Russ Hadlock welcome to acquiring minds thanks will I'm glad to be here Russ you bought an autog glass repair business in November 2022 things were precarious for the first year but then a few months ago in the fall of 2023 things took a turn for the worse and really reached crisis level so you are in the throws of a small business struggle as we speak we're going to hear that story and how you're thinking about the future and dealing with this but let's get started with some background on you please Russ so I spent the bulk of my career selling in one way or another from you know selling tools on commission in high school you know all the way through you know B2B uh career sales later in life and then uh in 2019 I stumbled across to an idea a product idea if you will it was the proverbial like lightning bolt moment developed a product and it started to Garner some traction and that product turned into a company so I left everything I had built and went all in on the product built before before we hear that a mini story which I want to I want to give a minute to give us just a little bit more background on you in your experience with business because I recall you telling me you weren't always destined to become an entrepreneur that happened maybe a little bit later in your professional maturation so to give me more on that I would say I was I was um I guess a product of my upbringing so you know my my dad was retired military and and blue collar and I that's what I that's what I thought I was you know going to be I never I didn't go the military route but I thought that I would just I would get a job and I would grind it out my entire life you know working for the man I just the concept of business ownership never really occurred to me um you know and then and then later in my career I got opportunity to become a partner in a company which gave me some exposure and then my wife's father was a successful entrepreneur and I think that those two things sort of changed um you know broke the frame I was living in and kind of gave me a different a different mindset and perspective and then I slowly shifted you know over the course of you know 8 nine years um out of the out of the W2 mindset and I don't know that I can I can go back successfully now if I had to uh it is it is a bit of a rabbit hole or a or a a red pill I should I should uh Russ and so you said eight or nine years ago so call it 2013 14 15 is when this Awakening is occurring that's correct okay okay and that uh Awakening is because of this exposure you get to kind of the the inner workings of a business at having been promoted to partner at a business that you were an employee of and then presumably you hit the books you listen to the pods you just start educating yourself over the next few years on all things Business and Entrepreneurship yeah yeah for sure I I think that there's a I I think if all of your guests um you know me included probably have a like a a su level of um personality which is is somewhat obsessive um you know and I have not everybody has that but um you know like you I'll drink Diet Coke relentlessly for six months and then I I'll bounce and do you know do you know I'll be on a water kick in a different diet and I'll obsess over the and that type of Personality trait um also you know can take people the other way that's where addiction comes from and things like that you know I I I recognize that about me but um I think that that's part of what um that's an undertone in the entrepreneurial spirit and so yeah when I got exposed to business um like really deep really far and it just sort of hooked um and that's yeah that's how I ended up here podcasts and books and you know we all know the the buy then build of course that gets mentioned many many times on on here um all of those things I couldn't consume it fast enough I still do even now and now let's return to this uh light bulb moment of a product concept that you had uh were you D were you still um employed as partner of that previous business and what in what industry was that um it was packaging so it's agricultural packaging um okay yeah I I would say that that that company that business like everything about that place was was was great I I probably you know in hindsight should have stayed there I just you know because of the things that we just just mentioned I just I can't you know I need to be um my mind needs to be consumed and I there was enough extra time in that job that allowed me to pursue other creative opportunities and I've always been um creative to some extent um you know I've had a wood shop and I love metal working and all of those things and and yeah so I was this this product was all built on peleton so in one of my obsessive moments I bought a pelaton bike in 2017 with a quest to lose weight um and I was you know riding 45 minutes a day every day because I was in that obsessive moment um and then I got to a point where i' lost the weight and I was starting to ride to just maintain and I was starting to get bored and I wanted to keep myself engaged I was looking for some other hook like some other dopamine hit while I was on the bike and so I started to to you know play video games and other things I was like I can't be the only one that's trying to ride and and get other things accomplished well I for whatever reason I was looking at the bike and I saw a you know I don't want to say Vision because that sounds cheesy but um I saw the the vision of a of a tray on that handlebar so I was like if I could put my laptop on there I could ride and then answer emails and do other things I was kind of dabbling in Amazon um Arbitrage so I was Lear learning Amazon Seller Central and all of those things and so I thought you know if I could ride while I'm doing that or studying you know PPC or whatever um I could kill two birds with that one stone and so you know I just I saw some people might remember but there's a this plastic tray that goes on the the steering wheel in a car for the traveling salesman and and the the aen on TV ad or the pictures that float around is the guy's eating his hamburger in his you know in his car and this tray is sort of pinched on the steering wheel why that that tray design I felt like a similar iteration of that would work on the handlebars of the bike and so um I created one in the wood shop and tested it and I was like wow this this might actually work and so then you know to condense a very long story that I I parlay that into a successful product and then later a company I found a partner we engineered a bunch of parts and you know built a successful e-commerce company and bought her own machines and in-house and Manufacturing and and we we did a lot in a couple of years and that some of that thanks to co and the pelaton rise but and Russ the at what point did you have the confidence to go all in on that business and quit your W2 that's a that's a trick question uh in the sense that um I probably would have done I'm a little reckless in that sense um like I I feel like I came came from nothing so I'm not afraid of nothing but I have a you know a spouse that is in my ear and I think we all understand that like every entrepreneur you know there's usually a good woman behind him somewhere and uh or vice versa a good man behind a good good woman but um so it was I think it was getting over the hurdle of convincing my wife like I have an opportunity here to to go all in on this and I didn't want to be on my deathbed and look back and say you know what I I played it safe and I wondered what could have been you know and so we finally got to to a position where you know she agreed and and I agree it was time to go all in we were we were both up late at night packing you know until you know you put the kids at se into bed at 7:00 and then we're packing orders and and labels and everything until 11: or 12:00 at night and and we were like I you know it was time it was a pivotal moment you know we either we had to do something and so that was that was the moment so fantastic and so we're not gonna we're not going to spend um much more time on this story but give us the bullet points how big did this business become obviously pelaton is the is the kind of picture of a company that benefited from from covid and this is in the co time frame and you were kind of in the you know on the coils of the pellaton platform yeah I mean that's that's you know you're basically building a product on a platform in this case pellaton so so give us the the high level of basically what happens and and put some numbers around it if you would yeah so so the product was at zero in July of 19 um and by I would say by the end of the year it was that one single product was generating you know close to 100 Grand a month you know so it was trending a million dollars a year in gross revenue um and that that Q4 of that year at that same time I was out looking for engineering partner because I knew that there were other uh um product opportunities within the space that were beyond my capabilities so I would say by the end of 2019 I had found a partner and by early 2020 um you know we were kind of like in motion like we were starting to produce some product you know um some ideas starting to put them out there I had developed a bit of an audience so I had I could quickly deploy an idea um and then by by the time Co had hit we had had you know I think two other products kind of ready to go they were launched and just starting to get some traction and then the the you know work from home orders started to land um and then we we just boomed after that so from 18 the first 18 months of Co so after the work from home orders started we we did 4 million in Revenue so we just absolutely exploded um W yeah what a ride yeah it was it was crazy so 4 million over the first 18 months of Co so annualized that's what 26ish 2.6 million um from an absolute standstill the year before um okay and and then what and then um the Amazon aggregators started to reach out like we had garnered some attention and and we had my partner and I had no intent to sell like we we knew that there there it may not have been Evergreen within pelaton um but we thought that we would parlay the manufacturing like we had purchased all of our own equipment and a building and everything we had in-house everything and we thought that we could parlay that into additional manufacturing opportunities so we would go you know Aerospace or whatever that's where his background was from and I could sell and so that's that's the idea was to build the company into that and then the aggregator started to call um and we got a lot of interest in in the acquisition and we thought wow this you know this was an opportunity we didn't even think about um and the multiples were so good it seemed like a no-brainer so we then latched onto another company that was going to help us build um the books and everything to prepare for sale here's what the aggregators look for here's what your books need to look like we had to separate the brand from the manufacturing the aggregators didn't want the machines and the employees and so we started to like you know segregate the company in such a way that those things looked optimal for the aggregator um and then I would say at the halfway through 22 so my wife is a teacher and we were ending nearing the end of the school year so it's April May of 22 I started to communicate with that company that was helping us I was like listen I'll make you a discount um if to sell you my half um to give us the opportunity to move so my wife wanted to move across the state um and you know get closer to the water and whatever and so uh I exended an offer to that company and they ended up seizing it and so they purchased me out and they became you know the standin for my partner the original my engineering partner is still still behind doing his thing and and so I took that that funding we moved and then we the search began you moved from Eastern Washington to the Seattle side correct yep I'm on the other side of the Puget Sound from Seattle but yep other that's correct great and was that exit a life-changing moment for you financially um it was I had dreamed of you know developing a you know a million-dollar product um when I was a kid like I always thought the million-- dooll I idea was the end all be all um you know I didn't have the entrepreneurial concept I didn't think about building a million-dollar company but I thought if I could you know if I could create a widget you know make a million dollars off of it I wouldn't have to work anymore I was well maybe when you were a kid a million dollars would have done the trick but that's yeah yeah when I was 10 that seemed like a really big deal um so I I you know all all told that product generated a million dollars obviously that didn't end up in my pocket the acquisition was um you know High six digits I didn't you know I didn't break that threshold but it was enough for me to um it was it was a life-changing amount and I felt like it was enough for me to uh to help me create the next step the next layer you know and I wanted some stability I've heard many times that selling on Amazon is like picking up pennies in front of a steamroller like you're sort of at their Mercy had a lot of frustration with China and and the Amazon way of doing things and I thought you know what I I wanted to go safe and stable and you know like we discussed in our preall I looked at everything you know from accounting practices and HVAC to landscaping and and I thought you know I wanted to be I want to be safe you know something that that I could do and that's that's the precipice and where did you learn about this concept of search between your success with the the pelaton add-on add-on product Trey product and search like how did you know that going out and buying an existing business because a lot of people even people who've been in entrepreneurship for a long time don't see that path I I didn't um you know I I didn't didn't think you know I thought that everybody sold to you know bigger firms PE firms or like the aggregators those those were the guys I was talking to right like these big these institutions that went out and and gathered capital and consumed a bunch of companies um I I you're I I I don't want to sound like I'm you know trying to flatter you or or sell the podcast but a lot of it has to do yeah a lot of it has to do with acquiring minds like i' I'd listen to uh a ton of stories I can't I don't know the exact day or the exact story that you know flipped that switch but that's where that data came from that's where that idea you know came from so in the in my obsession into business I had stumbled across you know acquiring minds you know amongst the half a dozen other podcasts and the stories that I had heard from you know from people with nothing doing a business acquisition I'm still a huge advocate even in the you know I'm struggling now but I still think that that from from a standstill there's no better way to create wealth you know like just hands down no better way and I'm I'm convinced of that wholeheartedly and so um yeah that's how I'm that's how I'm listening to your stories that's that's what got me into this mess I don't know whether to be gratified or horrified here Russ yeah um well well one more just followup on that yes you did you said you wanted something safe sure or safer safer than the certainly the you know building on the Amazon platform which is which is so unpredictable as you just as you just said but still you you were somebody who had started something from scratch and and created a wildly successful product and so that might you know that might otherwise give an entrepreneur the confidence to go and do that same path again you know seeking out a different widget a different product um you know yeah so so were you not at all tempted by another zero to one Adventure uh yes and no what there's two there's two thoughts behind why I didn't do that um the first one is I I didn't get enough money I think that gave me enough runway for me to really go out and and try and fail a couple of times um and then two I really felt like it was lightning in a bottle um that's probably a like an internal frame that I need to let go uh you know I feel like the the in all likelihood to to come up with a product you know and then catching covid at the right time at the right all of those circumstances to me felt so so random um that I don't really want to take 100% credit for the fact that that happened you know and then so in the back of my mind I think you know if I go through the the the the work to come up with an idea and try to launch it and build it I'm I'm going to be be leg down because I you know there there was so much fire behind the other one that it's going to be hard to compete with that and so I thought you know what I I'm going to be better off trying to find something that's that's already already got some momentum and try to inject what I what I do into that space okay so let's let's pick up uh at your search then so you all have moved Westward uh across the state to the West Cross Puget Sound uh from Seattle what is that area called on the other side of the sound from Seattle is that does that a name that kind of peninsula yeah the Olympic Peninsula is kind of what it's what it's referred to you know it's great you know the Olympic mountains are right in the middle of the peninsula and there's small communities wrapped all the way around so okay so tell tell us you you started talking about some of the kind of traditional businesses that we hear about a lot Landscaping HVAC take us into your search so i' I'd listen to you know many many of the other Searchers and the criteria you know that they that they work from right so I geography I kind of threw out the window I wasn't going to move again uh my wife wasn't going to let us move again so I knew I was geographically limited um and I numbers wise so I for whatever reason I was under the impression that I was limited in my acquisition Power by home equity like how much I could backend the loan with um in hindsight that was a very I I don't know how where I got that idea um because if you if you run that idea out it doesn't make any sense at all but um yeah I just felt like I was limited in what I could buy by the amount of equity Equity I had you know to to to back up the loan so Russ let's let's dwell on this for a minute just in case listeners in the audience are making the same mistake you had but you just recently bought the house so you must not have had did you just do a 20% mortgage typical like you must not have had that much equity in the house anyway well you know so we had sold our home and then I had you know you know money from the sale and I like I I put a bunch of stuff in it so I knew that this that the that was my biggest you know um my biggest asset right was the home so I had I had a fair amount of equity um you know which I felt like was allowing me to buy you know up the chain a little bit um and I felt like too I was also I was also and maybe some of it was subconscious just in the fact that I felt like if it all went down I could sell the house and clear the loan like i' still have a I could still have a business that was Cash flowing with no loan if I absolutely had to we'd be homeless but you know I would have a business that could you know could at least wipe the loan clean um but anyway that I you know I again I don't know why I had that like mindset uh but that's you know part of what I I had forced myself you know into a business that sort of fit in that mold and then I was a little bit you know spooked I think um by some of the bigger ones like I I've done a ton of creative deals um you know from buildings and homes to you know the business stuff is I'm not afraid to be really really creative in Deal making and so I felt like if I if I needed to buy bigger I could have I could have made the deal the deal happen but the fear started to um kind of come in over the top of me like I I didn't want to buy a business that was you know bigger than what I felt like I was capable of running mhm and so the the theory that the bigger you buy in fact the less risky it is uh intellectually you could understand that but like emotionally you weren't there which I understand yeah yeah yeah in hindsight that was that was probably you know a very very big mistake like I just didn't you know I just didn't peel all the layers of the onion back and really and really think about it and I think um some of that too is that I like I was alone in the search you know I think some of the search fund groups um there's a huge advantage in that there's a lot of I mean from the outside looking in there's a lot of dialogue that happens back and forth and when you're and everybody talks about being Al loone on a search and you kind of are because the criteria is different you know even if I found somebody else that was searching they're going to be every all of the variables are going to be different for that Searcher than they are for me so even if we could have some dialogue I don't know that I would have uncovered some of my Hang-Ups because you know we're both going through you know the end result is the same but everything else is different yeah you know the you know the dollars that you're willing to spend how the SBA you know brokerage is dealing with you um previous experience the business that you're looking at none of those things are are going to be the same the the bank motions of the bank are probably similar but that's the only part yeah well this point about now in retrospect you wished you had pushed through Whatever anxiety you had about buying a larger business um I just want to make sure that that I heard that correctly because if if there other I I mean I understand your feeling too like I mean I think it's it's natural for most people that like the smaller it is the less risky it is and even when you hear no no no a million-- dollar SD business SD business is going to be more stable and therefore less risky it's still it's still very hard to feel that as opposed to just intellectually understand it so I just want to I just want to highlight you now into your a year and four months into this looking back on that and just now you really do feel the truth of that the truth that bigger is better yeah oh absolutely I I and I felt like the that I had carved up the SD in my in my projections in such a way that I had a little bit of breathing room um I felt like it was big enough um but it can go that SD can get consumed so fast um you know like a third a third a third so a third debt you know a third extra or you know owner salary and a third for for slop is kind of what I what I had calculated for for SL for reinvesting or whatever for margin reinvesting anything hiring yeah yeah I knew that I wasn't going to run the company nearly as well as the old owner right like he grown up in it ran it for 25 years I knew operationally he was really had a dialed in right I knew I'm going to I'm going to like my cost of goods are going to go up 2% or 3% because I'm not I'm not buying a sharp you know I'm going to make some mistakes and I kind of accounted for for a lot of that I'm going to have to hire people to backend him you know and so I put I tried to put all those numbers in the equation but you know it probably should have been you know I'd have to look at it from a real number it's too important to just bucket it into a percent like I needed to look at real numbers and say okay can you know will this number XYZ pay for you know an employee 2% cost of good increase you know there were some expenses that increase that I didn't account for that sort of eroded you know my guesstimates that was probably the biggest Miss um as I just did know some stuff was going to go up and I didn't know it well let let's put a pin in that cuz we're going to get into the the nitty-gritty there but um but at this point is it fair to say that you kind of napkin mathed the search it was kind of like I'll have like you said divided the the sde that you would have into thirds and kind of that was what you the the kind of assumption you were operating under right right so I yeah I knew you know size-wise like I had looked at some you know a couple of businesses that were smaller and I looked at a couple of businesses that were a little bit bigger and then you start to you know do the do the equation here's the debt load and you start and I started from the debt load um and I was like here you know here are all the pieces and um Russ let let's actually do this math with the business you bought so so let's kind of quickly go through you looked at a few businesses that you didn't tell us is there anything to say about the businesses you didn't buy um I I you know I say one like I was really close um I sent an Loi and I Was preparing to make an offer on a landscaping company in in Seattle um and it looked it was smaller it was probably you know 60% of what this one is so this to give the audience some clarity this business does 2.3 to 2.5 million a year in gross revenue M um the landscaping company I think was like you know 1.5 or something like that you know 1.7 um and the the problem with the Landscaping one is I I realized when you look at the map you're like H it's just a fairy ride you know across the Seattle but the fery system is kind of a nightmare to deal with um the people in our part of the world understand that um but I I felt like if there was an emergency because it was on the other side of the water if there was an emergency I couldn't address it fast enough yeah um and then I didn't want to commute back and forth on a ferry every day so um that that business wasn't wasn't going to work out so that's you know one that I walked away from and it was it was smaller yet I mean that was probably a really good move it had those two it wasn't big enough and I had a geography problem so so at this point even though you're technically in the the greater Seattle Metropolitan Area and there probably a lot of people in your neighborhood Who commute daily over to Seattle to go to work you really don't even feel at you've learned that at this point your search is going to have to be geographically limited to the peninsula the Olympic Peninsula not even greater Seattle mhm right right yeah I mean if it was the right business in the Seattle area I probably could have you know I thought about um you know more ecomerce um you know maybe that in hindsight maybe that would have been a good a good idea but I felt like it was risky I was trying to stay safe you know I wanted a Services business um but you know I could have done e-commerce or whatever that gives me some remote capability from the other side and I looked at that like I dug around I went through Empire flippers and um you know some of the Ecom sites looking I just didn't find one that that grabbed me you know I knew that I I like I was afraid of what was going to happen with the economy um and I I really wanted stability you know I have a blue collar kind of you know inner core and you know Sweat Equity and I think the humans that make up the blue color space I can relate to um you know so you know some of that was my my draw to to to go the direction I did MH great and the and the business you know the the the of the to go back to your numbers question so of the 2.5 million um in Revenue it spits off about 600k in SD you know multiple well tell us about the business and then and then we're going to get into the the numbers what what did you how did you find it what is it so a friend of mine sent me the listing uh this one was on bis Quest only it was the only place it was listed uh and if it had said when I was scrolling through the list if it said Automotive in it I didn't even I didn't even open it I had no interest in automotive none I'm not a I'm not much of a you know Car Guy per se um and there was just nothing about the automot space that interested me but uh when he sent me the listing and I looked at it that I'll tell you the the criteria that got my attention is that there's more than one location and there's more than one discipline so this particular company U the AutoGlass clinic in Mobile Radio has a 12vt component so auto accessories from you know car stereos and lighting to vehicle outfitting and stuff um to all the way to autog Glass um and so when I was looking at it again I'm looking at it from a safe perspective I'm like okay so you you you've got the when the econom is hopping and people are putting money in their cars I've got the 12vt side that that will that will breathe with that side of the economy right and then I have the AutoGlass side that is safe and stable and you know again that recession doesn't really care about like if your windshield's broken you got to get it fixed y um and there's also a huge Insurance component which you and I talking we'll come back to that but there's a insurance component to that too so I'm looking at all of the things that can kill this business and I'm like man this looks really really solid and there's two locations so um location one and location two are about 40 minutes apart geographically so there's two population densities two you know income I would say the the core income that the the company attacks um varies greatly between those two um locations so again more stability I'm like okay I'm diversifying my income I'm diversifying my geography I'm diversifying the discipline all of those things were attractive to me and in the 25 year a you mentioned 25 years that the previous owner had been in it for that long was he the founder also no his his dad was the founder so it started as Mobile Radio in 1982 I think in a garage mhm uh very attractive I mean it had weathered any number of storms correct correct yeah very very um well run wellb built um the the company has changed like I could I could probably do a whole hour on how this little tiny company had like evolved you know under the two different owners and how drastically different they've been they've been run um you know the the the original owner the founder had mult you know I think half a dozen or eight locations at one point um and and then the you know when the the Next Generation took it over completely redesigned the company um you know brought it back to two two companies changed the operational um it's just further proof at how eclectic the business space is right like it can be done you can make money A Million Ways there's no right way there's no um black and white to it um you can be successful in the way that you run a business in a multitude of ways uh yeah so that so that's you know how we part of the reason that made this company so appealing to me and then I met the um I shopped them my wife needed a new windshield and so I scheduled here and I brought the car in he didn't know at the time who I was like I I was communicating with a broker I had signed the NDA gotten some documents he didn't know who I was but I came in and shopped it and so I got a chance to see the the owner in action and kind of see the company in action and feel the atmosphere and the culture um and then I you know had my windows tinted at the other location so I shopped both locations you know to kind of get a feel on both doing my own personal due diligence um yeah and you liked it what did you find when you shopped it yeah like it felt really really solid it felt like a like a company that had been around for a long time um it it was the the culture felt good the interaction you don't get to interact with everybody but I got to interact with enough of the people where I could sort of put there was no um underlying sensation of you know discomfort or any nobody was uneasy or you know like I just there were just no red flags popping out of the you know internal culture that I could that I could perceive anyway so yeah I I I I kind of felt like this this is the one you know and I and and then I got a chance to I went a little bit further and then scheduled a meeting with the owner uh um so the broker at that point once the owner and I started to communicate the broker stepped back and then he was just waiting for the deal to close um which I from a broker standpoint that I feel like he failed the situation to some extent but I mean it was fine and uh so the owner and I got you know we went and had a beer and got to spend some time together and I got to know him and he got to know me and I think it was at that point that they that you know we we bonded and realized that we clicked we were very complimentary I think if he and I could build a business together it would be great um much like my previous partner like uh uh I'm I I think there's two types of entrepreneurs um you know obviously there's tons of Shades but some is most people can be carved up into two buckets you're either you either lead sales and marketing or you lean um you know operation aptitude right and those two things make a really good partnership in my PR previous partner was very much operationally you know oriented right and I knew that I'm sales and marketing you know big idea um quick to act you know like I all of these things that I think are both a blessing and a curse for what for what I do and so I knew I was like okay this this company if this company needed an operational rebuild I'm not the guy like I just I I just don't have that capacity I can hire for it and I can see it but I just don't have the the ability to to fix that and so I knew that he was that that the bones of the company were good right and that where he was lacking I was strong so I thought I could come in and then start to grow that top end like let me inject my my skill set if I could just keep the wheels on operationally inject my skill set and then grow that Top Line so that was the idea and so Russ one more time on the numbers it was 2.3 to 2.5 in Topline revenue and what was the take-home what was the SD uh just shy six just shy of six so this isn't super small it's it's maybe you know it's not a million dollars of SD that you know or 750 to a million but it's also not crazy small actually right but yeah which is what I thought I thought that you know this is this is big enough to handle handle the debt load you know throw 100 or 150 out for take us through that math take us exactly that math now that we know what the SD is call the the SD 550 to 600 yeah so I I knew that so um the debt load was going to be a couple hundred grand a year to kind of no matter what you know so that left me with somewhere between 4 and 500 uh to then you know carve up into me or additional employees or company growth or a combination of all of those things and so I knew that I wanted I didn't intend to take any money out of the company for the first year and a half to two years so I I thought okay that's that's 500 you know the four to 500 that's left in the bucket know 3 to 400 um after Debt Service that is left to hire for employees so I knew there was going to be a gap for the the exit of the owner um and then there's going to be some growth initiatives there's going to be a lot of stuff that I I'm going to do the um a ton of money I was going to dump in early on to upgrade you know all of the marketing the whole marketing side of it like website rebuild signage branding you know all of that stuff and so I figured I figured I could touch half of that so 150 to 200 and the other 150 to 200 needs to stay in the in the system right for opt operational you know cash flow and so when you say you weren't going to take any money out you mean you weren't even going to pay yourself a salary right yep so you were going to work for your plan was to work for free for for whatever a couple first couple years right right yeah that that was the intent is I I could I mean I felt like if if it was generating enough money you know then you take a quarterly dividend or if you're starting to see regular cash flow then I can put I can throw myself in payroll but I was prepared to not not pay myself and I had put a smaller down you know I we did the typical 10 and 10 breakup so the owner carried 10 I put 10% down um in the acquisition and I didn't I intentionally did not put a larger down payment down so I could hoard some cash to for my own survival um and so yeah that was the intent like if I didn't need it great um if I did need it you know I had I had a cushion like if the company wasn't generating enough I had my own my own uh cash to keep me to keep me going so that was that was the plan like which I felt like I you know I had it all mapped out really well I thought yeah I mean it it sounds like you're being actually quite conservative and so you said 10 10 10% seller no 10% Equity 80% SBA loan great and and fully anticipating to invest fully anticipating A J curve and and prepared to not take any money for yourself if the if the business needed that um and keeping powder your own powder dry in in the form of putting in less Equity 10% so that if you needed to have cash on hand to infuse in the business or what have you it was there too so you you really are you really are trying to foresee choppy water and and and and be able to to navigate them okay all right so so we've got the transaction you are before you just finish saying that you were you're the sales marketing guy and the or type and the previous owner is more operational um he's not going to stay in the business so you you perceive this Gap what are you going to do to fill it so he he actually did stay U for about 6 months on payroll um to try to train me like the relationship that he and I had like I said was was very very good uh we developed a uh very much a friendship and and um I knew he would be there um I would say he was he was I agreed to pay him like his request to stay the salary um or the hourly rate was was really high but to me that seemed like tuition like to keep his knowledge to get to keep that 5 year knowledge of the business in the system while I try to learn you know from the fire hose seemed like money well spent so again to to go back to your previous point like I had a bunch of you know powder left to to deploy that was almost a hindrance in a sense like every time something came up I'm like I you know I I prepared for this I got it I'll take care of it and uh and so I think that gave me a false sense of security which you know later haunts me but we'll address that later but to go back to to to him so he stayed at a higher rate we also hire backfilled an employee that was supposed to be as capable as he was that was a huge miss the salary I wasn't a part of the hiring in that again I'm not I'm not faulting him because everything in the rearview mirrors always looks better it's at the at the moment I think we all thought it was the right the right maneuver um but the guy wasn't capable of you know doing what he did and he was provided a salary that that threw the numbers off um and this was all at the 11th hour so we closed in November um that employee was hired in September um so this is and this employee was basically another kind of operations person with a lot of Industry knowledge and experience who you saw as the person who was going to replace the owner after the owner's six months came and went sort of thing correct correct yep he would get hir get that was part of my contingency too in the acquisition is I told the owner like I I can't sit behind the desk and do everything that you do every day there's enough I felt like there was enough you know sste to hire a good guy to put in that seat and do that job um and so that was part of my criteria and I accounted for that in that sste you know uh I had a certain salary in mind he was hired at you know 50% more than I thought so that's one of the one of the drops in the bucket that started to eat away at that sste that was unexpected and again this was happening between between September and the Clos date of November that was one of the things that that change that and I because I didn't get a chance to to interview I didn't have any say in the salary he was doing what he the seller was doing what he felt like he needed to do to get the deal across the finish line and in reality it was throwing a stone in my backpack um you know that that would haunt me later and I I don't know like I could have done a bunch of different things you know in hindsight to to I think blunt that um and I just didn't speak up enough because of deal fatigue like we had started the process in June and I think deal fatigue was a big problem for me um because I'm I'm inherently a sales guy I wanted to close the sale at that point like in June I started it I'm like I'm looking for an investment I'm looking for my future and all those things and then by November after months and months of due diligence and back and forth and working on all these things I just wanted to over the Finish Line yeah and really I should have walked away there were there were probably three three things you know in that last 60 days that um should have made me walk away but I didn't want to walk away with you know five months worth of work you know and just throw it away but you need to be willing to do that that's a a huge lesson anybody call sunk cost fallacy yeah uh really hard to really hard to walk away from a sunk CA in anything in life um but the disciplined business person pushed es through that but I hear I I hear you Russ don't get me wrong what were these three things that now are obvious red flags in retrospect um so that that was one the to to hire for the owner you know the cost to replace him was much higher than I than was anticip I mean the right guy is probably still out there somewhere as plausible um but he just at the moment that wasn't the right guy for that spot um so that's one the because we did an asset sale versus the stock sale um the leases had to be Rewritten and the lease in the primary location doubled the landlord you know was able to take advantage of that like he kind of knew that the whole deal hinged on on these leases and the bank wants a wants a 10year promise you know the bank wants to see a 10-year lease well if you know so he took advantage of that and doubled doubled it you know so there's there's there's two things now that have basically those two things alone almost amount to 30% of my of my equation and so um and then I think the the complexity of the job I think right at right at the tail end I got to see how complex the business is um and and I I think I knew at that at that moment it was it wasn't as easy to backfill for that complexity than I thought it might have been and by complexity you mean the technical knowhow that's required of your team or do you mean okay yep yeah and the the business as a whole like I so from every I did retail for for years and then I went into B2B sales you know commercial sales and then and then I pretty much was in B2B space you know continuously after that and then I went into manufacturing e-commerce well all of those the transaction um pay case is very um patterned you know it's 30-day terms and most of the buys are happening in bulk on Rhythm this business the daily transaction volum there I probably do more transactions in a day than I I saw in two weeks in the Ecom business because Amazon takes all of that like what you're seeing on the as an Amazon Seller on the back end is you get paid every two weeks you know you're uploading you know you're you're you're sending in your inventory on this on this timed rhythm in my B2B sales it was the same thing might have been daily transactions but the volume just isn't there you know I've got to buy a part from O'Reilly's and I got to buy a part from Honda and then I got to build that to the insurance company and then I got to turn around and and return this part that was bad part like that the velocity of all that creates a ton of complexity in cash flow um and I I got just a little glimpse of that in the in the waiting hours prior to closing and it and it spooked me um in that the operational demand was going to be you know extreme and and interesting and so this is really about the complexity of a high volume transaction business versus what you've been used to where even though the volume might have been higher high volume it wasn't you weren't having kind of direct contact with that high high volume you were thinking thinking in in weekly terms two bi-weekly terms MH and you know one of the ways that you'd characterize this business or your perception of this business rust to me on the preall was Dumb and safe which is and and you meant that affectionately you meant that positively um and I guess the dumb piece meant you Me by that you meant like we're doing windshields were doing car radios like it should be pretty straightforward is that what you meant by dumb and is that now what you you know subsequently found out was not as dumb as it looked ye oh yeah yeah for sure um I I would say I try to keep this thought out of my mind because um it can take me down with it but there there are so many ways to make to make money that are easier than this like we as a as a collective team and hats off to the guys in in this both in the industry and within my team because the amount of work and effort it takes to spit a dollar out um is insane to me H you know um the the The Sweat Equity that goes into like removing windshield is not easy there's a ton of parts to it um the customer doesn't give a crap really who you are um so to create a positive customer experience is difficult um and and you you could work really hard and put a team you know in there for like I said you know maybe a hundred bucks well by the time you put all the other operational cost on top of that like it's just very you got to do a ton of them like everybody's got to sweat really really hard to get that income and and I I would say this isn't the only service business that's like that I've studied enough to know that there are other places like that too but at some point like volume and scale you you start to reach different tiers where the money that's brought back to to HQ for lack of a better term starts to accelerate right you get to a threshold where you sort of you pass all your fixed operations expenses and then after that it's just it's either cost of goods or or payroll and so you're generating the amount of profit you get for every dollar after a certain level starts to increase right like it's there's this this hierarchy or tier in this instance um I don't know that threshold is out there somewhere but I can't see it I can't figure it out because the payroll has to go up so fast um to get to get the the work through the system um it's it's hard to explain without like bringing up Excel spreadsheets and kind of walking you through each transaction um but it's just not there like there's no huge windfall at a certain level because you can't I can't run production every car is different you know every customer is different every transaction is different and so really you're trying to make money off of every single one and it's hard to stay efficient because you you know there are so many po holes you can fall into throughout the throughout the workload MH and that's all stuff I got to you know I got to work through and the previous owner didn't have much perspective on that stuff he doesn't understand the world that I came from and I don't understand his world and so there was a a little bit of you know transational loss there like he you know I would ask him questions from my perspective like why do we do this this way you know even even the the transaction at the counter to to me seems really laborious um I was like this doesn't make any sense you I'm I'm from soft like I understand Shopify you know and stripe and those are all made to make the transaction easy and fast and it's evolving all the time and there are apps to go in the system to make it better and I look at this system I'm like man this is this is awful you know in in how long it takes to get through a transaction like I get sweaty because I feel like the customer realizes is this over yet you know and just waiting to check them out and uh and so not having him understand my perspective and me not understanding his perspective creates a loss in my ability to upgrade the company right some some old business owners I'd say old lightly but some guys that have been know their old fashion and know that they do things the old way and they're okay with that and they know that there's efficiency to be gained I would say that the old owner doesn't even isn't even a conceptually realizing that there's a loss in that system he just doesn't know any different because he's he grew up in the business he doesn't is that to say that he resisted then your efforts to to to ring some efficiency out of these these processes um a little bit resistant um I would say but not not for any other reason other than it was just lack of perspective he just straight just didn't know like he just doesn't understand the perspective like what I'm trying to I might as well be speaking a different language like it just it just goes it just gets lost you know and and what perspective of his do you lack that you think is an impairment to your your being more effective um he's like he'll look he looks down um every everything operationally like he to me he'll spend an hour chasing a dollar um and I just cannot wrap my head around that part of the reason that this company is so good is because of those things like like he was anal about everything and that's hard for me to wrap my head around I'm a I'm a speed guy that's part of sales and marketing right like I you know I lost 10 bucks in the back in I better go make 20 on the front dangerous perspective from a business owner I recognize that I know it's a weakness and I don't let that like cloud my judgment or you know what how I'm trying to maneuver um you know so I don't know somewhere in the middle there's there this business should be you know can be run properly right I'm probably too sloppy too too risky in in some of my behavior where I felt like he was too conservative so he's choking out the top end right and I'm killing from the top end like I'm you know neither side lets the business really really breathe and perform where it should which is why I think we would make a good partnership well that that's what I was going to say Russ on the other hand it's like maybe you need that tension between the back of the house guy and the front of the house guy to come to a happy medium where the where the business thrives right right and that's that's what happened in the previous business like I'd have some crazy hair brine idea and then I go talk to my partner I'm like hey you know like I think this is great let's go do this and he was like come on man that's like that's stupid I was like what do you mean it's stupid you know and we get to have some some dialogue and we get to argue about it a little bit and and and then we come to a realization like you know what maybe maybe the concept is is good but the execution would have created XYZ you know down the line I'm like all right you you know what you're right like we missed that one yeah you know at the same token I could I could I would drag him out of his comfort zone like hey we got to we got to swing on this and it would you know and we'd hit a winner and and it'd be good and so that Push Pull created this this great you know progression and I think that that's what I missed and I and I knew that I knew that like I I didn't have that and I thought I could create a system for that and I actually grabbed um a couple of different firms to try to help me with um you know CFO type role bookkeeping you know to sort of account for my weakness in that space m but it's just not the same as somebody you know sitting over your shoulder saying hey do you know should we do that you know or or you know like we got to let's watch the books a little bit tighter we're losing some money over here and uh yeah all all hard lessons uh well Russ let's let's catch up on the plot let's kind of bang through 2023 your first year of ownership just cuz I'm I'm watching the clock and we there's a there's a lot still to talk about in terms of your lessons learned and how you're thinking about the future so you get into the business and what what does your what does the first year look like so coming out of coming out of the winter time um I'm I'm still like I'm swimming in in like trying to trying to figure out what the heck is going on very very long days um you know weekends too just trying to just trying to understand the ins and outs of the business uh you know and granted the owner is still there you know for the first six months um and so I I'll lean on him a lot I'm trying to watch him and how he's operating and try to take on those at the same token I'm looking at the back end and I'm like I the gross dollars are there they're climbing they look good um but payroll is way higher for me than it was for him and I can't H you know it his cost is in there so if I back that out then the guy that he hired to replace him I got to back that out and my costs are still kind of High you know and and I'm like okay my only at that point my only choice cost of goods looks good operational expenses overall all look all kind of fall in line um to where they were expected to close so if we back up the clock a little bit after close so the rent on the primary location doubled my insurance like garage liability insurance you know van Insurance all that stuff went up 20 or 30% because I was a new enti the insurance company didn't recognize me even though the company had been around a long time I was I was a new risk right so that went up 20 or 30% that was a cost I didn't account for I accounted for interest rates to go up went up more than we expected right so there's another basically all my extra income was erased between owner payroll new guy and then rent Insurance interest all of my disposable income was gone at that point so I knew at that at that moment like I wasn't going to make any money so Russ can can I stop you on an important point because it's funny this that this hasn't come up I don't think in any of my interviews I must be mistaken on that the fact that you did this asset purchase which is the standard way of doing these small business Acquisitions not always but the standard meant that your landlord used it as opportunity to write you new lease double your rent and you just said about the insurance company you know you didn't grandf you didn't get you didn't get any of the the previous owners pricing because they're they are all seeing you all your vendors or not all but some of these important vendors are seeing you as essentially a new customer a new client of theirs and they then give you market pricing which is a lot higher that what than what your owner had been paying anything more to say about and and if you had but clearly I mean to be clear if you had bought this as a stock purchase you would have you would have inherited the old pricing we presume so anything more to say about that because it's such a it's such a powerful uh point and and a powerful weakness to an asset purchase yeah I I like I could really get on the Soap Box about this one because it hurt me so bad um the the the health insurance changed too even though like I don't I don't I learned more later that made it seem like I it shouldn't have changed but it changed my l& rates were different like my overall payroll expense change I don't know how the state does that um but the l& rate for that classif ification Changed For Me versus what it was for him I don't know why because all that stuff had to be rebuilt um under my new legal entity yeah all those costs were unseen until the end my all the insurance so the National Insurance like group I guess um this is a whole thing too so my number one competitor I have to communicate with every day because they own the glass servicing side of it so safe light Solutions is you know own safe light autog glass and they handle all the glass claims for all the insurance companies anyway when our legal entity changed they dropped us out of the network so this company had been part of that that Network for 20 years and I didn't get paid for 60 days or so once once they realized that the transaction had taken place I had to re-register and resign up for them so they would tell every customer that they're were not a preferred you know vendor of theirs um there's no warranty so customers would would then opt to not do business with us that didn't know any different um we had to fight for the customers we did get and then we were in this huge pay delay um I didn't get any money so February to like March um yeah the end of January February all of March basically I I was receiving no insurance income and what percentage of the revenue does that represent roughly um uh it's probably half wow yeah so your Revenue drops by half yeah yeah the cash flow while I was still doing the work so I'm still getting I'm still getting insurance work still doing it but they're not paying because of they're like it's it's uh this is a little bit of a conspiracy theory but I think that they do it on purpose to try to choke you out because because I'm a I'm a smalltime competitor the whole Safelight Solutions doesn't want us to exist um they do everything that they can within legal boundaries or sual boundaries to try to make sure that the little glass shop suffers and so they they they were in no hurry to rebuild my profile even though we met all of the all of the criteria to be certified and all of the Technics met all of the criteria to be part of that like I had submitted it over and over and over and you get no response back you get no response back or you we're working on it send us this we're working on it send us on this and they just drug it out like no other system on the planet takes that amount of time like literally if if if I didn't have my own cash at that point to keep the company going we would have died they would have killed me before we even really got off the get off the ground and I think it like because they just don't care sorry I'm going to get really like passionate heated about that because I think the system is really really messed up and and do you think that if you had done a stock purchase all of that would have been avoided correct yep I would have slipped in the back door and they wouldn't have known any different and the business would have stayed right where it was and as you are as you are funding basically the this lost Revenue out of pocket are you expecting that the work that you're still delivering is just going to is eventually going to be compensated and you're going to get kind of get a big lump lump payment as it's released sort of thing so you are banking on it eventually coming yeah I knew eventually the money would catch up to me like it just SATs at sits out there as long-term you know AR and so I I was kind of okay with it but part of it too distorted my vision on the company um like I I couldn't really get a good perspective on cash flow because I wasn't like I was having to supplement it with my own cash in the beginning and so for the first you know that first quarter in the company um you know everything is sort of insane at that anybody that's gone through an acquisition understands that like you you don't know which way is up right and then I have this like emergency that I'm trying to trying to handle and then I'm not triaging some of the things I should have been like I should have recognize that payroll was an issue but I'm worried about cash getting cash in like just to I just want to keep the lights on I'm not worried about anything other than trying to keep the whe like I'm 90 days into this thing and I'm going to and I'm going to go you know I'm going to lose it all like this is crazy and so the furthest thing from my mind was am I operationally sound at that moment because I'm just trying to stop the bleeding yep and and yeah and so what I finally start to catch up like I'm starting to get the checks in starting to get some money they finally let us back into the system you know now now the customers call to make the you know to make the claim and they say oh this is one of our preferred shops and we'll stand behind the warranty so we start to get some customer reinforcement through the don't get me wrong the safe light solution still wants to kill me um but they have some legal verbiage that they use to make the transaction for the customer sound better um and so I'm starting to get some cash flow but I think at that point I'm starting to recognize now we're headed into the summer which is the busy season and I'm like man payroll is really really high you know I saw a payroll um outbound payroll In the Heat of the Moment month you know during the busy season you know 55 to 60k um in payroll and I'm I'm way over 100 you know plus and I'm like I you know where is this going you know and I'm trying to I'm trying to dissect it cuz I have I have one extra person I have the owner you know and I'm picking up some overtime and and there's just some stuff I'm not I'm not seeing in in payroll and so even though the gross dollars are going up again there's no there's no additional profit like I'm basically you know just just surviving Dollar in dollar out Dollar in dollar out like God this isn't this isn't good good you know and that's what leads us to to the crisis that we're in now I kind I I knew it in June I knew I was in trouble I was like but I I have two options I can either start to Tamp down the growth and Tamp down what I'm trying to do internally and rewrite the the payroll structure which I was deeply concerned with what that would do with the culture like you're the new guy you come in you're here for 6 months and now you're starting to either lay people off or change what the money I'm making um um you know and I felt like that could be insurmountable in a company with 10 to 12 13 people um I didn't want to lose them I didn't know the business either right like there's I I can't go out there and change a windshield like I like I could now I could but I couldn't then and so I'm at the mercy of you know of the the people that that work with me like I I TR like servant leadership we're all aware about that is 100% me because I can't do any of it you know my job is is to make sure that you're you're happy and that you stay here and you do your job so I was I was defly afraid of that so my only option at that point was try to grow so I found a small a there was a small guy um that had a small book of business just north of me so I acquired his book of business I get a scream a good deal on that I'm dollar cost averaging through acquisition so write that one down um uh so I acquired his book of business and I was able to drop that into into our bucket and that started to give us some some additional lift so 10 15% growth I'm like okay I'm you know I'm starting to to cover that but you know the the payroll is still still too high and then uh and you're and you're not able and you're not able to to crack this crack the code on why because that is so dramatic what did you say it should be around 50 60 and it's at at 100 so it's almost doubled yeah yeah it's almost doubled so the so the owner has gone by June I think that helps um and but I'm still still hurting and in payroll um and I I'm not taking a payroll and so I know it's not me and I'm just yeah I'm still trying to trying to figure this out like I'm looking at past payroll like who are the employees that were here before there's been some turnover so it's not all the same um there were a couple of other deals that were done outside of me you know prior to me that that I learned about later I was like oh this guy's making way more but why you know I just assumed that that obligation and I don't know what transpired to that anyway like we we could go down a whole Rabbit Hole in that okay but needless to say that led me you know all the way through the summer and then um so the owner's gone I kind of figure out what I'm doing now you know I I still work a lot um I still open and close dark to dark um but I'm not you know I'm not needed on the weekends I'm not on my laptop at home you know digging through Excel and and QuickBooks to figure out what's going on I have some transparency in numbers now um and then the summer starts to end and we hit October and then there's this huge fallof in revenue and I'm like oh that's that's painful so overnight the the business starts to really Hemorrhage um because my costs um as you know with typical cash flow EB and flow right like as as your as your Revenue goes up the cost lag behind it and as the revenue goes down the cost for the high cost from the previous month is still hitting you right it takes some time for those two things to to converge so we just overnight all of a sudden ran into this huge Crackdown now I've already deployed you know a fair amount of my own Capital to kind of keep the wheels on and buy myself some time I'm trying to buy myself time how much did you put in at this point Russ um I'm I'm in yeah I I would say if you count the October deployment I'm you know 100ish 100 as of now or back then like 100 as as of you you know as of yeah through October I think I'd probably deployed 60 plus going into into Q4 and then October he haded to do an an emergency dump um into it to keep it going and then at that point like my own personal Runway is really scaring me a little bit and I don't see I I look in the Horizon I'm like I don't see a way where this company can pay me and stay alive and so now I'm kind of at at this like this crisis threshold I I finally like went back to the team you know I laid I laid a guy off I didn't replace some that I had lost through attrition and I redid the payroll structure so I have a sales team that's on commission that's the way it's always been you know I believe in commission and you know some of that but that the commission structure was hurting the company so I finally went back and I told everybody I was like listen I like I I have to I have to to fix this which was brutal like the the one of the guys that I sent home was a beautiful man like just a a beautiful human and it was got wrenching to send him home but I you know I had to do it right and then I had to have the conversation with you know somebody who who had become a custom he left his previous employer to come work for us for a salary that he thought he was going to get and I have to re like I have to cut his pay by 40% and I was like I I I just don't have a choice the company can't support it right like all none of those things are discussed when go through the acquisition right this is the this is the drama in this interview like nobody nobody tells you about that pain like you you can you can go through a termination you know at a big Corporation as a manager you're you're anointed the guy that gets to send some money home it's painful but I'm I'm doing it from a from a perspective that I acquired this company and I made you a promise that I was going to take care of you and I'm not upholding my end of the bargain I just from from my you it's painful yeah it's so much more personal you're not you're not acting on behalf of the corporation you are it's it's kind of on your shoulders as you put it I mean you you've made it kind of an agreement with each of the employees and feel like you're not upholding your end right right yeah it it's a it's a machine in in order to let people pay for their families like I I get the luxury to lead the machine so that these people can work here and pay for their families right like it's it's not about me ultimately yeah anyway so you know needless to say we you know we got past that and we we sort of rided the ship from from a payroll perspective you know in a cost perspective um but the company is still very very um dire in the sense that our revenue is continuing to to be you know 30% or better below what it was a year ago in so even even so even though this is now offseason you're lower than historical off Seasons yeah yeah I'm seeing numbers that this company hasn't seen since 2019 um and and the the the you know the first few weeks of that I felt like it was me like am I am I choking the business now right like am I have I have I eliminated our capacity to generate revenue and the Maneuvers that I'm making right reducing the the the uh technician count um reducing the payroll like is everybody's um you know wherewithal to push through and create more Revenue am I shrinking that which is my ultimate fear right like and from a sales and marketing perspective that's the last thing I want to do like I want to have this you know I want to have this funnel with tons of capacity in it and I don't have the capacity that I used to so I'm like I you know where's the math and what what's the maximum number of dollars I can run through the system and that's what that's what I'm looking at is did I choke it and that I need let's say these are round numbers this is not factual let's say that I need 200,000 to take care of everything everybody and spit off some cash right 200,000 a month in Revenue right a totally a hypothetical number but let's say that I need 200 to pay for everything Y and um I've made Maneuvers that only allow me to run 175 like I all out best op operational you know capability and I can only get 175 through the system right I've I've essentially like put a cliff that we're going to we're going to dive off of so um so that's where things stand right now um that's where things stand right now Russ yeah I don't I don't know um what that thresh I mean I I I have an idea what that threshold is but I don't know what if if I've limited what we're capable of I don't know the volume's not there the inbound volume's not there um in my opinion I'm I'm speculating and what does what does the previous owner say about about this has he ever seen anything like this or are you even communicating to him about what's going on yeah we're still communicating he he lives he moved away um and has a has a regular job now and so he and I communicate far far less um and I've I've posed this question to him um but he doesn't really have an answer like again it just sort of like it falls on deaf ears I'm not faulting him for that but I would like some you know some input like oh everybody tells me it's seasonal like I know that there's a low season but I'm 20 or 30% below I'm actually getting most of my most of my Intel from other local business owners in my space so I know there's another you know AutoGlass company that's for sale um that's fairly close to me I I I was able to get his documentation look at numbers real-time numbers just from a from a perspective I mean he's close enough geographically that we that I I can the economy is the same but far enough away that he's not you know in my back pocket anyway I was able to get his numbers and look at his real-time numbers and see that he's down I know that um cartoys which is a you know a larger competitor in our space they're they're down there's another audio shop there down 30% I'm like okay so for whatever reason there's an economic retraction that's hurting me I didn't think AutoGlass would suffer from that I'm seeing in the electronics for sure but I'm also seeing it in AutoGlass and I my my theory as of late again I I roll through a bunch of different you know this this could change tomorrow but um I think that because Nationwide there's a big company that laid off closed a bunch of shops and laid off a bunch of technicians 300 and something technicians back east somewhere and um I think what's happening is that the the people are just holding up right like they're holding on to the cash and so what happens is that the AutoGlass industry the demand starts to shrink a little bit and then safe light Solutions this is conspiracy that you might have to cut all this out but I think the safe light Solutions can turn up the steering um in that they start to scoop more work like they get to talk to my customer way before I do and so if they're if they have open capacity they get to communicate just a little bit more with a customer to try to bring that customer into their facility keeping that customer from me in the summertime when it's busy they're full they don't really have the capacity they don't want the call center to suck in as much work and so I think they they the dialogue or the script that those call centers use changes depending on seasonality so I think that's what's happening is that safe light is soaking up more work because the whole Market has shrunk a little bit interesting so so your your kind of survival is predicated on overflow business from safe flight but when the whole industry gets a little this is your theory but when the whole industry gets tight safe flight has less overflow and they keep it all for they keep more of it for themselves and so there's less coming to you at the margins MH um but the final Revenue numbers for 2023 were they how did they compare to previous Revenue numbers if you look at the entire year we ended up about flat so up 20% 20 plus perc June you know probably started the tail end of May so June July August September was even you know maybe 10% better and then October we started to see a fall in such a and it was so severe that we erased all the gains that we had in the summer so I ended up finishing the year about flat to what it was the year before so I had seen you know 20% growth over the whole busy season and then lost it all in Q4 um ended up flat and so now and my expenses through that whole summertime were huge you know I'm I my end p&l for the year is going to be netive 6 digits easy um I don't have final numbers yet but yeah and even and that's after you've put in about six digits uh correct yeah Russ going back to the owner and his ability to help you the I mean one thing just going way back to this general manager sort of person that he was going to hire as his rep did hire as his replacement and paid generously um and then now maybe his inability to really help you do you think a lot of that stems from the fact that he his experience of the business was without a big Hefty loan payment so he just feels like there's more his experience of the business is one with much more oxygen than you have I just I just think that you know when we talk about owners and sellers they don't have their real day-to-day reality is so different than ours because they don't have this big SBA payment that all of us have do you think that that plays a role in in in you're kind of talking past each other I yeah I I mean I showed him before we Clos the deal in the months heading into there was a couple of times where I I was you know I had this like my projection tool you know my Excel projection tool and he could see in that projection tool here's here's the SBA debt load like I was giving him full transparency on everything that I was taking over um and again like it's just um I don't know if it if he if he chooses not to say anything and has a thought or if he just doesn't have a thought you know I don't I just don't know because I I you know I had some questions and I exposed that to him and we've had questions later I was like listen I you know the salary that you used to pay yourself basically is now SBA debt you know um those two things were interchange that's part of it what made me comfortable is like he's been paying himself the salary for a couple of years I was like so the company can support it comfortably you know the SBA debt SBA debt um and and so I you know I but not once did he acknowledge you know in you know in September of whatever I took this in due in financial due diligence I may have uncovered it like where he changed that I didn't see it but it where he took less to keep the company going I I just couldn't find it um but it's hypothetical but yeah to answer your question I don't know why I didn't get any like why he doesn't like maybe you could do this or what about trying this or what about that speaking of trying things and things that he wouldn't relate to again on the SBA loan talk to us about this what you've done with with your loan so I I knew that there's a risk there's a cial risk I'm I'm at a point where you know I could you know not have enough cash to keep the company alive or the company could shrink fast enough where I can't make the obligations and so I thought it might be prudent for me to reach out to my SBA lender and say hey I'm you know I haven't missed any payments I haven't been late um but maybe we need to have some dialogue um and God bless him the SBA lender was immediately sent me to his team and they were like let's see if we can you know you know do a modification or do you know interest only payments or whatever like he gave a list of things that were were plausible and I was like what you know that was that was a huge relief to me um I don't I don't want to marry myself to an SBA loan for two decades um tell us what the restructuring was if you can well so it's not it's not complete yet so I went through the paperwork Gauntlet you know know two weeks ago and so it's under it's within underwriting review I just got an email this morning actually asking for some additional information they need some more uh to to clarify the final 2023 numbers um so I don't know what they're going to do um you know but if they it looked to me like their initial thought was a modification extend the term you know 20 years versus 10 years which would take a huge load off of you know off of the the company and could you know con ably create the breathing room I need I mean we're still we're still you know in Dire Straits but I feel like the decline is leveled out you know so if I play the decline out I'm going to be 20 to 30% down for the for the rest of the year but I'm still going to I'm still going to have a busy summer it'll just be 20% less than last summer um and those are numbers that I can I can just rebuild my you know my projections and and work back off of what I think that will be and so I put in the new SBA payment I'm making a bunch of other shifts too to to try to to try to help and and get through it and so you so let's let's pick upart some of that so you the SBA lender offered to reamortize the loan over a 20-year term rather than the 10 which is what it was and that of course reduces the payment a lot can you say how much or is I'm not sure that'll be helpful to the audience but maybe just give us a number anyway yeah it's uh so it could be um it's going to be around 80 grand a year 80 grand a year that that frees up okay um of course it does then make as you said the loan a 20-year loan so you'll be paying it off for 20 years if you don't refinance at some point in the future is there any other negatives to it because that does seem like a pretty good deal for just raising your hand yeah I I I don't know that there are any other like gotas in that um I don't know like what happens if it gets worse I you know what if next October comes around and I'm still I'm still in a predicament do they get to do I have any more lifelines like if this is the one Lifeline I get you know do I use it now you know I would say that those are questions that I have in the back of my mind but there's no other there's nothing else that has come out of the woodwork that looks negative I I mean I think we all recognize that the bank doesn't want to go doesn't want to repossess a home like you know like they're not out to do that there's nobody wins in that I guess in my instance where I've got enough equity to cover it they might be okay with it you know but then they make homeless and then you know having an owner like from A bank's I'm just trying to put myself in their position from A bank's perspective if the owner you know has lost everything like how can you ensure that your debt is going to continue to get paid right like if you take everything from me and I have nothing to live for I just from A bank's perspective it just doesn't make sense to me right um right you know maybe they're maybe they're bloodthirsty I don't know but no no it's definitely an important insight into their psychology that they they don't want to repossess anything they want to see their their um their borrowers be successful and so they they give themselves wiggle room on the back end that they might not be so transparent about up front uh I'm getting a little above my pay grade and talking too much about that because I I don't know what what um Quivers there are in the in the what arrows there are in the quiver but when you talk to your lender do did you get the feeling that you could have an even more open conversation than you had where it's like okay thank you Mr or Mrs lender for changing the amortization the term here what happens if things keep going the wrong way what what are step two three and four do you have any visibility into that nothing was exposed U but the fact that I I was immediately sent to a team that's built around it dealing with this makes me feel like there's a there is a triage system in place yeah and and I imagine that there's probably a tiered you know a tiered you know perspective I don't know like with like had a had a uh SBA payment bounce like I I assume there's some sort of deployment like they they have a probably an sop for when that happens right like this team probably comes converging in on you and then you start to you start this dialogue process I'm just I think I'm ahead of it so I'm not seeing all of the I'm not seeing everything those are all yeah and so Russ with this some debt relief as it well it's not I guess it's not relief but this debt extension which relieves the monthly payment you you and let's say that your numbers are now down 20-ish perc your sales are now down 20ish perc if you did you I hear you say that you know playing that forward for the remainder of this year if they remain down 20% all the way for all 12 months that with this relief of the debt payment you can you can make them numers work you can the business can be sustainable uh yeah I believe so you know back you know when I restructured the payroll I I also went back to my insurance company and changed deductibles and changed coverages and stuff the bank has some say in that I have limits in which I can I can maneuver stuff but yeah I uh I changed I changed that I changed the health insurance plan which really I'm too small for health insurance I mean it was a cool perk by the previous owner I shouldn't have it at all um to be honest um but it's I so I changed the percent in which the company pays um and and I changed the sick time policy like I'm I've made a ton of like lever polls I now charge a customer 3% if they're going to use their credit card you know um all these little things to change um the revenue perspective you know and the net profit perspective like I'm changing all of that currently in addition to the debt I'm also you know know I'm trying to consolidate um locations like I need to get everybody Under One Roof so I have the I can't retract anymore right now because I'm so spread out so I need to get into a central location like this is a whole a whole another story here but this is actively happening right now is if I can get everybody into one roof if I need to retract and lay additional employees off I can I can still be efficient in one building with two buildings trying to keep coverage in two buildings technicians in two buildings I at at a retraction limit unless they start to limit hours and then from a customer perspective that looks I I think that that looks bad um like oh you're only open you know 9 to 4 or you're only open Tuesday Wednesday Thursday I just the impression that that gives to the customer I don't think is very good um it's just too hard to control you know operationally you know the number of locations that I have when I need to retract and if you consolidate will this do you think that this will set a new Foundation from which you can survive comfortably or is it also kind of a Hail Mary uh it's a little bit of a Hail Mary I'm I'm I'm pushing my eggs into what there's some some stuff you and I can't talk about it right now but at the next call we'll be able to have a discussion there's another layer in this consolidation um that I I can't speak to right now but yeah I there's there's aside this R I'm making one final like push to try to keep everything alive and here's here's the other side of that if I can get everything into one unit I have I have a guy that's capable of being a general manager and two two sales members everybody's dispersed across the facilities right now so it's basically everybody's like I'm covering a facility I've got another guy at another facility and then I've got two guys at at another facility if I can put everybody in that one roof I don't have to be there open to close and I can go get a job so that which I'm going to have like I keep deploying my my Runway I I got to I got bills to pay too and I don't want to kill the company because I need to eat um like I need the if the company can pay for itself um you know and I can I can run at 30,000 ft and just let it idle I'm good with that but I got to go out and find a job I can't do that if I need to be here open to close so that's another Advantage if I can get into one seat I can go out and seek you know outside employment to at least keep the lights on that from a from a Searcher perspective so I looked I looked at that business so okay can you jump into the system if if all hell breaks loose can you jump in and do everything right and I thought like in landscape I can go pick up a shovel we talked to the the gentleman that owns the cemetery he was able to jump into the system and go do some of that and and pick up I don't have the skill set um now I could be a salesperson but a salesperson doesn't make enough to pay my bills so for me to to to get rid of a salesperson and take that seat yeah um it still creates a you know a net negative situation for me so you know there's the the the one position that could pay me enough I don't bring enough value to the company to to have that person leave the company right like his contribution is so high and so good for the company that it would be again a net negative in you know for the company so I need to you know potentially go out and seek outside employment but I can't do that until I get into one building Russ you just teased the fact that that we have already planned to reconvene to hear how all of this is played out because we're talking now and it is so in flux uh and a lot of the a lot of your prescriptions for how to solve this dilemma you're you're literally putting in place like as we as we just heard you had a request from your SBA SBA lender in your inbox this very morning so we are going to talk again and hear how things uh have shaped up here for now is there anything more that the audience should hear should know anything I failed to ask I I not not that I can think of um but yeah the next six weeks will be telling there'll be a lot of uh a lot of developments both from the SBA side do we survive the winter so the busy season starts um you know starts to ramp up in March so we're in January right now I got to get through January I got to get through Fe February and then I should start seeing lift in March um I'll know in 6 weeks um about the one facility idea and I can cut up I'll be able to map that out um and explain what the other the other the other side of that that I can't speak of yet I could talk about that um and the yeah so it'll be it'll be a good recap okay Russ well of course thank you so much for giving us a window into what this looks like real time uh I and I'm sure every single person listening to this is is really rooting for you uh sounds like a very difficult situation but that you are doing your damnedest to pull through so um we'll we'll hold our breath in the meantime and talk to you again when you think it's appropriate of course you and I will be in touch I look forward to it will I look forward to it more than you know thank you Russ I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business