Ryan said:
Exactly how long did your business last after you sold out? Rumor has it you saw the inevitable and sold it to some poor sap who was out of business in 6 months.
No need for some long post full of excuses explaining why he went out of business either...........
Wow, I leave you guys alone for a couple hours for some light TV watching with Sioux (HawthoRNe for her and Memphis Beat for me afterwards) and when I come to turn the computer off all heck has broken loose. (And I know my name in a headline on MB is never going to be good!)
Thanks for the support, folks, but I'm good with this one since none of it is hardly a secret. I've taught over 80
SFS seminars in the last 14 years and almost invariably the question will come up in class "What happened to your business?" so I tell 'em which means I've probably told over 2,000 carpet cleaners the same story. (Since it is the truth I don't have to remember which version I tell to who.)
Now Ryan, I'll keep it as short as possible but ya gotta admit you asked and it IS the truth. (BTW, please keep any PM private.)
Sioux and I moved to Durango,Colorado in 1976 with 3,000 bucks, a Castex Model 700 portable extractor and a Ford Pinto station wagon. After a lot of down-in-the-trenches fighting, clawing and kicking and just being too-darn-stupid/stubborn to hang it up by 1991 I had grown the company to right at $750,000.00 per year in revenue. (Which incidentally is 1.3 million in today's dollars) The company was very profitable and I took 10 to 12 weeks of vacation a year. (Ryan, if I can find my 1991 tax returns I'll send you a copy- seriously.)
But one cold morning in January of 1991 I woke up and said to Sioux, "I don't want to do this any more." I loved the cleaning industry (still do) but all those years of running an emergency services restoration company and dealing with 16 employees in a small market base of 30,000 people just took their toll. I wasn't having fun any more.
So I put the business up for sale and by November of 1991 we actually had three different people bidding on the business and yes, all three parties were well represented with CPA's, attorneys, etc. (Which I believe shows my company wasn't a business that would "inevitably" go broke.)
But, just like the movie where the guy says "show me the money" I went with the one (I'll call him "Greg") with the cash and yup- Greg paid 97% of the price in cash up front. I carried 3% of the price in a promissory note and yes, that got paid off too. Yeah, I cashed out for a very nice amount of money. (No, I'm not Warren Buffet rich however I am "financially comfortable". I work with Jon-Don and
SFS on a very part time basis because I "want to", not because I "have to".)
I've told this sad part of the story to quite a few people, including several
SFS classes where we had time. We closed the business sale on a Friday and I remember my first inkling that things might not go well with the new buyer was when I offered to come in over the weekend and give Greg some "orientation sessions" so we could hit the ground running on Monday. His reply? "Naah. It's been a long week for me and I want to take it easy over the weekend." Hmmmm ... (Remember, this is the guy who has put his life savings into this purchase plus a large inheritance AND is on the hook with a very large SBA loan and he wants to "relax"?)
I then took Greg out the Monday after the sale (BTW, he was an hour late coming in to the office on his "first day") to teach him how to pre-inspect carpet cleaning jobs. We were on our way to a big job climbing west out of town on Hwy 160 and he looked at me and said, "Steve, I can't tell you how grateful I am for selling me this business." I still remember my reply, "Well, I hope you still feel this way six months from now."
So to keep the long post to minimum let's fast forward over the next six months where Greg fired me from my 15 hour per week consulting contract after one month (fine with me!) and had alienated all four of my office staff (who all walked off the job after collecting their "six month stay on after the sale bonus" from me) plus had ticked off the wife of the largest realtor in town plus had let the technicians take over the running of the company because he "didn't have the time for it" plus had lost the confidence of every major adjuster that I had worked with for years AND terminated the Free Lifetime Spotter bottle program we had been running for years and instead started charging $4.95 per bottle for it plus ... well, you get the picture. (By now I literally had quit going to the grocery store because my customers would upbraid me in the aisle for having "sold them out" to this guy.)
So sure enough in the spring of 1992 Greg calls me almost exactly six months after we signed the papers and wanted to meet me for lunch. He looked me in the eye and said, "Steve, I can't do this. I am in over my head. I'll give you the business back if you will just assume the SBA loan." (Which would have meant I would have shown a whopping profit because the SBA loan was for less than 50% of the purchase price.) My reply? "No." I had cut the emotional strings six months earlier and I was done with that part of my life.
So Greg stumbled along for the next couple of years running the company slowly downhill, going through a succession of managers because he just didn't have it in him to do it himself. (Which of course added another unnecessary layer of overhead to an already struggling business.) Then I heard he sold it for less than 1/2 of what he paid me for it and it went through several more owners, slowly spiraling down by living off the good will we had built up over the 16 years I had it. Then I believe (not sure) that around 6 or 7 years ago it went completely out of business.
And that is it. Sure, I felt bad about how things played out. My customers felt betrayed (even though as I took their verbal abuse on the streets of Durango I felt like yelling at them, "Where is it written that my life is to clean your carpets forever?"), my employees suffered under some really bad management stuff (but I gave generous bonuses to all the managers who stayed on for six months plus several technicians went into business against Greg using my Value Added Service concepts and did very well) and my family suffered from my inevitable angst due to all of the above issues.
So Ryan, no long post "full of excuses" why Greg didn't make it. But for the general edification of other board members I'll give you my take on why he failed:
1. A small service business (even a good one which mine was) is a very fragile thing. All you really are selling is "experiences produced by people". Which means you better be sensitive to people. Greg proved to be one of the most emotionally clueless and obtuse people I have ever met and suffered accordingly.
2. You have to have the fire in the belly. Especially in a restoration business (40% of our gross was in fire and water damage) even the owner needs to pitch in when things get "tight and tense". Greg either couldn't or wouldn't.
3. Even the owner needs to "play by the rules". Our company was built on systems and procedures. IF Greg had just followed them (or even better just moved to Arizona after buying the company and let my managers follow our systems and procedures) the company would have prospered. But he didn't.
So would I sell the business again? Absolutely. It was the right thing to do at that point in my life. (I was 38 years old.) Would I have sold it to Greg knowing what I learned after the sale? Probably not. But he seemed so nice, very business like and professional plus he had a LOT of money which I relieved him of!
Even so, with the wisdom of hindsight I think I would have gone with either one of the other two bidders, who while not having the cash reserves Greg had they both did have a solid record of running small service businesses. So it goes ...
Nostalgically and truthfully submitted,
Steve Toburen
SFS.JonDon.com
PS Now if anyone wants to know what I have been up to since I sold my carpet cleaning/restoration company you'll have to click here:
http://sfs.jondon.com/about/sfs-history (You guys didn't think I was going to type this much and not stick at least ONE link in, did ya?)
and went out for a few hours.
