Adventures with Lyrical: Buying a Business (REPOST)

Shonuff

Shonuff

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opiate82_sl said:
I am pretty shocked you get that much business via the yellow pages. I know when they show up on my front porch they are immediately round-filed. I still do yellow pages but I've cut way back on my spending/ad size there. A couple of years back I put a super-aggressive offer right in my yellow page ad, better than any other coupon we had out. I got like one redemption a month. Might be a lot different for my industry vs yours though, or just different market, I dunno.

Your yellow-page ad vendor should be able to set you up with a tracking phone number to save your wife some time in the future.
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Not a fan of tracking numbers in the yellow pages. People look at past year's book, and we'd only own that number for 12 months. So they call and it looks like we went out of business.

And yeah, I spend $2,500 a month for the Philistines that still use paper. I bet they still jack off to porno mags.
 
Shonuff

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Corndog_sl said:
It's really easy to sign checks for 5k, for new equipment with the justification that it'll help make you more money faster... The treadmill is never ending.
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We are getting off of the treadmill. I've started making payments on the last two pieces of equipment I owe on, the ones with the prepayment penalties. Why? Because I don't want to make payments on anything.

I'm sure I'm going to have a huge tax liability in three years, as my monthly bills will go down as debt expires (still another $8.5k a month in business debt), but we'll start obsoleting our equipment ourselves (and buying replacements).
 
Shonuff

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July was a great month, the company netted $27k, after I paid myself 10k. It's amazing how much smoother things go by paying attention and working hard. My Managers never got results like that, unless there was a bunch of emergency work.

Probably the main thing I've done is stressing correct bidding techniques. We were lower than industry standard in our pricing. I gave the Secretary a spreadsheet to fill out every morning, to show our loss/gain based on industry standard. It's one reason my Manager quit, he kept blaming the guys for being lazy. In the meanwhile, they'd be working 14 hour days to try to meet quota, because the prices were so low. They get out at 5:30 PM instead of 8:30, and are happier.

I'm pretty damn busy doing my job and the Manager's job. It takes 12 hour days. But the results are showing. And the reality is I worked longer hours for other people, and didn't have a stake. Maybe in a few years, when the business is paid off, I'll bring a Manager on to take over for me.
 
Palum

Palum

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Lyrical is my favorite Batman apologist in the landscaping business segment OF ALL TIME.

It's funny to see your results though - bad employees in key positions just murder businesses left and right.
 
Shonuff

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Palum_sl said:
Lyrical is my favorite Batman apologist in the landscaping business segment OF ALL TIME.

It's funny to see your results though - bad employees in key positions just murder businesses left and right.
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Can one person hold back the entire company?

I don't want to pin it all on one person. He had a lot of technical experience (20+ years). We leaned on him in situations where we were unsure of ourselves on complicated jobs. What would happen when we got busy, he'd screw around more. All of the equipment, trucks and cars are tracked by satellite. We got so busy that no one sat there staring all day. From what the crews tell me, he'd do things to make it look like he was working. He'd tell me the guys were on a complicated job, so he'd need to go help them. He'd go park his company car next to theirs, and then his girlfriend would come pick him up, and he'd go sit at home for eight hours, while on the clock. This stuff only comes out after he's left. They also told me that they caught him getting blowjobs from his GF on jobsites, and also he openly smoked a bong in front of them. The crews tell me they didn't want to get their job in jeopardy over it.

I don't want to blame it all on one person, but since he's left, payroll is down about 15% (the guys don't have to stay out until 9 pm finishing under bid jobs), I've paid off three pieces of equipment (working on four), paid down credit cards, my working capital has doubled, and customer complaints are resolved with a few days. Profitability wise, we have exceeded last year's net profit already.

The guys are working harder, and smiling now. Before, their example they had was that they had a bunch of rules they needed to follow, but the boss never followed them himself. If they broke a rule, he'd be an extreme prick, and then he'd go and break the same rule he told them not to break.

I'm OK with me doing his job, I figure that towards the end, I only got about a half a day's work from him (but paid him a full day). Between my wife doing the Secretary's job, and me doing the Manager's job, plus our jobs as owners, we are busy. But it's doubled our weekly take home. As a friend of mine said, if you are doing their jobs, don't just have the extra money go into an account somewhere. Force yourselves to take their paycheck, or you won't be motivated to work 12 hour days. I can't delegate as much as I used to, I have to go do it myself.
 
Palum

Palum

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I think sometimes a good business process analyst is the best thing money can buy. Sometimes you don't even realize how minor variations or issues can cause catastrophic losses just because their visibility to the decision makers is different than down the road. I've worked for companies where minor, minor changes had massive increases in productivity or profit.

You're right that it's often unfair to lay blame on one person, no one is perfect BUT that's not excuse for the intended process not to be perfect. No plan survives battle of course, but sometimes putting procedures and numbers in black and white and holding people accountable to standards it's just staggering what gaps you find.

I don't relish your concern when you do eventually try and find another manager. It's extremely hard to find managers who have an eye for detail, people skills and the vision to see how their actions affect the big picture. Mostly because they don't need jobs, or want too much money, it seems.

To give an example: in one case a company was sending letters, editing files by hand to correct addresses. It just grew up out of small business (couple a day who cares). They saved probably 100K in payroll a year at least in admin staff by automating NCOA and buying some USPS address validation/correction service and reduced letter vender costs by almost half because they didn't realize the ETL for the excel sheets they sent over each day WAS READING THE ENTIRE FILE WITHOUT FILTERS EACH TIME, lol. They thought they were sending 3x 1/3 a file (as an example) with letters and it turned out it was 3 x 3 letters. For who knows how long. lol
 
Shonuff

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LOL, a customer offered me some pussy today, while I was on an estimate. She told me she thought Black men were sexy, started rubbing my arms and shoulders, and offered me some wine. She also wouldn't let me leave. It was a five minuted bid that turned into 45 minutes.

I won't lie and say I didn't think about smashing that.
 
Cad

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I didn't know Lyricals name was Johnny. Is Lyrical the alt?
 
Shonuff

Shonuff

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I'm conducting due diligence on a business. This will be the first time I've done so since I bought this one in 2008. This one just fell into my lap, from a networking group I'm in at the country club. The earnings look stable so far, it's netted 20k a month for the last three years (give or take 10-20%). It's for a handyman business with 18 contractors.

Why am I doing this? It's not for the money, it's about the challenge.

We'll see. I never get my hopes up in these things, I think I conducted due diligence on 38 businesses before I bought this one. Sellers usually hide something. Either it's not making the money they claim, or it's making to much money and they are hiding it from the IRS. Of those 38 businesses, 36 of them falsified higher revenues, one of them was "iced" by the landlord, and one of them I bought.
 
Shonuff

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August numbers are in, and total profit was $41,896 for the month.

To say that I've got a taxation problem going on is an understatement. I've opened up a 401k for my wife and myself, because with the safe harbor plan, we'll be able to put away $50k a year, tax free.

I'm not getting prideful, because I've owned this company long enough to know that I can be losing $30k in December. August has been our peak month of the year, but the lows have gotten better, as advertising has helped us manage the lows.

It's nice to see the cost cutting efforts I've made over the lat year have taken root. Sales are flat, margins are up greatly. I blew a lot of cash trying to get to $1 million in sales.

With high fixed costs and low variable costs, when I lose money, I lose a lot, when I make money, I make a lot.
 
Nester

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Lyrical_sl said:
I'm conducting due diligence on a business. This will be the first time I've done so since I bought this one in 2008. This one just fell into my lap, from a networking group I'm in at the country club. The earnings look stable so far, it's netted 20k a month for the last three years (give or take 10-20%). It's for a handyman business with 18 contractors.

Why am I doing this? It's not for the money, it's about the challenge.

We'll see. I never get my hopes up in these things, I think I conducted due diligence on 38 businesses before I bought this one. Sellers usually hide something. Either it's not making the money they claim, or it's making to much money and they are hiding it from the IRS. Of those 38 businesses, 36 of them falsified higher revenues, one of them was "iced" by the landlord, and one of them I bought.
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The overhead and PITA dealing with 18 contractors does not seem even close to worth $240k when you already have a good thing going. How much of your current business would you lose if the new one took all your attention (and it will)
 
Shonuff

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Nester_sl said:
The overhead and PITA dealing with 18 contractors does not seem even close to worth $240k when you already have a good thing going. How much of your current business would you lose if the new one took all your attention (and it will)
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We are meeting with them next week to get to know them, and learn more about the company. At times in the business I own, I've been hands off (and margins dropped). When I run it, margins are up. How much margin am I willing to give up over here, and will what I gain over there be worth it?

I'm short a Manager right now and doing his job. I'm working 10-12 hour days with no breaks. The way I see it, you should never ask your people to do something you won't do yourself. Now that I have this business humming, how can I step away a little, to manage 18 contractors, without letting this one fall too much?

I feel like I have problems getting people to think and manage like I do. My last Manager had to move 200 miles away to get equal pay, so compensation is not the issue.

The best Manager I've had brought in 80% of the results I have. Everything in my business is team based. I preach humility and practice it. If I screw up, I admit it and adjust. If they screw up, I expect the same. Everything we do is interrelated. One thing affects the other. In the past, people would screw up, and affect the whole thing, and no one would correct it. Now, when we screw up, we fix it as a team.

I realize that the failure to find Managers with real hustle is my fault. Every Manager I've had grew into an ego maniac, that bullied employees when I wasn't around.
 
Palum

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I dunno, I think you could do well with a 'serious' handyman business. One of the problems is interfacing with customers and getting the desired results. Quite frankly, most handyman types I've used (or been involved in a job with) over the years were at best as good as I was because they were JOAT and not a specialist in flooring/painting/framing/etc.

I didn't really appreciate it as much before, because I can actuallydopretty much everything, but as a homeowner now I would seriously consider a service that could A) send aqualifiedtechnician (not necessarily 'expert/master/etc.') and had reasonable rates for the time commitment of a job. To give you an example - I need to replace a bunch of door sweeps, gaskets and weather stripping on a couple exterior doors. I can (and likely will) do it, but I would seriously consider paying someone to do it - just not at the rates I'd get going to a door+window company. I just know I'll have to buy two sawhorses, some silicone, some liquid nails, etc. and by that point I'm down $50 anyway for crap I won't use frequently. I also need to replace one hose bib, but I really don't want to buy a torch, pint of flux and heavy gauge solder to do one job. I'm not going to pay a plumber more than the tool cost on that one either since I know how to solder. I'd consider paying someone else some money to take care of it quickly.

A good, service and community based company (IE, you can see jobs done for 'neighbors' on web portal, 'oh yea shit I need that done too and it was only $35 + materials!') with easy to use and schedule tools (web portal, upload/text portals to streamline pricing/bids) could probably do well in metro areas, I think.

If you go traditional handyman, though... I guess have rock solid insurance and PR/advertising. Besides the grannies, I don't see people using a handyman to do it right, they use them to do it cheap which means failure, complaints, lawsuits, issues. I can't tell you how many enraged homeowners would get an estimate on, say, flooring and go apeshit over install prices because the legit flooring installer would refuse to put down ceramic tile on top of lino glued to 5/8" hardwood nailed to luan nailed to 2x6 floor joists put in by some asshole during a cheap ass series of renos over 15 years. Some of that shit is legit scary, I would fear doing a lot of jobs as a 'cheap as we can go' style handyman.

Just my 2P.
 
Shonuff

Shonuff

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Palum_sl said:
I dunno, I think you could do well with a 'serious' handyman business. One of the problems is interfacing with customers and getting the desired results.
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The one thing that makes me want to do this is the amount of service awards they've been given by customers. They are the most awarded handyman company in the area. And by my contacts in my networking groups, they are the largest company in the area in their industry, with a great reputation.

It is already a major PITA dealing with ten employees over here, I have no idea how hard it would be to manage 18 contractors. I believe there is a significant upside to the company, as they aren't doing the things I am advertising wise. I was able to double our customer base the last few years through radio, TV and billboard advertising. They aren't doing any of that. Theoretically, I can increase overall contractor utilization, or get new contractors, and not have to spend a fuckton on equipment like I'd have to do here. For the company I own now, each crew needs $200-250k in equipment. Notice I said theoretically. The devil is in the implementation.

We'll have some coffee and talk. Push comes to shove, there needs to be enough managment over there to be delegated to. My margins are higher here. This is the first successful business I've had (I had an online business that was brutal). This is my baby and first love. If we slow down, I'll be here.

I make plenty of money now. But how can I challenge myself even more? I don't do vacations, or golf. I love to stay busy and do things at a high level.

Can I even maintain the service levels they have? From looking at their awards and talking to them, they give a ton of money away in customer satisfaction expense. You sneeze over there and they write you a check. I'm not big on paying people to give me positive reviews on yelp, Angie's List, etc.
 
BrutulTM

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How qualified are you to evaluate their work? Handyman covers a pretty wide range of shit and all of it can be done right or done wrong.
 
Shonuff

Shonuff

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BrutulTM_sl said:
How qualified are you to evaluate their work? Handyman covers a pretty wide range of shit and all of it can be done right or done wrong.
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Good question. I have no idea who does that, as we've not gone over staff yet. It may be the owner, and that causes a bit of a problem.

There may be systems set up for quality of work issues. We just used a non related handyman, where they sent us an email asking us if the work was done in a professional manner.
 
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