For all of you wondering how I make money, this is how: In early 2022, I met an acquisition entrepreneur who had lost close to $2,000,000 after buying his business. We’re eating dinner together, and something he said really hit me: “I think I just financially screwed my family” I had driven 4 hours to meet him, and had no idea what he was going through before sitting down. We keep talking and talking about what he was going through, He bought his company in late 2021, a few months later, interest rates rose. The builders he was working with cancelled projects, and paid him even slower on jobs he’d already completed, on top of that his SBA loan payments were increasing. Then, he went through a huge J-curve. He bought a company with almost 100 employees, and there were tons of skeletons in the closet. Money was being lost in every conceivable way. Underbidding jobs, then mismanaging overtime, then lackluster AR collections. You name it. $1.8M gone. All of his working capital. In one year. Anyways, we’re sitting down in this grungy diner, I’m trying to think of every way I can help him, when I realized he really needs other business owners he can talk to. 1. Just to have people to confide in. People to build camaraderie with through the tough times. A little therapy with people who’ve gone through similar times. 2. To actually get some tactical answers to what the hell he can do in this shit storm. He had friends to talk to, sure. But they don’t understand or can relate with being a business owner. For obvious reasons, he can’t talk to employees and managers. For many entrepreneurs, even sharing all the ups and downs with a spouse isn’t ideal. So, my now friend was basically facing the most daunting, stressful, challenging period of his life ever. Alone. So I offered to help him find other business owners to talk to, other people who want to collaborate and share on their journeys together. That’s when I learned about “peer groups” Groups of other experienced business owners, getting together to commiserate losses, celebrate wins, and share tactics, resources, and the realities of SMB ownership. So I built 2 groups pretty quickly, just to see if they’d be helpful. And they were. Ran them free for a year, just to help. Eventually, I realized how fulfilling they were, to the members, and to me, and committed to it full time. That commitment also led me to host over 30 SMB/ETA events across the U.S. with 1,000 people in attendance this year (and we're doing more in 2025) During this time I’ve learned a lot about what business owners actually go through every day, and about what a successful peer group looks like, and what doesn’t work. I'm extremely optimistic for our community's growth over the next few months So this is my call to action for you: If you'd like to attend a local meetup with other small business owners, or you'd like to learn more about the peer groups Visit the link in the comments section below 🙏

We’ve been doing “Owner AI Demos” in Scalepath We bring a member into our weekly community calls, they show off the thing they built for their business, maybe share a skill file, everyone learns from it and builds stuff for their business If anyone wants to come in and show off what they built and connect with a bunch of business owners, feel free to DM me. Not accepting AI agencies at this time, just other owners actually working with the tools every day.

Claude just misspelled “documenting” in its response to me today. Spelled it “Documving” First time it’s ever done that for me, didn’t realize that was even possible

Some observations on key man risk in SMB acquisitions: I’ve had a bunch of these conversations in our peer groups. I see the same setup again and again and again. You acquire a business where one person, usually a long-tenured estimator or sales rep, controls somewhere around 30% of revenue. This person has been in the same market, at the same company for a decade or two, everyone in your market knows him. At some point a lot of customers stopped calling the main phone line and just call this person's cell. The relationships are his, not the company's. Then the new owner comes in and starts trying to improve things. Implement a 50% deposit requirement, take photos at a job site, document new estimates, enter quotes into the CRM. Basic stuff. And that person just doesn't do it. Not openly defiant or spiteful. They just don't do it. They've been doing things their way for 20 years, they know how much money they bring into the business, and they have some amount of “Fuck You” leverage. What I've noticed is that most new acquirers recognize the problem immediately and they know they need to fire that person (this is after many direct 1:1 conversations that don’t result in changed behavior). But they hold onto them for months because the math feels terrifying. They have this big SBA loan every month and if this person leaves and takes 30% of revenue with them, they’re going to be screwed immediately. So they drag their feet, hope it improves. But at the same time they’re asking every other employee to follow and adapt new systems, procedures, use new tools, hold them accountable, etc. All while this other person (the key man) does whatever they want. Enter new business problem: shitty culture One of our holdco guys described this on a call earlier this year while he was still in the middle of it. He said the rest of the team could see that this person wasn't being held to the same standard as everyone else. Another member said “it’s poison”. If people see that you say something but there are no consequences for ignoring it, that becomes your actual culture. Congratulations, now your employees feel mistreated, or worse, start becoming disobedient. And you’re not the leader anymore. No one is. Every owner I've spoken with who eventually let that person go has said roughly the same thing. “Most of the customers stayed. The team rallied, and several of them told me afterwards they’re glad that person is gone.” It's not uncommon for high performing salespeople to also be a big PITA that other employees are quietly tolerating. And most owners said they wished they'd let them go much earlier. One of them fired his version of this person at the end of March. Almost every customer stayed, record sales months followed, and most importantly that owner felt the first sense of relief he’d felt since owning this business. I hope this is helpful for some of you out there, whether it's just seeing “What's happening in SMB Land” or you're in this exact situation yourself.

I’m a huge fan of NewCo Risk @MrJoshFro & @andyharbut They do phenomenal work for @PIONEERCAPADV clients and are incredibly responsive Full disclosure: I have no economic relationship with this firm and these are just two good dudes. Link to their website in the comments below

This whole Bricks and Minifigs story is crazy.

This is the future of AI IMO Charles built Peggy, his personal AI assistant to help him with a variety of tasks in his demolition company. Step by step, iterating along the way and making changes, he built something incredibly smart that’s saved him a ton of time and made his life easier. Now he’s giving it to other business owners. When Anthropic develops a new model, it’s built for millions of users, generally decreasing the specific usability for anyone single avatar/persona. Charles takes the underlying tech, iterates with it and applies is deeply to build one highly functional “thing” that solves a small number of problems for a specific type of person (small business owners) and suddenly he’s in a category of one. I bet in less than 12 months we’re going to see someone try to become the new Tim Ferris “4 hour work week” but instead of employing an overseas person to get your time back, you just build an AI assistant yourself. Or in this case, just pay for the one Charles already built. The future is going to be insane.

highly recommend

I’ve had a couple friends get laid off recently. Always heard about “young people are struggling to find jobs.” But never seen it first hand. Hits different seeing it happen to people you know. Very thankful at the moment to own a stable, growing business.

A little over 5 years ago, I heard a podcast from @BrentBeshore on acquisitions, loved it. At the end he said "follow me on Twitter." So I did. Got an amazing job from (then) Twitter, met hundreds maybe thousands of awesome people. Started a couple businesses. Largely off of this platform. Thankful this morning to this community of people and letting me be a part of your journey!

Mark’s been a member for ~2.5 years now. Something you should know about our “sales” process… I will introduce you to the members of your peer group before you pay $1. I do my job of matching you with the right group. You verify it for yourself. Our groups pay for themselves many times over. If anyone wants to have a chat and understand how I’m open about it.

Strong recommendation to the ETA community: Get on the phone and have conversations like these. Appreciate the conversation Steve, was reflecting on my notes from our conversation over my road trip to VA. Can’t wait to do it again

One of our Scalepath members lives in a small town about an hour outside Mexico City. Apparently tons of entrepreneurs and small business owners there. He’s surrounded by fun awesome people doing $10M, $20M, $30M or more in annual revenue. Apparently none of them use AI and barely know what Open AI, Clause, LLM, any of that stuff is. I can’t help but feel that’s crazy. Or are the rest of us just early?

Eric is a rockstar and overall just a great wholesome person. Super happy to have him in our SMBTwit community, if you’ve gotten to meet him in person you know exactly what I’m talking about Here’s to 4 more years Eric 🥂

The discourse on starting vs buying home services is missing the incredible shift the industry has undergone in the last 3 years and why they have genuinely increased in value (although current market multiples are still wild) 3 years ago, you could generate real lead flow with a good GMB, a decent website and some ad money. You could start with <$1mm and get to profitability quickly and then grow from there with cashflow. Today, that is almost impossible. Most of the lead flow is going to ads, so you have to pay for all your leads. So you need way more money to start (say $2-3mm). So there is more of a financial moat today, hence higher valuation for existing businesses. Taking a step back, I think it would be helpful for folks to assume the market is much more efficient than they think. 8-10x acquisition multiples are usually 5-7x for the buyer because they have purchasing synergies. The big roll ups aren't stupid and overpaying by 3x vs. market. Similarly, if these businesses get bought for 6-8x EBITDA, they have real value which means you can't just create them out of thin air easily. In turf, we see 30-50 new companies each year that just churn. We've started 7 new locations with the all the know how and capital from our existing locations and it's still hard. Obviously it can be done, but if it was easy, these businesses wouldn't trade where they do.

Cyber attacks are getting way more sophisticated and fast, way faster because of AI. 3 stories from our peer groups recently: A member wired ~$100k to pay for a new roof. The scammers had gotten into the roofer's email months earlier and were quietly waiting. Once the job was completed he received an email invoice from the roofer's actual email domain, with the full email history intact, and swapped in their own bank account. He even ran the raw email headers through AI to check. Came back clean. A second member downloaded malware. Hackers monitored his computer for days, captured his bank login, then attempted to move >$50k. His bank froze it. But while it was happening, the hackers signed his email and phone up for hundreds of spam messages per day so any bank alerts would get buried. They also set up filters inside his email to auto-archive anything from his bank. A third story wasn't from Scalepath, but a member shared it. A friend wired $40,000 for a classic car. Spoke with the seller. Spoke with the manager. Got photos. Got records. Car never showed up. How to protect yourself: - Hire an IT/MSP/cyber security firm - 2FA on everything that matters - Most cybersecurity insurance policies don't cover social engineering, meaning if you're the one who clicked send they can't help you. Check your policy - Wire transfers are nearly unrecoverable after a few hours. Checks and ACH have protection wires don't. - Above a certain dollar threshold, require a phone verification step as a policy. And call a number you already have for them, not the one in their email. If they've been compromised, that number could be fake too. Also, video/voice deepfakes are starting to become more of a thing, if you've ever been on a podcast or you have a video of you talking online somewhere, people can impersonate you.

Everything Charles is building with his AI VA is insane. Can't believe this app is free