Julie hottinger Janna hottinger sisters welcome to acquiring minds we're glad to be here yes Julie and Janna I've already said one interesting angle to your story you are sisters but there's a lot more the two of you bought a business in the construction space last year last year or was it earlier this year uh earlier this year October October it's 2023 yeah the two of you bought a business in the construction space last year and despite some hiccups it is going well so we want to hear all about it Julie why don't you start us off with some background on yourself then Janna we'll go to you I started off working in politics and then when I had my uh first and only kid I um transitioned into public health um went back to school got my Master's and PhD and where worked in public health for about 10 years through covid and I've always been interested in sort of doing something um you know running my own business but I had always thought that you had to like come up with an idea or something so I sort of had been thinking about incorporating what I was doing into somehow creating a business but then um I started getting like tired of public health Co really kind of put me through the ringer I guess um and didn't really like I don't love working in a bureaucracy um I found that out during my public health career and I my best friend's husband had um purchased a about 10 years ago he bought a carpet cleaning business and made it grew it really big and ended up selling it off and I started talking to him about um starting a business and getting out of Public Health and doing my own thing um meanwhile J and I are sort of talking about doing this and I'll let uh her tell you her story but we um started looking at starting our own business and looked into um things that we could easily learn without having to go back to school and then like 6 months through that um he was like why don't you just buy the business and so we uh bought the book buy and build started listening to your podcast and a year and a half later we uh bought a business amazing and just curious your uh friend's husband who so successful in franchising he didn't think that you should do a franchise uh you know he wasn't um necessarily against doing a franchise we actually looked at a couple of franchises um but he said you know the the he thought the best thing about a franchise was if they had like some special sauce that no one else could recreate in terms of like you know what you end up paying in terms of like franchise fees and everything if it's something you can go out and create your own he thought you know do that or as as we learned it it seemed to be less risky we we were always about like lowering risk and just from everything I read it seemed to be less risky buying um a an established company that was you know over a million dollars in revenue and um going from there so he had a great EXP though with franchises sounds like it great Jana tell us about your side of things how I got here so I have uh worked in government and uh nonprofits for most of my career um I've essentially worked for the same leader for the last 20 years he was the mayor of a major Metropolitan City now he's the CEO of a foundation and I'm the chief of staff um he is likely going to be retiring pretty soon um and so it got me thinking about what I want to do next where I can apply everything that I've learned in all these various positions um and and was looking for some autonomy and So when Julie and I we were I think we're on vacation one one weekend up at a cabin up at a cabin and we just started talking about you know what what we want to do Julie was already kind of looking at this starting or buying a business um and then we just continued the conversation and I I kind of was like well that that sounds great because I have all these skills that I've picked up over the last 20 years you know I have never worked directly in business um and I'm going to need to find something I don't want to stay where I'm at and so if we can find something that over the next few years we can grow um and then I can step out of of my nine to five if you will and so you had said that you and Julie the kind of as the plan forms you and Julie partner but you don't immediately go in you go in I guess when this gentleman retires right or when we reach you know a point that that it makes sense financially well obviously the trust issue between partners is one that you got to Leap Frog because as sisters you have a lifetime of TR trust built up on the other hand of course partnering with some with a a sister or a family member or a friend Etc um could only adds another layer of complexity to the the partnership relationship how did you all think about the the the potential downsides here the risks here to the relationship yeah we um we talked to a lot of people as we were sort of going through the process of like looking at businesses and deciding what we wanted to do I have um a really good friend who has a family business um that's really successful and spent some time talking to her um we talked to other folks who had family businesses and then we we kind of formulated that you know we need a really good legal partnership agreement um that gives us either one of us a really easy out if we want to get out you know no questions asked this is how we would divide it up we spend a lot of time working on our relationship I guess and working you know uh my mentor or our Mentor um uh Michael is his name um said you know like overc communicate with each other just make sure you communicate everything and I think that has been really important you know every day I call Janna and give her like an update of what's going on and just just really making sure we're communicating everything but you know we're we're early and so far so good you know we're just very aware of the fact that it could be very difficult um yeah a partnership like this I think we went into it you know knowing about that thinking about it talking about it making sure that that was definitely something that we needed to um be very intentional about so let's hear about what your search parameters were you've decided to partner now the search comes what what were the parameters what was the timeline share with us about that please I certainly didn't want to go back to school um and you know learn something very like timec consuming or you know so we wanted to look for something that was something we could learn how to do first we wanted to like start a business from scratch we focused on Like Home Service businesses also because we um through my friend Michael we had a lot of sort of Connections in that world and that's what he did and um so so you know we that's sort of where we started um we looked at uh you know like I said an an epoxy flooring business which was a franchise um so that was the first perimeter though I guess was something we could do um and so you two were prepared to do epoxy coating yourselves you were prepared to be the technicians and whatever it was I think we were we were prepared to learn how to do in case we needed to like I don't think we were going into it thinking that was going to be our role but I think we wanted to be able to step in if needed and to find something that that yes we could physically do um if needed but yeah like we when we were looking we went to an epoxy flooring company um in New York because of the weather conditions are similar to Minnesota and you know we like checked to make sure we could even like lift some of the equip equipment which you know we had to like jump on it and get it down and so yeah I mean we we wanted to make sure we could fill in so you really were not scared of getting your hands dirty it wasn't the game plan but You' do it if you had to yeah like literally dirty literally literally yes um and then I think the other parameter you know as as we as we went into our search we added more things like um once we decided we wanted to buy a business we wanted a million in Revenue to start with um and then what were some of the other things we I think we our minimum sde was like 300,000 yeah to start with is what we're looking for um and let's talk about that number so the idea there is I assume you were going to use an SBA loan yes and do some sort of 10% or 20% down structure yes yes yep assuming that the the SBA loan payments are going to eat up half your SD right let's call it so that if you bought a business with 300 SD once you got in it would leave 150 after loan payments and so that 150 was going to go to both of you one of you less than one of you know one of you and then but not even full salary and the rest goes to reinvestment in the business it's a low SD what I'm getting at clearly is that it's a low sde number particularly with two partners right and mid midcareer folks who you know who are you know can can make good income elsewhere so I think that we are lucky in the fact that I can continue with my regular job and I don't need to be paid uh Julie you know currently her husband has a good job um and I think we could be a little bit more lenient about how much we needed to make in the beginning of this Venture um knowing that we were hoping to build and scale and make the company more profitable but I also I did need to make a salary yes so that was part of the um because you know I would be working full-time in the business yeah and leaving my job we had the benefit of my husband working but I did need to earn something can you share with us like what you needed was this like 50 or 75 sort of thing you needed to be able to take out well I think by the by the time we got done I I because we I had been unemployed for about a year and a half at that point um closer to 100 like I would say our final SD requirements were more in the 450 500 range ah precisely for this reason because because Julie needed to make a proper salary after having gone unpaid for a year and a half and again we learned that like that's one of the amazing things about like acquiring a business is we learned that you don't have to like give up absolutely everything to do this or we you know we didn't we grew up with parents who were not finan Financial people or or you know entrepreneurs and so we had I had never learned how you can use money to make money I had always thought you needed um you know to come up with an idea and grit your way through to make money you know like you had to have this amazing idea and you had to like eat ramen noodles for four years and you know you're not alone in thinking that Julie that's that's part of the reason why this podcast exists to disabuse people of that notion go ahead yeah and I mean I wish I would have known this sooner because I mean I'm loving what I'm doing right now it's totally up my but it it it didn't take like a massive change in lifestyle it definitely has changed you know like my husband is now the main parent for a while and you know it changed a lot but financially it luckily because my husband works it it didn't cause as much deprivation as I thought it might yeah but that that also is is a lesson in buying a slightly larger business because you your criteria of sde expanded or grew to be 450 or 500 that was going to give you extra room to pay yourself yeah so so that's also a key takeaway I think here I mean if you're if you're going to buy a business with low SD uh and it which means it's going to be quite small and you're going to need to invest some of the earnings of the business back into the business so there's going to be even less SD for you to pocket you very likely either need to do a Ramen living lifestyle or you need to have sources of income or big savings or whatever so this is all kind of basic arithmetic but it's worth spelling out for people y great for sure and Jenna going back to your um expected future involvement in the business you said it was going to be timed to your boss who you're for whom your chief of staff hiring but I suspect it's also going to be tied now to the business generating enough earnings to pay you something that would be acceptable so there's actually two criteria y to meet before you get into the business yep I'm pretty flexible in my career like I can continue as long as you know I I need to until the business is profitable enough for me me to to start working um there so I do have some flexibility which I think is it's good do you have hopes is it kind of like a sooner the better or are you like a year feels good or five years like like I ium it's not completely open-ended no it I'm thinking you know three years three to five years ah okay so lot more longer term so Julie will have been in the business running it for 3 to 5 years when you step in hey I'm I'm warning you now that could that could be tricky for the ship's going to feel like the boss or is going to be the boss yeah well you know I also like we have uh larger aspirations I guess in terms of like where we want to take this and you know I could see a situation where I am the person who like like eventually we' like to get like a general manager to come in and run and then go buy more businesses either in this um you know in woodworking or cabinets or something else so I could see a scenario where Janna jumps like I go and like start you know like jump in when we buy a new one and set up our systems set up um you know get things rolling for a year and a half two years and then you know I move on to the next one and and like there's a a place for Jana to like in the in the overarching structure too and I also am working in the business like I'm not like removed from it you know I have duties that that I'm doing in the business and I'm here a lot okay well that's a good clarification because with a full-time job one might think that you are pretty it's pretty removed um so so the vision recognizing that you're only you said October so only N9 months into it we're going to see how it goes but the vision uh that could come to pass is kind of a hold coat you bought bought multiple businesses and you're kind of the you're kind of the one who jumps in as the immediate manager operator uh Julie and for a time gets things transitioned and then maybe rinse and repeat and Janna you might be kind of more at the hold Co level and maybe I'm already like layering on more detail that you know maybe from your all's perspective it's like well we'll we'll just cross that bridge when we get there but um it feels like that's kind of what you said yeah I think that's I mean that's my vision um we are a ways away from that of course sure but uh yeah that and Jenna do you imagine yourself ever being an operator getting in um I get you know I I haven't like put too terribly much thought into that I think like right that's a no that's a no I know go ahead it's definitely something that I need to think about and we need to plan for of like what's gonna happen next when this eventually happens tell us some of the listings that you looked at or the businesses that you that you considered before arriving at um what you did so the first one we looked at which was I think it was like $225,000 was the asking price was like a fabric who curtain a pster that was the first one we we looked at um kind of like a a practice I guess type interview the owner see how this all goes um so that was the5 was the was the purchase price you weren't even seriously considering it the SD on that would have been 50 Grand right just kind of like dip our toes in and and see how this whole um buying a business process works I guess okay what else uh so then we looked at um I you know I think the epoxy flooring was next which was the franchise um we ran into this issue with the Brokers um who were selling the upholstery thing that we just had we just had a bad experience with them so we were like okay we need to pause and we um I just like put in an email request to this franchise and started working directly with them um we were pretty serious about that one we actually traveled to multiple sites we were in Salt Lake City and uh New York um to look at different franchise sites um and then at and then at the end of the day we just we just couldn't pull the trigger on it um we looked at another epoxy flooring company that was trying to sort of do something similar to a franchise um but he was just kind of starting out okay we looked at let's see after that we looked at an asphalt company we looked at two asphalt companies um one was actually uh owned by a woman and so we were um pretty excited about that one then we went to an asphalt convention and we're uh we're uh had some got to love small business yeah yes had some interesting interactions and came away what do you mean what do you mean well so we met with um it just turned out that my sister or my daughter's rioting instructor's husband's Dad yeah was like this asphalt King and had just sold his gigantic asphalt business to private equity and it turned out he was going to be at the convention so we met with him one morning and he was like I don't know why you guys want to want to be in this business and he I mean I think he clearly like had had a rough night of celebrating so like he was he was like do not do it yeah he's like do not do it want to do it everybody is like an and I think I think it tell us it sounds funny and interesting but also there are going to be people listening to this who are looking at asphalt company so so why why did the king of asphalt say don't get in especially since he'd sold and you know Pro probably was speaking pretty candidly yeah I think because it he said it's a really I think like it's a really tough business business and he had started when he he like went to a year of college quit college was like I want to I want to do my own thing and he started at the very like he started with a pickup truck and a shovel and asphalt so you know he started at the very beginning um and had been in it for you know 30 plus years um I think he thought it was like physically demanding um I think he thought it was uh just really difficult to and this is funny given what we now own but difficult to deal with contractors construction you know different construction projects um I think you thought it would be difficult for a woman to be in a a business with that's pretty much male dominated um now did he say that or did you are you assuming he thinks that uh I'm assuming I'm actually pretty sure he said that yep um he wasn't the only asphalt person who told us that too um which you know I don't really put a lot of you know there there was like a woman of asphalt booth that we hung out at and they were all like yeah do it but uh so who knows about you know whether it's a woman like I'm sure there are tons of women who can go and Rocket I think it was also worried that we just didn't have the experience yeah I think now would be the time to introduce that that theme of your story as women looking at construction e Home Services e trades blue cery businesses and um what you experience there this is a theme of the story um so it'll we'll kind of interlace it throughout from here on out but I don't think you were talking about the king of asphalt but you looked at an asphal company a different asphal company this was the the owner who freaked out on you right yes yes can can we hear that one because this one this one is directly related to again this theme yeah what happened there so so this was the second asphalt company we looked at and and one of the reasons we were interested in Asphalt and construction is because we have a background working in government and we were going to be certified as a woman-owned business and so we were going to try to take advantage of that giving getting like government contracts and you know City municipality contracts so that's sort of why asphalt kind of fit into what we were looking at um but so we were met with the second asphalt company he um you know we like we got the deal I guess um he we met with him a couple times leading up to uh you know signing um we had our financing in place we had agreed to keep his son on which was really important to him to work in the business um and we needed his son because his son you know really knew how to run the business and knew the knew the business um he was going to stay on for like a year and help us um we were going to pay him for uh he was going to do it I think for free the first month and then we were going to pay him as a consultant well like literally we were hammering out the agreement and the night before we were supposed to meet with our lawyers to finalize he called me at about 8 o'clock at night and he was like I can't do this I can't sell this to you um you guys don't you know you're you're not going to know what you're doing this is a rough business um he was just like complete 180 because he had been really supportive at first and um so this was completely out of the blue yes you're at the finish line and he calls you and starts ranting yes and he was he was he was ranting and and was it about your lack of experience or the fact that you were women both was he explicit he wasn't explicit and this has been sort of something that like a something we have not been able to figure out but it's been a common theme in everything from meeting with banks to you know buying businesses is it our lack of experience or is it because we're women is it because we don't have business experience like we haven't been able to really parse out what it is you know which one of those and it could be a combination of all of them um you know that's given people pause when when like presenting them with with us and do you feel like you do you feel like you've gotten a lot of NOS or pauses compared to you listen to acquiring mind so compared to the sense you get from other guests I think so I mean it definitely and and from other business owners that I talk to MH um it definitely seems that again you can't parse out what it is if it's women lack of business experience or lack of like industry experience what it is but you know I think it definitely uh seems that it's happened more to us than other people other people may have gotten NOS for other things but I have never heard somebody get a no for lack of experience in my limited network of people who buy small you know midside businesses yeah Janna what do you think um I guess I agree with Julie I feel like we were second in a lot of the the businesses we went after um but I feel like we we went after quite a few before we we found one that was a good fit for us um and I think it's a combin I also think it's a combination of factors I think that being two women does play a role in it when you're looking at construction um depending on the owners right like like the the folks we bought this business from they had no qualms at all about us being two women in the business um but I feel like kind of like maybe generationally there are some still still some things about women being in in um the construction industry or labor that that pops up once in a while you know it's one of the things not to excuse the behavior of some of these sellers but it might not be that they are like I don't think you can do it because you're women but they think that their own Crews might yeah so they're they're kind of you know they're kind of projecting on to you know onto their Crews how their Crews might react to you y um and I go ahead no no basically that's it go ahead no I think I think that's a really important point because you know the crews and then also like the contractors you're working with right um so yeah so which is again not to excuse it or to say that it's it still fundamentally comes down to more friction as women um so but it could be them imagining kind of second order right uh experiences that you'd have very interesting um well it's good for other women to hear and and it's this thing that happens so much in kind of um you know social dyamics um with you know gender and race and so on is you if I went through those experiences maybe I would have gotten the same amount of nose the same you know felt the but I wouldn't have had to had the nagging question mark in my mind so even if I went through the same exact process the same exact experiences and number of noses you did I still am going through it a little more lightly because I don't have to I wonder hm is it I'm a woman sort of thing so anyway something for everybody out there to be aware of but particularly female listeners although they probably could have guessed that this would be something they'd have to an additional level that they'd have to deal with yeah all right well um let let's we're quite a few minutes in we haven't heard about the business you bought so let's let's get to that tell us about the the business that you bought what it is and why did you like it all right well um we bought a um commercial cabinet company um we do it's it's custom work we do uh tenant Improvement jobs for like office spaces we do um Medical Offices retail restaurants bars um work through we're a subcontractor so we work through contractors uh for the most part um and making cabinets and and so cabinets are specialized enough I mean I know that putting up you know IKEA cabinets in a kitchen is hard I'm just thinking in a residential con uh uh context here that the general contractor that does the rest of the kitchen is also doing your cabinets it's not a specialty thing um but in a bar or dental office or a any commercial environment cabinets are a specialty thing so the GC that's handing hand all the other construction activity just doesn't knock it out themselves yeah and even in residential they they don't they're like residential cabinet companies too that bid for yeah but um yeah they so like the architect will work with the contractor to um come up with you know everything and then they'll bid out the cabinets and the mill work so you know we do like closets we do cabinets we do reception desks um those are our main things we're doing a lot of feature walls right now um so like wood paneling or um slat walls any any sort of um mill work that is in an office space okay and so that's why this Mill workk that's why the it's kind of you call it woodworking it's a woodworking business when we bought it it was I think so 2.1 in Revenue last year in 20 well in 2022 so and we bought it October of 203 three yeah um they had seven employees SD was uh 750 um let's see the the owner it had been in business for 30 years um he was a cabinet maker himself and just grew the business his wife did all the bookkeeping and accounting she had like a full-time job and did that on the side we met with them um and just connected with them right away we really like the owners we really think they um I mean the business was just very well-run the guys had been here for so there were seven employees three of them had been here for two for 20 years and one for like since it it was started like 30 years and the rest of them had been there for a couple of years um and they he the owner thought that they would all stay on which was really important to us because we know knew nothing about cabinet making um and by the way this is also a trade that you're not going to be able to get in and do yeah it's to right yes that you know we um we we just we learned also that you can't be too rigid in your your you know it checked off other boxes um so and it was two years into it and we were like we got to pull the trigger at some point and this feels right Julie you've been searching for two years like full-time uh I it wasn't full-time because I I worked but yeah after Co I kind of left work so yeah I mean it was two years and doing a ton of research and um you know visiting doing tons of networking and the this business did the of course Construction Construction related that is all always um you are you're worried about the cyclicality of that lender stor always love it how do you think about that Project based how' you how' you think about that I guess 30 years old that's the answer to that question right that that meant a lot to us that it was 30 years old and he could have grown but he didn't want to like there's zero marketing budget zero and he was turning people away and he just didn't want to manage more than seven people but that really meant a lot to us that you know like it's even though it's um a construction business and cyclical if you think about it like every 10 years people need new cabinets um in like this this space it's kind of very Niche um but they need to a lease and an office space is basically every five or 10 years and when somebody moves out or moves in they redo all the cabinets okay um realize that yeah for the most part I mean sometimes it's not a big job it's like we want to change the break room cabinets or we you know but they always try to Spruce it up a little bit yeah yep and with uh like Co all these business business are downsizing which means they need to do tenant improvements and change um change their space which was something shortterm to look at but we didn't know that when we got into it I don't think I didn't know that like that was a a blessing and wait that that's a a blessing wait but I I think of Po the postco commercial world as smaller Footprints less office space yeah yeah we were worried about not a good thing we were worried about it um and also worried about the economy because at the time we were buying interest rates were Rising um and you know people were predicting a recession and uh but yes so we we had these theoretical ideas about Co and if his growth had been like Co effect but yeah like what Janna said we found out that all these bigger spaces were condensing because of work from home and so there was tons of TI work going on because they had to make these spaces enticing for people like we put in kegerators and we're still putting in like kegerators and like you know just really um sing like what do they call them thought rooms or yeah I don't I don't know like you know just like all this updated stuff to get people to want to come back to the office okay so so the fact that on the one hand it doesn't look good because the footprint of office is is going to just get smaller in the aggregate but on the other hand there's all this churn happening which you do benefit from because they're re envisioning the office the office and therefore doing constru ruction to put in kers um so lots lots of work for you all um okay very interesting I just want to say this um I was talking to somebody a couple days ago and he funds private Equity Funds who are solely interested in commercial real estate and he was telling me that it's horrible for commercial real estate right now yeah and to me you know a year ago I would have been like oh that's that's must mean it's terrible for the cabinet business and I think just a really interesting lesson in all of this is like to really get down to the local level and see what's actually happening because all these big numbers can can be very helpful in guiding you but you know we're so busy we can't and and I don't I still know if there's like a delayed effect and it'll it'll hit us but it's just so interesting to me that you know he's saying it's only starting to pick up now um so I don't know it's just really interesting to you know you just really got to talk to people it's a great Point Julie that you know we we probably a lot of the associations we make about how what Market a business is tied to are pretty loose and and they they need to be interrogated more closely by us as business buyers to really understand the Dynamics there um it's a a great Point um but speaking of then a business owner the seller who was turning business away didn't want to grow and what you're seeing you're going gang busters so what what is revenue projected to be you said it was 2.1 at the end of 20 for calendar year 22 mhm you bought it late 23 what do you think revenue is on track to do for this year we're on speaking on July 1st so we're halfway through the year yeah so we're at 1.5s now almost 1.6 we have to close things out but um for the end of the quarter um you know and summer is the slow season theoretically and we are booked through September so yeah yeah so so you could see getting to three to three like doubling yeah yeah I I've sort of quietly made it our goal is to get to three okay I also like the the guys um I don't want to scare people into like we're gonna throw all this work at you because we're new and we have all these goals and so that's what I mean by quietly but they they already have experienced of 50% increase in volume for the first six months of this year have you hired or are they just working harder or or what I mean they're already the business is working at a much higher level there's more much more throughput 50% more throughput yeah so we um we've hired we hired uh two two new people and then like a summer intern um or a summer like a kid out of college who wants to see if he wants to be in the trade um but we're and we're still trying to hire it's been really tough to to hire I mean that is what's going to slow us down yep not an uncommon thing to hear um but with this whatever intern Apprentice guy testing things out and then the two others that supports 50% growth in revenue from 2.1 to 3 million I also think that that um we've done some efficiencies in the shop Julie has and in kind of the project management of of the whole um operation um I think that has helped keep the guys and actually we have a a woman now cabinet maker um yes I shouldn't just say the guys can't say the guys anymore um have have like kind of I the the old owners did everything on like paper and pencil like they had no technology no systems in place for you know project management or anything like that so I think just kind of implementing some of those efficiencies has helped as well to produce more so have you have you digitized the business we are working on it it is um it's a work in progress you know we have some but we're still kind of figuring out what exactly we need for others like job costing um figuring out what tools there are that can help with that um so kind of narro Now give me one example of an efficiency that you thought was you know a big win I would say even like just a minor thing is like paying bills online and M you know just like just like minor things yeah direct deposit for employees um we have a a a a Time Clock system that we have implemented I mean it's some very simple things um but I think it it just it you know building on that is going to to be beneficial I feel like things are going really well have there been fetal moments have there been has there been any difficulty or I mean this is you're certainly making it sound too easy oh yeah no they're every day I mean so I'm trying to remember when the first fetal moment happened oh there been multiple okay there have been multiple yes um we've had you know like our laminator uh a couple weeks ago got guon Beret syndrome and had to go to the hospital you know and his paraly was paralyzed and now is having to work through getting back you know getting back to work but because we have such a small team you know we lost the laminator which is like an important job um luckily one of the new hires knew how to do that so we've had like some just employee like tragedies like that happen um the cash flow situation is is real it's real it is um we we could not understand it when the previous owner kept saying we can't explain to you cash flow because it is so dependent on when the they don't pay you until the entire job is done and then the contractor gets paid so we have jobs that we haven't yet been paid for and they've been done and you know we've paid for all the materials for like four to six months yes so cash flow was rough yeah that I think is definitely something yeah that we knew it was going to be a problem but we didn't realize how big of a an issue not issue but how big of a how much we're were going to have to like manage it every single day to make sure that we had enough cash and that it was longer we had like we had figured out like three to four months is what we needed for cash flow and it's I mean like I said some jobs it can be up to six months to get paid and how have you man other than being super on top of it have you had to use a line of credit or infus the business with more of your own cash or anything like that or just hyperd discipline has got you through I think that so we had a working line of credit as part of our financial package so we have used that and we're using that um that has been able to sustain us for now um and hopefully you know it seems like we're getting a handle on it as as we get more of the like lagging receivables it but um and I I think relationships also mattered a lot because we had a great relationship with the bank so they increased our line of credit like three months in when they could see that we were you know selling gonna have some trouble yeah and they could see all the the the sales on the books um and then you know we like if some like one month I talked to our landlord and I said can you wait a week to cash our rent check you know and we have a great relationship with him he actually owns I mean he owns the building but he owns the company that's on the like other side of our building um you know sometimes we can call our uh vendors and like we've just through talking to people and like we have our our quartz guy he's like I totally understand I own my own business I went through it like yes you can pay me next week totally fine like we are just honest and you know and so far people have been great like I'm sure they won't wouldn't want that to go on but you know we don't want it to go on forever and it's like Janice said it's it's evening out now where it's not as big of a problem you're basically having to wait twice the general contractors's got to get paid and then you got to get paid from the general contractor so your business model is the gc's you're a sub to General Contractors so so let's let's talk a little bit about that um because that's one of the cons oh I would say one of the benefits of the model well I don't know if this is a benefit but one of the things with this model is that we don't work directly with customers which I think is nice we work with this the contract actors who have a better understanding of the business and like how it works and you know you're not talking to somebody who just had their kitchen cabinets put in and are super mad about it or yeah didn't like the work you did um were were working with with contractors rather than customers I guess the contractors are customers yeah but and also the commercial side of it is rather than doing residential I think is is great in terms of yeah customer feedback and the is there customer concentration when you're working for gc's is it like you know some big GC in town you guys are Minneapolis yep some big GC in town provides you all your work sort of thing I'm exaggerating but something like that what's con customer concentration like when you're sub that was another huge red flag in the business um we have basically two contractors and we work in like with smaller contractors I would say they're midsize contractors um eventually we want to reach out to the larger contractors but right now we're just bidding job to kind of mediumsized contractors maybe 50 to 60% of our jobs are with these two contractors wow yeah which is huge red flag um I am one of the things I'm doing is working on trying to diversify that um pool because there's plenty out there uh it's just again a matter of like we don't want to they really count on us so we don't want to stop delivering to them we just want to add on and again that's that's a growth uh a growth strategy and still working on hiring people right right again that being the bottleneck I mean if you could hire people you could probably pretty easily find more gc's to work with who themselves are probably probably desperate for mil work M workers cabinet makers talk about to us about the experience of buying into a business where you don't know anything it's and it's a as you as you said Julie this is a pretty this is a skilled trade this is a this is something people go to school for uh and here you guys are sauntering off the street to buy the business what can you tell people who are haven't yet gone down this path about how to prepare for it um I would say the owner was key in um how like in training me in and I still have breakfast with him every couple weeks um he really I I I mean he believed in us he knew that I he's he's like you're not going to learn how to build cabinets but you're going to learn how to bid them and understand how they're made and understand like the process you know actually building them is something that you don't even really need to know but so he really spent a lot of time teaching me he also spent a lot of time when they announced the sale there were three guys who were pretty upset about it um the three who had been here for a long time and the owner spent a couple weeks taking them out to lunch you know um really talking to them to get them on board and without those three guys staying and they have taught me so much um it would have been really tough I don't I don't think I could have done it without the owner being heavily involved and the three main guys being I mean they they change their attitudes they are so helpful um they are like a couple days ago one of them brought me a cabinet making book and you know I don't know if that's a hint but also like he's always you know they're just always great really yeah which we couldn't have done it without them and how do you think they were they were one over was it the seller the seller taking them to lunch and and convincing them or it's something that you've done now as their new bosses and owners I think that it's a combination but I think that Julie has built really strong relationships with them and has listened like spent a lot of time talking to them and listening to them and you know lwh hanging fruit like direct deposit you know just doing some of those things right away um that they had been wanting is is helpful in in building the team and getting everybody on board but Julie spent a lot of time with yeah and we really focused and this is something we believe too like like we you know the first couple weeks I'm just like I want to live listen I want to you know you guys know we know nothing about we are honest we don't know anything about cabinets I want to listen I want you guys to tell me what's working what's not working I also want us to grow together and we want to share that like we want to share our success with all of you and you know when we get to that point we will figure out a way for you all to like share this because there is no way we could have done this without every single one of them buying into us and you know working with us and doing their jobs and like they're rocking it well good for you Julie for I mean there's uh really I mean you seem to it wasn't it not without not without uh you know issues along the way but I think the one thing I really worked on with them is like uh just to be open and honest like tell me what I'm doing wrong it's fine I'm not how often do they how often do they come to you and tell you you're doing something wrong and what what for example quite often quite what have they told you uh just like the other day I was uh bidding a project and um I it was a bigger project with a lot of like wood details and feature walls and fancy reception desks and I emailed like our main my main uh estimator and project manager and I'm like can I because he was also Bing on the job for another contractor and I was like can you just check my bid to make sure it's okay and he was like no offense this job is too big for you sorry but oh but yes I I will bid it and we can go over it on Monday and I can show you like you know so they they tell me you know but I that's how we learn right and I tell them like every mistake you make they were a little bit hesitant to they kind of like covered up mistakes and and I'm like every mistake you make is an opportunity to make things better so let's talk about it um and so we're starting to get out of that that shell of like hiding things but anyways yes they're very honest which is good I have a strong selfesteem so I can and I know I know nothing about cabinets so well I want to start wrapping this up but I I there was um an in the weeds question that I I failed to get to that I think is important just the the structure of the deal so so I don't think we heard about that reminder to people it was the business when you were bidding to buy it was $2.1 million in Revenue in 750 in SD which by the way great margins those were 33% margins in a subcontracting construction business yeah that so I should I be surprised because I am those seem like really good margins I was crazy surprised I mean it it's I I think it's just it's a really complicated business so maybe uh I don't know yeah it's um but does it now that you've been in it for for nine months do you feel like those margins are true to your experience um we so the previous owner like pinched every single penny to get to that we are doing some improvements so we're spending more right I can see down the road us getting back to that but you know like we just spent some money on doing a a shop cleanout because he like kept everything so you know we got a dumpster we actually had three dumpsters that we you know so we're spending somewh more than he spent but I think it will even out once we you know get things implemented and yeah right these are these are one-time expenses and so you think you could return to a 33% margin uh status quo yeah we'll see I mean we also Al he wasn't investing in marketing you you'll want to do that on an ongoing basis Y and he wasn't investing in growth and hiring etc etc so these are all if if you're growth oriented are going to be ongoing new expenses yep yeah okay well that might just be one of those where we that we often hear about if SD seems really high Andor margins seem really high it could be because the business is just being underinvested in very common for a retiring owner to just be underinvestigated like that well and just two points on that the um what the one thing we found out that we should have probably looked into a you know note to sell for the next time the employees hadn't had a raise in forever like preco so we had to get their salaries straightened out um or their wages and then the other thing was he really like our Mentor Michael said go through the p&l and like you can eliminate you know probably there's so much junk in there that you can get rid of and there was not a thing like it was it was bear bones it was bear bones like yeah no you know nothing so he really didn't spend much okay okay okay so it was 750 sste what did you buy it for what did the structure of the deal look like please so uh we bought it for 2.1 we're right or two two two and then we put 10% down we had a sellers note for 10% and then SBA financing for the rest okay very classic pretty straightforward and that 10% you put down you guys split the two of you okay easy enough and then as part of that deal we had the line of credit in there as well yeah that was part of it it was and how much how much was the was 350 to start with no I think it was 250 to start with okay what about the fact that this is both of your first business experience like your business people for the first time how's that going yeah I think it's a bit of an adjustment for me because um you know I've I'm I've always done working for I don't know what taxpayers or community and and this is like I have to think about this as my business that I need to like continue to be super motivated to meet goals it's not just gonna you know not just going to build itself um so I think that's been a bit of an adjustment for me and is this a do you like this or do you not like this I do like this I do like this I mean Jenna often one of the things you'll hear guests say is that they wanted to build something for themselves as opposed to building right serving somebody else's right building for somebody else essentially right yeah yeah Julie so you you're taking to being a business person it it feels pretty natural the so going from public health to being in business yeah I think it's a little bit like my campaign background because it's it's very similar to running a a political campaign in terms of like having to budget and having to you know get things done and figuring out how to do things and networking and um but I also love the fact that I'm doing this for myself because I also have never worked for myself always worked you know public health is for the public good and campaigns are for you know getting somebody elected and I just like I love that you know that I'm like this is about like what I'm building and growing and I love the challenge of it and um I love that you have to be really Scrappy to figure things out um or at least I do maybe because I didn't go to you know business school like I just you just got to solve problems and I love that and just to wrap up on the the theme of women because I hear from women and they want to have more see more women where you all are sitting here as guest on the Pod hear more stories from women um we've already talked about it quite a bit but is there anything more that you want to speak to them to say I I will say that this seems like a very encouraging story but what what would you say so I would say that one thing like advice if I could give advice is for other women is to just network with a lot of other female business owners and a lot of women who are working like maybe not in the industry because we kind of had a hard time finding that for some of these but just like a lot of networking a lot of meeting with women who may be in the same situation okay yeah and I I mean I would also just say you know I mean be Fearless like don't let perceptions or uh get in your way it's been a a great experience for us and it's it's sort of fun being in a business where we're you know kind of the minority um because everything looks like an opportunity for us I what do you mean well like so we we just hired um a young woman cabinet maker and I have this big giant box truck that we use to deliver our our cabinet like for big jobs and the laminator had the license to drive the box truck and he's out and so I needed to get another employee to go get the license requirement and drive the truck to these big jobs my two young gu guys said they didn't want to drive it and I because for whatever reasons and I was like I will ask Darcy because she will at the chance to do something new and you know powerful and and I knew it she was like yes I will do it of course I will like sign me up you know because there there's just so many new opportunities for women that it's it's really exciting so a lot of the stuff that happens in the business is not traditionally done by women so women could really enjoy kind of probably haven't had the experiences themselves a lot of opportunity for new experiences yeah yeah okay better way to say it and and all of all of that what we were talking about earlier where sellers either themselves thought as two women it wouldn't work or thought that their employees wouldn't give you the respect that you'd need to be successful bosses all of that stuff now that you're on the other side of your transaction in a business you're you know you're you're just a data point of one the one business that you bought but do you have any more insight into that now do you think that um sounds like things are going well with your own business but do you understand it better do you uh have you learned anything about all these sellers perspectives on the fact that you were women and what on the inside what it's actually like to be in one of these businesses um they they were just wrong yeah they were just you know I don't know I think I think maybe not having a business background is probably the biggest red flag to people yeah um I think the contractors that we've worked with they have had no issues no no I mean it's been surprising actually that the contractors are like we just want our cabinets we don't care you know we want to make sure that you know what you're doing but we don't care what gender you are or you know they just want to do business so that's been refreshing and great okay well let's end it there Julie and Janna hottinger how can people reach out to you uh email is the best um okay we'll put that I'll I'll get those from you put those in the in the show notes uh and what is the name of the business signature woodworking okay and we'll we don't have a website we have ah wow that guy really wasn't that guy really wasn't spending money on marketing NOP M okay okay juliean and Jenna thank you very much for sharing a really fascinating story congratulations on the early success thank you thank you I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business