The Green Condor: Clearing Growth Hurdles
Hello $wanigans! Welcome back. I thought it would be good to talk about The Green Condor today since it has been a couple months since my siblings and I completed our acquisition.
Before I get into though, I first want to give a couple shout outs. I have had a blast blogging the last six months and that is partly attributable to how supportive fellow bloggers and the personal finance / FIRE blogging community have been. Just this last week I had the opportunity to interview on The Millennial Budget on How I Became a Millionaire by Age 30. Additionally, The Frugal Millionaire post has received great receptivity and was featured on Rockstar Finance as well as the Editor’s Choice on the Canadian Budget Binder. If you haven’t already, I hope you check them out and give them a read. Thanks!
Back to The Green Condor. As a quick reminder, or intro for new readers, my siblings and I bought an industrial services company recently. While we reached an agreement for the purchase early in the summer, there were a number of things we needed to do in order to actually close the acquisition in mid-August. For more background, check out the previous articles titled My Small Business Investment and The Green Condor.
And as a quick refresher, recall that my brother James is running the business day-to-day with Jon very involved as well, but from afar (living across the country). James and Jon are both owners and employees. My older brother and I are just owners.
Update on Sales
As you may recall from the last article on The Green Condor, we restructured our consulting agreement with the prior owner in that we pay him $100K less if we don’t reach our sales goal by year end. Well, good news and bad news here…the good news is at this point we consider it pretty unlikely we will pay him. The bad news…well sales have been soft still.
What we fully appreciate now is how little he did prior to the acquisition. He was in really bad health, he had a lot of family things going on including a shotgun wedding for his daughter, and for some dumb reason, he has always de-emphasized marketing which, given the long sales cycle for this business, means we were a bit behind once we took over.
BUT…let me be clear that we still have a ton of confidence in this business. He is gone and so is his bad management and the employees are all very grateful for that which is a good sign. There are some hurdles we need to clear, but we still have ambitious growth expectations.
The Growth Hurdles
We’ve outlined the following growth hurdles for us to overcome before we can expect to ramp up this business. This business is seasonal, and the busiest season is coming up in the late fall and winter.
- There have been a couple staffing issues we’ve identified. First, there is a lot of finger pointing among some employees as to who is responsible for what. To resolve this, we’ve detailed office roles and responsibilities and are holding them accountable. James and Jon are all about having the right people on board, and if we have issues going forward we will find someone else for the role who is more of a team player.
- We are still under staffed. Having an active manager in the office helps, but James is just one body. It has been a priority to add project managers and technicians underneath them. We have had some success early in finding new folks, but we still are looking for others as we prepare for busy season.
- On top of not having a full staff, many of the technicians have needed additional training. As we are still slow leading up to the busy season, this has been a good time to send them to training programs and classes. While it is costly on the front end, it should help us improve efficiency when we get busy. They love that we are doing this and investing in them, so it’s a win / win. And, we are being prudent and letting them know that if they leave or quit within 6 months that we will claw back the cost of the training from their last paycheck. There have been no issues with this so that’s great.
Marketing and Incentive Programs
As previously mentioned, an emphasis on marketing was lacking. However, we do have two employees responsible for marketing. We still need to evaluate their effectiveness and determine if we need more help here, but we are making progress.
We are focused on continuing to take steps forward, but sometimes you are forced to take a step back. This happened when shortly after taking ownership of the business one of the marketers was in a car crash. She is ok, but she was hurt pretty bad. MRI came back with a bone spur and a bulging disc in her neck. Needless to say she has been on pain killers and has taken a lot of time off. She is wanting to slowly return to work, doing some things from home currently, but TBD on when she returns fully.
We realized that the prior owner didn’t have much of a positive business relationship with many influential and potential customers and referral sources. We’ve noticed a lot of positive feedback. James and the marketers have gone out meeting many people and indicating there is new ownership now. While the sales cycle will take some time, we are happy with how receptive they are in establishing a bigger relationship going forward.
Last point here, is that we will be implementing an incentive program for the marketing folks. This will be based off their ability to develop and establish additional relationships and referrals and getting sales credit for business brought in. It won’t be a huge part of their pay structure, but they are excited for the change. Full implementation will be in the coming months.
Equipment & Tools
With the acquisition, we inherited a lot of equipment and tools. However, not enough and we quickly realized we need more, especially with the busy season coming up. This was ultimately the easiest hurdle to clear.
The prior owner had offered up some additional equipment at the time of the initial acquisition that he had in storage. We didn’t think it was necessary and so passed. Now realizing it is, we went back and made an offer to him. We did some research and for all the equipment, we offered about $14,000 which is roughly half of what he was originally offering it for. He wanted it off his hands though so he accepted, and we walked away with a steal of a deal.
In retrospect, we wonder why he had it in storage and not utilizing it…speaks to mismanagement in our view.
For smaller hand tools and the like, we didn’t really have much to work with. Many of the techs were bringing and using their own tools from home (sad, I know!). So James went out and bought a ton of tools. This hasn’t been a big investment, but the employees are all super happy with the new tools, etc.
We recognize that tools can be known for disappearing from the job though. So we have assigned tools to each tech and made it clear that they are responsible for them. If they go missing or aren’t taken care of appropriately, they’ll be responsible for replacing them going forward. We researched this and talked with other peer companies and this is not an unusual practice and the employees are cool with it too.
While we know the relatively soft revenue through the first 9 months of the year isn’t necessarily good for business, we are at least happy that we now got the business at a discount (paying the prior owner less of a consulting fee), and we do still feel good about the prospects for growth in the future and the overall strength of the business.
Things have been slow, but it has been a blessing in disguise. We have taken this opportunity to train, hire, and implement many new initiatives prior to the busy season.
We still have calls weekly and they have been running more efficiently with all of us brothers so that is great. I think it has worked well to get things ironed out and to discuss our plans and next steps.
James has been super busy the last couple months implementing our changes, organizing the business and setting the foundation for growth. Hopefully this will all slow down for him just in time for the busy season to ramp up!
Lastly, my goal for giving these updates is pretty simple. First, based on feedback some readers are simply curious of our progress. And secondly, for those who may one day consider taking a similar path, hopefully these updates can serve as a guide and informational as to what all is entailed.
Thanks for taking a look!
The Green Swan
Work Harder, Work Smarter, Retire Earlier and Find Your Beach
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