SMB lesson:
Day after acq. announcement, heard rumblings that our senior plumber felt job-insecure and betrayed by the transaction.
Big problem when my largest vulnerability is the skilled trade talent.
Someone I have a deep respect for recently told me:
"When things start to feel boring, that's your signal to double-down. It means you've started to figure it out."
I needed to hear it. Maybe you do too.
4 years ago, today: my partner and I took over a small plumbing shop. Just us + 3 plumbers. $1m ann. revenue.
Today, we're at 90 team members and recently crossed $20m revenue run rate (and finally got our margins dialed).
Wild ride. 🇺🇲
SMB lesson:
Day after acq. announcement, heard rumblings that our senior plumber felt job-insecure and betrayed by the transaction.
Big problem when my largest vulnerability is the skilled trade talent.
The other day,
@sweatystartup
mentioned competing w/ companies that use fax machines.
I can do you one better, Nick.
Toured a plumbing/HVAC biz today that invoices via *typewriter*
$2MM worth of invoices / yr.
I am not kidding.
It's admittedly gray, but this is the leadership I know.
Get in front of your people.
Be genuine.
Help shoulder the load.
Pull out their unique insights.
Action those insights asap.
Let them know they're appreciated.
Books I've found most useful to get smart on small business acquisition and operation:
1. Financial Intelligence for Entrepreneurs
An excellent primer on understanding the numbers of business. Easy read. Actionable.
Available cash & timely action wins the day.
Got a cold-call today from a small plumbing shop in my area looking to sell their 250 commercial service accounts.
We weren't his first call, but I had an offer to him within a few hours. He replied within 5 mins w/ a counter. Deal.
You're brought an opportunity:
Residential HVAC company
$1.1m revenue
2 employees
$400k SDE
$800k purchase price (2x!)
No. The trucks are old. The employees are the seller's wife and a 65 yr old installer. Don't buy this.
Let's talk about customer list acquisitions.
First -
Closed on the business exactly 3 weeks ago.
Today we crossed $100k in revenue.
There's a ton of $$ to be made in the trades. We haven't even gotten started yet.
Stood in front of the new team of our largest deal yet this morning.
Having built a 30-strong team across 3 trades in residential home services, Bill here had quite a few suitors in late 2023 - us and a few of the nat'l consolidators y'all likely know.
Ultimately we won on
Just sourced a $7m rev HVAC co hiding in plain sight on the fringe of our service area. Only 30 reviews on Google.
Very realistic valuation expectations. Pursuit is on.
Cold email 🔥
Cold email outreach to 98 plumbing/HVAC co's in the 2 counties we serve in NJ.
61% open rate
14% response rate
Acquisition talks progressing with 7 owners
Sept roll-up for plumbing biz:
- Full paper -> digital transition
- 2 new plumber hires
- Outsourced US-based CSR
- Avr. 12.5% wage bump across team
- Health + 401k benefit added
- +42% Google reviews
- ~$50k Net Profit (+66% > historical!)
Now this week, he'll see immediate implementation of a couple of those ideas.
You want employee buy-in?
You get buy-in talking shop while carrying a 40gal water heater through hoarder's basement.
You get buy-in by immediately implementing good ideas from below.
For all the new folks just joining, a little about me:
⚔️Previously: Marine infantry officer
🛠️Currently: Growing, acquiring plumbing & hvac co's
📈Past 18 mo: Organic growth from $1MM to $3MM rev
🚀2022 Goal: $10MM rev
Tweet about leadership & operations in small business.
After a 9-month "deployment," today is my last day full-time at our NH co. The tape:
+ From 85 hr weeks in office to 30 (~0 going fwd)
+ From 15 team members to 26
+ From $300k avg sales/mo to $600k (>$900k in Aug)
+ Team morale 📈
+ 3 new leaders developed/installed
I'll take the other side of this.
Too many business owners looking for (yet another) SaaS to solve some niche problem of theirs when a spreadsheet will do the trick.
Return on paid digital ad spend in October:
4.7x - Google Local Services
3.3x - PPC
2.9x - Angie's List
2.2x - NextDoor
1.5x - HomeAdvisor (Angi Leads)
Be deliberate about the culture you're trying to build.
Last year, we instituted an annual award at our HVAC company - "The Fan Man."
Criteria: The one team member you call first when you're in a jam. The one you know will drop whatever they're doing to come save you.
Voted on
A reminder this week that the stakes are real in the first 30 days of an acquisition:
$8m HVAC co, very recently acquired in our area, is being completely gutted of its staff due to a botched integration.
I've interviewed 4 of their people so far with more lined up. 3 hires.
First truck returned from wrap shop today.
We'll be "the guys in the blue trucks" from here forward. Photo doesn't do it justice - this thing is bright!
This week, we rolled out menu pricing for the plumbing biz. 5 options provided to customer for every job. No hard selling - we'd be happy performing any of them.
Average ticket this week: $815
Last month: $524
+56% increase just by adjusting our presentation.
A large driver of service business success is how efficiently you can reach your customers and the talent available in your area.
When we took over our NH HVAC business, I quickly became frustrated by how difficult the local road network made it to get to the large population
🚨🚨 Biggest week to date for the plumbing co.
And a $6,800 paycheck going out to one of the techs responsible for it. 💪
Enjoy the holiday weekend, y'all.
@LeadershipAcad1
We've done this a few times.
+ Leave the digital assets and GBP up so that the folks looking for it will still find it.
+ Fwd the phone to your team. Be thoughtful about the talk track to introduce yourselves.
+ Re-wrap / re-shirt the team to your brand so it's all TC folks
Cold email + local clout is a killer combo.
Over $40m of HVAC/plumbing revenue now in the acquisition pipeline. All in our existing service areas. After I've screened out a bunch of interest.
Send lawyers, guns, and money.
- Last-minute laborer call-out
- Couple urgent high-opportunity calls to cover
- Both field managers at off-site training.
Guess who gets to hand-dig a sewer trench in a tight space?
Sometimes you've just gotta earn it the hard way.
Just now realizing that today is my very first true Veterans Day.
Miss it sometimes, but couldn't have asked for a better transition. Much to be grateful for.
For folks just joining, a little about me:
⚔️Prev: Marine infantry officer
🛠️Curr: Leading & growing trades businesses
📈Past 3.5yrs: Growth from $1MM -> $14MM rev
🚀2024 Goal: $17MM rev
🥊Mission: Give the trades a good home
Tweet about leadership & ops in small business.
As a new SMB owner, you've got to put yourself out there.
They won't care that you're not an expert in their trade. They want to feel that they have a say in the company's direction.
Are you listening?
@LeadershipAcad1
Look at the performance data that Google provides for the GBP and see if people landing on it are actually searching for its brand name. If not, merge them together. If yes, keep it active until the brand searches tail off.
I have a few elderly neighbors that look for my assistance re: home improvement projects, esp. plumbing/HVAC. Often their biggest expense of the year.
Immediately go to the top of the priority list.
Tip for those looking to buy residential home service co's:
If the target does no marketing and the husband/wife team does all of the admin/phones/scheduling, drop ~15% off your net margin.
You think you're paying 3x on 30%, but you're actually paying 6x on 15%. ✌️
Morning: Belongs to me
Midday Break: Belongs to my dog
Afternoon: Belongs to my team, vendors, contacts
Evening: Belongs to my wife and friends
Simple framework, but I've become much happier & productive since becoming deliberate about this.
Sharing a small win:
These trucks all used to be scattered across this lot. Looked messy. Was messy.
A couple weekends ago, I parked them all in line along the road. Never said anything about it to anybody.
It stuck. I'm thrilled.
Friendly reminder: If you fly an American Flag at your home or business, check to make sure it's not tattered.
Plenty of well-intentioned folks out there flying beat-up flags. Don't let it be you. 🇺🇲
One way to get leads from this cohort: buy a business from one of them.
I have been approached no less than 6 times in the past week by competitors and owners in adj. industries (HVAC, etc.) to buy their biz within next couple years.
SMB integration tip:
At takeover, look out for the folks who are both key-men and serious problems.
Immediately set to work peeling back and eroding that key-man status.
You'll be glad you did. We were.
Turns out that, with effort, you can actually build a big business instead of trying to make it big selling courses on how to build a small business.
And maintain your dignity while you're at it.
@girdley
USA has a distinct advantage in military training. We have nearly every training environment available within our own borders.
Mountains, desert, jungle, swamp, cold, hot - we can fight anywhere and prepare in a way that we feel like we're playing at home field.
A friend and recent colleague of mine, Capt Geoff Ball, currently has the enormous task of leading the unit that took the brunt of the blast in Afghanistan last week.
Sharing his words here:
So those 250 backflow test accounts we rolled up in January...
One of the clients that represented 9 of those tests just gave us their other 300 devices to service.
And it turns out they need to be done quarterly, not annually. 🚀
It's wild to think back to what this company's org chart & infrastructure looked like 18 mos ago compared to today.
14 team members -> 61
11 trucks -> 39
4,800 sqft -> 22,000
The circle of life in a local market:
▪️Nat'l consolidator acquires competitor.
▪️Goes poorly. Mass exodus.
▪️Competitor GM joins us.
▪️We treat him well.
▪️GM introduces us to his friend, founder of a small shop.
▪️We acquire his friend. Tiny deal.
▪️We treat him well.
@sweatystartup
I once served at a restaurant that required this. No writing notes. Cash only. No receipts.
Wildly successful NJ institution w/ lines out the door. Made my memory crazy sharp by the time I left.
Owners went to jail for tax evasion a couple years later.
Another reminder today that I am by far the worst customer service rep in my org.
You want to demand the owner so you can lose your mind over something trivial?
Welp... don't be surprised by how the former infantry captain responds to your bullshit.
Low-hanging fruit for EE morale:
Company used to deduct 1/2 hour for their lunch every day.
Team hated this. I was tired of getting the "I didn't take lunch today" call. Felt like policy was inherently adversarial.
Nixed it last month.
Low impact to P&L. Big win for team.
Big day for plumbing co:
Today's my partner's first day on the team. Departing a promising engineering career to go all-in on what we've built.
He's an ace. This is a big step in the right direction for us.
Sharing a small win:
These trucks all used to be scattered across this lot. Looked messy. Was messy.
A couple weekends ago, I parked them all in line along the road. Never said anything about it to anybody.
It stuck. I'm thrilled.
Backflow preventer testing tuck-in acquisition closed today. 250+ new commercial service accts to begin 2021.
Love how all parties seem to row together when the year-end approaches!
Can confidently say I've talked to every currently listed plumbing/HVAC deal in the Mid-Atlantic and Northeast. No one is safe.
3x active offers submitted ranging from little tuck-in to big swing.
Got a wild hair today and sent out a handful of targeted emails to local competition / roll-up targets proposing buy-outs.
36% response rate same day.
2 owners' cell numbers provided for follow-up.
First three days of ownership complete.
Solving problems.
Getting my hands dirty.
Finding the inefficiencies.
Getting to know the team.
Tired, but haven't felt this satisfied in a long time.
If you want to see aggressive change, pay your overseas team members American-sized incentives.
Guess when I started to.
⚠️ Implement with extreme caution ⚠️
I saw 2 scenarios.
He blows his timeline. Still anxious going into long weekend. Wife's worried. Maybe looks for another job.
Or I drive out to him, help him get it done in time & out the door. All while getting to know him and hopefully putting him at ease.
Easy decision.
Members of my team have begun collaborating to build their own processes and procedures without my input.
Streamlined, repeatable, documented.
I'm over the moon.
Last week, we firmly planted our feet in New Hampshire with a big shop move and upgrade.
Pulled our two NH co's under one roof and one brand, completing the merge we began in Feb.
Team's walking with their heads held high.
Productivity & collaboration have noticeably increased.
In some ways, I feel like I'm playing SMB: Easy Mode.
Worried about:
-Busting a loan covenant? Hard to do when you acq. at ~2x SDE, even without growth. DSCR now > 8x.
-Cash management? We get paid on delivery. No A/R.
We can actually focus on process & quality of service.
Saturday I rode shotgun for a 12hr shift with the plumber on-call. Similar story.
Busted our asses, talked shop and life, broke bread, jammed to some Wu Tang Clan.
Good day of work.
Local service co M&A hack:
Subbing work to sellers we're in talks to purchase.
Allows us to see them work, shoot the shit on the job site, pay them quickly, and put our tight ship on display.
Working beautifully with one local seller at the moment.