How to Hire a GM and Buy Business #2 | Shane Ehrsam & Brandon Adams Interviews

Shane arson welcome back to acquiring minds thank you for having me very happy to be here Shane we did our first interview last October aired in November 2022. you acquired a trailer dealership business in north Texas and I wanted to have you back on for a quick update to hear how things are going 10 months later first things first Shane remind us a bit about North Texas trailers the business you bought yeah thank you will uh North Texas trailers it's in the name we are a three location trailer dealership in the Greater Dallas Fort Worth area we do everything that you can expect out of a normal car dealership we sell new trailers uh sell some used trailers as well and then we do service maintenance and repairs we also have we sell parts over the counter and we do sell rentals as well great and how old was the business and how big was it uh when you bought it the business was founded with one location in 2007 expanded to the two other locations and a few years after that so we've been around for 16 years when I bought the business I think we had 17 employees we now have 22. um and the business had uh experienced some tremendous growth as a result of some coveted Tailwinds uh so in 2021 the business did nine and a half million in Revenue fantastic well we're gonna hear um what has become of those Tailwinds are they still there or what we'll get to that remind us uh just a little bit about the the size of the business in in terms of any kind of um well both the deal terms and the size of the business and how those two fit together and then we'll we'll get into the now yeah I I had an SBA loan um a highly highly leverage I was uh able to negotiate a standby seller note with uh with the sellers as well as a regular seller now um and uh so brought minimal Capital to to purchase um due to the structure uh purchase price was four million dollars um and um ebitda in 2021 was around 1.7 million and as I recall that 1.7 million in 2021 that was that was the the covid bump it was it was closer to 900 in previous years yeah uh 18 through 20 average around 900 000. well I mean 1.7 or 900 000 great uh sde ebitda numbers to get as a self-funded Searcher and one of the big themes that we talked about in our first conversation Shane was uh was how you were able to get your hands on such a fantastic business after a relatively short search it was a six-month search and you were extremely systematic about things and so um your this that interview will be linked of course and so people should definitely go back and listen to that uh because you really had a dialed in process and and were rewarded handsomely for that so Shane bringing us up to August 2023 open-ended question how's it going well it's been awesome it's been fantastic um this has been by far the most professionally rewarding Year of My Life um Bar None um I don't want to be cliche but like a lot of successful Searchers say we wish we'd all done this sooner but you know life happens for a reason um as I mentioned in my first podcast I was laid off that was what set me down this journey um had that not happened you know I don't know if I ever would have taken the leap and Ben had the runway to do so so you know um it all happens for a reason but that being said it's been a great uh first year in business um financially we're doing well um but personally and just professionally I've really really enjoyed being the leader of my own business getting to work with such great people impact the lives of people in a much different way than I did in in the corporate world um so it's just it's been awesome well when I'm when I hear you what I heard you just say about what's been so great about it a lot of that is kind of the people related stuff you like being a leader you like the the relationships that you've established impact is a word that you'll hear a lot of my guests say you just used it how you're able to impact their lives can you um can you follow that up with any specific examples how you've been able to impact a life or an example of of of leadership your role as leader that was particularly gratifying and it just adds a little bit of color to to the broad Strokes yeah I mean I have a lot of different examples to pull from um you know it's a very different life managing technicians parts and service advisors trailer sales people I mean it is a very very blue collar business um kind of rough around the edges to be completely honest and that's a theme within the industry um I'm excited to see some of that changing and I've had a lot of people reach out because of your podcast uh people that are searching and come across other trailer dealerships and I welcome it I think it's awesome I love to see people uh taking a look at this space it can be great um it can be pretty ugly though too but getting back to your your point you know um within the first four months I added a 401k company match which we had never had before I added health insurance which we had never had before I have basically quintupled our bonus opportunity um for this year I've completely changed our compensation and bonus structure to be even though all of our employees were had some sort of incentive compensation incentive I've realigned that so that it's just easier to follow it's more focused people are achieving and making more money than they did before but it's even more personal to that you know I have I have a family that works for me where there's four different individuals cousins nephews brothers sisters that work within the business in two different locations and you know and just being able to provide for that family um and and just stories like that um has been awesome you know I would say that the one thing that I I contrast it with from my corporate life is one of the My Favorite Things in the corporate business was you know getting a young hungry person out of uh college or or even at a business school and kind of mentoring them and and seeing them develop and you know aligning their white collar you know High compensation promotion interest with my own um interest as their leader in helping develop them and as a small business owner I don't really have that anymore right it's a very flat organization and until we can grow to multiple locations there's really no little management so it's a very different type of mentoring and development than it is in such a big corporate organization um so I miss a little bit of that but I think I'm having an impact in a very different way which is which is also very very gratifying and probably more real if that makes sense that's fascinating and Shane some of the stuff that you just mentioned that you did um Health you introduce health insurance so so before you there was no health insurance and now there's health insurance what a what an enormous additional benefit yeah uh and costly um but I'm I'm you know it's I think it's really important and um it's actually very rare within the trailer industry so it wasn't you know it wasn't as if the the previous owners were doing anything kind of out of the ordinary um but I felt like you know health insurance is really important and a 401k is really important and honestly I mean some of what I've been doing is just kind of financial education for my employees and trying to get them to understand you know what that what long-term impact that can have um and so you know a lot of this has been just education trying to introduce people to these these Concepts that are kind of somewhat foreign to them um and explain the benefits and you know we've had um majority of the folks are participating in the in the 401K but not everyone's participating in the health insurance and um you know hopefully as we go into our open enrollment at the end of the year that'll that'll increase a little bit and we'll get more people on the program but it is a lot of kind of education because it's something that's they've never been exposed to before let's talk numbers a minute if you can so as you said the years prior to covid the business was doing um for a few years there I think multiple years about 900 000 and Ste have this fantastic Tailwind that got you to 1.7 uh of sde in 2021 where where is sde looking at looking now understanding that you've added a lot of costs in in the form of these benefits yeah Revenue um through July is up about 10 and a half percent which I think is fantastic um you know it's not the the crazy 200 300 growth uh that some of your guests share um but it was a bigger business um with multiple locations and and um yeah so I'm very happy with that gross profits up over 12 and a half percent and then you know obviously my p o looks a lot different than the previous owners with I'm paying myself a salary health insurance depreciation interest on the SBA loan all kinds of stuff but when I back all that out and I really try to get to an sde number um we're actually exceeding 2021 which was their best year we're on track too so we'll we'll pass 10 million in Revenue this year um and SD will will surpass what 20 21 did as well man that's fantastic so so this covid bump was not just a bump it was Ace it appears to be knock on wood kind of a secular change you got to this new level of Revenue and it appears to be sustaining well the the biggest difference is that our true trailer sales and the profit we could make on those during covet was much higher than what they are today prices have have normalized inventory is now available within the industry um all the dealers in DFW are are fully stocked on inventory so in 2021 nobody had any inventory you could charge whatever you wanted and people were going to buy it that's not the case today where we've made up the differences in our parts and service and which is a already comes with a higher profit margin as it is and really tried developing that increasing our inventory levels um you know my job as leader I feel like is to identify obstacles and problems that are in the business or things that don't that don't allow my employees to be as successful as they possibly could be in order to remove those roadblocks whether that's through money whether that's through an organizational change whether that's through software um and so you know quite literally we're just ordering a lot more parts inventory than we ever did before and we're we're buying in bulk and we're getting bulk discounts because of that and that's allowing us to to increase our margins on the parts and service side and and maintain higher sales revenue um and and also that's some parts availability that covet impacted as well so just a reinvestment on that side and and then as we come into this kind of normalized selling Market it's it's reacting to that and figuring out okay well things have normalized we can't expect things to continue in this coveted craziness which is a theme within the industry in fact in industry-wide in Texas the number of trailers sold is about 20 down from prior year but we're still we're still up over prior year and up over 2021 um and I think I attribute a lot of that to just to some of the incentives I put in place some of the managements that I put in place um the way that I am you know ferociously kind of following up with my sales people about their follow-up on leads and you know just trying to get a kind of a different mindset we've also spent a lot of time um developing a new sales process um so I think a lot of those things are are impacting that where the industry is is still kind of reeling a little bit um so I'm excited to see you know how that plays out and and if we can continue that momentum despite you know what most people are projecting is a downturn in the industry or a further downturn um so we'll see but I'm optimistic that sounds great Shane good for you for figuring out ways to to strengthen the business even though the industry itself is there's seeing softening demand I wonder why there is so much Searcher demand people picking up the phone and calling you um about opportunities in this industry given the slackening demand yeah and and a lot of them have that question and kind of ask my thoughts on it and you know I can only sell them from my experience which is revenue is up for us um so it's possible you know um and I don't know that I have some magic or Secret Sauce um I think it's just a it's about how you approach the business it's how you support and arm your employees for Success um and if you're willing to do that and invest in that I think there's still you know there's still a lot of opportunity out there let's uh Linger on the the business itself here for a second so one of the kind of types of business that I haven't given a lot of attention but it interests me is is a dealership business so it's not retail it's not exactly I mean it kind of is retail you'll correct me if you don't really consider it retail but it's high ticket item retail generally um some dealership businesses are exclusive you're the exclusive dealer for X manufacturer um others I guess you serve multiple manufacturers I'm not able to give a lot of description here because I kind of I'm not that familiar with the business model but it intrigues me if you can generalize not just about the trailer dealer business but dealership businesses in general as a business model what's it like what would you tell people is it fundamentally just kind of a retail business or is there more more Nuance there it is a retail business but there is more Nuance um and and this is not this is not a a traditional search fund kind of business I mean this is this is really not even what some people are in in cell phone at search to go after probably not the right business it doesn't have a lot of those same characteristics with recurring Revenue contracted Revenue you know and and certain things like that and um really the best way to scale is to add locations and add geography and that comes with its you know own challenges so um I wouldn't necessarily suggest this as a blanket for everyone who's looking for a business it it fit what I was looking for really well and I'm very excited to be in the business um but to answer your question you know it is retail it it you know all the same things that make you succeed in retail quick follow-up with customers great customer service High you know high scores on Google reviews um good SEO you know getting a good marketing all of those kind of things play into it where we're really trying to differentiate ourselves and create a value proposition to our customers is we do a lot of B2B and a lot of B to uh B to G business and as I kind of look at who our top customers are why they do business with us a lot of that has to do with convenience um and and a high level of service in a quick turnaround and so if I can continue to lean into that and really try to go after more construction related businesses more municipalities and school districts and maintenance um you know teams and Lawn Care Landscaping businesses that their trailer is how they make money it is how they transport their product to and from their job site it is how they get their work done and if their trailer is not working at least that truck is not able to work that day or that crew is not able to work that day and so where we've differentiated ourselves on our service side is oftentimes we can turn around to trailer repair in one one to two days where some of our competitors will be two to three weeks so for the business owner especially a smaller business owner who's maybe has one or two trailers that's incredibly important um so we've just we've been really good about developing Partnerships with some of these these companies and I'm looking to continue to expand that we're actually in the process right now of hiring an account executive an outside sales role to go out and find some of these new customers um of course you know like any retail business will sell sell to anyone if you're a homeowner you want to come get a little utility trailer and it's the only trailer you buy in the next 10 years we'll sell it to you but we're not going to Target you right because you're going to probably price shop us against six or seven other dealers you're going to do a whole lot of Internet research and all these other things and if we if we can find the right trailer for you at the right price point we'll sell to you but my goal is to go out to the construction company that has 20 trailers in service and become the dealership for their entire life cycle when when one breaks down I'm going to sell them a new one and inevitably when it breaks I'm they're going to bring it in for repair or when they need replacement parts and let's say they have their own mechanics and service team they still need to get those parts somewhere so they're going to come to me I have good margin on those those parts as well so I want to own that life cycle with those larger clients um and by providing a really high quality service and convenient service to them sounds like a winning strategy to me Shane the but but let's Linger on this point about it's not a search or friendly business in the sense that it doesn't check some of the classic boxes big one first one always being recurring Revenue we all love recurring Revenue when we can get it but plenty of people will say don't you know don't over emphasize it there are lots of really great businesses out there that don't have recurring Revenue yours is not a non-recurring revenue business does um that affect you psychologically like is it every morning you're leaping out of bed breathlessly checking what yesterday's sales were and as you kind of you kind of alluded to hammering on your sales guys sales team to make sure that they're following up I mean is it always feel like this kind of Perpetual race to push sales um give us a picture of the kind of feeling of that and then does it and make would you then tell people that recurring revenue is more or less important than we think yeah I I I absolutely have those thoughts um and it's our sales has been this kind of roller coaster with Peaks and valleys in the last 14 months um July for instance was a really bad month for us it was the worst month we've had since I took ownership and there there really isn't any Rhyme or Reason to it other than it's hot as hell in Texas and nobody wants to go out and search for for a trailer but it's been hot as hell in August and we're still doing well this month so it's that that's the part that's frustrating is that I there doesn't seem to be much Rhyme or Reason from one week to another and you know we can have a week where we do two hundred thousand dollars in sales and the next week we sell three trailers for you know thirty thousand dollars I mean it can really do these crazy Peaks and valleys um on the sales side the service and part side stays far more consistent and so that's really you know that's really been beneficial and the way that I try to look at our business is if I can pay my fixed expenses or operational expenses through the gross profit made on parts and service then anything I sell kind of is is gravy or or false to the bottom line from there we're not quite exactly there you know we still need sales and if we didn't have sales we would be in a pinch but we're getting closer and closer to that point and I think when we can get there um as well as develop more consistency with our sales process um I think that'll be a really good sweet spot but yeah I mean absolutely if I knew if I could project you know November and December and 2024's revenue based on long-term contracts and you know uh this the pipeline that my sales team has that'd be great but the reality is is that's just not the case in in this environment and kind of related to that the you mentioned that you were very levered so you have a big SBA loan and that SBA loan from the lender's perspective is a nice recurring payment you're paying that uh service that debt service every month how does that feel is it just one of your costs one of your big costs like payroll and it's like not Not So Different or does it feel um like a burden a weight that you're bearing luckily right now it just feels like a normal monthly expense um yeah we we have you know every pretty much every month we're exceeding and we're making money we're we're I'm able to pay myself a salary I'm able to put money away into savings um as well as as maintain my debt payments I'm not paying down debt any early or fast right now which I would like to do probably a few years from now um right now I'm kind of stockpiling money away in effort to buy the properties that my businesses are on because the sellers are are still my landlords um and you know I'd like the autonomy of being able to do what I want to do as far as improving and upgrades to those properties and those buildings um and I'd like to do that as the owner of the properties versus the tenant so that's kind of my my number one project in the next six to 12 months um and we'll be there pretty soon um but of course you know the number one job is a business owner especially an ETA business owner is to you know is to protect your cash flow right and so I'm just trying to put money way um and and have money you know in in coffers to you know break in case of emergency um if that depth that SDA payment comes up on the 15th of the month and it's looking a little tight I know I'll have money set aside to make sure that that's not an issue two more questions for you Shane you bought a your deal was a stock deal not an asset deal uh unusual in our world has that is that now in the rear view mirror no tail to to that uh the the structure of that deal or has there been stuff now over a year into the business where you still feel the difference there um as I mentioned in our first podcast we were actually served a lawsuit the day before closing um that lawsuit has since been settled through uh Attorneys at the the insurance company hired and you know I was confident at that time that insurance would handle it and they did and they settled and you know but had we not had the proper insurance for that that could have been a whole different challenge um and and so it I can't say it's in the rear of your mirror because any liability from the previous 15 years of business ownership you know depending on statute of limitations could be brought up at any point there could be a trip and fall that happened in 2019 that I'm not aware of and somebody decides to sue now or an employee related issue from an employee that I've never met that comes up but um you know I think that you know that's where having the right insurance and and the right kind of guard you know guard rails in place to protect yourself and if you're going to do a stock sell you got to go into it eyes wide open and probably do a pretty good risk analysis uh before going in and then if you don't have the right Insurance arm yourself with the right insurance and potentially maybe even you know go a little Overkill just uh you know with the umbrella policy and everything else to make sure that you know should something come up from the past you have you know Insurance in place they handle that Shane you and I had an interesting exchange over email about the you're still a listener to acquiring mine so thank you for that and you you catch yourself sometimes hearing some of the best best stories on the Pod and by best I mean just my guest has just been absolutely killing it from a financial perspective um and you know that that creates in all of us uh a certain emotional a certain emotion called Envy um what did you have to say about that I thought it was really fascinating yeah I I hear your guess and obviously you have some really impressive folks on that are doing great things with their business and people that are tripling the size of their business and two years or less and people that are building these 75 million dollar Revenue hold codes and you know all these different examples right and um and I'm envious to a certain degree of that and I I I can see you know man that would be just so cool to be able to be the owner of that and maybe some of it's a lot of it's prideful um but then when you really think about what is it that Searcher why is it the searcher why do they need that level of growth or what what do they have to put in to achieve that level of growth you know I was I I I wanted to be a business owner to basically paddle my own boat I wanted to Answer to No One have the ability and autonomy to run a business the way I saw fit and because I had such a sour um you know sour exit from the corporate world and experience in the corporate world I wanted to take my my life into my own hands and as a result of that you know I get to choose how hard I work and and how many hours I put in every day and what my work life balance looks like and um you know if I wanted to Triple the size of this business in the next two years I would need outside investment I would need um a whole lot more that I'm not doing today and and some may look at me and say well why aren't she doing that but I plan on holding this business for a very long time you know hypothetically forever and and probably building to it and at maybe adding locations or buying other dealerships or or maybe developing or buying into a different type of industry and having an operator run this but I have such a long-term outlook on this business that and because it's cash flowing it's doing well I'm very happy with 10 to 15 growth you know what I like to do a little bit better and get to 20 25 absolutely but to double in such a short amount of time it's just this business is not really equipped for it and I have to be okay with that and I am okay with that because I've gone on several vacations this year I've been able to step away from the business I'm working from home today you know and I work from home at least once a week every week to you know kind of take a step away from the business and focus on what I need to focus on as a leader but also to recharge a little bit um and I think if you're you know if you have investment if you have a five to seven year old period or less if you are writing some sort of industrial Tailwinds like you have a different outcome that you need to achieve to satisfy that and that can drive a lot of the decisions that you make both early on and throughout your whole period um and for me that just wasn't the journey I wanted to go on you know I I don't want to be in a private Equity kind of mindset where I have to achieve this 30 irr and I have these all these folks that I have to answer to to achieve some sort of financial outcome um just to meet their their needs um and for me that's just you know that's what I'm more comfortable with and I'm I'm very satisfied and happy in that but I have to check myself on that whenever I hear these success stories whether it's your pod or elsewhere and just remind myself that's not the journey I'm on that's not necessarily why I got into search you know I happen to thread a very very lucky needle in the sense that I got to take ownership of my my business I didn't have to take outside investment while also buying a fairly large business at a very good price point that's cash flowing well um so I got you know I have to admit I got very lucky but I put in the work on the front side to to put that to get to this point and also went into an industry like we've talked about that's you know not traditional and and I'm okay with that so um you know I think as as Searchers that are still looking really think about why you're getting into search do you want the autonomy of being a business owner and do you want to be able to do you want to work 60 70 hours a week do you want to con consistently be under pressure to hit some sort of financial growth Target or you know are you just looking for the best financial outcome period and and you really don't want to be an operator for the rest of your life neither answer is is right or wrong it's just something that you as a Searcher should look introspectively and determine what why are you getting into space we all know that it's a great financial you know economic outcome or it's a great Economic Opportunity um but if that's your only driving Factor then be aware of that versus all the other things that that could potentially be driving your motivation yeah and and realize when you hear somebody else's story that might seem somehow cooler than yours or than the one you're hoping for yourself that they have their own decision Matrix that they had to layer on top of of uh when they were you know making doing a search and buying a business and that decision Matrix might have been very different than yours um so so it's really kind of hard to know really how somebody's doing without also knowing what's driving them what their plan is what you know what what their backstory is what investors they might have breathing down their neck um so it very wise words and I appreciate the the transparency and vulnerability there Shane I think it's really important that people hear that I'm I I yeah I Love featuring The the hold code stories with the you know the eight figure hold codes but um I'm I'm aware of what it does to my own psychology and so I'm I so I'm also aware of what it does to the to the listener psychology so thank you for for sharing calling it all out yeah absolutely and I would just say there's no right or wrong answer right and there's people yeah there's a common theme of don't buy too small but if you're just trying to buy a lifestyle business then that could be okay for you right if all you're trying to buy is a lifestyle and get away from Corporate America that could be okay depending on the business if you are come from an investor background or PE background or invest in a banking background and you want to you know get this outsized return well then that's gonna you're gonna need a look within those guardrails to find the right business and and then when you're in the business execute all those growth levers to to hit those metrics and that's a great outcome for you too so it's just really what is important to you as a Searcher right exactly thank you Shane how can people how do you prefer people reach out if they're if they'd like to yeah I've had a great time connecting with Searchers uh since the first pod um so Shane at ntx trailers my email is the best way to get a hold of me if you're in Dallas Fort Worth happy to meet up or just get on a phone call um it's been a it's been a really rewarding experience to uh to get back to to people who are on this journey and I'm glad to see that it um it's continued popularity Shane arson thank you very much for coming back on Sir congratulations on your success so far thank you very much hope you enjoyed that conversation with Shane now comes my update conversation with Brandon Adams whose first appearance was episode 59 entitled six months in the truck buying an ice delivery Biz Link in the show notes Brandon Adams welcome back to acquiring minds thanks for having me back will it's a pleasure to be here Brandon your first episode aired way back in early 2022 you had acquired an ice delivery business the year before 2021 and one of the key parts of your story was how you found yourself behind the wheel delivering ice for the first six months of ownership which was kind of the perfect image for how unpredictable uh buying a small business can be but you Rose to the occasion rolled up your sleeves and became an ice delivery guy because that's what was needed today we're going to get an update on how things have gone in the year and eight months since we had that first interview but before we get into it Brandon please remind listeners who you are and what brought you to the world of buying small businesses sure uh thanks will my name is uh Brandon Adams I'm one of the one of two partners of K4 Holdings um based in Philadelphia Pennsylvania my business partner Don Ware is uh down at the ice business right now um monitoring things and and working uh in the business still um but uh yeah it was um in the Army for six years as a Recon team leader um then found myself pushed into the hedge fund space for 10 years and um the small business space was something that uh don introduced me to from his time working uh in a number of manufacturing businesses for his father and it seemed like a great opportunity to combine the small team leadership uh experience of the army with the intellectual and financial challenges and and um problem solving of the hedge fund world so it's been nothing short of exhilarating and challenging and it's been everything we've we've expected it to be and more so all right like like you said in the intro driving trucks and reminding me of uh one of chenmarks um weekly newsletters uh maybe from two weeks ago when they were talking about having the correct expectations about what you'll be doing in in the business and um when Trish talks about Manning the uh the parking lot attendance slot or uh being up at two in the morning to plow snow that's exactly what we've been thrown into as well great well I'm going to have you elaborate on that in just a second here Brandon but before we get into it remind us also about the business that you acquired we've already told people that it's ice delivery but give us a full picture absolutely so we found this business in the fall of 2020 um closed in April 2021 uh the name of the business is the Philadelphia dry ice company and also operates a packaged ice delivery company that operates under the name Jim's ice so we do all the above and some related products so we distribute dry ice to uh large medical laboratories so at the hospital systems in Philadelphia you can think of the University of Pennsylvania Jefferson Health Temple Health also to large food Logistics providers so folks who would be utilizing the dry ice in their delivery of either Frozen seafood or frozen meats or ice cream um think U.S foods and some others along those lines and then we also deliver packaged ice so you can think of the traditional route-based service where you have a merchandiser set up outside of a convenience store or in our case we do mostly construction sites and job sites so there will be requirements from the workforce to have a certain amount of ice and water on hand at any given time specifically in the summer but also through the winter so we have a route set up where we deliver packaged ice to those types of consumers as well and then we also sell some related products like insulated shipping coolers and whatnot and between the first customers that you mentioned the kind of big sort of more institutional and then versus the kind of having the construction sites and convenience stores what is the pie chart of that breakdown look like in terms of Revenue short when we bought the business it was roughly 65 percent to the dry ice and about uh 30 to 35 percent to the package dice with the remaining being the ancillary products um since the owning the business for the last two to two and a half years that uh mix has gone down slightly so maybe 60 percent dry ice to 30 to 35 percent wet ice still maybe a little bit higher uh 35 to 40 on the wet ice side um and uh there are different reasons for that um and I think the last time we spoke one of the growth areas that we may have identified was on the dry ice side and the need for additional dry ice perhaps manufacturing capabilities and uh death sentiment has shipped that since we last spoke as well and we're actually finding greater opportunities on the package that I decide interesting without knowing anything about ice manufacturing that's that's at first blush seems like good news because I would imagine it's easier to make wet ice than dry ice um but but uh cool okay so my instincts are right well let's put a pin in that uh or or not to the next question if this is if this is part of the answer to this question I like to just ask kind of open-ended how's it going how are you feeling about things um I should say in the last 18 months so how's it going since we talked last it's going very well um I think since we last spoke I might have been may have been saying about our goal to hire a general manager uh in the coming three to six months after we last spoke we ended up doing that we hired a gentleman who previously had been running one of the branch locations for a very large dry ice manufacturer so he knows the dry ice base very well he knows all the dry ice customers in our region very well he's a great team player he's added a a great deal to the company um and he's the one that's uh that's in the truck that's um you know operating day to day and um he has full responsibility for the team um my partner and I still manage the the balance sheet and um the financials and um you know coach him along quite a bit um and we help out wherever we can wherever he wants us to um but he's taken uh he's taken full responsibility for for the day-to-day actions and I think you know the next uh leg of the journey for us is going to be to get him to be more in the office and less on the road uh in the truck because he's doing quite a bit um in the truck as well but he's a local guy he's incredibly incredibly happy I think with the position and the freedom and autonomy we've given him to to operate and run the team the way that he sees fit and it's gone very well well people are going to be really interested uh in this Brandon because putting in an operator or a general manager is a step in the evolution of owning businesses so that you are able to then work on the business rather than in the business or perhaps buy another business uh or just kind of work on strategy every everyone knows uh you know the value of putting in a GM um you've said it's gone well uh is it as would you encourage people to be as optimistic uh about the possibilities of putting in a GM has it has it panned out and allowed you guys to think more strategically about things maybe look at another acquisition yeah I think it really depends on your individual goal um uh from the gecko Don my partner and I have um you know been striving to create a holding company um you know not the typical reason why everyone would would say so but you know it's a it's a diversification thing it's an intellectual challenge thing um and so it's been our goal to have somebody that can manage these businesses day to day um so that we can focus on like you've mentioned buying additional businesses um growing the existing businesses organically and inorganically and so yes um hiring this gentleman was the right move it's freed up a lot of our time to focus on um finding other businesses to purchase we have one under Loi currently um we wouldn't be able to do that work without him taking up a lot of the um a lot of the bandwidth um in the ice company day to day it's also allowed us to hatch and look at the ice business from a higher point of view from a from a wider wider angle lens and so that's allowed us to identify pieces of the market where we might be able to capitalize if we allocate resources one way or the other and you know if we're in a truck making deliveries making sure that the customers are happy making sure that the employees are happy today we don't have all the time in the world to focus on those things and so I would say that it you learn different things you know buying this buying the ice business the most important being that labor is a great challenge especially in unskilled work I hate to say that it's unskilled but um I think that's kind of how the market would Define it but it's it's very difficult to find people who are going to be committed to the team committed to the to the job when you have to find a way to to give meaning to it um and so John our general manager has done a great job of of creating his own Vision but also Under the Umbrella of um of our guidance and our kind of intent with with how we want the business to progress and I think over time that we've we've turned over a number of the people that probably didn't fit that Vision or didn't share uh the same sentiment about where the business was going and the team has evolved to uh be a really a great hard-working High morale um everything that we could have asked for maybe we have one or two folks who are on the out were on the outskirts and I think seeing the core group uh really come together has allowed them to to see um how that might how they might fit into that broader picture as well and this Vision that you're talking about John is the GM's name yes John John is the author of this Vision or did you you and Don your partner and John collaborate to articulate a vision uh no so Don and I have you know our own thoughts and high-level thoughts about why we want to be running these businesses and obviously we want the financial Independence we want the intellectual challenge we want the leadership challenge but part of it also is we want to be able to give our employees meaning give them resources and ways to improve themselves many of our employees have goals of running their own businesses one day and we want to empower them to do so however we can one of our one of our warehouse guys currently runs a home improvement company on the side so you know he's leaving work at four o'clock and he's going to a job site where he's either laying some flooring or he's redoing somebody's bathroom or kitchen or porch I mean he's doing this in um you know some some not great areas of Philadelphia and he's really providing a community service and improving these people's homes and their lives and so we try to do as much as possible to encourage them to keep doing that to see if there's any way that we can help if there's any way that we can you know Market his business for him we have another gentleman who is studying on the side to become a psychiatrist or counselor and so we're trying to help him chart out a path towards being able to do that independently so we really want to make sure that we're improving the lives of our employees as much as possible and so when we brought John in um we without telling him what our vision and intent was we asked him you know kind of what he wanted out of the job what he saw um with this business and and what his overall mindset was moving forward and and so that's something that he shared without us um soliciting it from him um he's also somebody who uh wants to be running a business one day and he actually uh as of last week just closed on his first business which is a vending machine business in Philadelphia which again great hard-working guy he's he's managing our business from eight to four every day and either before work or after work he's out filling his vending machines now um so we love empowering people we love seeing them flourish um in in our business and outside of our business and that's a a great byproduct of of owning your own business that's fantastic Brandon how interesting a bunch of budding entrepreneurs on on the payroll and everybody kind of helping each other become better ones I want to one of the things I liked about your uh your trajectory here Brandon is that um again lingering on this point of hiring an operator is that you when you got to the business and you found out that you were going to have to be driving the truck yourself really doing the delivery of the service that the business provides yourself and for six months uh and you as I said in the intro you didn't shy away from that you you dove in and did so uh and yet now you have found a GM and you're and you're doing kind of the you've got another business under Loi uh the first step to building a holding company is is well underway you're thinking strategically it sounds like you've you um as you as you look at the industry in which you play the ice business you're thinking very strategically about it and what opportunities there are and where you should where you should invest so I see uh in you and Don your partner guys who are um really appreciate both doing the work themselves being operators themselves and then also being strategic and stepping out I feel like many of my guests are either one or the other they're not if they're not scared of operating they like the idea of operating and they see themselves as The Operators of the business maybe indefinitely maybe one day they'll they'll step out but they they they're not in a rush to delegate away the operations they actually they run to it they like the operations and then I see the Other Extreme which is probably more common where people just want to move chess pieces around they don't want to do anything operational they want to get a GM or operator in there as soon as possible or preferably hire a business with an operator so they can just think strategically and uh you know do the fun intellectual build the Empire stuff um you guys seem like a really great uh balance um so long preamble to my question which is when did you and Don decide that it was time when and how did you decide that it was time to bring in a GM that's a good question um I think it it it was going to have to happen all along if we wanted to accomplish our our goal of creating a holding company owning several businesses we had to find the time to be able to put in the work to go out and find businesses to purchase or find ways to grow the ice business and it wasn't going to happen with us you know palletizing packaged ice and you know driving the forklift every day or driving the delivery truck every day while also you know reconciling the books and and whatnot so I think we just worked really really hard the first year um we took every single order that came in uh I would be at home having dinner after work with you know my wife and my daughter and my wife was pregnant at the time and it'd be six o'clock 6 30 having dinner and I'd get a call that one of our drivers who had been on on after Call of Duty you know wasn't picking up his phone and something needed to do out it was very small small order it's probably a you know 300 order of packaged ice going to a restaurant in Philadelphia and I live about 40 minutes away from the facility and there were many many times where I would take that call and be like hey I'm sorry I have to go I have to go complete this delivery because I at that time I didn't know if the business really um depended on that incremental 300 or not um so every you know every other night or every third night over the summer that that first summer I was driving in um after I'd already come home to go make these small deliveries and and you know eventually they added up um they did they would they were meaningful um I don't want to say that the 300 wasn't itself meaningful but you know making sure that you're doing what you say you're going to do for your customer that was important um and so the company has a really great reputation in the city for for doing what we say we're going to do being reliable when many other people are not and you hear that that Trope all the time about um you know all you have to do is pick up the phone and to an agree to a degree that's a little absurd um but there is a little bit of Truth in that um and I think when someone does get you on the phone and you're you're kind and you're empathetic to their situation and you're doing everything that you can for them I I think it goes a long way and our reputation has um you know definitely I think we had a great reputation before we bought the business but we've definitely been able to keep that keep that up and I hope um get more of a positive reputation as well through the way that we've um handled our inbounds and the way that we've coached our office manager taking inbounds so putting in the work that first year we did very well the first year the Year prior to us purchasing the business um they had had a number of coveted Tail wins and the business was radically doing about 750 000 at ebitda um both even before the previous owner um had bought it and he kind of kept it steady at between 650 and 750. um covid brought a deluge of demand for dry ice as people were ordering food from home and the The Strain on the logistics piece of the puzzle um skyrocketed and people were just clamoring for dry ice and paying up for it so he went from about 700 000 of Eva da in 2019 uh to 2020 he did did 2.4 million so his enormous Tailwind um we benefited a decent amount from that Tailwind so I think the first year we did right around 1.4 million of Eva dot so we had a lot of excess cash um to to allocate as we saw fit and we we set a lot of that aside um to obviously purchase another business um but the the following year the second year we hit probably about 1-1 so it's TR it's it's not trending up but it's it's sustaining itself well above you know pre-covet levels um which is more than we than we modeled out so when we were pretty comfortable with the stability of the business with what we saw as the amount of work that had to go into it we got a better gauge for what we needed on a go forward basis in terms of Staffing and we just had a better handle on what our expenses were going to be what Revenue we could really rely on and what Revenue was kind of high risk at that point once we learned the business infinitely we felt comfortable that it was it was time to find the right person uh to be the general manager and like I I'll just say like I did before we found the most important thing in its business was was Labor um and uh and talent management and it's probably been the biggest challenge for us but I've also found it to be the most rewarding part of a part of owning the business is honing those um those systems for hiring and figuring out um how you how you can find and you know not necessarily an a player for you know the general population but an a player for a forklift driver or an a player for someone who's gonna greet the customers coming into the facility and package up their ice for them and carry their ice to their car for them and help the drivers and the the delivery drivers load their trucks how do you find those types of a players um and we've not always done a great job we've we've probably hired 10 people since we started and I would say you know three of them ended up not being all that great and it was probably because it was early on and we felt a great time crunch to get to get somebody in the seat and you know like you learn in the hedge fund world if you're trading you know you can only do you can only have two of three things you can have price you can have volume or you can have speed you can choose two of those same thing with with hiring you know you either have to hire someone right away you can hire the right person uh or how much you're going to pay them yeah um you can only have two of those things um so at the time we put a premium on getting somebody hired quickly and I think we found that that was the incorrect variable to solve for but as we as we learn that and and changed our systems over time we've hired better and better folks and that's only added to uh the morale of the team overall as well so everything is kind of accelerating exponentially so one of one of your learning I I basically I want to see if we can get for the audience something that you learned through getting better at hiring because for many of the businesses that my listeners will be interested in labor will be the the bottleneck for those businesses as well as it is in your case so this hiring thing is such a universal challenge you mentioned uh what was it quick volume or um essentially yeah yeah price two pick two right and you guys chose the wrong one which was speed although it sounds like the the circumstances necessitated it anyway so you've now chosen so you learned that that speed isn't necessarily getting somebody in the seat as quick as possible maybe isn't the right move these processes that you're referring to your hiring processes that you've refined is there any lesson that jumps out there that you might share with other people who are about to embark on on uh you know a labor heavy business no and and you know I've it's it's still iterating like I said we've we've only hired 10 people and and to us that sounds like a lot because prior to this um business ownership um Adventure I hired a grand total of zero people so 10's a lot more than zero depends a lot fewer than I'm sure Michael gurley's hired thousands of people um and he's got a great great process for hiring and I'm trying to learn from him and other people and I'm trying to iterate on my own process and um you know a lot of it just comes down to the basics uh you show up on time or you show up in a presentable fashion um for our delivery drivers you know do you not have a suspended driver's license on your record that you know not not like currently but ever um so it's a lot a lot of like just doing the basics um I think you know prior to that we had just been fumbling fumbling around and uh worried about getting somebody in the seat as quickly as possible so now we you know we have them come in we definitely have them meet with every other team member um to make sure that there's at least a basic level of uh you know the vibe is going to match one way or the other yeah we like to ask a lot about you know challenges they've faced um in Prior roles or just in life and how they manage those challenges we like to try to screen people for humility um it's not easy to do especially if you're hiring for a warehouse laborer how many times you're going to have them come in and how many times are you going to have them go through some sort of assessment where you know they're trying to get hired as quickly as possible and they're they might have five other jobs that they're trying to go to who they're going to screen really quickly and those might be for companies who don't mind churning through people really quickly and for us um the marginal team member is Meaningful and we want to take our time with it so we also want somebody who's willing to take the time with us and who wants to be a part of a team like that and isn't just looking for to get hired as quickly as possible fantastic and another question Brandon on your decision to buy another business so which is related to hiring your GM how did you decide that it was time to invest your intellectual Capital you know your attention you're in Don's attention I guess in looking for another business and and you got one under Loi so that's going to require you know going through the whole acquisition process again a lot of your attention that the that the best allocation of that attention was to buying another business rather than rather than folk continuing to focus on the ice business and in growing it or making what others whatever other strategic moves that you've envisioned there yeah it's just a matter of value um so owning Ace business um making deliveries we provide ice to other ice businesses funny enough so we've learned a lot about the local market and what is potentially available and when it might become available and those are all on our radar um and we spend a lot of time building those relationships and um showing those folks that when the time is right we're likely the right people to sell to um the time just hasn't come for that yet um the thing that might be on the on the calendar sooner than that would be becoming a manufacturer of ice for our own branding purposes and for more vertical integration um that's being tossed about right now in terms of hey does it make sense from a real estate perspective from uh from a plant build out perspective um equipment and whatnot but we always had our eye on um the m a market to see if there's if there's value to be had and under what circumstances and and we did find like I'm sure a ton of people have had spouted out recently on podcasts and on Twitter that um you know with with SBA rates anywhere from you know 975 to 11 depending on what kind of rate you're getting it makes it challenging especially when seller expectations for Birch multiples haven't come down all that much but the deal that we have underlr right now um it was sourced uh proprietarily actually uh don came across it from somebody he met in a beer Club um so this gentleman happened to be um the accountant for this company is local um it's uh about 10 minutes from where Don might live um and it just came together of the course in about nine months uh we met the owner uh for lunch with her accountant and personality seem to match up very well um we met the gentleman who is her general manager um who is fantastic and has been in the business for over a decade um and we had lunch with him and we've gotten to know him quite a bit and we're very comfortable with uh the team that they have in place and at the end of the day like I was talking about um resource allocation the value is was right as well so it was in a business business that we felt comfortable with um it's a little bit it's not as uh simple as the ice business um bringing ice from point A to point B but they have a great experience team in place and I think that um we found value in what they were willing to sell the business for the terms and also our ability to potentially grow the business and it's funny that we went underly about a month ago maybe two weeks ago another local business popped up that's generally in the same uh ecosystem that could potentially make for a great combination so we're working on that right now and um we're not taking our eye off the ball with the uh with the ice business expansion either so we uh have a decent amount of retained cash that we can put to work and always looking for where the greatest value would be well speaking of retained cash as I as I recall from the from our first interview you the what you paid for the ice business the seller recognized that the the incredible bump that he saw from covid was likely not to last or it was going to come down somewhat so he didn't try to do a multiple off of that year but off of previous years and so the fact but the fact that it it didn't stay at way up at 2.4 million in your ebitda but it but it has hasn't come all the way back down to 750 as you said it's it's kind of settling out somewhere nicely above where it was pre-covered which is great um so you guys bought a business of let's call it you know well north of a million dollar or let's call it a million dollars in ebitda um it's bouncing around I recognize um and that's given you cash in the coffers that's given you the ability to hire a GM so are you Advocates of buying as big as you can could you have imagined of buying a a business with a lot less sde uh definitely not as a as a two-person team I think I I could have envisioned that as a as a solopreneur perhaps um but seeing as uh we're a two-person partnership um both with young families the feed something smaller probably wouldn't have fit our profile right um but uh that being said and you know I don't want to skip over the fact that uh having that cash in the bank was was never a foregone conclusion um you know we we bought the ice business uh based off of information that after the fact turned out to be quite faulty and and though um all those things came together when we started operating and and created quite a bit of worry for the both of us luckily I think the underlying financials ended up being um or what we were able to get out of the business from a revenue perspective uh ended up being better than we thought um but that didn't hide the fact that you know the seller was uh he was paying people under the table he was kind of doing all the the funny stuff that you hear about here and there and and luckily none of it was meaningful enough to to bring the ship down um we were able to Institute um better systems we were able to you know create a normal payroll um much to some of the employees Chagrin because they were on the beneficiary end of that um and some of those folks had to get cycled out and that was difficult um I don't want to understate how difficult that was at first um but I think you know we were able to bring uh you know some semblance of or hopefully a great semblance of proper business functioning to what was previously probably being run like a pizza shop like a South Philly pizza shop but it's much more professional now um and you know it was it was not easy but luckily you know the demand for the product was there um the reputation for the service was still there and that was something that we were able to keep and build on um and it ended up being a a great a great choice so yes I don't regret any second of it but I don't want to understate how difficult it was to get through the first six to 12 months well uh just a couple more for you here Brandon and one just on the on the heels of what you just said you know I'm looking at a couple of guys who bought this small business as you just said it was challenging for sure for the first 12 months but you are well on the other side of that now happily the demand for the service remains strong the reputation was strong you have professionalized so you've added value to the business and now you're in a position you've hired a GM that appears to be working out great you've you've really put your fingerprints on the culture now which was something that we talked about in the previous interview that the that the that the founding family culture I think still had its tentacles uh in the business and it sounds like it's very much now um Brandon and Don have their Mark is is much more visible and you got a business under Loi to really start the Holtz code so for what I'm seeing it is a couple of guys who are really doing it doing the thing doing it successfully as hard as it was in those first 12 months and and on their way to having really having a hold code and realizing the dream is there something I'm missing because it seems pretty great a lot of long nights um delivering ice to a Red Lobster at three in the morning that's four hours away okay that was uh that you know nothing worth having is is you know Gonna Come Easy um exactly so and you can't get to two businesses without having one first um so I've talked and talked to a number of uh other entrepreneurs recently um one who bought a business about nine months ago that actually Don and I were were trying to Target and he got in there and got the LOI in there first um had coffee with him yesterday um it's Ben yeah yeah I'm interviewing Ben later this week okay Sandy yeah uh I had coffee with Ben yesterday and you know yeah you um you find the conclusion is that it you know it's good to be in business you want to get into business and once you're in the business um a lot of other doors open a lot of things you hadn't thought about open and a lot of validation comes from just being in the arena and doing it doing the thing and um not to say that the rest is easier or whatnot but it's kind of like you open one door and then there are three more on the other side and uh you open two of those and then there are ten more um that's definitely the feeling that we've had um the people that we've met the relationships that we've made just being in business to start with um my conclusion is just you know if you're thinking about it and you have the confidence to do it like just just go and do it make sure you do it um you know competently obviously and not um with too much risk but uh anything worth doing is going to carry some degree of risk but I I encourage everybody to do it um it's been uh it's been it's been great well I'm gonna leave it there uh Brandon because you you um it's it's a powerful message what is the preferred way to reach you if people have questions do you like LinkedIn do you like Twitter oh you can just email me Brandon kplervoldings.com you can DM me if you want on Twitter it's Brandon P Adams I would say just yeah email me or shoot me a DM Brandon congratulations on your success so far I love the fact that you guys are such good operators and also such great strategists uh and all while remaining humble let me know when you when you close on that business you got under Loi yeah I love too well I'd love to tell you all about it thanks Brandon 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 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