Entrepreneur Jeff Homer discusses transitioning from high finance to acquiring and scaling music schools. Topics include artist's aversion to selling, profitability of music vs. dance, importance of general managers, using apps for operations, and potential in other industries. He shares insights on acquiring a music school every month, raising growth equity, and the challenges and rewards of business consolidation and scaling.
Lower-market roll-ups offer unique opportunities in consolidating overlooked businesses.
Elevating internal talent to general managers ensures smooth transitions and business continuity.
Identifying growth potential, operational enhancements, and team culture are keys to successful acquisitions.
Deep dives
Transition from Side Project to National Consolidation
The podcast episode delves into the story of Jeff Homer, founder of Ensemble Performing Arts, who initially purchased a small music school called Dana V Music outside Denver. Jeff's acquisition was driven by his personal connection to music as a child who had taken piano lessons. The business lacked digital operations, using Google Sheets and pen-paper mix for scheduling. Jeff's operational tweaks, including implementing vertical SaaS solutions for efficiency, led to immediate improvements. This success sparked the vision for a national consolidation as Dana V Music grew into a scalable model.
Opportunities in Lower Market Roll-ups
The podcast outlines the unique opportunities in lower market roll-ups, emphasizing Jeff's strategy to acquire small music schools that were overlooked by many due to preconceptions about the arts industry. The historical decline of community music stores, shifting to lessons, created a niche for consolidation. By buying small, Jeff mitigated downside risks, leveraged manageable equity investments, and rapidly scaled his acquisitions from one to five schools in under a year.
Elevating Front Office Personnel to General Managers
Jeff's approach of elevating competent individuals from within the acquired businesses to general managers was highlighted. The case of Chelsea, a front desk person promoted to general manager, demonstrated the success of this strategy. Chelsea's transition showcased the importance of focusing on individual suitability, instilling clear responsibilities, and providing infrastructure support to ensure effective role evolution and business continuity.
Key Factors Driving Success in Business Acquisition
The podcast discussed key factors contributing to Jeff's successful business acquisitions, emphasizing the significance of identifying growth potential, implementing operational improvements, and fostering a passionate team culture. Jeff's strategic vision and focus on leveraging core business strengths like community-building and personalized services were pivotal in transitioning small acquisitions into thriving national consolidation endeavors.
Expansion into Dance Studios and Market Comparison
Jeff discusses the expansion into dance studios, highlighting the transition from music to dance within the business. He mentions the difference in market size with dance being larger than private music due to public school music programs which limit the private music market. Additionally, he outlines the operational differences between group dance lessons and private music lessons, emphasizing the impact on margins and customer interactions.
Growth Equity Financing and Potential Market Opportunities
The discussion delves into the growth equity financing model employed by the business, drawing parallels to venture or growth equity series A financing structures. Jeff recounts the progression of raising three tranches of equity over five years to scale the business. Furthermore, he explores potential market opportunities in specialty service sectors beyond music and dance, suggesting avenues for growth and consolidation within similar business models.
