Unemployed to a Multimillionaire in Less Than 5 years with Mike Mathweg

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. Brought to you by the HubSpot. Podcast Network, the audio destination for business professionals with great shows like Marketing Made Simple. Today, we'll be breaking down a journey of being unemployed to becoming a multimillionaire in less than five years. To drop these value bombs, I brought Mike Mathweg into EO Fire Studios. Mike is a relentless entrepreneur and business growth expert who achieved remarkable success before the age of 30, exiting the insurer's industry in under five years for a pretty sweet payout.

0:35In today's foundation, we'll talk about the eight steps in successfully buying a business, building a team, deal sourcing, initial discovery, due diligence, evaluations, making the offer, closing integration. You can tell we have a lot of things to cover today, all value bombs. And a big thank you for sponsoring today's episode goes to Mike and our sponsors. Success Story, hosted by Scott D. Clary, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversations on sales, marketing, business, startups, and entrepreneurship.

1:11A recent episode discussing the billion-dollar health secret with the founder and CEO of Whoop is a must-listen. Listen to Success Story wherever you get your podcasts. I have a question for you, Fire Nation. Do you feel like your life is optimized, or do you feel like you're leaving a lot in the table when it comes to health, wealth, and relationships? If you think you could use some personal guidance in optimizing your life, let me help. I've created a program called Optimize, where I will personally work with you one-on-one to get to know you, your life, your goals, and your dreams. If you want to learn more about this program, visit eofire.com slash optimize.

1:48Mike, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. It doesn't happen overnight. It takes a lot of consistency, no days off, and just putting in the work to be successful. And it takes getting lucky, being honest. Fire Nation, a lot of times luck is where effort meets opportunity too. So if you're doing those first few things, if you're putting in the work, you're putting in the effort, opportunities will arise. And yeah, you might get lucky and people will definitely call you lucky, but you're there grinding every single day.

2:26And today we are talking about going from unemployed to multimillionaire status in less than five years. So first off, you entered and exited a business in less than five years, Mike. I mean, that is warp speed to the next level. How did you accomplish this? In the early years, I kept my head down and was just busting to build my own personal book of business. And then I was at the time I was studying other successful entrepreneurs, seeing what have they done that I'm just not doing. And one of them was acquisitions. So I purchased my first agency with my mentor and became business partners on that acquisition.

3:11And then I had the opportunity to buy a minority stake in his company. And I did it. and went into millions of debt at the age of 27 years old to make sure I had a seat at the table. Well, you had a seat at the table. You made a most of that seat at the table and you exited in less than five years for a pretty sweet payout. And since then, and maybe actually during that time as well, you created eight steps in successfully buying a business. Let's go through those first four steps right now. Step number one to buy business successfully is you have to have a team around you. And that is accountants, attorneys, and most importantly, people that do transactions on the day-to-day basis.

4:04Because you need to focus on, as an entrepreneur, on your bread and butter. Because if you change gears and focus on everything else, your bread and butter might suffer. So that's deal one. And then step two is deal sourcing. Like you got to find these deals and there's in the course I've built, there's about five different deals sourcing I go through. And once you find a deal, you need to do quick initial discovery because everybody and anybody wants to sell their business, but most people that you're going to come across are just not realistic. They think their business is worth more than what it really is.

4:53And the one area that we screwed up on in the first business we purchased is really step number four, which is due diligence. And that's really when you can go through the business fully and understand everything that you're doing. and we didn't do proper due diligence, which it came to kind of bite us after closing, but you learn and you don't make the same mistake twice. What's the next step? Evaluating the business. Once you've kind of gone through the due diligence process, now we kind of got to evaluate the business. And when you evaluate businesses, there's two ways to do it. it's either a revenue evaluation, which that's kind of the simplest.

5:49You take the top line revenue times it by a multiple, which right now in the insurance space, one and a half to two and a quarter is kind of the going rate as the time we talked. Or the other way to evaluate a business is EBITDA, which is just earnings before interest, taxes, depreciation, amortization. really how I explain it to people it's your income minus your expenses that's really what your EBITDA is and EBITDA purchases are really the people that are selling a business and not a book of business in the insurance business and that's where a lot of people kind of get the multiples very mixed up is they think oh I can get six times revenue which those multiples are more for the EBITDA purchases and evaluations.

6:44And then after we evaluate the business, now we really just keep on going on. How are we going to make the offer? Making the offer in the course I put together is six different options to make an offer. You can do all cash. You can do seller financing. You can do equity. You can do mix match of all of them. It just depends on, hey, how do you want to do it? as you know, buying all cash and paying 100 % upfront, you as the buyer, you're taking on all of the risk because the business could go to zero the next day, which is very unlikely. However, it's where you take the risk. And after you make the offer and everyone signs up on it, then congratulations, it's closing day.

7:41but where a lot of people i help buy books of businesses they think that's where the job is done where realistically your work is just beginning and this is where a lot of people and i've seen this in the industry where people kind of put the most important step on the back burner, which is the integration process. They think that, hey, I just bought a business. I don't have to do anything with it. Well, you can, but now you got to integrate it, which is not just the money side of things, but how are people going to know, like, and trust you on the asset you just purchased? So that's where I kind of go through every step-by-step on how to successfully integrate the business after you close it.

8:36Because we both know in business, people do business with a know, like, and trust. And even though you just bought a business, the clients, the customers, you don't have the know, like, and trust aspect. So it's your job to do it. It's an easy process, but you have to put in the work to build the know, like, and trust. And that's a very high overview on the eight steps on how to successfully buy a business, which the course I built takes it down a lot deeper in each step along the way. Fire Nation, we're actually going to do a little bit of a deep dive on a couple of those steps in a minute. We're going to talk about building a team and a little bit more important things you're not going to want to miss when we get back from thanking our sponsors.

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11:18That's all lowercase letters, Notion.com slash John Lee Dumas to try the powerful, easy-to-use Notion AI today. And when you use our link, you're supporting our show, Notion.com slash John Lee Dumas. I have a question for you, Fire Nation. Do you feel like your life is optimized or do you feel like you're leaving a lot on the table when it comes to health, wealth, and relationships? After interviewing over 4 ,500 successful entrepreneurs, I have found that every one of them have optimized their life to a high level. In over 12 years of running a multi-seven-figure-a-year business myself, while staying healthy and raising a wonderful family, I figured out how to optimize my life to an amazing level.

11:59It didn't happen automatically. There was a lot of struggles. But through mentorship from others and a lot of intentional work, I got there. And if you think you could use some personal guidance in optimizing your life, let me help. I've created a program called Optimize, where I will personally work with you one-on-one to get to know you, your life, your goals, and your dreams. Then over a three-month time frame, we will create a fully optimized life that will set you up for a lifetime of optimized health, wealth, and relationships based off your goals and your dreams. An optimized life does not happen automatically.

12:33It only happens through intentional work and guidance from someone who has reached that level that you are striving for. My goal is to turn you into a fully optimized human based off of your life goals. If you want to learn more about this program, visit eofire.com slash optimize. We'll jump on a call. We'll discuss the specifics of the program. And if we both feel to fit, we'll talk about next steps. eofire.com slash optimize. So Mike, we're back. And one thing that I know you've found is that building a team is a critical part of this journey. Talk us through your advice on this front. What did you do?

13:08What are some examples? What should Fire Nation know? Building the team is very crucial because you need to be able to have experts in your fields that one has done deals like this before. Because this may be your first deal, this may be your second deal. But we need to have experts on your team. You need to have, like I mentioned earlier, in the process that our first purchase, we did not do a good job on the due diligence. So when you're building your team, you need to have someone that specializes in the due diligence process. And when you're buying a business, you need to have the leadership in place or the leadership on your team.

14:06Who's going to manage this new business? Like, congratulations, you're buying a business, but how are you going to manage the 10 employees that come with it? Everyone has strengths and weaknesses. You got to know exactly where everyone's at. I think this is one of the most important is you got to have someone has negotiation skills on your team because you're going to go into the process early on. And if you just say yes to what the seller wants, it might not be the best thing for you. The thing that I personally struggled on when we were doing our first acquisition is I did not have enough knowledge in the importance of an attorney to make sure all of the documents were to perfection, as well as an accountant.

15:05And then lastly, this deal, we didn't need it because our first deal we paid in all cash, but a banker because you need to build a relationship with either a regional bank, your local bank or wherever to have funding lined up when needed. I thought when I was buying the insurance business for the first time that I have a good credit score. I don't, my debt to income's good. However, we struggled when i bought minority stake in my mentor's business we struggled to find a bank that wanted to actually finance an insurance industry because there's no real assets it's not like i'm buying a building so having a relationship with a banker from day one when you're building your team will save you in the long run so mike Before the break, we went through the eight steps in successfully buying a business.

16:14Pick maybe one or two of those steps and let's do a little bit of a deeper dive. I want to maybe hear an example of either yourself or somebody that you've worked with who's actually done this in real life. So whether it's deal sourcing, initial discovery, due diligence, evaluations, making the offer, closing integration, choose one to start and give us an actual real life example so that our listeners can really understand what that looks like. Awesome. Yeah, let's dive right into initial discovery because I've had a lot of people that come to me and say, Mike, I want your help with buying a business or vice versa, someone looking to exit.

16:53So I brought on a client back in June and they were wanting to exit within the next 12 months. So I helped them with really getting everything lined up where we can make it very appealing to a buyer. And this is where I took them through this step-by-step process. I said, okay, where are we located? What team is currently on payroll? How much is that? and what's everybody's responsibilities. And then I took it down a little further and I said, okay, post acquisition, what is the team going to look like? And then we moved down into the type of business is it. So we broke it down, hey, it's a Medicare agency.

17:56And then we got it a little bit deeper. where we said how many are Medicare supplements, how many are Medicare Advantage, what does your three-year retention look like, carrier breakdown. We broke it down bit by bit. And then we got into the financials. And during the financials, I knew from doing this for a couple years now, I knew this was going to be an EBITDA purchase because it was an agency. They had agents, and they had 5 ,000, 6 ,000 policies. So we went through, and we got all their taxes put together. We went through their P &L. We did their ad backs, found out what the true EBITDA was, and we painted the picture of why somebody should purchase this agency.

19:02And then I took this to a couple of the buyers I know in the market that one can afford to purchase this. And we got it under LOI. in less than six months for higher than we were projecting. We were able to take this agency, get it prepared for the market, and I took them through the initial discovery, which in this eight steps is step number three, and we got it prepared for the market. and I took it to people and said, hey, here's where we're at. If you're interested, let's set up conversations with the sellers. And then right now, currently, we're in due diligence, looking to close January, early January, 2025.

20:05So Fire Nation, I really hope you can understand what it looks like to actually make a deal happen. These eight steps, of course, we just touched upon them. We did a little bit of a deep dive on one or two of them, but there's so much more that goes behind this process, the successful conclusion of that. So Mike, why don't you close with a bang here and share with Fire Nation the one key takeaway that you really want to make sure our listeners get from our conversation today. Don't be afraid to ask for help because I regret not asking for help. The first deal I purchased, which turned around cost us 40 % of the revenue overnight because I let my pride and my ego get in the way of asking for someone's expertise.

20:57So if you're looking at buying a book of business, you are looking at selling your business, reach out, ask for help. I'm more than happy to help. If it's not me, ask. Because it's going to save you time and money asking for that help than trying to do it on your own. Mike, if Fire Nation wants to learn more, wants to connect with you, what is your call to action for our listeners today? Find me on social, Mike Mathwick. I'm on Instagram, LinkedIn, Facebook. Reach out to me. My entire business model now is just to help as many insurance agents and entrepreneurs provide guidance on ways that I wish I had when I was building my businesses.

21:44So connect with me, happy to help any way I can. And I appreciate you and give me an opportunity to be on this podcast. For sure, brother. And Fire Nation, I hope you know that you're the average of the five people you spend the most time with. And you've been hanging out with MM and JLD today, so keep up that heat. For links to everything we talked about, visit eofire.com. Just type Mike, M-I-K-E in the search bar. The show notes page will pop right up with all the links. And once again, find Mike on social. That's Mike, M-I-K-E, Mathweg, M-A-T-H-W-E-G. Mike, thank you for sharing your truth, your knowledge, your value with Fire Nation.

22:23For that we salute you and we'll catch you on the flip side. Hey, Fire Nation, a huge thank you to our sponsors and Mike for sponsoring today's episode. And Fire Nation, are you ready to rock your very own podcast? Check out our free podcasting course where I will teach you how to create and launch your podcast for free, freepodcastcourse.com. I'll catch you there or on the flippity flip side. Success Story hosted by Scott D. Clary is brought to you by the HubSpot podcast network, the audio destination for business professionals. Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversations on sales, marketing, business, startups, and entrepreneurship.

23:03A recent episode discussing the billion dollar health secret with the founder and CEO of Whoop is a must listen. Listen to Success Story wherever you get your podcasts. I have a question for you, Fire Nation. Do you feel like your life is optimized or do you feel like you're leaving a lot in the table when it comes to health, wealth, and relationships. If you think you could use some personal guidance in optimizing your life, let me help. I've created a program called Optimize where I will personally work with you one-on-one to get to know you, your life, your goals, and your dreams. If you want to learn more about this program, visit eofire.com slash optimize.