Adventures with Lyrical: Buying a Business (REPOST)

So, for a year end up date, we should do 970k in service fees, and 205k in profits. Both numbers should have been higher, but we had a wreck that cost me 50k, work comp billed me double (even after attorneys got involved), and we did not get industry average pricing. We got 10% less in billings than we should have, by being lower than industry average.

I wanted to break one million in service fees, but a guy wrecked a truck and it cost me big time in revenue. Work comp issues are over, we switched companies (never use Berkeley, they are money grubbing assholes). Pricing will be addressed through pay plans in 2015. I also feel as though I overspent in advertising, I think 15% of sales is too much. I've mapped out the entire year at like 12% of sales.

I know I set a goal of one million in sales here last year, and posted it here, but it didn't happen. We did see annual growth of 15-20%. Next year, the goal is to reign in the repairs, advertising and underbid jobs. The goal isn't to grow sales, but to increase margins. I know I've left at least 50k on the table this year, minimum. The guys did stupid shit with my equipment. I've got a 2k clutch I have to have fixed on a piece of equipment, because one idiot started the equipment in high gear for a couple of weeks. And this was after he was trained the right way. As soon as he was left alone, he'd start it in high gear. He's no longer working for me.

We just started running our first ever sale, to keep things moving during the Winter. 50% of all customers are calling on it, and call volume is getting to be like it was back in the Fall. My only regret is that I started this TV campaign this week, and not Dec 1st. Typically, all we do is brand advertising, and I'm amazed how many people are calling in to try to save a buck.

This will be a record December for us, and it will be the only December in the last ten years where we don't lose money. By mid January, things get back to normal for us. December in other years, we've lost 30k before. Every year has gotten better, and last year, December was only a 15k loss. We might make $1 this month, and I'll be extremely happy.

Tmac47_sl said:

I've been MIA for a long while. Any updates?

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Thanks for asking.

In December, we actually turned a profit. It was the first time in ten years that this happened. December was 4k, January was -9k. This is a much better run rate than we've ever had in our off peak. I can remember losing 25k in December, and then in January, and then in February one year. We are running on TV non stop, on one network, and it is keeping us busy. People ask how I can afford to do TV, I respond, how can I not? We've lost only 5k this Winter, other Winters where we didn't advertise, we'd have lost 50k by now.

We are just a few weeks from March, when it starts to pick up again, and I can't wait. All would be going well, but for receivables. I've got like 10k out there in customers who think they are too smart to pay their bills. After talking things over with my Lawyer, we've revamped things, to increase our chances to win in Court. We have a satellite tracking all of our equipment in real time. We just got a new phone system that has a nice web portal, and records all calls. It can be ported to the Estimator's cell phones (but that part is laggy so far). Last year, we were being bid insanely high to do this. We have a lot of phone numbers, and the charge to do so on traditional is like $700 a month. We switched to Vonage business, and are saving like $100 a month on our phones. And, at the Lawyer's behest, any time a deal is done, we send an email confirmation to the customer.

I've never lost in Court, but my Lawyer feels if we do these things, I have a 0% chance of losing.

Tarrant_sl said:

And didn't you lose that case with the customer who had their gate smashed? Or did you pull that one out? Fuck those people too.

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The company has doubled in size over the last three years, we've met all sorts of douchebags. I have to have a Lawyer on call at all times now. People see us on TV, and think it's the lottery when we drive by. We've tightened up things a lot, from now on, no conversation is had with a customer that isn't monitored, whether it's by satellite, phone, or email confirmation. It's comical to see someone lie, and then tell them they were recorded, and then see them backpedal.

The case never went to Court. My insurance company decided to pay them, rather than go to Court. We would have won, but oh well. My auto insurance did not go up.

grumblethorn_sl said:

Did the methhead ever show back up or is he dead in a ditch?

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Still doing meth, he had has GF show up to get his W2, so he could smoke his tax return. He's had run in's with the police, they think he's in some sort of meth/theft ring, but can't catch him. Talk about a quick descent into hell. I used to take him to the country club with me, and put him in front of my wealthier clients, and he fit. It only took a little drugs, and his world turned upside down.

Palum_sl said:

Too many people simply don't pay their bills. Quoting the 2014 CFPB report:



There's not a business in the world that operates on receivables that isn't going to need to collect money either internally or externally.

Funny story about similar fuckery: years ago when I worked in retail I was helping do deliveries because we had a ton of call outs. One dude listed his wife was going to be home. Get there, no one is around. Wait 15 min, try to reach all listed numbers, no luck - move on. 5 hours later we get back to the store, assistant manager is fuming, dudes lawyer is on the phone, guy is pissed, how could we, etc. Turns out, the guy claims we gouged his precious exotic hardwood floor and it's impossible to match and we'd have to replace his entire house.

Yea, except his bimbo wife had apparently bounced to go to the mall or something and he didn't realize we hadn't even delivered the product because no one was home. Whoops.

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That's messed up.

We had a customer approve a contract on the phone last week. This is a Secretary of a well known businessman I know i n the community. She approves the contract on the phone with my wife. The next day we go to do the job, and she turns the guys away. She immediately calls the office and tells the Secretary that we do business dishonestly. My wife gets her on the phone and tells her the call was recorded. My wife listened to the tape, where she very clearly said she was approving the contract. The women then goes from saying we do business dishonest, to saying that there was a "communication issue." I'm glad I started adding monitoring systems in, to cut down on the shenanigans.

So, we've gone from being abnormally slow in the Winter, to having the phone be busier than ever. Our season hasn't really started, but call volume is higher than our peak time. And that just kind of happened overnight. Weird. Without getting into too much detail, I consolidated our TV ads to build more presence on one network, rather than be splashed all over the place. Overall TV budget is down 30k this year. I also got a lower rate by committing to a yearlong contract.

We keep picking up 10k a day in service fees. At this rate, with the commercial contracts we have pending out there, it should be a banner year, if I can hire good guys. I've had several guys come my way, but they have a reputation for being tweakers. One guy even had the rep of being an adrenaline junkie that thrived on danger while at work. Not a good idea with all of the equipment I have around here that can kill in an instant.

Lyrical_sl said:

So, we've gone from being abnormally slow in the Winter, to having the phone be busier than ever. Our season hasn't really started, but call volume is higher than our peak time. And that just kind of happened overnight. Weird. Without getting into too much detail, I consolidated our TV ads to build more presence on one network, rather than be splashed all over the place. Overall TV budget is down 30k this year. I also got a lower rate by committing to a yearlong contract.

We keep picking up 10k a day in service fees. At this rate, with the commercial contracts we have pending out there, it should be a banner year, if I can hire good guys. I've had several guys come my way, but they have a reputation for being tweakers. One guy even had the rep of being an adrenaline junkie that thrived on danger while at work. Not a good idea with all of the equipment I have around here that can kill in an instant.

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I hired two more people last week, as we are unable to keep up. One guy worked here before. He's a good worker, but I fired him for not being careful with the equipment. He's the type of guy that will not pay attention and do $5-10k in damage. He's been unemployed for the last six months, so maybe that has taught him a lesson on being more careful. He's being watched closely.

I'm still not fully staffed, but two more people means I've gone from losing $700 a day, to making 1,200 a day (it's actually three because one guy came back from being injured from some stupidity in his off hours). I could still hire one more guy and get it to 1,600-1,700 a day in profits, but I'm not hiring any mouthbreather off of the streets. I did that a few years back and it was a nightmare.

I lost my Manager a couple of months ago, and I'm OK with it. We were arguing a lot, and not getting along. The last straw was him screwing around with his old lady for four hours, instead of working. They are all on satellite, and his ego grew so big he thought I wouldn't call him on it. I yelled at him, he quit. He was for sure that I couldn't run the company without him. And the next company he went to work for went out of business 30 days after he started there . They took his paycheck and ran.

Anyway, since he's left, production is up 20%, costs are down 15% and customers aren't complaining. I've also managed to pay off five equipment loans. We are writing checks and getting titles in the mail. I was going to write two more checks and then have all of my equipment paid off. We went to do it, and found out that Wells Fargo wrote the loans with prepayment penalties. So I have to sit another 22 months and make payments. I wanted to get all equipment paid off, but that makes no sense now.

All of my loans expire in the next 40 months, and then I save $10k a month. I'm also paying myself my Manager's pay, so saving $4,500 a month. Things are going better than they ever have, now that I've taken an active hand in the business. No one cares more than the Owner. Employees tend to do just enough to keep their jobs. There was no killer instinct in the business, the guys have taken on that aspect of my personality since I've taken over. You never know what tomorrow brings. My Manager would sell 3k and then go slack off. I sell 10k a day sometimes. A mature salesman knows that tomorrow they may not sell anything. When you have momentum, you have to capitalize on it. It takes discipline to not slack when things are going smooth. Also, the guys seem happier. My Manager was not pricing jobs high enough, so the crews had to stay out until 8 or 9pm a lot of nights to make their quota (all the while, he was sitting on his sofa at 4:30!). They are appreciative about not having to stay out past 6pm.

When my loans expire, I'm paying off my McMansion and not going to owe a dime to anyone. I'm tempted to go on a shopping spree, but fuck materialism. It's never about the money, it's about the game.

I should add that I'm donating more to charities now. It will be about $1,700 this month to charities.

Corndog_sl said:

I found my clientele love donating to charities. I wonder if you could have on your contract like, we donate to charities, do you have a charity you like in particular we could donate to because of this job etc? People love to say oh blah blah does work for this charity etc. My sales record is still held by a day where 25% of my sales went to a charity. They were roughly 25% higher than my highest all time non charity event day.

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I'm not a big believer in broadcasting what I give to charity. It's kind of like when a corporation gives away $1 million and then spends 5 million advertising that they gave away 1 million. Charity work is its own reward. I don't like using charity as a form of marketing.

As these loans are retiring, we are going to be more involved in civics. What else is there? More toys? I'm a pretty simple guy. I know businesspeople that need to pay themselves $20k a month just to pay their personal expenses. My break even is 3,800 a month. I'm in the Midwest, the cost of living is low here. I don't pay myself more than that. My Manager's pay has gone 100% to debt reduction.

I suppose I should start working on retirement, but I want to get to the point where I have zero payments other than weekly payroll first.

grumblethorn_sl said:

Great work man.

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Thanks. I can't say I've done anything special, other than to give a damn. When you own it, you want everything to be perfect. In a short time, I'll be posting on here, "I win." That will be when my loans expire. October 2018 is a good month. I won't be paying 6k a month to PNC Bank any more for my SBA loan.