One Question Friday: To Raise or Not To Raise?

yeah i feel like i could rule to where i know i could be what i want to put at all in it like a day's off on a road travel never looking back hey guys producer ben here i wanted to introduce this new friday episode that we're gonna be doing you probably remember that on fridays we were doing best of the week well it turned out no one really like that everyone thought it was filler everyone thought it was fluff so we're cutting out the best of the week friday episodes but we still wanted to do something for fridays that was short sweet are you going for the weekend and so what we're doing is called one question friday so you can submit a question and the fellas will answer it so for this first question it was about a guy's business and whether he should raise money but it can be about anything it can be about life it can be about sean's workout trainer it can be about anything so if you want to submit a question and you want to hear your voice on my first million just go to m f m pod dot com it's like my first million m f m pod dot com and in the lower right hand corner you'll see a little circle with a microphone in it click there and then you can record a voice mail and leave it for us and if we select your question then you'll hear yourself on my first million so again this is just a short friday episode one question one answer let us know what you think and if you like this placement for best of the week alright so without further ado here is this week's listener question hey guys this is matt i left my full time job february first to grow this business full time since then we've had some really great growth and we're up to three locations right now things are pretty smooth other than the normal kind of day to day chaos that happens when we're in into business we're shooting for six locations by the end of this year and then the year after that we'd like to double it you know around twelve or eighteen locations my question comes with growth you know i've gotten a lot of different piece of a advice from different people you know right now this is a bootstrap startup i'm the only founder and i'm twenty four is my first business running full time so is it better and there's kind of the different piece of advice i've gotten is it better to run it bootstrap grow slowly grow controlled is it better to take some money on and grow as fast as possible to get as big of a market as fast as possible or is it better to maybe bring on a a partner or c cofounder who can sorta of help you grow faster and maybe bring some capital or expertise or advice in at the same time i'd love to hear you guys think and love the show thanks alright so we got a question here from do you know you remember his name what was his name no i don't even remember his name that's okay nice guy from south carolina is that raleigh or north carolina north carolina alright so he's got business it's called yeah well steve from south carolina even those his name is doug from north carolina alright so he's he's out his business motor boat mechanics which is basically a motor motor mobile motor boat mechanic business he'll get you know the website says let's get you back on the water fast i guess if you're if your boat breaks they'll fix it for you he said he's got three locations and he's thinking about growth what did he really want help with sam but what's the question what's the actual question is he wanted to know if so he's he some some results he goes should i bootstrap or raise money and that's actually a really bad way that's that's not the right question to ask and let's start with like raising money versus not raising money and then this guy a specific example so i think that like raising money versus not raising money you have to fig ask yourself a what type of lifestyle do you want and b what type of business do you have there's a great blog post that i like and they say that raising money it's it's for two different things one there's ben and jerry's and there's amazon if you're amazon you wanna raise a lot of money and you wanna get really big really fast because it's almost a winners take all market i would say social media is like the best example of a winners take all market where it's like you just gotta get big quickly because once everyone's using your product everyone else continues using your product and that's like one of those things where it'll last a long time and be big whatever or there's been in jerry's which is like well you could actually have like loads of different types of ben and jerry's and different types of ice cream so it doesn't really matter you know like one friday they'll go to your place another friday they're gonna go another place you all can survive so in that case it's it's okay to kind of go slow and so you have to decide do you have that type of business and the second thing is when we talk about what type of lifestyle you want are you willing to sign up for like this rocket ship lifestyle so basically i heard this great analogy where they said vc is kinda like rocket fuel and what that means is that rocket fuel is meant for rockets that wanna go fast or blow up it's not meant for cars regardless if that car looks cool or if that car is a fast car rocket fuels for rockets not great cars and you have to ask like do i want a car or i wanna rocket it be personally most of the time i want a car so that those are those are two ways of thinking i think about raising money overall what do you think yeah i think you you you you nailed it that's like saying hey guys tool wrench i like you know the hammer a wrench it's like i don't know those are just tools to do what what are you trying to do here and said you first gotta answer what am i trying to do here question and they gotta ask do i need to a hammer or a wrench or something else altogether right like let's say he's like oh you know what like yeah i agree you know let me i'll tell you right now mobile motor mechanics is not a rocket it's a car and that's okay there's no that's not a disrespectful thing that's like just what it is that's okay cars are awesome and so within that okay you could raise money from you friends and family to open up more locations or go to the bank and get a loan and open up another the location and so really the question you gotta ask is like say i'm saying like how fast and aggressively do you care to do this like how how important you is growth versus you know not having tons of stress and your lifestyle now let's say you do wanna grow okay if you wanna grow then the next question you ask is so walking down the chain we said is this a rocket car it's a car okay do i wanna grow or do wanna go kinda steady and kind of not not over extend myself no i really do like to grow alright cool within growing is money what's holding you back or is this something else that's holding you back may a lot of times is not money that's holding you back maybe it's well if i open up another location who's gonna run this and it's like actually i need to hire and so my operations can you know withstand another location or it's you know i need to you know scale you know our product offering and i just need to add you know more any expand from boats to you know like different types of other vehicles and stuff like that and so you know you gotta figure out is money your bottleneck so if you decide alright it's a car i do wanna grow and money is my bottleneck didn't go raise money now you'll know exactly how much you need and what you need for and who should go raise it from and you have a very tight story and this guy i think he said he's only twenty four right yeah i actually think that yeah there we do have a couple friends and we know we know of people who have raised money at a young age and kinda knocked it out the park but i think if you have this guy said he had four locations i don't exactly know what that means i guess like four mechanic shops maybe there's a world where you could have a business that makes hundreds of thousands of dollars or even millions of dollars of year at a relatively i mean if you're twenty four that's really young but even if he gets it by the time he's thirty it's relatively young it's like dude you're you kinda got money figured out now go and file your ego and go really big think there's a world where you could do that so in this particular case i just looking at boat mechanics dot com i'm on the website i would say probably don't raise money and if you do raise money like just know what you're signing up for but yeah i think i think it's a dumb question i i think it's i think it's in summary to our first weekly question segment dumb question it's not dumb it's sorry matt matt foster sorry matt colorado it's not dumb that you asked it that's actually a good question to ask but it's like it it's a it's a question that a lot of people ask and i think that it's the wrong question and it's dumb for that reason it's not dumb that you want the answer it's just a silly way of going about it when you really think about it when you know the game it's just a lot of people when you're new you know i guess it's not dumb but you know what i mean what i would do by the way matt if you're twenty four what i would do is i would as an exercise i would go try to sell this business i would say i have three locations i'm making i don't know let's go five hundred k a year of eb across these three locations and i would go try to find kind of like a pe company or like a local buyer or a list on buy sell i would go try to talk to some sellers because what might happen is you might say alright do i wanna grow this and i need to get to eight low like how much money how much time and money does it take for me to make two million dollars out of this business and what the answer might be is it's gonna take you three years and you're gonna need to do a bunch of hard work you might need to raise a little bit of money and you might need to like open up a bunch of and travel it or you might be able to be like i can sell this for two million today off of three locations producing let's call it you know three hundred k of eb or something like that and so i would go try to figure out if i sold this how much would i be able to sell it for how much interest is there in buying a business like this and what questions do they ask and what parts of my business make them worried or scared about this maybe it's operationally it's all based on me maybe it's margins are not good enough maybe it's not growing fast enough whatever it is that will also give you a little bit of a road roadmap and like an objective opinion on like the quality of your business and i actually think that's very healthy the to go like maybe a year or two years before you wanna sell it spend a few weeks have a couple conversations because it will you'll come back and say oh now i can you know i've moved straight to the end you could go to the end and say i wanna sell this well now i know what they want now i know what numbers i need in order to sell for that multiple now you know for that for that end out now i know where they what parts of my business are not so good looking and you can work on those for the next year or two i went and looked this guy up while we were talking i motor mechanics is not gonna be as big home run i literally browsing his profile i'm like oh this guy might have a couple home runs in him and motor mechanics is gonna be an awesome stepping stone for him to get there in stepping stones super important so i would if i was this guy i wouldn't probably not raise money alright that's a wrap yeah are i feel like i could rule to where i know i could be what i want to from at all in and like a day's off on a goal travel never looking back