The Entrepreneur / Business Owner's / Self Employed Lounge

[cosine]

I think there are three risks that stick out:

1. Employee retention
2. The maintenance contracts
3. Language

Retention can be aided either with retention bonuses, or a percentage of the cash flow as a bonus.

If the maintenance contracts are long-term, then a couple of employees quitting would suck, but they wouldn't easily drag the whole business out the door with them, at least not quickly.

The last item is language... a number of the names in the employee roster are Mexican. I barely speak 5-10 words of Spanish, and if they are new immigrants or still use Spanish every day at work, then this might not be the right business for me.

 

[Enoch]

Supposedly with an SBA loan you can put 10% down. Surely I could cough up the $180k for something that nets such a massive cash flow.

I've worked as a financial analyst in M&A, people do make their businesses look much better right before they sell. Also, if I borrowed $1.6M at 4%, I'd pay about $64k/year just in interest. I'd also probably promote some of the more senior people to assist managing it and step away myself over time.

Seems wildly profitable and life-changing compared to my current salary of $85k.

I'm not terribly experienced with landscaping, and the business really is in a super expensive area. People in this ritzy town have high standards for their $10-20M homes. They will never, ever mow their own lawns.

But, I believe I do know how to run a business, and how to manage at least some amount of people.

I think I should pursue this, but not sure what first steps to take.

Hire a CPA to review their books and make sure to back out any PPP/ ERTC $$$ other Covid freebies that increased the book value of the business but cannot be relied upon every year.

 

[rainy]

I think there are three risks that stick out:

1. Employee retention
2. The maintenance contracts
3. Language

Retention can be aided either with retention bonuses, or a percentage of the cash flow as a bonus.

If the maintenance contracts are long-term, then a couple of employees quitting would suck, but they wouldn't easily drag the whole business out the door with them, at least not quickly.

The last item is language... a number of the names in the employee roster are Mexican. I barely speak 5-10 words of Spanish, and if they are new immigrants or still use Spanish every day at work, then this might not be the right business for me.

Employee turnover is a reality in this industry. Tenure is important. If guys have been there 5+ years they'll likely stay on. We didn't lose a single employee during the transition. And frankly they like younger ownership.

Language: It's good you see a lot of Mexican names. They enjoy the industry and are generally long term fits. I don't speak Spanish. My brother doesn't. Our GM does this weird English/Spanish/Italian mix. What I have found is important is that the foremen speak English and they can then speak to the labor on their crew. I honestly don't think it will be any kind of a hurdle for you. It's pretty common.

 

[cosine]

Employee turnover is a reality in this industry. Tenure is important. If guys have been there 5+ years they'll likely stay on. We didn't lose a single employee during the transition. And frankly they like younger ownership.

The tenure of the 5 "lead employees" are:
21 years
21 years
15 years
14 years
11 years

I'm 33. I've worked at companies going through "growing pains", people getting fired right and left, one company laid off 25% of the workforce, one time my whole team quit, etc.

This landscaping company seems like an absolutely amazing contrast. These men need to be treated with respect.

Language: It's good you see a lot of Mexican names. They enjoy the industry and are generally long term fits. I don't speak Spanish. My brother doesn't. Our GM does this weird English/Spanish/Italian mix. What I have found is important is that the foremen speak English and they can then speak to the labor on their crew. I honestly don't think it will be any kind of a hurdle for you. It's pretty common.

That's also very helpful!

 

[rainy]

The tenure of the 5 "lead employees" are:
21 years
21 years
15 years
14 years
11 years

I'm 33. I've worked at companies going through "growing pains", people getting fired right and left, one company laid off 25% of the workforce, one time my whole team quit, etc.

This landscaping company seems like an absolutely amazing contrast. These men need to be treated with respect.


That's also very helpful!

Foremen in this industry don’t like moving around. Very different than white collar environments. Those tenures look excellent. What we did was sit down with all foremen, assure their continued employment and then offered an open forum of ideas for improvements and future investments to help them do their job. The previous owner never did this and it gave a real positive impression and they felt they had a voice and we were now invested in them. Getting a crew a 36” replacement mower or a couple new backpack blowers after they express concern goes a long way.

Every winter we also throw a pizza party or BBQ and let the foremen tell us what’s going well and where we can improve.