Adventures with Lyrical: Buying a Business (REPOST)

Tmac

Adventurer
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The issue isn't pay them more.

Equity is not the issue.
Well, I guess there's no hope... Just kidding.

Streamline your Estimator training process, advertise the job as an outside sales position for $50k per year, start recruiting at college business schools and BOOM! Profit.

I'm honestly surprised that you're not constantly looking for someone to fill the Estimator position. Especially since you only have 1 guy when you probably need 3, right?

What's the rule? Hire slow, fire fast?
 

Shonuff

Mr. Poopybutthole
5,538
791
Streamline your Estimator training process, advertise the job as an outside sales position for $50k per year, start recruiting at college business schools and BOOM! Profit.

I'm honestly surprised that you're not constantly looking for someone to fill the Estimator position. Especially since you only have 1 guy when you probably need 3, right?
I need guys with industry specific knowledge and experience. For instance, we are doing a job where we are clearing a city block of debris, removing dead trees and beautifying the trees. The job requires a grapple truck, as well as a bobcat with arm attachment. There is so much work there, that someone without industry experience would screw it up. A misbid on a job this size could run a $10-20k loss.

If you bid jobs wrong, you eat the loss. The previous owner told me of a time when they did work for any extremely wealthy individual (not a millionaire, but billionaire). He bid it at 90k, and the job should have been 160-170k. The job pretty much rented the company to this person for two months. In this case, it was the busiest months of the year. So the owner lost at least 70k.

You can't pull guys out of college and have them do it. I've owned my company for five years, and I still don't trust the accuracy of my pricing. You need to pull laborers with five years' experience, and then try to make them into a Manager. The only way it can work, is turning a blue collar employee into a white collar employee, and for some guys, that's impossible. I'm talking to a guy at another company right now, who is known to be a hard worker, and wants to do better for his family. The company in question, the owner is notorious for pulling $200-300 out of someone's weekly check at random. He pays at half the rate I do. We'll see how it goes.

To answer your question on Estimators, I need two pretty much at all times. We've been getting away with one, but last year, we lost so many jobs because we couldn't run a timely bid. Between jobs getting cancelled for us not getting to them ($2,500 a week) and jobs sold to other companies before we could run the bid, we probably lost 5k a week from Spring to Fall.

As I type this, I realize that we are not going to be able to keep pace. If the phone is ringing like peak times right now, what will it be like in the peak times?

I'm going to need to make a change. I've taken away my Estimator's other responsibilities, and given them to the crew leaders. Before, if a hose busted, tire went flat, or the guys needed oil and gas, he'd go get it. But we are still a week behind on bids right now.
 

Tmac

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I'm going to need to make a change. I've taken away my Estimator's other responsibilities, and given them to the crew leaders. Before, if a hose busted, tire went flat, or the guys needed oil and gas, he'd go get it. But we are still a week behind on bids right now.
That sounds like stuff I did for my boss when I was in high school, not stuff an Estimator should be doing. My boss payed me $11/hr to help him do urban forestry. He was retired from the forestry service and had enough business to work around the clock. My job consisted of oiling/gassing the chainsaw, sharpening the chain and loading the truck.
 

Shonuff

Mr. Poopybutthole
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That sounds like stuff I did for my boss when I was in high school, not stuff an Estimator should be doing. My boss payed me $11/hr to help him do urban forestry. He was retired from the forestry service and had enough business to work around the clock. My job consisted of oiling/gassing the chainsaw, sharpening the chain and loading the truck.
He shouldn't be doing stuff like this. A few years ago, the Estimator might only have had enough estimates to run for six hours out of the day, so the rest of the day he was free to float around and assist. Over the years, I've increased our monthly ad budget from like $600 a month to 10,000 right now. The calls are coming in hot and heavy, and he has zero slack time now. Many days, we get more calls than he ran in that day (i.e., he runs 12 estimates but 20 come in). In the Winter, he has enough slack time to run those errands.

He still has this impulse reaction to go do this stuff. I had to tell him this week to delegate.
 

Izuldan_sl

shitlord
154
0
You really need to offer more money if you want to retain another good estimator. I wouldn't say higher base salary, but definitely more performance bonuses, better commission, or equity in your company as suggested earlier. The fact you pay your current estimator double the usual rate is nothing. My top guy makes 4x the average salary for his position. If you really want to be the best, pay like it.

Your company is in the middle of growing pains, and it is really crucial how you respond to this current growth period. Think about the opportunity cost to you with the delay of getting more workers to grow your company.

The single greatest trait for a business owner isn't intelligence, it isn't work ethic. It's the ability to adapt to the changing landscape of your business.
 

Corndog

Lord Nagafen Raider
520
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I need guys with industry specific knowledge and experience. For instance, we are doing a job where we are clearing a city block of debris, removing dead trees and beautifying the trees. The job requires a grapple truck, as well as a bobcat with arm attachment. There is so much work there, that someone without industry experience would screw it up. A misbid on a job this size could run a $10-20k loss.

If you bid jobs wrong, you eat the loss. The previous owner told me of a time when they did work for any extremely wealthy individual (not a millionaire, but billionaire). He bid it at 90k, and the job should have been 160-170k. The job pretty much rented the company to this person for two months. In this case, it was the busiest months of the year. So the owner lost at least 70k.

You can't pull guys out of college and have them do it. I've owned my company for five years, and I still don't trust the accuracy of my pricing. You need to pull laborers with five years' experience, and then try to make them into a Manager. The only way it can work, is turning a blue collar employee into a white collar employee, and for some guys, that's impossible. I'm talking to a guy at another company right now, who is known to be a hard worker, and wants to do better for his family. The company in question, the owner is notorious for pulling $200-300 out of someone's weekly check at random. He pays at half the rate I do. We'll see how it goes.

To answer your question on Estimators, I need two pretty much at all times. We've been getting away with one, but last year, we lost so many jobs because we couldn't run a timely bid. Between jobs getting cancelled for us not getting to them ($2,500 a week) and jobs sold to other companies before we could run the bid, we probably lost 5k a week from Spring to Fall.
I think you're a bit off here. Obviously it is easier to take a guy who has worked on the crews for 5 years and train them to do the bids. 5 years ago you weren't working on these crews and now you run the whole show. You can take a white collar worker and put them into the position you want. It just takes more work. You might have to have them job shadow your current estimator for a year. The first 6 months he is learning. The second 6 months, your current estimator is shadowing the new guy double checking all his bids to make sure you're not loosing money.

Also take a look at your work force. You're plagued by inadequate workers. Lets face it, the construction/service industry etc attracts not the brightest guys. They're competent and hard working, just not the brains of the operation. Now when you promote them to a higher position you're losing them to other companies/bullshit etc. If you hire outside of this demographic, say someone like yourself, who was used to working fortune 500 companies etc. You're hiring a different work ethic etc.

I'm not saying you can't hire from inside your crew. But at the same time I wouldn't discount hiring outside of it. There are people out there that can fill this role that know NOTHING about your industry currently.

Also for longevity, take a page out of the banking/investing sector. Offer a 50K signing bonus that states they have to stay with you for 3 years or pay it back etc. Give them a reason to want to stay etc.
 

Tmac

Adventurer
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Your company is in the middle of growing pains, and it is really crucial how you respond to this current growth period. Think about the opportunity cost to you with the delay of getting more workers to grow your company.

The single greatest trait for a business owner isn't intelligence, it isn't work ethic. It's the ability to adapt to the changing landscape of your business.
Losing $2,500 per week is painful, but even more than that are the residual benefits you're not getting, like referrals.

I don't have to explain this though, no one knows this better than you. You're just getting hung up on paying them $50k and not offering equity and I think it'd be a shame to lost just as much business as you did last year because you're not willing to pay people more or even try offering equity.
 

Shonuff

Mr. Poopybutthole
5,538
791
You really need to offer more money if you want to retain another good estimator. I wouldn't say higher base salary, but definitely more performance bonuses, better commission, or equity in your company as suggested earlier. The fact you pay your current estimator double the usual rate is nothing. My top guy makes 4x the average salary for his position.If you really want to be the best, pay like it.
Nowhere within 100 miles, is anyone in my industry paying more. My guys are making double what they are at some companies around here. There is a big company around here that pays their Crew Leaders $11 an hour, and lays off for four months a year with no unemployment. It's pretty easy to beat that when my guys work 60 hours a week, in the Winter, while their counterparts are sitting at home, holding their dicks in their hands.

I'd promote one of my guys I have now, but their people skills are not where they need to be. They just don't have the temperance to be able to deal with customers.

When I do find a guy that I feel comfortable with, he'll definitely be paid more than he'd make anywhere else.
 

Shonuff

Mr. Poopybutthole
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I don't have to explain this though, no one knows this better than you. You're just getting hung up on paying them $50k and not offering equity and I think it'd be a shame to lost just as much business as you did last year because you're not willing to pay people more or even try offering equity.
I'll say it again. The issue is not the pay. The last Estimator that left the company (the one that got strung out) couldn't get $11 an hour up the street. The issue is finding the right candidate with the right skillsets.
 

opiate82

Bronze Squire
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For the skill-set you are looking for you might be competing against more than just your industry for qualified candidates. Your ideal candidate would make a great restaurant manager for me, for example, and I could offer wages that are competitive to yours with an extremely flexible schedule, benefits, vacation and sick pay, on top of that.
 

Tarrant

<Prior Amod>
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Yeah I'm not sure why you keep getting hung on on "your industry". The job you described could fit into many fields and many of those fields pay more. You have to compete against them too. Hell my 9-5 job is easy as shit and I dont work 10 minutes over 40 hours a week, have sick days, vacation, crazy benefits, my school is paid for and my salary is more than what your estimator makes. On top of that I never have to leave air conditioning during the summer.

Not dogging what you pay, it's not like $50k is a small amount of change to pay out to someone but your perspective seems a bit narrow.

Besides, from what you describe of the people you have to choose from within your own field it seems like to me that you'd WANT to look to poach someone from another background who would be more reliable and in tune with your needs and in order to do so you may have to pay out a bit more.
 

Izuldan_sl

shitlord
154
0
Nowhere within 100 miles, is anyone in my industry paying more. My guys are making double what they are at some companies around here.
I think you have to think bigger picture. 100 miles is nothing. I'm confident there are people in California doing your estimator's job making $100,000+. Most probably make $60k+. Now granted, cost of living is much, much higher out here, but people don't think like that. They think "hey, why should I work for Lyrical who's only going to pay me $50k, when I can go to Los Angeles, start at $60k, and make 6 figures eventually. Plus I get to live near the beach".

This is why you have a talent drain. If someone is truly skilled, they are going to seek the best position possible, and it's not going to be with your company. Just like people leave their hometown all the time to go to the best college possible. You need to be an industry leader, and not just for your community. Think bigger.

And the issue is always pay. Rule #1 is "it's always about money". Rule #2 is "if you don't know why something is happening the way it is, refer to Rule #1".
 

Shonuff

Mr. Poopybutthole
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Not dogging what you pay, it's not like $50k is a small amount of change to pay out to someone but your perspective seems a bit narrow.
I'm in the midwest. In the town I'm in, 50k is like 100k in other places.

As far as the guy I need, it's got to be industry specific. We specialize in being able to do the most complex jobs in the area. You can't take a guy whose never done the work or operated the equipment, and have him bid in 5-15 acres, or big construction jobs.

I've tried out guys that had 20 years experience, and they couldn't bid jobs correctly. If you don't bid correctly, you are too high, and then you don't win bids, or you are too low, and you lose money doing the work.

After five years' experience, I'll take a blue collar guy and groom him over a college grad any day. If he's had the experience, a light bulb can go off any day, and they just get the whole thing. Like my Estimator now, he never ran bids before, but after a few days shadowing, I tested him by sending him out on his own. He came back with $10k in contracts in eight hours. He just "got it" in 72 hours flat of training.

You'll never understand how to do jobs, unless you have done them. And to be able to tell how much time a job is, from start to finish, means you need to be able to do everything. It will take five years to get someone to that point. But a guy who has done it, might be able to pick it up in one week, up to six months. There's just less investment.

The industry figure is that to get someone to Crew Leader level costs $250,000. I'd say taking a Crew Leader to being an Estimator is in the tens of thousands. In this case, a guy with a college degree is pretty useless. Why spend 300k over five years to get someone to where they need to be, when I can get a guy whose been in the industry, and can pick it up potentially in a few days (but more than likely it will be six months)?
 

Shonuff

Mr. Poopybutthole
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This is why you have a talent drain. If someone is truly skilled, they are going to seek the best position possible, and it's not going to be with your company. Just like people leave their hometown all the time to go to the best college possible.You need to be an industry leader, and not just for your community.Think bigger.
Bullshit. Most of the laborers stay in the area because of family. Manual labor isn't popular any more, most people in my industry are there because it is a family tradition. I have two families that work for me, and they are all second and third generation laborers in the industry. Four of them are in one family that's been in the area for decades, and the other one is from another family where the Father owns a business and been around even longer (my Manager worked for his Dad, until he realized he could make more with me). All of my employees have been in the area at least 15 years, because of family. The one guy that left the company (by moving), moved for family reasons, and made 40% less to keep his wife happy. This is the only guy that ever left to move, and it was for less.

Keep speaking in generalities. Family ties people in the area, not money. Furthermore, it's another benchmark that you spend no more than 1/3 of sales on payroll, because you can't make profits doing that. I spend 1/3 or more almost every week. If my competitors can pay 1k less a week to employees, they undercut me that much on bids. So they pay their guys less and less so they can be the lowest priced company out there. So I sometimes get my nuts cut off over being $70 more, and it's all in labor (and them carrying no insurance).

I'm happy with my average laborer making 2.5 times the per capita income, and Manager making 4.5 times that. They all live in small country towns on the outskirts (where they prefer to live). They drive 30 minutes to the bigger city to do the jobs.

Remember, I'm not only competing with my competitors just for laborers, I'm competing against them on customer bids. There is a yin-yang to it. I already spend a lot of time educating customers on why I'm higher, but I know for a fact that my competitors are taking their savings on wages, giving lower prices, and winning some bids from me. We spend a lot of time building value, but some people only see price price price.
 

Tarrant

<Prior Amod>
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I'm in the midwest. In the town I'm in, 50k is like 100k in other places.
Really? Me too and I can most certainly tell you that is not the case.

I can tell you are of the frame of mind that you are 100% correct in this and no amount of others telling you otherwise will change your mind and that's fine. You're the one lossing out on $10,000 a month in backlogged and missed contracts. You're also the one who has posted pages and pages of the money you've spent on advertising as well. How much of that advertising at the moment is also being wasted sicne you can't even tdo the jobs they are bringing in?

I don't have a dog in this fight, it's your business and I truly wish you well in it. I've enjoyed reading your posts and watching the growth you've went through but I firmly believe you are looking at this from the wrong angle. You say you'd rather groom your guy who has been in the industry and use your current guy as an example. It's great he's doing well but what about the 3 others hwo have failed? And if your guy sees he can do the same thing in California or somewhere else even in your own state (like someone said, 100 miles isn't much) for more money, then what?

You don't agree and that's fine but when you continue to not be able to find the right guy to do this and are bleeding more and more profits maybe you'll change your mind. It's cool to boast about how much money you make and how well you've done with your busienss but when you also post about how at the moment in your slow time you're missing profits of what would be $120,000 a year (and will be much more when you actually hit peak times as you've said) it seems much less impressive.

In the end you're gonna do what you feel is right and I can't blame you for being that way, it's your busienss afterall.

I hope you figure it out, I'm pulling for ya.
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Edit - man my phone sucks at auto correcting

(Also I can't stress enough I'm not trying to be snarky in my responses at all so please don't take any of it as such.)
 

Shonuff

Mr. Poopybutthole
5,538
791
Really? Me too and I can most certainly tell you that is not the case.
And I when I sent Tuco my financials on FOH, he got tax returns showing that the owner draw was only 4k a month over a multi year period. I pay myself what my Manager makes, and that's been confirmed by Tuco. Mind you, I live in a 5k+ square foot house, drive a Mercedes and live in a great school system. It's pretty damn cheap here in the Midwest. When I lived in Atlanta, you couldn't live in a good neighborhood on 8k a month. We had to squeak by, and lived in a 1,200 square foot apartment because that's all we could afford.

You're the one lossing out on $10,000 a month in backlogged and missed contracts. You're also the one who has posted pages and pages of the money you've spent on advertising as well. How much of that advertising at the moment is also being wasted sicne you can't even tdo the jobs they are bringing in?
It's more like 20k a month. We lose 2.5k a week in estimates we couldn't get to, and 2.5k in jobs that we couldn't complete in a timely manner. I've made adjustment to our ops to address the latter (bought newer and more efficient equipment and changed how the crews work so there is less slack in activity). So I expect we'll do 10k more a month from that, and I'm addressing the former problem now.

I hope you figure it out, I'm pulling for ya.
smile.png
There's a thing in B-school called Sustainable Growth Rate (SGR). Over the years, one Estimator has been enough. But at an annual growth rate of 15%+, it's to the point where one will not be enough.

Think about it, I have two choices here:

1- Get a college grad, spend 300k and wait five years, hoping I get a return. Industry wisdom says this doesn't work, those that do the work can bid the work. It's also said that if your Estimator's prices get out of wack, put him to work with the crews for a week and they'll get back in line. Most college degreed people don't want to do the type of physical labor we do.

2- Get a Crew Leader from somewhere else, offer him more pay, and spend maybe 50k and six months, hoping to get a return. I've had two Estimators that picked it up in weeks, some guys are slower. There is a lower average investment in money and time.

That's not a tough decision.

This is a problem about adding on excess capacity. It's like if you own a business making widgets. Widget sales take off, you increase people, but eventually you get to the point where your factory can't produce more. Do you want to spend $50 million on a new factory, when it might only produce $5 million a year? How are you even sure you can maintain current demand? If sales drop, you might be stuck with a factory you can't pay for, and union laborers that you can't just simply lay off.

I'm pretty sure that in the next 12 months, I'll need to buy new trucks at $50k apiece, at my current trajectory, for new workers to be able to use. I'm getting to the point where I'll need two Secretaries. And that's with two Estimators.

It's a good problem to have, not being able to keep with demand in this economy. I'm 100% sure the best route to go on this is to find a laborer or Crew Leader and steal him from elsewhere (by paying him more).
 

Tarrant

<Prior Amod>
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I agree the demand is good, but the money you are losing out on is the same as someone reaching into your pocket and stealing it from you. How long until word gets around and this starts?

"Yeah, X company is good but I tried to get them to come out and take a look at my property and they didn't have time for me, I'd probably just go with Y company if I were you."

Is this not a worry for you?

(I realize this is off topic a bit from where we were at originally but you stand to lose 6 figures at your current rate and to me that's about as far away from being a good problem as you can get.)
 

Izuldan_sl

shitlord
154
0
I keep forgetting that Lyrical thinks he's the best, most successful businessman not only on these forums, but probably he's ever known. Certainly in his own mind.

Good luck to you then. You certainly don't need any advice, and certainly not from someone like me. Your company's EBIDTA doesn't even equal my payroll, but whatever.

All your education, and you still can't figure out how to hire someone for a mid-level position. I hope you figure it out. I'm sure you think you will.

Just as an aside, people on the coast, big city people like in New York and Los Angeles have this stereotype of Midwesterners (outside of Chicago) being small-minded people. Everything you posted about your laborers just feeds that prejudice. People who have no desire for upward mobility, that just want to be comfortable living with their families. Successful people, on the other hand, will go where they can succeed, even if it means leaving the state where they grew up. Those are the type of people I get to hire, because I pay them more than they can make anywhere else. More than in a 100 mile radius, more than in a 1000 mile radius, more than in a 10,000 mile radius. You? You get to hire the leftovers, because you aren't willing to pay them enough to entice them not to leave. You get the employees who put family ahead of work. I get the ones who put work ahead of family. I wonder which of us has the more productive employees?

But I digress. This thread is obviously just about you dispensing business advice. God forbid someone give you advice on this thread and you take it constructively.
 

Shonuff

Mr. Poopybutthole
5,538
791
I agree the demand is good, but the money you are losing out on is the same as someone reaching into your pocket and stealing it from you. How long until word gets around and this starts?

"Yeah, X company is good but I tried to get them to come out and take a look at my property and they didn't have time for me, I'd probably just go with Y company if I were you."

Is this not a worry for you?

(I realize this is off topic a bit from where we were at originally but you stand to lose 6 figures at your current rate and to me that's about as far away from being a good problem as you can get.)
Of course, it bothers me. I have two negative reviews on my business, one is from a guy that waited too long on an estimate, another is from someone who tried to steal a check that his insurance company paid out that was supposed to go to me.

I do stand to lose 160-180k in sales, but I've addressed that. Between buying more efficient equipment, specially fitted trailers to speed up downtime between jobs, investing in an old truck to be like new, changing workflow for the crews, and changing who has what responsibility, I'll cut that in half to about 80k. I just spent $35k in equipment upgrades in the last 45 days. The other half will come from adding on Estimator #2.
 

Shonuff

Mr. Poopybutthole
5,538
791
I keep forgetting that Lyrical thinks he's the best, most successful businessman not only on these forums, but probably he's ever known. Certainly in his own mind.

Good luck to you then. You certainly don't need any advice, and certainly not from someone like me. Your company's EBIDTA doesn't even equal my payroll, but whatever.

All your education, and you still can't figure out how to hire someone for a mid-level position. I hope you figure it out. I'm sure you think you will.

Just as an aside, people on the coast, big city people like in New York and Los Angeles have this stereotype of Midwesterners (outside of Chicago) being small-minded people. Everything you posted about your laborers just feeds that prejudice. People who have no desire for upward mobility, that just want to be comfortable living with their families. Successful people, on the other hand, will go where they can succeed, even if it means leaving the state where they grew up. Those are the type of people I get to hire, because I pay them more than they can make anywhere else. More than in a 100 mile radius, more than in a 1000 mile radius, more than in a 10,000 mile radius. You? You get to hire the leftovers, because you aren't willing to pay them enough to entice them not to leave. You get the employees who put family ahead of work. I get the ones who put work ahead of family. I wonder which of us has the more productive employees?

But I digress. This thread is obviously just about you dispensing business advice.God forbid someone give you advice on this thread and you take it constructively.
Enough with the dick waving please, no one cares.

I'll take any constructive feedback when it's legit, but I'm also the first to call bullshit. Tarrant has actually made me go look at some numbers and do some assessing. I even got my Manager involved.

This thread is great for me, and I've said that over the five years it's been around. It really crystallizes what I need to do, and forces me to look at the future (and not be store blind).

I picked up a lot just from discussing the issue with Tarrant. I'll take his feedback, because a lot of it is valid. I won't buy all of it, but a lot of it is good. He's right, I'm losing a buttload of money to work we aren't getting to. It's very crystal clear to me now that if I add up a loss of efficiency to ops, as well as not getting to bids, I'm leaving money on the table.

Due to this thread, I went and counted up all of my bids to be done, and we are 5.5 days behind. We have ten calls a week that are being cancelled because we can't get to them. We close half of our incoming calls, and average $762 per job. Call volume will double in June, looking at history. I've made some adjustments in spending $35k on equipment and equipment improvements, but more need to be made. I also just just hired two more workers, which increases my productivity by $1,500 a day.

Hindsight is 20/20, but I wasn't expecting some of the advertising things to be so successful. Look back when I decided to go balls deep on TV a few pages ago, and you'll see where demand started getting out of control. TV has been like adding on another full week of calls on average in a month, and that's on the lowest rated network.

The fun part of being self-employed, is that I get to implement the changes, and judge the results. It's my ant farm. We'll see how the Summer goes.

This line of reasoning (in this thread) has been good for me, because while I don't want another mouth to feed, if I look at seasonality, by the time Summer hits, it's going to be "Apocalypse Now" with customer calls. As they say in any Operations class, at different levels of production, the bottleneck changes. My bottleneck is now the Estimator. But once I get two Estimators, it's probably going to be needing more equipment. Then it might be more advertising. Then I'll need another Secretary. The bottleneck is always changing.

I've started putting feelers out to my guys on people who either are Estimators or could be trained to be one. We'll see how it goes.