james maxwell thank you for joining me today on acquiring minds will super glad to be here thanks for having me appreciate it james you and your partner jordan inman acquired a commercial janitorial business in november um so you're and you're coming up right on your six month uh anniversary um lots of themes to the story that we're gonna dive into it was a partner search obviously want to hear about that you guys acquired in a smaller market about a hundred thousand people so i want to hear um kind of about a search in a smaller market you acquired in an industry that's really appealing to a lot of searchers commercial janitorials one you hear about a lot on search fund or in other places you're both ex-military uh and and much more lots to go over lots that's gonna be valuable to the audience on this so let's begin with your background as always so tell me james a little bit about yourself um and and anything you want to mention also about your partner jordan yeah thanks will um so let's see i'm uh i'm married i've got got two young kids both in diapers so uh extremely hectic phase of life right now i've got one who's just a little bit over two and then we have a seven month old uh seven months ago so if i do the math if i do the math that means that one and the the signing on the dotted line for the business happen right around the same time yeah yeah i was i was doing due diligence uh you know from the hospital i was uh reviewing stuff while holding a newborn it was uh it was great wow bold but um yeah so so had the second child and uh and then closed on the business shortly thereafter um backing up a little bit uh as you mentioned i'm a veteran um spent a number of years in in both the marine corps and the navy um in the marine corps is where i met my partner jordan um he's a he's a former marine officer as well um didn't do quite as long in the service as i did so he's he's got a bit of a head start in the civilian sector which has been great but um as i was thinking about my life post-military and what i wanted to do i i went and got a an mba a lot of folks do that when they're not sure exactly what the rest of their life looks like and really great experience i knew the traditional paths weren't right for me um you know consulting investment banking what a lot of my peers went and did uh but thinking about what transferable skills do i have leaving the military and what career would i get the most satisfaction of them my time in the service leading people and running a small team was the most gratifying part of my career and entrepreneurship through acquisition is in my mind the most immediate way to replicate that and you know go from leading small teams in the military to leading a small team in the civilian world was was just the perfect fit and learning about eta has been just um an incredible blessing to me my partner jordan i know as well and just kind of the lifestyle we want to live and the satisfaction we want to get out of our careers and that takes you today we're about six months in did you learn about eta at in the mba program so i'd say a couple years prior i was just kind of starting to brainstorm what am i going to do when i when i leave the service and a lot of people wait until two days before they leave the service to figure out their next move um i wanted to have you know a longer runway than that and um i can't remember exactly how i how i came across it but um uh was recommended some books um you know all the all the majors that everybody talks about let me guess right yeah you got it uh landed on sites you know like searchfunder.com and um uh it was just like that light bulb moment like wow this is this is actually a thing and nobody really knows that until they they kind of learn about it and so i get to my mba program and i dedicate everything i do there to how can i give myself tools for the toolbox for an eta career and don't tell some of my professors but maybe i gaffed off some of the stuff that was a little bit less relevant for for my future but um but using using uh that time in the mba program to really arm myself for proposed mba was was really awesome and i had a lot of great professors and mentors along the way too well you're only six months in so this question might be a bit premature but i do want to i do want to ask to what extent you feel like the mba program did prepare you for being an entrepreneur eta is is a lot of people's discovery of eta does happen in mba programs um at the same time you know lots of entrepreneurs and particularly in silicon valley land will say that mba is more you know kind of training to be a manager rather than being an entrepreneur so weigh in on that how did your mba program prepare you for these first six months i 100 don't think an mba is required or necessary is it helpful yes um i think it was helpful for me in the fact that i was so far removed from undergrad you know i you know i graduated undergrad um you know 15 years ago yeah so my last finance class or economics class was a very long time ago and um with a couple kids thrown in the mix you know that might as well be 100 years ago so i think the the what the mba allowed me to do was kind of reset my brain and kind of um relearn some of the things that i that i had already learned but things that uh definitely helped and you know we'll get into this in a bit but talking about due diligence and some of the classes i took in uh in my mba program allowed me to dig into some of the accounting things that two years prior i you know would have been a complete foreign language to me but um yeah i'm a 100 passionate believer that an mba is not required and um for those who are coming from finance type jobs or uh are a little bit closer to undergrad experience i you know i wouldn't even necessarily recommend it and it sounds like to the extent that it was valuable it was really in in these kind of um quantitative technical financial skills that you brushed up on that that was the most valuable stuff from your mba program yeah that and um the networking i think has been great you know just being part of um you know one of the top mba programs and just you know hearing presentations from the search fund community from different uh of the major investors um getting to intern with a traditional search fund which i did between years one and two just so i guess having access to those experiences was was awesome yeah um also you know my my favorite professor um he's a really really great private equity guy and as i was getting ready to close on this business he put me in touch with a really good friend of his who happened to own one of the largest janitorial companies in the united states you know 20 years ago and he's been kind of an unofficial board member for us so that network's been been really great and really valuable too yeah and that is one of the things that you often hear about mba programs that a lot of the value of them is actually in the network rather than the the book learning 100 cool the now um if you were if you were if you interned with a traditional search fund and you were going through the mba route so you you would have been a candidate to do a traditional search fund rather than a self-funded search you guys did a self-funded search however so um what tell me tell me about that decision so the the internship was awesome i interned with two great it was a partner search fund from my business school so met them through that network and just the exposure watching how they interacted with their investors the targets they were they were looking to acquire and just being a part of that was was phenomenal um i think i knew from the start that self-funded was for me mostly because um i'm very i was very geographically focused and all the investors i spoke to in the traditional search fund world and you know you know this um they want you to be a little bit more open to opportunities outside of a town of of a hundred thousand which is which is where i knew i wanted to you know raise my family um so i was very specific so i think that alone probably would have killed any traditional search fund aspirations and then secondly i and there are some investors that are into the more um long-term you know i guess more permanent equity kind of structures uh yeah but i didn't i didn't want any kind of exit pressure for me this was a opportunity to build a career in a place where i want to raise my kids and i didn't want you know five seven ten years from now uh t to feel the pressure of of of doing some kind of exit you know if i really like the business if i enjoy it if i'm able to grow it um you know organically and organically and it's just great um you know why not keep this thing forever and pass it down to my kids one day so i wanted that flexibility and and uh and the freedom but the traditional search fund route is great i know you just hosted the debate there between uh self-funded and the traditional and you know they're both completely excellent opportunities it's just you know you you pick an orange or you pick an apple and there's different there's pros and cons to both and the self-funded was just made the most sense for me at the stage of life i was in yeah okay let's get into the search itself so so we're not gonna say to people exactly where you are but it's a it's a um a smallish city of about a hundred thousand folks uh in the northwest of the us um and you want it as you just said you wanted to live there so that uh would pre that would limit you know the the opportunities presumably so talk to us about what your search looked like in um in a relatively isolated or smaller market so the great thing about our search and um you know when jordan and i decided to partner up and and make this thing a reality the great thing is we were under no time pressure whatsoever to make an acquisition you know some you know traditional search funds you know you've got two years of runway right to find something and close on it jordan and i um you know both had uh had income sources we both have you know wives that work so we didn't feel that pressure which was just great it allows you to i think come at the situation very very sober soberly i guess and really take our time to find the right opportunity regarding our specific search it was it was the result of networking so we knew we wanted to buy something in the town we were in and it's just a matter of talking to people and getting to know people and sure enough opportunities kind of start to percolate to the surface so this one was uh um came from a business broker but it was a gentleman whom we had kind of developed a relationship with and it had gotten to the point where he's like hey guys i've got this great opportunity that you know i haven't listed yet but i want you guys to take a look at it and um we took a look at it and it was it was really intriguing and uh you know that was it we had looked at a number of other deals before sorry i don't want to use the word deals um i read something recently i think it was a big private equity firm they banned the use of the word deal have you heard about that no tell me why because it sounds so transactional yes um i can't remember the name of the private equity firm but it basically said nobody at this company will use the word deal ever again and if you do there's like a fine crazy and um but i get it you know when i when i read people and um or read what they write and they're talking about deals deals deals it is really transactional and and this is this is human uh human lives we're talking about in small business this is people's income this is how they put food on the table and you know this is a living breathing thing and calling it a deal um yeah for some reason maybe it was just reading that article but it now uh um doesn't sound right to me so anyway i looked at a number of other opportunities um before we had landed on this one but once we saw it we knew it was worth pursuing we put in an loi i think a day or two later after we had met the seller and um and then we were under contract shortly thereafter james when you said you were networking in town um does that mean that you were i mean obviously that means you were reaching out to the bro the big business brokers in town getting on their radar getting on their lists was there anything else that you were doing and how did and um as a follow-up how did you cultivate the relationship with this particular broker who sent you this business opportunity yeah um so jordan had been in this town uh much longer than me i i told you he had gotten out of the military a number of years yeah prior and um he's ultra well connected here you know has a great network of friends and mentors and that alone super super valuable so um getting plugged in with jordan right away kind of um helped me kind of access that as well you know because my wife and i my kids were fairly new here but um the power of just reaching out to somebody and saying hey do you have a few minutes you know i'd love to pick your brain you know i'm a transitioning veteran um mba student whatever you know that goes a long way i think people are they're very willing to help um it's just having having a little bit of courage to go out and put yourself out there and ask but um yeah i was surprised because i i hadn't done that in years you know my my career had been so established but now it's i need to go and kind of create opportunities in a way and um just kind of reaching out putting yourself out there and starting those conversations and you never know where one conversation will lead you and i think that's what we found well welcome to the life of an entrepreneur that's also a big part of that what's different about being an entrepreneur versus working for somebody that's right so so james you you're you're doing this networking you're talking to brokers you're reaching out ask you know kind of what you just described um what what a deal flow and forgive the term i i it's going to take me a few times to break the habit of using that word what is your deal flow what does deal flow look like in a city of a hundred-ish thousand people when you're really out there um you know beating the bushes trying to trying to find opportunities um like do you feel like if you hadn't found this business you might have been waiting around for another year or two or no it's like no no there's there's deal flow like we could have found something we we would have been able to find something what is that what does that look like for people who out there who might be also looking at living in a city of this size i think there's way more opportunity out there than what you might find on brokered deals or businesses that are that are listed for sale the seller of our business in fact didn't even know she could sell the business it was only because her daughter-in-law was a real estate agent who happened to know a business broker and just one day said hey have you ever thought about selling and our seller who's a fantastic woman is like what do you mean i can't sell this and um and sure enough that's how that conversation started so i think my point is um there are so many businesses even in a town of 100 000 and nearly all of them are for sale for the right price yeah and i think it's just a matter of finding the ones who maybe don't even know that selling is an option but damn coming out of covid people were worn out people were exhausted you know at the traditional search fund we did a little bit of direct outreach you know proprietary and our return on time was very very bad doing that but we're reaching out to massive companies you know that that get a lot of contact daily from private equity firms and other kind of potential suitors i think the proprietary direct outreach i think you would have a lot more success on the smaller side of the spectrum because you're mostly providing an opportunity for people for for people who founded a business as a way to exit but they might not even know is a possibility yeah so um coming out of covid everybody was worn out exhausted um i think the opportunities were were phenomenal even in a town of a hundred thousand yeah cool and but you didn't you didn't in in your search resort to proprietary at all correct i think um for us it was really uh you know jordan and i decided to do this and like i said time wasn't really a factor yeah and so we really um we're kind of slow rolling it you know seeing what was out there learning some different industries um i think had we wanted to really put the pedal to the metal we would have uh we would have gone all in on you know every different method of of sourcing potential opportunities yeah cool but didn't need to and just to be clear with people um your your city is not you know you're when we say a hundred thousand it's not a hundred thousand because you know you're part of a five million dollar five million five million person metropolitan area it's a pretty self-contained hundred thousand dollar hundred thousand person population um so just wanna be be clear with people that this isn't like a a suburb of a major city it's very self-contained um and so how long did how long did it take for for you to find the business um slow rolling it yeah so just um kind of being a passive uh you know person kind of searching um i'd say maybe five months from when we decided okay this is something we're going to pursue and we're going to pursue it together um five months until we uh got under contract on on that company wow that's great yeah man your story just keeps getting better uh wait till wait till people hear about about the numbers so um let's do that right now so tell us about this this business james what does it look like start with um i mean repeat for for me what it does and kind of get get into a little detail there and then give me the top line numbers on it please okay so um 22 year old company so been in business a long time profitable since year one seller is the founder grew the company phenomenally well over the course of 22 years we bought the company with just north of 35 employees or so um so a very robust team but she was managing the entire thing herself and i think that's what you find on on the lower end of the the lower market here is um you've got an owner who's operating it and they are kind of tapped out in terms of how far can i take this thing with um the resources that i've got and um you know she she worked wonders in getting this company to where it was and when we saw the opportunity it was phenomenal because everything was so wired tight you know her books were were spotless her record keeping was immaculate um which i would say you don't find a lot in these smaller businesses they might you know they might be a lot more messy this one and maybe it's the nature of the industry it's you know this this this seller is a cleaning company she is very tidy very clean and all aspects of her life are tip top yeah exactly and um so she's so tidy and such a perfectionist that uh we saw the exact same in in the way she ran her business and um so to to throw some numbers uh yeah at you um basically we were looking at when we bought it um 2020 revenue at about one and a half million um so we came in in kind of mid 2021 so annualized we were looking at i don't know 1.55 million in revenue something like that with very healthy ssde just north of about 500 500 000 so those were kind of the numbers that we saw um coming in you know we put in an offer um uh at basically one 1.8 billion was our was the purchase price that we landed on that uh the seller accepted so we're looking at you know a little bit north of uh three times multiple calculating sde by the way is not as easy as it sounds it's always kind of a moving target you know and it kind of depends what what you decide to add back what the bank decides to add back um you know as the the year kind of flows on things change a little bit so um i can't say specifically okay sde was 526 000 um but i'm comfortable in saying it was you know between 500 and 600 yeah yeah um so that's about where we were um i think the multiple that we offered was very uh very fair um you know we were buying a company that had a phenomenal reputation great contracts in place you know the top dogs in town here so that's worth a premium to us yeah yeah um had the company you know been taking payments from venmo and you know you've got some cash under the table to employees we didn't have any of that that we had to sift through and in the lower market there's value in that for sure so we definitely um we paid a good multiple that the seller was happy with that we were happy with and uh yeah it worked out well i mean you changed this woman's life she she thought she was gonna you know end her career and kind of close the door and walk away and instead she's got a hundred 1.8 million bucks so it's awesome and you guys you guys got a really really solid business with 22 years of history and tight contracts now talk to me a little bit about the so it's it's commercial cleaning is there any kind of um specialty work or or higher skilled work that the the business offers and i ask because the margins you know let's call it just 500 000 on you know 1.5 million uh in revenue for easy math if you know roughly she's she's that doesn't include her salary but i mean those seem like really strong margins and um one of the things that you often hear about janitorial commercial cleaning is it looks desirable in many ways you know recurring revenue business to business etc except because it's rather low skilled the margins can just be razor thin doesn't seem like the case here so uh help me work through that yeah the mark the margins are definitely very healthy and um you know we're we're paying our team members very well and we're also charging very much in line with kind of the industry standard at least in this region so from a gross margin perspective we're right on track with other commercial cleaning companies okay okay um so we don't have any advantage there i think where we have a huge advantage is the seller was pretty much running the business herself so she was the office manager she was sales she was um basically every function in the business which by the way we have now hired out um you know a number of team members which is cutting into our margin quite a bit yeah i want to hear about that we'll get to that yeah so i think she ran the business in such a lean way that it was very profitable and we knew in due diligence the the f the initiatives we wanted to put in place we're gonna cut into those margins so it was very important to us to know okay can we finance this thing can we pay the people we want to pay to have different functions within this business and also leave you know meat on the bone for for jordan and i and we felt very comfortable looking at the history of this business and and you know the direction that we wanted to go that yeah this thing was was definitely very viable okay well let's get into that a little bit because if i'm i'm thinking to myself doing um some back of the napkin stuff here 500 grand in sde um you gotta service the debt pay yourselves you're a partnered search so that's actually two salaries or two people who who want to see um profit coming from the company and then you and then you basically immediately decide to put in a gm because she's been working 18 hours a day for 22 years or whatever and that's not what you signed up for um that starts to feel all of a sudden 500 000 doesn't start to feel like very much but in fact you could afford to hire a gm and do all the things i just said debt service and pay yourselves and have money left over to to either hire somebody else or reinvest in the business that that's how far this 500 000 is going yep so um so yeah so to give a little bit more context to our debt service so um we we did a uh an 80 10 10 structure so we're basically 90 leveraged right so which is a very common structure in you know when you're going the sba route our debt service is just about i'd say about 200k a year so there you go so after debt service we've got about 300 300k left over since we've bought the business we've you know we're on track to do about 2 million this year so we're up about 30 percent um our sde is about 700 000 now at this point um just through some some you know just through some simple kind of initiatives and i don't like this phrase either but low hanging fruit you know we've got a lot of customers who haven't had a price increase since 2015 and when we do the margins on that one customer we realize we're breaking even and so the margins are still very healthy even though we've got a number of customers that are breaking even so um simple things like that uh you know have have led to some growth right off the bat growth in revenue growth and um in profitability um so yeah circling back we knew when we bought the business that jordan and i we did not want to run the day-to-day we knew if we got sucked into that we would be buying ourselves a job and working in the business and not on it and so we knew hiring a gm right out the gate was was how we wanted to to approach this and we found a great general manager who came on board you know shortly after we got the loi signed and that gave jordan and i some space and breathing room to know that the day-to-day functions were going to be handled and what other strategic initiatives can we work on to really grow this business and hiring that gm if we did not do that we would be um we would still be very successful and don't get me wrong but um you know we would uh i think i think things would be moving a little bit slower if that were the case so that was an investment to us that was just a no-brainer yeah and let's uh hear a little bit more about hiring this gm um i'd love for you to be able to tell us how much you pay this individual and then also if she was working so hard on the business can everything that she was doing truly be replaced with just a single individual versus you know two you know founder founders tend to do the work of three people yeah so um so that's a really great question and we're we're grappling with that right now so we we brought on the general manager thinking it would be a one-for-one swap with the sorry right um we also brought on an office manager to run our billing hr payroll those functions so we thought initially those two hires would be kind of replacing that seller in the day-to-day role but what we did not realize is you cannot replace 22 years of resident knowledge as easily as you think and this goes back to the transferability of small business is something that everybody needs to really really reflect on before they get serious about buying a company because you know things sound great on paper you know when you do your excel modeling and all that is this business truly transferable and you know i'll give you a story um yeah one of our key key employees she's kind of our liaison she's bilingual she does a lot of uh she comes to every meeting with team members to help translate and um anyway she's she's just fantastic she's been in this company about five years and when she heard that the seller had sold the company she broke down in tears and the sellers said hey what's what's wrong you know like these guys are great um you know the company's in good hands and she said well you know i don't i don't know if i want to work for a man and and you think about like she had been working for the seller who had come up as a cleaner herself was very relatable to these team members you know most of our our cleaning staff are women um there was a lot of relatability there um she had come up as a cleaner herself she didn't speak very good spanish but there was there was definitely connection there and so when you bring in a couple of you know military veterans um there's a huge diff right there's a huge difference there and um that was a challenge and um we have to think every day about okay what message am i sending with everything i do like the clothes i wear the car i drive can i replace this seller or do i have a strategy to really replace the seller because it's more than just okay i've got some management skills and i can figure this out there's a lot of new ones there's a lot of nuance there that um you got to think about as well well and you know this isn't this type of leadership um challenge i'm not sure the military prepares you for this one i mean this is a little bit different right or or no or no or or do you feel like military leadership that you learn is generalizable to kind of all leadership like yeah is there anything that you're that um that you're applying from your military years into this particular um um leadership issue that you're that you find yourself in yeah i think um so my biggest weakness and i i know this um just from self-reflection and hearing from others i can be very direct very blunt don't really beat around the bush and the military rewards that right really clear concise communication i've found that that can be uh received negatively in in civilian context and you know the military i can say hey will like you this up like go fix it um if i say that at my job now or at my company now you better believe i'm gonna have a file of team members walking out the front door yeah so um there's it's just a different uh culture and i have to work on that you know because that's that's um that doesn't come naturally to me i think because of so many years of conditioning i guess yeah yeah and and do you have any specifics you could share this is so interesting about this this woman who was intimidated or didn't want to work for a man um what you've done i mean you mentioned like thinking about the car you drive or um or how you communicate with this this woman what have what what have you done to to whatever soften that relationship or or in gen engender trust i'm i'm just so curious because it yeah it if the way you described it it feels like kind of oil and water what do you do there so first off our general manager is the nicest guy you will ever meet he's and that's why we love him in this role because you know he's so customer-facing and facing and he's the right guy for the job because he makes the customers feel appreciated and cared about and loved he makes the team members feel appreciated cared about loved and i think that he has the ability to disarm people right off the bat which maybe i don't maybe jordan doesn't um so he he complemented our weakness right here and that's how you should hire people and um you know he uh we knew immediately we we have to address this specific issue head-on especially with our most important team member and it was just a um a very quick attempt at building trust with this woman and um you know letting letting her know that we're not just people buying a company who are going to make changes and potentially affect the way she provides for her family you know it was um getting to know her on a personal level and you know it's great you know my general manager had a had a birthday party recently and and this woman showed up and brought a cake and um yeah so i think i think we're we're getting there but it's still it's always going to be a challenge you know and it's never done it's it's keeping trust developing it and then keeping it yeah and james can you tell us more about the hiring of this gm what what what does somebody pay a general manager in in this industry yeah and how did you find the person was it just an add-on indeed or what nope so i think regarding pay that's that's a tough question i think um i would say the market rate for general manager of a company this size you know maybe um maybe 70 to just north of 100 i'm a big believer that you know overpay for for talent and putting the right person in the right seat so um you know we're paying this gentleman you know 100 000 a year to run the company with the potential for some uh equity that vests after a certain number of years running the company and um the idea is that we need to incentivize the general manager to a want to join us and then b do a great job and stick around and we wanted to pay enough where you know it wasn't going to be a well maybe this is a good opportunity maybe it's not you know we wanted to pay enough where you know this guy was like hell yeah i'm on board you're paying me enough that money's no longer an issue um you know and there's incentive for for growth and being a part of this thing for the long run so to us that was worth it and where do you find somebody like this oh yeah sorry so um so actually through through our network you know um uh very long story i guess but uh you know we we got here and um you know child care for our daughter at the time and um met this great gal uh named sarah who uh who ended up helping out watching watching our child um when we first got here and and it turns out um this was sarah's husband who had a great career with a big national company um i think the problem was for him to continue to grow in the company he was in they would have to leave the town that we're in so he was kind of capped out in terms of uh you know career mobility without having to move to a bigger metro area yeah which for the same reasons as why i wanted to raise my kids here he wanted to raise his kids here yeah um so for him to take the next step in his career i think it was just the perfect fit perfect timing um and uh yeah he was willing to come on board and i think the trust that we had known each other we had developed a relationship you know his wife is basically uh an aunt to my my daughter um there was kind of that instant that instant correct not instant i guess built level of trust james so you you with this general manager um well one of the things that you led by saying is that the the military experience um really is uh uh applies well to small running a small business right and it's it's really something that you felt like all the skills that you had learned in the military that would be the kind of the perfect outlet um be doing buying and running a small business in fact you you put in a gm so you're actually one step removed from direct leadership you're leading him so i don't mean to say that you're you know you're not leading but but it's not you don't you're not kind of like front line leadership you're kind of behind the guy leading leading things yeah and if you disagree with that characterization um stop me but i i want to i want to um just kind of push on that a little bit therefore because in some sense your you guys are um your roles are much more strategic and less kind of like rallying the troops um yeah what talk me through that yeah so when you when you come into the military as a young officer you're you are that frontline leader you know with your team doing everything they're doing rallying the troops you know charging the hill as as jordan would say yeah you know you continue to lead at different levels in the military different sizes of teams um and i guess there's always an opportunity to be that front line leader you know even if you're you know a general or an admiral but things do change a little bit you know you start to um you know think instead of thinking down and in a little bit you're thinking more up and out you know as you as you uh advance in your career in the military and you become you know the person who's thinking more strategically and maybe issuing overarching guidance to the tactical elements that are then going to go and um and execute your your intent you know your commander's intent which is what they call it in uh in the military and i think um i think in terms of transferability that's probably where i was at in my military career was you know more of the um you know issuing the overall guidance and then letting the tactical elements kind of execute that um and i think that's kind of what's happening now with with our company you know we've got a general manager in place we're thinking strategically up and out issuing our kind of overall intent and then letting our general manager execute it and and these first six months so far so good on that with that approach yeah so um so the first six months is uh you know i guess stabilize like we closed on the business let's let the dust settle and um and stabilize everything and really um step into the seller's shoes and it's been tough we'll i'll tell you what um you know we hired the office manager i was getting in there really trying to get some processes and systems in place our seller was a filing cabinet person for 22 years and just trying to get all that stuff up on step move to a cloud-based um you know system for organizing our our files and everything like that um getting everything into quickbooks online all this stuff sounds very yeah of course you do that but it takes time you know and just working on that but turnover has been almost non-existent from an employee and customer standpoint over these first six months which has been awesome growth has been growth has been incredible and a lot of that i'll tell you has been initiatives that the seller put into place before we closed so we can't take a bunch of credit for for um initiatives that that she in fact uh did for us and by initiatives you mean just like selling like she was getting close to signing new contracts oh yeah i mean she she was signing new contracts up until you know the day we closed and we had a three-month transition period with her um you know 90 days pretty standard and she never once had the mindset where i sold the company i'm out of here you guys are on your own yeah she she is incredible she loves the company she cares about it regardless of whether or not she owns it this is her baby and it will be forever and you know we're six months into it and i called her on monday just to pick her brain about something and you know she answers on the first ring and and loves talking to us and maybe we got really lucky i think you know i've heard horror stories of sellers riding off into the sunset after a week but we got really lucky and that's another thing is during due diligence really assess the kind of seller you have make sure it's a person with integrity make sure it's a person who who is going to guide you the right way during transition you know and somebody who six months later will still answer your phone call and and uh answer a question within reason of course yeah well i i and i she sounds like a remarkable woman i i don't want to take anything from her um but i'll just repeat myself like you also you know from her perspective it's like i mean you made her a millionaire um and she wasn't expecting she was she wasn't expecting to walk away to walk away with anything necessarily i mean if she's been getting 500 000 in sde for many years she probably had a nice um a nice nest egg saved up um yeah but but just you know she's also incentivized to make this really work um because it's either 1.8 million or zero from her from her perspective and i really think that that that your story is so um emblematic of of the opportunity here where you know to indulge the cliche win-win i mean you guys got a great business at a great price and she got this wonderful solid you know um windfall that she wasn't even expecting as she moves into retirement it's just so it's just such a happy happy deal um and and i think that's just that that really happens a lot in this acquisition entrepreneurship world with with these small business owners who just don't don't think their businesses are worth anything in fact they're worth a lot um to people like you and me it's great um and but so just to on the sales thing and what she these these initiatives that she teed up for you you said it was 1.55 million in revenue when you acquired the business and now you said what 1.9 ish 2. yeah we're i think um 2022 we're looking at about 2 million um as long as we don't mess anything up but you know our january to now run rate is uh is pointing that direction so 30 growth yeah in in the first year and but but you said some of that did come from also just raising some prices so improving margins on existing businesses on existing contracts a little bit yeah so um you know just the just the prices that we've raised um on a number of accounts you know that contributed you know about 60 grand a year just in revenue increase just on some simple increases now i don't want people to get the wrong impression and think that that's all going to flow to the bottom line because there are serious wage pressures happening right now the labor market is brutal and wages are going up faster than uh faster than we can keep up so um don't think that we're you know greedily raising prices just to um go right into our pockets you know we we are we are paying that back towards our keeping our team members because you know this is a high turnover industry um you know janitorial specifically uh i can't remember the statistic i think it's like 200 annually turnover which is a lot our company doesn't have that our company doesn't have that problem fortunately i think you know we've hired uh i think 15 people in the last six months and we've lost maybe i don't know four or five so um our turnovers been really low um but you know we pay our our team members very well and yeah that cost comes from somewhere james i still have a bunch more questions for you and i'm paying attention to the clock um so i'm going to kind of jump around here and move quick um just tell us a little bit more that what you found about commercial cleaning in the first six months uh just because this is you know this this does have at least from from the outside really attractive characteristics of b2b recurring revenue um but and so searchers look look at it a lot um but it also has reputation for razor thin margins as i said uh what are some of the pros and cons now that you're inside this industry that you see uh labor turnover you just mentioned what what else so i'm going to start with cons just because uh so labor is always going to be the challenge and when i talk to um you know like i said our unofficial board member owned one of the largest janitorial companies and he said labor is always going to be the challenge and you know if you solve it uh great but you won't um so it's just one of those it's one of those things that's always going to be there um the challenge is not only turnover but really making sure quality control is dialed in like you know we've got upwards of 250 accounts and we can't go and visit those every week to make sure they're being cleaned to company standards so there's a lot of autonomy there with with our team members and so our company is only as good as the team member who is servicing that account yeah and that's a lot of reputational risk um put on somebody who we don't have a lot of uh daily oversight on you know so that's a con uh absolutely the pros you mentioned it recurring revenue i think 95 i think is uh recurring contract based you know monthly uh cleaning so a lot of recurring revenue we really looked at covid to understand how kovid affected this industry what we found is it was pretty covet proof you know some customers dialed back maybe the frequency of cleaning because their uh their staff maybe wasn't in the office regularly during during coded so maybe they went from five nights a week to two um but they also paid more to have enhanced disinfection so maybe our team members were in there twice a week but um now they were doing enhanced disinfection of all touch points you know different services stuff like that um so really this this company the one we bought grew during 2020. a lot of industry a lot of industries didn't and um i thought that was that was really neat a little bit of fear okay our are people going back to the office you know there was a lot of conversation about that is office life his office life dead and um i read enough articles to also get me thinking about okay you know is his office cleaning gonna gonna change and what we found here is people are back in the office you know that um it doesn't change too much maybe it's different in uh you know cities like manhattan or something like that or new york city but uh um everyone's back in the office and and things are booming here so i see this industry not being disrupted in a meaningful way i see it being very resilient um the biggest challenge is just going to be labor yeah well man i mean if kovid couldn't disrupt this business then you know nothing will well accept inflation yeah so yeah um that's another tricky one and we're we're not you know we're in the thick of that and who knows when that gets better yeah um james on growth so again to the theme of being in a smaller market and i think you'd mention that some of the biggest names in town were on her client roster of this business that you acquired so do you see a lot of growth potential here other than kind of you know tweaking the turning the dials like you said on on maybe um you know slight place price increases for customers that haven't haven't experienced those for a number of years but just in terms of like number of customers and and new business how do you think about that in in in a smaller market yeah i um yeah i want to talk about jordan in a little bit too and kind of the different roles that that we kind of find ourselves in in this company but um regarding growth we jordan and i have always looked at this as like a just you know a platform acquisition um we're really cutting our teeth we're getting our mba in small business ownership right now and we're learning a ton and it's such an awesome experience regarding growth janitorial it's it's tough to scale um in a meaningful way because of that quality control issue like like i was telling you about obviously there's solutions for all this stuff but what we've decided as a company the strategic direction that we want to go we follow traction by the way eos like many of your your listeners and other guests but um we've decided we want to be the one-stop shop for property management firms which make up the majority of our customers you know when we're cleaning office buildings it's actually the property managers that hire us not necessarily the business owners themselves and we want to be the vendor that property managers call when they need anything done so when they need janitorial work they call us when they need their commercial windows clean they call us when they need their floors stripped and waxed they call us so we want to position ourselves as the one-stop shop we've already been doing all those functions as a very small portion of our revenue for current customers so we see a path to organic growth just in those kind of adjacent services yeah that we can that we can provide to these property management companies and um so that's kind of our our strategic vision for this company is just to be that one-stop shop and we're already kind of well on our way there james you said you wanted to mention jordan and i also wanted to hear about um your decision to partner up and and be partners in this so um tell me what you can about that okay so um neither jordan nor i financially needed a partner to to make this opportunity happen we both could have independently done this and we both independently would have been successful um i'm a huge proponent of partnerships first of all i don't want to go through life alone i think that's that's boring you know um but i'm i'm a believer that one plus one equals three and there's a there's a cliche right but um man we're dropping lots of cliches today james i'm uh i i can be stubborn i can be set in my ways confirmation bias is a real thing yeah i can start to see what i want to see i can start to believe my own as they say and um for me having a partner is having a sounding board who can talk me off a ledge who can give me a perspective that maybe i wasn't thinking about and saying that you know it goes the other way too i mean jordan um he's a brilliant mind he is probably one of the most analytical guys i know he's able to assess things in a way that when he's when he mentions a you know a thought just like wow i can't believe i didn't think of that and i think the ability for us to balance things off each other is going to make this company exponentially get to where we want it to go um exponentially faster yeah um and you know we don't always agree on stuff and thank god for that because if we did why the hell would we partner up total speed partnered with the same person but i think what jordan is very good at and and where i try to be just as good as him is when we talk through something we debate it we go over the pros and cons when we finally make a decision we both support each other 100 going forward on that decision right and um a number of times jordan and i have gone back and forth and you know we come to a decision and he says he's like okay he's like i got you 100 let's do it and there's a lot of value in that not a lot of people are wired that way and jordan is but he knows that he and i ultimately when we're facing the world we have a united front you know we might you know squabble behind closed doors or have disagreements but when we open up that door and we have our message that we want to communicate we are united because i think nothing is more toxic than leaders who bicker in front of their subordinates like what kind of example does that set you know and um you know not not that we don't necessarily you know have some uh some devil's advocate kind of conversations and stuff like that in our meetings but um but yeah he is uh he's very good at discussing the pros and cons of things and then when we make a decision we we move out on them together and um he's awesome i wouldn't have it any other way i like i said financially we both could have done it independently but um he is uh he adds so much value to to me and i hope i add the same to him just in the way that uh you know we can just be there for each other and be sounding boards for each other that's awesome james hopping around here the during the pre-call you mentioned that your lender actually provided some sort of coaching kind of mentor mentorship might be a little bit strong but some coaching of the process and in fact in yeah in this space lenders i've heard before that lenders kind of can yeah they they serve that purpose a little bit because um many acquisition entrepreneurs are doing this for the first time and they recognize that and you know they they see so many deals they know the pitfalls can you elaborate on that a little bit tell tell the audience what your experience was yeah so um just being around the the search funder community and um you know a frequent consumer of podcasts like yours and others lisa forrest is is a well-known name in this space and so reached out to her directly and actually i kind of got to know her when i was interning at the traditional search fund she came and uh spoke to the interns at the uh the search fund and got to know her then and um and then went when we pursued this deal reached out to her she is there's a reason she's popular in this space it's not because she's a banker who can um who can uh get the money she is a she is a mentor will you know she's um i was able to call her bounce some ideas off of her and i know that she is um offering guidance and not just trying to close the deal you know and um she was awesome i spent hours and hours on the phone with her as we were getting this thing to the finish line and um she was helping me look at due diligence in a way that i maybe some blind spots that i had maybe in ways that would have killed the deal not from a bank funding standpoint but from my own personal sense of comfort and so she was willing to potentially lose the deal just to make sure that that we were taken care of and you know i don't have any other experience with other lenders in in small business acquisition but i will say that lisa was um was awesome and i'll 100 use her every time going forward and james you did your own financial due diligence all of your own due diligence because your seller had such clean books talk to me about the the due diligence process yeah so i i i initially thought okay i'm gonna i'm gonna outsource some of this to a third party um but what i wanted to do was i wanted to get in there and take a crack at it myself before i brought in a third party and i wanted to do that for a couple reasons first i wanted to really get intimate with this business myself yeah and and two i wanted to see what what can i find out about this business with the very limited knowledge that i've got and i think what for better for worse what what came about was i was comfortable enough with everything i had mostly because of like you said the the sellers just you know complete attention to detail on everything and just how clean everything was and then my um you know very recent knowledge with um with some of the schooling that i had had i felt completely comfortable you know and um you know lisa even even kind of guided me in that direction i asked her i said hey you know would you advise me getting a you know a q a v done on this company and um after walking her through everything she said james i think you got it you know and i know that's a risky thing to say because you don't know what you don't know but i felt i felt pretty comfortable with what i had um i think had i come across anything that was very unusual to me or something that i couldn't something that was making me stay up at night i definitely would have uh brought in a third party because what's ten thousand dollars you know when you're buying a several million dollar company in the long run but yeah i just didn't feel the need to do that and and did you feel that it did also serve the purpose that you wanted which is educate you about this business a lot more so when you when you got in there you were just going to be a smarter operator because you already knew you you already knew it down to the you know down to the dollar pretty intimately i was so red into everything on this business and even more so than the seller in a lot of ways you know i would ask a question about some account and she'd be like what are you talking about i'm like well it's right here on your on your pnl or whatever and um you know she she didn't live in that world whatsoever you know she um her bookkeeper ran her books and um she was pretty uh pretty removed from that um in terms of like you know real specifics and uh yeah i mean i got so intimate with the business it was great and i would recommend everybody even if you hire a third party do not just put that off on somebody else because there's no better way to to find skeletons in the closet than to just open the closet door yourself you know james is there anything that we didn't touch on that you think the audience should hear about yeah i think we you know we talked about the transferability i really see that as being just a major thing that a lot of searchers probably overlook um they look at revenue and sde on a listing and then they get excited about it um but they don't really understand you're going to be living this business for a very long time you're going to be getting married to it you're going to be having dreams about it nightmares about it is this something you really want to get married to is this industry something that really um that you're you're passionate about um so i think i think that would just go a long way just sellers just or i'm sorry um searchers really thinking about is this something that a i can take over you know can i now lead these people that the seller has been leading for 20 years and can i dive into this industry in a meaningful way i think that's um that's super important james if people want to get in touch with you what's the best way yeah so um jordan and i both uh so we're both on linkedin so james maxwell and uh jordan inman and then my email address is jaymaxwell814 gmail.com and then his is jordan r inman gmail.com and um i just made a twitter account and uh i've never posted anything i like literally just made it because i hear all these all these guests they're like oh you can find me on twitter and um so i'm just starting to poke around on that but uh that's that's actually kind of cool um the whole twitter thing which like i said i'm very happy i was just gonna joke about it james i was gonna be like i was gonna say what are you gonna get on twitter so yeah you're you're one step ahead as you should i mean and you should be on there i'll reiterate what you've heard what is your twitter handle so audience go follow james even though he's he's new to the platform let's give him let's give like give him a boost and follow her ship what's your handle i actually don't know but i'll tell you after this and then maybe you can uh i'll put in the show notes yeah yeah cool sure cool james this is great thanks thank you sir for the time yeah thank you will take care