We all fear that our business is not going to be able to run as well without us there. International bestselling author Aaron Muller says we have to address that fear. Once you get through that and know that it’s good without you there and maybe even better, then you got to make sure that you have the right manager in place. Going along with that manager is having the right systems there so that manager follows your direction based off of your systems. That company runs the way you run that business if you were there because you’ve set everything up for them to follow. Having the right manager plus systems equals business that runs without you. Aaron talks about how to become lifestyle business owners by operating a profitable business in the community that runs without the owner.
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Aaron Muller: The Lifestyle Business Owner
Our guest is the number one international bestselling author of The Lifestyle Business Owner: How to Buy a Business, Grow Your Profits and Make It Run Without You. Aaron Muller is the owner of eight multimillion-dollar companies that run completely without him. He is the Founder of the Lifestyle Business Owner Academy, which teaches entrepreneurs how to do all this. Aaron, you have kindly offered to our Smallbiz Brain series readers a special video training called How to Own A Profitable Business That Runs Without You, Even If You Don’t Own A Business Yet, Even If You Have Very Little Money, Even If You Have No Business Experience. Let’s welcome, Aaron Muller, to the program.
Thank you, David. I appreciate it.
It’s great to have you. We’ve worked on some projects and it’s been a delight working with you and your team. You’ve successfully done what not everyone can do well and that is building a team around you with complementary skills.
One of the biggest highlights of my process of getting that book done that you just helped me get the audio done was hiring you because I’ve got to give you kudos for that and a little plug. It was amazing how fast you were able to put that together for me. I am so thankful. It just was so smooth once I met you and we got it going.
I’m grateful to you. I grew up in a world where broadcast deadlines are very important. I take deadlines and projects very seriously. I appreciate the kudos. We’re really here to talk about this idea. What events in your life led to the situation you’ve now found yourself in where you are the owner of eight companies that essentially run without you? They’re generating a whole lot of top line and EBITDA as well.
I’ll try to sum it up and so it’s not such a long story. I feel like in my situation I was born to be an entrepreneur. When I was eleven years old, I lived on an island. My first business was a shrimp-catching business on the docks in San Juan Island. I’ll get up at 7:00 in the morning. My parents owned a marina. They went out and bought a marina there. My stepdad had that entrepreneurial spirit too from Corporate America. I’d get up at 7:00 in the morning with him. I’d go drive ten miles from our house into town and catch shrimp and bring them back home. We’d cook them. I bagged 50 shrimp. I’d go the next day, boat to boat selling 50 shrimp for $2.50. That was the start of my entrepreneurial life.
I got the bug and did another business the next year. Once I moved off the island when I was about fifteen years old, everybody worked on that island. I have the mentality, I got to get a job. I’m not going to just sit around in the summertime and play with my friends. I found a job washing trucks at a mobile truck washing business. We’d go out at 5:00 in the morning on the weekends. When my friends were still partying and stuff, I’d get up in the morning, we’d washed garbage trucks and I fell in love with it. What happened was by the time I was sixteen years old, I was running this guy’s business. I was employing a lot of my friends. I was getting them to come work for us and I was running this guy’s crew. I was able to develop in this guy’s business and develop his business and get it to run without him having to work in it every day.
That was the first time he had ever had anyone do this for him. He was loving life. My junior year in high school I said, “I want to own my own business.” I was able to present that to him knowing that he would probably offer something to me because I was so valuable at this point to him. I said, “Rob, I’m thinking about starting my own landscaping company when I graduate high school.” The first that went out of his mouth were, “Aaron, why don’t you buy into my company? I’d love to have you.” I was like, “That sounds like a great idea.” I knew this was going to happen because I had made myself invaluable. That’s what I did. When I graduated high school, I bought half this guy’s company that I worked for and went on from there.
[bctt tweet=”Aaron Muller teaches entrepreneurs how to grow a business that runs without them.” username=””]
Do you still own that company? Is that still going on?
What happened was, I did other companies as well like retail stores and mail-order businesses all throughout that. I got to a point where I have this retail store. I call it my four-year college education because I learned how to fail in that business. The truck washing was going so well. We grew it crazy. When I graduated high school, I picked up over 400 accounts. I realized I was a salesman. We opened this retail store and it struggled for four years. I took big pay cuts and everything. I was like, “I don’t see the light at the end of this tunnel, but let’s dump some more money into this business that’s failing.” Our truck washing company was always supporting it. I said, “Let’s sell this. Let’s sell this truck washing company and put this money into it, but how do you sell a business?” All of a sudden, this was on a Friday, I asked this question to my partner, “How do you sell a business?” On Monday, I got an envelope underneath my door that said, “To the owner, confidential.” I went into my office, opened it up and it was like, “Have you ever considered selling your business?” I was like, “Somebody is pretty much monitoring whatever I’m saying here.” I called this guy up and we ended up putting our business on the market. I had it on the market for over six months. I fell in love with his job, this business broker, but he hadn’t sold anything in six months.
After the six months, I said to him, “Mike, you haven’t sold anything in six months. Why don’t you buy my business?” I think he’d be perfect at it because he had just gotten into the business six months prior. He goes, “Aaron, I’ve fallen in love with your business just listening to you talk about it. I’m going to make you an offer.” What I did was I sold that truck washing company. I paid off our debts. I gave that business back to my partner at the time and I said, “I don’t see the light at the end of this tunnel. I’ve been doing this for four years. I’m going to go do something else.” I went out and luckily had made some money on Qualcomm stock. I put $1,000 into it and made $200,000.
I went out and bought an auto repair shop. I knew nothing about the business. I just knew how to talk to people in customer service and all that. I bought that business and I hired a consultant right away to teach me how to do it right. The thing that I wanted to become a business broker one year later, and that’s what I did. I set my mind to it and made that happen. I hired the right people to help me do it right, so I knew how to run that business properly and be profitable and run it without me being there. That’s what I implemented and made it happen and went on from there. I’ve been a business broker for several years selling people’s companies.
You’re still doing that now. The brokerage part of it puts you at the center of a lot of conversations with businesses that are being bought and sold in the market.
I love the industry. It’s great. You keep your pulse on everything.
Are there particular types of industries that you tend to focus on? Are they all brick and mortar or some of them are online? What’s the mix? The stuff that you sell or operate as a broker in?
I’m into the service company. I like service businesses because it’s very easy to differentiate yourself versus that retail store where everyone is selling the same product. Service is what I do. All my companies that I like to buy are typically service-oriented businesses. Those are the ones that I like to broker the best. If I’m going to do any sales in that business, which is not really about sales, it’s more about information gathering and different opportunities, one time I can do a little bit of sales because I truly believe in service companies.
This idea of differentiation. Back to the operational side, the work you do around creating a business and I’ll use the word automated. It can run without you. To me, that suggests systems automation. You did this for the guy you worked for, how do you approach the teaching of that and what are some of the core elements of creating a business that runs without you?
We have a chapter on this. It’s chapter twelve of my book and it is a little formula that we have. It’s address your fears plus manager plus systems equals business that runs without you. You first have to address those fears that we all have that, “That business is not going to be able to run as well without me there.” That is such a common fuzz in our heads and especially controlling-type people. Once you get through that and know that it’s good without you there and maybe even better, then you’ve got to make sure that you have the right manager in place. Going along with that manager is having the right systems there so that that manager follows your direction based off of your systems. That company runs the way you run that business if you were there because you’ve set everything up for them to follow. That business runs without you.
You’re like the modern-day Michael E. Gerber, The E-Myth idea, which I think you may be familiar with.
I love the comparison. Before I bought my auto shop, I read that book. I used to refer that book out to everybody that bought a business.
You’re totally familiar with Michael’s work?
Yes. I say that my teachings are almost a little bit more even in depth on those teachings. That’s how I set my academy out to be even more step-by-step to understand how to make that happen.
Before we met, this was the guy that preached it, taught it, monetize the intellectual property around the idea of systematization, which strikes me as very similar. You’re a new generation of business owners. This is an evolutionary process for small business people and you were riding that wave and then adding much value to it in your own way. This concept of lifestyle. Lifestyle also it’s the outcome of automating the business. Now, you can live the life you want to live because you’re not working in the business while you’re working on it rather than in it.
Everybody’s lifestyle is different, everybody’s interpretation of what a good lifestyle is. If that lifestyle means that you work 80 hours a week, but you choose to do that, you choose to do that. If you choose to work five hours a week and do nothing else but go out and fishing and having fun, then that’s another lifestyle. Another one might be having multiple businesses, and this is what we do. My wife and I, we have multiple companies because it takes very limited amounts of time. There are companies I spend zero hours in for years. There are some that when I want to spend my full energy into it and be successful in it or grow that business, that’s usually when I put a lot of time into something is when I want to grow it. I have the time to do that and focus because you can’t be good at anything if you’re only spending five hours in any one business.
[bctt tweet=”Having a good adviser on your team is key.” username=””]
It’s almost counterintuitive. You’ve got this portfolio of companies that run. You get them to a place where they are autonomous. That allows you the space to grow one of them or the new one if I’ve heard you right, which is interesting. It’s not what I imagined. You imagine this kaleidoscope, this mosaic of, you’re five minutes here, five minutes there. It couldn’t be effective if you were just dashing and diving into each one in this cycle and I envision what that might be.
I’m glad you brought it up because it’s a misconception to think that you don’t have to put any time into a business. I don’t even say that in my book. I tell anybody buying a business that you are going to have to put some energy and time into this to make it run the way you want it to run successfully. Where I made a mistake when I was younger the first time around, let’s say because I’m a casualty of the crash. I built a $2 million house and I lost it in foreclosure. I lived in a buddy’s basement and got divorced. The difference then than now is I was starting and buying businesses like one every three months to six months. It was crazy. I had a trust fund partner.
You deploy the capital and you’re like, “I like this.” You look at it and you do your due diligence.
I didn’t make enough of these businesses successful and running successfully and profitable enough to move to the next one. I was just always doing five minutes here, five minutes there. This time around when I started acquiring businesses again or starting anything up, I focused and I made sure that company would stand on its own and was making a profit between 10% and 20% bottom line as an absentee owner before I would go to the next business. That’s what’s the difference. If the economy changes and it crashes or it takes a downturn, I’m not going to get hurt like I did the last time. I’m not going to say I’m not going to have any challenges, but I have multiple streams of income in every one of my companies right now and they run really well.
You have a portfolio of a certain level of diversity as well, so they may be non-correlating in terms of seasonality or revenue-generation or even customer demographics. Can you speak to that? Your selection of companies that you purchase? How do you approach building your portfolio?
I’m pretty well-diversified in different industries. I do have an eCommerce business that sells the product. I have auto repair shops, a mobile truck washing, an eco-friendly pressure wash and a web design.
You’ve got this automotive sector with a few there. You’ve got a thing going with the products on Amazon or eBay. We had that conversation about that. You’re not unwilling to explore. A lot of diversity within your portfolio, which is probably good. They don’t correlate.
During the crash, my truck washing company grew leaps and bounds. That was the one savior when I was struggling out there. My auto shop did okay enough to pay some bills, but I grew during that period of time with my truck washing company. It’s weird. You never know which company is going to take off. You do want to try to think about things. I used to have a used appliance business. That was an awesome business too. People give you a free appliance and you put a couple of dollars into it and you sell it for $100. It’s huge profits. There were some other challenges in that. There’s always a challenge in a business. It’s not going to be just a sweet deal with no issues. I deal with counterfeiters on Amazon. I’m constantly battling that. If you are diversified and you find products that people or services that people are going to need no matter what, during the downtime or good time, like an accounting practice, a bookkeeping service. Everyone needs to have that done, but you don’t have to be a CPA to have a bookkeeping service. You can hire the right people to do that for you. I’m not a technician. I don’t know how to fix a car but I have great technicians working for me.
You create the systems that run the business. You can run it from here. You don’t need to know everything there is to know, but you understand the principles of running an autonomous business, my word, the lifestyle business. You can rinse and repeat that regardless of the actual functionality of the business, the product that it offers, which is the distinction you made.
I guess my teachings are a little different with Michael Gerber is just the fact that he talks about, “You set up a system and anybody can do it.” I don’t totally 100% agree with that. I’m not going to put crummy technicians working on people’s cars because I’m going to have headaches in my life especially these days with the reputation online. You’ve got to have high-quality people working for you, so I pay well. I make sure my focus is building a business, so that is kicking butt and it’s the busiest of that industry in town. Everybody wants to work for me. That’s good. I can pay them well because we have enough business coming in to do it.
Let’s talk about the capitalization when you’re getting into looking to buy a business. I think you have written that it’s possible to build a lifestyle business for yourself or multiple businesses with very little money and possibly no business experience. Open this door for us, if you will.
I’ll give you an example in my life, something I did. I bought a business about a few years ago and it was another auto repair shop and it fell on my lap. A guy called me up and that knew me and said, “Someone passed away and I want to sell this out.” I’m just crazy like that. I always told my ex-wife in marriage counseling, to me, it’s like another hamburger I’m buying.
You have the creative spirit. I come from a creative world. I am a musician. There’s this thing we call shiny objects. I want to make a distinction for people. It’s not a shiny object. You have an energy and an openness to exploring new opportunities and diving into the mechanics of what makes this business work. There’s curiosity and the ambition to grow your portfolio. That combination is incredible energy from here.
This guy gave me this opportunity and I bought this place. What’s crazy as I was in the process of buying a property and another business, but I was waiting for it and I was saving my money to do this other big deal. When it came I was like, “How am I going to do this all?” The business was $550,000. I only had to come up with 10% because I was able to get the seller to finance a portion of it. SBA rules have changed a little bit since then. You can do deals with 10% down again. It used to be 25%.
I didn’t know that. The LTV changed on the SBAs?
It depends on the bank. I know banks that will do it for 10%. I was able to do a 25% down deal where I put 10% of my money in and then the seller finance 15%.
There’s your 25% in and do the SBA in the balance?
I got into this business and the very first year I was in that business, I worked a total of maybe five to ten hours max. One was doing some remodeling, like supervising a remodel in the office and dealing with some employee, just change over and stuff. I netted out on that business $168,000 that first year in business with $55,000 investment. That’s a 303% return. My second year, I’m going to net over $250,000, $350,000 in that business.
What does this business do?
It’s an auto repair shop.
Do you have more than one of those?
I have three of them. If I were to start an auto repair shop and I’ve done it before, it costs me about $300,000, $400,000. I’m spending money for the next three to four years or five before I even start making any money. I bought this business and made a 300% return on my money in year one.
[bctt tweet=”You don’t have to learn the hard way. You can learn from other people’s failures.” username=””]
It was an existing business. It had distress but the capitalization of the initial start was already there. You just leveraged what it was already doing into a structure around debt financing and some of your own money. It’s not like you can login without some skin in the game, but what you’re suggesting is you don’t have to think in terms of coming in with as much capital as maybe some early stage business owners who are just learning this stuff think.
If you start a business, it takes $250,000 a lot of times even to get it going and people don’t realize that. They think it’s cheaper to start a business. It’s actually cheaper to buy a business. I’ve even heard other people talking about like getting into business, even with no money down, where they’re able to work a deal out with the seller that wants out and all that stuff. That’s complex to do it like that. You’re not going to get maybe as good opportunities if you do that. If you have no money, there are always ways. If you want it, you can get it and make it happen.
It does take a lot of passion, curiosity and structure are so important. We’ve talked about it a little bit, the structure, whether it’s a seller financing, some amount of down, an SBA facility or something else. You have to engineer the right structure to make it work, don’t you?
100% and that’s why having a good adviser on your team is key. I always say, either get a local business broker, I help people even nationally. You need to have an expert on your side that’s done this stuff that will help you through this process and make it easy because we’ve all failed. Why not learn from other people’s failures? Do I have to learn everything the hard way? I don’t want to learn the hard way. That’s why the day I bought my auto shop, I hired a consultant to help me do it right from the beginning because I was tired of failing. I don’t want to fail every time.
You come to this place where it’s, “No, I don’t want to make the same mistake and rinse and repeat that part of my life.” I’ve done speaking gigs where I’ve talked to a room full of people about coming in with this raw vulnerable, “Here’s what I did wrong and I want to help you avoid that.” I wondered if that would even add value to these people and I ended up getting business out of it on the production side. This is all so valuable. Tell us more about the Lifestyle Business Owner Academy. How does that work? Are these live events? Are they online? Do you sell courses? I know you’ve got a video. Talk to us about the academy.
The academy developed based on the book and the writings in the book and the teachings in the book. I didn’t set into in the very beginning to do this academy. It was like, “I’m writing this book. I want to have something that shows more credibility when I’m working with clients.” It started developing into there’s this whole training ground that people could benefit from. I was getting sick and tired of seeing people buy jobs and be miserable as small business owners. As a small business owner, you should love your business. You shouldn’t be hating everything in it. I am a business owner because I love what I do. I want to have the power to do whatever I want to do.
There have been a few dark periods where I was doing something I liked but it wasn’t working, but I always chose to do the thing because it’s integration. It’s not a balanced work life. They say balance is integration.
I wanted to empower these small business owners so that they can love their business. We have more small businesses because I see more and more companies going out of business, small businesses and all these big conglomerates, like the big box stores and all these other types or even franchises. Those guys aren’t even owners of businesses. They have a boss. The franchise is their boss. I wanted to empower small business owners and make them good at business so that they love it. That we have more small businesses and great service because I’m sick of all the crap service we get in our society. We’ve gotten to that point of low prices mean more to everybody. It doesn’t mean more but this is what society has driven us to.
We’re driving to a commoditization of a lot of stuff.
I wanted to create something that anybody could do and I could help more people than just a couple of people. I wanted to have it for the masses. My wife is super dynamic and looks ten times better than me and helps me in all my companies, I said, “Mayumi, will you help me do this?” We put together over 110 training videos on various different subjects based on getting that business, the marketing right, the employees right, the operations right. How to turn it into a lifestyle business owner, how to buy a good business and how to understand the financials. I found that I looked at a lot of different courses out there and it was always sales courses, how to close a deal and blah. I was like, “That’s great. I want to know about how do I do my marketing on Facebook?” I want that one source to say, “I want to know how to do Facebook marketing.” I have a course on that. “I want to know how to manage employees and get an employee that works well or how to hire one good and all that other stuff.” We put together this whole system from start to buying a business to all the way down to the end. The end of the academy is how to be a lifestyle business owner with meanings. Not just taking your business to run without you, but having that business contribute something more to society than profits.
There’s a social good element to everything you do and you want to teach that, disseminate that as a value for entrepreneurs. It’s not all about them making money or transactional business. It’s a, “Let’s do some social good while we’re at it and love what we do.”
I’m sure you would agree that after a while the money just goes. It’s not that important. It starts to become like, “What am I doing this for? What’s my purpose?” If you start thinking like that, you’ll be energized still. You still have more things to contribute.
Any final thoughts? This has been unbelievable. Let’s finish the academy, we can find video courses. Is that the way you distribute the knowledge that you’ve created in these training videos?
If you go to LBOAcademy.com, it’s going to take you to some training videos, but also to a webinar that we’ll put together that shows you what’s involved with all the training that we give. They can get a free training. There’s no obligation. There’s a lot of information on the site that’s going to tell you what we do and all that so that you can decide if it’s a good fit for you. If you are a business person in any way or you want to be one, there’s no course like this. I’m not just saying because it’s mine, because it is awesome.
[bctt tweet=”If you’re thinking about your purpose, you’ll be energized and have more things to contribute.” username=””]
I liked the way you described it. It sounds like you took the time to figure out what’s the full spectrum of what I need to know to do this well, including the lifestyle piece but it’s the employee relations. It’s building a culture. All the possibilities. You laid out a few of them. I get a sense of there are so many facets to this. It isn’t like one course. It’s multiple courses and it almost sounds like a menu-driven thing where you can learn what you feel you don’t know about. Maybe it’s the accounting that you don’t know about and that’s the course you should take. Do I have that right in terms of the format?
Yes, exactly. The other cool part that we put in is we consult as well along with it because people can put comments. They’ll watch a video and they go, “How do I do this and this and that?” Sometimes I’ll get an email from a member privately and I’m like, “No, you’ve got to put it in the video, underneath the video because I want to make sure everybody that’s taking this course has additional information from members also.” We’re always answering every single question in there so that you’re going to get hands-on consulting without us being there.
You’ve got this community Q&A, raw curiosity, let’s get to the results focused on the idea that’s brilliant for everyone who’s participating. That’s the LBOAcademy.com. There’s also a link to a free video training you can get. It’s a long URL, but it’s LBOAcademy.com/p/smallbiz. Aaron Muller, it’s so good to have you. Your energy is infectious. I’m excited. I want to go buy three businesses now. I want to do it right. We just released Aaron’s book, The Lifestyle Business Owner in audiobook format. Chris Abell did a fantabulous job on that. He’s brilliant. We’ll do this again for sure. I’m serving entrepreneurs with the podcast and radio work that we do. Aaron, it’s great to be with you. Thanks so much for joining us.
Thank you, David. I appreciate it.
Important Links:
- The Lifestyle Business Owner: How to Buy a Business, Grow Your Profits and Make It Run Without You
- Lifestyle Business Owner Academy
- How to Own A Profitable Business That Runs Without You, Even If You Don’t Own A Business Yet, Even If You Have Very Little Money, Even If You Have No Business Experience
- The E-Myth
- LBOAcademy.com
- The Lifestyle Business Owner – Audiobook
- www.LBOAcademy.com/p/smallbiz
About Aaron Muller
Over the years, Aaron Muller figured out how to operate a profitable business in the community that runs without the owner. Imagine making a 6-figure income as a business owner while working as little as 5 hours per week. Aaron partnered with his wife Mayumi and started teaching others how to become lifestyle business owners.
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