Adventures with Lyrical: Buying a Business (REPOST)

Eomer

Eomer

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We sat down again this morning, and everyone was a lot calmer. We explained to him where we were coming from in terms of him thinking that he should get two bonuses despite all the discussion in the past week about him being on equal terms with the other 3 guys and so on. He said his main concern was that the previous bonus (of about 7k pre-tax) was guaranteed, while the new bonus (probably about 20k, assuming the company makes about 1m, which is realistic) isn't. However my bro and I both know that's bullshit, he was cranky because it meant less money to him than he thought he was going to get, because he figured he'd get both. He hears what he wants to hear, nothing else. Regardless, he was fairly contrite and we all agreed that we want to move on from this. My bro also spoke with the other PM and the purchaser, and both basically said that we should have fired him on the spot.

So we agreed upon what was originally discussed. However my bro and I agreed that unless there's a big change in his attitude and ability to get along with others (our purchaser said that sales guys at a couple of the wholesales we deal with have also complained about him), that we'd likely cut him his bonus next year and send him packing. The timing right now isn't great for us for a variety of reasons.

Really what it comes down to is that he's greedy and bad with money. It's not so much about ego or that he thinks the company revolves around him. He and his wife have bad spending problems and I'm sure he's still dealing with the aftermath of his business bankruptcy, so he needs to get more more more all the time.
 
Shonuff

Shonuff

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Tmac47_sl said:
Your cranky PM sounds like the epitome of the 20/80 rule. I agree with Lyrical. Start the hiring search now and keep your eyes open for a top notch replacement with an appetite to learn and a good attitude.

Hire slow, fire fast.
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No owner wants to hear that, when it takes you six months to a year to develop someone into a Manager. But the reality is if he sees his replacement around the corner, he'll become humble. That, or he'll continue to fall on his sword, but it won't matter, you'll have a replacement for him.
 
Shonuff

Shonuff

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Eomer_sl said:
Really what it comes down to is that he's greedy and bad with money. It's not so much about ego or that he thinks the company revolves around him. He and his wife have bad spending problems and I'm sure he's still dealing with the aftermath of his business bankruptcy, so he needs to get more more more all the time.
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And employees like this is why owners a lot of time have to act like Dad. I have to counsel my guys all the time to stop blowing their take-home pay at the casinos. We are the only company that works all year around in my industry, but that's no guarantee. One day, we might slow down like the other companies, and I tell them they better have money saved. But the reality is some of them blow 1k a week at the casino and when they are forced to only get 40 hours a week, they freak out.

If I can get them to stop blowing their cash on gambling, booze and whores, I wouldn't have to deal with their bullshit. Guys come to work bitching about how they are broke after they blew $500 on hookers over the weekend.

I don't understand it, but this is the mentality of a lot of blue collar workers.
 
Tmac

Tmac

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Lyrical_sl said:
I don't understand it, but this is the mentality of a lot of blue collar workers.
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You don't understand it? It's not a characteristic of blue collar workers. It's the mentality of a society that constantly pursues self-fulfillment in the form of pleasure and denies the existence of moral truth. This mentality works well in the moment, but backfires when we get caught with our pants down.

Bill Clinton, Enron execs, and Lance Armstrong all share moral commonalities. They aren't the rule, but they're no different than your shady employees.

My only point is that morality (religion aside) plays a role in business as well as life and serves to protect both you and your family if you choose to live recognizing its truths.
 
Shonuff

Shonuff

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Tmac47_sl said:
You don't understand it? It's not a characteristic of blue collar workers. It's the mentality of a society that constantly pursues self-fulfillment in the form of pleasure and denies the existence of moral truth. This mentality works well in the moment, but backfires when we get caught with our pants down.

Bill Clinton, Enron execs, and Lance Armstrong all share moral commonalities. They aren't the rule, but they're no different than your shady employees.

My only point is that morality (religion aside) plays a role in business as well as life and serves to protect both you and your family if you choose to live recognizing its truths.
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I guess I'm pretty vanilla, I haven't spent $100 at the casinos this year, drink like a $10 bottle of wine a week, and don't mess with whores. These guys come to work burnt from gonorrhea or chlamydia sometimes. They are married, but didn't get the STD from their wives.

One of my best, honest and hardest working workers still brings problems like Eomer's employee does to work because he has four girlfriends, blows 1k a week at the casino, and has an 800 a month cell phone bill (and won't change his plan to unlimited calling). So he comes to work after he can't pay his 500 a month in rent and bitches up a storm. Here's an idea, pay your 500 a month in rentbeforeyou go blow 5k in gambling and skanks. I love the guy like family, but he's somewhat retarded when it comes to spending cash.
 
Tmac

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Lyrical_sl said:
I guess I'm pretty vanilla, I haven't spent $100 at the casinos this year, drink like a $10 bottle of wine a week, and don't mess with whores.
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I'm the same way. I never keep beer in the fridge, even though my roommate keeps the thing stocked and I've never gambled. For me, the odds are never in your favor so gambling has never been a temptation for me.

I used to smoke weed every day all day, used to drink and party on the weekends, used to hook up with girls regularly, until I realized (with help) that I was miserable and ultimately none of that stuff brought me joy. It just had to get worse before it got better. I can't really take credit for the life-change, but my life did change and I'm better for it.
 
Shonuff

Shonuff

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Jeez, we'll do just under 50k in service fees in January and make 14kish profit on that. Margins are lower because we have no pricing power this time of year, and we've had freak repairs needed (one piece of equipment cost me 2k in repairs this month on unrelated repairs), but at least we have a margin. It's the best January on record for us in a month we normally lose.

All of this was planned for, but I never sat there and said we'd do 50k in typically what is the second worst month of the year. I'm redrawing some of the plans so that we can do 80k in March (it tends to get better from there, and doesn't slow down again until November). The goal is to do one million in sales this year (non-emergency). Only 5% of small businesses ever get there, and we've knocked on the door with emergency work. But you can't count on emergency work all the time, Mother Nature does what she wants and when she wants.

All I can say to business owners is keep looking for ways to improve in all facets. You have to be almost like what winning NFL coaches do, they are constantly tweaking and improving things until everything is perfect. It will never be perfect though. If you want to succeed, you have to have a restless discontent.

Am I pumped? Yes. That's because January is usually 25-40% of what the other months are in any given year. Once we get past February, we never lose money, it's all green from there. And we are green now.
 
Tmac

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So, just an update.

I talked to the Department of Natural Resources today for the state (they do about $4m in timber sales every year) and they are very interested in our product. They currently have no way to create a preferred system of timber dealers (timber buyers) and are going to pitch our software to the department heads as a way to create a preferred system of dealers.

I've also started talking with some small business consultants, who are going to work out a fee based system that works on revenues they actually help me produce. I think one of the first things they're going to help me develop is a video pitch to timber companies that can benefit from our software. I'm going to push the bootstrapping model and get the companies that are testing our software to pay for it at a discounted rate that they'll be grandfathered into once we go live.

We currently have a timber company with about 10 crews that wants to test the software and another company with 15 crews that does about 1.4m in tons of timber per year. So, the ball is rolling... I think we'll have something for them within the month.
 
Shonuff

Shonuff

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Tmac47_sl said:
So, just an update.

I talked to the Department of Natural Resources today for the state (they do about $4m in timber sales every year) and they are very interested in our product. They currently have no way to create a preferred system of timber dealers (timber buyers) and are going to pitch our software to the department heads as a way to create a preferred system of dealers.

I've also started talking with some small business consultants, who are going to work out a fee based system that works on revenues they actually help me produce. I think one of the first things they're going to help me develop is a video pitch to timber companies that can benefit from our software. I'm going to push the bootstrapping model and get the companies that are testing our software to pay for it at a discounted rate that they'll be grandfathered into once we go live.

We currently have a timber company with about 10 crews that wants to test the software and another company with 15 crews that does about 1.4m in tons of timber per year. So, the ball is rolling... I think we'll have something for them within the month.
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Cool. What monthly revenues are you projecting in the short, medium and long term?
 
Tmac

Tmac

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That's a good question. We have a first-to-market advantage right now, so really, it all depends on how these first few companies that test for us respond. If we can provide a case-study that shows how much time these companies save (which should be around a day per week) by using our software, we could seriously rake in the dough. We're pretty confident that we can charge companies anywhere from $300-$500 per month for the software, but they'll be saving way more than that. It would break down to about $100 per crew, per month, but they would save about 4 days per month for their wood buyers who oversee the crews.

I see us easily pulling in 10k per month short-term after we go live. Long term, because we have the ability to expand nationally and internationally, we could honestly see 10x that number.

I'm currently looking into a valuation of the company, so that we know how much equity to offer investors who are already willing to give us their monies.

The timber industry is currently a $30b industry and nothing like what I'm providing exists.
 
Shonuff

Shonuff

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The local news is calling for a huge ice storm. The last time we had a storm of this magnitude, I was knocking back 80k a month in profits. We had so much in emergency work that the guys were logging 90 hours a week. I'm not going to get too excited until it actually hits.

The sad thing is six months after a huge storm hits, we were struggling to get to break even, after 100 new companies popped up out of nowhere. You had construction companies trying to do what we do.

It hasn't happened since 2009, odds are the media is just being sensationalist.
 
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checkyeah_sl

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yea it was more of a joke. Lyrical do you offer tree trimming services? I see quite a few ads for those even in Austin. Their advertising ramps up during the winter.
 
Shonuff

Shonuff

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checkyeah_sl said:
yea it was more of a joke. Lyrical do you offer tree trimming services? I see quite a few ads for those even in Austin. Their advertising ramps up during the winter.
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I posted it on the old boards, tree care is what we do, hence why I can charge $75 per man hour.
 
kegkilla

kegkilla

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Lyrical, i took your advice from the other thread and started to implement some controls in my business to stop my employees from stealing from me. what do you think?

rrr_img_14239.jpg
 
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Shonuff

Shonuff

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checkyeah_sl said:
yea it was more of a joke. Lyrical do you offer tree trimming services? I see quite a few ads for those even in Austin. Their advertising ramps up during the winter.
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This storm was all hype. They called for the worst storm in years, and it ended up being just a regular storm.
 
Tmac

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Lyrical_sl said:
This storm was all hype. They called for the worst storm in years, and it ended up being just a regular storm.
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That's pretty much the story with news today. That's why when things like Katrina/Sandy happen, the folks who stayed behind are like, "Wow. They were actually telling the truth this time..." /shock
 
Shonuff

Shonuff

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Tmac47_sl said:
That's pretty much the story with news today. That's why when things like Katrina/Sandy happen, the folks who stayed behind are like, "Wow. They were actually telling the truth this time..." /shock
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The worst part about it is (since we are the largest tree service in the area), after the last storm, they called us to ask if any damage was done. We said no, and then the local anchor was reporting that night that there was so much damage done that FEMA might have to be sent in. Not only were there no calls, but I have people working in different areas all day, and no one saw any damage. Absolute B.S.
 
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