James Bloom welcome to acquiring minds thank you James this is going to be a great story you took a small quite small commercial HVAC and plumbing business uh bought in 2019 really got rolling in 2020 so in about four years you've grown that small business into one on track to do north of 20 million in Revenue maybe 25 million in by the end of this year 2023. we're going to hear basically how you have spent these last four years so effectively Let's uh start with some background on you please James sure so I spent most of my career in the corporate world I started out out of college working for Lockheed Martin went through their Finance leadership development program uh transitioned to a company in Pennsylvania called Air Products and chemicals where I spent time has essentially the finance lead for several different divisions within their chemical business um when Air Products split off their chemicals Division I ended up going with the electronics Materials Division which became its own company called versu materials moving out to Arizona to head up and run one of the one of the three main divisions there so I was running a 500 million dollar uh Specialty Chemicals business both from the finance side really looking at what investments we would be making uh what plant expansions we would be pursuing what M A activities we would be going after and then also eventually moved into more of the business management side of that so overseeing our operations in the U.S in Europe and then also in Taiwan and Korea all this sounds like great experience to have to go off and now do what you've done is that is that right I think it was it's been very helpful I mean I was running doing what I'm doing now but for corporations I think the big difference there is when you're doing it yourself you're not playing with house money right if you there's no unlimited bank account that a corporation might have um and also you know I'm doing a broader role where I'm having to manage the HR side of things recruiting people before there were hundreds of people doing those things for me where now there's a very small team or even myself you know directly involved in those things so I would say although I had very in-depth business experience and certainly the m a side of things that I was looking at before helped with the initial acquisition um being in a small business really requires you to focus on many many things that may have been done by other functions in a corporation okay okay great well that's great um that's great clarification um I'm sure this will be a theme as we go along but please pick up where where you were I think you were now in you're now in Arizona yes so um after being in Arizona for a couple years really more uh family changes mainly being my second son coming along um kind of drove us to want to come back to the east coast at that time you know it always it had always been my goal and my dream to own my own company run my own business and so at that time you know I had the conversation with my wife that if we come back I don't want to come back working for someone else I want to go and try to do something on my own and that's when I really started looking for business to acquire great and so you had had an entrepreneurial um Instinct but had never really capitalized on it and you decided to now and why in the form of buying a business and not starting one from scratch because typically when we think of entrepreneurs these days we think of people starting businesses from scratch but you appear to understand that you could go buy one which is not something that a lot of people realize I think the biggest driver there was having a young family and having a steady paycheck right um in a business environment I didn't have the financial ability to just say okay well I'm gonna go and start something where I potentially might not be paying myself a salary for several years um so going out and finding an existing business that had cash flow you know coming in had existing customers was very attractive to me because I was able to go out and do my own saying but also still you know be able to pay myself a salary so that way my family was still able to continue living kind of the lifestyle that they were used to and I was able to support um you know a family that at that time was a wife and and two kids now we have a third um so just going to a situation where it was potentially you know zero income for some period of time wasn't something that I thought I could handle and you had MMA experience deep in many experience it sounds like so you knew that of course you knew that businesses were bought and sold but um you understood that individuals also that for kind of first-time entrepreneurs could go out there and buy a business you you just kind of instinctively knew that or you'd you'd heard about that I don't think I've ever heard of that um I didn't really know anyone else who had gone down this path it was something that I started doing research on you know through some of the websites that are out there Biz Buy sell is actually where I ended up finding this business but doing a lot of research on those types of sites to see what was out there understanding the SBA support that's out there for first-time business buyers or someone like myself in that position um and then you know found out that it was possible that there were businesses out there for sale that were established and then at that point it was really just trying to find the right one well I love that James because a lot of my listeners probably almost all I guess all of my listeners by definition um are consuming content around buying a business uh and there are a lot of sources of that content these days like this podcast and others like uh a couple a handful of books a couple in particular that people cite over and over as having kind of opened their eyes and exposed them to this world um and so you were you're really kind of self-taught um I mean we're all self-taught to agree to a degree we don't go to school for this necessarily unless we have an MBA but but you really were kind of just cruising website to figure this out I mean I don't I don't mean to diminish it but you you know you you weren't right reading a book you weren't listening to other people's stories that's um that's unusual um it's unusual today probably in the past that's probably how everybody did it but I digress um okay so you guys are going to move back to uh Pennsylvania you want to be an entrepreneur this is the moment you want to not start something from scratch because you need um to support a young family and have kind of income from day one so you you're Googling around you hit upon Biz Buy sell um and you are looking for do you have kind of parameters for what you what you want to buy on Best Buy sell what do your filters look like or you or is it more Geographic it's like anywhere yeah tell us what your criteria were so the the big things were Geographic a certain cash flow that I was looking for and a business that I viewed at least as something that is not going to go away anytime soon right so everyone has air conditioning everyone has Plumbing um I was looking at service type businesses like that that are are going to be somewhat recession-proof um and you know nothing is without risk but not as risky as something that maybe a trend or a fad that would be you know a very good business for a short period of time and then in a year or two gone right yeah I was looking for businesses that have been around for a long time that showed a certain track record of a performance and also in an industry that I at least viewed as as you know sustainable those sound like the if those are all very familiar to to me into this audience what was your geographical constraint where were you guys going to move so our family is all in Allentown Pennsylvania so we wanted to be within you know some reasonable Drive of there and we settled you know just north of Baltimore and what kind of cash flow did it need to have um I wanted to at least be able to pay myself a hundred thousand uh and then I you know with with the cash flow that could support the business on top of that um so I was looking in the 200 to 300 000 range of cash flow okay so two to three hundred thousand in sde so that you could then after paying Debt Service having money to reinvest in the business pay yourself a hundred thousand minimum and somewhere in the geography like reachable distance to Allentown Pennsylvania and enduringly profitable so what did you find I found a lot of different businesses so I probably looked at I would say 20 different businesses along the way um you know varying service businesses I I did want to lean towards mechanical from some of my experience working on plan expansions in more of an industrial capacity so I did like that particular business but I was looking at just about anything that I saw that looked like on paper it had the right cash flow and the right you know the right number of years of of ongoing business um the biggest challenge I had looking at businesses I think you know you're always asking for tax returns and financials often those things look very very different um especially with the SBA you need those two things to align fairly close um which this business did have you know tax returns that were at least supported by their internal financials so I pushed the owners of any business that I was seriously looking at to provide me with their internal financials and ultimately with this business once we had an Loi in place you know really getting hold of their their QuickBooks access and being able to dig through and do my own analysis to make sure that things were actually what you know what they looked like on paper um but that was that was a challenge going through with several of the other businesses that I came across you know the tax returns looked awful the internal financials looked fantastic and and it was hard to get a great story on on why there was such a gap um and especially with the SBA that's something they're going to look into as well and they you know they want to feel comfortable that what is showing up in the internal financials if that's what the valuation is based on which it typically is um you know that that this the numbers hold together so I think with my m a background that was one thing that I was able to dig through and validate myself um that was really important early on yeah and so for these businesses where you just couldn't close that discrepancy do you think that there that the business owners had been a little bit Shady uh or that they just couldn't I don't know that there was some other explanation it was just messy books and I think it messy books to some extent and a lot of people were trying to sell evaluation based on one year not so much on a trend I wanted to see something that was you know three years on average supporting what the selling price was um a lot of them would have you know one great year one terrible year and then another okay year and they would want to try to base all the valuation on that one really good year sure um that was a challenge with several of them it sounds like you're doing your own due diligence then did you did you work with any third-party diligence providers or was it just all you uh this was just all me I there was a valuation that was required by the SBA as well so in theory someone else was also looking at at the financials and at least coming up with what they thought the valuation of the business should be so that gave a little bit of extra Comfort but that had been my that had been one of my roles for several years in the business world is looking at you know large multinational companies and doing essentially the same thing I was doing on a much smaller scale and just give people a picture um it's not something I've asked before what does it look like to just pour through the QuickBooks of a business I mean is that essentially what it is I mean you're just going line by line by line for the past 36 months is that kind of what it looks like um mainly so what I did was I I looked at the sales by customer to understand you know how many customers do they have where is the revenue coming from is it all you know are all the eggs in one basket is there some diversification some protection there especially coming in to a new business and taking over those relationships from from an existing owner one of my concerns was losing large accounts just because the relationship was with the owner so that was one thing I wanted to vet early on um also really just trying to look at the expenses trying to understand on those things that are being added back for the sde you know how how realistic are they are they really owner expenses or are they other expenses that are you know that they're trying to classify as owner expenses I think that's something I spent a lot of time really trying to make sure that that those ad backs were valid all right James well so tell us about the business that you found liked and acquired so I ended up finding Excel Mechanical Contractors uh the company had been around for almost 10 years at the point when I was coming in um I had noticed a trend that the business had started out small as as they do about four years in they brought on some nice accounts and grew the business you know up to about just shy of 3 million um but at that point they had stayed pretty much at that level for four or five years and really there was no growth after that so that was something that early on I I tried to understand why that was the case um after talking with the owner a little bit more you know I understood that that was really his strategy was to grow the business to a level that he he liked he was comfortable with um and his goal was to keep it there and ultimately exit the business and go into retirement so I I liked that the business had established some really credible customers some some very good accounts and had showed success over you know four or five years with those accounts keeping them and growing those accounts um but also seeing that if they were able to do that with with those types of accounts there is likely growth potential you know to continue to add on accounts like that where they had just not really been pursuing that so I saw the company had a strong track record in a attractive industry and there was definitely growth there that was possible but really hadn't been tapped into yeah you know if I'm the seller of a business that's not growing and I wish it would grow but it's not you know what I might tell my prospective buyer is oh I just haven't pursued growth you know how do you how do you trust that that reason how did you um you know punch through any skepticism you might have had about his answer um that there that there wasn't growth so I think it was really seeing the types of customers so they were able to bring on a regional account with JCPenney they were able to bring on a regional account was Walgreens those are those are pretty major accounts um those are customers that are not easy to satisfy um and you have to have a level of performance to be able to satisfy that that type of account so being able to see that they were able to bring those types of customers on and maintain those didn't necessarily give me Comfort that they weren't trying to grow and couldn't but that there was enough performance there and enough customer service there to satisfy those types of accounts um and I didn't see it as a far stretch to be able to bring on additional accounts like that if they were able to perform on the accounts that they had well one thing that you said when about your own due diligence process was that what you one of the things you were trying to sniff out was whether or not there was essentially customer concentration like customers that were that represented a lot of the sales and sure enough there are two Walgreens and JCPenney so so on the one hand what you just said it's it's very positive that this business was able to land and keep satisfied and even grow the the the the revenue sales from these customers but on the other hand they represented a pretty good chunk of a business's entire sales right so yes how did you so what you were just were you just willing to overlook it um figuring you'd grow out of that customer concentration yeah to some to some extent so um that was the one thing coming into this particular business that made me less comfortable and one of the things I knew I needed to address as soon as possible coming in so they did have other customers that um we're strong customers and had a fair percentage of the revenue coming from those other customers but they were concentrated in those two large accounts which I I did view as as a risk going in um so again for me it was more the the demonstration that they were able to operate at that level with those types of customers that made me comfortable and also along with some of those customers they were branching out into other customers that that were essentially related to them so they started breaking into work with the Smithsonian and I was seeing that continue to grow um and there were some other customers that they had developed relationships with through those two accounts and those were starting to grow as well so although it was highly concentrated I did see a path that they were on to starting to Branch out to some other customers um but yes going into this that was by far the largest risk and did you well I'll I'll get to that in a second um I'm gonna ask if you uh how you tried to mitigate that risk if if at all formally in in the structure of the deal on the structure of the deal can you give us some some numbers again you said the business was at about three million dollars in Revenue can you um tell us what your deal looked like numbers so the purchase price was 785 000 um which I mainly financed through the SBA uh the prior owner held 10 percent in a note for 10 years that was something that I I wanted and also the SBA was requiring um and then along with that deal I also secured a 125 000 line of credit with the SBA uh just to have some of that working capital in the business it was an equity sale but it was structured similar to an asset sale um the prior owner basically we snapped a line on the sale date and any work in progress AR um and prior was the owners anything that was generated after was was mine so he took basically the arap um that was before the sale anything else that booked after that fact was was staying with the company so there was cash flow generating from day one um but we also had that line of credit there to cover the Gap basically as we started ramping up our cash inflow and so 785 that's kind of the Top Line number purchase price so what what multiple did that represent another way of asking what what was the sde of this business uh it was about about it between a two and a two fives multiple um and so I jumped on this pretty quickly because I thought that valuation was fair if not undervalued the sba's appraiser came back at about one three five so they you know kind of helped me get more comfortable with my assessment that the business was undervalued um and so coming into it there was you know there was equity in the business at least from their perspective uh from day one because of the selling price and that 1.35 million dollar value evaluation the seller sees that too he does not see that the seller does not see that okay yeah he did not see that he we did talk about it after the fact and he he said I left some money on the table I guess but I mean we had a pretty close relationship um we spent a lot of time together uh over I guess it was about a year of you know from when we started talking to when we closed uh that got extended by about three months because right when we were about to close and the SBA was essentially ready to sign the paperwork uh that was when the government shut down for several months so I had quit my job in Arizona came back to the east in November and the deal didn't close until February because that's how long it took for the government to open back up man um but so I mean that was uncomfortable at that time but it was also good because I got a lot of time to spend talking with the prior owner and getting to meet the vice president and getting to meet the head of the service Division and really starting to better understand the business and really understand the capabilities of the company which was that was really a good thing in hindsight but even though he going back to the valuation go and purchase price even though he eventually learned that sorry it was the SBA did their own valuation for their own sense of comfort and they came back with 1.35 and so I and I I should know this I guess um that is part of the sba's process so all buyers will when working with the SBA the SBA will do evaluation the buyer will be made aware of what that number came back at but the seller is not correct okay yes that's my understanding that they always want to have that valuation just for their own sake to make sure that you know what what their funding is actually worth what you know what you're paying for it yeah right sure of course um and so but he was still his multiple even at 785 the number that you bought it at was still two to two and a half uh of sde so that's still you know if we use kind of three as a as a very rough rule of thumb average um that's still pretty low even what he was choosing to sell at right yeah I think he had been given some advice from a broker that he had always thought was probably too low But ultimately he followed that that broker's advice and I I think he he wished you know later on that he had set it for a higher price but um he followed along with with their advice and I I certainly think it was undervalued and the SBA did as well so at 2 2.5 then so the sde was somewhere in the 300s is that math right yep that's right okay so back to the the customer concentration risk did you put anything in the contract uh in your terms to help mitigate that risk um or or did you especially now that you had those those three months of downtime after you know after when the government shut down um did you like demand or request a formal introduction to Walgreens and JCPenney how did did you deal with that before you took ownership of the business in any way uh yeah so so the main way was just making sure that the contracts were in place that there were no restrictions on ownership transfer um once I've found out that you know there were contracts in place that would carry us through at least until the transition happened um that gave me a level of comfort that you know the customers would have the ability to see that although ownership was changing the company was remaining the same and be able to build that level of comfort with the customers before you know contractually they could have ended things um gave me a level of comfort I I was confident knowing that the team had been in place the owner really had kind of stepped back and was allowing the two people I had mentioned before to really run the day-to-day operations so the relationship was really more with the company and with those people than it was with the owner and that was my biggest concern that you know I didn't want to step into something where you know this was the owner's cousin or something working you know for the customer and that's the whole reason they had the contract I was I was confident that if we had enough runway on the contracts that they would be able to see okay well nothing has changed right we the service level that we're receiving is the same the people that were receiving it from are the same the only thing that's different is the person who you know is is running things is different right and coming in I think you know right away we set up meetings with these customers to go to them face to face and explain what was happening assure them that things were not going to change and if anything I would be more actively involved in what was going on with their accounts than the prior owner had been and I think they really liked that um and ultimately you know they liked the transition and there were no issues there um we did end up losing the Walgreens account later on but it had nothing to do with the the transition of ownership or anything like that it was more a corporate decision on how they were going to manage contracts uh nationally versus regionally we'll probably want to revisit that when we when we get to that point in the story before we proceed James so give us a picture so mechanical HVAC and Plumbing two big customers you've named Walgreens and JCPenney so just paint a picture for us uh of exactly what the work the service that you're delivering is is it basically doing the HVAC and plumbing for a new Walgreens and a new JCPenney or an existing JCPenney because I don't think they're opening new ones please it was all um existing work so we didn't do any new construction at all right when I first came in so basically what what we were doing was contracts to maintain the equipment that was that was in each of the stores and then any troubleshooting or repair work that came you know that anything that happened if something broke or if they were having an issue with any piece of equipment there on site you know they would call us directly we would go out troubleshoot make recommendations and repair any of the equipment that was there um so that was primarily what we were doing for those accounts um if there were we weren't getting involved in new work per se but on the Walgreens accounts they had had some stores that were new um they had other contractors do the installs and they were not done properly so they did then contract Excel to come out and and make the repairs or make the corrections to the installs on any of the new stores so we weren't installing the equipment first time but we were going back and fixing anything that was done incorrectly or if there were system issues well and that raises a question in my mind initially how was your seller able to get these accounts um in in the first place because I would imagine that when the JCPenney location was built the Walgreens locations were built they there's a construction HVAC and plumbing contractor and that uh HVAC and plumbing contractor hopes and expects that they'll also then service those locations and it will become a recurring service-based relationship not just the one-off construction and in fact that's a pretty common playbook for for businesses who go after construction Revenue um opening hoping and expecting that they'll also parlay that into uh recurring service Revenue so how how was Excel your former owner how is he able to get these contracts out of the hands of the original Construction um HVAC and plumbing businesses that did the work in the first place so the JCPenney account um CBRE manages all of their facilities entirely and Excel was in a building working on something else they had a a big problem that the original contractor either couldn't six couldn't figure out what was going on um or they weren't able to respond in time and they just actually came to excel when they were in the same building and said hey can you guys help us with this our team was able to look at that and fix those issues that the other contractor was not able to fix um from there they continued to use Excel because they saw that we had the capabilities to troubleshoot and and fix system issues that some of the other contractors were not able to do and that person then helped them actually grow into the Walgreens account as well because they had worked there before as a regional manager and they said hey we have this company that is really really good you know they are able to fix issues that people have been working on for a long time and could not fix so that was it was mainly Word of Mouth that then spread Excel from from Walgreens to JCPenney and then into some other accounts as well once you once you get that good reputation going it's it's interesting to see how that permeates the market and people start to find out about you even when you're not really advertising which this company never really was well I know that that's also a theme that we are going to get to about how much how you've grown since you've taken ownership and I want to Circle back well actually before we get off of this kind of what the services that you that Excel provides forgive such a basic question so does mechanical HVAC and plumbing is that essentially the same thing as commercial hvs HVAC and Plumbing some mechanical and HVAC are typically interchangeable um and there's residential levels of of HVAC there's residential levels of Plumbing really the distinction that we make is you know is it going to one single individual's home and doing the work or are you working with a business so our customers we focus on business to business we don't go out to someone's home in their residence and do any work there um and part part of that is that's just you know the market we've focused on and part of that is also the fact that we're Union so our rates tend to be higher um you know we have more overhead than a residential company which you know may have it may just be one person in a vehicle it may be three you know three people driving around in vehicles their overhead is extremely low their rates tend to be much lower because there's no requirement on what they have to pay like we have being in Union but uh so commercial is just anything that you if you're working with a company if you're working with the federal government uh you know we may call that commercial or institutional but those are the markets that we focus on specifically because that's where we we see that we're able to compete on price yeah okay so commercial mechanical government these are all kind of um interchangeable well government means means something specific but their mechanical commercial kind of interchangeable and to contrast with not residential not the consumer great right correct one one point I want to Circle back to as well what you did when you came in as owner and went and had a meeting with Walgreens and you know demonstrated that you were going to be frankly more active in the business and more aggressive with the business uh than the previous owner had been we saw on this podcast so often the concern is with the buyer is about okay I'm going to buy this business it's going to be very disruptive I'm going to come in on day one and the employees are all going to freak out because you know there's a new owner in town and all the change and nobody likes change and that is not um that's a real thing that is a pattern that happens over and over and over so I'm not I'm not sure that um you can change the the day one Jitters that employees feel when you come in as a new buyer but you know if you have a seller who's not aggressive about their business because they're approaching retirement whatever they're just not that growth oriented and they're a little bit resting on their laurels you know there's a strong argument that you as new Young buyer can come in and say hey I'm here to make things better I'm here to you know Infuse some new energy into this place um of course you have to be super delicate you can't criticize the seller um but and maybe you're not criticizing the seller it's just going to be a different it's just going to feel different at the business um different doesn't necessarily mean better I just think that we have as as buyers people listening to this podcast we have this notion that like oh you know me coming in as new owner is going to be created as bad news and let's just let's just like remind ourselves that we're coming in with with new Energy new ideas and that can that that's an opportunity to get people really excited about new leadership uh and and so I I think you maybe saw that from from your customers from from Walgreens I'll stop there but maybe you want to react to that James I tried to make changes gradually when I came in my message to the employees on day one we pulled everyone together um was I am purchasing this company not because I want to change it but because I saw it as a good company High performing company I don't I think that you guys are doing great things and I'm not here to change that I'm here to help that continue to grow um I made it very clear that the people that were there the processes they had in place I thought they were very you know they were very effective and clearly they had demonstrated a track record that that showed that was the case I I said the same things to the customers you know I'm here I believe that this company is doing really really good things um I don't want to change that I want to make improvements upon that but what made us successful at the past is not going to change you know we're going to give you the same level of service if not better and and employee-wise we're going to treat you you know the way you've enjoyed being treated by the previous ownership if not better I want to build on the base that you've created not destroy that it doesn't it doesn't help me it doesn't help anyone to destroy all the good things you've been doing that have made this company successful we need to just add on to those things and continue to build on that so we can grow and do something more I think that was something that really made a lot of people more comfortable seeing that you know I wasn't there to slash you know all of our overhead or all the people that we had you know those are the things that made the company what they what they had become I don't want to start from scratch I want to take what's there what's good and continue to build on that you know make improvements along the way so I think you know showing everyone that I liked what they were doing and I wanted to keep it that way and getting very involved whether it be you know just telling everyone hey if you need to talk to somebody you know if you're a first year Apprentice or the most senior person here you can you can come to me and talk to me I will try to help make this thing better same thing with the customers showing them when they're responding to emails if there's an issue encouraging them to come to me that if I see something that is not going well I want to address it I want to make it better and I want to be extremely responsive to your needs that really went that went a long way early on to show them that hey this guy's serious about keeping our relationships strong and making it even better going forward um and I think those things were critical coming in to base to both make the employees and the customers very comfortable that things were going going to at least continue to go as well as they had before if not get better and and what was your what was your sense of how people how receptive people were to that I'm sure you know you had to prove out you were making a promise and you had to prove it out and after months of proving it out people were embraced you with open arms but I just for the audience thinking about their day one speech do you feel like people left the room as it were wherever you took wherever you delivered this message however you deliver this message do you think it landed well I think so I had a lot of people you know come up afterwards and say oh you know I'm really really happy you you made us a lot more comfortable knowing that you like what's going on here and that things really aren't going to change a lot um they did appreciate that it made them a lot more comfortable and doing it in person with them I think was was really critical um you know spending time afterwards talking with them getting to know them you know on a person more personal level uh rather than just being hey here's the new guy coming and we don't know anything about him you know um just showing them hey I'm I'm a person too you know I just want to come in here and and be a team player and work with you guys and make make this thing as you know as best as it can be I think they really appreciated that awesome chips you had touched on the fact that you know part of the reason that your seller wasn't super active in the business is because he actually had to kind of a man a thin management layer of two two people right so just give us a quick picture of that so at that time it was it was just a service business I think there was only maybe about eight people we had Dave Who was the really the technical side of things um he was overseeing the service work that was being done making sure it was being done correctly making sure that the right people were on the right jobs and then you had Debbie who is the operations manager on the service side making sure that customers were taken care of that their concerns were being addressed that we were having people scheduled properly um you know they're showing up when they're supposed to show up the work that's being done is understood by the tech who's going there and then the work that was completed was understood by us and communicated back to the customer properly um so really those people had the service side of the business under control the customer relationships were very strong with them they trusted that what Dave said was an issue and needed to be addressed was addressed and was addressed properly and that when we said we were going to have people on site taking care of their needs they were going to be there and they were going to get it done and we were going to communicate back to the customer what exactly had been done and ultimately what they're paying for you know James the your criteria going back to that was you said you wanted what did you say two to three hundred thousand in sde and happily you got something with north of 300 000 Ste um did you think when you were about your criteria did you think about whether or not you wanted any kind of management layer uh because that's that's a happy a happy surprise to find that there are actually you know there is some level of management there because otherwise you get in there and you are doing I mean it all falls on you so did you think about that in advance or were you just kind of pleased to find it once you found this business so that was that was a consideration definitely um I was looking for an owner who had either removed himself entirely or had stepped back and had people in place to make sure that the business was running properly especially coming into a business where I I didn't really have experience in mechanical I mean I had project managed some plant expansions and things like that but I wasn't familiar with how to do the work per se right or how to run a service a mechanical and plumbing service business so having those people in place that knew the technical side of the business and had those customer relationships again that weren't directly tied to the owner and that the owner was the only one that had these relationships something that I looked for early on I didn't want to walk into something where everyone was going to come to me and ask me how to do their job technically in the field because I certainly would not have noticed how to guide them in that way and I did not want a business where the owner was the one talking to the customer every single day that when that person was gone that customer was going to feel very uncomfortable that they no longer had someone to go to with their needs and with their technical questions so knowing that those people were in place early on was something that really drew me to this business and then as I progressed through the due diligence really understanding what those people did and just how good it what they were doing they were really you know added to my level of comfort one of the things that we talk about a lot on this podcast is size of business uh to to buy and if there is a if there is a right answer to that at best practice and and and many will strenuously argue that you should buy as big as possible and not by quote unquote small not by small and 300 000 or two to three hundred thousand sde would be considered small um you again you were you were just you were over 300 but you also had kind of a management layer so so one of the things to consider is not strictly look at the sde number but look at the sde number and then and then say are there managers there because a three hundred thousand dollar sde business where there's no managers and everything is on the owner is very different than a three hundred thousand dollar sde business where there are actually two managers in place um which is which was your case um did you think about uh we already know that you wanted a hundred thousand dollar salary for yourself and the business needed to afford that but did you think um any any other thoughts around the size of business I mean would you have sprung if you had found it for a million dollar sde business for example I would have but I was really looking for something that I could grow um and something that it looked like the overhead structure was there the administrative structure was there to support growth at least in the short term so some you know one of my goals was always to find something a little bit smaller that could grow into something bigger and ultimately add more value that way um I think you know if you buy a big business yes you're going to have that nice Ste value coming in you're also going to pay a higher price and is the growth really possible there or has that company already grown into whatever their Niche is and you know they're already at the top end I was looking for something that I could expand the size and and ultimately the profit of the business uh to to gain more value uh throughout the years as opposed to just maintaining that you know million dollar sde I wanted to grow up to something you know along those lines or greater yeah yeah well that that's great James and that that is an argument many have said about buying on the smaller side there's probably a lot more uh a room to grow there a lot a lot higher ceiling there um and you know looking strictly at numbers uh with if you can indeed grow it and you get in at a much lower entry price than in terms of your own kind of return on on cash invested can look um that much more interesting uh which is certainly the case in Europe certainly the case here James actually um remind tell folks how much cash you have in the business in total um so far I've probably put in about 300 350 000. and how does that break down so it was about a hundred thousand for the initial uh when I purchased the business that's how much I actually put in and I use the SBA loan for the rest and then since then I've put more I've put about 250 and as we just continued to grow and so you've come out of pocket to Fuel Fund growth at times correct yeah early on uh I mean when we went from you know under three two four to eight you know 13 or 14 last year and now up to 25 I've funded some of that myself which was fine because I've really hadn't put much in up to that point everything had been through the SBA and through uh the line of credit that we secured with the SBA um and I had put you know relatively small amount in up front yeah but I am still I am curious why come out of pocket for those additional infusions and not you know if the business is I mean and not secure financing elsewhere from your bank for example a larger line of credit a new line of credit so we are doing that now um I think there's challenges in buying a business at first um Banks want to see a certain number of years of you managing the business of you being self-employed before they're really willing to entertain much in the way of lines of credit or other funding um I probably would have looked to get a bigger line of credit from the SBA initially had I known that we were going to be able to grow like we have we've certainly gone above my expectations when we broke into the construction market and things have really taken off there um so I didn't really want to bring additional debt in per se and you know there were some challenges up front just talking to banks on hey you know I've owned this business for a year and a half let's can we can we talk about a line of credit they're like ah let's you know let's give it another year or so let's see the financials um and then with the ups and downs of covid that we ran into not long after buying but this has a lot of banks were less willing I think to to put money out there um I think they wanted to see how how things were going to play out going through covet a lot as well yeah for sure yeah another recent guest talked about uh exactly that that it was hard for him to get a line of credit after he took over the business and the growth opportunities were uh were more than he anticipated and so he went to Banks looking for uh credit to to enjoy that growth and and they said well you've you're he'd done an asset deal so the entity was too young and maybe also they were just judging his kind of his own tenures is to short um to give them comfort so a reminder that uh getting getting access to credit um as a new buyer recently in the business can be difficult James I wanna I wanna get to all the growth that you've done but I still have just a couple questions that I think people will be interested in before we do the you I one big thing I heard you say that I needed to Circle back on was not an asset deal this was not an asset purchase that's correct yeah it was an equity purchase and mainly that was to ensure that the contracts that were in place you know nothing happened there we didn't want to have to change legal entities or do anything like that that may rock the boat on some of those larger contracts uh and so obviously the calculation there was that the risk of an equity deal meaning that there could be some liability that surfaces that bites you in the butt um the the risk of that was less than the risk of losing these very important customers that was my opinion at the time yeah uh I think you know had we lost those large contracts you know right out of the gate because of something like that the business really wouldn't have been worth anything or you know very very little less certainly less than what I ended up paying for it uh where doing the equity deal maintaining The Entity track record the um you know this the same entity that those contracts were already in place with they didn't need to reopen anything that could potentially cause us to lose those contracts and it for me that was something knowing that some of those contracts were such a large portion of the revenue that was a risk that I I didn't really feel like I could take um if they went away I wasn't confident that we would be able to instantly go back out and replace that and has it been fine to have done an equity deal or has there been anything that came back to bite you um there really hasn't been anything that's been an issue with that the company I mean we did I did our my research on any filings and certainly that was part of all the disclosure schedules that we had in the contract um I I think having a having a good lawyer on your side when you're structuring the contract when you're structuring the deal is really important so that way you're covered in any instances where there is something that's not disclosed um but we we had not run into any issues with that two personal questions for you James first so two kids now three I I don't ask this question I shouldn't more what was you the conversation like with your partner your wife about what this this new life this new professional life of yours was going to look like because I imagine that you were anticipating spending many many hours in the business during the transition that you're maybe going to be home less you'll tell you'll correct me if I'm wrong and so you know she's signing up for something here too uh maybe you know maybe less James at home so just talk us through that because that's a that's a huge piece of this I need to add I need to be asking this more um so she she was pretty understanding I think a lot of that came from the fact that I was already working about as many hours as a human cat um in my in my previous roles so from from that aspect hours is that that a human can how many is that uh over a hundred a week for sure I mean oh you're kidding you were worth running 100 hours a week yeah I would say not not every week but often so I was running I had employees in the U.S in Europe and in Asia so you know I would work I'd go to work very early I would go to leave and I'd start getting phone calls from Europe I would get home and you know I'm trying to go to sleep at night or have family time and I'm getting phone calls from Asia or I'm on conference calls at 11 o'clock at night 12 o'clock at night four o'clock in the morning um so I think if anything my work life balance has stayed about the same maybe it's actually improved slightly I don't know that that will be the case for everyone I certainly work a lot of hours now um and and very much so in the beginning um but for us that wasn't anything new um she was supportive of you know it was something I wanted to do and and she knew that I was making a compromise moving back for her personally um so I think you know there were some compromise there it was it was a little bit of give and take um it's been you know there's been stressful times it's very different when you it's when the business and your personal is very much tied together and the success of you personally is very much tied to the success of the business where if you're in a you're working for somebody else that's not necessarily the case right you can you know if things go poorly you go somewhere else and get another job if things go poorly in your business you know that that could mean a lot of very bad things for for yourself personal personally um I think that's been probably the biggest you know the biggest thing to get accustomed to and and for her to get accustomed to that hey you know this business is us right um although it's a separate entity our assets are tied to this business our uh our financial health is tied to this business uh and and everyone else can leave but I can right I'm I'm I am this business we are this business um so I think having her start to understand that a little bit more then she understands why you know I may have to put in some extra hours here or there to make sure things are are going well um or that we're you know we're overseeing things properly how many hours a week would you say you're working on average now uh probably 60 or so okay and you've already started to answer the next question I wanted to ask you maybe so I don't know if there's more to say you had a successful corporate run in corporate I've got a lot of responsibility there resulting in hundred hour weeks thank you for your service um how did it feel to become an entrepreneur you had said you had you kind of had the bug for a long time and now and here you are as an entrepreneur how does it feel different I think it's uh it's very rewarding especially so you know in the day-to-day it's challenging very very challenging there's a lot to think about um like I said before you know there are in a corporation there's many functions um and each of those functions are done by specific teams in a small business there's one team or maybe one person doing many of those functions you know from HR to Staffing to anything right financials um you're really touching everything and it can become very overwhelming at times uh so it's it's definitely the most challenging thing I've ever done but I would say it's definitely the most rewarding as well um when I have conversations with new customers or you know employees or just think back over what has been accomplished over the last four years it's incredibly rewarding to see what you know what we've been able to do here going from a very small core team to building you know a much larger team a much larger business and I I can honestly say I've learned more in four years than probably all of the years before that very challenging but very rewarding and extremely educational uh on the point about education and personal growth what muscle would you say you've built during these four years and what muscle that you had before coming out of your corporate years has atrophied looking at it from a financial Acumen standpoint I would say cash flow management has been something that I never really had to focus on or deal with in the large corporations when your company is essentially printing money no one thinks about the balance sheet no one thinks about you know collection that is something that in a small business is absolutely essential it's the lifeblood of your company and so I think I've really learned a lot about that I've learned a lot about leadership and and relationships with people in this role much more than I had in the past if anything is atrophied um I guess it would just be you know working in a in a corporate setting where you're working across the Matrix organization and in interacting with different functions that don't necessarily uh have have the big picture in sight um and and some of the politics that go along with the corporation you know that is much much more diminished in a in a small business where everyone is kind of looking at the same thing working towards the same goals there's much less of that that you deal with and so I guess if anything it would be you know just dealing with a corporate culture setting and uh and and some of the politics that go along with that well that's a that's a muscle you were probably happy to see atrophy I I don't see anybody ever celebrating their ability to navigate bureaucratic politics yes I I agree 100 percent it is a real skill though in the corporate world yeah yeah yeah for sure uh all right James well let's we we're taking our time here but we we can't leave without giving the audience what they came for which is these these eye-popping growth numbers so let's get into that uh yeah we're not going to be able to go through all four years but give us a sense of you come into the business and what's the plan what's the growth plan so coming into the business um the growth plan was to grow the service business um acquire new customers in that space and then ultimately work towards also developing a Construction Division uh I think you had mentioned earlier a common theme in this industry is opening construction divisions so that you can also then grow your service business you can continue on with those contracts after you do the initial install and that was really the thought process in in going that direction um some of the things that happened to us not necessarily what we did ourselves Force us to kind of pivot and and change a little bit so when covet happened we were just starting to open our Construction Division and really starting to develop some capabilities in teams for the Construction Division but when covet happened it almost shut down our service division entirely so you know those customers that we talked about were no longer letting people in their sites they were no longer doing maintenance on their equipment because their sites were essentially shut down and JCPenney actually went bankrupt during covet as well so so it really forced us to Pivot even harder into construction those those types of projects were still going on unfortunately we had made that pivot at a very good time and picked up our first large construction project at the National Institute of Health um and so we started pivoting into construction uh did a couple projects early on that went very well we established ourselves as as a good quality contractor started building those relationships with some of the GCS that were local and also creating more of a buzz about ourselves from a word of mouth standpoint that we were doing things well that we were you know proactive and identifying issues with design and helping to solve those issues on the projects that we were doing um and that we were you know we took the same level of customer service and responsiveness from our service business and transition that into our construction business and I think that really set us apart and and allowed us to continue to grow develop things really strong relationships with GCS where we're getting repeat business almost exclusive business with some of those contractors now um and that's that's really you know I always call it it's a snowball right a snowball rolling down a hill continues to build and build and build that's really what's happened here you know we did the right things at first showing that we know what we're doing and that we're responsive and that we do good work and that really gets out there other people see that other people want to be part of that so both from you know employee Recruitment and Retention and also customer acquisition just doing those right things has allowed us to continue building and building as we go and does that I would imagine that mechanical or commercial HVAC and plumbing is is competitive that there are a lot of providers out there and and I'm hearing you say well we we really just provided great service and and let Word of Mouth do the rest so in in this what I assume is a very competitive market there aren't other folks out there providing great service I mean I would just think that in any in any competitive market the service because it's so competitive service quality is pretty high because that's that's one way that it you know competitors differentiate differentiate themselves so it's it's very competitive um I think what we found out on our first project and we were doing a project that was almost identical to a project that was going on at the same time and one of the largest mechanical contractors in the area was doing that project we did the other ones um we demonstrated a level of knowledge and a level of caring about what the customer was getting that was significantly higher than what they did and we identified flaws in the design process for the systems and gave them Solutions on how we could change the design to allow the system to actually function the way it was supposed to function where they installed it exactly for the plans never brought up any concerns you know in their system that they started six months before us ended up commissioning after ours because we took that extra time and that extra care to show you know we're not just here to install what you tell us to we're here to actually help you get the result you're looking for we want to understand the design intent and make sure that the system that we put in actually functions the way it's supposed to um and I think we came in with the assumption that these large companies were doing all the things you said the high quality work the customer care where I think what we found out is that in reality a lot of them have grown very comfortable and maybe too large to the fact to the point where they're not really focused on every job and focused on what the results are going to be um and so they're they're not taking that extra step to identify things that are an issue and to work with the customer to actually help them get what they're you know what they're trying to achieve where we showed that we are willing to do that and and ultimately you know that that not only gives a better result but it creates the relationships and the trust that I think a lot of people do not have for some other types of businesses that are out there um you know a lot of people almost assume it seems like that they're going to be taken advantage of by a contractor whether that be you know someone building your house you know or a Commercial contractor where we try very very hard to do the right thing to build the long-term relationships we're not focused on how are we going to make a dollar today we're focused on how are we going to have a customer for the next 10 years um and I really think that's set us apart and our employees appreciate that approach and appreciate that they're going out to do good work and give the customer something that's going to make them happy and certainly the customers appreciate that as well just going back to this this theme that we've talked on starting the construction side of the business it sounds like did I hear you say that you started it with the idea that that would be an in to develop service relationships um or versus did you think that the construction side of your business just the con purely construction work for its own sake would become uh you know a growth engine or or you know the basically the the core of the the core of the business which is where I think it is today so initially it was to find another Outlet to grow our service business um initially I thought like you had said the construction Market would be overly competitive you know we hadn't really proven ourselves we didn't even know what our capabilities were necessarily we knew we had very knowledgeable people good people and we had the union support as well to acquire additional additional good people um but I didn't necessarily see that as something that we would be able to grow significantly I saw it as more hey we would be able to get into these buildings and then add on service contracts later um I would say it's almost worked in the the opposite direction this the construction business has grown rapidly um we have many GCS now that almost demand that we're bidding their work because they want us to have it um service business has not grown like I would have liked it to that is the one thing that I and really that has mainly been because the construction business has grown so much that a lot of my focus and attention has gone towards that um and this year I actually want to try to pull myself out of the construction World a little bit more you know we have good project managers in place now we have good estimating teams in place um my goal is to kind of step back away from that now that we've established what we need in the office to run that business well and and kind of go back to focusing on the service business and working to grow that again um but yeah that that wasn't necessarily what we were expecting to happen but again you know we found that if you do the right things that snowball starts rolling and it just keeps building yeah well I I will say I am reminded of something that people sometimes say about buying Blue Collar businesses but usually consumer-facing blue-collar businesses um which is not your business but they'll say you know so many of these businesses that tend you know Home Services businesses for the consumer just don't call you back Miss appointments they're just not providing a high level of quality service to the End customer to the consumer and so if you could just do that you know you'll you'll be you'll have more business than you know what to do with and and now there are detractors to that and you know maybe it's not so simple so but but you do see this as something that is said and it sounds like in in your case that was the case you deliver better service and it has worked like a charm absolutely that's really been the main thing that set us apart um and the main thing that has allowed us to to grow like we have we're not doing anything overly different right everyone's putting in the same kind of systems and doing the same kind of work but it's more that customer you know that customer care right yeah that's really set us apart and to me it's it's table Stakes you have to do those things to have a good business but yeah that's how I see it exactly it's like why is this such a differentiator but go ahead yeah I I hadn't anticipated that being the case but it really has been um yeah and it's it's been a pleasant surprise for us because we're like oh this this is just the way we think we should get fixed yeah um it's just I think that all these companies probably start out that way the key is as you grow to get the right people in place and maintain the right policies um and and the right decision makers to make sure that you keep doing that and you don't just you know become another company that has so much work now that all they're doing is focusing on getting it done as fast as possible without necessarily considering what the the customer you know outcome is okay well that raises the question you have many more employees I'm going to ask you exactly how many in a second you have many more employees than you did four years ago you've grown a ton uh you're no longer tiny tiny do you see a future where it's going to be hard to maintain the level of quality like are you starting to see oh this is why it's hard this is why the big guys provide bad service I don't think we've gotten there yet um we're very selective we spent probably a year and a half looking for a project manager because we want to make sure that if you have the right people in place to make sure that we do continue that same level of quality I think that you know being part of the unions does help with that as well we know we're getting a trained labor force and a highly experienced labor force typically as well um and I think that one of the things that's worked well for us you know not only treating our customers well but treating our employees well our best way of attracting talent and and getting good talent to ensure we maintain that level of quality is building good core teams that we keep and they will bring us the people that they know they've all worked for the biggest and best companies around um and they're able to say hey Excel is a really great place to work we really like the things that are happening here you should come work here um so you know being able to have those good people that will then also bring good quality people to us I think has been really key and I think we should be able to continue doing that for quite a while still we went from about eight people to around 80 by the end of the year we'll probably be you know somewhere around 90. um and it's it's really been the key of having good relationships with the union and also having good relationships with our own people that are willing to bring the good people that they know that they worked with the you know the All-Stars that are out there to our company because they feel comfortable that we're going to take care of those people you know at as good as they have been in the past or or better eight to eighty people 90 by the end of the year revenues three million to your your You're Expecting 25 million by the end of the year yeah and we have a backlog of about 40 million right now so so what is that what does that mean for 2024 if I if I pushed you to make a prediction uh we'll be over 30. uh I don't want to grow uh I'm trying to hold that gross a little bit I would like to spend a year you know developing our processes and procedures a little bit better building up a nice buffer of cash flow um you know growing that fast is great but it also has its challenges so my goal is for next year to be you know 20 bigger 25 not a hundred or two hundred percent um like we've seen in the past uh and then you know continue on that trajectory from there uh We've we started our electrical division last year that will do close to 5 million this year um I would like to probably keep that around the same maybe grow a little bit but that part of our business can grow exponentially um we have a really really good leadership team there um and all of the customers that like us on the mechanical side are now desperately trying to give us their electrical work as well um so that that would be a strong growth engine in the future but I think it's something that we want to do the same thing we did on the mechanical side develop the processes the people the tools make sure we have everything in place before we go crawling too fast and give us a breakdown of the 25 million James so you just said 5 million from from electrical which is a totally new business line break it down for us so it'll be about 5 million from electrical um about 16 from mechanical construction and then around four from the service side two more questions for you James uh one I've heard you mention working with the unions now now I know very little about this um but certainly in in Blue Collar environments obviously unions are a thing can you give us two or three minutes on you know kind of a primer on on what what people considering buying a blue collar business should think about if they encounter a listing that is a union shop sure and I think it's different in different parts of the country um the strength of the unions in the Northeast are much different than the further south you go in this area the union is is not as strong as it is in Philadelphia or New York um so I think both us and non-union contractors um don't don't have to deal with quite as much on them pushing uh regulations and things like that to us it's more a collaborative approach here um I've really viewed them as a as a business partner so they will you know we try to create good relationships with them they're essentially trying to make sure that we're giving our employees a certain standard of wage safety um and you know they're not being worked to the Bone for for nothing right um for for us that's the way I think that our employees should be treated anyway so I don't really find myself running into any regulations that they have that I disagree with um it does maybe limit our pool of where we would compete slightly more because we are paying our people a higher wage although I don't think it's wildly out of the market but we're not going to compete in residential we're not going to compete in small um Construction where it's uh you know a single a single store a small you know small store a Subway or something like that right we're not going to be competitive there but especially in this area in the federal Market a lot of the work is wage scale work anyway so they're even the non-union contractors have to pay their people relatively the same wage that we have to pay and relatively the same benefits that we have to pay so it doesn't really affect us there our our target market is mostly the federal and Commercial work anyway um so for us I think it's more of a benefit than anything uh we know we're going to have a labor pool we're going to have qualified people so I don't need to put an ad out and hope I get someone good that applies for the ad I will make a phone call to the union and say hey I need this type of person I need a welder for a job and either I want to keep them forever or and they want to keep them for a month or two and they will go out and actively help me find that person whether they are working somewhere and they're unhappy at that place or whether they are unemployed currently it allows us to get a job and staff the job much quicker than we would if we had to go out to the street and just you know put out an ad for Help Wanted or something like that they also help us identify opportunities that may work for us you know they'll they'll find jobs that are out there that we may not even know about and send them to us and say hey this is something that we would like you guys to look at or hey this is something that seems like it's up your alley let us know how we can help you know they they may help with funds for for bidding to help us be more competitive uh or you know they may just be able to help us make sure that we have the right Staffing if we win the job so it to me it's more of a partnership it's it's almost like a a temp agency that has a lot more you know benefits to it as well you know they they want to help us right yeah yeah well one thing I don't understand and by the way now that I now that I've heard you explain how that's a great source of talent I realize I failed to ask you like how you grew from 8 to 80 90 aside from generating sales you know which is the the demand side but serving it with your own Supply because all we hear about is how difficult it is uh the hiring people how difficult it is and particularly Blue Collar particularly skilled Blue Collar like HVAC technicians and plumbers so you've answered it but I would still say with the Union like okay so you have this go-to resource that has access to lots of um lots of technicians but I would still say in a constrained labor-constrained environment like the unions probably Fielding lots of calls from from the James bloomses of the world saying hey I need a guy I need five guys so I would still think that you even though the union is there as like a phone call away that you're still going to be bumping up against you know Supply demand dynamics that are just affecting the entire world of like blue-collar labor no you can at times it really depends on what kind of work is going on when there's large projects where hundreds of people are going to work you may run into that I think for us anymore it's a lot less of us calling them and saying hey we need somebody who's on the who's on the bench you know send us whoever you have and more us going to our own people internally and saying hey we need to hire x amount of people who do you know that's good and then they will go and make those phone calls at a more personal level and those people may be working somewhere else but because our people are able to tell them hey these guys you know they're doing the right things they're treating us well the company's growing it's it's exciting over here we've been able to get people without really having to go to the union the other good thing about the union is all these guys know each other they've all worked together before they know who's who's awesome who's okay and who's not great right yeah and so we go to our people whether it be our foreman on on certain jobs or whether it be one of our superintendents who've worked for the union for 30 years they know everybody who's out there and they're able to go and say okay hey who's slow or you know this company they'll know before us what our competitors are doing okay this competitor is slow on work right now they have people that are are not really being utilized let's make a phone call to them and see if we can get some of those people so there's a lot of Market intelligence that you get from being part of that group as well and having people that really they all know each other well well I I need to ask this more when people are working in environments where there's Union um because yeah you've just made a strong a strong case for it um and you know I think the conventional story is that the business owners and and and um in unions kind of work at Cross purposes so I wasn't expecting uh everything you just said uh and again I can only speak to my experience in Maryland Virginia and DC and I think the unions in some of the northeastern areas like New York and Philadelphia are a little bit different I think they are more Pro worker and less Pro company um but here you know the unions in this area maybe have 10 of the market share their goal is to grow that market share just like our goal is to grow our market share and if they help us grow that helps them right so as long as as long as you're willing to pay people what I think is a fair wage um and treat them the way you would expect to treat any employee I don't see a downside to it really thank you for that James all right let's wrap up with the how you got on my radar was because I I heard about you bringing on a a partner a Capital Partner to for the next stage of growth um can you talk at all about that and and who you worked with uh who you worked with to make that happen so I worked with Dan Daniels uh reached out to him Dan Daniels is who uh he was my business broker that I worked with um oh to acquire the business he he no no sorry no no no he about about a year ago I saw the kind of the trajectory of this company saw the demand from our customers that we have and at this point I I view growth not as something that we're pursuing but something that's inevitable we are once you are in with certain customers they expect you to bid all of their work and they're going to give you as much of it as they possibly can and that list is continuing to grow for us every time we do a job I don't think we've ever had a job where that customer isn't coming back and saying we want you to do a majority if not all of the work that we have let's figure out how we can make that happen and you can only keep those relationships that way if you continue to support them and bid their work and do their work so I see this growth you know as inevitable and something that we need to be able to support um so with with the increased growth with the SAS growth it's not something that I felt that I could handle all of my own I wanted to bring in some additional resources and I want to see this company grow into what I know it can become so I I went looking for a Capital Partner I reached out to Dan because he has a great Network he was able to put me in touch with many many qualified people that you know could really help us continue to move in the way we wanted to move and continue to grow like we have um ended up finding a really good partner in the area he's involved in many businesses and has a lot of really strong contacts in Washington DC and Virginia um and in January he came on as a partner um so we're really we're still kind of in the early phases of really building that partnership and continuing to grow but our our Target is to take this business to at least 100 million over the next five years um which I I think is very very much achievable if we have the right resources in place um so he's he's really contributing some of those financial resources some relationships that he has both on the banking side and the customer side um he's you know he has a very strong Network in Washington DC and is able to really give us access to some of the things that we really didn't have before and some relationships that we did not have before um so it's it's definitely starting to make some make some improvements here you know I talked a little bit about the struggles for funding and lines of credit and things like that he's been able to really help us overcome those and and weigh out achieve much more in the way of those things than I think we would have you know if we're just trying to do it uh organically if you will um so I think that's really been a really been a good thing a good change here um I'm still managing Denver and um basically I'm the one continuing to run the business and run where the strategy is going you know we basically meet monthly and just kind of talk about where do we want things to go where are they at now um and what is needed to get there which I think not only helps the business but also helps me personally with you know having having someone else with skin in the game right before I talked a little bit about this the stress of being the only one um responsible and tied to the success of the company it's nice to have someone else to share some of that with um and at least be able to talk to you know about about what's going on and what we need to get to the next level uh this is a business that requires a lot of a lot of investment a lot of assets we've built our own Fab shop spent probably two hundred thousand dollars on creating a Fab shop that can allow us to break into new levels of work do work more efficiently and more profitably but with that there's a lot of upfront capital investment that's required and that's not something that I wanted to continue to have to fund all by myself right James can you name this gentleman uh his name's Steve Khalifa Steve Khalifa and so he's effectively like a private Equity partner here but it sounds like it's he's a a one-man band sort of thing so he um he owns two other mechanical Contracting companies in Colorado and then also owned one in Washington DC as well we've somewhat absorbed that company that was here in Washington DC but he's involved in in a number of other businesses I think I don't know probably like 40 some businesses entirely whether he's sole owner or a partner and to close out James thank you for that by the way um to close out you bought this business as we talked about for uh seven what was it 785 765 785 right right yeah it was two two and a half X so so you've grown the business eight times so you're looking at let's call it you know you grew it from 3 million to call us call it 24 million for easy math so 8x so you're certainly going to enjoy some some um multiple expansion there could you to take a guess at what the valuation of your business is at 24 million dollars in Revenue uh so we had a SBA appraisal done a year ago and it was at 3.6 million um that was when we were at about 12 million in Revenue uh so we've we've doubled that so I would say it's it's probably somewhere around four or five nine now oh why wouldn't why wouldn't the valuation also have doubled to like seven million it may I'm just being conservative James is there anything that I didn't ask you that we that you think the audience should hear about the experience of buying a commercial HVAC and plumbing business and and growing it like crazy over four years I I think we touched on just about everything um like I said it's been it's been exciting it hasn't happened exactly the way we thought um you know coming in I wasn't expecting to lose one of our biggest customers which happened early on again to no fault of our own um I wasn't expecting covet I wasn't expecting supply chain issues but um it's a good it's a good industry and even though you know cobit happened things like construction they go on right our target market of the federal government we're seeing economic slowdowns in other sectors but ours has remained pretty much the same we're not seeing a Slowdown in in work being bid or awarded um so I think you know overall it's a great industry to be in um there's certainly challenges like every business and when when you have global issues like that it can become interesting in any business but uh no we're still here and continuing to grow through throughout all of that um so I think you know finding the right people finding the right customers in the right market and and doing the right things as far as the work you perform and how you take care of your customers is key I think that's the case in any business but it's certainly been the reason we've been successful here great James and kind of as an aside you still uh check in on Biz Buy sell uh and now kind of because you're looking for a business for your wife to buy do I do I have that right yeah I mean it's a it's a hobby of mine anyway right I love I still have the m a uh bug I still love looking at different businesses and uh yeah maybe one day we'll find something for my wife she's or getting to the point where the kids are you know going to be in school here and then in the next couple years she'll have some time on her hands and I I honestly even though she's never done it I would wager that she's a better business person than I so I think you know with a little support from me I think she would do great running a business and uh definitely be looking for something for her in the future cool well what an endorsement for buying a business uh Your Own Story plus the fact that you're trying to rope your your wife into this crazy adventure James Bloom how should people get in touch with you if they if they want to have questions you're a hard guy to pin down we worked on getting this interview on the calendar for a while I'm so glad I did but you are very busy um how do you prefer if people have questions that they that they reach out to you I would say email is probably the best that jaybloom737 gmail.com I'd be happy I love to talk about any businesses I love to look at Acquisitions uh and love to help other people that are potentially going down the same path so I've even done uh some some business sales myself or some family members so I just I love I love it it's I love analyzing businesses and I don't know it's it's something I enjoy cool thanks for so much for your time and for coming on and sharing with us James congratulations thank you 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