Does Size Matter

Back around the 19998- 2000 timeframe, I organized a loose association with a small telecom entrepreneur and a banking executive.

We put together a holding company to buy mature firms that we deemed to be "cash cows". We were in the Washington, DC area and targeted Mid-Atlantic companies. We didn't just want to be small company executives.

We wanted to be the "Mini-Moguls of Buyouts"!

We must have looked at 20 - 25 companies. When I say "we looked at", I really mean "I looked at". You see I was the point person. I created the criteria to determine if a firm was worth a look. I evaluated each firm against the criteria. And I contacted the target executives to arrange meetings.

One of the more interesting firms was a mom and pop team that ran a sheet-metal company. They were both around 60 years old and could smell the sweet scent of retirement hovering just around the corner.

Was that scent roses or lilacs?

I could see the weariness in their faded brown eyes. And the lines on their faces spoke volumes about the business battles they had endured.

Yet, they were Mini-Moguls.

Mr. Executive ran company operations. Mrs. Executive ran the back office stuff.

Their revenue and take home cash for the 3 recent years looked something like this:

2000: Revenue $2,500,000; Take Home Cash $300,000

1999: Revenue $3,000,000; Take Home Cash $400,000

1998: Revenue: $3,800,000; Take Home Cash $600,000

Mr. Executive talked about his customers, future prospects, financial statements and ... retirement plans.

We listened intently, saying very little.

My buddy and I chatted up a storm as we rode home. We talked about how The Mini-Moguls had not really reached their potential. We were full of ideas about how to maximize revenue, expand into other markets, use the Internet effectively ... blah blah blah.

We were just full of it!

Then some things occurred to me. It was one of those light-bulb moments that every budding mogul has at some point.

• These mini-moguls had made $600,000 one year. I had never made that much money. Nor had I made the $400,000 or the $300,000 they made the other two years
• They lived in Potomac, MD - an upscale, ritzy community that at one time housed Sugar Ray Leonard. I lived in a 1,500 square foot townhouse
• They weren't the market leader in any category, but they'd run this business and made lots of money for years
• They were a lot smarter than me about the sheet-metal business

We passed on buying the business.

But the lesson is this:

Although they typically don't make the news, and they're always a little weary-eyed and tired looking, Mini-Moguls live a much better life than most aspiring, big-mouthed, educated Mogul Wannabees that don't really know a damned thing!