I think so. That's, that's for sure. Kind of my, my take here.
Acquiring Minds
How 1 SBA Loan Brought Down 2 Businesses
Episode
Excerpts · 478 segments · ~1:34:10 long
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03:45 Background: construction to consulting13:10 Meeting Matthias, operating partner deal17:23 Equity structure and personal guarantee24:37 Austin landscaping business details31:55 Dallas acquisition thesis43:01 Undisclosed commission liability surfaces53:35 Employees stealing customers, competitor1:03:58 Dallas bankruptcy and personal fallout1:16:25 Shutting down Austin business1:23:07 Custom AI-built software for landscaping
You just a second ago talked about the non compete that you think he violated the non compete that and also I think a non solicit which is more enforceable than a non compete, but I think he was flagrantly violating both. Tell us a little bit about what you found there on that front.
Yeah, so the reason we learned about the. Him starting a new business was that a few months, I mean as we were going through this whole process a few months later we, we experienced like a, we started feeling like we weren't performing like we used to be. This is in, in Dallas we had, we used the same marketing people for, for both Austin and Dallas and we were getting significantly better…
And the revenue just started dropping and so we had to make some tough decisions and let some people go. In Austin we, we outsourced bookkeeping and over there we had a, we had an in house bookkeeper. I don't remember what they call it, $80,000 a year.
We had an in house designer. We had an in house designer here, but we also used, we outsourced some of our design work, like the 3D renderings and whatnot to different third parties. They weren't doing that there.
So we started looking at how can we cost cut to adjust for this drop in revenue. Let me take a step back here. The designer that we had up there when we bought the business was an hourly employee making like I don't know, $60 an hour, which is market for landscape designer.
By the time she was working 20 hours a week, by the time we had kind of got there, the hours were up to 40. So with overtime at that rate, it ended up, I don't know, being something like 130, 40 plus thousand a year, which was much above market. And we knew this because we had a in House designer in Austin who's probably a little more qualified, but making significantly less.
And so we gave her the opportunity to say, hey, we're gonna drop you to a base salary, but we're also gonna give you commission. And if you sell what you sold last year, you should be exactly where you're at now. But at least this way we get some peace of mind that, hey, things are.
Are, you know, selling. She ended up deciding not to stay with us and. And resigned a couple of weeks later.
After that, we. We let go of the bookkeeper. And I remember driving up there and talking to the sales guy, like, hey, why is. Why is like, our cells are dropping.
What's going on? What's on the pipeline? Let's talk through this. And then he had a healthy pipeline.
And this is just like, hey, I'm gonna close this one. It's just taking me a little bit longer, blah, blah, blah. And then he ended up putting in his two weeks notice.
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