Case Study #38: Removing Yourself from the Scaffolding

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Removing Yourself from the ScaffoldingBryan Clayton started building PeachTree, Inc. as a high school student. He eventually grew it to 150 employees and 8 figures in annual revenue. He spent his first years at college telling himself he didn’t want to cut grass for the rest of his life… as the income continued to roll in. Bryan realized that he would probably never earn as much in the job market as he was already doing in his business. When he graduated, he went all in on “cutting grass.”

Learn the Lay of the Land

Bryan really had no background for how to build a business and stayed curious about how to do things the right way. One of the things he did early on was visit large landscaping companies whenever he traveled for conferences. They often allowed tours of their facility on request, and Bryan used those tours as an opportunity to observe and take notes. What were they doing that he wasn’t? What systems did they have that he could put in place as well?

Residential income had been the startup engine of his business. As Bryan began chasing commercial accounts to diversify,  he learned that they paid on 90 day terms. This meant that signing a six figure contract to do work for an apartment complex or a set of bank branches required a certain amount of working capital. It was the only way to deal with such a long delay in payment. These kinds of lessons continued to shape how he built the company.

Differentiate Yourself

Once Bryan felt that he was executing the basics well, he developed a culture that differentiated him from his competitors in landscaping (of which there were many). He saw himself as a true partner with his clients. For example, many drive-thru restaurants often have cigarette butts in the drive-thru lane. They’re unsightly. When people lean out to order or to pick up their food, it’s unappetizing to say the least.

Bryan picked up on that situation and pointed this out to restaurants. He went on to pick up all those cigarette butts as part of his landscaping service. He (correctly) surmised that cleaner driveways might lead to better sales, and the restaurants noted this sort of care and thoughtfulness. The word spread.

Bryan also deployed the same thoughtfulness at apartment complexes. He asked where the model apartment was and what the standard closing rate was after a tour. His goal was to increase that closing rate by improving the appearance around the model apartment by adding touches of landscaping at no extra charge. Bryan wanted to drive home the point that he wasn’t just cutting grass, he was trying to make sure his clients did well financially.

Time to Sell

As time went on and Bryan continued to grow his company, he came across books like Built to Sell and The Four Hour Work Week. He realized that while he had put some systems in place, he felt as if the entire company was just scaffolding that he’d built around himself. He was worried that his absence could cause the company to collapse. “I didn’t realize that the life of a business owner could be something other than rushing around all day putting fires out.” While he did manage to put some systems into place to make the company an attractive acquisition, he wasn’t able to hide the fact that he was “done” and didn’t really want to go back to running the business if a sale wasn’t completed.

An Important Lesson

His acquirer, a large operation who had done many acquisitions, could “smell” this fear on him, and that’s the first lesson Bryan would give to up and coming business owners:

Prepare for a sale when things are going well. This will take some time to put together, sometimes years, so don’t do it when you’ve run out of gas. Do it when you’re doing well, or your buyer might take advantage of your mindset of being “done.”

He adds, “Don’t get hung up on what YOU think the business is worth.” His acquirer was not interested in the 80 paid-for trucks that were part of his fleet (in fact, they sold them all the day after the sale closed and unsurprisingly, brought in their own equipment). The buyer was only interested in revenues and made an offer (which happened to be the best one) with no consideration for the equipment. It doesn’t matter what YOU think the business is worth. It matters what the market, and ultimately, the buyer who has done due diligence thinks.

It’s always possible to differentiate yourself, even in a red ocean like landscaping. Start with the basics of having the proper business systems in place. Then ensure that you have a culture that stands out… not just to your staff, but to your clients. Their delight and word of mouth will carry you the rest of the way.

We’ve represented buyers and sellers for landscaping and other outdoor businesses for decades.
If you have questions, give us a call.

Know Your Broker: Debbie Small

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From the very start of her career, Debbie Small was interested in small businesses and entrepreneurship. Even as a child she confessed, “I didn’t read Glamour magazine like my girlfriends, I read Entrepreneur!” In college, she put those lessons to work and created Party Pizzaz, a business that sold unique party favors to sororities and fraternities at Kansas State University. She spent the first decade after college as a Senior Media Consultant for Time Warner producing comprehensive television advertising campaigns for small business owners and placing them on cable networks. She found the work fulfilling and loved the opportunity to consult with business owners to assess their needs and grow their revenue.

Due to her experience, she is recognized as one of the top brokers in the country!

Utilizing her core strength of working with business owners, Debbie joined the Apex team in 2004. She’s now worked in the Mergers and Acquisitions industry for nearly 20 years. While she’s sold hundreds of businesses in a variety of industries, she’s still the same friendly and approachable person that she was when she first started as a broker. Her longevity and seniority with Apex have given her extensive experience helping business sellers and buyers navigate the numerous complexities of selling and buying a business. She’s helped many sellers avoid challenges that can arise when cashing out of one of their largest assets, their company.

Due to her extensive experience, work ethic, and customer focus, she is consistently recognized as one of the top business brokers in the country!

Debbie was named Apex Broker of the Year & the International Business Broker Association’s Platinum Chairman’s Circle Winner!

When asked why she loves selling companies, Debbie replied, “there is nothing better than helping make business buyers’ and sellers’ dreams come true! It’s the American dream to own your own business, to be an entrepreneur, and then sell your company, reaping the financial rewards of all your hard work!”

She went on to share the example of a manufacturing company she sold that was generating $1M a year in profit. Within five years of buying the business, the buyer had tripled his cash flow profit on the company and came back to Debbie to sell the operation. She said that “it is difficult to find that kind of return on investment anywhere else including the stock market, real estate investments, or securities.”

Debbie noted that buyers can face challenges when trying to acquire a company. “The buying environment is very competitive.” Debbie has thousands of buyer confidentiality agreements on file with only a small percentage of buyers actually acquiring a business. Savvy buyers become the ‘squeaky wheel’ with her to get her attention and rise to the top. She advises buyers that “there are too many well-capitalized buyers in the market to play the waiting game on making an offer. A solid business will be snatched up immediately! It is best to come to terms with the seller on an accepted purchase price prior to doing a deep dive into due diligence.”

Along with working as a broker, Debbie loves being a mom to a teenage son. She also owns and manages residential real estate properties. Even now, as Apex’s Broker of the Year, she still remains as driven to achieve as she did when she was that young girl flipping through business magazines!

To learn more about Debbie’s broker services, feel free to contact her at .

Paycheck Protection Program: The Latest

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PPP Loans UpdateSome time ago, we noted that funds were going to be available for small businesses and in the intervening weeks the Paycheck Protection Program (PPP) story has developed significantly. We wanted to give you some updates, as well as encourage you to apply if you need to, as there is still money available after an originally botched launch.

First Round: $349 Billion

Government isn’t ordinarily known for efficient launches of large scale programs, so we shouldn’t have expected anything different in stressful circumstances. Some of the lowlights included:

  • The funds ran out in 13 days.
  • Many small businesses were only able to apply one week after the program opened.
  • Some very large companies with significant financial resources, like Shake Shack, Ruth’s Chris, and you can’t make it up, the Los Angeles Lakers, received loans. After massive public backlash, they all returned the money, though we suspect that they wouldn’t have if no one had found out.

It was a banner day for the banks, who netted 10 billion dollars in fees alone, and all for underwriting SBA-guaranteed loans, which means almost no risk.

Second Round: $321 Billion

Alas, the website crashed the day the second pot of funding was made available. After enough complaints, banks with under $1B in assets were given some windows to apply (unsurprisingly, the largest banks had been getting preferential treatment). After the blowback from the first round, there are still some clouds hanging over this round of funding:

  • Secretary Mnuchin noted that all loans over $2M will be audited, but didn’t say who would be doing that auditing. Banks? The SBA?
  • Treasury did provide guidance on how loans could be forgiven:
    • Loan proceeds must cover payroll costs, mortgage interest, rent, and utility costs over the eight week period after the loan is made.
    • Employee and compensation levels must be maintained.
  • But it didn’t give guidance as to how the retained portion of the loan would be categorized on a balance sheet.
  • The IRS managed to mobilize in time to let us know that expenses normally deductible would not be so if they were used to trigger forgiveness of a loan.
  • But the IRS hasn’t given guidance on how a forgiven loan amount will be dealt with either, but knowing the IRS, they won’t have our interests at heart.
  • Thankfully a non-government agency, the American Institute of CPAs, has put together a helpful guide to help you track and calculate your path to PPP loan forgiveness.

There haven’t been the absurd cases (like the Lakers) in this round, but what seems to be clear is that without guidelines, loans are not merely being given for rescue. Some companies are taking the loans to fund growth. It could be argued that the intention of the funds was to rescue small businesses that were on the verge of going under, but there doesn’t seem to be restrictions in the funding policy requiring clear proof of that, and given the current business atmosphere, there doesn’t really seem to be a moral problem with making sure your business survives during a time which may be tough on many.

Our Recommendation

As of the time of this article, there’s still more than $100M available in funding. As we’ve said previously, our long-term outlook for the economy, not just in the US, but worldwide, is positive. We also think that political circumstances are such that decisions concerning the finer points we’ve highlighted above are likely to go the way of small business owners.

We encourage small business owners who think they could put this funding to good use, even if not in immediate danger of going out of business, to give their bankers a call to see if it makes sense to apply. If you’re one of the many business owners unhappy with their banking relationship, give us a call. We’ve got some solid names to share with you.