Topics:

Never Miss a Beat - Get Updates Direct to Your Inbox

Home » Podcast » From 6-Figure Purchase to 8-Figure Exit In 30 Months

FILTER:

From 6-Figure Purchase to 8-Figure Exit In 30 Months

Keith Leimbach is the Chief Executive Officer at Portfolio companies and the creator of DINCPIE, where he teaches people how to create diversified income streams. Keith spent almost 30 years in the corporate world before breaking into the entrepreneurial landscape. He has successfully built several companies, including laundromats, an Amazon FBA brand, garbage and trucking businesses, and more.

Keith now has an eight-figure exit under his belt and is passionate about educating and empowering other entrepreneurs through his podcast, Diversified Income Experiment.

Here’s a glimpse of what you’ll learn:

[01:41] Keith Leimbach talks about finding his path as an entrepreneur
[09:36] How digital marketing, a great product, and an expert team led to Keith’s eight-figure exit
[18:52] Why you should properly understand and manage your financials to achieve a greater exit
[24:41] Keith reveals how a consumer-friendly website accelerated his online growth
[27:11] Why do you need to delegate as an entrepreneur?
[31:57] Keith’s financial advice for entrepreneurs looking to grow and exit their businesses
[34:48] De-risking your business and navigating the challenges of completing a deal
[43:43] Keith explains the importance of education and community in the entrepreneurial space

In this episode…

Do you feel like something is holding you back from the next chapter in your career? Are you searching for information to build and exit a business but keep meeting a dead end?

If so, you’re not alone — Keith Leimbach was once a fresh entrepreneur with no clear path to get started. He had scaled the corporate world only to find his true passion in launching and cultivating brands. However, there were no guiding resources available when he began, and he had to learn the best ways to grow, operate, and de-risk his business through trial and error. Now, Keith is changing the landscape by offering transparent information through his podcast and his platform as a wildly successful entrepreneur.

In this episode of the Quiet Light Podcast, Joe Valley sits down with entrepreneur Keith Leimbach to break down his path to achieving an eight-figure exit. Keith explains how to delegate as an entrepreneur, the value of consumer-friendly marketing, and why it’s crucial to understand your finances. Plus, he talks about his podcast and how he’s delivering value to other entrepreneurs.

Resources mentioned in this episode:

Sponsor for this episode…

This episode is brought to you by Quiet Light, a brokerage firm that wants to help you successfully sell your online business.

There is no wrong reason for selling your business. However, there is a right time and a right way. The team of leading entrepreneurs at Quiet Light wants to help you discover the right time and strategy for selling your business. By providing trustworthy advice, effective strategies, and honest valuations, your Quiet Light advisor isn’t your every-day broker—they’re your partner and friend through every phase of the exit planning process.

If you’re new to the prospect of buying and selling, Quiet Light is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.

Not sure what your business is really worth? No worries. Quiet Light offers a free valuation and marketplace-ready assessment on their website. That’s right—this quick, easy, and free valuation has no strings attached. Knowing the true value of your business has never been easier!

What are you waiting for? Quiet Light is offering the best experience, strategies, and advice to make your exit successful. To learn more, go to quietlight.com, email [email protected], or call 800.746.5034 today.

Episode Transcript

Intro 0:07

Hi folks. It’s the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals.

Joe Valley 0:29

Hey folks, Joe Valley here. Thanks for joining us for another episode of the Quiet Light Podcast. Today’s episode is going to be an incredible exit story. We’re going to talk to Keith Leimbach, about his exit, his many years of journey through entrepreneurship, all the different things that he’s done. Really cool stuff, Keith, welcome to the Quiet Light Podcast.

Keith Leimbach 0:51

Hey, Joe. I’ve been I’ve been listening for quite a while. I can’t believe I’m on your show. Nice to Nice to talk to you again.

Joe Valley 0:57

Man. It’s good to have you here. I appreciate it. Where in the world are we chatting? We’re in the world I

Keith Leimbach 1:02

at the moment. Yeah, I’m in, in my house in the mountains in Evergreen, Colorado. Beautiful place west of west of Denver. And if anybody has ever been to Evergreen, they know there’s one bar in town, it’s called a little bear. And that’s pretty famous like old country bar that we hang out every once a while.

Joe Valley 1:20

Well, based on the background, the wooden ceiling the big is that an elk on that chimney back there?

Keith Leimbach 1:25

That’s an elk taken off of Ted Turner’s Ranch, it’s a Boone and Crockett registered animal it’s a it’s a it’s a big, it’s a big elk.

Joe Valley 1:34

you’re living the Colorado picture as well as in name and envision only. So that’s pretty cool, man. Well, listen, let’s let’s talk about your journey and give give the the audience a little bit of background on your entrepreneurial story.

Keith Leimbach 1:48

Yeah, you know, everybody, well, everybody’s got a story. And, and, and everybody has a journey, man, I find, I find them also fascinating. And I find that mine is a one that folks, I’ve got my own podcast, you know, as well. And a lot of people reach out to me, and they’re like, dude, I’m making I’m the exact story that you’re telling me. And my story is, you know, recovering corporate Exec. I spent three decades in the corporate world, the last couple of gigs as a public company, CFO, and then as a as a CEO. And my last two gigs, and I left that world, the, you know, the last of which was fairly violent, and, and there really wasn’t a path back to the corporate world, at least one that I was willing to take. So I had spent so many years of my life trying to figure out where I really what I’m really passionate about. And I had confused two things, I confused being an entrepreneur with being a CEO. And, and I always, for some reason, I mean, I always wanted to be an entrepreneur ever since I was in like high school. But as I, you know, graduated, got a good job, you know, started climbing the corporate ranks, and I confuse being an entrepreneur being a CEO. And so I spent, you know, 25 years down a path to become a CEO, and I got there, I don’t think I’ve ever freaking good at it, and ended up in an app leaving the corporate world, and it gave me a chance to then kind of rethink what what was I really trying to do. And what I was really trying to do was to be an entrepreneur. And and I think so many folks like that I talked to they just find their corporate life to be unfulfilling. And I you know, that’s my story. I I, you know, I, in lots of successes, man we took, I took two companies helped take two companies public one in 1999, one in 2012, we sold one to Oracle in 2008, for 17 billion. And you have those types of financial success, innovation feeling, man, it’s just you know, this is something you put on the highlight reel. Yeah, but selling, you know, the entrepreneur journey, and then building a company to the point where I could sell it and have a pretty magnificent exit, one that was better than any of my corporate exits. You know, financially, just so it was so much more fulfilling man just so much more interesting and enrich and it’s in its own

Joe Valley 4:14

way, let’s do the dates here. You know, you and I keep kept putting off recording this podcast because your ex it took a little longer a little longer, a little longer, the company that you just sold, that gave you more financial benefit, as you just said, then all of your years as a CEO and CEO, how how long did you operate that business? When did you launch it? And I guess we’ll figure out the math. When did you launch it?

Keith Leimbach 4:41

Yes. So I bought I bought it for you guys, as you know. That’s right, not man. I got the listing from Quiet Light. And I tell so many people

Joe Valley 4:49

that that makes you an acquisition entrepreneur, Walker would be very proud. You bought it, you built it and you exit it. I’m sorry to interrupt there, anytime, anytime. By Business comes up, I have to give Walker Deibel props for his book, The what’s the name his book? Buy Then Build? That’s right.

Keith Leimbach 5:08

Yes. And you know, there’s so many opportunities out there to do that. And people particularly coming from the corporate background, they have so many skills like the stuff you actually learned that you can apply to some of these smaller businesses, but I bought it in August of 2019. And I got the listing from Chuck in June of 2019. And it took us two months to close. And, you know, it’s fairly little acquisition, I paid 400, and change for the business, and just an industry that I really liked. And then fast forward two years, just short of two years, in July of, of, of this past year, so July of 2021, I was talking to, to a customer of mine, and I said, I might be in a position later this year where I would sell this business. And, and, and wanted them to know, just out of courtesy, but also to see if they’re interested maybe in acquiring the business. And so shortly thereafter, probably close to the two year anniversary of me purchasing the business I was I was in contract to sell it to them. And then, you know, the dates that you’re talking about, man, so I, that was, I think it was actually the first week of September, when when we got to kind of a verbal, we put it into an LOI by the end of September, and then spent October November and December going through due diligence. And just, you know, there’s a lot of steps in the processes, you know, man, and it took us three months to get through it.

Joe Valley 6:35

Yeah, and it’s a big company that that is buying. So they have that bought it. And so they have different processes in place that take a lot longer, right, they come in Yeah, it’s not like selling a million dollar business, somebody that is it’s the first purchase or second or third or fourth or fifth, it’s when there’s a lot of money behind it private and public. And some of the some of the aggregators are getting to be this way, there’s so much money coming in that they’re requiring a deeper dive into every aspect of the business before closing the deal. And some of them have taken quite a bit longer, especially the larger ones. Alright, so you bought it for 400 grand, we’re not going to talk about the business itself. We’re not going to say how much you sold it for. But ballparking it tell us what you did in 24 months in terms of growth? Yeah.

Keith Leimbach 7:29

Well, let me tell you a couple things, Joe, man because I wouldn’t want to be listening to this and not really know like, what’s the freakin punchline? And so I can tell you that it’s an eight figure exit, and

Joe Valley 7:39

$400,000 in 24 months

Keith Leimbach 7:43

Bitcoin I actually had to put some effort into this to let you know, it wasn’t like as simple as just buying Bitcoin and I love the

Joe Valley 7:53

punch line part of it, because now people are really going to listen, so thank you for that. That’s yeah, holy cow,

Keith Leimbach 7:58

that’s a Yemen. So there’s, there’s two really important parts of of that kind of valuation. One is what you achieve just through, you know, multiples of revenue growth, like how many times can you make the business bigger, and I was into the business, you know, a year less than a year and and it was already 10x What I you know, what the the revenue Yeah, and earnings of what it had done, you know, before it acquired it, and I can we can talk about how you know how we did that and then you know, another massive set of growth in the second year on the stage of the exit but so there’s the there’s the revenue piece like if if you if you grew a business if you if you did $1 in revenue and all sudden you’re doing $10 in revenue, you know, that increases what the company’s worth obviously by by 10x You know, roughly but then when you get to a certain level of earnings man you kick into a new tier of valuation like multiples of earnings and so you get this 2x You know thing going on the the the two factors that come come together that really give you a massive growth multiple against you know, what you buy something for, and that’s it’s why I advocate so much like buying a business he’s evaluating these opportunities out there because this is real man. I’m making this stuff up. And now I dress like what’s his name with a hoodie on like, two years later that’s funny stuff.

Joe Valley 9:21

He talking about Zuckerberg he talking about the character from billions and HBO cuz he always,

Keith Leimbach 9:26

rather rather be the dude from aliens. But Zuckerberg was who I was thinking of, but let’s I didn’t make any kind of Zuckerberg money.

Joe Valley 9:32

I’m not I’m not incredible though. Now join your show with the

Keith Leimbach 9:35

hoodie. I’ll say that.

Joe Valley 9:36

Did you go from 400,000 to 4 million in 12 months? Because you just said damn smart. Did you hire that did do you have this? Yes. He says yes. With caulk. Yeah, of course. Just kidding.

Keith Leimbach 9:49

Biggest knucklehead in the world? Listen, there’s when I bought this company it was it was from the founder had built a really, really beautiful product, and just absolutely hated marketing. Hmm. And so when I bought the company, I started talking to our customers, I realize, oh, yeah, man, we, it’s a great, it’s a great product, it’s just not enough customers know about it. And so we started an awareness campaign. And, and that that really took off. And as we talked to customers, I said we at first it was, you know, just me and our and our bookkeeper and like, order administrator, a really fabulous lady. And she had her own business and this thing was so small, she kind of did it as a part time hustle, just, you know, I paid her 50 bucks an hour or something to help me out. And then I, I did a search to bring on a good digital marketing firm. And, and we started to expand the reach, and we’re talking more customers. And then customers started asking us for stuff like, Hey, I love your product, but I need, you know, XYZ that goes with it. And so then we would start to put those products together. And and then it was a compounding effect, we just listening to what it is that that people want. And I was fortunate enough to have a really, really great marketing resource that it turns out lives really close to me. And I did a global search for like a digital marketing firm, I was really interested in getting a great firm turns out the guy’s like a three iron for my house really turned out to be a great fit. And then as we grew, we really needed some some operational support to be able to handle the volume of orders and handle the, you know, the the order, all that kind of stuff, man. And so I brought a really smart guy on to run our day to day operations. And then he ended up building up a team over time as well. But that

Joe Valley 11:37

was that smart guy in house or remote. So he was

Keith Leimbach 11:41

a contractor at first. And the first smart guy that was a digital marketing guy hired him, he had a digital marketing firm, he ended up liking the business so much he shut down his digital marketing firm and became, you know, basically my my leader of all things digital. And then because he’s a really capable guy, I also asked him to help me with all new product development. And then the second really smart guy helped put all the day to day operations in place so that we could scale on a real stable foundation as opposed to, you know, some rickety ladder that you find out Holy crap, like, what? What am I doing here? Man?

Joe Valley 12:14

I’m curious for the two people that you hired there. Did you give them equity? Did you give them upside? Were they were they incentivized in that way? Or were they just did they just love what they did? And it helped grow the business. So you could eventually exit

Keith Leimbach 12:29

as the ladder man, they, anybody if you give anybody equity, you know, that they’re gonna, you know, I think they’re gonna appreciate it. I, I just have always been in the position where I own a little piece of a big company. Yeah. And I never found it. That motivating, right? When they were big financial events like IPOs, or sales of the business or whatever, they, they created value around those things. It was interesting, but it was never a motivating factor is more of a reward. I figure I can always provide a reward at the end, as opposed to try to trick myself into thinking of motivating people because I’m, I’m not Yeah, I also think some of these motivation things are, are I find them actually insulting? Because if you tell someone Listen, man, I’m gonna pay you more if you’re able to produce X, Y, or Z. I don’t that’s that’s basically saying, I want you to change your behaviors and somehow do something differently than you would have done otherwise. Because I’ve now put this new carrot out in front of you. I think people look at you cross eyed like, dude, I’m gonna work my ass off you no matter what, what, what kind of carrot you put out there. I’m working hard for you. And that’s why I find it almost insulting to have that kind of rewards based thing. I’d rather I’d rather have a recognition in at the at the end of it to say, Listen, man, oh, you guys kicked ass and worked hard. And as a result is my dog saying hello to Joe. As a result, you know, I’m going to provide this kind of benefit for you as a thank you, as opposed to some artificial motivator on the front end of it.

Joe Valley 13:59

Now, I appreciate that. And given you know, that you lived in the world with, you know, as a CEO and CEO, you had a lot of people that you had to motivate and you found the right way to do it. So I asked because I was curious, not because I thought equity was the only way to go. So appreciate that. How did they feel? When you broke the news to them that you were under a letter of intent? or at what point did you break the news to them?

Keith Leimbach 14:24

When I had cash wired into my account, then we got together with with my team and let them know, you know, one on one, so I could have a good discussion with them individually about what had happened, what the current status, you know, so that the questions that go through people’s mind just like you would expect, like what so Okay, good for you, Keith. So you just made a whole bunch of money. Like, do I still have a job? Is my job changed? Is the office moving to a different place? And because I sold this to a strategic customer of mine You know who all of my employees know super? Well, I think there was a lot of not relief, because relief implies that, you know, they been stressed out about where it was going, they didn’t know was going anywhere at all. Yeah, but I think a lot of satisfaction that, you know, they know, this company is a super great company, they know it to be a great company, this is a company that, you know, is, of course, quite a bit bigger than me. And so employees get benefits and employees get 401k and get to be associated with a bigger organization, they get the job security, they, you know, you’re working for some dinky little company, I don’t know whether it’s going up or down, right. And so I think people were really, really excited about, you know, about that news, that they’re joining up another place as opposed to like, Listen, man, if I’d sold this to some search fund guy, or some private equity, you know, do they had some knucklehead that, you know, was gonna come in and run the thing? And I’m introducing these guys to the new 26 year old boss, that would not, I would not have had the same reaction.

Joe Valley 16:02

Yeah. So your buyer was strategic. So they were comfortable with your buyer, that makes sense. Because your buyer was strategic? Did you? Do you think you got a bump in valuation? Because of that?

Keith Leimbach 16:14

Yeah, I think so man, because, you know, they understand the industry. And they understand, obviously, the product because they use it, and want to make sure that it didn’t fall into the wrong hands. Right, because then all sudden, maybe the, the product production goes down the drain, and it’s a critical element of what they build. And plus, in terms of their own strategic direction, it was aligned with what they were trying to do. So, you know, I had a couple things working in my favor, that certainly contributed to being able to support evaluation that that that I wanted to get out of the business.

Joe Valley 16:50

Did you tell them that your prices Did you wait to they made you an offer?

Keith Leimbach 16:56

I told him my price. And, you know, everybody will tell you not to do that. Here’s the way the conversation went, it probably always goes like this, but I, I know, these guys, and I might have played it differently had I not known him. But you know, we got on a call and I, you know, we walked through the financials and, and what I aspired to do, and they talked a little bit about what they were trying to do, and then it came down. Alright, man. So what do you want for? And I said that it’ll What do you think it’s worth? The same conversation? Probably 1000 times?

Joe Valley 17:27

I don’t know. You go first. No, no, no,

Keith Leimbach 17:29

no, they said to me, they said to me, Hey, I know how this is gonna go, man. You can’t offend us. So just tell us what you think is worth. And we’ll tell you whether we think we can pay that. Yeah. And, and I did. And they said, Listen, give us give us through the end of the weekend, or whatever it was. And we’ll get back to you with a formal with a formal offer. And now we know what what you want. You know, we’ll we’ll kind of we’ll, we’ll take that into account, basically, yeah, I’ll tell you, man, when I was a year ago, so last January, February, I had a company reach out to me private equity firm. And they’re trying to do a roll up in this industry. And they had some assets already in the industry. And they were looking for a platform to roll them into I probably wasn’t big enough to be the platform company, but I was big enough to be an entity rolled in. And so you know, we started with with a similar type of conversation. And they said, Hey, what do you want for? And in this case, I’ll tell you, because the deal didn’t didn’t go through. But I told him, I wanted 12 million bucks. And this is a year prior. And, and they said, Listen, if the financial support it, you know, we think that’s based on what you’ve shared with us probably reasonable, multiple, and whether we’re paying a higher multiple against trailing 12 months or smaller multiple against, you know, projected earnings. You know, we think that’s probably a fair number. And one of the things that really helped me get through this, this last exit, was having this discussion with this other private equity firm, is actually a family office many months prior, because as we went through the financials, what I started to discover is holy crap, man, I’ve got some stuff, you know, I look at the revenue, I look at the gross profit. And then I look to see what the bottom line is. I’m not spending a whole lot of time on the line items, I kind of thought we, you know, my bookkeeper was keeping a straight. But one of my really great lessons was, as I went through the process, I realized that there’s some holes in my financials, and I needed to go back and fill those holes so that I would be in a position to really have a sound sound story for the exit that would ultimately take place. And so this was kind of my a year ago, this was kind of my, you know, like, my, my, my trial deal. I’m gonna tell my wife like, I don’t think this deal is ever going to go through. But what it’s doing is allowing me to get really smart about what I need to have in place in order to get the right deal done eventually, and I didn’t think that deal was going to happen so close on the I have of wrapping this other one up. But man, I tell people now and one of the key lessons I tell your listeners man about this is, you absolutely have to know your financials. And they have to be rock solid. I know you tell everybody the same thing. Yeah, dude, I come from a long corporate banker, I thought my financials were freaking hard as nails. And I got into it. And I realized, you know, we’re putting inventory in, in our in our operating costs, as opposed to the balance sheet. And for people that are listening and don’t know what I just said, like that’s like Charlie Brown’s teachers talk, then you need to go get yourself a really, really great financial guy that can put, you know, not a bookkeeper, man, I’m talking about a really, really sound financial guy, and I’ll hook hook anybody up with the guy I use, because he was fabulous. Then he went back through the books and we clean some stuff up. But he also told me, Hey, listen, do you know that you know, shipping as a percentage of of sales, and as an overall percentage of your total cost? Like, it’s, it’s doing this on you at a rate that I really hadn’t been keeping track of. So then I knew how to go back and adjust pricing, and we ended up charging customers for shipping and a whole bunch of other things that totally changed the trajectory of, of our earnings profile. Wow, man, that’s, you know, hear and do this almost sounds like I don’t even want to listen to you, you’re gonna tell me to know, my know

Joe Valley 21:16

and listen to it. Listen to when people I mean, look, I tell people this all the time, and you listen to the podcast, it’s it’s all about the math and the numbers to begin with, if you don’t have a good handle on it, you’re screwed. Yeah, and we were talking about a mastermind purse, I can’t, I don’t want to use this person’s name. But before we before I hit record, but I was at an event where somebody was showing their financials, the guy that runs the event, always shares his numbers. And he discovered that his shipping costs went up, he was being billed wrong, and it was gonna, you know, annualized, it was gonna be about a million bucks. Yeah, he ended up selling his business a couple years later, for an eight time multiple. So he would have lost the $8 million in the sale plus a million dollars every year, if he hadn’t done what you’re talking about, pay attention to your numbers and get a good financial person to point out what’s happening in there.

Keith Leimbach 22:10

If you like that guy, man, I was telling you this earlier to man, like, I don’t have the I don’t know if it’s the will or the energy or the mental capacity anymore, man. But I don’t want to go through a report. Or I don’t want to go through my p&l and try to figure this crap out. Like I want someone that’s really really capable. That comes from a corporate background that knows what a financial analyst is looking for. And does that and that’s exactly what what my buddy’s name is Dan Scott, what would Dan end up coming in and doing and he’s like, dude, like, you know, what’s going on with shipping? What are you doing? You’re gonna eat kids eat this stuff anymore? Dude, your margins have gone from 22% down to nine. What

Joe Valley 22:48

is it? What is it? What is Dan Scott call himself? Is he a fractional CFO? What is his you know, what would he be? How would you put a label on him?

Keith Leimbach 22:56

You know, I think a fractional CFOs is that I consider my CFO okay. And so I think that’s the way people should, should think about that role. Because you need a bookkeeper, man, you need someone that can put the data into QuickBooks or NetSuite, or whatever you’re running. But you got to have a CFO man that is looking at this stuff and making sense of it and then reporting it back to you and helping you change the direction of, of you know, so many things, whether it’s product pricing, or shipping costs, or what your manufacturing and and, you know, all those types of things. That’s pretty cerebral stuff. And I don’t really expect my bookkeeper to give me that kind of, I’m not paying my bookkeeper to do that. They’re just in so that means I was either having to do it, or I needed someone like Dan to come in and that’s that’s why I brought him in as as my kind of outsource fractional CFO and

Joe Valley 23:50

duty. Let’s just Let’s just get it out there right now as people are listening. Dan was his last name Scott is that we said?

Keith Leimbach 23:56

Dan Scott. Yeah, you can reach him at [email protected]. And if I had my phone sitting here with me I would

Joe Valley 24:04

[email protected]. at Al. AlScott.com. Okay. One T or two and Scott. Yeah. What’s that one T or two in Scott to two T’s Scott. All right. Alscott.com.

Keith Leimbach 24:19

They give you a [email protected].

Joe Valley 24:23

Cool. Yeah. Can we go back to the beginning for a minute? I’m just going back to the beginning. I’m not asking I guess I’m just going there. Go there. We’re going back to the beginning, Keith, when you went from, you know, 4 million, sorry. 400,000. But you bought it for 400,000 at 10 times the revenue. What percentage of the business when you bought it was you know, direct consumer sales on your own site versus Amazon?

Keith Leimbach 24:50

Yeah, so just to be clear, as it was, it was 10 extra sales in the first few months of owning the business. And then obviously grew it very significantly.

Joe Valley 24:58

afford the digital guy or you did that on No,

Keith Leimbach 25:01

no, it was with a digital guy. My first move was to hire his firm. So I bought the business in August, and by October, I was hooked up with, with with, with the digital marketing firm. And then, you know, then we were, then we were moving fast and seeing a lot of growth. You know, and this is all I hear lots of folks, they asked me like, man, so you’ve benefited from the pandemic, because everybody started moving to this, you know, into the sector, and you had a, you know, just a lot of growth in that industry, man. And that’s true. I’m sure I did benefit a bit. But we saw explosive growth before there was the first case of COVID ever announced. And that’s based on on reach. And the answer to your question, Joe, is it was it’s all through the website. It’s all we sell to it, we sold, we still do today, we just do in a much grander scale, both geographically and, and, and absolute numbers, but we sell retail, and we also sell wholesale. And so there are some people that use our parts to build into vehicles that they’re creating. And then there’s also a DIY community. And so that’s a retail buy right through our website. And our website was organized really well structured, well, it had good, good brands, good branding to it. But it was just on a crummy platform, and I think it was on Squarespace or something. So we ended up moving into Ecwid. And then that’s a crap platform, at least for our application. And then, you know, we moved to the obvious and put it on Shopify, and then we’re able to one of the challenges you add product, man, you got to have a database behind you that you can add those products into and then be able to put them out on the website, you know, relatively quickly.

Joe Valley 26:43

And you’d never done that before. You were the CEO and CEO you this isn’t a skill set that you had that your digital hire do all of that for you. Or did you just grind your way through learning how to do it?

Keith Leimbach 26:53

No freakin way, man, I can’t learn anything at this point. But not not because I know everything because I just I can’t absorb it anymore.

Joe Valley 27:01

We were talking before I hit record, folks, we’re just tired. We don’t want to learn anything. Just tell us what we need to look at. You tell us what to do.

Keith Leimbach 27:10

But you know, I here’s something I think is really important. I tell I tell a lot of folks this. Don’t Don’t spend your time on the things that are just sucking the life out of you. Like for me to try to figure out how to build a Shopify site and do digital marketing and figure out did I even have a Facebook account, like I don’t even know what that is. And like for me to go figure that out would would have sucked all the energy out have been no fun at all. Yeah, but I could go pay a guy’s really freakin great at it. It’s absolutely genius, mind around that stuff. And helped me with branding and all that kind of stuff. That’s great. That’s what I like to do it, I like to, I like to know what I need, and then find really, really great people to go solve for that stuff. And it’s same with you talking about the like the financials, like I could have never fixed them. And I’ve never logged into QuickBooks in my life. And for me to go in there and try to figure out like all the stuff that was broken in there, like go hire really, really genius guy that does that for a living. And that’s, you know, part of Dan’s deep skill set from, you know, CFO down to, like, let me go check out the bookkeeper set this up, man, and we’ll, we’ll go clean things up.

Joe Valley 28:12

I’m gonna reach out to Dan myself, we should we, we grew well over 100% in 2021, for 2020. And with that, as you know, that kind of growth, there’s all sorts of expenses that rise and and and they add up, you don’t pay attention to them. And there’s different things that you can do that that CFO will point out to you and say, okay, stop focusing on that. Let’s focus on this because your margins are incredible. Did he do a lot of that for you as well?

Keith Leimbach 28:38

Yeah, he did all that man. That’s exact conversation, right? So sure, I could go get the monthly data from from the bookkeeper, and put all the spreadsheet in front of me and observe the trends. And I mean, intellectually, I think I’ve got the capacity to, to do that. But like, just from an attention perspective, and what, what I like to do, I spent so much of my time thinking about what I like to do, and also what I don’t like to do. So I don’t find myself in this trap of around doing stuff that I don’t like, because then it sucks the energy out of me. And then I don’t want to do any of it anymore, where you always spend my time, you know, getting people to do this stuff. While I’m over here spending my time doing the things that I like

Joe Valley 29:19

we you with, you’ve learned to delegate, which is something you know, most entrepreneurs don’t do very well. They like full control. They dig into it, they’ve got that I can do that syndrome, and they just take it on and and then they don’t enjoy it. It sucks the life out of them. They woke up emotionally toast burned out and they say How the hell do I get out of this thing?

Keith Leimbach 29:39

Yeah, and I think that’s true, man. Yeah.

Joe Valley 29:41

So did you have you always been good at delegating? Or is this from your your see oh, oh and CEO role?

Keith Leimbach 29:47

Dude, I’m so happy to give someone else work that I’m supposed to do. I’m awesome at

Joe Valley 29:52

that. Like he is great at it. All right, just past

Keith Leimbach 29:55

I don’t know, man. Probably Probably too much so but I would say that I mean Even though I’m always making fun of my corporate buddies for like, putting up with another decade of crap in their unfulfilling lives, I think one of the things that you know, we develop great skills because we manage great big, you know, things, whether the big projects or big teams or big companies or whatever they are. And as part of moving up the stair steps of the corporate ladder. There’s this great book, it’s called, what, What Got You Here Won’t Get You There. And it’s about the evolution of skills. And you know, whether I was good at my jobs or not, I was always at least were aware of what skills I needed to be good at, or to not be good in those jobs. And that’s helped me understand how to delegate things. And I think in some cases, it’s helped me in some cases, right, I’ve built awful teams. And I’ve been, you know, I’m sure the world’s worst freakin boss. At times I other people tell you like, I’m the world’s greatest boss. But I will tell you that I learned that I learned to delegate. And by delegating, I mean, I really just empower people and put it on their lap stillness, man, we’re living by the results of what you do. I’ll be involved in any step in the process that you want guidance, and you’re not you’re not operating under a tight rope with no with no safety net, like, as long as we’re working together in the same direction, and you’re telling me what’s going on, I’ll provide all the safety net he can. And so I think I bring that into smaller business to say, Listen, man, if you’re my digital marketing guy, you go do this, like, let’s, let’s review along the way. So we don’t go do eight weeks worth of work, and then come back. And it’s not aligned with what I’ve thought. But anyway, you know, I think I’m okay, empowering people,

Joe Valley 31:34

it seems like you are you just the numbers speak for itself? And it’s a it’s a quite a big number as well. But what about what about the hard lessons? You know, people talk about the mistakes they made, I don’t know how many you might have made in the last 24 to 36 months, it all sounds pretty, pretty rosy. But are there any lessons in there that you learned that you know, you want to help other people avoid? Well, I,

Keith Leimbach 31:57

you know, I’ll tell you from, from doing things right in from doing things wrong, you know, my lesson around the financials is from is from doing it wrong, man, I like thinking that I could just, I’m used to having a CFO, right, and everything’s going to the auditors and I got to present it for the board. And so like, this stuff’s all tied together. And I just carry that with me. And I thought this stuff would be too and it wasn’t I looked at the top line of gross profit, and what the cash flow look like, and thought I was doing okay, and it turns out that I wasn’t because I really hadn’t been on top of the financials. And so you know, that’s a, that’s a painful lesson to go get that corrected, it was expensive lesson to get it corrected. The other thing I’ll tell you is, you know, if you’re, if you’re looking on how to maximize your valuation, one of the really important things to do is to figure out where your where your risks are, and what your single points of failure. And so we do a lot of contract manufacturing. And when I bought the business, we had contract manufacturing solely in the Pacific Northwest. And, you know, the Pacific Northwest, has struggled the last couple of years are some pretty unstable times, right? There’s force on fire, and there’s people burning down buildings and riots, all kinds of stuff going on man, and it impacts the labor market, which then impacts your ability to get stuff manufactured. And so for me, I had a single point of failure that like if I didn’t, if, if I lost my manufacturing capability there, I’m done. I don’t, I don’t have anything to sell. I realized if I was ever going to sell the business, at that point, really with no plan to sell it, I just knew I needed to de risk it. And so people need to be looking for where are my single points of failure? And how do I you know, how do I how do I put something else in place and for me, it’s just as simple as replicating all the manufacturing capabilities in another metro area that had you know, different fault lines and different geopolitical, you know, kind of kind of orientations so that I was balanced there. And so we have duplicate production, in some case, triplicate production for for the parts that we make. And as I was I was in a position to start selling the company, this turned out to be a really, really important point. They’re like, holy crap, you know, the things that we’re thinking of that could stop your business, you’ve you’ve put a plan in place to navigate around those manner. So I think being able to de risk the businesses is pretty darn important.

Joe Valley 34:18

It’s the first pillar we talk about all the time, right risk growth answerability documentation a you got to have that documentation. If you don’t have it, you’re selling your business, but the risk these are the the non financial things that I think sway that multiple, really, really high or really, really low. And people don’t pay enough attention to them. They just say what are the things what multiple things selling for? Like, do you have one really rich 80% of your business? Yeah, yeah, yeah, that’s that’s really important. Really important. Doesn’t matter.

Keith Leimbach 34:48

That’s a really real conversation. Like all of a sudden you’re on a conversation with with a buyer. And they say, Hey, what is up? You know, buyers are smart. They’re like, Hey, here’s a risky Got your business? What are you doing about it? If and when the answer is I just replicated production in three places to make that risk go away. So does the problem. But if I hadn’t been able to say that, you know, the conversation that happens after the one with me on the internal meeting is like, Guys, what are we gonna do about this giant risk? I still like the business. But now we’ve got to go spend an enormous amount of intellectual capital and human power to go like, how, where are we gonna go? What do we know what the production thing is? How are we going to go replicate that? Yeah, and and sort of take that off the table. So it’s not a not a thing. Because that would like you just said that that’s a huge impact on your valuation, you know, things are buttoned up. They also realize all the things that we don’t know to ask, I bet they’re buttoned up to man, because the things he’s told us, our problems are legit, and the things that we’ve fixed, we can verify it. And then as part of the due diligence, obviously, the buyer is going to come out and inspect all this stuff. Anyway, man, so yeah, you know, there’s, you’re always playing with both hands on the table. There’s no pull over any buyers eyes that, you know, no,

Joe Valley 36:05

no, they’re gonna dig deep. If you if you lied, cheated, they’re still or just took shortcuts, they’re gonna find out and your deal is going to fall apart, and you’re going to be miserable, because you’re that close to life changing number.

Keith Leimbach 36:17

What’s another thing, man, there’s, I’m on the board of another company. And we’re in we were in due diligence at the same time as this deal as my deal. And, and that deal fell apart. And I’m watching this other deal fall apart. And watch in mind, I’m like, You know what, these things are so fragile man that you could you could say something in the wrong tone, and the buyer interprets it as some, some sort of risk. And then all of a sudden, you know, you know, the things over and you’re like, are you hos that close? Holy crap,

Joe Valley 36:48

that’s the, that’s the benefit. You’re old enough and wise enough and seasoned enough, you did it on your own. But if you’ve never been through before, if you’ve never been a CEO of a company, taking companies public, when you get two weeks from closing, you know, the biggest job as somebody in my position is to manage your emotions and expectations. Because everything falls off the rails at some point or another. And you have to make sure that you don’t, you know, drop your pants just to get the deal done, so to speak, right, I hate everybody there. But that’s, that’s the way it is.

Keith Leimbach 37:19

Because, you know, the other thing that happens, you know, you sign an LOI, right, you agreed to what the deal terms are going to be. And then you start due diligence. As you go through due diligence, and you find these things that create risk or uncertainty, you end up in a Retrade man and a Retrade is when they come back and say, Hey, I wanted to pay a 30 million, but now I’m gonna pay 18, right, because in the end, you’re like, or I was going to give you six and now you’re going to get to or like whatever dude, and to bounce that in your brain without, you know, losing your mind. Yeah, you can go back and fix it yourself. And then a year later, come back into the market and hope to get those numbers but you know,

Joe Valley 37:56

that’s, that’s hard. That’s a hard path that’s emotionally devastating, you’re so close, and then you get to pick up your pants and do it all over again for another year. And then go through the process of finding another buyer and who knows what the markets going to be like so that the lesson is to shore up your weaknesses you know, make sure you’re building a great business for a great buyer to take over.

Keith Leimbach 38:17

Yeah, man, show up your weakness but also really, you got to really put a giant spotlight on your strengths. And so one of the things that that I did right out of the gate was to was to patent this product and have some challenges with visible Yeah, yeah, it has to be defensible, but ended up man i I hired a legal firm that specializes in patents you know, these are like New York guys. You know, it costs so much freakin money like you convinced you went down the wrong career like oh my gosh is so expensive. But in this case, you so much get what you pay for. And I started down the path with you know, some discount patent operation. And you know what I got was, you know what was gonna look like a discounted patent and then I was talking to a buddy of mine, who’s way more sophisticated than me and runs a really massive companies like dude, let me hook you up with my patent guys. Because they are legit and you do not want to run this path. Any other way then, I mean straight up the middle with the most expensive guys you can find and I happen to know who they are and so he introduced me and my you know, my opportunity was real enough that they they were like yeah, we definitely want to help you out. And we through through there. You know they know how to do this man. And so not only did we get a patent that was granted but we did it in record time they were able to accelerate the process. And you hear a lot of people say gosh, you know it’s a patent product the three five years and maybe it does but we got ours done in think nine months and for edible utility or dry. You What’s that

Joe Valley 39:55

utility patent or design patent? This is a utility patent, nine months and the product Because already out there in the market, you can still get a patent even if it’s already out there in the market.

Keith Leimbach 40:04

Yeah, so if it’s been in the public domain for over a year, you can’t. But there’s lots of things you can do to product. Like, as we were evolving our product, it wasn’t the same thing that was in the public domain, we were able to add some some really meaningful stuff to it. And the combination of those things then became the patentable entity. And you talk about value accelerators, and valuation accelerators. Having a product that’s defensible, like somebody else does making it, you send them a cease and desist. And they can decide if they want to keep making it, but they do it now at the risk that they owe you since since they were notified. Yeah. And, you know, little players for the most part, fold and like, yeah, you know, I’m not trying to cause a problem, and bigger players. You know, patent fight is a $2 million undertaking. And I didn’t want to go spend two millions of my own dollars. But but now that I have been acquired by by a much bigger company, they’re like, Hell yeah, man, we’re gonna, you know what, we will absolutely go, go go defend the IP that we just paid for. And they paid for it handsomely. And that is a serious me got to have some way to build defensibility and you hear all these NBA nerds talking about moats and stuff. And, and that’s right, man, you got to have some way to defend what it is because, you know, I was looking at another really cool product company recently, as something maybe to acquire. And it’s, they built the defensibility by being a really great brand around this product, but the product you can buy from 100 different places, but they’ve got a really cool brand. And it’s you know, it’s a it’s a funner experience, I guess. But man, if you want to build a brand now you’re talking about I mean, you know, that dude is a freakin millions and millions of dollars is super expensive proposition. Yeah. So if you got something that you can patent, you should patent it. And you should spend absolutely as much money as you can, that you are uncomfortable with the expense. Because, first of all, it’s a balance sheet item, it doesn’t hit op x. And so it’s not like it’s gonna hurt, your earnings is gonna hurt your cash flow, it’s not gonna hurt your earnings. And then at the end of this, you have created real value of something that people can’t replicate when you’re successful selling it.

Joe Valley 42:22

No doubt, no doubt. Have you ever heard me talk about the fifth pillar? Keith? When I talk about the four pillars on the podcast, just say no, if the answer’s no, yeah,

Keith Leimbach 42:31

I don’t think so. Man, I read your book, but I can’t remember what the fifth.

Joe Valley 42:34

So the fifth pillar is that, you know, the, the mortar that holds everything together, it’s a little person on top, that’s you, like you, you, you sew up the fifth pillar very, very well, you know, you got to be likable, you got to be trustworthy, you got to be experienced, you got to be somebody that you want to do business with. And that isn’t saying all sorts of stupid stuff online, you don’t even have Facebook accounts. It’s kind of hard to say something stupid, you might do it.

Keith Leimbach 43:00

Trust me, man, is a good thing. I don’t.

Joe Valley 43:04

You might say to a buddy, but you don’t say it online. Right? I’ve seen deals fall apart because of what people say online, they just take a hard stance on one thing or another and the person that’s buying the business is on the opposite side. So you’re that fifth pillar, you know, epitome of a fifth pillar, you you lock it all in these people had a great deal of confidence in you, you made the business more defensible a better business for them to buy, you grew it like crazy at a great team. You thought about, you know, both exiting and and making it as good of a business for the others as well. So good. Anya, it’s pretty, pretty impressive all around.

Keith Leimbach 43:40

Yeah, thanks, man, I tell you what it’s been a really, you know, fascinating, for sure. Certainly makes for, you know, for great storytime. But in terms of, like finding something that’s fulfilling and meaningful, that just doesn’t end up on the highlight reel. And, you know, he couldn’t really care less one way or the other, but, but they’re impressive stats. Like, for me, this is a really meaningful. It’s a it’s a really fulfilling thing. And part of the fulfilling part of it is, and it’s why I put my podcast together and I appreciate you being on it, is because I can share this story. And if I can, if I can give someone just a little bit of, of, of confidence that their experience lends himself lends itself to helping them be successful on a venture that they will find more fulfilling in their own life. Then man, I just I just gave that person a little bit of a nudge and, and maybe enough that they will go out and find an opportunity that’s out there for sale and use their math skills to turn it into something that’s that’s worth a whole lot of money. And it might be something they want to run and pass on to the next generation and generate you know, just generational wealth, which is cool, or it might be something that you know, there’s one take the money off the table and a couple years later three or 410, whatever it is, sell it and and then and then basically have the same experience man and same for film and they can they can take those same lessons and go share with with other folks. Because I would tell you, I’ve listened like everybody man that’s listen to this ever seen so many YouTube videos and you know, let me show you how to be successful. And there’s lots of valid mastermind groups and all this other stuff did a couple years ago as on the other side of all that stuff. I was just watching it going who is a knucklehead? And how did he make so much money and I didn’t you know, how How’s his adventure were so much and I don’t even know what I’m doing. And now to be on this other side of it. And to be able to contribute back man I just I want to be able to do it in a in a real and meaningful and helpful way. I’m I’m not charging people for them. And I don’t run a masterclass. Did you call me? And I’ll tell you the answer, man. I’m, uh, I’m pretty available that way. Because Because I found you know, that’s, that’s, that’s what I find. So fulfilling for me. Yeah. So

Joe Valley 46:05

how do they reach you? Let’s talk about the name of the podcast, and then how do they connect with you beyond that. So what’s the name of the podcast?

Keith Leimbach 46:12

My podcast is called the Diversified Income Experiment. And I’ve been doing it for a couple years. And the whole idea behind it was when I left the corporate world, one of the first things I wanted to go do, I was just kind of turned on by laundromats man for some reason, and I ended up building four of them. And as I was on my journey to go build laundromats, I found there’s absolutely no information available about laundromats online. They’re real financials like What’s the capital cost? I mean, what does it cost to create a laundromat? How much money can you actually make? And what’s it cost to operate it that none of that stuff was online in any real way, and I said, you know, if I can find that stuff, man, I’m just gonna make it all available. Just I’m literally going to publish all this crap. And I wanted to build carwashes. And we’re building salon suites. And I built an Amazon FBA business, I started a trucking business, I bought this business, and I’m in the trash business, and I got all these things going on, man, but none of that information was available. And so there are two things happening where I realized eight people don’t know and so I’m just going to share it all in the second thing is people come from my background in this corporate world, and are handcuffed by, by by the money they make and just don’t want to leave and so I created this podcast is called the Diversified Income Experiment. I really, here’s my own money, and I can go start these, these ventures and someone workout and some of them don’t, I just shared, I just share all the information

Joe Valley 47:33

and great songs. So you should definitely tune in and listen, obviously Keith says he’s got some experience great guy to listen to great stories to man. And

Keith Leimbach 47:42

also reach me at [email protected] So the Diversified Income Experiment, the website is is is d i n c p i e in my email is [email protected] [email protected]. And I get people from all over the world reaching out with you know, all kinds of fabulous stories and questions and and whatnot. And you know, just it’s never a tell me the detail of that financial model again, like I didn’t follow it. It’s Hey, man, I I am stuck in the corporate world and I need someone to give me some some direction and I really appreciate you to get here’s three questions. I just had this guy from Slovenia reach out to me by whatsapp. I didn’t know. I don’t know. My mom was that guy reached out to me. He’s like, can I chat with you about something?

Joe Valley 48:30

So awesome. That’s awesome. Well, listen, man, I don’t want to take too much your time you got a dozen businesses to be operating. And I appreciate the fact that you took time out of your day to connect with me and and share your story here.

Keith Leimbach 48:41

Appreciate it, Joe and listen, man, anybody’s trying to sort out their financials reach out to Dan because that guy can figure it

Joe Valley 48:47

out for you. Yeah, we’ll put that in the show notes. We’ll put your contact information in the show notes. We’ll put the podcast in the show notes as well.

Keith Leimbach 48:54

Super great talking to you again, buddy. Be in touch.

Joe Valley 48:56

Thanks for coming on. Yeah, see me.

Outro 49:00

Today’s podcast was produced by Rise25 and the Quiet Light content team. If you have a suggestion for a future podcast, subject or guest, email us at [email protected]. Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.