#105 - Buying and Building a Profitable Aviation Business with James Spearman

[00:00:00] Welcome back to Passive Income Pilots, everyone. Tait Duryea here with Ryan Gibson. What's going on, man? Not much. Excited today to talk about buying a business, you know, and people think buying a business, you got to have all this money and have all this time and do all this work. And yeah, you probably are right. You probably need that. But you know what? There's some things that you don't need. You might get seller financing. You might buy a business that doesn't require you to be there.

[00:00:29] day to day. And yeah, you got to work out a little bit, but you know, maybe you could turn it into a passive income stream at some point with enough hiring and the right people. Or you could sell it and make a bunch of money. And we're going to unpack how to do that today with a guy that owns a aircraft mechanic shop in Tennessee and a seaplane business. And I think he's doing things the right way. He's really kind of grown his business and his multiple on what it's worth, which is a lot of money.

[00:00:59] Which is really fun. Yeah. So I'm excited. Yeah, it was a fun episode because we haven't talked a ton about buying businesses. You know, we've got James Spearman today from Spearman aircraft. He bought a mechanic shop from an owner who was retiring out, spent a year mentoring him. And he's really gone through the process from ground zero of taking a business that really wasn't much of a business at all, turning it into one and turning it into something that's actually worth a ton of money now.

[00:01:29] And so we're going to go through marketing, how to market operations and systems, and just what that process looks like if you're interested in actually getting your hands dirty and buying a business. Let's get to the show. Welcome to Passive Income Pilots, where pilots upgrade their money. This is the definitive source for personal finance and investment tactics for aviators.

[00:01:56] We interview world-renowned experts and share these lessons with the flying community. So if you're ready for practical knowledge and insights, let's roll. James, thanks so much for joining us. Hey, thanks, Tate. I appreciate it. Thanks for having me on the show. I've been listening to y'all and I love that y'all are pilots to speak the lingo. But then, you know, just like myself, I'm in business doing it every day with the grind. And so it's a lot of fun to kind of mix the two.

[00:02:24] And a lot of my customers are in real estate, so they also own aircraft. I think it's pretty cool to get y'all's perspective and see y'all's aircraft ownership experience so far, too, or if you're there yet. I'm coming along. I'm coming along. Not yet. I think we're both coming along. We'll be buying or maintaining aircraft with you soon. Awesome. Awesome. Tell us your background. I mean, we gave a little bit of an intro to the show. From your perspective, what's your background?

[00:02:54] What do you fly? How'd you get into what you're doing now? Yeah. So my grandfather was World War II aviator and he flew the B-25. He went through three aircraft, went through two tours in the Pacific and World War II. And I grew up seeing pictures of him with his arm out the window of a B-25 with bolt holes straight down the side of it. Right. So cool. And so that was really cool. I knew he stayed in long enough to become an Air Force pilot.

[00:03:22] Then he flew the B-36, B-52. Unfortunately, he died the year that I was born. But my dad always told me stories about my grandfather and how he was a pilot. And when I was around middle school, my dad started taking me to air shows. And then it just got me hooked then. I knew some way I was going to be around airplanes. So I joined the military straight out of high school and I was enlisted first. And then with the Air Force National Guard and I was getting my degree in the same time.

[00:03:51] I was deployed a couple of times as a mechanic. And meanwhile, I was going to Middle Tennessee State University. And actually, my dad was a he always worked for himself. He was an artist. At one point, he had an artist character business at Disney. And he had like, I think all of the character artists in the resorts were his business when I was really young. He made some poor decisions and kind of lost it as I was growing up. But I never saw him work for anyone.

[00:04:19] And so I had a little bit of an entrepreneurial bug left in me from that as well. And so I would always kind of like fix something up and sell it on the side of the road. When I was in college, still serving in the Air Force National Guard, I started getting around realtors. And one guy was like, hey, man, you ever heard of bird dogging? You know, and then I figured out, I was like, man, you know, I think I can put a sign out and I don't even need the money to buy it. I can get the house under contract and then just sell the... What is bird dogging?

[00:04:49] Well, just going out and, you know, finding opportunities for realtors. Wholesaling. Yeah, wholesaling. And so I'd get a house under contract and then I'd just hand it off to a realtor. And they would, you know, he'd pay me like, I don't know, 500 bucks or a thousand bucks. That was, to me, the most money ever. But yeah, I kept growing and then I got my mechanics license. And then eventually the Air Force picked me up and sent me to Air Force pilot training,

[00:05:14] which was kind of a boot camp for me to start really be my own business owner later on in life. Because at Air Force pilot training, your dream is online every single day. People are going home around you and it's because they're not good enough, right? Like just straight up. And so you got to have that like will to keep going and not give up and climb over obstacles. And so did that, went through Air Force pilot training and came back.

[00:05:43] I still had kind of the security of the Air Force National Guard. And so I purchased my first business. The previous years, I did use a little bit of my experience in real estate to get in this one. I had him owner finance the deposit and got into it zero down and kept going. And so his best year, best five years prior was $125,000. And we've taken it to 1.2 with five employees. Well, if you hear that in the background, that's an air compressor. It's pretty cool.

[00:06:12] If you're, you got to go on YouTube. James is sitting in an aircraft hangar. This guy practices what he preaches. Yeah. He's got like the engine mount and a bunch of stuff. And yeah. Yeah. I'm not, it's not a green screen behind me. You can see I can move this. Yeah. A couple of airplanes torn apart. This is great. Yeah. A lot of people, they're like, oh, you got a green screen behind you. That'll go off. That's cool. No, you're the real deal. I like it. Right in the hangar.

[00:06:40] You know, you bought a business and you got seller financing. And this is, this is actually like a crazy perspective, right? Where I think a lot of businesses, people think you got to come up with a bunch of money to buy them. And I would say, I don't know what, what would maybe 90% of the time, like there's usually going to be an owner who is going to sell you the business with some kind of a seller financing in place. Can you kind of speak to the mechanics of that? That's, I think that I think it's a barrier for a lot of people like, oh, I can't, I can't

[00:07:09] buy a business because I don't have any money to buy the business with. And nine times out of 10, the owner's going to hold back some, some note. Yeah. So luckily I was around aviation and I'm, I'm surrounded. I mean, like the airplane behind me is five, $600,000 plane. I've got another plane in the corner that was purchased at 1.2 million. Right. So you have to, you can't fake that, right? Like you got to have the money. So I was flying with one guy when I was still a mechanic in the air force and I was working

[00:07:37] for serious aircraft and he owned, um, he owned, you know, several, uh, suntan cities and planet fitnesses and buff cities. So he was a really high level dude. And, uh, I got him to tell me his story and he was like, yeah, James, he's like, you know, you know, boomers are essentially retiring at like a rate of like 11,000 a day at that time. This was like 2020. And most of them don't have really, I mean, the guy that I was talking about, he's got an

[00:08:05] amazing extra exit strategy, but most of them, they've been working for 20, 30 years and they have, um, you know, they built something that's probably one to $5 million in revenue and they don't really have a great exit strategy. And so, uh, that was the case with the business that I purchased. He didn't really have a great way out. And so me coming to him saying, Hey, you know what? I want to take this thing over. And, uh, if you owner finance, um, this, uh, you know, you got to make it like worth, worth their while too, right?

[00:08:34] Like I'll give you your top number and then, you know, I'll have you paid out, uh, in this X amount of time or I'll refinance and get you out. Right. Like they don't want to be hooked on the hook for 30 years for something. You need to give them an exit. But, um, you know, most of the time they're willing to kind of sit down and, and give you they'll, a lot of the deals that I see, they'll work, uh, just not, not that I'm like in it every day, but I just hear about it. Um, and being around other owners that are, um, you know, in that boomer range is, uh,

[00:09:04] they'll stick on for about a year and like give the, the new person, the, uh, the training that they'd need to be successful because, um, ultimately they want them to be successful. So they get their exit money and they can go on and be happy. Right. This is so good because I, you know, we're, we're seeing more and more and more of this on, you know, social media where people are buying, buying businesses. And oftentimes, just like you said, there's no exit strategy. The, the kids don't want to take over the business.

[00:09:32] You know, they don't have a nephew or a niece that wants to take it over. And it's like, there's no option, right? They're literally going to walk away from it or shut it down or just give it to somebody because they're just sick of working in it. So you're doing them such a great favor. What multiple did you pay for it based on EBITDA or, you know, net operating income? Mine was a little bit unique. Mine was the one that I purchased. Now I had worked in other shops, so I knew this level of shop should be around $1 million

[00:10:00] in revenue if you just do like the basic stuff. And I wasn't like professing myself to be some sort of business guru. It's just the old owner was doing this more like a hobby shop. And I was like, wow, you know, if we could just kind of like invoice the, for the work that we're doing, we should be closer to a million. And so, um, you know, I gave him a one-to-one revenue. That's super unique because I mean, he only had, he was only making 125,000.

[00:10:28] And so that was, I kind of did him a favor. And to me, I bought an opportunity. Um, and I knew that I should be able to make 125,000 back pretty, pretty quick based off of what I think the business should be doing. Um, but, but most of the time, and initially I was trying to find anything. I was just looking for an opportunity. I actually was almost about to buy like three Froyos. It was like a little chain of Froyos in my area.

[00:10:55] And, um, again, that, that mentor that I had was like, James, there's, you know, there's like a Zillow for businesses. So you can go on and kind of like that, uh, the MLS or whatever, you know, for, for real estate, you can go on there and it's all listed out. It's a little bit different, but. We haven't talked about that on the show yet. What is that? Uh, I mean, I don't make any money from this obviously. Right. So I'm not like advertising or anything, but there's a biz buy sell is the one that I used when I was getting, it's kind of like Zillow for businesses.

[00:11:24] And, uh, just educational wise, um, you know, like, uh, let's say there's a restaurant. They don't, they don't want to advertise that they're selling because then they'll lose all their employees. Um, so they have to be fairly discreet about it. And so most of the time you'll see, like, if you go on biz buy sell and you look up your area, it'll say like, I don't know, local hardware shop in this type region. It doesn't say the name. You have to sign an NDA with the, the broker, which would be like a realtor for a business.

[00:11:54] And then he'll start sending you the books. And so I just, I just started again. This was from my mentor telling me, he's like, dude, just get, get them to send you as many books, even if you're not interested in it and start teaching yourself how to read a PNL, uh, and read how to be it, read a balance sheet. Yeah. But James, you bought a business that you knew you didn't buy a Froyo business because you don't know a Froyo business.

[00:12:16] How much do you think your success is attributed to buying a business that you knew versus trying to buy something and then just kind of figuring it out? What, what would you say to somebody that's like, well, yeah, he's a mechanic. So he bought a mechanic shop. Like that makes sense, but I don't have experience in Froyo. So maybe I would stay away from that. What, what would you say to that? I mean, ultimately I'm in a unique position because I love airplanes and it makes it a

[00:12:45] lot easier for me when I go through like something catastrophic and I don't make any money for six months. To be fair, I love Froyo. Yeah. I love Froyo. So, you know. I mean, it just, it's a little bit easier for me when I have hard things to come up, but ultimately I really like being a business owner. I like owning my, I mean, you can't really go back after it's hard to go back after you, you kind of get a taste of that. And so I would have taken any opportunity and then I would have used the money to buy airplanes.

[00:13:14] It just would have been backwards, you know? Right. Yeah. Let me, let me ask you something different too. You said that the owner helped you get your bearings for the first year. Yes. What if that wasn't the case and it was kind of like they threw you the keys? I mean, what, what were the big takeaways from that, what that guy taught you? So a little bit to unpack there. There's a lot in that statement. What I would say most of the times the owner is going to want, he's got a vested interest for you to be successful.

[00:13:44] And so even if I knew nothing about this business, I would still buy a business because ultimately what you want to go is to find the books. You want to get in the P and L and you look at that bottom line and you're like, okay, this business, you know, especially if it's already got a staff in place, right? Like it's already, it's already past the one year or the five year mark. It's most businesses fail within the first five years. So if this thing's at year six, it's already past that you're stepping in then.

[00:14:10] And so you just need to figure out how you don't F up the bottom line and have him stay on for as long as you need. So it's definitely doable. And I think what he taught me was ultimately, uh, like I said, he, he didn't have great systems in place, but he had his contact list. And so, um, you know, I got his contact list and, um, he had a vendor list, which was also really important for me. Uh, that was specific in my industry.

[00:14:40] Um, the rest of it, I didn't really, you know, I kind of, kind of implemented my own, own systems, uh, like, okay, we're going to actually bill somebody for an oil change when they come in for an oil change, simple things like that. But if it was Froyos, I think I could, you know, uh, it, and somebody told me this early on and like, James, it just, it doesn't matter what the business is. It's how you run it. Um, so it, it honestly might hold me back a little bit, um, because I'm so passionate

[00:15:07] about aviation and I'm not willing to make like a hard decision because this, I'm so vested in it. Whereas if it was Froyos, I'd be like, ah, this isn't working for me. Let's change this. You know? Um, I think that's, um, that's so true. You know, every business can really be split into finance operations and marketing. And it's amazing. I mean, you think of an airline, it's like finance operations marketing.

[00:15:33] It's very clear that even, you know, biggest to smallest, you can split those up. Um, mechanic shops tend to be very old school and I'm on your website right now and you have some really splashy marketing. I think a lot of people could learn if there's some pilots out there listening, you're an airline pilot, you own a small business, check out spearmanaircraft.com. And, and, you know, the fact that your Google reviews are all over the place and you've

[00:16:00] got photos of the team and, and work going on and you've got YouTube videos with some really great thumbnails. Where did you learn the marketing side of things? Uh, well, I didn't have any leads. And so I made a lot of dumb decisions to start off with because you can grow pretty quick with a service-based business just by word of mouth. But then like it stops, like you need, you know, it helps you grow your word of mouth more mouths.

[00:16:28] So, and so I was, I was like growing at a rate that my revenue that, you know, I didn't realize that there was this dead end on word of mouth. And I used to joke. I was like, I know, I used to say that with people. I was like, oh, I never market. I don't spend a single dollar on marketing. And I was proud of that. And I thought it was good. And then I hit that wall. And then I had over invested in the staff and over invested in a whole bunch of stuff. And I was like, oh my F. Oh my F and God. Right.

[00:16:55] So, and then, so I hired a company to come in and do it for me. And that didn't work at all. Waste a ton of money on that. And I started, got to the point where I started running thin on cash and I'm like, I got to make this happen. I got to figure it out myself, I guess. And so I just started like, you know, I did invest in a coach that helped me a ton, learn the basics and learn the ropes of sales and marketing because I mean, ultimately a maintenance

[00:17:25] shop for the most part is order taking. You need tire change? I have tire, you know? Okay, great. You know, that's this much money. There's no sale there. That's not sales. Right. You know, but when I start selling like, let's say, uh, uh, you know, uh, tens of thousands dollars service club, that's way different. And it helps my cashflow or a hundred thousand dollar avionics install. Right. Big difference. And so I didn't have leads.

[00:17:51] And so I just started consuming, uh, Alex Hormozy has a lot of great stuff out there. I went through all of his books. I watched all of his stuff. I invested in Dan Martell's stuff. Um, and then, um, so I learned the basics and then I found Upwork and I'm like, oh man, there's these dudes that for not very much will, you know, edit these videos. I just need to film it myself. And then I, I started getting leads and for way less than what I was doing because at one point I was handwriting letters.

[00:18:21] I was mining the, the FA registry, which, you know, you can pull up the registry and it's got an address for the owner. Well, I was handwriting letters, sending it out to like, uh, you know, I would, my goal was like, okay, I'm gonna get two in the mail a day. And I got like one lead a year off that. And then I did, I got on one podcast and I sold 10, you know, tens of thousand dollar electronic ignition upgrades for, and that was free.

[00:18:50] It was just my time. I was like, James, you effing idiot. Like you've been doing, you've been working so hard, so much harder. So I started there and then I just, over time, you just start getting a little bit better at it. You find like, okay, instead of we can do a little bit of this in house. And then now I started working with a professional photographer that we will film for, you know, Monday and Tuesday, uh, from four to 8 PM every single week to create the content that we need it. And then he edits it. And then I've eventually found somebody that knew what they were doing with Google ads.

[00:19:20] Um, because that you can waste a, a metric ton of, uh, of, uh, of money on Google and Facebook ads. If you don't know what you're doing, I found somebody that was really good. Um, and then just started piecing it together and it just gets a little bit better. You know, by adjusting. So I think what you're sharing is so valuable. And if you're listening to this, uh, I know that we have a lot of listeners that have, have, you know, consumed content on episodes where we talk about maybe buying your own self

[00:19:47] storage facility or buying vending machines or, you know, and maybe these things are a little bit less passive, but we talk a lot about, about the potential of running your own physical real estate, you know, buying short-term rentals. All of this feeds into finance operations marketing. And if you, if you don't have this marketing piece down, uh, it can be very difficult to get ahead. I think that, you know, you really, you really nailed it with the education thing.

[00:20:17] You, you said you started reading Dan Martell's and Alex Harmozy's books. You notice Ryan, Ryan and I always tell the listeners, you know, what should you do first? It's like, go get educated. You want to go buy that storage facility, go join the self storage association for your, your state. Um, do you want to go do, you know, buy a business, maybe go take some courses on, on all this stuff. So this is, this is fantastic. Success leaves clues, right? Yeah. Somebody told me, because like I said, at some point I started to get thin on cash and I was

[00:20:46] so upset about it. And I was like, what am I doing wrong? You know? And the guy was like, you need to go invest in yourself. Um, and I was like, well, how the F is that going to help me with payroll? You know? And, but he was, he was actually dead, right. I made so much progress when I started investing in coaches and ultimately that's investing in yourself. So you're, you're exactly right. Right. Yeah. I, the, the biggest gains I've made personally have been investing in myself and joining groups of business owners and networking with people who have done it.

[00:21:14] Those gains can't be made in college or with an education even. I mean, those gains are hearing from real people that are doing real things. I haven't done a lot of the coaching, but you know, I know that, you know, being a, being with a coach who's seasoned enough and can give you enough perspective and really understand where you're coming from is a big deal in helping your progression and checking in. Definitely. Yeah. I've been very fortunate to be around very successful people and that wears off on you.

[00:21:42] I mean, you're, you're the average of the five people you spend the most time with. Right. And so you got to get into a room with people that are where you want to go or where you want to be. And so if you think about the five people you're spending the most time with and they're not going places, you know, maybe it's time to upgrade the people you're spending the most time with. And, um, you know, they're going to wear off on you. They're going to, they're going to up your game. They're going to really push your limits.

[00:22:07] And that's why, you know, I love flying, but I also love being in an environment where, um, I can really grow through education and be around people that are pushing and striving to be, you know, something more than, you know, just kind of an average day-to-day deal. So. Yeah. And I don't know if I've shared this publicly on the show before, but I've spent well over a hundred thousand dollars in the last five years on coaches, masterminds, and, uh, mentorships.

[00:22:33] So, I mean, I, you know, I bust out my wallet when there's an opportunity to, to coach with someone, uh, and you need help going from A to B, um, it's worth it to shortcut that learning cycle. Yeah. It's money well spent. If things are, and it honestly, you don't start doing that until things get tough. Most of the time, like if things are easy, like you don't, you're not inclined to invest in yourself and get better. It actually takes the hard times, but that's.

[00:23:02] The hard times are the ones where you think like, oh, I should put this elsewhere, but yeah. Right. Yeah. And being vulnerable about it is, is critical. I think people like to come off like I'm successful, nothing's wrong with me. Um, and I think if you can, you know, be vulnerable with your coach or be, you know, with the right people appropriately, of course, but you know, let them know what you're struggling with. It's amazing what comes out of, of sharing what your challenges are with, with the right people, right?

[00:23:31] Like don't give your sob story to somebody who, you know, isn't a business owner and never will be. To your, you know, your new hire FO because he's the only person that'll listen. Yeah. Yeah. Yeah. You don't need it. You don't need to be vulnerable with that person. Please don't do that. It's not fun. Within five minutes of getting airborne, hearing about all your problems. Oh yeah. You're talking about in the cockpit. Yeah. The airlines. Yeah. So with the guard, most of my peers are flying for Delta and American right now.

[00:23:59] You know, I'm the odd one out that decided to do a business, you know, so they come back and they're all like that. I hear all those stories. We're flying around the tanker. It's like, I wish I, I wish I made more money. I wish, you know, and it's like, dude, maybe buy less boats, like have less X, Y's. Start there. Yeah. That's kind of why we started this podcast was opening people's eyes to what else is out there. That's the key. You're like, no, no, no. I want to have the X, Y's and more boats. I got to figure something out.

[00:24:28] How can I afford this? Yep. That's the old Robert Kiyosaki. How can I afford it? How can I afford this? Instead of I can't afford it. I love that. Yeah, totally. So who is the coach? You don't have to like name his name or her name, but who is the coach? How did you find them? Are you going to grow out of your coach someday? I started with actually Dan Martell, who's kind of a big flashy name right now. And I did his coaching for a year.

[00:24:58] And I, you know, again, I was just a mechanic and a pilot. I had no clue how to sell something or do marketing. I mean, I was in the military. I knew how to do operations and leadership in a way, but not really effective on a small team of, you know, four or five people. And so he helped me at a point where I effing hated it. I wanted out. I was so upset.

[00:25:24] I just hit a wall and I watched one of his reels on Instagram. It's 20, by the way, you met, you brought up 2025. Yeah. If you're not doing Instagram or podcasts, you're going to get left in the dust. This is, it is what it is. You better get on or you're out. Well, I think that there's, there's, if I may interject real quick, but you know, something that drives me nuts is that like a plumber can't just be a plumber anymore. It's like, they got to be a dancing plumber on TikTok if they want to be successful.

[00:25:53] And it's like, there's, there's some of that. There's also just the fact that it's the people who provide the most value that rise to the top. And when I, when I look at the YouTube videos that you're producing, you know, it says interested in electronic ignition. And that speaks to someone who is struggling with the decision. Do I need this? Do I not? I don't understand it. And if you're able to educate them and provide value, then they want to do business with you.

[00:26:21] Um, so I think leading with value and whether you own a laundromat or a self-storage facility or a private equity firm or a mechanic shop, it all comes down on the marketing side to how can you deliver the most valuable to your customers. And in a lot of ways, it's about delivering education. I think that, you know, sometimes it gets mixed up because you see people, you know, realtor dancing on social media and it's like, okay, they're missing the point. The point is to provide value.

[00:26:51] And if you can educate and connect on the educational aspect, you're going to build trust and credibility with, with your clients. And to Ryan's point, he was asking me about the coach. I mean, this is, these are things that Dan taught initially. Yeah. You're, you're putting out, his saying is like, give, give, give, give, give, give. You're, you're giving, you're adding value and then ask. Right. So then it's when you put that value out. Um, so yeah, you're exactly right.

[00:27:20] But, um, I use Dan for a minute, uh, for a year and I grew a ton and then I was kind of like, well, I'll see what else is out there. Sometimes with the coaches, what I've noticed is kind of like it's coaches coaching other coaches to be coaches. And I looked around the room and I'm, I'm the only one with like a brick of order. You said it and not me. I just, I hate having an episode where we're like, you should get a coach.

[00:27:44] And then like somebody starts like Googling coaches and they get the coach that's being coached by the coach to coach the coach, to make a business coaching. And the guy's never done anything, you know, and you're like, I did gain a lot. I did make Instagram real. But, uh, from there I kind of moved on. I, I, I think you should kind of go through phases. My, my next one, I'd honestly, one that I'd like to, Oh, I did Ryan Serhant, which is kind of more in y'all space. The, um, uh, real estate guy, y'all familiar with him? Mm-hmm. Yeah.

[00:28:13] Ryan Serhant, uh, but he focuses more with realtors, but, um, I used whatever his marketing processes were, uh, to kind of build a brand. Uh, I, I focused, I built a lot of my brand off of his, his teachings. And then I think Ed Mila is kind of the next one that I'd like to work with some. And most of it's all like group, right? Like I'm not hiring the dude one-on-one. Uh, but that would be good. I, I think at some point finding someone that's a little bit more like, Hey, can I sit down with you one-on-one?

[00:28:42] And they're not, they don't have this big, like conglomerate, like of coaches or massive chat room with people in it. Good stuff. Invest in yourself. How much does that cost? And how often do you meet with your coach? Um, I think, I don't know if he's going to come after me or whatever, but I mean, I paid, I don't care to say what I paid for Dan Martell. I mean, I think it was only a thousand bucks a month at the time that they met once a week. Oh, not bad. Really not that bad. Okay. That's cheap.

[00:29:10] He taught me how to set up a, a, I, uh, immediately I'd go in through his processes. He taught me how to do an emailer, which I started being able to immediately get returns from emailing people. Right. Like have a list that you can email to get late, to get work. Uh, Hey, I have this thing. That's great. This is great. Sounds like it's worth its weight in gold. I mean, deal it twice the price. Yeah. And then I think Ryan's thing is around a thousand bucks to a month.

[00:29:38] Um, you know, I don't do Dan's anymore. And then I think most, if you work with a consultant one-on-one, which I do some of that, honestly, David McClaskey and, um, East Tennessee is a great consultant. He kind of developed the systems around pals, which is kind of a local burger chain, but they're based on excellence. And this burger chain has like one defect, like it's a fast food restaurant. It has one defect in the bag.

[00:30:06] So to put it in perspective, you know, you go through, get your order from McDonald's, you're going to look in the bag before you drive away. Right. Like that's just trained in you to look in the bag, make sure your stuff's in there. Pals success rate is like one error for like 3,600 orders or something. It's, it's crazy. And, uh, he's, he's helped these businesses when the Malcolm Baldrige orange, which is the award for highest quality in the United States, which among like Rich Carlton and stuff like that is really cool.

[00:30:35] Um, and he charged, most of them will charge, I don't know, three, 400 bucks an hour. You could just be like on the spot. Hey, teach me this. So it's, it's really not breaking the bank. What you just brought up is operations. So we've talked about marketing. Let's talk about operations. You, you buy yourself a business and, you know, what are the systems and processes that you had to bring in and put in place, uh, in order to make the business run efficiently? Well, it, it depends on where you're coming in.

[00:31:02] Where I came in was I, you know, I didn't really need to retain anyone from his staff. It was just a hobby shop and had friends helping him. So they all just kind of went their own way. So initially it was just me on the shop floor with my toolbox and a desk and a list. And I just started calling people and asking them if they wanted an oil change from there. I, you know, it didn't take long to where I needed help.

[00:31:22] And when it's only the owner and like, let's say one or two people working alongside of each other, it's kind of, it's not easy, but it's not like people are going to be when you're working alongside your boss, like side by side, it's a lot harder to, you know, be on your phone and just check out. Right. Like it's so much more obvious. So that was kind of easy. The, the different where it started to become difficult is when we got up to like five and six and then 10. Um, and I didn't have any management systems in place.

[00:31:51] And then I hired a director of maintenance to help me, um, manage the operation. He manages the planes. I get the planes through the door and he's the best mechanic I've ever met in my life. And neither of us really had any great systems other than we were shooting from the hip. And we just accepted poor performance, not poor quality, but poor performance forever. Um, and it's not been until like this past year where I've really started like, you know, this isn't working for me.

[00:32:19] Like we're, you know, we need consistent performance out of our guys. And what gets that? Conversations, crucial conversations and standards. Uh, be standards. Yeah. Yeah. Being able to say, Hey, you know, and for, for example, my line of work, you know, if a tire change can be done in an hour and a half and it takes three hours to do it. I mean, it's not like I can just build a customer double. Right. So that, that's just out of James's pocket. And then it happens over and over and over again.

[00:32:49] And then you just kind of let it go. And you're like, ah, well, you know, as long as we're making a certain amount, it's fine, but it's not fine. Until all of a sudden it starts to boil over and now it's a big problem. And so. And what's a tire change supposed to take? An hour and a half to take it. Sorry. And so if you're a business owner, how do you know that? How do you even set that standard where, you know, it takes an hour and it just, you have to know because you do it yourself, right? Well, I know. Yeah. Because I was doing the thing with them alongside of them.

[00:33:17] And honestly, there's, I mean, if you had a barbecue shop or like a cookie or a candy factory or anything like that, I mean, for the most part, until you hit a million, the owner's going to be out there doing the thing too. Even if you never did candy before or something, you know. So, uh, but if I was going into a business that did 20 million or five or 10 million, where the owner is essentially sales and marketing only and, and operations. Um, I would ask the owner, how long should this take?

[00:33:47] And the, the, the previous owner should be able to have, to get to that level. They need, they have, they need to have systems. So like now I've got a sheet that's like, okay, we'll change this, this blah, blah, yada, yada, yada, where I could give that to somebody. I could give that to y'all and you'd be like, oh, okay. I, I, now I have a standard to hold the guys to. And ultimately it wasn't that my guys were being trying to steal from me or being malicious. I just didn't have any standard. And, and except for what was in my head, I was like, this should take an hour and a half. They're like, well, where does it say that?

[00:34:15] You know, you know, that's a great point. And it's so, it's so important in, in business. I mean, it's just like, think about your airline that you fly for. When you go to the simulator, you crack open your, your F-com and you've got SOPs and you, you go through this flow. And, and the standard is within, you know, left to right, five degrees. I mean, it's, it's all laid out in print, right?

[00:34:40] So apply, if you're, if you're going to go into something like this, take your military or your airline background and just apply it. And I would ask you, what happens to you at the sim when you don't meet standard? Yeah. Right. Like something happens, right? They don't just like let you walk out and they're like, oh, you know, they're like, no, you get a conversation and you might get another ride. Yeah. An unsat. And then you're going to come back and do it again and hold you to the, they're like, oh, he was, he just had a bad day today. He'll be fine next time. Yeah.

[00:35:11] Let's talk about selling the business. So, okay, you've built, you've built the business, you built the systems, you built the marketing, you got the list, the things churning. And you're like, okay, now I really want to be a passive income pilot and I want to sell this thing. Talk to me about how you would sell this if, if you were going to, and would you offer owner financing? Financing. Um, if I were to sell it, uh, which to me it's so far off, like I'm just, I genuinely love what I do. I, this is, I get to play with airplanes all day, every day.

[00:35:40] Um, and then lead advantage of team. So to me, it's a lot of fun. Uh, but if I were to sell it, I would, those processes that we were talking about would have to be down pat. And so that, um, I've got a, a legit, it's like, dude, I've already got this set up. Okay. The, the content makes itself. And then it goes to this person to get edited. And then it goes to this person to get posted. You just let that system do its thing.

[00:36:07] And then, uh, so that you're going to constantly have leads coming through the door and now, and I've got the sales system set up where if you put a person in this role, they've already got exactly what to tell a customer all the way to the completion. And then the same thing, a standard of keeping quality and performance on the shop floor. It's already set up. If I, if I were to come to you and tell you, uh, you know, Ryan or, or, or, or take like, I mean, I, I've got a business that's going to put whatever, let's call it a million dollars

[00:36:36] in your pocket or 200,000 in your pocket or 500,000 in your pocket. It doesn't really matter. And it's got all the systems in place. And all you just kind of need to do is make sure it keeps doing the thing that's set up. It's a no brainer. What kind of multiple would you be wanting to sell that for? Most businesses, uh, I got off track. You guys asked me this earlier. Most businesses will sell, uh, three to five, uh, three to five X of EBITDA or cashflow. And I think you said that you bought this business for a one X and it's because there were no systems

[00:37:06] and processes, right? Correct. And it was such a low dollar. Right. And you're adding all this value through the systems and process. The systems are, are the value. That's where the value is, is in the systems. Yeah. I had to come in and make all the systems. So, so if you're listening to this and you're thinking about buying a business, well, no matter what it is, whether it's Froyo or an aircraft shop, I think the key here is, you know, learning marketing, learning operations and systems building. Uh, and then of course there's the finance side, but.

[00:37:36] Well, and all that's in real estate too. This is a good workshop. Exactly. It's the exact same. Yeah. Exceptions of like a 20 times EBITDA real estate. Wow. That's awesome. Yeah. Well, it's awesome depending on what the going into EBITDA was. So, but the difference with real estate is that leverage is more abundantly available. So, you know, it's, you know, small business. It's not as abundantly available unless you have a willing, typically you have a willing business owner that's selling. That's going to give you that, that loan. Yeah.

[00:38:05] There, there are loans out there. Most of the time the bank's just going to look at you and be like, okay, does this person seem like he has some sort of legitimate reason we could believe that he would be able to continue to run this? And then it's like pause X on that person. Okay. He's good. Then they look at the books and if the books are good, it's a no brainer for them because that should be able to pay the payments. So it's, it's doable. We always try to ask. That's excellent. Yeah.

[00:38:28] We always try to ask a question like, why would a Delta seven, three guy care about this conversation? What opportunities do you feel are out there for somebody who's making great income, flying airplanes, doing what they love? What would you, what would your advice to them be? Well, it'd be the same reason you'd want to invest in real estate, a passive income. Um, um, I, it, it depends on your vision, but there's plenty of businesses out there like

[00:38:57] Afroyo or like there, there's so many other examples where the owner is actually absentee. And so the idea is, can I take some of this money that I'm making from the airlines and make it make more money? Can I, can I buy something that matches my income? Right? Like if you had a, if I told you, Hey man, here's this business, it'll put 250 K in your pocket year after year. And you don't really have to do much with it. It's, it's worthwhile.

[00:39:24] And in your mind, James, who would be the three people you would need in your life to make that happen? Like who are three critical team players that you would say, well, I would go find a this, a this, and a this. I think you would need a, um, if you were looking to purchase, you need to, I mean, biz by sell puts you in touch with a lot of the brokers. You need to find the brokers that are selling the business.

[00:39:53] Um, and then they're going to start sending you books. And then immediately, once you start to get serious about something, you need an accountant, uh, a bookkeeper accountant to review their financials and make sure that, you know, Hey, what they're saying is true. Um, and then immediately after that, you're going to need a lawyer because you're going to set up an LLC, um, uh, to make sure that you've got everything in place to take this over and leave from a legal standpoint. So.

[00:40:21] Do I just walk into H&R Block and get an accountant, that accountant or somebody else? I would find an accountant that works with small businesses or, or not small businesses, the business that's makes sense for that business, right? Like if, if you've, if you're purchasing a $5 million business or a $10 million business, you need an accountant that works with five or $10 million businesses. Not one that works with $200,000 businesses. Right.

[00:40:50] What kind of a CPA does your accounting now? How did you find them? I, it was through a referral. I had a friend, uh, that put me in touch with them and I, I started at 125,000. So, I mean, it was kind of, you know, I just needed a bookkeeper to help me like kind of set up QuickBooks online and do my taxes at the end of the year. And I kind of quickly grew out of him and kind of grew past his capabilities.

[00:41:16] And then I kind of wandered in the desert for a while, trying to find a good CPA. Um, and then finally, uh, one of my customers was like, oh, you need to go to these people to help me out. And now, I mean, they are awesome, uh, because ultimately you need to have your books in place. Uh, a lot of people up until a million dollars, not like you're doing anything shady, but like, they're just kind of a mess. Like things aren't coded right. They're not the way they should be.

[00:41:42] Um, and so you can do that up until a million, but once you start making like 3 million, $5 million, that should need to be like on point. It needs to be spotless. Right. Yeah. I think the other thing about owning a business as well, if you're that seven, three pilot, that's flying for a major airline, you're considering whether buying a business is right for you. Uh, you know, we talk a lot about taxes on the show and this fact that you can run a bunch of expenses through it. This is what Robert Kiyosaki talked about in that purple book all those years ago that

[00:42:12] many people have read. And it's the fact that businesses earn money and then they spend money and they pay, they pay taxes on what's left. Whereas individuals, they pay money, they pay taxes on all of the money that they make and they, and then they get to spend after tax dollars. And that's huge. So if you have a business that you can put your car into, and now it's a, it's a company car, your cell phone runs through it. You're able to hire your kids into it and shift income to them.

[00:42:40] There's tons of tax incentives in terms of owning a business on the side, uh, in addition to your W2 that, uh, they can be very tax efficient. Not saying that it's right for everyone, but that is another thing to consider. And hopefully, I mean, I, I mean, I'm working alongside him every day, right? Like I'm going to go fly for the yard tomorrow. And my, all of my peers are flying for an American, American and Delta. Um, and then, uh, the ones past me are their captains for American and Delta and they're

[00:43:08] flying, uh, you know, uh, Oconus all the time. They're flying across the Atlantic and you could very quickly double and triple your, you know, your airline salary. It may be a little bit harder than working 15 days a month, but I mean, yeah, I mean, I'm sitting across from airline captains that are wait, you know, 10 years, my senior. And I'm like, yeah, how much you make? They're all, you know, talking about they cleared, you know, uh, let's say 200 or 250. And I'm like, Oh, okay, cool.

[00:43:37] You know, right. Yeah. It's, it's, uh, it's hard work, but you know, it's, it can be very lucrative. That's great. Well, James, uh, this has really been a great episode and, uh, I think people are going to take a lot away from it. How do listeners get in touch with you to learn more about maybe, uh, having something done at your shop or doing some bounces in a seaplane? Is that what they call it? Bounces? They're splashing goes. Splashes. Splashing goes. There we go. There we go.

[00:44:07] Yeah. Tell us more about that side of the business and how people can get in touch with you. Best way. If you're interested in owning an aircraft, it's really hard to like 1% of the population If you're listening to this podcast, you already know 1% of the population are pilots. Um, and it's an even smaller portion of people that own aircraft. And so it, there's, um, a lot to learn if you're going to just go out and buy an aircraft yourself.

[00:44:31] Um, and so, um, I routinely help people through that process, educating them how to own it. And then also, you know, and we're doing their maintenance, their inspections, upgrades, managing the aircrafts and pilot services. Um, and the best way to reach me is, uh, go to my website, www.spearmanaircraft.com. Fill out the form. I'll get, I'll personally call you and, um, I'd love to help you through that. And then if you're in the Pigeon Forge area and you're looking to do a few light flight

[00:45:01] lessons in a seaplane or actually get your seaplane rating, uh, www.iconicrides.com. And, uh, that thing is just a joy machine. It is so much fun. The Icon A5. Yeah, I've flown one around before. They are really fun. And I think one more thing, very important to, uh, to note what geographical area you're in. You said Pigeon Ford and for anybody that doesn't know exactly where that is, give them the geographical area. Yeah, we're in the Southeastern region.

[00:45:27] Uh, it's in East Tennessee, Smoky Mountains, and there's, it's like one of the top tourist destinations, uh, nowadays. Uh, so there's a lot to do in this area. It's great for a vacation. Um, a great area to spend some time. I think I've seen some cool, uh, Airbnb fly-ins, uh, in the Smoky Mountains. So, um, we'll be, we'll be in touch on, uh, trying to come out there and, and fly on some grass strips. Yeah. Come out and reach out and, uh, happy to take you up in the, in the seaplane or show you around town.

[00:45:56] And I appreciate the time. Thank you. Thanks, James. We appreciate your insights. Thank you. Thank you. Thank you. Thank you.