Dan Drake, owner of Industrial Applied Electric, shares his journey from CPA to entrepreneur, emphasizing family and community ties in Bend, Oregon. He dives into negotiation strategies, including seller-financed deals and the intricacies of bundling real estate with business acquisitions. Dan discusses overcoming challenges like sales dips and improving inventory management. He highlights the significance of understanding customer needs and maintaining a strong connection with the community, embodying the lifestyle change they sought through their business investment.
Dan Drake and his wife chose to buy a business in Bend, Oregon, seeking lifestyle flexibility as new parents.
Effective negotiation strategies, including seller financing and balloon payments, helped Dan mitigate financial risks in his acquisition.
Dan aims to modernize operations and enhance customer relationships to drive business growth and contribute to the local community.
Deep dives
Relocating for a Better Lifestyle
Dan Drake and his wife aimed to move to Bend, Oregon, driven by their desire for a better lifestyle and flexibility as new parents. Having experienced the rigidity of traditional work schedules after parental leave, they prioritized the ability to balance family life with professional ambitions. Their appreciation for Bend's community and outdoor culture further solidified their decision to settle there permanently. This geographical constraint would greatly influence Dan's business acquisition search, as he limited his focus to opportunities within this area.
The Business Acquisition Journey
Dan's search for a business to acquire began with a clear understanding of his financial goals and the type of business he wanted. He determined that he would be comfortable with a purchase price of up to $2 million and sought a company in the industrial or construction supply chain. Throughout this process, he remained aware of the risks associated with purchasing a business with lower Seller Discretionary Earnings (SDE), but was driven by a vision beyond mere financial returns. The importance of community integration and creating a sustainable family life motivated Dan to embrace the challenges of entrepreneurship through acquisition.
Navigating the Acquisition Deal
Dan successfully acquired a business generating about $140,000 in SDE, supplemented by its real estate, increasing its effective value considerably. He skillfully negotiated a deal that involved seller financing and a balloon payment structure, which presented both opportunity and risk. Recognizing the need for flexibility, he arranged terms that allowed for lower initial payments that would ramp up over time, giving him room to grow into the business. This strategic approach not only eased the financial burden initially but also aligned with his belief in self-investment for future growth.
Building Business Connections and Trust
Upon taking over Industrial Applied Electric, Dan focused on fostering relationships with the existing team, who had years of experience and deep knowledge within the industry. His proactive approach led him to engage employees before officially closing the deal, paving the way for trust and open communication. Additionally, he committed to improving the work environment by addressing employee needs immediately, which helped solidify team morale and cooperation. Establishing these connections proved essential as they navigated the transition together and prepared to tackle future challenges.
Future Growth and Community Involvement
Looking ahead, Dan's primary goal is to modernize operations by implementing an inventory management system and an e-commerce infrastructure, catering to a digital-savvy clientele. He believes that enhancing existing customer relationships will lead to business growth while seeking out new customers in the region. Understanding the importance of his role in the local economy, Dan aims to leverage his business to contribute meaningfully to the Central Oregon community. With ambitions to double sales within five years, he is committed to continual improvement and operational excellence through solidifying his company’s reputation and expanding their service offerings.
