you need and what you need it for and who you should gonna raise it from and you have a very tight story. And this guy, I think he said he's only twenty four, right? I actually think that uh yeah, th we do have a couple friends and we know we know of people who have raised money at a young age and kinda c knocked it out the park. But I think if you have this guy said he had four locations. I don't exactly know what that means. I guess it's like four mechanic shops.

maybe there's a world where you can have a business that makes hundreds of thousands of dollars or even millions of dollars of year At a relatively I mean, if you're twenty four, that's really young, but even if he gets it by the time he's thirty, it's relatively young. It's like dude, you're you kinda got money figured out now go and follow your ego and go really big. I think there's a world where you could do that. So in this particular case, I would just look at boatmechanics.com. I'm on the website. I would say probably don't raise money. And uh

If you do raise money like Just know what you're signing up for. But yeah, I think I think it's a dumb question. I think it's I think it's In summary to our first weekly question uh segment. Dumb question. It's not dumb and sorry, Matt. Matt Foster, sorry.

Matt in Colorado. It's not dumb that you asked it. That's actually a good question to ask, but it's like uh it it's a it's a question that a lot of people ask, and I think that it's the wrong question. And it's dumb for that reason. It's not dumb that you want the answer. It's just a silly way of going about it when you really think about it. When you know the game. It's just a lot of people when you're a noob, you you know, I guess it's not dumb, but you know what I mean. What I would do, by the way, Matt, if you're twenty four, what I would do is I would As an exercise, I would go try to sell this business. I would say I have three locations. I'm making I don't know, let's call it five hundred K a year of EBITDA across these three locations.

And uh I would go try to find kind of like a PE company or like a local uh buyer I would list it on buy bus sell, I would go try to talk to some sellers because what might happen is you might say All right, do I want to grow this And I need to get to eight lo like how much money how much time and money does it take for me to make two million dollars out of this business? And what the answer might be is it's gonna take you three years, and you're gonna need to do a bunch of hard work, and you might need to raise a little bit of money, and you might need to like open up a bunch of locations and travel a bit.

Or you might be able to be like, Oh, I could sell this for two million Today. off of three locations producing, let's call it, yeah, 300k of Vida or something like that. And so I would go try to figure out if I sold this, how much would I be able to sell it for? How much interest is there in buying a business like this? And what questions do they ask and what parts of my business make them

Worried or scared about this. Maybe it's operationally, it's all based on me. Maybe it's um the margins are not good enough. Maybe it's not growing fast enough. Whatever it is. That will also give you a little bit of a roadmap and like an objective opinion on Like the quality of your business. And uh I actually think that's very healthy. To go like

Maybe A year or two years before you want to sell it. Spend a few weeks, have a couple conversations,'cause it will You'll come back and say oh Now I can

Yeah. I've moved straight to the end. You could go to the end and say, I want to sell this. Well, now I know what they want. Now I know what numbers I need in order to sell for that multiple. Now you know for that for that end amount. Now I know where they what parts of my business are not so good looking. And you can work on those for the next year or two. I went and looked this guy up while we were talking. I motorboat mechanics is not gonna be his big home run. I literally browsing his profile, I'm like, Oh, this guy might have a couple home runs in him.

And motorboat mechanics is gonna be an awesome stepping stone for him to get there. And stepping stones are super important. So uh I would if I was this guy I wouldn't probably not raise money. Alright, that's a wrap. Yeah.

I feel like I can rule the world, I know I can be what I want to I put my la in it like my day song On the road less travel never looking back