Intro: [00:00:00] Business owners likely will have only one shot to sell a business. Most don’t understand what drives value and how buyers look at a business. Until now. Welcome to the How to Sell a Business podcast, where, every week, we talk to the subject matter experts, advisors, and those around the deal table about how to sell at maximum value. Every business will go to sell one day. It’s only a matter of when. We’re glad you’re here. The podcast starts now.

Ed Mysogland: [00:00:35] On today’s episode, I had the opportunity to visit with Tamer Shoukry. And Tamer is a business broker out of Ohio, and his claim to fame is Mr. Wireless. And it’s funny during our interview, I was thinking I was talking about wireless stores. And what I didn’t realize is just how deep that business goes. And what I’m saying is the resale market. I’m thinking we’re talking about new cell phone sales and products and services. But it was so much more than that.

Ed Mysogland: [00:01:17] So, it was a fascinating interview. And I’m certain that you will sit there and never look at another wireless store without going, “Wow, I had no idea.” So, my point is, it’s a good one. And so, I hope you enjoy my conversation with Tamer Shoukry.

Ed Mysogland: [00:01:35] I’m your host, Ed Mysogland. On this podcast, I interview buyers, sellers, dealmakers, and other professional advisors about what creates value in a business and then how can that business be effectively sold for a premium value.

Ed Mysogland: [00:01:48] On today’s show, like I indicated in my introduction, I’m really excited about Tamer Shoukry, who’s known as Mr. Wireless. And so, you can imagine to get that moniker, that is a real special person. And this industry is not quite what you might think. You think of it as a retail operation, but it really is so much more than that. So, Tamer, welcome.

Tamer Shoukry: [00:02:16] Well, thank you. Ed, thank you so much for having me today. I really appreciate that.

Ed Mysogland: [00:02:20] Well, I didn’t do your practice justice, so I was hoping that maybe you could talk a little bit about the work that you’re doing and your practice and your specialty.

Tamer Shoukry: [00:02:37] Awesome. Awesome. Well, in 2006, I started working for this nationwide distributor for wireless products. And, basically, what they did, they made me travel city to city, state to state, especially Indiana, to sell their product, which was Boost Mobile and Page Plus. And I had to go and flourish the markets. The market would not be familiar with these products, so I would move and I would spend weeks there until everybody starts selling this product, other retailers will start pushing the products.

Tamer Shoukry: [00:03:17] And that gave me a very, very strong stronghold when it comes to networking with small business owners who own retail shops, you know, corner shops, gas stations, all these mom and shop businesses, and bigger size retailers to introduce the products to them.

Tamer Shoukry: [00:03:40] I spent three years there and then I decided to start my own distribution company, that was in 2009. I became the master dealer for Boost Mobile, and number one distributor in the Midwest. So, we grew up from there. And then, I started selling devices in bulk to small carriers. So, smaller carriers will buy 5,000, 10,000, 20,000 devices per month, so I focused on this side of the business.

Tamer Shoukry: [00:04:14] Later on, in 2012, I started the first repair store in my area in Dublin, Hilliard, Ohio. And after one year, I started a cell phone repair school in Houston, Texas. And after that, I came back to Ohio. After three years, I came back to Ohio, and I started a little wireless software company that serves cell phone stores. So, I have a very good existence in the wireless industry in the country and overseas.

Ed Mysogland: [00:04:49] I would say. So, I guess the first place I would want to start – and I know this is a big ask – what’s the overview of the industry? Because like we were talking about before we got started, I mean, it’s not necessarily what everybody thinks that it’s just a retail operation. So, can you kind of give me a little bit of an overview on that?

Tamer Shoukry: [00:05:13] Sure. Yeah. The cell phone service or the telecom service is part of the infrastructure of any country and everybody is getting the service, any business, any field, medical, industrial, science, education. Everybody is using the wireless industry. And when it comes like this, you find yourself in a situation. There is always high demand on these kind of services and there is not enough people providing the service. You can imagine —

Ed Mysogland: [00:05:48] How is that? Is that true? I mean, how does that work? What you were saying was that there’s not enough people providing the service, I mean, what does that mean?

Tamer Shoukry: [00:06:00] Well, if you look at the country here, we have mainly, like, three or four major carriers – you know them – and they’re providing the airtime. And then, you have the dealers or retailers who are working under them providing the service. And then, you have the repair shops that do repairs for the devices when they have any problems or issues. And then, you have companies producing the devices, you know, Apple, Samsung, whatever. So, there is always high demand and there is not enough devices. I don’t think there’s enough devices in the market.

Ed Mysogland: [00:06:38] Really?

Tamer Shoukry: [00:06:40] Yes.

Ed Mysogland: [00:06:40] That was what caught my ear. I’m like, “Wow. There’s not enough devices in the market.” And as large as this market is, that’s a staggering statement. But you would know.

Ed Mysogland: [00:06:58] So, we have the market now. And I guess, when you think of a wireless operation – because when you were talking a little bit about your practice, you are not only talking about retail operations, but you were also talking about in truck stops, gas stations, things like that, where those are respective profit centers – tell me what does that look like, the mechanics of that. I know from a retail store, but does the retail store then go and sell to the truck stop? Or is there some other operation that has the cornerstone on that type of business? You know what I mean?

Tamer Shoukry: [00:07:47] Very, very good question. This industry is not stable. It’s changing every other year. It’s changing dramatically. So, back in the days when I started, we used to sell in corner stores. We used to sell in barbershops. We sell the device activated already with airtime, so you just turn on the phone and it has minutes and you can start talking and texting.

Tamer Shoukry: [00:08:11] But, now, all these venues start shrinking. But we have something new or we have the repair shops. The repair shop will be independent, will be providing services like fixing devices, activating new lines, and doing more than that. With the high price of the devices now, it becomes more like a car dealership. And this is the real — in the business, when you buy broken phones, fix them, and resell them. Huge margin. It’s more than anything you can imagine.

Ed Mysogland: [00:08:54] Now, I’m following you. So, where do you sell the repaired phones? Do you now turn online? Or are you getting foot traffic? Where is the source of that profit center?

Tamer Shoukry: [00:09:08] Okay. Perfect. So, if somebody who owns a store, usually the customer would walk into the store and they will ask do you have any affordable iPhone, for example, I don’t want to pay the full price. I said I have this model, I have that model. It sometimes will be like 30 percent off, 50 percent off from buying a brand new one. So, he would sell this, or he would sell them online, or he will export all the devices overseas for higher margin.

Ed Mysogland: [00:09:42] I get it. So, how do you – yeah. Go ahead. I’m sorry.

Tamer Shoukry: [00:09:45] So, you have some company that is selling, let’s say, 100 phones a month and some other companies selling 20,000, 50,000 phones for a month. You have this size and you have that bigger —

Ed Mysogland: [00:10:01] Sure. So, what’s a good size as far as revenue goes? What’s a reasonable operation? I mean, is that a half-a-million dollar revenue store? Or is that a $5 million revenue store?

Tamer Shoukry: [00:10:18] Usually, the independent one, the repair shops, they would be between 50 to mil. Some of them can reach mil. Especially if you’re in a busy city like New York, you can reach this number. The other bigger size companies, they do not do retail. They don’t face the end user. They would collect the devices, repair them, and then send them overseas for higher prices. And that margin will go up to $300, 400, 500 million.

Ed Mysogland: [00:10:57] Wow. So, the companies you just referenced, the ones that are buying up the damaged and subsequently repaired phones, they’re going around to all these shops saying, “Hey, I want to buy your damaged phones.” They refurb them and then sell them, right? That’s how that works?

Tamer Shoukry: [00:11:19] This one of the venues they do this. And the other way is they go directly to the carriers, because carriers will always — returns. And they will buy it through an auction. And the auction is not for everyone. You need to get certain certifications, like the R2 Certification, to be able to participate on those auctions.

Ed Mysogland: [00:11:45] So, what’s an R2 Certification? What does that mean?

Tamer Shoukry: [00:11:48] Responsible Recycling Certification. It’s very similar to the — but it comes to the electronics.

Ed Mysogland: [00:11:58] I got it. So, I’m based here in Indianapolis and so I know that there’s all kinds of retail operations that are selling phones, so that’s easy. But what about the folks that you just mentioned, the ones that are approved by the vendor to collect the phones, I mean, is that a big market? I mean, is there five people or 50 people that are buying up these phones?

Tamer Shoukry: [00:12:28] No. No. I would say the certified companies would be around maybe 30 certified. It’s not a big number. I can tell you the names of the owners of each company very easy because they don’t change that much. They don’t go out of business that quickly. I’d never seen any one of those companies dealing with the assets on the large scale getting sold. I never seen that.

Ed Mysogland: [00:13:03] Yeah. Those kind of margins, I’d hold them too. I wouldn’t sell it.

Tamer Shoukry: [00:13:09] There’s only a few companies that are the biggest companies. They’re going with billions of dollars. They got sold to private equities and entities like that. So, as I wanted to mention to you, it’s not only the small shop in front of you that one guy is working there. No. It goes way, way beyond that.

Ed Mysogland: [00:13:33] Sure. No, no, no. That’s where I was going with it, is that, it seems as though that’s the entry point but it just broadens out from there. And there is all kinds of money after just the retail side of the business.

Tamer Shoukry: [00:13:49] Yes. And there is also the companies that doing special type of software, companies doing finance technologies, and these guys are way beyond your imagination.

Ed Mysogland: [00:14:05] Well, circling back to the retail, I’ve always wanted to know how they make money. I mean, I know we’ve been focusing on, “Look, we’re taking damaged phones and we’re reselling them.” So, that’s a little bit of a profit center. But it would appear that the real profit is the guy that’s buying it, not necessarily the guy that’s selling the damaged phones. So, they’re getting a little bit of a hit, but it’s downstream that they’re making all the money. So, when I look at the retail operation, where are my profit centers? I know probably, you know, cases and things like that. But where else? Where am I looking at?

Tamer Shoukry: [00:14:57] When you go and you pay your bill, the monthly bill, this is profit. You get a margin. You get a small percentage. But by the time you will have more people coming to your store and doing the payments, that can pay your rent. For example, it can be, like, $2,000 or 3,000. When you are doing the repairs, you charge at least $50 up to $100 per device, so that is another thing. The accessories is another thing. In the accessories, usually you can make up to ten times your cost. So, you buy a charger for $2 and you sell it for $20. You bought this for $5 and you sell it for $25.

Ed Mysogland: [00:15:50] Yeah. Okay. So, the locations, the ones that I see, like when I’m looking at these locations here in Indianapolis, it seems as though – I don’t want to say they’re in the lower income, but it does appear that there’s a concentration in some of our lower income communities. I mean, conversely, where you would see like a Verizon not necessarily down in those same areas. Is that true or not?

Tamer Shoukry: [00:16:26] Yes. Yes. Usually, the lower income areas where you make most of the money. And it’s funny that you mentioned Indiana, because Indiana is very close to my heart. I started my career in Indiana. I consider Indiana as my school to understand the cell phone industry. And every city will have this one store that everybody likes to go there. And you had one, I guess, in the east side of Indy, and the store was amazing. Generation after generation, this is the spot. Everybody wants to go there. It’s not the nicest part of the town, but you know what? Everybody just go there.

Ed Mysogland: [00:17:09] Great service. I know what you’re talking about.

Tamer Shoukry: [00:17:11] But when it comes to the stores owned by the carriers, they usually go for the nicer areas. They usually go for prime locations. And the individuals do not like to open next to them because you cannot compete with the carrier. The carrier can hire the best executives, nicest looking sales people, the best devices. It’s not going to affect them. But if you’re an individual business owner, you cannot compete. You cannot compete. You want to be integrating with that company.

Ed Mysogland: [00:17:50] Well, that was where I was heading next. How does a company like this compete when you’re looking at online, you’re looking at BestBuy, you’re looking at where else can you activate —

Tamer Shoukry: [00:18:03] Amazon.

Ed Mysogland: [00:18:04] Yeah. And some of the bigger box stores. So, how does the mom and pop shop compete against something like that?

Tamer Shoukry: [00:18:12] I’m going to tell you a fact. It’s funny, when you go to one of the big boxes, you don’t get the service. You can grab the device, but no one is going to talk to you about it. No one is going to want to explain the plan. No one is going to tell you this is the most suitable plan for you. And if you have a problem, guess what? Nobody’s going to be able to answer your question. This is why they go to the repair shop to do the activation, to ask questions, and fix problems. And the same thing goes for the bigger carriers, they don’t have this technicality to sort issues with the device itself.

Ed Mysogland: [00:18:55] Yeah. I follow that. And I think one of the biggest challenges that I see, and we’ve tinkered around with a couple of them, has to do with repair. And I know you alluded to this just a minute ago that there’s a lot of profit baked into the repairs. And I have some children that have broken, you know, phones and iPads and so on and so forth, so I am well aware of the cost to repair it.

Ed Mysogland: [00:19:31] But one of the things that we continue to see is the difficulty in finding and then retaining help, especially with that. I think you can be easily trained on selling and understanding the product and the needs of the consumer. But a technician, that’s a different animal. So, how do I find them? How do I retain them?

Tamer Shoukry: [00:20:03] When it comes to technicians, this is the rarest type of employee you can ever — it’s very hard.

Ed Mysogland: [00:20:13] No, I’m with you.

Tamer Shoukry: [00:20:14] And usually, if I’m new in town, I don’t know everybody in town already, I would go to Google them and they said phone repair. And these guys, they would spend a lot of money just advertising online. So, when it comes to Google Maps, MapQuest or whatever, it will show you he’s there. He’s there. There is no single town, big town in the whole country without two, three, five stores doing repairs now. When I started my first store, I was the only one in my whole town in Dublin and Hilliard area. So, now it’s different — very well.

Ed Mysogland: [00:20:59] Yeah. And now what? You’ve got the major repair repair franchises. What, Cell Phone Repair? And I think there’s two or three others.

Tamer Shoukry: [00:21:09] CPR.

Ed Mysogland: [00:21:10] Yeah. CPR.

Tamer Shoukry: [00:21:12] Yeah. It’s funny, because these guys, they are not franchised really. It’s something – I don’t know how to explain it. The company used to be a franchise. CPR used to be a franchise. And then, they went to every individual store and they convinced them to change their sign and become under them. So, it’s Mike Repair, and everybody likes Mike. They will come to you and tell you, “Come join us. You will have certain kinds of benefits.”

Ed Mysogland: [00:21:44] I get it.

Tamer Shoukry: [00:21:46] I know the guy who started the CPR. He’s a friend of mine, I can say that. But when the company got sold a couple of times, now corporate is really separated from the store owners. It become a full franchise, really, you know.

Ed Mysogland: [00:22:08] Yeah. No, no, I get it. But circling back to the retention of the technician, I mean, is that just an economic thing or is there any other way to induce that type of person to stay with the company? Because if I’m looking at it as a buyer, I’m sitting here going, “All right. I got to figure out how I’m going to keep this guy.” Because what you just said is that the other shops are looking for a repair guy. And my guy probably has a target on his back. You know what I mean?

Tamer Shoukry: [00:22:39] True. This is a very important point, and from my experience, the best thing is to be generous to your technician. And, you know, you always have to have two or three of them. You can’t just depend on one.

Ed Mysogland: [00:22:55] That’s true.

Tamer Shoukry: [00:22:56] Once you have one technician, you hire somebody to be trained under him. Just in case something happened, he got sick, he had to travel, he got married, he got divorced, whatever, you always have a backup. You always have a backup. Somebody will get in and finish all the repairs. When I had my store, I had three. I had three all the time. Because if somebody got sick, we get heavy loads of repairs coming in, I always have enough people to do the repairs.

Ed Mysogland: [00:23:29] I get you. So, moving to financials, so are there various metrics or benchmarks that I could say, you know, if I have a 10 percent net profit margin, I’m doing great. If I have a 50 percent gross profit margin, I’m doing great. Are there any, like, ways to quickly look at a business and say, “Yeah. You know what? That’s a good target for me.”

Tamer Shoukry: [00:23:58] I would usually go and see how many repairs they do per month. I would see how many phones they sell per month. From my side, from my experience, I prefer the stores that sells more devices than the stores that repair more devices, because the biggest goal for you is to have the biggest sales. You need to sell more devices. So, it’s okay, you can do repairs, but you cannot focus on repairs only and neglect selling.

Tamer Shoukry: [00:24:33] So, I would like always to go to the store that’s selling the most devices in the whole area. You sell 100, I know exactly how much money you’re making. Because I would know he would at least make $50 to 100. So, if you sell 100, that’s $5,000. You sell more, you make more money. The rent shouldn’t be more than $2,000 under any circumstances. Some guys, they will go with more, but it will be always a big risk.

Ed Mysogland: [00:25:07] I get it. So, I guess as it relates financially, most people need their cell phone, so my question originally was centered around, you know, is the industry correlated to disposable income. And I think just from our conversation thus far, I can tell that’s probably not the case. There is no correlation to any part of the economy because people are going to need some means to communicate. Right?

Tamer Shoukry: [00:25:49] — percent true. And nowadays, with a device costing you up to $2,000, it’s not only people who do not have money, they go and fix the phones. I had a lawyer used to damage his small tablet all the time and come and spend $300 because all the documents that he has on these tablets.

Ed Mysogland: [00:26:13] Oh, sure, sure.

Tamer Shoukry: [00:26:14] Every time, every day he can buy brand new. But with the documents he has there, it’s worth his life. His career is only in this small device. He will come and spend $300 to fix it.

Ed Mysogland: [00:26:29] Sure. So, one of the challenges that I continue to see is this business as well as a business that is dealing with repairs as well as retail of new, and that’s inventory management. I got to imagine that it is a real challenge in this industry, isn’t it, to keep track of your inventory? Or is there like a universal point of sale type inventory management service or no?

Tamer Shoukry: [00:27:06] There are. There are. It would work for smaller shops. And there is software for wholesalers. But from the bottom of my mind, there is no real solution until today. I’m not saying this to bash the companies that designed those software, but you can do better than this. It can be more in details than what we have now. You can use QuickBooks like any other business. But when it comes to tracking your inventory, there is some software being used now, but I am not satisfied with the results.

Ed Mysogland: [00:27:49] No, no, I get it. So, who buys these things? Because I know you’ve sold a lot of them and I’m just kind of curious to know what does that person look like or does it vary?

Tamer Shoukry: [00:28:04] It varies. You can be a mom. You can be a dad. You can be a teacher. You can be a — you can be a government agency. You can be individual who is sending these devices, selling overseas. So, everybody is — but who’s buying more? You can ask me who is the most who’s bought more?

Tamer Shoukry: [00:28:27] And I would answer the question honestly. If you have any market with lots of immigrants, they would buy these devices more than anybody else, because the relatives back home in their countries, they’re going to ask them, we need devices, we need iPhones, we need Samsung, we need this, we need this. And there is no place in the whole Earth is cheaper than the U.S. when it comes to devices. So, the demand is crazy high.

Ed Mysogland: [00:28:59] I get it. That’s interesting. I mean, market multiples, do they vary in the industry or they stay fairly consistent? Because I got to imagine the risk remains the same, so I would assume the multiples fairly consistent or no.

Tamer Shoukry: [00:29:24] I would say it’s different between cities. Because if you’re new, it’s not the same thing. If you are in Kansas or Arkansas, you have less people, so your ability to sell devices is less than if you are in a bigger city.

Ed Mysogland: [00:29:46] So, multiples increase based on the density of the population in the area.

Tamer Shoukry: [00:29:55] Of course. Of course.

Ed Mysogland: [00:29:55] I get it. No, I mean that makes sense. So, as we talk about selling these things, is it a normal lending environment? I mean, it’s just based on cash flow and it works? Or is there a special way that these things get financed given the inventory fluctuations and such? I would assume it’s just like any other business. If it can support the cash flow, you know, you’re in business. Or is that not the case?

Tamer Shoukry: [00:30:31] Well, I would say, the biggest chunk of the business done cash upfront. And I was involved in one of those companies that provides a tool for financing for the independent store owners. So, the software will go and check the background of the person who’s buying the device. It will give you colors: red, don’t give him the device — it’s up to you; and green, go ahead and you can sell him, you can trust him, he has a good credit background, and he has the ability financially to give you the payment every week, $50, $20, whatever you agree on.

Tamer Shoukry: [00:31:17] But I would say cash is the biggest chunk of what’s happening here. Everybody just go and pay upfront. The financing comes from the bigger companies. If you go and buy from Apple, that’s brand new, expensive devices. They have their own financing and they make it easy.

Ed Mysogland: [00:31:37] Okay. But as far as buying the company, is it just like any other SBA lender? You know what I mean? From that standpoint, it seems that this is just based on cash flow. I would assume based on what we’re talking about, I would imagine my cash flow to revenue ratio has to be 20, 25 percent. That’s two-and-a-half, three multiple, which then takes me, as I look at it, to a bank. I mean, that’s plenty of cash flow to support some reasonable debt. What I’m trying to establish is the risk associated with, if I’m a lender, where is my risk in loaning that money, aside from the borrower him or herself? You know what I mean?

Tamer Shoukry: [00:32:40] I’ll tell you something, when it comes to small businesses, like individual stores, I never got any lender involved, just usually cash. But talking about bigger companies, the multiple million dollars, then it’s a totally different story. It’s a totally different story.

Ed Mysogland: [00:33:00] But if I come in some of the lower income areas, you had already indicated that the buyer pool tends to be —

Tamer Shoukry: [00:33:17] Competition.

Ed Mysogland: [00:33:18] Yeah. So, there is consolidation, so they understand it. But as individual buyers, so seller financing – because I’m sitting here, let’s just say it’s $200,000, would you risk 200,000 to buy this business that a lot of which is cash? You know what I mean? It’s almost like a food and beverage business. And to me, this seems harder to track my cash or no?

Tamer Shoukry: [00:34:00] True. This is why I mentioned that most of the buyers will be people from the industry itself. He can be somebody from outside the certain city or town. It can be the guy next door who always wanted to eliminate the competition. He would say, “Okay. I’ll buy it. I’ll take this place.” And usually it goes cash. They pay everything cash. If they have terms that’s between the buyer and seller, I do not recommend that at all because the consequences might escalate to a —

Ed Mysogland: [00:34:39] No, that’s great advice. Like I said, I didn’t anticipate that coming out of your mouth, but it totally makes sense. So, since we’re bumping up on time, the last question I asked every single guest, and you being the expert in the industry, what’s the one piece of advice that you would give, I guess, business owners in the wireless retail or the wireless industry? What piece of advice would you give them that would have the greatest impact on their value and their ability to sell?

Tamer Shoukry: [00:35:15] Do not buy a business based on your emotions. Never. You have to always —

Ed Mysogland: [00:35:21] Okay. So, that’s the buyer.

Tamer Shoukry: [00:35:24] Yes.

Ed Mysogland: [00:35:25] So, what about the seller? How is the seller? What does the seller need to do in order to make this business saleable?

Tamer Shoukry: [00:35:33] Your business has more value than what you think. Your business has more value than you think.

Ed Mysogland: [00:35:43] So, how do I get that out? Because I’m certain there are plenty of sellers that just heard that and say, “Tell me more. How do I get more money out of my business?”

Tamer Shoukry: [00:35:55] Hire a broker, like me. And I will go to your finances and I will make sure to represent your business in a better way than if you try to represent by yourself, based on numbers, facts.

Ed Mysogland: [00:36:14] Yeah. Yeah. I got it. So, the quality of your financial statements, even though you’ve got a bunch of cash that is flowing in and out of the business, that will determine whether or not you’re going to be able to sell at a premium value.

Tamer Shoukry: [00:36:32] Yes.

Ed Mysogland: [00:36:32] Perfect. So, Tamer, what’s the best way we can connect with you and how can people find you?

Tamer Shoukry: [00:36:38] You can search my name on Google or you can find me on Facebook at Tamer Shoukry. You can find me on Instagram, @cellphonesinbulk. Or you can call me at 614-226-2723.

Ed Mysogland: [00:36:56] Okay. Well, Tamer, I got to tell you, I didn’t know what to expect out of this. I’ve always seen it. I’ve always heard that the business was lucrative. I just had no idea that there was so much more to it than just a storefront. So, thanks for the education. I’m certain everybody’s kind of in the same camp with me of like, “Wow. What a crazy business. And, boy, that might be a nice little business for me to buy.” So, thanks for coming on and telling us all about that.

Tamer Shoukry: [00:37:33] You’re welcome. And thank you so much for inviting me.

Outro: [00:37:36] Thank you for joining us today on the How to Sell Your Business Podcast. If you want more episodes packed with strategies to help sell your business for the maximum value, visit howtosellabusinesspodcast.com for tips and best practices to make your exit life changing. Better yet, subscribe now so you never miss future episodes. This program is copyrighted by Myso, Inc. All rights reserved.