Have you ever dreamed of being the CEO of your own company, but that dream felt a long way out of your reach.
Well, how much do you know about buying and selling micro-businesses?
In this episode of the GrowthTLDR, we're talking to Ryan Kulp, CEO at Fomo and founder of Fork Equity, a company that buys and sells small businesses.
We talk to Ryan about:
- How he bought his first business Notify that later was rebranded to Fomo, and how he managed to pay for it.
- What Ryan looks for in a potential acquisition and how to ensure you end up buying a company that has a lot of upside.
- Why Ryan is now spending more of his time teaching people how to follow in his footsteps via his new course MicroAcquisitions.com.
Happy Growing!
Time Stamped Notes
[2:50] - Ryan takes us through how he bought his first micro-business, Fomo. At the time, it was solely an app built for Shopify customers.
[5:05] - Ryan's path into buying his first company was getting recruited by a VC firm that wanted him to do marketing for their portfolio of companies. They came across Ryan's profile on Angelist and felt he would be a great fit for their role.
[8:05] - Ryan takes us through how he first discovered the app Notify that would later become Fomo.
[11:10] - Ryan managed to buy Notify via financing and feels like that was one of his big breaks.
[12:50] - When deciding on buying a micro-business, you have to be able to put your rationality aside to see what the future of that business could become. You have to be able to see how much additional revenue you could make for that business and then convince the founder it's worth selling to you.
[15:00] - Ryan takes us through a new company he bought called (Lobiloo.com), it's an invoice app for florists. When deciding if the company is worth purchasing, you can first look at data like how much money it makes, how many customers are there, the number of hours a person spends per week on it. But he also looks at the 'metadata' like Lobiloo launched in 2013; there was nothing else like it, customers who signed up in 2013 are still paying for it, churn for the app was 1.2%.
[16:55] - When Ryan and his team buy over a business, they typically raise prices, improve the products UI, add better design, add the features customers have been asking for.
[21:40] - There are a lot of reasons someone might want to sell their business. The important thing is you can't let the reason someone wants to sell their business to impact your evaluation of it. A common reason Ryan finds an owner might want to sell is their business isn't growing, and it's hugely deflating for the person who is working hard on it day and night.
[25:05] - There have been a couple of deals where Ryan ran into problems because he didn't have all the details before buying the company. Ryan gives us an example of a Shopify store they purchased, and another Shopify app called Cross-sell.
[28:25] - One of the real challenges with buying over micro-businesses is the potential technical debt you'll inherit and how that will impact how much of the product you'll need to rebuild completely.
[31:00] - At any point in time, Ryan is working on multiple businesses in tandem
[32:55] - Ryan now teaches other people to buy and sell microbusinesses via his course (MicroAcquisitions.com). He wanted to create the course to give back to the community. Over the years, Ryan has given out a lot of free advice, but from his experience, people value it a lot more when it's something they've paid for. So far, students who have taken the course have done 20 to 30 deals.
– Ryan on Twitter
– Kieran on Twitter / LinkedIn / Medium
– Scott on Twitter / Linked / Medium
