Introduction
Damon Carson shares his journey of acquiring Pacific Insulation Supply, a B2B business acquisition that generates $600K yearly with zero inventory. Learn how he transitioned from tech sales to business ownership, overcame mental health challenges, and implemented scalable systems.
Founder Success Story QnA
Start us off, Damon, with a couple minutes on your personal and professional background and what it was that led you to want to go out and buy a business.
So kind of some brief background. I was in tech sales for the last like five plus years. Started originally working for we have a family business that sold Texas school districts and left that joined a couple different startups uh here in the salt lake area one called weave which recently ipo’d and one called bolt. You know bounced around a little bit ended up back at the family business earlier this year and that’s kind of the professional side but I really started searching about a year and a half ago. I got laid off from a job and uh it kind of was an idea that I’d had for a long time. I’ve been looking at you know financials and businesses for four plus years but really got serious about it about a year and a half ago.
What happened a year and a half ago that made you get serious about the search?
Just losing employment so I was let go from a job during the pandemic. You know I was looking for work but also was you know mostly just looking at businesses to buy and um even things to franchise just something to do out of my own kind of realizing that the way to really build wealth was through equity. But yes that was when things really took off for me in terms of looking at businesses and figuring out the um the process of you know dealing with brokers looking at financials getting your own financials in order all that stuff really started happening about a year and a half ago for me.
You had said that actually four years ago the idea of buying a business kind of first was on your radar and then you got serious about it a year and a half ago when you were laid off from the tech company during the height of COVID. So you obviously had entrepreneurial leanings. Did you ever consider starting something from scratch rather than buying? Like why buy versus start from scratch?
So like when it comes to tech I’m not really smart enough to do that. I mean I don’t really know code. I didn’t have that that side for me and also like my background my family was all in small business both on my wife’s side and my own side. My my dad’s a beekeeper so he runs like a bee farm and so I’m from a small town where a lot of people are small business owners and so that kind of just made sense to me more than like hey let’s build a tech idea and raise capital and that just didn’t really fit um you know what I’d known um and then I did I did try to start actually a garage flooring business but ultimately I just hated doing garage floors and so you know really what it came down to is like you know when you buy a business you buy a ringing phone and I figured um I think I would not have heard that yet that’s a great that’s a great way to put it. I stole it from someone on twitter it was a tweet I saw I don’t know who it was I’m sorry but um basically I knew like I had a better out I had a better chance of optimizing a business that ran than to start from scratch.
You had talked to me a little bit about the type of business that you wanted. What were your criteria?
Yeah so um I would say like the big three things I was looking for was um a business that dealt B2B. I really was uncomfortable with the concept of selling to consumers. I’ve sold B2B for the last five plus years so it made sense to me and I feel like I know the sales motion a little bit better. I wanted something that allowed me to live flexibly. I like to travel I like to you know go be with my kids and stuff and so I didn’t want something that you know was open until 10 pm at night. You know I wanted something that was gonna work regular business hours which maybe that sounds like kind of picky criteria but um another thing that I wanted was something that I could scale to an unlimited degree so um wasn’t bound by geographical constraints.
Was it e-commerce? Did you go out looking for an e-commerce business or were you more just like anything that fits this bill?
I’m open to it. It was more anything that fits that bill and also like whatever came around. I wasn’t doing any proprietary outreach you know I didn’t have any way of I didn’t know that was an idea or a thing you know I I didn’t even know that the SMB twitter world existed that was doing this um and so I was mainly just talking to brokers and whatever came across my desk. One business that was really interesting to me was a was a high-end audio business where they sold like really nice speakers and um receivers and stuff because they they weren’t selling online they were only selling storefronts so I thought well if I could sell online that would be cool then you know within the first phone call the owner I learned that the brands he deals with they weren’t allowed to sell them online so okay well I kind of ended that. So it kind of started to make sense to do e-commerce a little bit while I wasn’t necessarily focused on it.
You know what I’m hearing is that you’re completely self-taught. You’re not reading SMB Twitter initially. Did you read any of the books that come up again and again, “Buy Then Build” or the Harvard Business Review buy a small business book?
Yeah actually that’s how I was introduced to SMB twitter entirely was um I started getting really serious about it and I was like man I should probably like read something about this and so I looked up I probably just googled like best business books about buying a business and uh buy them build came up uh by marker dibel and so uh read that pretty much in about a day and then um looked up some podcasts that he was on and found a couple different podcasts and found those podcasts on twitter and realized there was this huge community of people that were trying to acquire businesses and people that had successfully done it and that it was actually a really good way of building wealth and so it felt good to have my thesis confirmed a little bit.
The idea of buying a business that you had kicking around for some number of years, did anybody give you that idea?
You know I really don’t know one thing I can I can think back to was in college I had a friend who uh and I’m I’m 29 so I graduated in like 2016. But uh I had a friend who um franchised the business right out of college instead of doing anything else he franchised something and um he was looking at buying businesses and so I’m I’m thinking that was probably my first introduction to like a normal regular joe trying to buy a business yeah um and then I’ve just got some friends that you know we kick around business ideas all the time and ty found biz by cell and you know yeah that entire world so I guess it and like I had seen family members buy businesses from like their like yeah I saw my brother-in-law by my his business from my uncle and so I knew that like it happened um but I didn’t really like know how it truly worked until probably a year and a half ago like okay I gotta get an SBA loan didn’t know what the SBA even was probably.
What about your financial criteria? What size businesses were you looking at?
Honestly I wanted to buy something that was less than 700 000 at first just like anything over a million just seemed outlandish to me uh and so I was looking at you know a lot of businesses like that but the tricky thing about that size is like they barely cover debt service and maybe paying yourself a little bit and so um I was looking at a bunch of thing about them for sure yeah and also they’re a lot more unstable and so I actually was um I was never really sure what my size wasn’t uh until you know I started really looking at it and I was like okay anything under sub5 I probably don’t really want to do and maybe I would now that I have kind of an anchor business but at the time you know I couldn’t think of of uh you know doing something smart on that so the way this kind of came together um was uh I fell into this business and um was actually looking at a business that was around 750 000 um enterprise value.
Was this from a broker? Were you reaching out to local brokers or did you reach out to brokers across the country?
You know I it never occurred to me that there were brokers across the country that I could like that I could talk to I was mainly just chatting with this one guy there are a couple I mean some of the big ones that are our nation like trans world and stuff but there’s one in utah that I was talking to a lot and uh he had shown me probably like 10 or 20 deals I don’t know I was a little bit nervous when I reached out because I for the one deal that I didn’t end up getting because I’m like man I’ve looked at so many deals he probably just thinks I’m you know just kicking the tires on anything and everything and I was really nervous about it um but we had chatted quite a bit and so he knew me and so um yeah I kind of threw through a broker that’s where I found this deal.
The one business that you keep talking about that you didn’t get, what’s the quick story on that one and then how did that lead to the one that fell on your lap?
Yeah it was a commercial cleaning business that had a bunch of uh a bunch of contracts with like local ski resorts here in utah which I thought was a unique niche and so um yeah I was looking into that and uh when I called the broker about it um he was like on vacation and then I finally got a hold of him on like a tuesday and I was like hey I’m really interested in this business and he was like well hey man I’m sorry but that’s going to be under contract in probably like an hour so maybe we should look at something else I was like oh dang it um I can’t get my stuff together in an hour you know so uh he was like but I have this uh this wholesale construction material business you could look at uh it does you know better numbers than this and it’s probably a lot more easy I got a lot easier to run and I was like oh sure okay whatever you’re just trying to tell me something um but I was like all right sounds good he’s like yeah I’m gonna list it tomorrow but I’ll send you the financials tonight and uh lo and behold it was the wholesale insulation supply business that I have today.
Tell us about it. What was it doing? What’s the business model?
So at first when he told me he’s like they want 1.1 million for it I was like that’s way more than I want to spend on a business but he’s like you know 1.1 million but it’s on pace to do you know 600 000 this year in net and so I I was like okay well now I’m kind of interested 600 000 in uh in EBITDA this year by being for sale for 1.1 yep yeah so the you know he sent me the financials and on the financials it had 2020’s revenue listed which was 2.2 million in sales and 380 000 in EBITDA and I thought okay well even those numbers are pretty good what’s going on in 2021 and so I looked at 2021 and um it was already at past those numbers and so I was like okay this is much more interesting um and so I didn’t really know what you know what multiple to look for I had read that like around three or four is probably where you want to be and so you know this one was priced at 3x of 2020’s revenue and so I thought okay yeah that’s that’s probably good maybe we can look a little bit closer in that and so then also like the debt service was pretty easy to cover okay on 380 and that service is going to be around 120 on that I can live very comfortably on that so and there’s a lot of money left to reinvest in the business and so the numbers started to fall into place for me even though it was a little bit more than I was anticipating in terms of cost.
Is it essentially an e-commerce business? Tell us a little bit about the business model and what it sells and how it sells and to whom it sells?
Yeah you know sometimes it feels like it’s uh all put together through paperclips and rubber bands but um but basically what it is is uh welcome to the lower middle market man yeah so basically we’ve got this uh we got a website pacific installation supply.com you go on there um the difficult part about fulfilling insulation in bulk is uh you know getting it to people right it’s not like I can just send it to a distribution warehouse and then they just fulfill it by amazon it’s you know the installation comes and it’s in um these big warehouses across the nation and so it kind of has to operate like a local business but with an e-commerce front end so people call us up or text us or email us and say hey I’m looking for 2 000 square feet of this type of insulation and then we have partners that house the material and deliver the material and so then I have um a team of sales people who then call around warehouses see which warehouse near them near the customer has the supply and then we organize delivery.
Why are people coming to you rather than going directly to one of the distributors?
That’s a great question and this is something that I had to figure out on the fly was like okay who is my ideal customer profile and um basically the way these distributors work is if you’re buying a lot of construction materials or insulation you can get an account with them and buy directly and get contractor pricing and it kind of eliminates the need for me but if you’re a small contractor and you’re a small or you’re a homeowner even and you want to get better pricing than say home depot or lowe’s but you don’t you know you’re not doing quantity um yeah we’re kind of feeling that niche and so I get a lot of uh contractors who do everything rather than just like insulation contractors who only do insulation because they’re doing so much volume they can go directly to the distributor yeah um yeah but yeah so we kind of fit that like middle man niche but at the same time during the supply shortage there have been a lot of big companies who their normal supplier is out but they don’t have a relationship outside of that one supplier we have four or five supplier relationships and so they can reach out to us and then we kind of work as a middleman for them as well so that’s kind of the niche we feel we feel and that’s why people would end up going to us as opposed to just the distributors directly.
Your customer is kind of like a general contractor with like a crew or two, like kind of a small mom-and-pop general contractor who’s not big enough to buy insulation in bulk?
Yeah yeah you know they don’t have a big warehouse where they’re shipping materials and holding materials they need it this week they need to deliver to a job site and they need you know a certain quantity now that’s not always the case I’ve had some big customers already you know where they’re working on huge projects and I’m shipping to their warehouses but that’s a little bit more rare and and sorry that’s because of the supply chain issue with the larger guys who haven’t been able to fill orders yeah you’re getting some of their some of their disappointed clients.
You just mentioned a day job. Can you care to elaborate on that?
Yeah yeah so this is kind of awkward but um yes I was working for our family’s uh you know tech business basically um I am now no longer with it I’ve I’ve put in my my notice and I’m done working but um yeah we can reveal your last name on twitter revealed my last name on twitter um the big thing was you know I at first I thought well maybe I can do both you know maybe I can find a way to automate a lot of this and do both and then after I took over it became pretty obvious to me you can’t do both um or you’re gonna do neither of them very well and so uh you know family business wanted to kind of uh resign it was kind of a secret within the family I wanted to resign and talk about it openly in person so um yeah I did that over the holiday break and everyone was pretty excited for us but uh yeah that was a that was one of those uncomfortable things at first was like man I’m really excited about this but I kind of have to keep it secret.
When you said you thought you might be able to do both, were you thinking about Pacific Insulation Supply as buying a job or were you thinking about it as an investment?
Um I don’t know if I was smart enough to really think about that I think I thought okay if I can make some tweaks here from a tech perspective if I can make it easier for customers to get quotes maybe my employees can handle more of the burden and less of you know less on me then after I took over I realized that which really wasn’t possible obviously I can there are some ways we’re going to make quoting easier so we’re taking less phone calls and fielding less texts and that’s more automated but um in the short term no it is definitely a job you know when you buy anything that doesn’t have a full-time manager in place you’re essentially buying a job and so now the the question for me over the next six months is okay can we keep revenue at a place where I feel comfortable bringing on a manager so that I can do other things like you know growing the business um and less day-to-day operations details work because I I don’t like being in the details I’ve I’ve learned overwhelms me.
How many employees are there?
Uh so there are four um they’re all overseas well there were three I’ve added one um but uh yeah so they’re all overseas and so you receive an order and you send it to one of your employees and they call around or email around the u.s you I guess you kind of have a a working list of distributors um well and you’re you’re probably call the the the warehouses are the locations that are closest to the the client that that made the purchase uh and then identify where the insulation is and they submit the order and have it sent to the customer.
Are you managing them mostly or are you also receiving and processing some orders yourself?
Um yeah so the way it kind of works is two of them are well are have been with the business for a while and so they are um they’re fielding phone calls they are um working front end with customers as well and I really like it every time I see an order come in that I had no idea what’s happening that’s like my yeah you know I love that so that’s the goal that’s when the magic starts yeah yeah um and so that’s kind of the the way it’s been working out for them and then what I the kind of recent change I did was I was calling around like the first couple of weeks I was calling around all these distributors and just on the phone constantly um between the customer and these distributors trying to figure out where stock is and when we can get it there and um one of my sales people was I wasn’t just struggling but just sales weren’t happening for her as fast and uh her region was a little bit more constrained so anyways I asked her if she would want to just do fulfillment for me and so decided to kind of break up the jobs the job duties and I plan on doing this even further but um I kind of shared this on twitter but basically like yeah you know in software sales there’s the predictable revenue model which is essentially there’s an SDR or a sales development rep who is cold calling setting appointments to an accounting executive who then works the deal closes it passes it on to a customer success manager or integrations team who then manages that and then the account executive goes back to square one with someone else and so it’s kind of broken up like this because you can specialize and it’s easier for an SDR to just you know make a ton of dials set appointments and then just forget them and then an AE to just close deals close and so I kind of decided all right right now this we’re doing way too much of everything our sales people are receiving phone calls trying to send quotes calling distributors doing order fulfillment making sure that things are you know being communicated to the customer on time and so it was just leading to like kind of a bad customer experience and honestly a bad employee experience like this is not fun to do all this calling and coordination and so um the first step in that was I asked the salesperson hey do you want to do order fulfillment for me and so whenever I get a text or I’m actually working with a customer I figure out what they need and I just ask her to go find it she finds it she puts the order in and then she communicates the details and so if there’s negotiation I can still handle that negotiation but uh the things that I don’t want to do I don’t have to do and I don’t like doing logistics that’s not my thing and so eventually I want to break it up to where all our sales people have order fulfillment in the back end that are making sure orders are processed fulfilled paid delivered on time and the sales people are only making sure that they get a yes on the order.
Are you out there proactively trying to close new business? What does it look like? How are you applying your tech sales to your job now?
Yeah to be completely honest I don’t really want to pound the pavement ever again I’ve pounded enough pavement in my day so um instead I’m trying to figure out a process that um I can hire people to do that so my top sales guy he asked me to buy him a list he said buy me a list of you know construction companies that I can call and um I haven’t done it yet but that was like last week we had this conversation um but I plan to do that and I want to basically um create a separate arm that is only outbound calling and so um that would probably bring on me bringing on other people to do that because we really are kind of at capacity in terms of what we can handle just on inbound inquiries right now and so I feel like if we added um you know a new section of people that are only cold calling and then passing those on to our seasoned salespeople to continually manage um I think we could we could find some success doing that but um we haven’t we just haven’t done it yet I’m still buried so hopefully I can get unburied and start um start doing some of the things I want to do and that’s kind of what I’ve noticed is when you buy a job all the ideas that you have of fixing the business are just ideas because you actually just have to run the business and then once it’s running you know you can maybe start up to think about changing things but you know the thought of change at this point feels almost kind of scary because I’m like man I just feel like I got the I’m figuring out what I’m doing here you know.
You have mentioned on Twitter just meant your mental health and how that’s played a factor in this whole process. Talk to me a little bit about that. What is your kind of mental health history?
Yeah so um I’m super open about it because for years I was very secretive about it and I felt like it built up um made it worse a little bit but yeah when I was 17 I was diagnosed with um with bipolar disorder or kind of a mild form of bipolar disorder and um that basically means swings of you know excitement or hypomania mania whatever you want to call it and then periods of depression and mine are kind of more longer and more pronounced than like on a daily or weekly basis mine happened in months and so um you know I’ve been taking medication for the last almost 13 years now for this condition and but it still kind of affects your life and so uh I still struggle a lot even daily with anxiety um you know even being medicated but basically uh I went through I went through these phases where I would get really excited about something um in college it was whatever I was studying or some career path I wanted to do in my career it was working for a certain company or doing working on a project and then I would sometimes bottom out I would get really really excited really high on an idea and then I would crash and I would bottom out I would discard the idea and I would move on and so I actually had this happen you know with a couple different business ideas and you know once I decided to make the acquisition some of the internal dialogue that I had to work through was okay what part of me wants to do this is it all of me is it truly me or is it the you know is am I having an episode or am I just really excited about something yeah yeah I’m having a manic episode where I think I’m going to take over a business and go and make all these changes or um or you know or is it really me.
How do you work that out? How do you find out if it’s the real you or the hypomanic you that’s whispering in your ear?
Uh I think the biggest test is time um if it sticks you know if the idea sticks with time and if you can if it can endure the ups and downs and so I started to realize like okay I’m not like blind to some of the flaws here I’m not blind to how hard this is going to be you know I’m not creating a sensationalized question of this in my mind um it’s very realistic to me it’s like okay I know this is going to be hard uh I know this is going to be a big life change even though I wasn’t necessarily like sure what that would entail um but it wasn’t just this like sensationalized idea so I started to realize that it was different than times past but also I was in a different state mentally I wasn’t having swings really I spent a good portion of 2021 just trying to get mentally healthy in preparation for this acquisition or just because you needed it anyway just because I needed it honestly 2020 was a bit of a year for people I’ve heard yeah some things happened so uh yeah it’s kind of to not to you know digress too much but basically um early in the year it became apparent to me that I was not doing well mentally I was kind of holding things together but I wasn’t uh doing I wasn’t excelling and so I kind of had I had uh spent some time away from work even this spring just kind of trying to get mentally right and kind of had just recently gotten to a place where I felt that I had three or four solid months and then okay I’m I found this this great acquisition so I’ve got to make sure I’m ready and healthy and prepared to take it and so um yeah I can’t say that it’s been all roses ever since taking over I’ve had a lot of really strong anxiety or you know extreme lows but also extreme highs um not necessarily in a manic way but in a wow this is so fulfilling this is amazing yeah but at the same time those depressing moments can be really depressing when you’re you’re overwhelmed or um you know just really bummed out about something that happens so uh it’s a constant dance and something that I hope I can continue to share more about with people because I think a lot of people struggle with it and don’t know they do or maybe they do and they’re scared to admit it.
Last question for you just about the future of the business itself. I think the obvious expansion here would be into different categories beyond insulation. Talk to me about when you get to breathing room what that strategy might look like for you.
Yeah so that’s part of the goals for the year I think within you know six months or so and I can hopefully bring on a manager that’ll give me time to open up the second category so yeah I’m trying to figure out who who my customers really are and get to know them and right now I’m finding that I have a lot of roofers um people who you know reinstall ribs have to do a lot of insulation work and so the distributors that I work with they carry a lot of different material and so I have accounts and I have the infrastructure ready already to ship these materials and all I have to do is essentially spin up the products on the website yeah and so um yeah so I’m still identifying what it’s going to be but it seems like roofing would be an obvious fit um metal siding could also be or siding just in general could be another fit um sheet rock drywall I’ll probably just look and see if you know the markets that I’m in and see which of those categories is a little bit more thin than the others and kind of bolted on so I think at first it’s going to start out just cross-selling so we have a insulation person we ask them if they need she-rock or you know if we know their roofing customer try and just get in on the action there too and then kind of grow from there so we’re gonna try to take it organically and then once I find some traction we’ll actually launch something.
Do you think that you could have handled a two million dollar acquisition? Three million dollar?
Oh I think like buying yourself a business where you’re going to have to be the star player is kind of scary so and hard and you know it’s kind of hard because you’re not like an absentee owner you’re a very active okay if I don’t do this it doesn’t get done type of owner yeah I mean not having ever done those other ones I look at it like maybe they would be easier like there’s probably more infrastructure in place and like it’s a train that can keep moving right now I’m shoveling a lot of coal to keep this train moving yeah so I think there’s a lot of places I can fail um where I think like you know a bigger business that has more things in place and you know more employees that you know have a role a specialized role it might be easier in some some regards but at the same time probably I would have been too scared to do that.
Damon Carson Business Stats
Damon Carson acquired Pacific Insulation Supply, a profitable B2B business with impressive growth metrics. The business operates with a unique zero-inventory model and serves contractors across the United States through a network of distribution partners.
- Business acquisition: $1.1 million (plus $20,000 added by Damon)
- Yearly EBITDA: $600,000 (2021)
- Annual revenue: $2.2 million (2020)
- Business age: 7 years old at acquisition
- Team size: 4 employees (all overseas)
| Metric | Value |
|---|---|
| Purchase Price | $1.1 million |
| 2020 Revenue | $2.2 million |
| 2020 EBITDA | $380,000 |
| 2021 EBITDA | $600,000 |
| Monthly Debt Service | $120,000 |
Damon Carson Method
Damon Carson implemented a strategic approach to acquire and operate Pacific Insulation Supply. His method focuses on leveraging existing systems while gradually introducing improvements to scale the business.
- Identified businesses with B2B focus, flexible hours, and unlimited scalability
- Targeted businesses with minimum $1 million valuation for stability
- Implemented specialized roles separating sales and fulfillment functions
- Leveraged supply chain disruptions to acquire new customers
- Planned gradual expansion into complementary product categories
Damon Carson Tools
Damon utilizes a combination of traditional business tools and modern technology platforms to manage operations efficiently. His tool selection focuses on automation, communication, and business growth while maintaining a lean operational structure.
- CRM system: For tracking customer interactions and sales pipeline
- Communication platforms: To coordinate with overseas team members
- E-commerce website: Pacificinsulationsupply.com for online presence
- Financial software: For managing business finances and cash flow
- Twitter: For networking and learning from other business owners
Key Notes
Damon’s journey offers valuable insights for aspiring business acquirers. His experience highlights the importance of mental preparation, strategic planning, and operational flexibility in successful business acquisitions.
- B2B business acquisition provides more stability than starting from scratch
- Businesses valued at $1 million+ offer better cash flow and stability
- Mental health preparation is crucial before undertaking business ownership
- Specialized roles (sales vs. fulfillment) improve operational efficiency
- Supply chain disruptions can create opportunities for smaller distributors
Get Started in Just 5 Steps
Following Damon Carson’s successful path to business acquisition, here are five key steps to help you acquire your own B2B business. This proven approach can guide you from initial research to successful ownership.
- Educate yourself by reading books like “Buy Then Build” and joining business acquisition communities
- Define your criteria: B2B focus, flexible hours, and scalability potential
- Connect with business brokers and analyze financial statements of potential targets
- Secure financing through SBA loans or other lending options
- Plan for transition period and avoid making immediate changes to the business
Conclusion
Damon Carson’s successful B2B business acquisition of Pacific Insulation Supply demonstrates the potential of buying existing businesses rather than starting from scratch. His journey from tech sales to business ownership, while managing mental health challenges, offers valuable lessons for aspiring entrepreneurs. By focusing on businesses with strong fundamentals, implementing specialized roles, and planning for strategic growth, Damon has positioned himself for continued success in the competitive construction supply industry.