At first glance, purchasing an existing small business might seem like a golden opportunity for an aspiring entrepreneur. After all, with a built-in client base and fully-equipped operational facilities, success is
practically guaranteed, right? Unfortunately, the reality is rarely that simple. In this episode, Gene Marks and Brandon Lirio, the founder of Battleground Fitness, discuss the challenges of acquiring an existing company and how small business owners can overcome them for a smoother transition of ownership.
Podcast Key Highlights
- What Do I Need to Know Before Opening a Brick-And-Mortar Business?
- Make it a priority to work in the industry that you want to go into.
- Don’t underestimate the importance of mentorship when you’re first starting out.
- What Should I Do Before Buying a Small Business?
- If you’re an aspiring entrepreneur who’s considering buying an existing business, find out exactly why the previous owner is selling it. Conducting your research beforehand will enable you to see any underlying deal-breakers.
- Try to work at the business that you want to buy so that you can get a sense of the foot traffic.
- Working at the actual business also shows you what your potential employees will have to deal with on a regular basis.
- How Should I Approach the Transaction Process When Acquiring an Existing Business?
- It’s a good idea to purchase all aspects of the existing operational business, including its name, logo, and trademark. Doing so gives you freedom to rebrand without having to concern yourself over any future financial obligations to the previous owners or shareholders.
- The purchase price of an existing business should be based on the wholesale cost of everything on the shelves, plus some of the more expensive fixtures, adjusting, of course, for the operational capacity and depreciation.
- Is It Okay to Incur Debt When Purchasing an Existing Business?
- While it’s admirable to try and pay off all costs upfront, it’s okay to absorb a little bit of debt when investing in assets that can generate a lot of revenue.
- Offering Net 30 terms with your clients also allows you to keep your debt manageable.
- How Do I Raise the Capital I Need to Purchase an Existing Business Without Incurring Significant Debt?
- Personal Savings
- Private Loans
- Seller Financing from the Previous Owner
- How Do I Ensure a Smooth Transition When Taking Over a Business?
- Before you’ve officially purchased a business, ask the previous owner to teach you everything you’ll need to know in terms of operating it, as well as familiarizing you with all his existing inventory, suppliers, and client base. This ensures that you’ll be fully independent once you take over.
- Seeking the support of an experienced CPA will ensure that you have a financially sound business plan and prevent any potential surprises prior to taking over the reins.
- You should also draft up an operational document for your private loan financiers for transparency and so that they will trust you enough to handle the day-to-day responsibilities without micromanagement.
- Lastly, you need to speak with all the current employees about any changes you’re making at the company. Having this conversation early on will give you time to adjust accordingly, should any employees decide to leave.
- What Mistakes Do I Need to Avoid Once I Become the New Business Owner?
- To avoid making a bad investment, don’t buy large supplies of a product before you’re sure there’s a customer demand for it, especially if it’s a perishable item.
- Customer acquisition isn’t always a guarantee when you buy a business, so anticipate a certain degree of customer attrition rate at the beginning.
The views and opinions expressed on this podcast are for informational purposes only, and solely those of the podcast participants, contributors, and guests, and do not constitute an endorsement by or necessarily represent the views of The Hartford or its affiliates.
You’re listening to the Small Biz Ahead podcast, brought to you by The Hartford.
This podcast is brought to you by The Hartford. When the unexpected strikes, The Hartford strikes back for over 1 million small business customers with property, liability, and workers compensation insurance. Check out The Hartford’s small business insurance at TheHartford.com.
Gene: Hey, everybody, it’s Gene Marks, and welcome back again to another episode of The Hartford Small Biz Ahead podcast. Thank you so much for joining us, whether you’re listening or you are watching us online. Very happy to be here. Very happy to have Brandon Lirio. Brandon Lirio is the founder of Battleground Fitness in the Hartford area, correct, Brandon?
Brandon: Yep, we have two supplement stores known as Battleground Nutrition in Oakville and in Cromwell, and then Battleground Fitness is our online training arm as well as, we train out of Steel Beach Gym in Waterbury, so basically all through southern and central and northern Connecticut.
Gene: Oh, that’s great, so three locations, two supplement stores, you’re saying, right, and then one where actual training and fitness gets done. Is that correct?
Brandon: Correct, and obviously, online, we train all over the world as well.
Gene: That is amazing. So first of all, this is gonna be a business conversation, Brandon, because I know you look at me, and you know I’m the kind of guy that works out a lot. You can tell, okay.
Brandon: But you’re blowing those sleeves out, just making me look small.
Gene: Well, we’re gonna push aside the whole health and fitness topic. I do wanna talk to you about running your business, but before we talk about some of the challenges that you’re facing, some advice I know that you’ve got for our audience, just give us a little bit of a background history of yourself and your business. How do you get to this point of running the company?
Brandon: Sure, so I actually served in the United States Air Force for upwards of 11 years. And while I was overseas, first in California, and then when I moved to Germany, I kind of got a little bit into bodybuilding and didn’t know if it was for me. And then, I met my friend, who actually is now the registered dietician for the Clippers, Jessica, and Jess was starting a military-only bodybuilding team. We decided to do it together, and then after a couple of years, we decided to turn it into a business where we were gonna basically take competitors and bring them to the stage. And then, I got out of the military, moved back here, and while I was doing my personal training and traveling the world, where I became two-time Mr. Universe, three-time Mr. Natural Olympia in my federation. I decided to go to work at a supplement store just to try and meet new clients and give myself something to do throughout the day. And sure enough, a couple of years later I bought the place and that turned into Battleground Nutrition, and now we’ve got our training arm and our supplement arm and I still professionally body-build. So here we are.
Gene: That is crazy. As I’m talking to you, it’s like, okay, I have a lot of questions to ask you about health and fitness as well, and I’ve never spoken to a Mr. Universe before. How about that? Listen, an actual Mr. Universe. You also have a podcast as well, correct?
Brandon: Yeah, so it’s called the “U-Natty States of America.” I run it, and we’re bringing on a co-host here real soon. You can literally search it wherever you get podcasts on, Apple iTunes, on Google Play, and there’s a full video available on YouTube. You just search U-Natty States of America, or my first and last name, Brandon Lirio, and it’ll come up. And we just cover everything in the sporting world from a natural bodybuilding perspective, and we’ve been doing that now for about 17 episodes and people seem to really like it. So I hope people keep listening because I’m running out of topics.
Gene: I find it hard to believe that you would ever. And obviously, in the world that you’re in, you can always revisit topics and give different angles on them and have different guests with different angles on those topics. I’m not worried about you with content. It sounds like a great podcast and it’ll be something that I’m sure you’ll continue well. So you said when you first got into the fitness business, this is after the military, after touring around, you bought an existing business. So first of all, how long ago was that? And if I can ask, how old were you when you did that?
Brandon: Yeah, so people think I’m a little younger than I am. I’m in my mid-30s now. I’ll be 36.
Gene: That’s young.
Brandon: And so when I went to work at a place called the American Nutrition Center, was up in Avon, for a good friend of mine. His name was Corey. And Corey, after a couple of years, was just like, “Look, I’ve kind of taken this as far as I can go without expanding into something else. And with my family and stuff, I don’t know that I have enough time. You’ve worked here for a couple of years, which was, I think I started working there early 2017 and I bought the place in 2019 and the ownership went to me six months before the entire state closed for the pandemic. So the fact that we’re still around a couple of years later, at least is a testament to the fact that I wasn’t just gonna roll over and let it go under in the toughest financial times that we’d seen in a long time. So that was, yeah, 2019, I think it was the second week of September. That Monday is when I took over.
Gene: It’s funny that you bring that story up, because you never ran a business before, right? This is the first actual business business that you’re running.
Brandon: Brick-and-mortar sales business, for sure. We had our online business, even when I was in the military since 2014. But brick-and-mortar sales business where you need shelf space and inventory, yeah, for sure. This was my first foray with that.
Gene: And it’s totally different animal, right? I mean, this is not a typical e-commerce company. And I always talk to a lot of people that they wanna start up businesses, particularly younger businesses. So when you were doing this, I mean, you’re in your early 30s, when you’re a young guy with no experience of running a brick-and-mortar business, did you feel like it was pretty important that you had a couple of years working in that business before you bought the business, right? I mean, how important was that for you?
Brandon: I mean, 100%. And it wasn’t even necessarily like, “Hey, I need enough information in terms of what to prioritize shelf space for, how much I should have mark-up for. I mean, stuff as simple as what they call MAP-pricing, which is minimum advertised pricing, where if you break those MAP-pricing rules, you could lose your licensure to sell that brand because you’re undercutting other people around that are in that same agreement with the same companies.
Brandon: But I will say that the main thing that, when I really took over, that I was thankful for, was the fact that, since it was already an existing business, I had some trade references for people who were willing to kind of guide me along the way in terms of what to expect, what would be right, what would be wrong. And obviously, you look at somebody doing something else and there’s things you say you would do differently and try and change things, but ultimately, the main thing is just you need mentorship from specific people who’ve been there before you. And I was very fortunate that a lot of them met me when I was just an hourly worker there and were kind of willing to take the walk with me. And I still do business with 95% of those companies today because they were just there for me. And even during their price hikes, when they needed to do it during 2020 and 2021, we still were gonna keep them on the shelves. And anytime we have public events, we invite them to come to them. That was the most important thing, was just dealing with people, I’ll say. So I was really thankful for that.
Gene: There’s a big trend right now. Business owners are getting older in this country. The average age of the U.S. business owner is about 55 years old. So we’re starting to see an uptick in businesses selling themselves. So people looking at succession planning and looking to exit out of their companies. Meanwhile, at the same time, the whole Millennial generation, which you’re one, is getting older as well. And they put in some time in the business world and a lot of people are looking to do their own thing. So I’m kind of curious what advice you would have for somebody, and it doesn’t necessarily have to be in the health and fitness world, but somebody around your age, maybe somebody in their 30s, who, maybe they’re working for somebody but they wanna start their own business. Do you think it makes more sense to start something from scratch, or what are the pros and cons of just buying an existing business and then making it your own? What are your thoughts on that?
Brandon: So interestingly enough, when you asked me that, because one of the things that I never mentioned on any of my fitness podcasts is that my alma mater at Southern Connecticut State, my second degree actually, was my bachelor’s degree for business management. So it’s not like I jumped into it, and was like, “Hey, I’ll figure this out and go to school along the way.” I already had my business management degree and then kind of finished up my fitness degree in terms of going back to school. But I will say that one of the things that people don’t take into account in terms of when they start a business is that, if you’re taking a look at buying a pre-existing business that’s selling, the first question you should ask yourself is, “Okay, they’re not selling it, most of the time, just because they’re like, “Oh, I’m kind of grown out of it. So it’s a great business. Enjoy.” There’s gotta be a reason underlying everything. Really, why are you selling the business? Shoot me straight, right?
Brandon: A, is it because you’re not able to keep up with the growing demand of this new dissemination tool that is the internet that’s kind of underselling all of your prices. Is it the fact that your customer base has changed? Which was one of the problems we had, why we moved a store out of Avon and into Cromwell, was because, post 2020, it was a different customer base there. We didn’t have the same foot traffic. A lot of the gyms had already closed. A lot of the other supplement stores, even though we were still around, had already closed.
Brandon: So our customer really wasn’t targeted in that area anymore. It would’ve been just as easy for me to find someone, and go, “Hey, listen, this business has been here five years before I took over, which means that this thing has been here for eight years. So everybody knows where it is. It’s a pre-established business. We’ve got our customer base. I’d be happy to give you their email lists, and names, addresses, everything.”
Brandon: If somebody were to purchase that from me, they would find out pretty quick that it probably was pretty worthless because none of that stuff was there anymore. So there’s pros and cons to both, right? I would argue that if you’re starting a business from scratch, you’re gonna be learning a lot of things on the fly that you didn’t know were problems and realistically didn’t know were expenditures. That was our biggest thing when we started our online business. But if you’re buying a pre-existing business, you really shouldn’t just jump at the fact that it’s name recognition, it’s customers around. No, no, no. Take a couple, I would argue at least a month or two. Go through their books. Hang out there for a shift. See what it’s like in terms of the foot traffic. Ask the business owner, “What’s your busiest day?” That’s the day I wanna come in and sit with you. If it’s not busy to you, you could always say, “I’ll give you another shot. I’ll come next Thursday.” But trust your gut. If the writing is on the wall that they’re telling you, “This is their busy day, but no one comes in,” that may be one of the reasons they’re looking to sell the business. So I would argue it, it’s 50/50. You’ve got to weigh the pros and cons. It really is why you’re buying the business and what the actual business is, I would say, for sure.
Gene: It’s funny that you… Maybe it’s the wheels turning as well. I mean, I always say, younger people, when they’re looking to start their own business, they should work for a company in that industry and learn from that company, so that if they then want to go out and start their own thing, they get an education. No offense to your business management degree, but there’s theoretical learning that you do in college and there’s actual real-life learning. So that’s good for somebody on the younger side.
Gene: Cause I’m thinking like, “Man, if I was gonna go…” Like my business, I run like a technology services firm, and if I was gonna buy somebody else’s company, there is something to be said for, literally, working for that company. You worked for this company for a couple years. I mean, you saw how the dog food is made. So you have to admit that, you had a front-row seat to the business, so that when it came time to buy it, you pretty much knew all of the good, the bad, and the ugly at that point. Is that a fair statement?
Brandon: 100%, and I also would then know what the good, the bad, the ugly was for working in my position that I used to work there, which was just a customer service position. So that when someone would come to say, “Hey, I want a job here.” I would go, “Listen, here is the boring parts. This is what you’re gonna have to… If you’re not willing to do X, then you know this might not be the job for you.” I also have a tendency to try to always beat the minimum wage in terms of the industry and in terms of the state because I wanna keep good people around.
Brandon: So it was nice to be able to say to someone, “Listen, I’m kind of a tyrant when it comes to the rules, but outside of that I’m very lenient and I expect you to be a standalone worker. I’m not gonna stand over you and watch over your shoulder. But that means I expect a certain level of customer service and a certain level of hands-on dealings when people come in. But outside of that, I’m gonna make sure that I pay you a little bit above what everybody else is paying so that I can keep you around.”
Brandon: But that also means that I have a little bit of leeway to go, “Listen, while this is an entry-level position, I’m trying to treat it like it’s not an entry-level position to give you room to grow. But if I see that you’re just not the type of person that can grow with the company, no harm, no foul, but we’ll just replace you with somebody who really wants to be around. And I found that that was super helpful too because I remember the days that I was just sitting there on those slow days being like, “I should be doing something right now.”
Gene: And you wouldn’t have known that unless you didn’t have that experience. It’s funny, it sounds trite, but employees continue to be the number one asset of any business. And if you’re looking to buy a business, retaining those employees, particularly the key ones, it’s an absolutely critical thing to do. So the more you know about them and what their needs are, and the better you pay them, the more chance you have for keeping them on. Well, I’m gonna move to some operational stuff in a minute, but before I leave, only ’cause it was fairly recent, you said this was 2017 that you bought this business, correct?
Brandon: Yep. Well, 2019. I worked there in 2017.
Gene: Sorry 2019, even more recent, as you started in 2017. So I’m curious if, you don’t have to go too into anything that’s confidential, but I’m curious if you can share a little bit about the transaction itself. How did you finance it? The former owner, did they stay involved? What kind of a deal was it? Did you buy the stock or did you buy just the assets? And then, what did you learn from that? Would you have done anything different? And I’m asking you this, because say, I’m looking to buy a business, or anybody in our audience are looking to buy a business. What advice would you have for somebody going into something like this? The actual particulars of the deal, if you’re willing to share.
Brandon: So it not too much in terms of what the purchase price actually was. It was basically, “Hey, listen, the goodwill of the business is kind of built into the deal,” which that would be read as the customer lists and the actual base of the name. I didn’t want the name. It actually is owned by someone else and I knew I was gonna change the name pretty much immediately.
Gene: First of all, that’s very interesting, ’cause a lot of times people buy a business because of the brand, particularly if it’s a local fitness company. People know it in the area, but you wanted to put your name on it.
Brandon: Correct. I will say ’cause it worked perfectly with everything else that I was doing in the industry. So realistically, it’s like, “Listen, if my brand is Battleground Fitness, then it just makes sense to have a Battleground Nutrition.” And no disrespect to the previous name owner, but the handshake deal that they had between him and the previous owners, I never even met the guy. So I was like, “I don’t want this to come back to bite me. Even if there’s name recognition here, I know eventually that if this grows big enough, I’m gonna owe somebody some money. I don’t wanna do that. I want this to be synonymous with my brand, my name, my career.” And so I basically had that written into the contract, by the way, because again, if it’s a trade name, you can’t just show up to Walmart and change the name on the outside if you bought the place, right. You need to actually have something in the clause that says, “I’m purchasing all aspects of the operational business and that includes name, logos, trademarking of any products, and I’m allowed to do with them what I please.” That was very important.
Gene: What about assets of the business? I mean, there was equipment’s…
Brandon: Yeah, there was a truck. There was the actual equipment on the shelves. Realistically, that’s what we used, because it was a small business and it had been around five, six years. We used that as, basically, the purchase price. Whatever the wholesale cost of everything on the shelves, plus some of the more expensive fixtures, like the truck, the refrigerators, the in-body scanner, which is a lot more expensive than people think it is. But a lot of the other stuff, in terms of like the shelves, the iPads, everything was running on, the TVs, things like that. It more was like, “Listen, these are older. You bought these when you bought the place. They work, they’re operational, but if you were to ask someone to come in here and appraise what they’re worth, they’re not worth much because they’re old. Technology goes out fast.” You can still use it for what it’s worth, but it’s not really worth much other than its operational capacity. So they were nice enough to basically just say, “Hey, listen, our purchase price that we want, so that we can split it between the shareholders and the owners of the company is just whatever’s on the shelf and some of the more expensive equipment, adjusting for the operational capacity and depreciation.
Gene: And I haven’t visited the facility, and I know that Alyssa was very excited to visit the facility and meet you, but that just didn’t happen this time. But is there equipment there? Is there treadmills and ellipticals, and stuff like that?
Brandon: No. So the main thing that you would come there for that would be considered equipment would be all of our shake bar equipment, our refrigerators and freezers. But realistically, what people are coming there for that they would be able to use would be what’s called our in-body scanner, which essentially is, as funny as this sounds, it’s the type of scale you would use at home to read your body fat percentage and everything on steroids. No pun intended. But realistically, what it does is it, within a 2% margin of error, will tell you your lean muscle mass, your body fat mass, if you have any disimbalances from left to right, top to bottom, which segments are holding in terms of a percentage point against the general population for your age, your height, and your gender. That’s what people come in to use, and then ask for recommendations based on what they’re doing in the gym and what we have on the shelf.
Gene: Was that body scanner and any other equipment under any lease? And if so, did you just assume there’s leases as part of the purchase?
Brandon: Nope. And I will say, that they did that well, and that was one of the things that they told me when I bought the place was, and I’ve always had this idea too. I don’t like owing people money. I don’t mind having things in terms of, “Hey, I don’t have a lot of money in the bank because I purchased this to make my business better, to make my family life better, whatever.” I don’t like owing people money. So realistically, in terms of leases and stuff like that, I think, even now, the only thing that we have in there is a water dispenser that actually goes into the main water line that’s owned by a company called Quench. Everything else is owned flat-out and we are going to continue to try to do it that way as much as possible.
Gene: There is a balance to that, just saying. Cause I have a lot of clients that feel the same way, and myself and my wife, just personally, in my business, we are definitely on the same page. But I do have to admit that the more successful clients that I’ve worked with, they can absorb a certain amount of debt that is gonna help them grow, and it’s just a math decision. I mean, if you assume some debt because you’re opening up a new place, you’re leasing a piece of equipment.
Brandon: That’s what we did in Cromwell.
Gene: Yeah, and if you lease this equipment and you know it’s gonna generate X amount of work, you can do the math, how much revenues it’s gonna go. And as long as you can maintenance the debt and have money left over, that’s why people grow. So you realize that…
Brandon: Oh, for sure. And the funny thing too about that is just, when we opened Cromwell, I mean, it’s not like I had $45,000 in liquid capital, where I was just like, “Let’s purchase it flat-out. We literally had to do just that. And I will say that one of the things that I failed to mention in the beginning was that, one of our main areas of success is knowing which brands and which products from those brands people like, because we have what’s called Net 30 terms with a lot of our companies. So essentially, they’ll send us the product. We’ll be able to run some deals, we’ll have people do some taste tests, we’ll showcase it on our social media, and then 30 days after we actually receive the packages, when we’ve already had a chance to sell off 50, 75% of the inventory on it, then the bill becomes due and we can place a new order. So Net 30 terms is actually us absorbing an amount of debt at any given time in terms of our operational capacity, for sure.
Gene: That makes sense. And again, with whatever you care to share, if you’re gonna buy this business and you were previously an employee, you had served in the military, I mean, I don’t know how much money you had in the bank, but how did you buy the business? Did you do it on personal savings? Did you get financing for it? Did the guy selling it to you, give you a seller financing? Were you’re paying that person off over time?
Brandon: All three, actually, right. So I took some out of my personal savings. We had a private finance loan from a family member and then 50% of it was actually on terms, where it was every month, we would give them a specific amount until the entirety of the debt was paid off. Again, I don’t like owning long periods of debt. So we made it, I think, it was something like 15 months, or something like that. It was paid off.
Gene: That way, the previous owner or your previous boss, he was able to walk away really after 15 months. During that period of time, was he very involved in what you were doing or was he basically leaving you to do your thing?
Brandon: No, he gave me, “Hey, this is your customer list. This is how the distribution works. This is what you wanna do.” And to his credit, even before I owned the place, he basically was like, “Listen, I’ll tell you what, You come work the day hours and I’ll leave you to it and just count whatever you need to count in terms of, hey, the inventory, take a look at how things operate.” And basically, what I was doing was still making my salary position while I was there, but I, basically, had taken over his job, which was the same job, essentially. But hey, we need this for purchase order. And what I would do is kind of mock it through him, where I would say, “Listen, this brand is running low on this product. I need X units and we wanna have them by X date. So here’s the flavor breakdown. And then, basically, what he would do is loop me in with whoever the actual distributor was on an email chain, or a text chain, or whatever the actual purchase portal was. And then, it would wind up coming to the store. I would put it into inventory X, Y, Z. So by the time I actually opened the door and he wasn’t there anymore, I’d already kind of been doing the ordering and that job for about 30 to 45 days at that point.
Gene: How long did it take before he was really out of it? You were running it, you were dealing with your suppliers, you were dealing with your customers. It was Battleground Fitness and you were the face. How long did that take to happen?
Brandon: I mean, I would argue maybe a month, if that. The first week or two was us hanging out together, trying to, hey, this is moot. But to kind of put it on me as well. I’m one of those people where I don’t really love too much, having someone stand over to do some menial tasks or whatever. So when it comes to the first week of, this is how it works and this is what’s expected, even when I was in the military, even when I was in school, it was like, “Just tell me what needs to be done. Come check it when it’s finished. If it’s right, tell me it’s right. If it’s wrong, tell me what to fix and I’ll fix it.” I really didn’t want somebody to mentor me in that manner, which was like, “Do it this way.” And again, to his credit and to Rich from one of our main distributors, Sportika, they were basically like, “Look, here’s my cell phone number. Even after we’re out of here, we’re here to help you.” So they were willing to kind of stick around as mentors and protect a little bit of what I had put in, in terms of intellectual and physical property and sweat ethic, just because we’ve been friends for so many years.
Gene: I have even more questions about this deal. So you mentioned those guys were acting as mentors. Did you have anybody else that you had that helped you from an expertise standpoint, attorneys, accountants, anybody else that you found to be very important as part of this?
Brandon: So I do have my CPA, who’s been with me since we’ve been doing personal training. He’s also here in the State of Connecticut, Bruce Wazorko. Shout out to him. And his whole office, when I wanted to purchase the place, I went there with the breakdown of the last year, the last five years, monthly breakdowns in terms of sales and expenditures, and kind of a profit-and-loss breakdown. And asked him what he thought about it, what I should do, how the financing should work.
Brandon: That basically was just an hour-long meeting of me trying to make sure I wasn’t making a mistake. Is there other questions I should ask? And then, obviously, the private loan financiers, “Hey, what do you think we should do? Is there anything in terms of how much you would like to be involved on the day-to-day?” So we actually had to draft up, myself, I drafted up an operational document, which was not, “Hey, here’s the finances.” In the actual day-to-day operational document, it basically says, “Listen, the only reason I’m here is for financing and to make sure that you guys are always involved in any major decisions that we make. But the day-to-day operations and how this is gonna go is, basically, on my expertise and on my industry knowledge. So that means that you’ve got to kinda let me off the leash a little bit and let me work.” And they were willing to do that. So realistically, I think that it, for better or for worse, it just came down to the fact that a lot of people sort of trusted that I’d been in the industry long enough and kind of knew enough people, which, like I said, the fact that we survived around here when a lot of other people didn’t the last three years, there’s got to be something to that, right?
Gene: It tells you a lot. It tells you a lot. A couple of more questions on this. You mentioned earlier about employees and taking care of them and paying them more than minimum wage and all of that. First of all, how many employees were there at the time when you bought the business in 2019, and how did you communicate that? And are they still with you?
Brandon: So we had, I think, four other people in the one location, right, and one of the things that I was trying to do when I actually bought the place was streamline it a little bit, where obviously, if I bought the place and day-to-day operations, I’m just sitting at home and this was before I had kids too. I was like, “Well, look, Corey’s hours are gonna become mine, and if any of you guys are looking to move on, just let me know now. So that way, I can kind of get the schedule written.” And when I bought the place, obviously, it’s an entry-level position, as most people would see it, in terms of, hey, we’re just working hours.
Brandon: Whereas I wanted, if I was gonna open up other stores to be like, “No, no, no, this isn’t an entry-level position. We wanna do a retained earnings partnership, where if you’re working hard enough and you’re the store manager, you should receive a percentage of everything that’s left over at the end of the quarter in terms of an incentive to do more sales. So the original four or five people that were with me at the time, obviously, moved on, bigger, better things. Throughout the pandemic, we had probably four or five over the course of the two stores, and now that we have two stores still, I believe there’s four of us. I still take some hours at both stores, just because it’s my business. I wanna be there boots on the ground and see how it runs, see what the problem is, see what the draw is, and see how we can make it better.
Gene: Of course. Final question on the acquisition, and then I’ve got just a question to ask you about some employee stuff, and then we’ll wrap things up. But Brandon, when you look back on this now, so this was 2019, you and I are having this conversation in 2023, it’s four years ago. Give us some advice. What mistakes did you made, if you had to do it differently? The whole acquisition. Your first business that you bought. What would you have done differently?
Brandon: Here’s the funny thing, right? Corey and Rich, right… Rich owns an international supplement shipping company, called Sportika. So his acquisition of inventory was a lot different than mine. It was a lot different on terms, it was a lot different in volume. And so when you used to walk into a lot of these places, and sort of vitamin shop and GNC used to look like this too, and you’ll notice that nowadays they don’t, it used to be, every shelf was filled front to back as much as humanly possible with this inventory. And so my process was fill it up, fill the shelves up. You’ve got to fill them up. It’s all perishable inventory. And so the problem becomes not just whether or not business stays up, but if the industry trends to a different product, you could have thousands of dollars on the shelf in this product that nobody wants anymore.
Gene: You’re making bets on this stuff, right?
Brandon: That’s exactly it. And so one of the major problems I had in the beginning was, if I had a company that came to me that released a new product, cool, send me two cases, where it’s 36 units of a new pre-workout, and then it’s like, “Okay, I mean I liked it but my customer base didn’t like it, which was one of the things that I had to also come to terms with was that, there are certain products that just, I don’t agree with them in terms of their scientific renderings that they say they have to prove their claims. I don’t agree with those certain things that I won’t carry. And there are certain things that I just won’t carry in terms of the fact that I don’t like how they’ve leveraged their marketing. I won’t name the company, but there’s one company that, even though they’ve been very popular over the years, they’re the most expensive product on the market and their main market is to active duty and veterans. But they offer them no discounts and they’re more expensive than everything else I have on the shelf, and I’m like…
Gene: When you bought the company, originally, was some of this inventory part of the stuff that you bought, you were saying?
Brandon: Well, yes, at first, there was some of it. And when I looked at it, and said, “Why is some of this inventory, do we have so much of it, was because it was overstocked from Rich’s company that they were like, “Listen, we now have shelf space. If we can’t sell it online here, we’ll just move it into the store and we can blow it out for clearance prices, which is a very smart thing to do as a business owner.” I don’t have that pipeline. So when I saw that, and then I’m ordering, I’m like, “I’m really trying to keep the same amount of volume on the shelf.” And then, it clicked to me when I went and chatted with Rich, that he was like, “No, no, no. A lot of that stuff was cases of things that they’d sent me to test out Connecticut as a market or to try and sell online, that when it didn’t, the distributor basically said, ‘Look, it’s yours. Do with it what you want.’ And we moved it into the store and kind of sold it for less than it would’ve been even MSRP price for most people, just to see if people would like it. I don’t have that.
Gene: I guess, the takeaway though, is that, if you were to do this again, you would’ve dug further into the inventory that you were purchasing.
Brandon: And how it was acquired and why the prices were the way they were. Some of the things I was like, “Wow, it’s a really cheap pre-workout.” Well, now, I know why.
Gene: Great piece of advice. That is a great piece of advice. Anything else that comes to your mind? You don’t have to have a list of mistakes.
Brandon: No, no, no. The one thing that I will say that I was a little bit more than surprised about, and it’s no knock on the people, in general, is just that, listen, when someone builds a business and they build a rapport with somebody, the customer acquisition that you’re getting when you repurchase this business and make it your own, even if you keep the name, even if you keep the operations the same, even if you keep the inventory the same, some people patron that business because they like the owner or they like the people who had hands on it. And even if you try to do everything exactly the same, some people are just gonna say, “Yeah, but I was shopping there ’cause Corey was there and there’s this other place. It’s closer to my house. I don’t really have any allegiance to Brandon.” so that’s just to tell you, listen, you’re going to have some amount of customer attrition rate in the beginning, even if you do everything right.
Brandon: It’s not necessarily that you’re doing something wrong or that you should change how you’re doing things. You’ve just got to understand that sometimes it’s the same thing in terms of a restaurant you really like that’s near you. It changes hands. They think they’re doing everything the same, and then you go, “I don’t know, man. It’s just not the same. I’m gonna try that pizza place. It’s closer to my house.” That’s okay. Things happen. But you do have to account for that, because you’re gonna start to ask yourself, “Well, did I do something wrong? Did I purchase different inventory? What happened here?” The attrition rate sometimes is directly related to the personal touch that the owner or the operator has with the everyday customers. That’s just the way it is.
Gene: Brandon Lirio is the founder of Battleground Fitness. We have been talking really all about Brandon’s journey to purchase his very first business back in 2019 and get it up and running and what he’s learned from doing that. These lessons apply for all industries, although, if anybody’s in the health and fitness industry, I think these are really valuable things. Brandon, again, give us your website and also your podcast as well, if people are interested in your health and fitness advice.
Brandon: Sure. So if they’re interested in any of our supplements from our brick-and-mortar, it’s www.bgnutritioncenter.com. If they are interested in our fitness plans, it’s www.bgfitonline.com. You can just go to Google and search Battleground Fitness or Battleground Nutrition. Both will come up, no problem. And our podcast is the “U-Natty States of America”. You can go ahead and search that on YouTube, Spotify, Apple iTunes, Google Play, anywhere you get your podcasts. And then, on YouTube, you can also search my name to find our video series, which is sponsored by Ironman Magazine, which is the “World’s Strongest Every Man” on YouTube. So I’m everywhere all at once and kind of nowhere at the same time.
Gene: That was great advice. Hey, I appreciate you very much. Before I let you go, what do you think of these?
Brandon: I mean, listen, if you wanna go to www.bgfitonline.com.
Gene: You’re giving me advice already. That’s plenty. That’s all I needed to hear. Here’s you need to do. Listen, man, two to three days a week I play squash, okay?
Brandon: Hey, it’s better than most. Just do something. That’s all we say. Just get up and be passionate and do something.
Gene: Fair enough. Hey, Brandon, thank you very much for joining us.
Brandon: Thanks for having me, guys.
Gene: Very much appreciate it and best of luck with your business.
Brandon: Thank you.
Gene: Thank you, everybody. You’ve been watching and listening to the Hartford Small Business Ahead podcast. My name is Gene Marks. Hope you got a lot out of this conversation, I know I did, for anybody looking to buy a business, particularly a first-time business as well. So we thank Brandon for that great advice. If you need any other advice or tips or help in running your business, please visit us at SmallBizAhead.com, or SBA.TheHartford.com. Again, my name is Gene Marks. We will see you again soon. Take care.
Download Our Free eBooks
- Ultimate Guide to Business Credit Cards: The Small Business Owner’s Handbook
- How to Keep Customers Coming Back for More—Customer Retention Strategies
- How to Safeguard Your Small Business From Data Breaches
- 21 Days to Be a More Productive Small Business Owner
- Opportunity Knocks: How to Find—and Pursue—a Business Idea That’s Right for You
- 99 New Small Business Ideas