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Episode Summary
Most owners spend twenty years building something, then sell it once and hope they got it right. Colin did the opposite. He bought a commercial cleaning company off Craigslist for $5,500, grew it to 43 employees and roughly $675K in revenue in under four years, and sold it on purpose. Not because he had to. Because he wanted to learn how to sell a business so he could go do it again. That framing alone is worth the hour. He went back and knocked on every old customer’s door, switched everyone to pre-billing so new accounts were cash positive from day one, made his contracts auto-renew with no opt-out, and let Google do the lead generation because he was the only company in Bozeman with a website. Then he got bored. We got into why he sold himself instead of using a broker (and why he’d hire one next time), how a wrong-fit first buyer cost him 45 days and probably money, why his accountant and attorney working together saved him 30-40 grand in tax, and the asset-vs-stock fight over how the purchase price gets allocated. Honest, transparent, and the rare conversation with someone who treated his first exit as tuition.
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## Top 10 Takeaways- A job and a business are not the same thing. If the owner does all the work, you’re buying wages, not profit.
- Pre-bill every new contract. Your suppliers give you 30 days, your customers pay you upfront, and growth funds itself.
- Auto-renewing contracts with no opt-out are a quiet value lever most owners never install.
- Being first on Google in a sleepy market is worth more than any sales hire you’ll make in year one.
- Your business is your people. Hire from second-job applicants who already work hard somewhere else.
- Cull your smallest accounts before you sell. Fewer, bigger contracts make the business easier to transfer and worth more.
- The buyer’s bank cares about owner discretionary earnings, not whether the “earnings” are actually a 70-hour-a-week job.
- How the purchase price gets allocated (goodwill, non-compete, inventory, ordinary income) can move your net more than the headline number.
- Your accountant and attorney working together on the deal will save you more than they cost. Multiples more.
- The first offer that lands isn’t the offer. Tell them you’ll get back in a week and finish the conversations you already started.
Sound Bites
“There’s a difference between having a job and profit. People are categorizing it, yeah, but if you’re doing all the work and you’re working 80 hours a week, that isn’t profit. You just have a decent paying job.” (@TBD) — Colin Engstrom
“When I start a new account, it doesn’t cost me a penny. I get paid before, and the profit from the first month paid for the stuff. Now I’m cash positive, I can grow as fast as I want.” (@TBD) — Colin Engstrom
“I probably paid them five grand for facilitating the deal, and I probably saved 30 or 40 grand in taxes. It’s a no-brainer.” (@TBD) — Colin Engstrom
“You can get an offer for 25% more, but if you’re paying ordinary income, you’re actually losing more money.” (@TBD) — Colin Engstrom
“Part of this for me is, I’m going to do this the rest of my life. So I want to learn how to sell a business. There’s a huge value in that to me.” (@TBD) — Colin Engstrom
About This Episode
Colin Engstrom is a Bozeman, Montana-based operator who bought a commercial cleaning company off Craigslist for $5,500 in 2014 and sold it roughly four years later as the largest company of its kind in town. A finance grad who skipped the city job to ski, Colin treated his first acquisition as both a real business and a deliberate tuition payment, going through a full sale process so he’d be ready to buy and grow the next one. This episode is unusually candid on the unsexy mechanics: pre-billing, auto-renewing contracts, owner discretionary earnings, asset vs. stock sales, and how purchase price allocation actually hits your net.
Resources Mentioned
- GEXP Collaborative — Ryan’s exit planning firm (episode sponsor). — gexpcollaborative.com
- Rhodium Weekend — Where Ryan met the mutual contact who introduced him to Colin.
- Norm Brodsky — Inc. magazine columnist who documented his own $110M sale and pulled the deal when the buyer called ten minutes late.
- Bo Burlingham — Co-author with Norm Brodsky; referenced for the Inc. magazine sale series.
Connections
Phase + Module:
- Module 1 — Ownership Goals — Colin selling because he was bored, not because he had to. Owner-defined endpoint.
- Module 5 — Predictable Revenue — Auto-renewing contracts and inbound Google leads as the revenue engine.
- Module 7 — Leadership Team — Promoting from within, GM as the operational backbone.
Milestones:
- Milestone 1 — Time & Role Goals — Owner deciding when “I already did it” means it’s time to sell.
- Milestone 13 — Strategic Plan — The choice between scaling to $2M, diversifying into landscaping, or selling.
- Milestone 21 — Leadership Development — Why losing the operator’s key people post-close is the biggest buyer risk.
Concepts referenced:
- Normalized EBITDA — Why owner discretionary earnings need adjustment for owner labor before any multiple applies.
- The Owner-Operator Trap™ — A “business” where the owner does the work is a job dressed as equity.
- Cash Conversion Cycle — Pre-billing customers while running 30-day terms with suppliers.
- Value Gap — The space between what a tax-minimized P&L shows and what the business is actually worth.