Adventures with Lyrical: Buying a Business (REPOST)
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Shonuff
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Legal stuff aside...
It was probably the best month we've had in two years. We did about $90k in sales and just under 35k in profit (net income+debt servicing+owner's draw). I've been planning for a year for me to get to the point where I could hire more people and keep them busy, and we've been busy in spades. The stat is that less than 5% of businesses can do $1 million + a year. I've been trying to get to that goal as a base level.
Because I have mostly a fixed cost structure, as sales increase past fixed costs, profits increase greatly. Last month, we broke even at $33k. This is why I've been advertising like a freak. In past years, when we've had freakishly busy months, profits were crazy. Think $75k on 150k in sales. The problem is that it's never been sustainable. We do 150k one month, and then do 60k the next. This is why I'm advertising so much, so I can create more opportunities to have killer months.
We left money on the table. Between equipment failures, and lopsided teams (sometimes), as well as some boneheaded decisions, we could have done another 12k this month.
I'm trying to think bigger, I really am. I sit here and say we had our best month in years, but we could have done $200k in sales. Because of five minutes ago, my backlog is roughly 70k with 205 estimates that still need to be run (we close 50% of our calls at an average of $762 per job).
The reality is that we can do 100k max in a normal month with the people I have now (eight full time). When we did 150k was when I worked the guys six days a week, twelve hours a day (something I don't want to do forever, they get burnt out). At some point, we'll need another crew, and that crew will need 100k in equipment.
Growth is fun, but I want to do it without borrowing from the bank.
It was probably the best month we've had in two years. We did about $90k in sales and just under 35k in profit (net income+debt servicing+owner's draw). I've been planning for a year for me to get to the point where I could hire more people and keep them busy, and we've been busy in spades. The stat is that less than 5% of businesses can do $1 million + a year. I've been trying to get to that goal as a base level.
Because I have mostly a fixed cost structure, as sales increase past fixed costs, profits increase greatly. Last month, we broke even at $33k. This is why I've been advertising like a freak. In past years, when we've had freakishly busy months, profits were crazy. Think $75k on 150k in sales. The problem is that it's never been sustainable. We do 150k one month, and then do 60k the next. This is why I'm advertising so much, so I can create more opportunities to have killer months.
We left money on the table. Between equipment failures, and lopsided teams (sometimes), as well as some boneheaded decisions, we could have done another 12k this month.
I'm trying to think bigger, I really am. I sit here and say we had our best month in years, but we could have done $200k in sales. Because of five minutes ago, my backlog is roughly 70k with 205 estimates that still need to be run (we close 50% of our calls at an average of $762 per job).
The reality is that we can do 100k max in a normal month with the people I have now (eight full time). When we did 150k was when I worked the guys six days a week, twelve hours a day (something I don't want to do forever, they get burnt out). At some point, we'll need another crew, and that crew will need 100k in equipment.
Growth is fun, but I want to do it without borrowing from the bank.
Have you ever thought of buying a competitors business? Seems like that would fix at least some of the things you just mentioned!
Shonuff
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Tmac
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If you're thinking that acquiring a competitor makes sense so that he can acquire their assets, he'd probably have to pay 5x what he would have to pay for equipping a new crew. In that sense it's not worth it.
On the flip side, from what Lyrical's posted before there seems to be a pretty low ceiling in finding professionals to do the work, so as the labor pool shrinks, wouldn't the price to put another crew on the ground increase? It might be much much greater than Lyrical's $100k estimate, which in turn might make it worth it.
My point more or less is that with competitors going under left and right (as described by Lyrical) I could imagine that there are opportunities to be had. Think cheap assets etc. to raise his capacity (a problem Lyrical adressess) for handling jobs. With his premium brand he potentially could make more money.
Shonuff
Mr. Poopybutthole
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The Big Three competitors include us and two other companies. One of them has moved to 100% government work, and they send us free referrals. This guy just sent us $7,000 in one week because he won't do residential work any more. He prefers having a set amount of business every month on a big contract. The other competitor has offered to sell to me, but I don't like how he treats customers. His business is on the decline, both from removing all advertising and yelling at customers. He's also raised prices. We beat him on a $2,500 bid last week, on a long time customer of his, who told us that he's pricing himself out of business.
If I buy their business, they are going to want more than the value of their equipment. But if I'm willing to travel, I can find a good deal on equipment. But it's still going to be 100kish for another crew for good equipment.
I've debated it with myself, and I think I'm just going to make sure that the two crews right now have the best equipment, bar none. I can spend $15k on them and increase their productivity probably by $700 a day.
Shonuff
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So, we are definitely picking up more work with me running estimates also. Only now I'm working in the business, instead of on it. But at least I don't have to worry about me stealing jobs from myself. I've noticed that I'm following the patterns of some of the douchebag bosses that I've had, and it needs to stop. Every time I outsell my employees, I tell them my dick is bigger than theirs bla bla bla, just like all Type A salespeople do. I need to encourage more, and dick measure less. There are some days where no one is signing. Some days, you get in a rut.
One of my guys just got offered $5 more an hour and left. I talked with the rest of the guys, and they all said the same thing, smaller companies offer you more, but they might run out of work in two weeks, leaving you jobless. A few years ago, a smaller company offered a guy working for me $70k a year to be a laborer. He leaves me, relocates, and as soon as he gets there, the guy pays him $100 and tells him he's run out of work. This happens in the Summer every year. But by the end of August, the phone is ringing again with people looking for work. What happens is we pay more money except for the Summer months. The smaller companies offer the guys whatever they want and then lay them off as soon as they can. Some employees jump at at the chance, but invariably, they've been unemployed in 60 days or less. It is what is.
I'm thinking about buying a small loader with a grapple for one of my crews. The main crew has a grapple truck, the other crew has to move everything by hand. It can pick up 1,000 pounds, and from what my Crew Leaders tell me, will increase productivity by $500 a day for that crew. Having it there is like having another employee, but only paying him $400 a month. We are spending way too much time removing debris, last week we went eight hours over cost doing it.
One of my guys just got offered $5 more an hour and left. I talked with the rest of the guys, and they all said the same thing, smaller companies offer you more, but they might run out of work in two weeks, leaving you jobless. A few years ago, a smaller company offered a guy working for me $70k a year to be a laborer. He leaves me, relocates, and as soon as he gets there, the guy pays him $100 and tells him he's run out of work. This happens in the Summer every year. But by the end of August, the phone is ringing again with people looking for work. What happens is we pay more money except for the Summer months. The smaller companies offer the guys whatever they want and then lay them off as soon as they can. Some employees jump at at the chance, but invariably, they've been unemployed in 60 days or less. It is what is.
I'm thinking about buying a small loader with a grapple for one of my crews. The main crew has a grapple truck, the other crew has to move everything by hand. It can pick up 1,000 pounds, and from what my Crew Leaders tell me, will increase productivity by $500 a day for that crew. Having it there is like having another employee, but only paying him $400 a month. We are spending way too much time removing debris, last week we went eight hours over cost doing it.
Shonuff
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The court date is August 7th. They found out who my insurance company was, and filed a claim against me involuntarily. The Adjuster reviewed the info and said that there's zero evidence that it was our fault, and said that neither we nor they would accept liability. He recorded their statements, and said that they keep changing their statements and are not trustworthy. This is the same thing they kept doing with me, and it's why I filed. I can't try to fix this in good faith if they keep changing what they say. I've tried to fix this, this could have been easily fixed, but they are just too condescending. And it's pissing everyone off. The Adjuster called me today and he was wore out from their B.S. They might be upper management types, but they think they are better than everyone else, and it keeps costing them. Hopefully, they go to the Judge with that attitude.
Shonuff
Mr. Poopybutthole
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We've been bidding lots of commercial jobs for office complexes and subdivisions. And so far, we've got $6,500 and 9,700 from them, with another 22,300 and 7,500 still pending. That's on top of the residential calls.
I have a guy a poached from another company in Texas coming to work for me next week. He worked for the company before I bought it. Apparently, he can run a crew, run all of the equipment and do estimates. I can't wait for him to get here. I'm going to have to keep stealing the good employees. I offered him more than he could make in Texas, and he knows we are stable (as in don't layoff employees much like other companies).
We are moving to the point where we are going to increase capacity another 45%, slowly but surely. There will only be so much I can increase capacity before I'm buying trucks for 50k apiece though.
I have a guy a poached from another company in Texas coming to work for me next week. He worked for the company before I bought it. Apparently, he can run a crew, run all of the equipment and do estimates. I can't wait for him to get here. I'm going to have to keep stealing the good employees. I offered him more than he could make in Texas, and he knows we are stable (as in don't layoff employees much like other companies).
We are moving to the point where we are going to increase capacity another 45%, slowly but surely. There will only be so much I can increase capacity before I'm buying trucks for 50k apiece though.
Tmac
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I don't mean to hijack the thread, but I have a question.
I've had a video sitting for about a month now waiting to get approval from the university, so that I can use certain footage.
I finally got approval, which is apparently impossible to do, and got one clip from the person in charge of all of the university's digital footage. However, I need two other clips from him and he won't return my calls. I know the guy and we're familiar with each other.
I've probably left 5 messages on his voicemail along the lines of, "Hey ____, thanks so much for getting me the footage and I know you're really busy, but I'd like to get those other two clips as well. Talk to ya soon, thanks again!"
My last voicemail went along the lines of, "Hey ____. I just wanted to let you know that I really appreciate you helping me out on the footage, but I really need to get those other two clips. I know you're busy, so I'm willing to help you out in any way I can. Please give me a call."
Still no response.
I've been in his studio several times and he works out of there on a daily basis. At this point, should I just show up at his studio in person?
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I also wanted to mention that I'm 28 and this guy is in his 50's.
I've had a video sitting for about a month now waiting to get approval from the university, so that I can use certain footage.
I finally got approval, which is apparently impossible to do, and got one clip from the person in charge of all of the university's digital footage. However, I need two other clips from him and he won't return my calls. I know the guy and we're familiar with each other.
I've probably left 5 messages on his voicemail along the lines of, "Hey ____, thanks so much for getting me the footage and I know you're really busy, but I'd like to get those other two clips as well. Talk to ya soon, thanks again!"
My last voicemail went along the lines of, "Hey ____. I just wanted to let you know that I really appreciate you helping me out on the footage, but I really need to get those other two clips. I know you're busy, so I'm willing to help you out in any way I can. Please give me a call."
Still no response.
I've been in his studio several times and he works out of there on a daily basis. At this point, should I just show up at his studio in person?
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I also wanted to mention that I'm 28 and this guy is in his 50's.
Shonuff
Mr. Poopybutthole
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Can you see your company growing too big locally? Ie, there is not enough work to sustain your workforce? Or are there other cities/towns/areas close to your own area that could easily be serviced by expanding with a smaller sub-branch?
Shonuff
Mr. Poopybutthole
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If I had the right people, I could triple the company. We just expanded two other cities. I moved our trucks to be more centrally located, so we can get to those other areas.
Also, working capital is an issue now. I've bought $45k in equipment and am spending 10k a month in advertising. I'm not going to borrow from the bank, so it gets a little tight. I'd rather grow from working capital than borrow more money.
So, in a perfect world, if I had the right people and more equipment, I could easily triple the company. The advertising is working. Because we have such a backlog right now, we are losing work still. We are booked a month out right now, some of my competitors don't have work for the day. But on the flipside, I can charge what I want. I don't have to negotiate when I'm backlogged a month out. A customer tries to cut my nuts off on a deal, I hand them a brochure, and tell them to give me a call if they want us to do the work.