YouTube Transcript:
How to 4x a Contracting Business in 3 Years | Michael Heath Interview
Skip watching entire videos - get the full transcript, search for keywords, and copy with one click.
Share:
Video Transcript
View:
Mike Keith welcome to acquiring minds
yeah I appreciate you having me on will
Mike you and a couple Partners bought a
very small Garage Door business tripled
it in about 3 years though it hasn't
been without some fetal position moments
you are now also in the pool business uh
with another acquisition so we're going
to hear kind of a a trajectory of
somebody who pivoted out of real estate
into business buying uh and is is moving
pretty quickly and I think it's fair to
say sees his career doing this going
forward let's get into it Mike how about
some background on you first please uh
yeah I grew up in um St Louis Missouri
it's about 30 minutes south of the city
um went to school at University of
Missouri St Louis uh studied accounting
business and uh business
administration uh after that went down
to Bogota Columbia um was supposed to be
a four-month trip ended up turning into
threee years came back to St Louis um I
got into insurance I did mortgages for a
while I like the mortgage business but
you know taking phone calls to 11
o'clock at night really didn't fit the
lifestyle that I wanted uh went the
corporate route for about five years
working for a roofing
manufacturer uh gave me a little bit of
structure and uh it was great but you
know I didn't really see myself climbing
the ladder I wanted a little more
ownership and then that's where the
garage door company came into play uh
that was back in 2020 and I was still
working for uh Malarkey roofing products
at the time and uh we ended up buying
the business while I was still working
for uh that company but it happened
during covid so we were working from
home the majority of it so I was doing
all my sales calls in the beginning of
the day and then um dealing with the
garage door company uh whenever I had
time well Mike but tell me where real
estate investing uh came into this
because that was what you had started
doing kind of as your as your
entrepreneurial Outlet correct yes yeah
so I was flipping well I was yeah
flipping houses I had a couple buy and
holds um you know the whole idea was
that I'd flip my way to being able to
buy uh rental properties and it was
going well I mean I did I did pretty
damn well on a handful of these
properties but um you know when you're
working a 9 to5 and then doing this on
the side and I'm making you know $2 $300
a door it's just seeing the path to what
everybody tries to shoot for and this is
Financial Freedom it just seemed like
such a long road and that's why I
started doing more of these flips and
the flips you know I did a handful that
were really well um and then I had one
that put me in the hole we probably lost
well I say we I lost probably about 80
to $100,000 on it wow so it was a kick
in the teeth uh we got through it um you
know my dad he's a retired Carpenter
right now so he you know really saved my
butt on that and um got me through uh
that difficult time but you know and
Mike that 80 to 100 Grand that you lost
on that deal did was that more than the
sum of all the profits you you'd earned
from the previous successful deals I
mean did it eat up everything you'd
built so far no no not all of it but it
just definitely hurt and it was a little
it was it was discouraging for sure but
you know the attitude was that like you
know I made 100 on I made a couple
hundred on U the other properties done
so I knew it was just a cost of doing
business and I made a couple mistakes
learned from them you know it's a cost
of the tuition and um just was ready to
push forward but the uh the business
buying you know I have a friend that's a
broker that had been you know every time
we get together he's telling me about
all these deals um and talking about the
people that were buying these and most
of them were Executives that were
retiring they still want to stay in the
game and uh it just sounded really
exciting and the amount of money that
they were putting into the deal was
about the same amount of money that I
was putting into real estate to buy
these properties and you can do it
through hard money you can do it you
know if you have the cash and the
capital you can always you know put that
in for the down payment um but it just
seemed like it was the same process and
these loans were you know seven to 10
years you could go SBA and do 25 if
there's real estate attached to it but
it just seemed like there's a lot more
money over here than what I'm doing with
real estate and I know that you can make
a ton of money in real estate through
multif family
flipping it
just it it it didn't it I don't know it
was something that was new to me and I
knew the Brokers um one of his friends
he's an investor and he owns probably
about 150 businesses and we were at a
bar one day and I was you know curious I
was asking them questions and I said you
know look I'm I'm investing in real
estate and that's how I see my path of
out of my 9
to5 why do you buy businesses because
everybody tells me that these things you
know most the failure rate is like 95%
he's like on like startups sort of on a
startup yeah yeah okay and he's like
he's like you know he's like on a
startup yeah that's true he's like but
if you buy a business that's been around
for 10 15 20 years the failure rate's
much less he's like you have obviously
have to do your due diligence on it to
make sure all the the records are are
straight and everything's you know is
what they say it is but he's like Mike
you can pay these things off in three to
five years if you buy the right business
he's like and think about that he's like
you can if you set it up properly and
you get somebody to run your
business you could be making 150 200
whatever it is and with the same amount
of money that you'd have to put into a
real estate deal he's like that's why I
buy businesses and he's like some of
them fail he's like that's true he's
like but worst case scenario you file
bankruptcy two years later you just go
do the same damn thing again so it kind
of blew my mind only two years that's
what he said at the moment I you know I
don't know what uh after you file
bankruptcy I don't know what the period
of time is to be able to build up your
credit back up but um yeah I mean that's
what I don't off hand either but I know
it's it's more than two years but anyway
still point point remains there's a you
can recover it's it's brutal but you can
recover yeah that really changed a lot
of things for me so I started talking to
the broker and I said look like you know
I've got sales Business Development
experience um you know I came from Blue
Collar I know that I can speak it I can
also do the white collar thing um but
you know if you see something that fits
what you think I can handle please just
send it my way you know janitorial
business came along I looked at that I
actually went under contract with it Loi
and uh the guy was able he let me run
his business while I was under
Loi and uh after doing it for about a
month we were doing commercial cleanings
you know TJ Maxx stuff like that and um
I just didn't want to deal with it you
know the type of employees that we were
dealing with uh the business made about
150 to 200 Grand a year it seemed it
seemed good it's just I didn't really
want to work in that space um well we'll
tell people why not because that is a
that is an appealing space on its face
at least because it's recurring
Revenue uh that that basically it's B2B
recurring Revenue you get these
contracts why didn't you like it
the employees that were coming in uh
that I had met a lot of them were taking
the bus routes and in St Louis the bus
system isn't really the best public
transportation is not really the
greatest a lot of the employees were
getting rides from friends and family um
it just you know we were doing uh
cleanings down in Springfield Missouri
and I remember one day the person
couldn't get to work so I had to drive
all the way down to Springfield Missouri
to go do this cleaning by myself and you
had repair all the uh equipment you know
the owner didn't really it was a small
business it was him and his wife that
were running it and it just I wanted
something that had a little bit more of
a system in place and um he always had
high you know a problem with high
turnover yeah it just didn't really seem
like it was a good fit for me at the
time and maybe I just didn't know much
about buying businesses and what you
really had to deal with uh because found
out later that's sometimes you got to
jump and get your hands dirty so um it's
nocturnal as well right these cleanings
happen during the night uh they can
happen at night sometimes early in the
morning 4:00 5:00 in the morning they're
there before the store opens up and
they're easy I mean it's you know
looking back I think it would have been
a great business but at the time it just
with me working a nino5 and then doing
this on the side it just didn't make
much sense okay so um but yeah looking
back it probably would have worked out
uh and
then Mike this this so it was this
conversation with your broker friend and
this local guy who's bought 150
businesses you said yeah that that
opened your eyes to this and that that
was and so you're seeing this guy this
Exemplar of this of this path 150
businesses um so obviously that's an
inspiration so you say so the napkin
math makes sense and here he is sitting
in front of you having done it and
presumably been very successful at it
and so after that that that's your
that's your kind of uh ETA eye opening
moment and you and you run after it
pretty much yeah okay great okay sorry
just wanted to make sure it was that
that was the Genesis I'll get questions
from time to time about being able to
work in the business first in some
capacity um or a guest will have have
some sort of structure like that how did
you how did you work that you got it
under Loi and then and then the owner
just said to you feel free to come
working was it compensated tell us more
about how you were able to try before
you buy it wasn't compensated and I just
said that I wanted to get a feel for
what the business was like to see if
this was a good fit for me and the
broker said like you're more than
welcome to try to see if he'll be a
he'll be willing to do this he's like I
doubt it most sellers do not want you
know a potential buyer to be working in
the business and he was fine with it and
he let me come in and honestly I was I
was setting up new accounts for
him and we actually opened up two new
accounts um or two new locations with TJ
Maxx while I was trying this out it was
ridiculous but he was like yeah just go
ahead and do it and he's like we've got
this person down in this area and you
can uh just tell them when they need to
be there so I was running the damn thing
I mean I was looking for employees I was
doing everything that you know an owner
of a company would do MH um which was
surprising and then we got to the end of
the due diligence period And I told him
that you know I think I'm going to back
away from this this isn't a good fit for
me I think the business ended up going
under because he was just done with it
and he wanted to go do something else
but um yeah mistake on his part I would
never do that if we were selling a
company um you know because you why was
it a mistake because he he checked out
even further once you were in there and
he just hoped and kind of behaved as if
it was going to close and then it didn't
yeah 100% M so you know and he had
already introduced me to to the
employees hey this is the new manager
he's going to be you know he's going to
be working with you the with you know uh
on your
schedules contact him I had the
employment agencies calling me I had uh
TJ Maxx calling me telling me that
people weren't showing up after we had
already after I had already told them
that I'm not not interested you know all
the accounts he basically transferred
everything over to me like he had
already sold the business so yeah it was
a mistake on his part um
I think you know I'm not sure what the
conversations were with broker but you
know I would imagine they advised him
against it but he was just at you know
he was just done with the business and
he wanted to move on so he was willing
to let it you know run into the ground
or you know hopefully if everything
worked out I was going to end up buying
it but it didn't go that way gotcha okay okay
okay
next carry on to the next business all
right so State Line came around I think
at the beginning of 2020 and Co was
going on and we looked at the business
so uh the business was for sale for
250,000 um it was making 250,000 a year
uh the owner wasn't paying himself or
his wife a salary so they just lived off
the uh income from the business so it
was a 1x deal it was small uh Revenue
was probably about
2.5 and um and that was consistent you
know year-over-year even through Co they
were essential workers so he did not
stop he actually picked up um but you
know he never got over 2.5 in Revenue
because he said he was happy he's like
250 for me and my wife is just more than
enough we don't need anymore he's like
if you want to grow this thing he's like
all you got to do is take on the
contracts so so at the time you know the
broker he was retiring Mike yeah he
wanted to retire and so 250,000 and it's
being is in SD and it's being sold for 250,000
250,000
now of course one of the first things
that we always look at in an SD
situation is what it would cost to
replace this individual and just to look
at the business truly as kind of a
standalone entity and and not require
you being the owner operator even if
your plan is to do that for a while or
indefinitely so 250
minus what this guy what his market rate
would be and minus what his wife's
market rate would be would be their
replacement cost what do you think that
would have been if you
ballpark I mean was she fulltime time
she no she only worked probably 10 hours
a week okay so
um I'd say that we could probably get
somebody for probably about 30 35,000 to
do the books uh with the revenue that he
was doing and then for to replace him it
would be somewhere around 880,000
so you know you're looking at maybe about
about
150,000 net if we had to replace him but
you know so my role in the thing I found
I had a friend that was working for a
competitor and he had reached out to me
probably about two or three days before
the opportunity presented itself and you
know he was working for them he was
basically running all the operations
they weren't paying him what he should
get paid working for another business
not for unrated to local competitor in
the garage door business ah so they did
uh they do commercial in retail or in
residential and um you know the owner
was checked out um Jesse was running the
company or running the business he
wasn't doing the books or anything like
that but he was doing all the estimating
he was actually going out and doing you
know doing some of the installs on the
doors doing the repairs he had a lot of
Industry knowledge he' been with them
for three years and he just wasn't
making what he wanted to make and he
knew that he was worth more but he just
wasn't getting the opportunities and um
so he reached out to me just asking he's
like do you know anybody that's looking
for a sales guy looking for somebody you
know can handle Ops and um you know I
told him I'd keep an eye out and then
three days later Here Comes this
opportunity I'm like man I don't know if
the stars are aligning or not but this
opportunity just came up if you're
interested this is kind of like it's not
a startup it's been around for you know
17 years but you just reached out to me
yesterday looking for something you've
already got the skill set for it so why
don't you come on as operator we'll buy
this business and we'll start you out at
60 Grand it's more than what you're
making right now and if this thing goes
the way that we're hoping you'll get a
profit share
and then eventually increase your salary
as the business grows and uh so what we
did with him is we gave them
5% uh 5% Equity uh there were two other
partners we did an SBA loan for
250 and uh it was $50,000 working
capital uh so we went through the SBA
and it was a 15% down payment 10-year
amortization um then
the yeah so that's how we we ended up
doing the deal um gave Jesse 5% and the
deal was for every $100,000 the business
netted we would give him a percent
increase um up to
20% so but but per year $100,000 so if
he did one year he generated an extra
$100,000 net you'd give him a uh an
additional point to vuy right then that
he keep forever what if he just kept oh
up to sorry up to 20% he's
he's
capped permanently there he could never
no matter what he earns for the business
after that correct gotta got plus a 5%
bonus so it was um yeah 5% on the net so
if he you know if we made you know
$100,000 he's going to get a $5,000
check at the end of the year plus
another 1% on his Equity up to 20% so he
so from his perspective his perspective
he has the opportunity to own 20% of
this business earn his way to owning 20%
of this business and enjoy and uh and
indefinitely enjoy 5% of the earnings
every year correct y plus salary
obviously uh and and and being paid
better than his current position and
this is essentially the same position
although probably I mean he'll have a
better boss one hopes yeah yeah exactly
better boss okay great and so let's just
go back to the numbers on the business
again real quick now that we have all of
that thank you for that detail $250,000
of SD so minus now Jesse's going to come
in for
60,000 um let's just keep off his 5%
just to keep things simple so that's
190 of SD and then you said the
bookkeeping was going to be probably 30
or $40,000 so let's let's just go to 150
to for easy math uh roughly um so you're buying
buying
aund a business that could earn for you
uh as as owner $150,000 a year for
250 so while that's a very small
business 250
sde uh and and by the way that again
that SD is really going not just not
just gener not just paying one person's
salary but one and a half the owner and
you know his wife's part-time um very
small but the ROI the unlevered ROI on
this is call it 150 over 250 so that's
60% on levered Roi now I'm simplifying
still because you're you know you're
probably going to have a curve and want
to reinvest some of those earnings in
the business there's probably a lot to
improve Etc but just napkin
math tiny business but phenomenal I mean
obviously I mean basically was you know
it was listed for being sold for 1X
multiple phenomenal Roi um why was it
being listed for so little I think
because the husband and wife were still
working in the business I mean he was
putting in anywhere from 50 to 60 hours
a week she was putting in 10 to 20 so I
mean he was on the road he was out there
doing the installs I think the man was
in his 70s at the time when we took over
so he just he's a road war and you know
we do jobs we can do jobs up in Boise
Idaho we'll go all the way down to Miami
I mean these these they we're we're
across the United States oh wow so it
was uh I think that's the reason why it
was priced so low and being a being new
construction and project-based uh you
don't have he had consistent income but
it was just not reoccurring Revenue
so I don't think that he got the
multiple that most of these buses would
get if he had reoccurring Revenue yep
yep yeah well and if he's working as
that much you just to be conservative
probably want to think about replacing
him with two people not one so actually
the the
150,000 in in expenses to replace him
and his wife is probably that was
probably an under um underestimate it's
probably closer to 200 or more yeah no
and I would imagine and that the idea
was that I would come in and I would put
the systems in place um eventually
replace his wife that was handling the
books if she did a good job we were
going to leave her in there because she
still wanted to make uh have a little
bit of spending money to go to the
casino and um the so yeah I mean it
sounded fine uh we had come up with a
rate and I like I said it was around
35,000 a year and she was going to give
us six months to let us get through the
um transition period so she was work
with me and help get that together um
but after we got into it you know first
day was a big eye opener um Jesse was
overwhelmed I was overwhelmed because
they were on QuickBooks uh desktop she
had dial up
internet um she had never sent an email
in her life uh everything was done
through snow mail I mean it
was just the amount of work that was
going to be needed to get us up to date
so I didn't have to drive to their house
or wait for the mail to come in to send
us our profit and loss for the month um
she was she was a she's a very nice
person but she was just not meant for
that position she did good the way that
they operated but it you know to run an
actual business there was no way that we
were going to be able to keep her Mike
let me stop you there two questions
first what did your diligence on this
business look like yeah so as far as a
due diligence yeah we just uh we
reviewed the bank statements uh looked
at the tax returns everything matched up
it's a little different between the cash
and an acral um because we the there's
about a 10% retainer that uh the gc's
hold back so we had to match up to see
that money was actually coming in in
previous years so you know if he did you
know $2 million in 2018 and they held
back 200 Grand we would had to make sure
that it was showing up in 2019 because
all that money was being held back from
it so um and so you guys are Subs you
work for G
on almost all your work okay yes and and
just to to press a little bit because
you you're so overwhelmed and by what
you find that she she doesn't use email
as one example you didn't in your
diligence push to go see the office or
somehow get inside the business
obviously you weren't going to do it
like you did with your TJ Maxx cleaning
uh company where you could operate it
for a while but um is there a learning
here or was there no way you could have deal
deal
how she was how she was doing the
books I don't think
I we probably could have pressed a
little more um as far as seeing the
office there was no office they worked
out of their home ah um so was homebased
business and and again we drop ship
everything so there's no inventory so
that made things easy um as far as that
goes uh the equipment that he had we saw
the trucks you know there's only a
handful of trucks that he had he had a
trailer you know there there wasn't
really much to see as far as equipment
yeah um but yeah if we would have had a
better understanding of how she actually
operated that would have been helpful or
at least prepped us whenever we walked
in day one well and and was there part
of you that on day one as overwhelmed as
you were to discover that you know what
a how much work there was ahead of you
did you not also see that as meat on the
bone value that you were going to be
able to add and and you know real make
this into a much more appealing business
and profitable probably efficient
business that was the idea that we were
going to make this more efficient you
know and my thought was you know she's
working 10 hours a week I could easily
go get a you know um either a third
party to handle the books or I can get a
bookkeeper to work part-time and they
can just handle all of it and then we
would just need somebody to U manage the
lean waivers with the GC or with the uh
vendors and the gc's it it didn't really
seem like a lot and honestly like it's
not looking back uh or what I know now
it's it's not that it's not that
difficult we've got the people in place
and they can easily handle it there's uh
programs like Seline they can help
manage lean waivers there is technology
that you can put into this and that was
the idea on my end is like it's going to
be a lot of work upfront and then I can
hire myself out or hire somebody to you
know uh get in this place once we have
the cash to be able to hire these people
so um yeah I mean it was uh that was the
idea with this and when the previous
owner told us he said there's you know
there's endless amounts of work and he
was still working through covid that was
good enough for us to pull the trigger
yeah well the other thing here to say is
that uh it's such a small business you
know there's always this tension about
buying small versus buying large buying
small one's first intuition is that
seems less risky uh because there's just
less money at stake on the other hand
it's a it's generally going to be a more
fragile business maybe a glorified job
for the owner and so it seems like it
could it could likely the smaller the
business more likely could just go to
zero bigger business on the other hand
intimidating feels riskier because
there's so much more money at stake but
it's more of a robust business and much
less likely to go to zero so there's
that tension there um so just but just
kind of leaning on the the former not
the latter where this feels low risk
kind of is I mean it was $250,000 for
this business and you had partners can you
you
say more about how you know that
everyone's Financial contribution to the
$250,000 or I guess to the down payment
the SBA loan was for 250 so what was
your Equity injection uh 375 so across
you and two partners yes so it really
wasn't you know for us I mean the
attitude was like look this we know it's
small it seem sounds like it's got legs
on it um worst case scenario we all have
to you know C uh come up with you know
split 250,000 three ways go ahead and
pay the debt back to the bank and it
just it it didn't really it seemed like
it had more positives than it had
negatives and if it was going to fail
then it wasn't going to wasn't going to
put us in the hole that much well I I
think this is a good a good example of
the logic there when the the that risk
profile I just gave the two two ways of
looking at a small business versus a big
business I'm convinced by your logic
here worst case scenario this thing goes
to zero and you guys are each out
whatever 250 divided by three-ish um now now
now
um I guess on the other hand to really
get just to really Analyze
This yes that risk is mitigated 250
divided by three but it's also your
upside is also mitig or is also a third
of what it would otherwise be so you
have less risk but you also have less
reward because you have these Partners
um anyway very interesting but but but I
I I I haven't even mentioned the thing
that you've now mentioned twice which is
the strongest signal of all that there's
a lot of work for this business to do
there's a lot it see at least according
to the owner who's going to be biased in
telling you this he wants to sell you
the business but if we take him at his
word there's a lot of growth to be had
here so you can quickly um have a much
bigger business and just have this
really really attractively low entry
point yeah absolutely and Mike what what
was your plan in terms of keeping your your
your
W2 well I I didn't think the work was
going to be that much uh I figured maybe
20 hours a week and I can do that on the
side I didn't mind you know I've worked
I've been accustomed to working two
three jobs you know my since I was 16 so
it's just my nature um so I I really
didn't mind putting the hours in if
there was going to be some upside to
this then and with the idea that we were
going to be able to hire out you know I
could do this for six months to a year
and then hire myself out and uh we would
have somebody operating it so um yeah I
didn't really think that the work was
going to be as much as it was but the
problem that we had was we told the
owner beef this business up and take on
as many contracts as you possibly can he
did exactly that so he went from 2.5 his
best year that he's ever done and we did
7.18 the first year that we in 2021 that
we took over so yeah it was extremely
stressful uh we didn't understand the
cash flow of the business um working
with gc's you know on uh you know we
bill for material on the 25th of every
month so as soon as that material drops
if it drops on the 24th then you know 45
days later after we Bill we're going to
get that money but if it drops on the 1
it's going to take and we can't build to
the 25th it's going to take 60 days well
we're on a net 30 to a net 60 with most
most of these vendors so you know
whenever you've got a material bill of
$800,000 it's a little bit of pressure
and I've got vendors screaming at us
telling us that they're going to cut us
off if we don't come up with money and
we didn't realize if we just had the
conversation at the beginning and
explained that we weren't able to build
you know the material dropped early so
we weren't able to build and it's going
to take another 15 days we didn't
understand that they were willing to
work with us if we just had those
conversations early uh so yeah we got I
was in a few fetal uh position moments
going through that because we had
material bills over a million dollars
that we didn't have the working capital
we didn't have a line of credit
established ownership group had money
but they didn't have that much money so
we got ourselves into a few pinches in
the first year that we took over um wait
wait Mike let's let's let's unpack this
a little bit Yeah you so when you c talk
about materials so obviously that's the
garage door materials the stuff that you
use to do the project you have your own
vendors for those you buy those uh on
30-day terms call it um so for all these
and so you've grown you've tripled now
from 2 and A2 to
7.18 um or almost tripled actually when
I said you tripled at the beginning you
more than tripled because I was I was
pegging it to the nine and a half number
that I've just uh spoiled for the
audience that you get to the next year
in 2023 um so that would have been
almost quadrupling it anyway so you're
growing like crazy um you got to buy all
these materials and then you're not so
you're but you're not then collecting
then you get because you owe your
vendors after 30 days but you're not
getting paid for you know 45 maybe 60
days very kind of simple cash flow not
simple to belittle it but kind of
classic cash flow problem um and so you
your vendors are now telling you this
becomes so acute that your their vendors
now telling you they're going to cut you
off so this is also a classic case of
growing so fast is is actually can be
quite precarious because you get into
these cash flow problems
um is that just the nature of what you
had to endure or did you do something
wrong that if you had been more
experienced you would have done
better if we were more experienced we
would have understood that if you missed
the 25th you can't build to the the next
month on the 25th that was a problem
that we got into and we missed a couple
billing dates again I was relying on the
previous owner's wife to do this and the
communication was just poor between us
and she was frustrated because we were
trying to get her to you know use
QuickBooks online and she was still
mailing out lean waivers you know
through mail um she didn't know how to
you know again I mentioned that she
didn't know how to use email so
everything was just delayed it was slow
so we
um yeah that was that was a huge problem
and not understanding the the cash flow
if we would have understood how that
worked we would have had a line of
credit day one um because you know the
they'll they'll extend a line of credit
I believe it's 80% of the receivables
but we didn't know what we didn't know
at the time and that put us in a huge
pinch um thankfully we're able to get
out of it um we we had up borrowing
money from the ownership group I think
it was when you say the ownership group
you mean you ownership group you mean
you and the two other partners correct y
so you guys lent more of your own
personal cash into the business to get
you through yes which was a difficult
conversation with them because you know
we're only 6 months into this business
and I'm already asking them for over
$100,000 to get us through this period
of time but I knew that money was coming
in so that's how I convinced them I said
look like you know we've got 150 to 200
Grand that's going to drop that's going
to get us back in the positive we'll be
able to pay this back within three to
six months if we don't do this we're
going to lose the business and then
we're going to owe we're going to
default on our contracts and this is
just we're going to get sued and this is
going to be a huge problem so that's the
other side of the risk is if you don't
perform gc's can come after you and
they'll end up hiring another sub and
then you got to pay the difference of
whatever the sub's going to charge and
typically if they're coming in the last
minute they're going to charge a premium
so yeah a lot of risk uh that we took on
that we really didn't understand what we
were getting into um and Mike so the
learnings there would
be when you're in a a business like this
with these kind of unfavorable cash
collection Cycles
sure that you that you Bill on your own
internal schedule like like you need to
um yeah don't don't let you know sending
out an invoice slip and by the way this
20 billing on the
25th thing is that some sort of Industry
standard or something or is that was
that just your own internal date and why
couldn't you just be sending invoices on
say a rolling basis every time materials
landed uh at a gc's project you just
bill them right then it that's you had
till the 25th to do it so that's how we
do it now as soon as that material drops
we're billing um but you know again we
just the the person that was operating
the the books and dealing with the lean
waivers she just she just wasn't
consistent they didn't really have to
worry about it if they missed a billing
date it wasn't a big problem because
they had cash that they could float the
business with with us since we didn't
have that um you know she just wasn't
she was just very laxed on this she
really didn't care so much she didn't
have any skin in the game anymore so um
yeah okay okay and the uh say more about
the line of credit based on receivables
which you now you weren't able to take
advantage of to get you through this
fetal moment but you now know uh what
have been a possibility say more about
what that is so the I mean we're going
through this right now because we're
trying to get a line uh increase on our
line of credit because we've got a lot
of jobs coming up in 25 so typically the
bank and I could be wrong on this but
the I believe it's 80% of the accounts
receivable so if we bill out um if we
bill out you know $2 million worth of
material or whatever and we got all
these jobs lined up they'll give us 80%
of that money on a line of credit um so
we were able to get that through the
bank but the problem is it just takes
time they need to collect tax returns
they need to collect all of our
information from the owners ship group
um some of the owners since they silent
Partners they've got other businesses it
just took forever to get it done uh
obviously we were all rushing around
because time was of the essence and we
had to get it done or we were going to
default so we we were able to pull it
pull it together um the line of credit
really helped us out and got us through
the next two years uh because we were
still W waiting on retainage to come
through uh to use that to grow the
business and to pay the employees but
the um
yeah it uh wait wait which line of
credit a different line of credit well
the line of credit that we applied for
in the beginning of whenever this all
started so the ownership group they put
their money in to help us get through
that period of time to pay the
employees and then the uh line of credit
came through to help take care of the um
uh the the vendors that we needed to pay
for the material so I don't have the
exact time frame of when the line of
credit went through but we were able to
the line of credit saved us oh I'm sorry
so you did get the line of credit but
because it took time as it as a stop Gap
you guys had to put cash in correct yeah
we didn't we didn't start the line of
credit process because I called the bank
and I said look the owners the owner
told us that we only needed $30,000 a
month or $30,000 in working capital to
operate the
company that was because that was his
average payout to the
employees uh that wasn't to pay for the
material so we didn't know that we you
know the way that the um the way that
the cash flow cycle worked as far as
billing and then getting you know
getting payment for the material in 45
to 60 days we didn't understand that we
had to have money sitting on the side to
be able to pay this if it took them a
little bit longer to go ahead and pay uh
the GC to pay us for the material that
was dropped so whenever we started the
process we were already in a pinch
vendors were already yelling at us and
then we started the process to get the
line of credit so after having several
conversations with each one of the
vendors we explained to them you know
what was going on we were going to get
paid we build out on this date we showed
them the contract show them the billing
and spoke with the gc's so they were
comfortable with that um and then the
line of credit you know came through and
paid them off gotcha okay okay and
getting a line of credit based on
receivables uh this is this isn't
factoring you you still receive the
money right corre y it's not like the
bank takes over those invoices I I a
guest who will have aired a number of
weeks before this conversation airs
Jonathan Tupper bought an asset-based
lending company and factoring is one of
the things they do and and and factoring
is is basically I guess selling your
your invoices um cents on the dollar or
something we looked into that trust me I
mean we were we were at that time where
we needed to figure something out okay
but that was going to put us at a
further loss so we couldn't you know
that wasn't it wasn't a great option but
it was still an option uh but thankfully
that line of credit came through and we
were able to get through that period of
Time how fetal was this fetal position
moment I mean were you how worried did
you get what was the give us if you
would a picture into this dark moment
yeah it was pretty miserable uh like I
said my wife she's she's from bogot
Columbia and we were up in we were up in
Jersey to visit her brother and I'm
sitting on you know we're waiting for
the train to come and I get a call from
the previous owner yelling at me saying
that we owe $600,000 to one of our
vendors or they're going to cut cut us off
off
and I you know we the communication with
his wife wasn't there and we missed the
billing date and he said you know like
this this business is going to go under
if you don't get your together I
mean he's screaming at me telling me I'm
an idiot you know we didn't know what we
were doing and you know how dare you be
up in a different city when you should
be focused on this business and uh I I
had a panic attack right there you know
I'm sitting there it's supposed to be a
nice happy time to go visit her brother
that I've never met and it's cold in the
winter sitting there waiting for the
train and I'm just I blank face staring
at the sky like not knowing what the
hell to do so yeah it was it it wasn't
fun I'll tell you that um but you know I
think that's you know being an
entrepreneur I think a lot I mean it
takes grit you got to push through it
you know like failure isn't an option
and if it is failure at the end of the
day then like you got to do everything
you can to make it uh hurt less than
what it would so I got on the phone
started calling Banks explain the
situation what was happening and that's
when we started the line of credit
process um but yeah it was uh it was a
stressful time and thankfully my wife
she's been there for me throughout this
whole process and talked me off a ledge
and it's uh it's been good it's nice to
have somebody by your side to um to get
you through the hard times well and just
to add insult to injury the fact that
the owner is calling you and yelling at
you when really this is kind of due to
an oversight of his wife's right yeah we
clear on that okay yeah no 100% And I
mean it's that's another story with her
um we were kind of held hostage to keep
her around because we really needed the
previous owner to train
Jesse but her attitude was if she's not
working in the business neither is he so
we had to keep her on for almost a year
and a half and well probably about a year
year
um dealing with this the books being
screwed up none of it made sense we
didn't know what the hell we were making
on the jobs she couldn't do job cost
accounting uh let alone you know use an
email to send me over you know the lean
waivers that we need we needed to get
out so it was uh it was a challenging
time we ended up getting through it but
um yeah so I mean you can put the blame
on her but at the end of the day we
should have known what we were doing and
we should have cut ties with her from
the get-go yeah and Mike say just a
little bit more about your partners the
partnership group you and two others the
the two others what is your can you
share what that split looks like what
the the division of responsibilities
looks like so um the idea like I
mentioned in the beginning this was
supposed to be an investment and I told
them that I would get my hands dirty and
I'd get the system set up in the back
and I would just take I would keep track
of my hours and then here was my hourly
you know pay and
um so that was the idea behind it and
they were going to remain silent
Partners this was purely an investment
for them um and it still is to this day
you know they'll we've got a weekly
phone call that we do with the
Investment Group just to update them on
what contracts are coming through and
how profitable we are in the jobs um but
they all you know both of them run
separate companies in several companies
so the uh that was the idea from the
get-go is they would remain silent
partners and eventually once I got the
system set up that would be the same
thing for me and then if I had to stay
in the business I would end up taking a
small salary but in the beginning we
didn't have the money so I wasn't taking
any money from the business I just kept
track of my hours and I'd get a Payday
at the end of the year if there's any
profit left over did you ever get
compensated for that I did okay all
right so you're so so they're never
they're going to be pretty passive or
almost totally passive other than this
phone call and you are are working
toward that but in the meantime whatever
you have to do in the business you'll be
compensated for on an hourly basis um
and then yeah and then I and then I
guess and then I guess you said there
was also a stipulation that if you
couldn't become fully passive there
would be it would settle out at some
salary for you yes correct okay so let's
keep hearing how things have gone so you
were growing like crazy reason for this
cash flow crunch that was I think you
said 7.18 did you say in 22 yes uh 21
7.18 ah okay we bought it in November we
bought it in November
20120 okay uh so going like Gang Busters
this is a and then what happens in 22 22
was the same thing we did 7.75
7.75
um the uh we were we had gotten rid of
the previous owner's wife from handling
books we brought somebody in from the
competitor same place that Jesse came
from she was unhappy with the owner and
how he treated the employees she wanted
something that she could work from home
from uh a little bit part-time so she
came on she was fantastic we ended up
working with our CPA firm and her to get
the books in order because the books
were so screwed up um so she really got
us to a place where I didn't have to
deal with the billing I didn't have to
deal with the lean waivers I didn't have
to deal with any of that it was still we
didn't have a system in place at the
time so it was still not perfect um and
later on in 21 we ended up bringing a
consultant in it was a friend of mine
she had ran her father's GC company for
15 years so she came in and helped us
create a process create you know
systems and um by the time we finished
up it was probably about a two-on stent
with her by the time we finished up
she's like you know what are you going
to do for this position because you're
still working a 9 to-5 and there's still
a lot of work to be done and I said well
you know are you looking you're you know
what are you doing right now she's like
well I'm not I'm not working but I've
got two kids at home and you know I'd be
willing to put in you know part-time or
even possibly full-time if you guys can
handle it and uh yeah that was we ended
up hiring her and um started out at like
a you know competitive wage but you know
the promise was that she could work from
home I didn't care when she worked as
long as she was available if she needed
to take her kids to school she need to
pick them up do anything doctors visits
we don't care you got unlimited PTO you
can work anywhere in the world you know
you don't have an office I give you
health insurance um so she came on and
she replaced me she does it 10 times
better than I would do it uh you know
having that she's doing admin back
office everything that's not yeah all
all basically running the company
stuff that's not the crews themselves
not the projects themselves correct out
in the field yeah so she so now it's you
know I my hours went down from probably
20 30 hours a week to 5 hours a week and
most of the time less um so she handles
the majority of the meetings she
provides updates on the contracts she's
dealing with the licenses that we have
to get she deals with all the lean
waivers and coordinates everything with
the bookkeeper that's handling the stuff
for us um she's dealing with Jesse you
know she helped him organize things we
got a project manager that's underneath
him right now um you know any of the
phone calls that we get I mean we're
dealing with laborers that are on the
road 95% of the time so it's a special
special type of person that's willing to
do this and it typically comes along
with you know drug alcohol problems um
you know family issues and stuff so I
used to get all those phone calls I
don't get any of those phone calls
anymore um so she took off everything
off my plate she's phenomenal um we
ended up getting an office admin um you
know the office admin was her sister and
she had worked with her father's company
as well so she was well-versed in the
Contracting world so you know right now
she is helping with the schedules
because most of these guys are either
staying in hotels or airbnbs she goes
through our credit card expenses to make
sure that the guys aren't
overspending um we've got a team in
place now and and again it's taken off
everything off my plate um you know I
typically make the bigger decisions if
we get into a pinch you know jobs are
overlapping do we sub do we try to do
this ourself if we're subbing you know
she'll make phone calls out to all the
subcontractors in the local area to be
able to do this uh yeah she's she's
phenomenal she really changed the
business for us and it what is her title
she kind of coo she's I mean you could
call her coo director of operations um
but but Jesse reports to you and she
reports to you so they're kind of Jesse
reports to her now ah so yeah okay so
Fallon she Fe she feeds me you know any
information that I needed to know I've
got a few things that I want to know on
a regular basis or on a weekly basis
where we're at when the jobs are going
to be completed what do we have coming
down the pipe uh Jesse feeds all this
information to her they have separate
meetings and they review all this stuff
just to make sure that we're staying on track
track
make sure that the licenses are coming
through so that we can you know we can
actually perform on these jobs um it's
everything right now I just kind of
handle the finances and we do
projections um I work with a bookkeeper
to uh to do forecasting to see what the
next year is going to look like which is
a little difficult in the new
construction world because since it's
Project based it's hard to gauge but we
know how many contracts have been bid we
know where we're having final
conversations and then we know what
what's been won and then I report all
that she holds a meeting for the
investor meeting uh on Tuesdays and she
presents all that information so she'll
either run the meeting or I'll run it
myself uh just give them a quick update
and um yeah so I mean it's it's really
she's really taking everything off my
plate and um just turn this into a
business I mean we're a small lean mean
team um but the fact that you know they
can work anywhere they can take vacation
anytime they want as long as are getting
done what they need to do I don't care
if they're working 20 hours or 10 hours
we still pay them the same so um the
companies doing well enough to be able
to do that and the flexibility in their
schedules in my opinion that's what's
keeping them
around keeping her around keeping the
team around I mean you know yeah I mean
it's it's nice they all get paid well
they get paid what they have you know
get paid sitting in an office um and
with the flexibility like that like it's
you can't find most companies Mike some
follow-ups on what I want to get to into
now is a little bit of
the of the kind of the business itself
and it and its um appeal or not I heard
you just talk about how when Project
based land it can be a little bit
different a little bit difficult to make
projections and typically we are told
that construction businesses are you
know Project based work unappealing very
cyclical unfavorable Cash Cash
collection Dynamics as we've already
talked about um and hard to hard to
predict the flow the from year to year
how the business will go tied to the
economy Etc tied to construction um
however one thing that Sam rosadi
recently said to me he's in the
commercial um fencing business and and
did a roll up there and um just
partnered with private Equity big
success is that in Project based
construction one of the appeal
characteristics of it is that you
actually can see pretty you know I don't
know six months into the future or you
can get a pretty good sense of what your
Revenue looks like for the next six
months because that's how long it takes
to Bid and Win a job maybe it's not six
months I don't remember what the figure
was but you have some more visibility
into Revenue than you know maybe a home
services business that's for for
consumers and while you get paid
immediately when you have your plumber
dispatched to unclog a toilet
um you don't you you really don't know
what your revenue is going to be six
months from now um although you can look
at historicals of course but in your
case you actually have a pretty tight handle
handle
on I think you know the next few months
of Revenue six months six months is that
fair can you react to that yeah I mean
right now we can we know for 2025 we're
going to be we already have four million
on the books and we've got probably
another four or five that have already
been bit out we're having final
conversations so you know uh when
somebody asks us you know like what do
you project to make you know next year I
mean the ownership team's asking this
all the time and I got to tell them I'm
like well right now we got four million
on the books these jobs can be pushed up
or pushed back because it just depends
on when the gc's ready for us we've
already bid out x amount of dollars
we've got an 80% chance to win this it
always could fall apart at the end but
we're always bidding and you know and
based on our availability like if we if
it falls when a project is is starting
we always have the opportunity to sub
the job out and just manage it so six
months is is realistic for us but the
problem problem with these and working
with the gc's is that they can these
jobs can't get pushed up or they can get
pushed back so like in 2023 we did 9.52
million in Revenue so huge year for us
um but then this
year to date we're at
3.34 so so a huge drop off but we knew
this going into
2024 because in election years for
whatever reason there's always a
Slowdown and that information came from
the previous owner said if you plan on
doing what you did last year he said
it's probably going to be cut in half so
we still are
profitable well barely profitable at
that number but you know we we knew this
was coming and since we paid the
business off as long as the employees
are paid for us I I really don't care um
obviously I wouldn't be making profit
we're not running this business to make
nothing but you know if we've got to
suffer for one year and not make any
money like it's it's not a big deal for
us a few things to say so I feel like
your exciting roller coaster from 2023
to this year you said how much in 23 the
revenue nine
9.52 9.52 9.5 million and just a
reminder to every that this was from a
business that had never done more than 2
and a half million and its very best
year so that's where you know you you
almost have uh qu um quadrupled it okay
but nine nine and a half last year and
now you're looking at four this year so
so it's dropped by more than half but
you just explained why you're
comfortable with that but that is a you
know perfect example of why construction
Revenue can be not appealing these these
swings from year to year so exhibit a on
that but also exhibit a on the fact that
you knew going into this year your
seller told you you're going to have a
bad year it's probably going to be
dropped by half he was remarkably close
in his prediction um and so so and you
had that visibility even as 23 ended
looking forward in 24 so you do have
this uh this luxury if you will of
visibility of Revenue in the
construction world this is I'm harping
on this Mike because this is this is
news to me all I'd ever heard was
complaints about quality of Revenue in
construction businesses but this strikes
me as a pretty powerful feature of of
this and and now looking forward into
2025 you have a really good you have a
really good sense of you know you can
calculate to within a pretty reasonable
margin of error where you're going to
land yeah and I mean a lot of that
information comes from the gc's we've
got tight relationships with a handful
of them and uh We've developed
relationships with the project managers
and supers so you know they're telling
us what's coming down the pipe and
telling us what you know what they're
expecting and you know if it's if it's
affecting them it's affecting us so you
know one way arounded this year that we
were able to not have any gaps in the
schedule is we filled it with install so
we were the subs for subcontractors so
we just provided installation work for
them um we also are a distributor for a
handful of doors so we still bring in
some money through through that um but
we were able to get through the year and
you know still have a little bit of
profit to share at the end of the year
but you know it's um it it's not I know
with project-based companies it's a
challenge and again we've experienced it
you know jobs get pushed up they get
pushed back uh it's just being able to
be flexible and since we've got you know
a small team we're able to do that uh
the one thing that we don't want is
these guys to be sitting around so we
approach this year with the attitude
that if we got an A Pinch and we had a
month or a two-month Gap we were willing
to cut their hours down but still pay
them to sit obviously we would put them
in training or we would do something so
that they're not just sitting around
getting paid but we had enough margin in
the jobs that we did to be able to allow
that to happen because if they sit
they're going to go find something else
anything more I I did want to just ask
you directly about quality of Revenue
have we have we covered it well and let
me frame the question with this so um a
separate interview that will have aired
a few weeks before you um is with Jordan
duban who's rolling up garage door
businesses around the country uh and
they've moved very quickly and they've
and they've acquired a lot of EA in a
very short amount of time but they're
very strict in their criteria
around the revenue mix and they'll only
look at businesses garage door
businesses that are doing less than 10%
of install work fully 90% or more needs
to be
service because of quality of Revenue
and because of whomever might want to
acquire them in the future they're going
to have a similar kind of a similar very
high standard um so so react to that do
you do you wish you were doing more
service is it something you're trying to
shift that Revenue mix to do more
service or you guys a construction
company and you're at home with that you
know uh I'm fine with how the business
is doing if we do in between seven and N
million that's fine with us this is
would say it's a lifestyle I mean it is
kind of a lifestyle business for the
ownership group uh um but you know the
opportunities for growth you know we can
sub we can take on you know we've
already looked at a handful of
service-based companies and that would
be it'd be an easy add-on because the
new construction business is would be a
feeder to the service business um and we
really don't want to get into
residential because just specifically in
St Louis there's a lot of competition
you have a lot of chucking a trucks that
are willing to they put up a website and
they've got a you know it's a oneman
band that can go out there and knock out
a garage door at half the price that you
can because they don't have the overhead
um we don't really want to get into the
residential side but if we were going to
acquire something else I would want
something that's heavy on Commercial
repairs or commercial Service uh because
as we're doing these as we are doing
these new construction projects and
having relationships with the GCS and
the ownership group we could be selling
service contracts at the same time yeah
and that that is where the money's at um
so if we were to go do a rollup or we're
going to buy you know acquired
additional companies that's the route
that we would probably go so you do feel
that the money in this industry is in
contract Service and and specifically
commercial I would say that we if you're
looking at a subcontractor business
margins are lower than what most
subcontractors make um but the service
from what I've understood with my
operator he uh he said from day one if
we're going to take this anywhere we
need to be doing commercial service okay
you mentioned the loan the SBA loan that you'd paid it off I think did you we did
you'd paid it off I think did you we did say can you say say more about that
say can you say say more about that that's that was quick yeah so um I
that's that was quick yeah so um I believe we paid it off in either late 22
believe we paid it off in either late 22 or
or 23 um you know it was we were knocking
23 um you know it was we were knocking down the loan um we had the SBA and we
down the loan um we had the SBA and we had the line of credit so I think at the
had the line of credit so I think at the time we had enough cash flow coming in
time we had enough cash flow coming in to just go ahead and pay it off uh it
to just go ahead and pay it off uh it might not have been the best decision
might not have been the best decision because we were using the line more but
because we were using the line more but at with the SBA you paid it off with the
at with the SBA you paid it off with the line of credit well we had cash but that
line of credit well we had cash but that meant that we're relying upon the line
meant that we're relying upon the line of credit because it made up all of our
of credit because it made up all of our cash right uh we were relying upon the
cash right uh we were relying upon the line of credit but you know whenever we
um I I don't remember what the term is with the bank but as you know while
with the bank but as you know while we're using this line if we have cash in
we're using this line if we have cash in the bank then they're just going to go
the bank then they're just going to go ahead and move the cash to pay off the
ahead and move the cash to pay off the line so it was going to reduce the
line so it was going to reduce the amount of interest that we were paying
amount of interest that we were paying on a loan or you know on the line of
on a loan or you know on the line of credit so it just seemed like it would
credit so it just seemed like it would make sense and a hand you know all three
make sense and a hand you know all three of us had properties that were tied up
of us had properties that were tied up with the SBA so if the business would
with the SBA so if the business would default or whatever they would go snatch
default or whatever they would go snatch up the properties so we wanted to get
up the properties so we wanted to get our rentals freed up so that was the
our rentals freed up so that was the reason why we made the decision to do it
reason why we made the decision to do it we could have stretched this out over 10
we could have stretched this out over 10 years and paid a low interest rat on it
years and paid a low interest rat on it but we just wanted at the time some of
but we just wanted at the time some of us personal U situations we just wanted
us personal U situations we just wanted our properties freed up all right Mike
our properties freed up all right Mike well so just just to um level set us for
well so just just to um level set us for where the business is at here where
where the business is at here where where the day after Thanksgiving so
where the day after Thanksgiving so coming in toward the end of
coming in toward the end of 2024 you'll have a light year this year
2024 you'll have a light year this year in the 4ish million range um that's down
in the 4ish million range um that's down from 9 and a half million in
from 9 and a half million in 203 but it looks like you're going to
203 but it looks like you're going to get back to in that range in 25
get back to in that range in 25 so you have a nine let's call it a $9
so you have a nine let's call it a $9 million business um that could swing um
million business um that could swing um but but let's we could a let's average
but but let's we could a let's average what you're projecting for 25 20 and
what you're projecting for 25 20 and then 24 and 23 so what is that 9 plus 9
then 24 and 23 so what is that 9 plus 9 and a half is 18 and a half for 22 and a
and a half is 18 and a half for 22 and a half so call it 7 million is the average
half so call it 7 million is the average revenue um grown from 2 and a half
revenue um grown from 2 and a half million when you bought it in 2020 so
million when you bought it in 2020 so you've almost Tri tripled the business
you've almost Tri tripled the business and again I'm I'm being ungenerous
and again I'm I'm being ungenerous because I'm using this low year as part
because I'm using this low year as part of that average yeah um almost triple
of that average yeah um almost triple the business but you also have this team
the business but you also have this team you got Jesse an operator uh who's now
you got Jesse an operator uh who's now got a lot of experience in this business
got a lot of experience in this business you have the woman who to take has taken
you have the woman who to take has taken over duties for you you Jess you Mike
over duties for you you Jess you Mike are working five hours a week your loan
are working five hours a week your loan is paid off what are what are margins in
is paid off what are what are margins in this business if if his best year was
this business if if his best year was two and a half million and he was doing
two and a half million and he was doing 250 in SD SD two and a half th000 sorry
250 in SD SD two and a half th000 sorry 2 half million in Revenue 250,000 of
2 half million in Revenue 250,000 of SD 10 perish what our margins look like
SD 10 perish what our margins look like we operate I mean with with the overhead
we operate I mean with with the overhead that we have now um again whenever he
that we have now um again whenever he was bidding all these jobs so it sounds
was bidding all these jobs so it sounds great to go do 7.75 or 7.18 and 21 but
great to go do 7.75 or 7.18 and 21 but we weren't making anything because he
we weren't making anything because he was bidding these jobs with the overhead
was bidding these jobs with the overhead that he was operating at previously so
that he was operating at previously so at the end of these years that we're
at the end of these years that we're doing this we were making 2% 1%
doing this we were making 2% 1% net Jesse took over the bidding process
net Jesse took over the bidding process uh and the previous owner didn't feel
uh and the previous owner didn't feel that he could get any more for the work
that he could get any more for the work that he was performing but we were
that he was performing but we were actually able to double if not more and
actually able to double if not more and um double so in double the gross profit
um double so in double the gross profit margin so um so we were able to get a
margin so um so we were able to get a lot more money for the work that we were
lot more money for the work that we were doing because he was just the lower
doing because he was just the lower lowest bit bitter on half these projects
lowest bit bitter on half these projects so whenever we changed that started to
so whenever we changed that started to reflect at the end of 22 and then in
reflect at the end of 22 and then in 23 you know Jesse had been handling all
23 you know Jesse had been handling all the bids that it you know that he had
the bids that it you know that he had done in
done in 2022 uh so we operate currently on every
2022 uh so we operate currently on every single project our net net is around
single project our net net is around 9% so from the whole business so your
9% so from the whole business so your your net
your net income margin the end of everything 9%
income margin the end of everything 9% wow so n so like next year 9% on $9
wow so n so like next year 9% on $9 million is is $810,000
million is is $810,000 yes phenomenal okay and and in a
yes phenomenal okay and and in a business that you are by the way did you
business that you are by the way did you ever quit your W2 I did but I quit
ever quit your W2 I did but I quit whenever I took over the PO companies
whenever I took over the PO companies that we bought in May last year may of
that we bought in May last year may of 23 yeah so I was working double dipping
23 yeah so I was working double dipping and working you know a job been running
and working you know a job been running a business on the site and still
a business on the site and still flipping houses so no yeah it's chaotic
flipping houses so no yeah it's chaotic right we're going to hear about the pool
right we're going to hear about the pool for just a minute here as we wrap up
for just a minute here as we wrap up point is do you feel validated in going
point is do you feel validated in going down this path $800,000 coming off a
down this path $800,000 coming off a business that you work five hours in Now
business that you work five hours in Now You granted you have to split that 800
You granted you have to split that 800 across two partners across three
across two partners across three Partners so but even still that's going
Partners so but even still that's going to be 250 for you if if we're doing it
to be 250 for you if if we're doing it basically at a third uh third a third a
basically at a third uh third a third a third um no debt on the business paid
third um no debt on the business paid off the debt I mean seems seems and and
off the debt I mean seems seems and and let's not forget your entry point into
let's not forget your entry point into this business you said what what was it
this business you said what what was it 365
365 375 I think I put in
375 I think I put in 125 you put in personally 125 to be
125 you put in personally 125 to be generating now somewhere between 250 and
generating now somewhere between 250 and $300,000 a year
$300,000 a year yes so are you so how does so is that as
yes so are you so how does so is that as happy as it sounds you you're not
happy as it sounds you you're not smiling no I mean it's I am I mean it's
smiling no I mean it's I am I mean it's it's been great um you know you know the
it's been great um you know you know the uh I think you know the three-way split
uh I think you know the three-way split I think it's um it it worked out you
I think it's um it it worked out you know I've got you know there was my
know I've got you know there was my tuition paid and uh I'm happy with
tuition paid and uh I'm happy with tuition paid meaning you're you know
tuition paid meaning you're you know learning to be a small business off
learning to be a small business off exactly yeah I mean I've been through
exactly yeah I mean I've been through the headaches I've been through the
the headaches I've been through the fetal position moments I know how to
fetal position moments I know how to deal with the stress now um you know
deal with the stress now um you know it's uh it was it was hard you know
it's uh it was it was hard you know dealing with that you know my wife and
dealing with that you know my wife and she experienced a lot of these things it
she experienced a lot of these things it cause family problems and stuff but you
cause family problems and stuff but you know I can deal with it and you know I'm
know I can deal with it and you know I'm running three companies right now so
running three companies right now so obviously I can I can handle uh the
obviously I can I can handle uh the pressure um you know the way that things
pressure um you know the way that things are cut up at the moment I don't think
are cut up at the moment I don't think that I don't think that if if it was
that I don't think that if if it was today and I was going to look at this
today and I was going to look at this company I don't think that I would bring
company I don't think that I would bring in a Partners especially with the low
in a Partners especially with the low down payment needed for it but um
down payment needed for it but um especially since they're silent Partners
especially since they're silent Partners but at the time it was necessary and you
but at the time it was necessary and you know the way the operating agreement was
know the way the operating agreement was written it's you know it is what it is
written it's you know it is what it is um but yeah looking forward if I was
um but yeah looking forward if I was going to do this again you know the the
going to do this again you know the the split would would be different
split would would be different yeah right because because you put in
yeah right because because you put in whatever TW you said 12 and a half right
whatever TW you said 12 and a half right um and have a third of those profits
um and have a third of those profits whereas you could have put in three time
whereas you could have put in three time 375 and had you know fully 800,000
375 and had you know fully 800,000 coming out of the business um and
coming out of the business um and obviously in our world a lot of
obviously in our world a lot of self-funded Searchers use that Equity uh
self-funded Searchers use that Equity uh you excuse me take investor Equity uh
you excuse me take investor Equity uh and then don't don't have full ownership
and then don't don't have full ownership of the business but typically that's
of the business but typically that's when the they're really going to need
when the they're really going to need more money this was such a small
more money this was such a small business you probably could have found
business you probably could have found that 375 yourself yeah absolutely I mean
that 375 yourself yeah absolutely I mean I had I had the cast to do it myself
I had I had the cast to do it myself it's just you know whenever you've never
it's just you know whenever you've never done this before and having people that
done this before and having people that are you know already own businesses that
are you know already own businesses that are experienced and have a Lifeline you
are experienced and have a Lifeline you can call you know you spread the risk a
can call you know you spread the risk a little bit it just it just feels better
little bit it just it just feels better even if they're silent partners for
even if they're silent partners for whatever reason it just still feels
whatever reason it just still feels better that you got somebody that you
better that you got somebody that you can call at tot any time of the day to
can call at tot any time of the day to talk to about it yeah and also in that
talk to about it yeah and also in that moment of that that cash flow crunch
moment of that that cash flow crunch that you had you were able to spread out
that you had you were able to spread out the the infusion across the three of you
the the infusion across the three of you otherwise if you'd been the sole owner
otherwise if you'd been the sole owner you would have had to bring all the
you would have had to bring all the money all that stop Gap money yourself
money all that stop Gap money yourself which would have been pretty burdensome
which would have been pretty burdensome okay um and how old are you Mike uh I'm
okay um and how old are you Mike uh I'm 39 39 great any takeaways that we
39 39 great any takeaways that we haven't given attention to any learnings
haven't given attention to any learnings from this this adventure we we just
from this this adventure we we just talked about we've talked about so many
talked about we've talked about so many of them but any that you want to
of them but any that you want to articulate explicitly here understanding
articulate explicitly here understanding the cash flow is the biggest thing I
the cash flow is the biggest thing I mean if you don't I I've heard some of
mean if you don't I I've heard some of your other guests I can't remember the
your other guests I can't remember the guy's name but I think that he got into
guy's name but I think that he got into a cash flow Crunch and you know wasn't
a cash flow Crunch and you know wasn't able to get out of it um but
able to get out of it um but understanding you know how the the cash
understanding you know how the the cash flow operates in the business uh is is
flow operates in the business uh is is number one getting that line AC credit
number one getting that line AC credit day one I mean you have to have it even
day one I mean you have to have it even if you don't need the money I mean these
if you don't need the money I mean these two other businesses we don't need the
two other businesses we don't need the cash but I've taken out as much as I
cash but I've taken out as much as I possibly can on the line of credit in
possibly can on the line of credit in case we get into a pinch things happen
case we get into a pinch things happen you never know what's going to happen um
you never know what's going to happen um you know getting key main Insurance in
you know getting key main Insurance in case the worst thing does happen um to
case the worst thing does happen um to cover yourself because if we if
cover yourself because if we if something would happen Jesse it would be
something would happen Jesse it would be a problem but we would be able to Pivot
a problem but we would be able to Pivot to um I mean the the team would be able
to um I mean the the team would be able to handle it but we would be able to
to handle it but we would be able to Pivot to a subcontracting model uh so it
Pivot to a subcontracting model uh so it wouldn't you know kill the business but
wouldn't you know kill the business but you know just having these things up
you know just having these things up front and you know understanding how to
front and you know understanding how to you know to do the due diligence better
you know to do the due diligence better than we did um would have been you know
than we did um would have been you know those are the takeaways that I would say
those are the takeaways that I would say that are needed and small
that are needed and small businesses sometimes they're small
businesses sometimes they're small because the owner wants them to be small
because the owner wants them to be small They Don't Really Care it for growth
They Don't Really Care it for growth they don't have any Ambitions to go get
they don't have any Ambitions to go get any bigger so wouldn't look past them
any bigger so wouldn't look past them we' you know these other two companies
we' you know these other two companies that we acquired they've got a ton of
that we acquired they've got a ton of growth potential um we bought them
growth potential um we bought them obviously at higher multiples and higher
obviously at higher multiples and higher price but um you know there are some
price but um you know there are some gems out there that all they really need
gems out there that all they really need is just somebody that's willing to put
is just somebody that's willing to put in the work and put systems in place and
in the work and put systems in place and something that the previous ownership
something that the previous ownership never
never did and and the systems youve put in
did and and the systems youve put in place have have been successful
place have have been successful so starting to use email uh would be one
so starting to use email uh would be one system and getting on QuickBooks
system and getting on QuickBooks anything else any other systems to talk
anything else any other systems to talk about uh you mentioned the the lone
about uh you mentioned the the lone waiver stuff that there excuse me the
waiver stuff that there excuse me the lean waiver there's
lean waiver there's a yeah s line it's it's pretty fantastic
a yeah s line it's it's pretty fantastic um the the amount of hours that we're
um the the amount of hours that we're getting put on the bookkeeper was more
getting put on the bookkeeper was more than what she wanted so this technology
than what she wanted so this technology was able to help streamline some of the
was able to help streamline some of the the lean waivers that were getting sent
the lean waivers that were getting sent out people are people and they're not
out people are people and they're not you know you send an email out they
you know you send an email out they might get busy swamped and they just
might get busy swamped and they just look past it and for us time is
look past it and for us time is everything so you know she didn't have
everything so you know she didn't have to continually send emails out to get
to continually send emails out to get these lean waivers signed from them so
these lean waivers signed from them so it's it's really cut her hours probably
it's it's really cut her hours probably by 10 hours a week just not having to
by 10 hours a week just not having to deal with the stuff so uh that was huge
deal with the stuff so uh that was huge um you know the the bidding platforms
um you know the the bidding platforms there more you know I square foot uh
there more you know I square foot uh it's free to an extent and then we got
it's free to an extent and then we got another bidding platform um just to be
another bidding platform um just to be able to get access to all these jobs um
able to get access to all these jobs um so yeah we do have technology in place
so yeah we do have technology in place now I'm sure there's more that we could
now I'm sure there's more that we could implement but for right now this
implement but for right now this we're we're good with what we've got and
we're we're good with what we've got and when you talk about implementing systems
when you talk about implementing systems this is mostly what you mean yeah I
this is mostly what you mean yeah I don't I don't really outside of getting
don't I don't really outside of getting a we have a project manager that's in
a we have a project manager that's in training right now uh so that's the next
training right now uh so that's the next step for us is to take off some of the
step for us is to take off some of the work off Jesse's plate and then once
work off Jesse's plate and then once that's done you know if we're going to
that's done you know if we're going to get any bigger than 9 million 10 million
get any bigger than 9 million 10 million a year we're going to have to bring in
a year we're going to have to bring in you know additional Crews and probably
you know additional Crews and probably explore that subcontracting model
explore that subcontracting model more this subcontracting model where you
more this subcontracting model where you guys actually sub yourselves yeah we
guys actually sub yourselves yeah we would sub out the labor and then we
would sub out the labor and then we would fly in a a foreman to oversee so
would fly in a a foreman to oversee so whether that's just flying in once a
whether that's just flying in once a week or he would just stay on the job to
week or he would just stay on the job to make sure that they're doing it
make sure that they're doing it according to our standards that's we've
according to our standards that's we've we've been successful with that so it's
we've been successful with that so it's it's an option but it also takes away
it's an option but it also takes away work from the installers that we have in
work from the installers that we have in our
crews I think one other thing to call out we I mean we did at the top but just
out we I mean we did at the top but just to re reiterate is
to re reiterate is the value of having Jesse so when this
the value of having Jesse so when this deal came along you had an operator that
deal came along you had an operator that you trusted because he was a
you trusted because he was a friend um who had the exact necessary
friend um who had the exact necessary experience to be applied as operator of
experience to be applied as operator of this business so that that as you put it
this business so that that as you put it that was an alignment of the Stars I'm
that was an alignment of the Stars I'm not sure there's a lesson there other
not sure there's a lesson there other than to point out that there was some
than to point out that there was some good fortune here I would say the lesson
good fortune here I would say the lesson there is that if you've got somebody on
there is that if you've got somebody on salary it's easy for them to walk away
salary it's easy for them to walk away but if you've got the equity piece tied
but if you've got the equity piece tied in you know the 5% with the potential to
in you know the 5% with the potential to earn more that was I would say the hook
earn more that was I would say the hook but that's what kept him around when
but that's what kept him around when things got tough yeah so you know like
things got tough yeah so you know like hey you're making this but you know look
hey you're making this but you know look at the potential if we bid these jobs
at the potential if we bid these jobs correctly you know you could be walking
correctly you know you could be walking away with a 5% bonus and when you get
away with a 5% bonus and when you get your full Equity stake in the company
your full Equity stake in the company 20% of the profits he could easily be
20% of the profits he could easily be making 300 Grand a year so for somebody
making 300 Grand a year so for somebody that wasn't making more than 60 and
that wasn't making more than 60 and that's the potential now that's why he's
that's the potential now that's why he's here yeah and so it was $1,000 of extra
here yeah and so it was $1,000 of extra earnings um additional earnings that he
earnings um additional earnings that he earned he got another uh percentage
earned he got another uh percentage point of the business what is that
point of the business what is that number up to now what is his ownership
number up to now what is his ownership up to uh I think he's over 15% now over
up to uh I think he's over 15% now over 15% good that's great good for him what
15% good that's great good for him what about you had said to me that you hear
about you had said to me that you hear all these people or you hear a lot of
all these people or you hear a lot of people on the podcast
people on the podcast gu uh and you have a you have um some
gu uh and you have a you have um some communication with uh the Washington
communication with uh the Washington University where ET there's an ETA
University where ET there's an ETA course or uh I guess yeah a course a
course or uh I guess yeah a course a program um and so anyway you you're
program um and so anyway you you're exposed to NBAs who are doing this doing
exposed to NBAs who are doing this doing ETA entrepreneurship through acquisition
ETA entrepreneurship through acquisition and the the models and the technical
and the the models and the technical speak of IA and and and so on um
speak of IA and and and so on um and you didn't you don't come from that
and you didn't you don't come from that background react to to what is your
background react to to what is your reaction when you see some of those
reaction when you see some of those folks approaching this from a guy who
folks approaching this from a guy who doesn't come as a guy who doesn't come
doesn't come as a guy who doesn't come from that background and has been
from that background and has been successful over these last four is years
successful over these last four is years doing it you know it's uh speaking the
doing it you know it's uh speaking the language I definitely feel incompetent
language I definitely feel incompetent sometimes when I'm talking to these guys
sometimes when I'm talking to these guys because they they rattle off iida all
because they they rattle off iida all these acronyms and it's
these acronyms and it's like and I'm not scared to say look what
like and I'm not scared to say look what you know what do you mean by that or
you know what do you mean by that or what does that stand for um so it it's
what does that stand for um so it it's just they they have all the um the
just they they have all the um the experience the knowledge that they're
experience the knowledge that they're gaining from these universities that are
gaining from these universities that are teaching them ETA and teaching them how
teaching them ETA and teaching them how to go about raising money uh talking to
to go about raising money uh talking to private Equity firms whether they're
private Equity firms whether they're going to do their own search or they're
going to do their own search or they're going to join up with private Equity um
going to join up with private Equity um you know I I've met with a handful of
you know I I've met with a handful of private Equity companies and
private Equity companies and just I when I when I speak when I talk
just I when I when I speak when I talk to these guys I definitely feel like
to these guys I definitely feel like that I don't have the vocabulary to um
that I don't have the vocabulary to um communicate with them on the level but I
communicate with them on the level but I I don't have I'm not nervous or I'm not
I don't have I'm not nervous or I'm not um
um um I'm more than willing to just go
um I'm more than willing to just go ahead and say look like I I don't
ahead and say look like I I don't understand what the hell you're talking
understand what the hell you're talking about like can you break it down to me
about like can you break it down to me like I'm a 5-year-old and uh you know
like I'm a 5-year-old and uh you know several of them said you know whether
several of them said you know whether you are um going to do this on your own
you are um going to do this on your own or you're going to join up with a PE
or you're going to join up with a PE down the road like you know you got the
down the road like you know you got the grit you've got the determination to go
grit you've got the determination to go ahead and get after it this the kind of
ahead and get after it this the kind of person that we're looking for it doesn't
person that we're looking for it doesn't matter if you graduated graduated from
matter if you graduated graduated from Harvard or Wu or whatever it's going to
Harvard or Wu or whatever it's going to be these kids that are getting out um
be these kids that are getting out um thinking that they're going to go
thinking that they're going to go conquer the world like they definitely
conquer the world like they definitely can because they've got the education
can because they've got the education behind it but they don't have the
behind it but they don't have the experience and I feel like that gives me
experience and I feel like that gives me a leg up over these kids that are
a leg up over these kids that are getting out because you know yes you're
getting out because you know yes you're got a a prestigious University behind
got a a prestigious University behind you but you know I've got the experience
you but you know I've got the experience behind me and um so it it does feel a
behind me and um so it it does feel a little weird you know networking with
little weird you know networking with some of these guys but you know it's
some of these guys but you know it's been nice because they're reaching out
been nice because they're reaching out to me asking me questions how did you go
to me asking me questions how did you go about doing it and I think the one thing
about doing it and I think the one thing that stands out between myself and them
that stands out between myself and them is just experience and willing to stick
is just experience and willing to stick it through when things get bad you know
it through when things get bad you know what's the O scenario look like and
what's the O scenario look like and are you willing to deal with that
are you willing to deal with that pressure and the problems that come up
pressure and the problems that come up from it my take us home by telling uh us
from it my take us home by telling uh us about this latest acquisition or latest
about this latest acquisition or latest Acquisitions uh so may uh
Acquisitions uh so may uh 2023 we acquired Pool King Recreation
2023 we acquired Pool King Recreation which has been around for 42 years and
which has been around for 42 years and Florida Pool and Spa not in Florida
Florida Pool and Spa not in Florida they're based out of Maryland Heights
they're based out of Maryland Heights previous owner called a Florida pool
previous owner called a Florida pool because he had a partner that was from
because he had a partner that was from Florida um not the best for SEO but you
Florida um not the best for SEO but you know it works out um so we closed on
know it works out um so we closed on Pool King May 1st and we closed on
Pool King May 1st and we closed on Florida pool May
Florida pool May 26th uh so two transitions at the same
26th uh so two transitions at the same time uh chaotic hectic still running
time uh chaotic hectic still running another company um but it's been we've
another company um but it's been we've had a lot of uh hurdles a lot of
had a lot of uh hurdles a lot of challenges but it's been great um they
challenges but it's been great um they did have the team in place which was
did have the team in place which was very different they had the technology
very different they had the technology um buing obviously had you know they
um buing obviously had you know they were still dated with a lot of the ways
were still dated with a lot of the ways that they did you know they ran their
that they did you know they ran their leads so we've been we've changed a lot
leads so we've been we've changed a lot of things and we are still in the
of things and we are still in the process of improving
process of improving systems um but it's been going good it's
systems um but it's been going good it's different you know I'm more involved
different you know I'm more involved with P King on the I'm almost a um I'm
with P King on the I'm almost a um I'm doing a lot of general manager type
doing a lot of general manager type that's kind of the role that I'm um I am
that's kind of the role that I'm um I am here Florida pool is the team's running
here Florida pool is the team's running we we moved around a lot of people we
we we moved around a lot of people we had to let a few people go but we have a
had to let a few people go but we have a good team in place right now and I if I
good team in place right now and I if I wanted I could probably spend two hours
wanted I could probably spend two hours a week there maybe less but we're in
a week there maybe less but we're in growth mode so um you know 7 o'clock in
growth mode so um you know 7 o'clock in the morning I'm up at Florida and then
the morning I'm up at Florida and then um around 8 n o'clock I'm over at Pool
um around 8 n o'clock I'm over at Pool King and um yeah it's been it's been a
King and um yeah it's been it's been a busy year or busy what 19 months and
busy year or busy what 19 months and what is the combined revenue of those
what is the combined revenue of those two pool businesses uh Pool King is
two pool businesses uh Pool King is sitting around 5 million a year and
sitting around 5 million a year and Florida pool is we're hit 1.4 mhm so his
Florida pool is we're hit 1.4 mhm so his best year with Florida pool was probably
best year with Florida pool was probably about 1.2 so we've grown that company uh
about 1.2 so we've grown that company uh Pool King we bought it postco so there
Pool King we bought it postco so there was an enormous drop off from the
was an enormous drop off from the revenue they were probably doing over
revenue they were probably doing over six so we dropped about a million
six so we dropped about a million dollars in Revenue um so it's uh it's
dollars in Revenue um so it's uh it's been a bit of a challenge to see that
been a bit of a challenge to see that drop off we knew it was coming we bought
drop off we knew it was coming we bought uh the company at like a 2X uh with
uh the company at like a 2X uh with Revenue right now would probably it's
Revenue right now would probably it's it's about a 4X that we paid for it um
it's about a 4X that we paid for it um and then Florida pool we paid a 4X on
and then Florida pool we paid a 4X on that so it's uh it's been good but yeah
that so it's uh it's been good but yeah P King it's um to see what the company
P King it's um to see what the company looks like postco has been stressful uh
looks like postco has been stressful uh but there's a lot of things that we can
but there's a lot of things that we can change as far as the systems and
change as far as the systems and efficiencies to uh get us back up to
efficiencies to uh get us back up to where they were and did you buy these
where they were and did you buy these businesses with an SBA loan and partners
businesses with an SBA loan and partners so the gentleman that I mentioned that
so the gentleman that I mentioned that own the 100 50 businesses he uh they had
own the 100 50 businesses he uh they had this deal under contract the operator
this deal under contract the operator that was going to come in he had some
that was going to come in he had some family issues that he couldn't execute
family issues that he couldn't execute on the deal and um so the deal was going
on the deal and um so the deal was going to fall apart and um I had mentioned
to fall apart and um I had mentioned that I was out looking him and I had a
that I was out looking him and I had a conversation and just said that look I'm
conversation and just said that look I'm I'm ready to take the next step I want
I'm ready to take the next step I want to get a little bit more management
to get a little bit more management experience I I don't really have much of
experience I I don't really have much of a role at state line anymore outside of
a role at state line anymore outside of just making bigger
just making bigger decisions um so I was ready for it and
decisions um so I was ready for it and we made that decision probably February
we made that decision probably February 2023 and we ended up paying cash for
2023 and we ended up paying cash for both the deals um just to be able to
both the deals um just to be able to close before the busy season started we
close before the busy season started we wanted to catch all the upside so we um
wanted to catch all the upside so we um paid cash and it's a 4951 split so I
paid cash and it's a 4951 split so I have minority ownership in it and the uh
have minority ownership in it and the uh we refinanced after we closed on the
we refinanced after we closed on the deal it took probably about 3 4 months
deal it took probably about 3 4 months to get the refinance done um but went
to get the refinance done um but went conventional with the refi uh we have a
conventional with the refi uh we have a seven-year loan on both the businesses
seven-year loan on both the businesses we kept them separate I know some people
we kept them separate I know some people would disagree with that because one's
would disagree with that because one's service-based and the other one is
service-based and the other one is retail so they feed a lot of business to
retail so they feed a lot of business to each other and it would make my life
each other and it would make my life easier if we brought them together but
easier if we brought them together but the attitude is that we want to keep
the attitude is that we want to keep them separate because if one business
them separate because if one business fails it's not going to drag the other
fails it's not going to drag the other one down so there is potential down the
one down so there is potential down the road to go ahead and put these two
road to go ahead and put these two together once we're comfortable with
together once we're comfortable with that but they're both performing really
that but they're both performing really well
well separately and
separately and um yeah so it's been um I'm trying to
um yeah so it's been um I'm trying to think of anything else with the deal so
think of anything else with the deal so so your partner who is the the gentleman
so your partner who is the the gentleman with 150
with 150 businesses presumably has done well for
businesses presumably has done well for himself so he you guys bought these two
himself so he you guys bought these two businesses in
businesses in cash his cash and then just so you get
cash his cash and then just so you get the deals done and then promptly
the deals done and then promptly refinance them uh with conventional debt
refinance them uh with conventional debt not SBA debt and how much did did he
not SBA debt and how much did did he take out or you guys take out when you
take out or you guys take out when you 20% yeah so how much do the
20% yeah so how much do the 20% you took out okay gotcha
20% you took out okay gotcha gotcha no you took out 80% and left 20%
gotcha no you took out 80% and left 20% in yes yeah sorry sorry yeah right okay
in yes yeah sorry sorry yeah right okay um great and then the split is
um great and then the split is 4951 mhm yeah gotcha gotcha um and
4951 mhm yeah gotcha gotcha um and what's your plan with
what's your plan with those um there's been I mean are you
those um there's been I mean are you building a holds Co here Mike or or Buy
building a holds Co here Mike or or Buy and Hold or what it wasn't really the
and Hold or what it wasn't really the intention I mean it's a Buy and Hold um
intention I mean it's a Buy and Hold um you know my partner he he likes to keep
you know my partner he he likes to keep businesses he doesn't like to just flip
businesses he doesn't like to just flip them uh it's always a potential that we
them uh it's always a potential that we could do it but um with the number of
could do it but um with the number of companies that have approached us to
companies that have approached us to purchase them there's a lot of baby
purchase them there's a lot of baby boomers that are getting out of the
boomers that are getting out of the business
business um private Equity doesn't typically like
um private Equity doesn't typically like the retail side so since we're already
the retail side so since we're already doing this and if we were able to cover
doing this and if we were able to cover more territory in the St Louis market
more territory in the St Louis market and over in Illinois um there's
and over in Illinois um there's definitely a lot of potential there
definitely a lot of potential there again I've already had several
again I've already had several conversations with a handful of
conversations with a handful of companies uh that would like us to take
companies uh that would like us to take over they've seen what we've done with
over they've seen what we've done with the companies and you know it's small
the companies and you know it's small community here they all talk um so the
community here they all talk um so the ex the there's a lot of positive
ex the there's a lot of positive um there's there's a lot of positives
um there's there's a lot of positives that they've communicated to these other
that they've communicated to these other companies that they thought that we
companies that they thought that we would be a good fit so it's just a
would be a good fit so it's just a matter of time to take them down and
matter of time to take them down and having the right price in mind so um you
having the right price in mind so um you know doing a rollup would be great uh
know doing a rollup would be great uh taking on some new pool routes with the
taking on some new pool routes with the service company we can expand
service company we can expand organically we've got a handful of
organically we've got a handful of product lines that we could add to Pool
product lines that we could add to Pool King so um organic growth Acquisitions
King so um organic growth Acquisitions when the time's right um but you know
when the time's right um but you know the pool industry it's it's an easier
the pool industry it's it's an easier it's an easier business to understand if
it's an easier business to understand if I had to go out there and I had to learn
I had to go out there and I had to learn all this stuff and do it myself in case
all this stuff and do it myself in case something happened it would be easier
something happened it would be easier for me to do this than the garage door
for me to do this than the garage door business so I see more potential there
business so I see more potential there in the fact that there are several
in the fact that there are several companies identical to us that we could
companies identical to us that we could acquire it just seems like there's more
acquire it just seems like there's more legs on this than what the garage door
legs on this than what the garage door business has at the moment great Mike
business has at the moment great Mike anything else to add about your story
anything else to add about your story anything we didn't talk about I mean
anything we didn't talk about I mean there's we could probably do another
there's we could probably do another podcast on the pool companies because
podcast on the pool companies because there's plenty to tell there but um you
there's plenty to tell there but um you know I I think a lot of people get hung
know I I think a lot of people get hung up on the equity splits and stuff and
up on the equity splits and stuff and you know for me since I didn't really
you know for me since I didn't really come from this background and I didn't
come from this background and I didn't have the ETA education on it um you know
have the ETA education on it um you know I feel like I'm paying my tuition right
I feel like I'm paying my tuition right now so sometimes if the deal isn't
now so sometimes if the deal isn't perfect um you know my attitude with
perfect um you know my attitude with these companies is it if I can grow them
these companies is it if I can grow them hire myself out and then go do it again
hire myself out and then go do it again and more favorable deal and have
and more favorable deal and have majority ownership I mean that's that's
majority ownership I mean that's that's my path and that's what I'm planning on
my path and that's what I'm planning on doing so sometimes the deals you know
doing so sometimes the deals you know maybe they don't pencil out um you know
maybe they don't pencil out um you know perfect but you know you got to do what
perfect but you know you got to do what works for you and this has worked for me
works for you and this has worked for me pretty well and uh you know I I don't
pretty well and uh you know I I don't have a hold Coast set up but this is um
have a hold Coast set up but this is um you know it's a uh that's way that's
you know it's a uh that's way that's kind of the direction that it's going
kind of the direction that it's going but all this to this um you feel like
but all this to this um you feel like you're paying tuition is that to say
you're paying tuition is that to say that you're not you're not psyched about
that you're not you're not psyched about the 4951 split oh I am I mean it's it's
the 4951 split oh I am I mean it's it's great you know at the end of the day
great you know at the end of the day with the money that this company's
with the money that this company's making I'll be you know between the
making I'll be you know between the three companies I'll be pushing close to
three companies I'll be pushing close to million dollars a year once these are
million dollars a year once these are all paid off but you know so it is it is
all paid off but you know so it is it is great um having minority ownership just
great um having minority ownership just is a little uneasy at at times because
is a little uneasy at at times because you know if the majority owner wasn't
you know if the majority owner wasn't happy with the way that I was performing
happy with the way that I was performing I could be fired we could sell the
I could be fired we could sell the business I don't have any I don't have
business I don't have any I don't have any uh say so in what what goes on
any uh say so in what what goes on obviously you know they want to keep me
obviously you know they want to keep me around because I'm running the companies
around because I'm running the companies they got the respect of the employees
they got the respect of the employees but you know I'm dispensable at the end
but you know I'm dispensable at the end of the day so majority ownership and
of the day so majority ownership and whatever is coming down the line is is
whatever is coming down the line is is the direction that I I want to go yeah
the direction that I I want to go yeah yeah makes sense Mike if people want to
yeah makes sense Mike if people want to reach out with any questions uh how can
reach out with any questions uh how can they do that LinkedIn so I'm more than
they do that LinkedIn so I'm more than happy to talk to anybody like I said
happy to talk to anybody like I said I've been talking to some of the wasu
I've been talking to some of the wasu students I've had a handful people reach
students I've had a handful people reach out just to you know hear what I've been
out just to you know hear what I've been through uh I think the advice that I can
through uh I think the advice that I can give to anybody that is going to reach
give to anybody that is going to reach out is you know uh you got to do it at
out is you know uh you got to do it at some point you can overanalyze something
some point you can overanalyze something to death and never do the deal um
to death and never do the deal um sometimes you just if it if it looks
sometimes you just if it if it looks like it makes sense just pull the
like it makes sense just pull the trigger and do it and uh you know you
trigger and do it and uh you know you it's never going to be perfect I mean
it's never going to be perfect I mean like I said with the pool companies
like I said with the pool companies they're endless amount of things that we
they're endless amount of things that we missed in the due diligence um but we've
missed in the due diligence um but we've been able to work it out and get through
been able to work it out and get through the problems so you know sometimes you
the problems so you know sometimes you just got to just got to do it great note
just got to just got to do it great note to end on Mike Keith thanks for your
to end on Mike Keith thanks for your time today I appreciate it thank you I
time today I appreciate it thank you I hope you enjoyed that interview make
hope you enjoyed that interview make sure you subscribe to the acquiring
sure you subscribe to the acquiring minds Channel below we are now
minds Channel below we are now publishing twice a week so tons of new
publishing twice a week so tons of new interviews and stories to come stories
interviews and stories to come stories that will help you along your own path
that will help you along your own path to acquiring a business
Click on any text or timestamp to jump to that moment in the video
Share:
Most transcripts ready in under 5 seconds
One-Click Copy125+ LanguagesSearch ContentJump to Timestamps
Paste YouTube URL
Enter any YouTube video link to get the full transcript
Transcript Extraction Form
Most transcripts ready in under 5 seconds
Get Our Chrome Extension
Get transcripts instantly without leaving YouTube. Install our Chrome extension for one-click access to any video's transcript directly on the watch page.
Works with YouTube, Coursera, Udemy and more educational platforms
Get Instant Transcripts: Just Edit the Domain in Your Address Bar!
YouTube
←
→
↻
https://www.youtube.com/watch?v=UF8uR6Z6KLc
YoutubeToText
←
→
↻
https://youtubetotext.net/watch?v=UF8uR6Z6KLc