Kris

Why Seller Financing Isn't a Loan - And Why Thinking It Is Might Kill Your Deal linkedin.com/pulse/why-sell…

Sorry I've been absent from this platform for a long time. One thing I can tell you about buying and running a small business is this: It's easy to see "low hanging fruit" and all the growth opportunities that are there when you're looking at businesses for sale and negotiating with sellers and brokers. Actually executing those plans when you have a small team without any one person dedicated to strategic projects and change management is another story all together. It's even harder to find the focus and follow through when you are also working on starting a fund and a nationwide training program for a completely different venture. That said, persistence and focus does work. For the last 2.5 years I stumbled a bit and spent too much money on the wrong opportunities. pushing more sales with big B2B contractors for example which only lengthened my cash conversion cycle and reduced the predictability of revenue, leading me to higher financing cost for minimal income gain. But continuously re-evaluating our strengths and weaknesses I made the push this winter (during a painfully slow lul in contractor progress payments...) to double down on B2C and product sales. I implemented a partial (let's say 80% complete so far) website and e-commerce upgrade in March. So far my YTD D2C e-commerce sales are more than double same period last year. If we continue the expected growth curve through the fall I'm going to be looking at capacity constraints and maybe need to run a second shift. It's not quite a hockey stick here, but it's so satisfying to see that inflection point where things started working on the sales side.

It's not easy to manage a small construction business while also managing deal flow for NMC, but I'm glad I was finally able to get out into the field this week and get an install done (with the help of my brother in law Yves...) We just had our best catalog item sales month ever by far, and I'm working on expanding our installation zone through roll ups, strategic partnerships, and setting up a strategic partner program, so not only does it feel good to get my hands dirty (despite the accompanying back pain from digging holes), it was super valuable to get first hand experience into what our installers and DIY customers need to do in order to achieve the quality that defines our products. I have come back with a big list of suggestions for improving our installation instructions and designs that I would otherwise have never thought of.

@BunkieLife I have some ideas. Happy to catch up and discuss at some point.

@krisisbuilding We are struggling with the same question! How do we source the very specific wood we need to enable US manufacturing without using non-american wood?

Does the US have all the trees we need? In general yes, but there is not enough supply of clear vertical grain western red cedar in dimensions larger than 4x4. We're going to need to work on some better wood treatment processes to get dimensionally stable, insect and rot resistant knot-free wood that is grown in the US. Or else maybe get some more aesthetic gluelam with local species. Would be interested in chatting with anyone in the field who has ideas. And yes, I know local species like white oak and black locust work great outdoors but they will check and they have knots. It's not always the aesthetic that works with every design. And I can say design should not dictate decisions like this but it does. Lots of customers will just go with PVC if their only viable wood options have knots and checking.

Anyone have excess stock on hand of western red cedar 4x4s that can get to MA within a week? Ideally clear vertical grain but I'll settle for good quality. Have had a big uptick in orders corresponding with supply chain disruption due to tarrifs. This is a real request. Lmk.

It is to an extent, which is why I started a PE fund instead of a VC fund . . . after first spending a year or more talking to VC LPs and failing to convince them that it was possible to generate a good return without hunting for unicorns. But, this time around it feels different to me, because there are no moats. The tech itself is getting rid of the barriers to entry and having an 8 figure runway doesn't automatically give you a huge step up against anyone else. Even the viability of the market itself is questionable to me given the increasing ease at creating your own tools and models (and with quantum computers, I would say even your own full LLM systems) So, my prediction is this time around not only will there be just a few winners and a lot of losers, the "losers" won't have the normal exit paths that they have in the past. I'm guessing less buy-outs will happen and more full company liquidations. Nobody will care about buying proprietary tech or development teams. It will be asset sales of customer lists to large ecosystem companies and marketplaces.

@krisisbuilding Isn't that usually the case in VC?

Even ChatGPT understands. There will be a lot of losers and very very few realized winners in this VC investment cycle.

surprised at the comments from people who don't believe it. I don't have a $50M net worth but I own 2 businesses and have never bought a car newer than 15 years old. currently my daily driver has 250K miles before the odometer stopped working. I spend my money on other things (mostly gadgets and reinvesting in more business risks.) the CEO of a publicly traded $2B company I once worked for, whose family started the company and still owns the majority of shares, has always driven an old beat up station wagon. And that was a company in the auto industry. I don't agree with all your takes, but you point on this is valid. you're not saying driving an old camry will make you super wealthy. you're saying live how you want, don't be sucked in to luxury just because you think you have to, and that outward signs of wealth are not actually valid status symbols.

People would be blown away by the number of immigrants who drive beat-up Camrys, wear old jeans, and own a dozen properties with low debt and a $50M net worth. Won’t find them at the private jet terminal, and they’ll walk past your first-class seat, happily settling in 34B.

@thesamparr Claude.ai solves it with projects, but unfortunately doesn't have the voice interface that chatGPT does, so it's harder to use while driving

Ai people. Tell me how'd you solve this: - I often use ChatGPT has a exec coach slash thought part - It's spent loads of time asking me questions about myself, my goals, my strengths, weaknesses, business financials. - I come to it for advice - I've given it books to read and asked "how would this author approach this problem." - Even things like "what should the focus be this week to hit my goals"? I just use the same prompt window in ChatGPT. This is less than ideal because the context window prolly isn't long and its forgetting stuff. Plus if this prompt thread goes away, hours of training it is now lost. What's a good way to solve this? Have something built with Longchain, like a database of all my past convos? Is this tech even possible yet? My goal is to have a thought partner basically. Someone who knows me well, is smart, and gives advice.

It is critical as an entrepreneur - and in particular as an ETA entrepreneur - to develop a thick skin. A huge part of my professional life both as an entrepreneur and in the corporate world before this has been about negotiating and closing deals. I actually love creative deal structuring and, I think I'm pretty good at it too. I always work in good faith and keep things professional, but friendly. I want to do deals with people I like. In order to have good mutually beneficial results it means I am an open book. I don't engage in zero sum thinking and will avoid doing business with people who do. The one think I really dislike, more than any other part of being in business for myself, is when a deal goes bad and people take things personally. It takes emotional fortitude for me as an introvert to engage in open negotiations, so when a negotiation partner starts taking acts of god and unforeseen events personally and insinuates the either myself or someone I am representing is not acting in good faith, it is really challenging for me to maintain my cool. That said, in the business of deal-making and M&A, is inevitable that it will happen. Probably at a higher frequency in small business acquisition than with other kinds of deal making, because people's legacy are on the line on one side, and someone's ability to come out the other side with a deal that doesn't leave them at a high risk of bankruptcy. If a mutually beneficial agreement can't be reached, it's better to find that out sooner rather than later, but anytime before the final paperwork is signed is in the best interest of the operator who will be signing their life away to that venture for the next 5-15 years. But still, I am a people pleaser. I hate the feeling.

Agree but I would make it a permanent policy or at least make sure it's convertible without a physical. Most likely they will never need to use the death benefits on a term. But locking in the low price when your young, and being able to use that when you're 50 is another story

Public service announcement for the youngs: Stop procrastinating & go buy $1-2MM of term life insurance. It’s cheap AF & your family will thank you.

Oh I definitely do. The interest rates were hiked way too high way too fast without an understanding what the true root cause of the inflation was this time around, and would have been better controlled outside of extreme money supply controls. Just because all they have only have a hammer, doesn't mean everything is a nail, nor do you have to hit it. The disproportionate cause of inflation was overseas supply chain issues working their way through the system. The disproportionate effect of the interest rate hikes were felt on small businesses and payrolls. so we turned inflation into stagflation.

@krisisbuilding Might be an idea. Do you think Fed could be making better decisions? Seems they’re dealt a pretty bad hand with limited options…

Looks like President-elect Trump’s biggest mandate will be fighting inflation. What would your first move be if you were him?

Ultra-nationalist ideology and libertarian values are mutually exclusive. Neither are unchecked big gov regulation-happy policies possible to coexist with freedom in a sustainable way. The left-right dichotomy has always been a lie. It's not 'hatred' that is being stoked but it is fear, on all sides. And the big losers in all of it no matter whose ideological nonsense drives it, is small business and personal liberty I think the only way forward has to be to break the false dichotomy and create a true big-tent bipartisan group of big- and small-"L" libertarians and conscious capitalists that creates a true viable third way which actually prioritizes small business and the respect of our universal humanity and individual autonomy, and creates policy roadmaps that are designed to increase the chance of success for all people regardless of where they started in life.

If you say "it's the economy, stupid" and think that any administration really controls that, remember that the real economic villain of the past several years was an unelected official who was first appointed by Trump and then reappointed by Biden, and whose whole organization operates without any accountability. I don't believe any president really understands economics tbh. Only blind hard core monetarists would put economic ideology above the obvious impacts on people and not realize the the root cause of inflation is not always consumer spending. But when all you have is a hammer everything looks like a nail, I guess.

Yes, absolutely. But in addition to that, Trump's tax increases caused me personal pain and I had to go into debt to cover what was a 30% tax increase for me at the time. An administration that makes policy changes specifically designed to punish citizens in states that don't support them is dangerous. With an unpredictable administration, we have an unstable economy and it becomes more difficult to justify investment vs hoarding cash. I'm still bullish on small businesses no matter what, but I think businesses that cater to the wealthy or the very poor might be the ones that do the best in the short term....

@krisisbuilding Look beyond direct impact of your taxes. The deficits caused by tax cuts under Bush & Trump affected many of us indirectly.

As a solidly middle class tax payer, the only time in my life that my taxes were impacted by an administration's direct and intentional actions was in 2018, when my taxes were increased dramatically because of an intentional decision to punish citizens in states that voted against the president.

excited for the next round of webstore updates that are in progress for Trellis Structures.

Bumping this. Trade credit specialists please let me know