Patrick Norris welcome to acquiring minds thank you for having me I appreciate it Patrick I'd been eager to learn about the trash business and one day an email from you pops up just a few months ago and I'm going to read directly from it quote in your interviews will you always ask about needing an MBA or private Equity experience to be successful I had neither I'm basically a blue collar worker I bought a trash company built it for fiveish years and sold it end quote and I wrote back to you Patrick and said you had me at trash so so I'm really looking forward to this let's get into it Patrick please start us off with some background on you yes um so I went to college at Lal University in uh Philadelphia Pennsylvania and after college I didn't really know what I wanted to do so I joined the Marine Corps I spent four years in the Marine Corps between 2004 and 2008 um when I got out of the Marine Corps uh 2008 was around so coming by jobs wasn't very easy so I took the first job that I got offered which was uh working on the back of a trash truck for Waste Management in Boston Massachusetts um I did that for with waste management for about a year and then the contract that I worked under um they lost it it went to a small company um named Sunrise scavenger I worked for and um I went with the contract to that new company that different trash company um I worked on the truck for about a year and then the owner of the company asked me if I wanted to be his supervisor uh so he was a startup he had started that company um to fulfill this contract so um he he was the manager at that point and then he was just asking me basically if I wanted to do um The Daily supervision of the company um so I it took a little bit but I did say yes eventually so I went from driving the truck to being the daily supervisor um I worked with him how the super as supervisor how many people did you have under you and and how big was the fleet sure when I first started at that company being the supervisor we had about 15 trucks we probably had 20 employees um we all worked in Dorchester which is a section of Boston so it was like real really easy to control um it is a union environment which makes it a little bit different um but yeah it it was a 15 trucks 20 people um and then it was me as a supervisor and then him as the owner and then a couple people that worked in the office but I didn't do too much with them so it was just daily operation got it and how was it that he won this contract cont if his business didn't even exist because you said it was a startup just to serve this one contract or this was customer number one correct uh Joe he's probably on his fourth or fifth company in his life at this point so he had started as a younger person in the trash business um and he had bought multiple companies over the years sold multiple companies over the years he had ventured out into other businesses as well uh but came back to trash so he won the contract the city contracts are um bid out every 5 years he wins the contract and then he sets the company up after winning the contract okay very interesting Okay carry on with your story please okay so I work for him for well so I'm in that position the company's growing um he is essentially like a mentor to me at this point where you know um I'm growing as his company grows he's teaching me a lot um as we go the company eventually grows to um like 45 trucks 60 employees and it's still he's the owner I'm the operations manager um one supervisor below me um and then so I run basically the operation dayto day that was probably six years that I did that and then I started to get frustrated um with the situ ations so I started looking for a company to buy because I thought that you know I I saw what he had done and I thought well I can do this um so I just started looking on like Biz buy and sell at that point for a company to buy um I ultimately found one um so I left there to then pursue buying this company I'll ask for more color on how you were frustrated but just to set that up there are a lot of operations managers out there in the world uh I mean every business has one and they don't all set off to go buy a business but you did so that's so you're making it sound like a a natural progression but it's actually not um so elaborate on on making this big decision and go striking out on your own to to buy a business yeah um so in my dealing with other people who Joe had come in to do work for us I talked to this one gentleman and you know I we were talking about the business and such and I had told him like kind of what I wanted to grow into in my career and he said you know you should really talk to Joe about how he got where he got and he said you know you're not going to get where you want to go unless you go bu a business so and where was it that you wanted to go were you talking net worth were you talk what were you talking what was your goal yeah I think what hit what I was probably talking to him about is how eventually one day I would want to do what Joe was doing have Municipal contracts and have a business and his his advice was like well you're not going to get there by doing what you're doing now because you're going to have to strike out on your own and get some experience so that municipalities would um be interested in working with you um most of the contracts say you need like five years operating experience before they'll they're going to give you a contract um so it was really that person's advice um and just my talk with Joe like I had already known that Joe had owned multiple companies and you know he started out in his probably late 20s by buying a small company in the Boston area and growing it to the point where he could sell it to a larger company so um I understand it's not like a natural progression but I just thought you know if I was ever going to be that level of successes Joe that this is what you had to do yeah and the frustration that you felt was what you already explained that you you wanted to get to a a place where you weren't going to get to on this path or was there was the frustration referring to something else again yeah it's a multitude of things um at one point I wanted Joe to teach me the business side so I understood how to get the trucks out on the street how to operate with the guys but I didn't understand like how to get the contracts the business side he didn't share any of that stuff with me at one point there was a conversation about how he would share all that information with me and then um at one point we had a conversation where he said he would not share any of that information with me so that's ultimately on second thought maybe I won't share all that information with you exactly so uh and that was a similar time as a Gentleman Jim who explained to me like yeah he's not going to share that with you if you want to do this you're going to have to go do it yourself all right so Jim kind of makes it plain that you're going to go have to go do this yourself you're open to that you do it you what you quit and then get on bis by sell or you're on bis by sell while still working at Joe's operation or what what tell started yeah it started out just looking on bis by sell I think really ultimately I wasn't even married to trash I was just like okay maybe I'll find a business and for a long time I just you know would look at the website and see what I saw at one point I the company I actually ultimately bought I actually showed it to Joe cuz Joe was looking for work to do with some trucks that we had sitting around the yard and I said hey I saw this on this website if you want to take a look at it um he never told me what he did with it but ultimately um I quit there and then got serious about searching I had a house I sold my house I made the money that I was going to invest in this business by selling my house so I had a multif family house in Somerville Massachusetts I sell at um I actually moved to Philadelphia for probably nine months while I did the search CU that's where I grew up so I didn't have any family or anything in Boston so I moved home did the search from there was open to businesses in Philadelphia was open to stuff in Massachusetts I had a girlfriend that lived in Massachusetts who's now my wife um so it kind of just went like that um and the whole time I had this business like that I kept looking back at which was this trash company up here I did look at two companies down in in Philadelphia that I passed on um one was like a oil recycling um vegetable oil like food from from like restaurants and such um and it was a oneman show guy would go around collect it in a van take it back to some Garage in Northeast Philadelphia and uh turn it into a product that could then be sold to uh like a to make biodiesel um and I wasn't a fan of that business um and then I looked at a carrier business um you know like final mile type more type stuff like small packages they had people that like Lo that uh drove around in their cars and stuff like that and that was down in Philadelphia um and I talked to him and EV passed on that as well um the problem with the oil company was I didn't like the fact that you're basically trading commodity um so you had to ride the price of the commodity so that guy he had a couple good years he had a couple bad years depending on the price of of the substance that he was creating and then the carrier business I was not a big fan of because there was a Salesman there who basically had all the relationships and I figured if I bought that company and I didn't get along with the salesman he could take my business in a heartbeat so that's why I pass on that one okay and so tell us about the the trash business back in back up in Massachusetts that you saw and liked yeah so the trash business um it was a family operation like a true family operation where um the gentleman who started it the business it was him his uh son his son's uh wife worked in the company his other son worked in the company and his wife and that was it so a true family business um and they were all going to like once the transaction took place all of them were gone except for the the daughter-in-law she stayed around for a little bit um but it was a small company the advice that Joe had given me I you know I told Joe what I was going to do and ultimately he was like um I don't I didn't recognize it till later but he was excited for me to leave him to go buy something he had no he didn't care at all that I was leaving to go buy a company I think that he thought it was like a great opportunity his advice to me was go buy something that you can handle don't buy something that you can't handle don't buy something that's too big um so he had told me like don't go buy something bigger than a million dollars in Revenue cuz it could be too big for you to handle um so that's kind of like where I was looking this business the revenue when I bought it was $624,000 $625,000 a year um it did have like an SD of about 190 um so I thought that was pretty good it was asset heavy in that it had like $300,000 worth of trucks um the benefit the trucks were actually fairly new which when you by a trash company you're not going to find that cuz most people are going to use those trucks right till the end of their life get the most out of them and then try to sell the business but the uh father was like so fed up with the trash business that I think that he was just done mentally and he didn't care that um he was selling his trucks I mean one of the trucks was only a year old and he was selling it I want to just circle back on Joe for a minute so yeah I had thought that Joe would be bitter you were leaving cuz he offers to teach you the business side of things and then he reneges on that presumably because he doesn't want you to go out there and compete or doesn't want to lose you or whatever um but in fact when you say Joe I'm out I'm going to go do this on my own turns out he's excited for you but he doesn't share that at the time just curious um he no he did share it at the time and I was so frustrated I couldn't see through the forest that would be the way that I would put he was very like excited and then I mean I gave him like 3 months notice that hey I'm going to leave in 3 months and he multiple times asked me hey how's how's the search for the business going how's this going he so he was not upset at all that I was leaving because maybe he understood that like I I had to leave to go do what I wanted to do he knew I wasn't going to get there by working as his operations manager MH so no he but I didn't see it at the time I I was just kind of so frustrated with the situation that you know I kind of just brushed it all off I kind of regret that now looking back and being you know eight years older well I hope you sent him a bottle of wine when you know when you sold this business which the audience will have to wait to for another 45 minutes to get there but uh worked out worked out pretty well for you thank you Joe uh and then a little bit more on the Joe's advice don't buy over a million in Revenue so as a listener to the Pod you have heard no doubt that buy as big as you can within reason but um generally it's hard to find a business of 750 or million or 1.25 million in SD in sde not even Revenue in SD um so if you find those uh you know they're great um and they're better than ones that are doing 200 300 400 500 in SD so but in but many Searchers um kind of are intimidated they kind of are in line with what Joe would say they're intimidated by too big a business um you know wrapping their arms around that the advice is to buy that big because a bigger business is more sturdy is is is less risky um harder to screw up probably has management you know it's just a more robust thing that it's going to be harder to screw up in theory um so um interesting that Joe uh for a guy who is so experienced doing a bunch of these businesses looking at you who had a lot of experience yourself now in the trash business you're a star guy that his advice W was so counter to what we hear in our in our little world that you know bigger is better do you so I guess the the question would be do you think in retrospect that it was a good that it was good advice or do you think that you could have handled a two million Revenue do Revenue trash business yeah no I think it was it was good advice um he he and I are both um like I would say command and control people so like on a larger business I don't in a larger business that has you know $2 million of SD you're not going to have the time to like really dive down into what the problems are and I don't think he wanted me to get in over my head of like this company has problems most trash companies have problems with r roting and they have problems with people and a big company becomes harder to control all that and a small company I mean I bought a company that had two trucks running around every day it was pretty simple to control what was going to take place um so and there's also like the economics the trash you get involved in that at that point I didn't understand disposal which is like the name of the game and if you bought a $2 million trash compan I mean a 2 million if you bought like a $1 million SD trash company uh you're going to have problems with disposal and you better understand that going in and I don't think he would have verbalized that to me but now knowing my experience that's what I didn't understand going into this so having a small company and learning those lessons was actually probably the best thing well we're going to we're going to revisit this concept of disposal because it's such a an important strategic um consideration in this whole industry so that that's great but what about you know just pushing back a little bit on that Patrick you got you bought a business with two trucks running around you know one driver calls in sick and your whole rot is killed for the day so how how why didn't that why didn't that concern you why I mean I can drive the truck um and that I mean the whole my whole thought part is is when I took that company over like I said they had five people working there and it was going to be me and one other driver and then I had a controller who worked for eight hours a week so we're going to take their payroll and bring it way down right off the bat um be because I just had the I knew that I can just step in and do the work that isn't like if someone doesn't come to work I just run the route for the day and that's pretty normal on a small trash company whoever your supervisor is or if you're the owner like you're going to be out there you're going to be picking up trash and I mean I worked at that company for five and a half years and probably spent more days on the back of a or driving a truck than I did not over the course of the five years great well then returning now to the business get a couple more bullet points about the business that you bought so you said two trucks you gave us the number of employees how many like routs is that is like in in trash world how many like give us a sense of yeah what is that so A full truck would be five routes Monday through Friday one route a day right so um what they really had was seven routs there was one truck that worked 5 days a week and then they had a route on um I believe it was Monday and Thursday for a second truck so I hired someone to do the full five routs and then I was the guy who did the Monday and and the Thursday when we first started um and then so then a a route is a good route from what I was doing is like 300 stops a day maybe 400 depending on the size of your truck and how close together all your stops are um so what we were doing which we haven't gone over yet is strictly subscription-based residential service um and in the trash business there's like different types of service you know there's Municipal service commercial service this was strictly um in towns that don't offer trash service so the municipality doesn't pay for it so each household needs to go out and find a contractor to pick up their trash and um so 90 I would say 95% of our business was that there's 5% of like little bit of commercial work um but it was subscription based prepaid made um so the it it was a very focused piece of the trash business you know there's many lines of the trash business this is just one little factor of it and did you like that about it do do you prefer of all the many choices of of where where what Niche you want to serve in the trash business do you like residential subscription yeah so I mean coming from my background which was municipal uh sub was Municipal residential work uh it my background played the best here but now looking for like a small trash company this is the perfect place to get started because everything's prepaid so you don't have any kind of cash flow situations taking place um you you know they're all paying three months some people are paying up to 12 months in advance of the service so you're never really worrying about money so as a small company it's a great place to try to play where if you do like let's say rolloff containers you're doing all the work before anyone ever pays you and you may not see the money for 60 days before you know after you've already performed all the work um so this is like the perfect business in my opinion for someone who's starting um doesn't have the operating experience to kind of go out and buy a small business bus that already does this yeah I wouldn't say it's a great business to start because I don't know if you remember your septic uh guy from Philadelphia yeah and he was like oh wow it's an early episode man you really you really went to the archives um well he he he was like oh you don't want to start a septic company because you got to buy this expensive truck and then you don't have any customers to put material in and the trash business is like the same way if you're the guy who starts it you're going to make it to a million dollars of Revenue it's going to take you a couple years to get there and you're going to be kind of beat up before you ever uh you ever really get going if that makes sense and by beat up what I mean is yeah trash company it's like it's 24/7 right you because the trash never stops it's the blessing and the curse the blessing is it's always there the money is always there and the curse is is that it's always there and you better show up to pick it up because the second that you don't show up up is when people start calling someone to get somebody else cuz nobody wants their trash barrels at the end of their driveway completely full so the that's the like the saying in the trash business is blessing and the curse but to start that business what I'm making the point is is like you bought this $300,000 truck and you don't have any Trash to put in it it's going to take you you know a year or two to even when you start making money with that truck fascinating and and um on this point about getting beat beat up and and tying it to something you said earlier about the seller of the business that you bought that he was so fed up and we're still going to get into the terms of that in just a second but he was so fed up he didn't really care that he gave you a great deal what so is that is that kind of what you're saying he was just there's a lot of burnout even from owners not just not just the guys humping trash but the the the owners themselves yeah there's a ton of burnout I think because um you either have to get to that the trash never stops because the trash never stops um you either have to get to that point where you can get in your first layer of management or eventually you'll get burn out because you know not only does the trash never stop but the phone calls never stop and it's just like a constant unless you just stop growing the company right like if you just say hey I'm at a point where I don't want any more customers and stuff um it just doesn't stop so if you try to run a lean operation it will kind of work at you over the years and especially when you if you're going to start from zero it's definitely going to work on you over the course of five to 10 years um you know I know like another guy who started his own business but he got to that point where he finally put in a layer of management and then his life got much easier yeah I mean I hear about the trash but I I could probably identify a lot of businesses that have a relentlessness to them but that's why you hire employees I mean the idea is that you're spreading I don't mean that you're dumping it on youry but I mean you're spreading it out across a team and there are shifts and you know I mean at some point you want your I would think the solution wouldn't be sell the business but to grow to the point where you're big enough that you have management they have infrastructure that you can afford enough people that there are shifts and that everybody has a a normal life rather than feeling like they're Holding On by their fingernails to go pick up trash all the time um but you know it's it's probably one of those valleys where you gota you got to get across that Valley and it's really hard to get to that next level of size to to really get there and I that was probably that's probably my biggest lesson in the five and a half years that I did it right so if I had to sit back and say what's the number one thing that you learn number one thing that I probably Learned was it would have been a whole lot better to spend extra $100,000 a year and put a manager in place right um and if I had done that what I have felt how I felt at the end of the business no um but when I'm when I was in the business it's like oh I think you're I I was taught to run a business on the razor's Edge because that's how Joe was like we ran it every so that's what I thought was the right way to do it now looking back I I think I would say to myself well I could have spent a little bit more money and uh had a little bit better of like a work life balance okay well um speaking of that you also so you said one truck one guy for the five-day routes for the five-day truck and then the other truck was just Monday Thursday you were going to do those routes um but when I see trash guys outside there's two guys in a truck or three one guy's driving one guy's one you know dump yeah so what's that about well so it depends uh if you're running like a municipal contract where you have every single house for the whole Community you're probably going to have a driver and a labor like when we worked in Boston we had a driver and a labor on every single truck um and that was because just the number of stops you're going to complete in a day when you do the subscription service um if you if you can do one guy on the truck obviously you your margins are way better and there's a little bit more drive time so it's a little bit more acceptable to not put two guys on the truck um eventually like towards the when my last year we had trucks with two guys on them cuz our Roots were so big that we could put two guys on it still make money and also with two guys on the truck you get more productivity so you do more stops in one day so like when I bought the business we had roots that had like 100 stops on it and as I said earlier a good has 3 400 stops so 100 stops in the course of a day one guy can do it your break point is probably once you get over three 100 you probably need to put somebody else on there and so 300 or below or like the hundred when you got in there so you're you drive stop get out of the truck dump the trash out of the canister out of the barrel whatever can get back in keep driving so wow that that's um that that seems like a lot harder work than just being the yeah in and out of the truck and and like what's the distance between stops obviously it varies but is it every block want a block or is it every 10 minutes that math probably doesn't work out it's less than that probably yeah the math if you're doing the stop every 10 minutes you might as well park the truck and go home um um no so it really you would you I mean at the end we were in towns we're like we had half the town uh so one as you densify the business everything becomes greater and that's when you can do 400 stops I would say if what I used to think in my mind that if I couldn't do a stop every two minutes then we weren't not making good money so you're talking 30 stops an hour and that strictly this is strictly subscription based uh business if you go into the other lines it's completely different but for what we were doing um I didn't think that we were making enough money if unless we could do 30 stops an hour now we had Roots at the end we were doing 80 stops an hour um which was great but but when it's when you have that density you got two guys in the truck and the driver's not getting down and getting up he's just pulling for 10t or 30 feet and pulling forward 30 feet and pulling forward 30 feet like the guys on my block hitting every house exctly even though mine is Municipal mine is not private yeah and your guys if it's a municipal contract they're probably doing over a thousand stops a day they're like loading their truck going to the dump coming back loading it again wow okay and then Patrick tell us a little bit so this is my own uh big city or big city suburbs uh uh uh background showing I thought everywhere just had the city the city or the municipality or the town offered trash and that's what your taxes are for everywhere maybe except you know if you had pressed me I would have been like well yeah I guess in rural places probably not you drive your stuff to the dump but I I think I really underestimated how many places in the US don't have Municipal trash um so anyway give us a lay of the land there like what what size cities or towns often don't have their own coverage and and they have private businesses doing it to be honest with you I would have to make up numbers to answer that question but I could tell you this I'm 45 minutes outside of Boston and they don't Aller trash service so I'm not that far outside of the city of Boston I would say um we're maybe 15 minutes from the closest town that does offer the service um so basically if you had a if you had a town of let's say 20,000 residents you're probably going to be on that like break even point or like um because one of the towns that we serviced was Hudson and when at the end after I'd sold my business they actually switched to a quasi Town service and they were the big the most dense town that we serviced so when you start getting to that point then the towns start to think okay there's too many people here we need to start to think about offering a service um it's basically I think it's in line with that towns don't want to raise taxes but they want to have better schools and they want to provide a couple other things and also when we talk about disposal eventually disposal gets so expensive for the town that the town is like you know we can't just take everything from residents like in Boston they take whatever you put out cuz they don't want people throwing trash in the streets but um what other towns do is they start to limit what you can put out because they don't want to pay for all the trash that we create um and then when you get out to kind of where I live which 45 minutes outside the city they're kind of just like you know you can deal with it by yourself okay okay well and so maybe now would be a good time to learn about disposal and transfer stations and how that works and that strategic Nuance that's at play there as well so so give us a little tutorial sure so a company like Waste Management largest trash company in the country they control their trash from top to bottom so like they pick it up they put it in the truck they own the transfer stations that the collection trucks go to then they own what's called what I would refer to as like ight disposal so that's like your landfills or your incinerators um and they so they own once they get the trash in the truck they control it from top to bottom and on in my case you know I just owned it once I put it in the truck and now I have to figure out how to get rid of it um when you do like a municipal contracts sometimes the town the city is paying for that so you're strictly just paid to collect it the town tells you where to take it and then um they're paying the bill but on my end once it's in the truck I own it I can take it you know to any site that I want to take it to and I have to go out and negotiate a price for every ton that I take to that site so if I take it to like a transfer station when I bought this business we were paying $75 a ton to get rid of trash when I sold the business we're paying 105 right now uh that same transfer station is charging $160 a ton so I bought that business in 26 16 you know we're only 78 years later and they' basically doubled the price of disposal which pushes the little guys out because since they control it from top to bottom what happens is now they have a cheaper price of disposal so the stuff that they're picking up at the curb they can get rid of obviously much cheaper than I can um and the interesting part about it is a lot of times you in competition with the company that you're taking the trash to so they probably run a collection route in the same town that you do they own the transfer station you're taking it to them so now you're in competition your competition can control your price to get rid of the material that you pick up and obviously there's only so many disposal sites that you can go to um because you don't want and Patrick I just got to interject when you say disposal site when you say transfer station we're talking dumps uh is there a reason and you're not using that word but I just I I we're we're just taking stuff to the dump uh just just want to make sure abundantly clear to people go ahead that is exactly what we're talking about is the dump transfer station is like our collection trucks are dumping it in one spot and then on the backside they're putting it into like a tractor trailer and then their that tractor trailer is taking it to what you would call landfill when you go to a landfill tradition like most landfills that I've been to you don't see too many collection trucks in them cuz the the collection companies they don't want to sit in the line and go to the landfill where it takes more time so they want to go to a transfer station get the material off the truck a little bit quicker um but yeah it's all basically a dump yeah and and the in the transfer stations the dumps are smaller so you know they they're they're intermediate spots for trash and then all then then all these transfer stations these dumps feed in into an enormous landfill that's you know Regional sort of thing right exactly yes yeah um and then if it's not a landfill it's an incinerator but same idea all the different transfer stations are feeding into the incinerators well let let's just reiterate allow me to reiterate this dynamic because it sure makes it seem like as a small trash operator you are at a significant Strate iic disadvantage you have to pay to take your TR to take your trash to the dump think of it like a toll and the toll is set by your direct competitor yeah who's who's also using their own dump and will just not charge themselves the toll therefore have uh far less of their own costs and therefore charge charge less fees to the very customers you're competing with for so how is it how is this viable at all like why is it not why are you not immediately just shut down and out of the business um well once you if you're not bothering them and you're not stealing too many of their customers um then they are making money off of you right so if you're their customer at the dump and you're bringing all this material to them they're making money off you at the dump so like I had the company that that ultimately purchased my company we took all their our material to them and they said to me at one point well we would just rather have you do the collection we'll make the money off you when you bring it to our transfer station um so it's kind of them realizing a little bit like they can't pick it all up um two would be the big companies like um Waste Management Republic Waste Connections their service is horrible um and there's a way for us to exist in the world of we're going to go out there and we're going to provide good service um maybe people would pay a little bit more for it um but yeah so we can we can compete because we can provide a much better service than the big companies can and they basically determine that you're either too small to care about or that they actually that you actually serve their interests in some way way you help absorb some of the demand that maybe they don't want to deal with and like you said they they're still they're also profiting from your existence because they're charging you a toll to use their dumps exactly um and so like you're just fitting in this little world of you can make good money just like playing the game and fitting into this spot where they can't pick it all up um the thing is is once you do become big enough and once you do become a problem for them them they control your disposal so you do have to play nice right like you can't go and try to take all their work because then you're going to be looking for another disposal site man um okay and and now you mentioned the the three biggies and waste management will be a name that most people recognize that is a giant company um people will recognize the name just because it's a giant company we see their trucks we recognize their logo but it's also a uh one of the most well-known kind of case studies of a of a rollup uh I can't remember the founder or buyer the CEO whatever guy who built Waste Management what his name is if you said it I'd know it I'd recognize I don't I'd recognize it okay um and he basically saw fragmented industry and rolled up all of these small trash operators around the country and and it became what is today waste manager it was big success um and so you know I would say to myself you know this in it's kind of like the classic it's kind of like in our world we we look at an industry one of the questions we ask ourselves is how fragmented is it if it's still fragmented is private Equity or is there somebody there or is there Capital there rolling it up so if I think about the trash business I'm like well Waste Management long ago rolled r up this business how can there still be opportunity there uh so what what would be the answer to that question and my opinion it would be like a never ending cycle so uh and in my example would be this is that I sold my business and within a year there were two smaller companies that popped up in all those towns to try to take from the larger company that I sold to so I sold and actually in this a couple of the same towns another company sold we both sold to the same time so there wa the Waste Connections is who ultimately bought us they um were rolling up this little region they had bought their um platform company in the New England region and then they were just buying up the some of the little players in that area and immediately two companies show up startups you know random guys in a pickup truck was one of the companies and know another one actually bought a trash truck but they started taking customers so in my opinion it's probably like a 5year cycle where you know they buy then the service isn't good so then people start to come back into the that area and again they can build a good customer base just on the fact that they these big companies don't provide good service and why do you think that the big companies can't figure out how to provide good service is it that is it an economic thing where it just doesn't make sense for them to or is it just kind of the classic service tends to decline as a company gets big sort of dynamic yeah I think it's probably the second one service declines um we talked about earlier like me and Joe are like control people command and control and at a larger company you can't control everything right so um the management doesn't know the roots the drivers know the rotes um and you know if that guy goes on vacation and the person they stick in the seat misses 10% of the route we got a problem or just in like the culture of uh Co you know where you can't find truck drivers um so if a guy goes on vacation waste management will legit leave his route for the whole week they just say okay well we don't have anyone to do this so we're just not coming we'll see you next week I mean there were multiple times where Waste Management would leave a whole town on for a month and they just they don't have the people yeah wow now in that situation our horice it's unbelievable yeah no it's so that and our business was built on that so like in the summertime when Waste Management stops picking up our phone rings like crazy and then all we have to do is show up and like Joe used to say this business is easy you have good price you show up when you're supposed to be there and if you do that you'll have a good business um but it it totally runs in a cycle in what in what I believe I think the hardest part now compared to before is that um the big companies really do control the disposal sites so you have to understand the disposal piece um when I bought Mr trash F the name of the company um I didn't think too much about disposal and now going through the process that's would be my number one question if I went to buy a company a trash company tomorrow the first question I'm asking is where are we disposing of this trash and what's it going to cost us cuz if the answer is you know we go to a waste management site I'm going to pay a whole lot less for that for that uh business then if they say like oh we have a good deal over at this Regional company um because you're going to get a much better price at a regional player than a national player does that make sense yeah it makes sense but you need to be really sure because even if the the cost is some X today the price of dumping is X today course it could can and likely will go up so I assume there are multi-year contracts that a trash company negotiates with a transfer station to to lock in that pricing for some amount of time for for certainty s once you be get once you become big enough you can uh negotiate a price if you or one truck operation they're not going to negotiate with you they're going to say like here's your rate and they're probably going to keep it for like a year or so um a bigger player you know once you probably have let's say 10 trucks or so I mean I had like I had six trucks when with four full routs and like I would get a 12 Monon price out of our but it was a regional company it was not a national player who can who had the transfer station they would give me a price for 12 months and I had a really good deal with them and they again we like played nice with each other um we like would CH we would trade Roots at one point like I was in a town that they wanted all my customers and they said hey we'll give you all of our customers over here in this town if you give us all of our of your customers over here and and then we'll stay out of each other's way uh and then you have this nice disposal price over here does that make sense mhm so it there is a lot of working together I think when you can find like a nice Regional larger company in your area that controls some stuff I don't think there's any playing nice when you're running up against like a national company okay good tip so um first thing you'd want a diligence May well one of the first things you'd want a diligence is the transfer station situation the disposal piece of the business correct yeah yeah this is just fantastic Patrick all right so let let's Return To Your Story your deal uh tell us um so reminder everyone it was doing 625 in Revenue about 190 SD uh two trucks in good condition and with a value at about 300,000 yes there's actually three trucks they had a you know a spare um and then um yeah so the two main trucks one was 2 years old one was one year old um the other one was at that point probably 8 years old um and then obviously the other asset is the carts so what not only do you have to pay for the trucks but you pay for the carts that you put at all the customers houses right um so each customer gets a trash barrel and a recycling Barrel some smaller companies do it where like hey you go get your own barrels and we'll empty them but that really kills the economics of what you're doing the real reason you're giving them the barrels is so that you can say we're not taking anything outside of the barrels which means that you can estimate how much trash you're picking up every week so when you start saying like oh go get your own barrels and we'll just empty them now you can't estimate what your disposal is going to be you can't control that anymore so that's the real reason that the trash company's giving them out to you MH and all your rates are based on like what we how much trash we think can fit inside that Barrel um and if you wanted to know 40 PBS of household of trash and like 20 25 pounds of recycling um each week coming out of the house it's pretty you know different communities depending on socioeconomics that kind of varies but if if you use those numbers you'd be pretty accurate 40 lbs interesting that this week when I take my trash to the curb I'll Wonder this more or less than 40 pounds typical family of four probably okay okay we might be might be a little light then all right um so so tell us about the terms of the deal yeah so the deal I bought this company for 624 th000 um so basically I kind of like went back and looked after after our initial call and looked at some things um I paid like 1.8 of sde which is very low so like I said this guy who I bought it from he was kind of done um I you know said that the assets of the company were worth uh 300,000 and then on the SD I was only then paying 325 so it was a good deal um in my opinion and it kind of ruined me for being able to buy a couple other companies because when I looked at my first couple companies to like add on to this I was thinking like whoa why am I not getting the same why am I not getting this great deal that I got last time and these you know the two individuals who I first spoke with about buying their companies they were like uh no way like that this is not going to happen and um so it was a little bit of Education there and that's when I kind of realized that I had gotten this good deal but so yeah I paid 624 conventional loan a local bank you know they gave me the um the loan on the assets and then I had to come up with the rest of the money so I had like over 50% of equity in it I put in you know the 325 of my own money and then I had that loan for 300,000 from the bank right but wait when when you say 1.8 of SD I thought you said the SD was 190 on day one after I buy the business I have $300,000 worth of assets so what I he had to pay all these loans off so he is walking with I'm basically his sde of 190 I'm only paying him 325 on that cuz I have 300 I walk out of the deal with $300,000 worth of assets does that make sense so if I liquidate the company on day one I'm sticking 300 I have 300,000 of my money back right away exactly so so it was he you bought it for 624 but there was $300,000 of Assets in there yes so so so really so in terms of just the revenue that you bought it was 300 624 minus 300 is 324 is the way you're thinking about it and 324 is about 1.8x of the 190 of the 190 SD okay yeah does that make sense it does make sense yes thank you and so as you learned this was a sweet deal and all because he was just burned out yes and he knew that like his kids wanted nothing to do with the business and I I think his kids probably weren't capable of carrying the business on and he um he was a very smart individual in my opinion um but he knew that they were not going to carry this business on so um I think he was done he had moved over an hour away from where he parked his truck so for him to go to work it now became a hassle um and he was just kind of done with the trash business MH okay fair enough sorry circling back to the price again it was 624 but you also said the revenue was 625 so is that a coincidence or did he was he thinking basically I'll sell it for 1X Revenue I mean that's a really that conversation came up okay okay he had it to be honest with you he had it listed at um like 750 and he had it listed for two years and I actually my wife was very good friends with a business broker and um so my my then girlfriend who's now my wife said to me hey why don't you talk to Sarah about this business and um she said oh I had that listed for two years and this guy would not move on his price so now it was two years later he was with a different broker and I guess now he had realized like well I'm not going to sell this thing if I don't come off of this number yeah well and he was two years more into his burnout a year an hour away I mean he was he was ready exactly um and margins what do margins look like in in this business yeah you I mean from the day that I bought it until the end we were uh 25 to 30 um percent that that's like a Eva number it's not um like a net number at the bottom because there obviously you're always carrying like a loan that you're going to be paying right so um but you're e you're 230% easy Joe always told me like if you do a contract you you price the contract so that you're even to numbers 30% and don't go below that or he said you know you'd be in trouble cuz when you do a contract you got huge loans usually for the first five years because you have all the trucks and stuff like that and and yeah so a truck how much does a truck cost and how long does it last I mean how much do you in your own mind do you kind of factor in depreciation for the trucks yeah so um the nail a truck is going to cost you like I bought a truck towards the end of my business when we paid 325 for it uh you're talking 400,000 um for like a really nice truck so a brand new truck you're talking $350 $400,000 um you want to get 10 years out of it um after 10 years you're going to start to like the body is going to be pretty beat up so you're going to be putting a lot of work into the body um I mean after five years you're going to be putting work into it a trash truck you can count on like 20 to $30,000 in maintenance and repairs every single year um and that's after one year so you run that truck for one year you're like putting tires on it just changing the oil and and keeping up with filters and stuff like that um and then things are going to start to go wrong because you know you're pretty hard on the trucks um a lot of stopping and starting and then there's the whole um the hydraulic system which brings like a whole new level of expenses right if you're just running a dump truck it's a lot cheaper because there's only one cylinder on it to make it go up and down where a trash truck has you know maybe I'm going to say 8 to 10 cylinders on it and all these hoses and sensors and all kinds of stuff and it it um the maintenance is pretty expensive over the years but if you can get like if you bid a municipal contract you're going to pay for the truck in the first five years and then you're going to try to get the contract for the second time and then you're not going to have any loans you're going to so that's like where you make your money is that second five years when you're not paying off the trucks but you can still run them H okay but those 25 to 30% margins ebit do so not in so that does not factor in of course the heavy expense of Maintenance expense of the trucks and Loan expense well no maintenance expense would be above that right it's just paying off your it would just be paying off your loans um like when I had at my business I mean we had like three loans that we are paying cuz every time you bought a truck you got now you got another loan um so it is like search I think people you know they don't want a huge capex right in this business there's a lot of money in uh buying the barrels buying the trucks um so there is a big capex here uh but I think the margins are are decent enough to explain it or like to justify it you know and then ultimately um if you're going to run the business for 10 years hopefully there is some time in there where you have trucks that you're not paying for anymore and then you you'll make good money on those routes yeah yeah but you know if you're growing which you hope that you are you're also always buying getting new rots that you have to get new trucks for so yeah yeah um so I guess you think of ter things in terms of like the profit ility cycle life cycle of a particular route so of a particular route yeah for the first 5 years it's more expensive you pay off the truck second five years it's it's pretty gravy right something like that yeah it yes that would be kind of one way to think of it definitely in like the municipal world and where things are contracted it is definitely that way um in the subscription world where nothing's contracted it's I think a little bit different of a mindset um of course cuz your roots are always in flux cuz people you got churn people new customers other customers churn out exactly yes so one thing about churn and this business I think what you have to think about is real estate I would say the majority of this of the subscription service turns over because of people coming and going in housing so you know you move in you got to find a trash company if that trash company does a good job you never change um so you could live there for 10 years and the whole time you have one company um so I was having a conversation with someone recently who wants to do what I did and I said you know I don't know what the current housing market is going to do to this business because you know in the summertime we would have months where we got 200 300 300 new customers in a month because of people coming and going out of their houses now if we got 250 customers we may lose 100 too so we're still positive 150 for the month but my point to this gentleman was last summer in the town I live in they were five houses for sale so that opportunity to grow the business in a cold real estate market is going to be less than in a hot real estate market cuz you're just not going to have that house Changing Hands which is the open door for the business to grow okay interesting I I find I found that a little counterintuitive because I would have thought I I mean I guess it all comes down to that ratio that you just gave where if there's people move coming and going in a neighborhood you assume you're going to generate more new business than you are going to lose business but why why why do you make that assumption why did you say you know we might get two why do you get 250 customers but only lose a 100 I would think it would basically kind of net out all things being equal it basically be a wash well we were the best trash company in town yeah so so that's where our reputation was the the way that people found us mainly was our website and our website um was set up so that through basically them going onto our website putting their information in and two email exchanges our service would be set up no phone call um I could be out on a route and basically be signing people up at the same exact time because literally it was one email that I would just have to respond to acknowledge the fact that they were going to be set up um so e the ease of how our website made it so that people could sign up I think got us a lot of customers and also all these little towns have these Facebook pages and someone goes on the Facebook page and says hey what trash Ser I just moved into town what trash server should I use and if 50 people go on there and say Mr Trashman we're going to get it and that's exactly what it was my wife used to like monitor each town that we operated in their Facebook page and she would say Hey you know 50 people in Hudson said today that you guys were the best company so you're G to get some phone calls and that's exactly what would happen that's so cool Mr trash man that's so cool okay um Patrick have we learned everything we need to about the kind of the lay of the land of the trash business we talked about um trash never stops uh um people don't cancel as long as you're providing good service or if they move was there anything more to say about Municipal contracts versus the residential where you played um you had said earlier that you got into it you you know your aspiration when you were still working for Joe is that You' get these Municipal contracts contrast um those two types of businesses for us a municipal trash business where you're basically contracted by the city and operating under the banner of the City versus private yeah um I think Municipal is still a great space to be in um or the business that I was in um it's obviously like a smaller business it's more like a niche business um the municipal contract business is I think it's a great business to be in once you have the operating experience like I said earlier to get one of those contracts you need some operating experience first it's hard to do a startup with no experience in the background um but once you have this experience you know the one of the municipal contracts we have for the city of Boston and this was 10 years ago was like $7 million so it's a big chunk of work to grab all at once um it is the positive of that is that you're not hamstring by disposal so if I was going to start if I was going to go back into the trash company today where where I live disposal is very tough so if I wanted to go back into the trash business right now what I would do is take my five years that I have of operating experience and try to go get a municipal contract cuz now I don't need to play the disposal game because the town's going to pay for it m on like a on a small Municipal contract so like let's say you have like a small town that has like two trucks the town is not going to cover disposal so what you what you kind of need is like a midsize town so like not the city of Boston but maybe a suburb of Boston so maybe one or two towns outside the city they're still going to cover their disposal but they're not a huge contract so that would be like a great spot to start umh and you don't have to play the disposal game there are there's like a town that's close to me but it's like a one truck town and you actually have to cover their disposal so you're responsible for getting their price um but the the biggest difference between the subscription business and the municipal contract is that it's easier for a small player to get into the subscription business cuz you can start with like that one little truck one guy doing it all and starting to grow that business L yeah yeah is that the answer that you were thinking that's great no that that that was great Patrick um and now tell us what is labor like is it is it an easy business to hire for some something tells it's probably not in my experience lab labors very hard next to disposal it's probably your biggest turtle uh um obviously everyone knows CDL uh people with CDLs in this country just get smaller and smaller all the time so it's a competitive market because there's not a lot of people out there with CDLs and to drive a larger trash truck you definitely need a CDL the federal government a couple years ago made it even harder to get your CDL than it was before so it's just a continued hurdle and then we talked about earlier you know getting in and out of the truck lifting up the barrels it's a physically demanding job and I would say that your success rate in the trash business is somewhere maybe 15% of people will make it a year so you know 85% of people within the first year will not make it and it's just because it's physically demanding now as we talk about like automated trucks so like I don't know where you live but now they have trucks for like an arm comes out grabs the barrel and the yeah the driver never gets out yeah um I think that number is probably getting easier so you know maybe now you're at 30% of people will last because now you don't have to get out of the truck you just have to be successful in driving it um and again I think you know we didn't have any of those trucks in my business and if I was to go and do it again one of the things is I would want to have those trucks because now my hiring is easier and I had the re rearload style truck where the guys are getting out and they're working harder so but those trucks where the arm grabs they cost $400,000 right which is nothing for Waste Management but for you know Mr Trashman that's a lot of money to be shelling out for a truck um so you know it's a hard business then you have unions when you get into the city so then you have unions to deal with um just a when I bought Mr Trashman the guy I bought it from said you could hire a driver for 18 bucks an hour right and when I first started posting jobs I posted them for $20 an hour and I used to get a lot of applications this is in 2016 when I sold my business in 2021 I would post for 26 $27 an hour and no one would call so in 5 years we had increase the rate uh $7 an hour and we're you know $9 higher than what this guy I bought the business from and uh we couldn't get anyone to take the job yeah and and of course that was before inflation that was before inflation really kicked off so this is not this is not because you weren't keeping up with inflation or something you you had really increased your prices a lot the just the the supply of of drivers had gone way down yes exactly and I think it's also a generational thing in that you know uh people don't want to work on a rearload trash truck you know um one of the things that I would get frustrated with with employees is they would be there for a year and then they'd have their experience and then they'd go work at Waste Management where Waste Management put them in a truck with like the one arm so now their days a whole are and I would probably have made the same decision if I was them if I could make like the same money and now I just have to sit in the truck of course that's what you would do right yeah um huge difference getting up up and down out of the truck and picking up I mean that is incredibly physically strenuous 300 times a day picking up trash and dumping it I mean you must get all kinds of frankly you know um back you know injuries injuries are probably not uncommon the repetive nature of this weird you know your this weird movement of of kind of taking this big canister both arms over your head sort of thing yeah I mean workers comp's huge uh yeah PE so yeah it there is the people get hurt it's actually uh top 10 at one point it top five most dangerous jobs in the country it was more dangerous than being a copper firefighter um because you're in traffic people getting killed car hit hit by cars wow wow yeah that and just like it it's an industry so you also talk about like people getting hurt at like the processing facilities and stuff like that but you know people getting hit by cars people getting hurt by like not knowing how to use the trash truck appropriately um accidents think about truck accidents how bad they always are if a truck gets in an accident nothing good ever comes of it right yeah um so it is a very dangerous industry um a lot of training has to go into it to be successful a lot of safety and and such and Patrick what about the fact that you're dealing with trash this is a dirty job is that uh is that we haven't even addressed that directly is that an issue or is that really kind of a minor issue when when you compare it to just how hard the work is how just physically demanding the work is yeah I think um there are some people who you know after a couple days on the truck they're like hey this job not for me I don't want to be Co I don't want to be you know have fluid shot at me that I don't know what it is coming out of the back of the trash truck yeah um yeah it's dirty it's smelly it's uh not fun after a while you just get used to it right like you know don't put your head there cuz things are going to come flying out um yeah so there definite definite people that in the job interview in the job interview I used to try to convince people not to take the job like I'm going to tell you right now why you don't want to do this and if they and and what were the things that you'd say oh just it's hard in the summertime when it's 100° and you're jumping in and out of the truck and you're sweating and you're tired and um you know you're outside all day in the winter time it's 10° out and we're trying to pick up trash um the long hours the you know a typical trash truck driver definitely works between 55 and 65 hours a week right so it's a lot of hours um and a lot of physical activity you're outside in the elements all the time so I would try to explain to these people this is what you're get this is what you're signing up for and there are plenty of people who in the interview like oh I I didn't think of it like that you know I thought I was going to be driving a bus you know and that we you want to weed them out because of the expense to keep hiring people right when I first bought Mr Trashman um I it took me a month and a half to find a guy to stick and literally like every day I was interviewing people and new per people every other day showing up until I actually found someone who's you know i' had people work for one day and come back at the end of the day and be like oh this isn't for me right Patrick the way you make it sound it wouldn't be for me either it's it's it's actually enjoyable once you get used to it you're out you know you spend most of the day out by yourself like you know no one's watching you you just do your roote and usually as long as nothing happens you don't hear from anybody it's really for a certain individual who likes um some autonomy in their day that they can control what they're doing and their day in the trash ver one of the things I like about it is there's an end right like if you're an accountant you can keep looking at numbers right like you can open up the next file and start working on that guy's taxes if you're a trash truck driver eventually you get to the last stop and you get to go home and you get to control a lot of that day of how long is this going to take me which again when you talk about employees one of the things as a business owner that you have to do is you have to control how long that day is going to be for that guy and one of the struggles is if I say this takes you know if I say that your week should last 50 hours and you're making it last 60 you know we we have a problem and in today's environment like there's a lot of people that want to take a 50-hour work week and turn it into a 60 well Patrick I'm just watching the clock and we still have a bunch of Juicy topics to hit so I'm I'm going to move us along here tell us what you grew the business to so so we'll start at the end and then tell us how you did that so recall 625 in Revenue what did you grow it to uh 2.9 Million in Revenue so what is that four times four plus times yes great how did you do that well mainly showing up when we were supposed to so having that reputation good service um again we talked about our website how easy it was to sign up for the service and that the people literally could get it done in like 10 minutes and it would take two emails um so it was this something that you implemented the previous owner it was not so seamless you implemented this correct on onboarding thing yeah so the prior owner had a website um my brother-in-law he knows how to build websites so he built me a website and we changed a couple things uh we kept like the basic same layout but I mean we made it so that if you Googled trash service in the towns that we operate in we popped up first we paid Google for that right but you know it was short money for the amount of customers that we got because of it but if if you Googled trash service in such and such a town that we operated in we were always the first one to show up so that was a priority the way that we built the website he built it so that we were always showing up high in the Google searches is we were paying Google for Google ads which was uh worked well um so the ease the ease of our billing was everything was very straightforward um I'm kind of like a black and white person um and I made it so that our service was black and white so I don't think that the customer is always white right but I think that if they understand that this is what we're providing you they can live with the fact that you tell them no right so upfront just be very clear with this is what we're agreeing to do with you and then you'll have that reputation of fulfilling at least what you said you were going to do um and I think that while I think our customers appreciated that we communicated well we had a reputation for communicating well if things went wrong we had a way of notifying everybody like this is what's going to happen today um and and I think the big companies they don't they're not good at that stuff um they're not good at communicating so when their truck does go down for the day they're not good at communicating like we're not going to be there and people are just left to wonder where we made sure that everybody knew like what was going to take place um I think we ran on a tight budget and therefore it allowed us to have a money whenever we needed money so that we could grow the business right um so that was the one of the benefit is that we whenever the opportunity was there and we wanted and I wanted to do something to grow the business I always had the money to do it and it wasn't a problem to go buy a truck it wasn't a problem to go buy barrels um and I think running on that in that tight environment even though we talked about earlier like maybe I I ran it too tight um allowed me to grow the business um how many trucks did you get to uh four full routs so 20 rots uh in the course of the week so four full trucks we had six you know you always have to have spare trucks in the trash business you can't just run with four cuz one's always going to be broken or there's going to be something wrong um so we had seven employees at the end on the operational side um you know we had three trucks that had two people on it one truck with one guy on it um so yeah we had grown it significantly from the original set seven routs to a full 20 I did have two employees who were extremely consistent that you could count on like without a doubt uh two drivers who one of them was there the whole time basically I hired him uh six weeks after I bought the business and he was there the day we sold it I actually had a phone conversation with him today um and so he without him and the other his name's Adon the other guy's name was Alonzo without these two people's commit to like coming in every day just like I came in every day we wouldn't have grown the business cuz they knew these roots inside and out they could provide great service they never missed anything because they were there for so long that they knew what was going on we didn't have this extremely high turnover rate um finding the third guy like that was very hard I think right before I sold the business I hired a guy it could have developed into that but you know having those two very consistent pieces really made the business you know the observation I was going to make Patrick is that like what you did to make this a success and to grow this small business in some ways it's it's kind of what you always hear in our world which is um just kind of do everything in a pretty obv according to a pretty obvious best practice well solve your people issues to the extent that you can but then in terms of in terms of just provid you know like you've said now multiple times providing good service providing a seamless user experience uh and just you know and and being responsive and being easy to communicate with uh and and kind of not to minimize that because that all takes hard work and consistency but there's no kind of Secret Sauce necessarily and and it's just you know the other kind of clich the cliche you hear is that you know just in small business land you you know just pick picking up the phone like answering the phone you know puts you puts you ahead of the competitors and this start start what you're describing starts to feel like that's a little bit true here as well yeah it's 100% true I had um a perfect example of that is I had a competitor small business family business and I a couple times had tried to call this guy to reach out to talk business with him he would never answer his phone so every time you called him it went to an answering machine where if you called our business I answered the phone I had a cell phone and that was our company line and I was the guy who answered it for five years so when people called Mr Trashman they got the owner every single time um and people knew that like that's who when you answered the phone you were going to end up speaking to the owner which is kind of difficult to transfer away from eventually if I had not sold it we would have had to transfer away from that um but no I I think it is totally about how you can make this easier for people to sign up for your service um there's a guy that I know who's trying to sell his business now he still like charges for each single pickup that he does instead of just giving people a monthly rate so like if there's five pickups in the month he's giving them one price if there's four he's giving them another and it's like he spends more time doing invoices because he has to go through how many pickups he did for each customer then where I just gave everybody a flat rate and you know yeah one month you get me and the next month I get you but it all works out in the end yeah so yeah you you just um try to streamline the best you can try to make it easy whether it's the customer experience or your experience um like the employees they want their day to be easy figure out a way to make their day easier and they'll stay right so whether we're dealing with the customers whether we're dealing with the employees like figure out the way that is the easiest for everybody and I think you you're going to be more successful let's hear now about your sale Patrick uh what what did you what the so the business you got the business to 2.9 Million in Revenue so as we said you more than quadrupled it um yeah what did you sell it for what what can you share about numbers here sure I sold the business for 4.4 million and on the day I sold the business I had a million dollars in the bank so the bank account for the business had a million dollars in it on the day I sold it and I sold it for 4.4 so um we had no debt I had paid all the debt Congratulations by the way on behalf of everybody listening that's a very impressive feat sorry go ahead yeah um yeah so at the point i' IID paid all the debt off we had no debt um going into the sale just made it easier that there was no debt um what I ended up doing is I sold to the comp the regional company that I worked with for the five years that I owned this business that gave me a good disposal rate and we would trade Roots they sold to Waste Connections third largest company in the country and after they sold they came to me and said you know Waste Connections will buy your company um I figured that Waste Connections would uh beat me up on disposal rates over the years so I you know I was interested in the deal right from the beginning I figured that my disposal rate was going away so um yeah then they offered me more money than I thought the business was worth and frankly you know it was an easy easy decision when they offered me what they offered me and and so to be clear um we're we're now hearing again about this this strategic tension with the with the transfer stations you actually had grown to the point where you thought you were big enough that your transfer station provider uh Waste Connections was was actually going to it was likely that maybe not tomorrow but eventually it was going to start squeezing you on um the fee to use the dump there and so yeah they were they were going to start carrying so you kind of you kind of start to reach a ceiling sort of thing yeah exactly I think that unless you can figure out a way to control disposal you start to reach a ceiling and your ceiling is like either this business is going to cost a lot of money to keep reinvesting into or you can't afford the squeeze of whether it's you know the the the disposal or the fuel or the employees but as as you get bigger that squeeze is coming from like all levels um and in this scenario you know Waste Connections did end up squeezing everybody part of it has to do with the fact that like disposal in Massachusetts is very hard so their disposal rates are going up so they're not necessarily doing it to get every to take to put people out of business their prices their disposals going up because the state of Massachusetts they're not opening up any more landfills so they're they can't get rid of the trash any more than um before so that's why the price is going up um just a little piece of that the trash a lot of the trash here ends up in Alabama and South Carolina so that's how far it's going to get to a landfill so think about how much it costs to get the trash from Massachusetts to South Carolina and that's why the price is just exponentially going up over time wow so I if I'm seeing ATT tractor trailers on the on the interstate some of those could be just filled with packed down trash yeah that's actually what I do now is I drive a tractor trailer full of trash uh no way yes um so that's usually like a short haul like two hours but they put it on trains um and they have whole trains that go from Massachusetts down south into these landfills H well we'll we'll not uh think too hard about how much how much garbage we are all producing um but that's side note that's just such a depressing um reality um all right so and you bought it remind us when you bought it 18 20186 2016 2016 oh and you sold in 2021 oh you sold in 20 yeah there it is sold in 2021 okay so yeah so fiveish years to to sell a business for $4.5 million and have a mill million dollar in cash in the bank which you which I assume they let you take home you didn't need to leave any anything in there for working capital no so um one of the things the servic is pre pre um prepaid pre-build so when I sold the business you know I you do have to give them all the work that you didn't do so you know if you sell in the middle of a quarter and there's still two months left you've collected two months worth of work that you haven't done yet so you do have to give that money to them at close so like in this scenario that was $400,000 roughly um that I had that they kept so you know they bought the business for 4.4 they actually gave me 4 million because they of the $400,000 of unearned Revenue um that was still on the books so 4.4 they kept 400 gave you four and then you got to empty the bank account which had a million into it a million yeah correct yeah yeah so so five million to you it was all it's an asset sale right so you know they're buying your trucks they're buying your bins they're buying your customer list exactly that is just so cool Patrick I mean real I mean seriously uh congratulations I mean good for you I appreciate it it's uh uh what's what's Joe say what's Joe think unfortunately Joe passed away in uh 2019 okay so uh again when I look back and say I wish that I had handled that situation better it I don't I never got the chance to fix that okay okay we've touched on the fact that um I I just have in my notes Here I did want to talk about the um hiring another driver because for this whole time your whole tenure in the business you were driving a truck yeah and on yeah there was more times yeah more times that I was driving than I probably wasn't yeah my wife here's a good one for you my wife likes to tell everybody that when our two kids were born um I left the hospital within two hours to go back to work yeah so like once the kids were born and then our parents were there um and then I said okay we're good here and I went back to work that day we're good here we good here newborn okay but in retrospect you you do feel like might have been a little too much command and control personality I mean you should have you know the business school textbook would tell you you should have been delegating that should have and could have correct yeah and if I did it all again I that point where I layered in another layer of um management I definitely would have done that sooner I probably could have sold the business for more money had I done it because I would have been able to spend a little more time evaluating my business rather than being on a trash truck in the last year that I had that business I made two attempts to uh partner up with some people um because I had realized that it was too much for like one person and honestly if I did it again I think I would seek out an interested party right off the bat right like let I I need somebody else here who's just as invested as I am um and because if you have two people who are highly invested it's going to be way easier than just one person sure uh of course you're you're splitting the pie so there's always that calculation got a grow bigger yeah but then but of course no but yeah but that really really isn't well and so so that that's a great segue um and and and by the way in case the audience is wondering yes we are going to get to the mafia question but we got to wait till the end uh so wrapping up here Patrick so for the listener who um is interested in buying a business you know Joe had done this time and again then you went off and did it uh you explained earlier this Dynamic of you know the the big guys gobble up the little guys and then the little guys are gone there's Green Space and and and other you know upstarts pop up to to start doing trash again so it seems like there's Perpetual space in this in this industry and a lot of it's remains a lot of kind of fragmentation mhm so what would you tell you you you're a listener you I think you understand uh the audience what would you tell them about this opportunity do you think it is an opportunity for somebody out there yeah I think it's it's definitely an opportunity for people out there I think you have to understand your local market and that there's probably some markets out there that this isn't going to work because of you can't find the disposal or it's uh just too dominated by by the bigger players um but if you understand the market and you can find that you know smaller company that has just a couple trucks and maybe they're a little bit beat up and you and you could buy one or two of them like if you could go if you could find a market that had two of these companies at 600 go buy both of them and then you you you walk in at a better situation on day one um so I think that's where it's the local um if you can understand the disposal and understand what's going on in your little environment as I said we worked in 10 different towns right that's not a big area we didn't try to take over the state of Massachusetts we didn't try to take over New England we just wanted to compete in these 10 Towns right around us so I I think that answers your question there's definitely an opportunity there I think something else is like we haven't touched on private Equity loves trash there's a lot of private equity in trash as you get bigger because we talked about earlier big capital expenditure so you take a smaller company and as that company wants to grow they're going to need private Equity at some point to grow their company you know take a $10 million company to turn it into a $100 million company like one guy normally can't do that by himself so he's going to need private Equity to push him over the level um and even I was thinking about it in like Year guys framework or the search framework of self-funded traditional funded if you're a self-funded Searcher and you buy a small business your whole goal could be just to grow it so that a traditional search fund is interested in it right and you're going to make good money right so instead of saying oh I have to buy a company with a million dollars of SD you can be a self funded Searcher by this small company and just get it ready so that a traditional search fund would be interested in it because a traditional search fund is essentially a small private Equity company anyway like you're just preparing it for that level and then you can sell it or bring them into the equation um and stay involved in the business so that's like kind of I see this traditional and self-funded search working out in the trash business that's kind of how I would look at it that's awesome that's great Patrick well and it also feels like I've never um articulated this maybe it's true in every industry but getting from level one to level two level two to level three level three to level four it gets increasingly hard in the trash business uh for reasons that we've just been talking about but getting from level one to level two meaning 200 sste to a million sde that's probably the easiest in quotes the easiest of the levels to to to get to to move from between and and uh and yet and and yet highly highly uh rewarding if uh I mean you can you can make a huge amount of money as an individual if you can take it as you did if you can take a trash business from 200 to a million in SD exactly I think it's because at those lower levels you don't have the good multiples but then you get really good multiples once you've gotten to that you know kind of that level that we got to or even better you know if you had revenue of 5 million your multiples now are going to be really good because you're going to open that door to people who can actually pay good multiples and are interested in doing it in our preall we kind of talked about there's this space that we're living in where like these little companies like less than a million dollars in Revenue like private Equity doesn't want to deal with them and also waste management doesn't want to deal with them and if you call Waste Management you're like hey I have this company of a million dollars of Revenue they're like oh you're too small like we don't want to deal with all that does that make sense so you're kind of in this little niche here where there's a good siiz company that you can take to the next level pretty easily yeah and just to zoom out I mean a lot of kind of what we talk about here and the Dynamics at play here even a self-funded Searcher is a version of private equity and it's all a lot of it is doing the hard work of taking a business from one level to the next and at that next level selling to the bigger fish above you so self-funded Searchers are selling them to small might you know build up their business to sell to a small private Equity shop that small private Equity shop might you know aggregate a few to sell it to a bigger private private equity and on and on and on I mean this is kind of the this is kind of the game it's just what strata do you play in in my audience is playing at the kind of at the at the individual or partner strata down down at kind of you know not infantes small but kind of the smallest below private Equity so and even those like big trash companies I mean they're nothing more than a private Equity company I mean they're buying companies leveraged on debt and like Waste Management isn't doing this but the like next level down I mean Waste Connections model is that of private Equity so there are huge trash company but they're still in that same mindset of just buying these companies leveraged on debt great Point how does somebody do this and not have to drive the truck how does somebody honest question I know it sounds like prissy and well you know you want to make $5 million get your ass in the truck dude but but but is there is there I mean I guess the answer of course is buy a big enough business but not too big that you don't have to be the person going out in the truck that's pretty simple answer huh I think that yeah that that is the answer at a small level that I started at you're going to you you have to be able to get in that truck because I don't think that you would be able to unless you don't want to make money right like um you had a the tree guy from Las Vegas who was like oh yeah like you know I have my business over here that I really focus on I bought this tree company um and he wasn't looking to make like a bunch of money out of it he was looking to grow it so if you weren't looking to make your living out of this and you could put an operator in and you just wanted to grow it for the final outcome then yeah you just need to find the business and the operator but I think the difficult part there is eventually your operator is going to be hey man I'm running your whole business here and you're going to have a problem on your hands right right so he would have to be uh he would have to have Equity or he would have to have some kind of Interest that's going to keep him there um but the the other answer is buy two or three small ones if you can buy two or three small ones in the same area then it's already ready for that layer of management um I guess the hard part would be there is that you would have to be able to evaluate someone to put in that spot hopefully you would keep maybe one of the owners um on so a lot of times like when private Equity buys a trash company they don't come and buy the whole thing they buy 70 80% the original owner keeps 20% and now he's interested to have the next outcome in five years ex so youd probably have to run the same model Patrick what an education let's close out uh with there's one more thing I wanted to talk about yeah is that all right yeah it sure is um so we started this whole thing with do you need an MBA do you need private Equity experience to do this and I'm saying no um and a lot of times when I talk to people who come from my blue collar background and they say like you know I have this idea but I don't know like I don't have the experience to run a business I kind of just I have a sister who asked me about a business idea and she goes well you know I don't know anything about accounting accounting and I said that's why they have accountants I don't know anything about accounting either right so I would say if you are someone who wants to go out and buy a business you and you're an operator and you know you can operate the business but you don't know the back side of the business you don't know the business side of the business that's what accountants are for that's what insurance agents are for you trust the accountant you trust the insurance agent you are the operator and you quarterback back all the other stuff so that you can be successful you don't need to know all that other stuff that's you know why people go to law school so I think that's like a decent piece of advice that a lot of people don't ever think about amen it's great advice and and is is there something in there too about people who don't have an MBA listening to this podcast and maybe feeling intimidated because they see these other people who do have NBAs is that kind of where you going with this as well well I think it's blue collar workers are going to think to themselves like oh well yeah I know that I can actually run this landscaping company but like am I do I understand how to get the financing or do I understand like how to build the website like and I think a lot of people think that because you own the business like you know how to do all that stuff and they don't just think about the fact that no you can pay people to do this stuff for you and you don't need to know everything you just need to find people that you trust and it's no different than a CEO who builds a team the CEO doesn't know like every single aspect that's going on in the finance department that's what the CFO does and as a small business owner it's a small company but still you need to build that team in the background that to be successful right so in my what I did is all the people people that I met when I worked for Joe his insurance guy um I called them all when I was going to buy my business and I just said hey you know we met when through Joe and I'm buying this trash company and can you help me do this every single one said yes you know like there wasn't everyone was just like yeah sure yeah I did this for Joe and now I'll do it for you so I think that's a a big thing for those of us who didn't you know go to uh get our didn't aren't Highly Educated that you know we don't have we don't need to know it all such a good point such a good point Patrick thank you thank you for making that what else I see you glancing at notes was there something else that we wanted seriously anything else no that's it that's all I got all right well I want to hear about the mafia is is this business uh is is there still the organized crime element in this industry that uh it has a reputation for yeah in my experience I never openly ran into it so I wouldn't like is it there yes can you avoid it yes very easily you can avoid it I think that different areas of the country probably have like different issues with it um I think that in a small company you can totally exist and not run into it um I never ran into it obviously where I live there the mafia is not around so um I don't think the mafia's as interested in trash as they used to be because there's no cash in the business anymore so it's not as easy to move money through the business um everything's paid by credit cards and stuff like that so um in in my experience I never ran into it but sometimes maybe I think my eyes were closed if that makes sense like if I'd maybe open my eyes a little bit more I could have seen it but no I never presented with it I was talking to someone um a little bit ago and they were like yeah I mean if you ran into the mob they would give you a warning they would tell you somehow like you don't want to do this and um you would then heed to that warning but um I was talking to a guy one time and he was stealing a bunch of customers off of this guy and the guy just gave him a phone call and said hey you may want to look up my background before you steal another one of my customers and he said he looked him up found out who he was and stopped taking his customers wow so I mean but I mean that was a very nice way of dealing with it yeah I mean it could have been way worse I didn't not a single kneecap involved um well so so the takeaway is probably in certain Corners there's a little bit of it nothing like it used to be and probably also very regionally confined to to States or localities that people probably associate with the mafia um and but for most people listening to this podcast and who might actually contemplate buying a trash business probably not probably a non-issue yeah I'd tell you I mean if you just think about the large companies that are involved in this business and the fact that like private Equity is running all over this business the the mob can't exist right so the fact that all these big businesses are in the industry like it has to be legit like because on the lower levels so again if I was involved with the mafia I would want my operation to be a couple trucks just fly under the radar you know what I'm saying build this huge massive business up in my opinion but yeah it's totally local and um you could totally exist in this business and be extremely successful and never even know what was in the backround Patrick Norris what a delight uh I feel like I uh know a lot about the trash business and I love that you uh in five years made $5 million for yourself um starting as a guy who was on the back of a trash truck uh way back earlier in his career just very very inspirational I think the audience is going to love it how can people reach out if they want to ask you a question uh LinkedIn Patrick Norris I'm there uh it's basically it um I appreciate the opportunity um that you gave me here to speak and I really enjoyed the podcast I as a person who's not highly educated I guess I would say um I learn a lot from a constantly when I'm listening so if this was like eye opening to me when I found your podcast at like I didn't know what search was never heard of it before until I started listening to your podcast um so you know I learn a lot every single time I listen that's great I appreciate that Patrick uh and by the way why why are you driving a truck when you got $5 million to go out and buy a lot of businesses seriously um something tells me you like this you like the work you like the work oh oh I love the work um I do enjoy trucks I enjoy um the you know the I would love to be in business again um and maybe I will I think the reason I listen to your podcast is because i' like to open my eyes to other opportunities that aren't the trash business um I obviously have a five-year non-compete in the trash business so I can't go back into the trash business for a couple more years um and I think some of it is you know I had this pretty intense five and a half years and for a year now I've just been driving a truck for myself and it's a little bit of a break maybe recharge the battery so I can go do it again cool well keep listening to acquiring minds to get inspired about your next your next chapter um you'll probably get some inbound from this one uh I just had a great time so thank you very much Patrick thanks for so much time we're we're pretty long here but uh uh just couldn't stop myself so really appreciate it sir thank you you have a good day I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business