Host: Heather Shadduck Hydorn had achieved the gold ring in her chosen profession. She was a university professor with a PhD from Harvard, on the tenure track and getting published regularly. These are all the markers of success in the world of academia, but the hours were grueling and the pay quite low for having reached such rarefied heights. The breaking point came when her husband suffered a work injury and went on disability for six months. Well, flash forward and today Heather owns a custom closet design and install business she closed in January. How's it going? I cannot express how happy I am that I made this choice. Her words now it hasn't all been easy. There have been scary moments which we get into and we also learn about the Custom Closets business, which, notwithstanding the lack of recurring revenue, sounded pretty appealing. Please enjoy this conversation with Heather Shattuck Heidorn, owner of the Tailored Closet in Premier Garage of Southern Maine. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. I want to share an update on the Acquisition Lab. As you know, the Lab is a highly vetted cohort based accelerator and community for people serious about buying a business. After going through the Lab's month long intensive, you have ongoing access to almost daily Q and A sessions with advisors, regular live deal reviews with Walker Deibel, author of Buy, Then Build Potential Deal team introductions, and a very active Slack group with other searchers on the path. Well, the update is that the Lab recently passed 60 businesses acquired and for well over $100 million in aggregate transaction value. Also, all members now enjoy lifetime access to the Lab because when you buy a business, it's often just the first of many and the Lab wants to support you in every deal, not just your first. Lastly, check out my recent interview with Shane Ursum, episode 105. Shane acquired a business with over a million dollars in EBITDA in just six months and he attributes a lot of his deal success to what he learned in the lab. Check out acquisitionlab.com or email the lab's director, Chelsea Wood. Chelseieveenbuild.com Heather Shattuck Hydorn welcome to Acquiring Minds.

Guest: Thank you, thank you for having me.

Host: Will Heather, this is going to be a fun interview. You have a very different professional profile than we're used to seeing here in our world of buying business. You come from academia, a master's and PhD from Harvard. Then you are a professor at the University of Southern Maine So not the sort of resume that you typically see for someone who goes out and buys a small business. So let's hear all about the how the why you, you chose this path and if you would, Heather, start us off with some background on you.

[3:13] Guest: Okay, great. Thanks, Will. So I'm really excited to be here today. I think this is a great fit for academics who are tired of academia and maybe I can convince some more people to jump ship. So I did a Master's and a PhD in human evolutionary biology at Harvard University. I also did a secondary field in gender studies. And I had a career of looking at biology and trying to understand how our biology reflects our social and physical environments. And I, you know, helped to run a lab at Harvard for years. I had an assistant professor position at the University of Southern Maine. I'm from Portland. So it was really a homecoming for me. And I had sort of, I had made it, you know, I had the academia has the gold ring that only a little bit of people can grab. And I had that gold ring in my hand.

Host: Well put. And, and what in the gold ring specifically is what just basically being a professor with a salary and, and yeah,

Guest: ten year track, man. It' year track. It's. I had a, you know, 10 year track. I was publishing very regularly. I had sort of cracked the nut of figuring out how to teach and have active research streams and you know, a lot of publications coming out, mentoring students. It was, you know, I was suggested that I go up for early tenure. Things were in terms of, on paper I was doing excellent.

Host: And as you said, it's gold ring sliver. People get there. So this is, is a very difficult to reach this level and academia is very difficult.

Guest: Yeah, I mean it doesn't hurt to have a PhD from Harvard. Right. So there's very academic jobs. If you're, if you like go down the rabbit hole of whether or not to, you know, what's happening with academia since the 70s, more and more and more jobs and like when you go to college, your professor is probably an adjunct. So those of us that get a PhD and then are able to get a tenure track job are really asleep sliver of the people that are out there who do excellent research, who really want it and who. There's just not enough jobs because universities can pay an adjunct three or $4,000 a term to teach a class.

Host: And so what is an adjunct there? It's kind of like the 1099s of academia. Like they're just.

Guest: Yeah, exactly, they're, they're insecure they're people that have PhDs. Some of them have put thousands and thousands of dollars into a PhD or have gotten a PhD. They have the same background I might have. Many of them are excellent researchers. And there's just not enough academic jobs and university have found that they can go from being reliant upon a tenured faculty who costs them X amount in retirement and benefits and a salary, even if it's a low salary of 70 grand a year or something, to being dependent primarily on adjuncts who are paid literally three or $4,000 a class, maybe five, six, seven if you're at like a good university. And these adjuncts are also individuals who went through, you know, have a PhD level education, have really invested in their career. So universities, many universities are now like, instead of being 70% tenured professors are 70% adjuncts. So they're really run on adjuncts or insecure labor.

[6:36] Host: Okay, and so, so. But you have made it to this kind of next level tenure track.

Guest: I wasn't.

Host: And so what, what, what, what, what? Crushing it. Why the, why the change of direction? What started happening?

Guest: So I was frustrated with a lot of stuff about academia. I was frustrated with sort of like this, sort of like systemic factors, like some of what I was just alluding to. I was frustrated with the constant attitude of like, do more with less to the tenured faculty. So there's a lot of little things about academia that was sort of like bureaucratic. I, I used to say, like, 5% of my job was like my favorite thing on earth to do. And then the other 95% was just work. It was just work. And slowly, you know, the incentive to publish is so great that some of the articles I was publishing were work. Um, it was something that I had gone down the rabbit hole of, like, I was interested in it at first, but then I sort of like solved the question or I saw the solution or I did the analysis and I was like, oh, it was interesting, but I wasn't like, passionate about it or something. But I had to go ahead and finish the process of churning out the publication so that I could keep getting grants, so that I could be competitive, so that I could get tenure, so that I could, you know, et cetera, et cetera. And so there was a lot of that stuff going on. And I was working a lot. Tenured professors work a lot. Like easily as much or more than I'm working now as a small business owner. And the work was hard. It was very difficult work, often mentally draining. And I was making 60 grand a year. And so what happened for me and my family is that my husband made 60 a year as a freight train conductor and I made 60 a year. And we live in a high cost of living area. And that 120 was plenty for us to float, like a middle class life. You know, we were doing okay and we weren't like, you know, we weren't aggressively saving for retirement or something, and we weren't taking like big trips, but we were coasting. And then he had a surgery and it put him on short term disability for five months and his salary went down to $300 a week and we couldn't pay any of our bills. And so I had this job that was sucking the life out of me. I was literally getting sick sometimes because of how much I was working and how hard it was, like how taxing it was. And then at the same time, all of a sudden, like, I'm getting disconnect notices from everybody, everybody's getting put on credit cards and I don't really carry debt normally like that, not credit card debt. And it was just sort of this very futile feeling situation where it's like, I cannot believe I've been working this hard for this long. And I've like gotten the gold ring. You know, I've made it and I can't pay my bills. You know, if we have like one minor family emergency happen, we're in that position so many people are in where they can't, you know, they can't meet their, meet their bills.

[9:39] Host: And so how are. And we don't. I don't want to make the whole episode about academics, but just for the audience in context, how are academics surviving? If you were, you know, if you were at the kind of creme de la creme and you could barely make it, what about these people, these adjuncts and people who are making less money?

Guest: Well, they're not.

Host: They're not.

Guest: I mean, you can find there's this whole tragic world of like op eds about like these wonderful, wonderful teachers. There was one, I think, in the New York Times or the New Yorker last year about this woman who was just amazing. And you know, she ends up being homeless and she's living out of her car and then she gets sick and she doesn't have health insurance because of course these jobs, like these adjunct positions don't come with insurance. And like, she like dies some terrible, lonely, poverty stricken death. And she also, at the same time is this like beautiful writer. And she like, does this research and she, you know, there's There's a whole, there's like a whole genre of stories about adjunct professors living in their cars and things like that. And so people aren't making it. And that was another thing is that like, I've always. I don't know if you should come on in like an entrepreneurial podcast and be like, I've always sort of been questioning capitalism, but I have. I've always been like this, this is a really messed up system. And it was sort of like. And you know, you could sort of entertain the delusion that you were outside of it in academia in some ways because you can be like, I'm critiquing things and I'm working for change. But in reality, like, I was part of a system that was just like every other system and that was like, you know, the universities are supporting themselves. Not like universities are getting rich, but they have a broken business model off of like the bodies of people who are committed to this thing and aren't making it. So it felt bad to participate in. In many ways, even though I was doing very, very well, comparatively well.

Host: This is going to get interesting when you become a capitalist. I don't know if you're even.

Guest: My husband teases me all the time. He's like, you're such a capitalist now. I'm like, that's right, baby.

Host: We're gonna, we're gonna spend some time on that. Okay, but you're. Where we are here is your husband's on, on

Guest: work, like short term disability.

Host: Short term disability. And now all of a sudden, I mean, I think, I think as you put it on the pre call, like with your 120 in Portland, like you were living a middle class life but like one crisis away and sure enough, the crisis hits. And so now, now your, your life isn't. Isn't penciling as, as we say in small business land. It's not.

[12:12] Guest: Yeah, it sure wasn't.

Host: So, so, yeah, okay, so, so that. So then what.

Guest: Actually what happened is I had like a crisis of the soul because another. We can stop talking about academia because I'm over it. But like, academia, it's like a calling for people, right? It's like the biggest sunk cost fallacy ever because you put in years of your adult life chasing this thing and I, I was so miserable in so many aspects of don't. I had like wonderful people and some wonderful aspects, but so much of it was so un. Just like not fun. It was just work and then to be paid so little. So really what happened for me is that I had like a moment where one day, literally one day I woke up and I was like, it's not like somebody has a gun to my head making me keep this job. Like, I could just get a different job. I could just quit. And I quit. I, like, quit in that moment. I quit academia and I didn't know what I was going to do, but I knew I needed to make a lot more money and that I wanted to have control over my time.

Host: Wow. So you quit somewhat spontaneously or totally spontaneously.

Guest: It had been building, like I had been trying all these machinations of how to make it work. People in academia do crazy stuff. Like, people are like, oh, you should get a job at a different university and sending me job ads from places across the country. Because it is not uncommon in academia for a family to live in one location and one of the partners to work somewhere, even a plane flight away, and they like, fly back and forth and like, get a studio and live. I was like, that is, I do not want to, I don't, I don't want to work a place that I have to have a different place to live away from my family, to try to make this work, to like, try to bump my salary up to 130 at a better university, you know, and,

Host: and before we leave academia, what is. Well, I don't think we will totally leave it for the duration of the conversation, but what is the calling and also the 5% that you loved about your job? So what is, what is the thing that attracts people to academia? Is it doing the research? Is it, is it the prestige? Is it being able to just be curious for your, for your life, ostensibly, even though that's not actually what it is?

Guest: I definitely think it's all of those. Yeah, I think it's so different. People like different things, but I think prestige, curiosity, and like the life of the mind, academia is also, if you're doing it, if you can, it can be very entrepreneurial in some ways. Like the things that I like about small business ownership in terms of, like, can be relatively self directed. I can sort of be the boss of myself. I'm sort of responsible for a lot of things and am calling the shots on some ways. That's also true of many areas of academia. Prestige is big. You know, everybody, I mean, telling people like, oh, you know, I helped run a lab at Harvard. Like, everybody, like, you know what I mean? Like, people, like, people like the pat on the back. Academia can get very, like, competitive in a way that if you're competitive, can feel good to Be a part of where you're trying to win those grants, like you're trying to get those prestigious publications. Um, if you're the type of person that likes throwing yourself at stuff kind of like semi aggressively or aggressively aggressively, that can feel good, you know, to be in that, like part of that game. Uh, so, and then I think it's, I, I, I'm not sure what the draw is. So heavily, um, you work a lot of hours, but it can feel like you have a lot of control over your time.

[15:50] Host: Okay, well, I can't wait to hear the contrast between that and what your life is now. So, so the, the discovery of buying a business as the path to making more money. I know you dabbled in, in real estate investing as well. So talk to me about all, all of these various schemes and how things started to take shape.

Guest: Yeah, so, you know, my, my dad was a house painter and he retired from house painting by buying like low income rentals in Springfield, Missouri. So I was sort of always aware that like you could, you could buy property and have property, like make, you know, you could be a landlord. And so my husband and I tried that. When we maybe were married a couple of years, we had a baby. We had just had our first baby, which is like a crazy time to buy a three unit. And we bought this three unit that needed a ton of work. It was like, it was in central Massachusetts where we live. And what we learned from that is that I am completely uninterested in being like a low income rental landlord. We couldn't afford to buy in anything nice enough to have like tenants that weren't a mess. And so our tenants were largely a mess. And it felt really bad. Like we had these like very, very young couple, they're like 19 and 20, and they had just had a baby and like their dad set them up in the, in one of our units. And they were just a disaster. Like they didn't have enough money. Like they were always having like minor domestic violence problems or like having like intimate like infidelity issues that were causing like huge fights. And they were a disaster. And it felt terrible to have these. It's not like my choice is that they were a disaster, but they did not have enough money to like live their life, even though they were both working on and off. And we had to get like all the rent was super late and it was like constantly trying to collect and it just sucked. It was, it sucked. And it felt like. So we sold that thing when we moved to Maine and I was Kind of curious. A couple of years ago I was home with a baby and I was sort of, you know, sniffing around commercial real estate because I was like, oh, commercial real estate is a way that you could be in real estate but not have to deal with like taking, you know, low income tenants, which was I was like not going to deal with anymore because it felt bad and also was like a shitty business model. Sorry, I don't know if I'm allowed to start. I apologize. And this commercial building was for sale down the street from me and it came with the business that was in it. And that was when I first realized that people bought businesses because it had not occurred to me that outside of like, I. I knew that like sometimes someone sold a gas station or something, but I didn't really realize that people bought like this was happened to be a bottle redemption center, which is the craziest business. And I went down the rabbit hole of like, what does it take to buy a bottle redemption center? How does it work? Like, when I was looking at that property and this was all like two and a half years ago and it led me to Biz Buy Sell. And then on and off I like hung out a little bit on Biz Buy Sell for a couple of years. Just like browsing just it opened the idea of this is a thing people do. But I hadn't even found like the world of podcast or anything about it really at that point.

[19:10] Host: I like to say that Biz by Sell provides a great aha moment to people where you get on there and you all of a sudden these, the possibilities are unlocked. It's like, wow, look at all these, first of all, look at all these random businesses. Who knew that this X, Y and

Guest: Z were random businesses?

Host: Slash, I didn't also didn't know that you. These things are bought and sold.

Guest: So, so yeah, it's so. Biz by Sell is so funny.

Host: Yeah, it is. I love, I adore Biz By Sell. And, and so you were seeing stuff in Portland and in Portland, Maine, there are a lot of businesses for sale in Portland, Maine.

Guest: In Maine, there's at any given time about 250 real businesses for sale. And I was open to, I was, I wasn't really, I mean, at that time I wasn't really looking like I was just sort of getting familiar with what it was. And so we were definitely living in Portland. We have a lot of family here and within two hours of here. So when I decided to actually buy a business, we were like firmly locked in geographically. We were not Open to moving at all.

Host: August Felker is a two time successful searcher. First with a traditional search fund. The second time around he did a self funded search. Today, August runs Oberle Risk Strategies, an insurance firm with a dedicated practice group for searchers and acquisition entrepreneurs like you. If you've got a business under loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. A great no risk way to get to know August and team. They love helping searchers. They've worked with hundreds. Oberle is a specialty insurance brokerage for searchers by a former searcher. Check out oberle-risk.com O B E R L E- risk.com link in the show notes. So you've known about biz buy, sell now for a couple years. You, you dip in and out, you explore subconsciously. You're probably warming to the notion or maybe like, yes, so and so how does it then become more real? And how does, how does your search be your official search begin? I guess it begins the morning that you wake up and quit.

[21:21] Guest: Yeah, it sure does. So it officially begins when I'm sort of faced with this dilemma of like, okay, like I've, I'm quitting academia. Like, I'm done with academia. I had been like, I said, like this had been building. So I had like, I had looked at going to work. I had done some like informational interviews at research firms, like big research firms like Rand or something like that. Mathematica. I was really interested in like a year before that. And so, and then I have a friend who works, I have a lot of friends who work during user research for like big software companies or big banks. And so I have a friend that was doing UX at one of the big investment firms and he was like, oh my God, you're quitting. Like, come work for, come work with me. Like I'll get you an interview tomorrow. Like it starts at 170. It's great, yada yada. And so I was sort of like thinking like, what do I do? Like, do I stay in like the helping professions? I used to be the state refugee health coordinator. Like that job had sort of come back open. Do I try to like just cash in and like go do UX somewhere where you just like pawn your research skills to big companies that are like, why do people always exit my website right before this step, you know? And you ask people like, what annoyed you about this?

Host: It's funny, when I worked at a SaaS business, our UX researcher was a very academic guy. I didn't realize that he was actually fitting a pattern.

Guest: Yeah, there's a ton of academics that leave for UX because the pay is so much better. And then frankly, the research is stupidly easy compared to what people are doing in academia. The data analysis, my friend told me all about it. The data analysis is really easy. What you're doing is really easy. The questions are pretty easy. Like, it's just, it's a very, like, it sounds like a pretty stripped down version of what, how complex some academic projects can get or like some big data research project maybe. There's probably a world of UX that is like extremely complex. I don't want to like Offend 100 UX researchers who probably will never listen to this podcast.

Host: But,

Guest: you know, it was. It's a good transition for academics for some, for some academics. But like I said, I was. Kept coming back to this idea that like I wanted, I wanted more money. So that state refugee health job was kind of out because it was still going to only be like 75. And then I wanted control over my time. Like, I did not want. I loved that in academia. You. Nobody could like make me go to a meeting in the middle of the day. You know, that's sort of not true because there's a lot of meetings that you have to attend. But in theory, it's sort of. It feels true. It feels more true than it actually is. So I started basically only considering like big money jobs, like the UX job that my friend was doing or going into owning my own business. That's like the, that was the decision point I pretty quickly came down to. And so I went, I used my research skills to like go all over the landscape of like, what is this thing where people buy businesses? Like, is this a real thing? Does this actually make any sense? Nobody in my real life had any idea what I was talking about when my mom, my mom now works for me and it let her retire from her other job. When I first told my mom, she was like, basically like, that's the stupidest thing I've ever heard of. Why would you buy somebody else's business? Like, why do they want to sell it? Is it not working? Like, what would you even do with it?

[24:55] Host: Yeah. Is it not working? Is always, is always the question of people who are skeptical of this.

Guest: Well, why do they want to sell? Yeah, it's like, well, because people don't do the same thing forever. I don't know. Like there's a. Who cares why they want to sell, it's not really important. What matters is like, what do the numbers look like? What is this business? So, yeah, so I did all the things people do. I read the Harvard Guide to Buying a Small Business or whatever that book is called. I started like doing massive Google hunts. I read Buy, then Build. I joined all the Facebook groups and I started listening to, I listened to so many episodes of Acquiring Minds.

Host: I'm thrilled.

Guest: Good.

Host: And here you are. So must have been doing something right. That's right. Good, good. That's awesome, Heather. Okay, so, and so give us a little bit of a feel for your search. What were your criteria? You've already said that basically being in greater Portland is your geographic criteria. What about money industry type of work?

Guest: Yeah, I started out with things that I didn't want. So I quickly decided that like, I did not. I've done a lot of restaurant work in my past and I did not want a restaurant. I didn't want any high volume retail and I didn't want to work with low and with minimum wage workers. I didn't want my, my business model to be dependent upon the minimum wage because I feel strongly like the minimum wage is not a livable wage in almost anywhere, even here where we have a high minimum wage. And so I didn't want my business model to like have to have the minimum wage or else like the business wasn't profitable. And so there's a lot of. That eliminates a bunch of stuff. And then I wanted to stay within things that I sort of understood. So E businesses were completely out because I do not understand E commerce at all. And so I have a background in the trades. My husband's blue collar. My dad, like I said, was a house painter. My stepdad was a welder. I grew up painting houses. I grew up. I worked for a roofing company for a little bit. I've always known a lot of people in the trades, like home services. I get like, I get, I have no idea, like how to drop. I don't even know what drop shipping means.

[27:05] Host: Right.

Guest: I don't, I don't. But if somebody was like, can I, can you like measure and then sell and then manage the people that install a fence? I'd be like, yeah, I can do that. Like, I get that.

Host: Like, you know, it's interesting, Heather, I mean, you've explained why. Because it's your background. But typically somebody with a PhD from Harvard, not to make you feel self conscious, but typically somebody with a PhD from Harvard probably would not be somebody at home in A blue collar business. So it's, it's a fun juxtaposition, but I guess it's just because you're. Your background. I mean, that's where you came from.

Guest: Yeah, I can tell that actually by listening to your podcast. Like, there's a lot of people on your podcast that are like, then I had to learn how to work with blue collar workers. They're really different. They have problems that we don't have, their wife's an alcoholic or whatever. Hey.

Host: And yeah, people, people talk about it a lot because I ask it a lot and also because I. You also hear as a theme in this world that people underestimate the cultural gap there. So even if you're not like curious or worried about some, you know, cultural chasm, it's gonna, it's gonna hit you in the face if you've never contemplated it. Like, it. Because it is very different.

Guest: Yeah, yeah. I mean, because it hit me in the face the other way when I went to Harvard because Harvard, I went to the University of Southern Maine for my undergrad and Harvard, I was fully funded as a PhD student. Almost all PhDs at Harvard are fully funded. So it's not like I was special or something, but a lot of people at Harvard are. Ivy, Ivy, Ivy.

Host: Right.

Guest: You know, like I. And I remember clear as day, like I have many conversations that I was like party to at Harvard. I was like, what planet are you guys talking about? But there is this guy who's a professor there and he, his 12 year old daughter had had a friend over that weekend. And honestly, like, this is. I'm so uncultured. I'm going to like butcher this story. But he was, was. He was like astounded that his friends, his daughter's friend didn't know the difference between like, it was like so crazy. It was like camera bear and like guy cheeses or something like that. And I was like, what the is this guy talking about? Like, when I was a kid, cheese came wrapped in individual slices and you like unwrapped the slice of cheese and put it with the bologna on the white bread sandwich. And. And he was like, he was. Anyways, I was like, this is a different world. So my world went opposite that, you know, the other way. And for me, it feels so good to be back out of that was another thing that sort of was difficult at times about academia is that the. That culture fit. Was annoying sometimes.

Host: Yeah. And so. And now it feels. Well, I want to. Let's not jump ahead, but I want to. You're I think you're about to say, it feels so good to be back out of that. But, but let's, let's go to. Yeah, okay, so you decided what you didn't want. So. So you're gravitating toward home service, home service businesses, the trades, so forth.

[30:03] Guest: Yeah.

Host: Okay. All right.

Guest: And I looked at a little bit of business to business services too. Like print shops, something like that. Like. Yeah, okay.

Host: And so how did you find the business that you bought and tell us about it?

Guest: Well, okay, so I had an income range of. I liked everybody talking about, like sort of the back of the envelope calculation of, you know, half the money will go to the loan, like, of the, you know, and then you can get. I definitely was going to need like a 90% down loan, 80 SB, SBA 10, seller 10 ME, and using all the money I could get my little grubby hands on, that capped us out at probably around a 750 to 800,000 doll loan. Right. Like, I was not going to get much higher than that. So I was looking for. I was really looking for a business with an SD of around like 250 to 350, 400 and, you know, and then depending on like, what the business was, would determine whether or not that was like a good fit. And so the business I found, I was not looking at it all because it was a franchise. I'd seen it on the listings. It was an established franchise. I wasn't interested in franchises, which was a huge mistake on my part, I think, to not understand franchising beyond like Dunkin Donuts.

Host: Such a New Englander, I know.

Guest: Yeah, yeah, it's true. It's the only thing when, if somebody's like, what's a franchise? Before I would have been like, McDonald's, Dunkin Donuts, burger King, like just fast food franchises were like the only ones that I understood as franchises. So I was working with this business broker and I had. I had a business broker, I will say, like, completely not take me seriously and was. He would not show me businesses. He was like, you're going to be bored. You won't. You won't be able to leave academia and buy a business. Like, he did not believe me. And I wanted to see a business of his. And he wouldn't even tell the seller my offer. So I stopped working with that business broker and had another business broker who was great. And he wasn't my broker, but I was contacting him about businesses like pulling NDAs on him and, and he was like, I talked to him about what I wanted. He's like, I think I have a really good fit for you. And he showed me this closet company and it's a custom closet company and it was like exactly what I was looking for. And so I went and met with the owner, with him and he showed me the business and it was perfect.

Host: Great. Okay, well, let's hear more about it. But let me ask you a question about your target ste. So you said you were targeting 250 to 350, 400, as you said back of the envelope is that your loan will cut that in half. So let's say, let's call it 300 STE. So you are basically going to pay 150 year loan and have 150 SDE leftover. You've already told us that you were paying, you were being paid about 60 grand in academia. So were you expecting to jump from 60 to 150 or not because you wanted to be able to reinvest some of that 150 into the business, presumably Tell us a little bit more about your back of the envelope?

[33:13] Guest: Yeah, my back of the envelope was just me running it, not my husband too. And so it was just looking to replace one salary. And so it was the back of the envelope was the 150 that was left over would go probably 70ish to me right now and then have like, of course like 10 is going to go to health insurance or something like that or things that we can't think of right now because I don't know at the time I didn't know how to run a business. Um, and then that would leave like you know, 50 ish to reinvest in the business assuming no growth. But another thing about my model that I was like the businesses that I was looking at is that I wanted there to be a clear pathway to growth for the business. That was like obvious, like I like a day one plan for how the business was going to increase revenue so that you could pay that note payment and work towards like a three to five year goal of having like a much higher salary than 70,000 a year. Yeah, through reinvesting in the business, but also growing it so that, you know, a smaller margin is a bigger number.

Host: And, and so let me understand because going from 60 to 70 now, when you're basically like right at kind of break even in your life, an extra ten grand a year is significant. However, percentage wise, going from 60 to 70 is not a big bump. It's not trans. Well, I guess it is again transformative to your life. When you, when you. So how did you choose 70? And why didn't you want to go from 60 to 100, let's say. Or you did, you were just patient and you were going to wait to

Guest: do that for a year from 60 to 100. Okay, I'll go to, I'll go to. I would love to be at 120. I do think, like, fair compensation for the job that I'm doing now would be like 125 in the local market.

Host: Okay.

Guest: So easy for a business like this size.

Host: So, so how did you choose? 70 is the number that you'd compensate.

Guest: Because it's safe. It's safe. I want the business because I did not like, because I started this business and had, like, I, this is a, I mean, I, I bought this business and had, like, $40,000 in the business checking account. That is not a safe amount of money to have in the business checking account for a business that has $6,000 of employee payroll a week. And, like, you know what I mean? Like, does it. A million dollars a year in revenue. Like, I was, I started this business like I had other money. Like, I have family that could help if I got in trouble, but I don't want to buy a business and then, like, turn to my family with the deepest pockets and be like, help me. Yeah, you know, so I was trying, I'm trying to, like, build that bank account and be safe, you know?

Host: And do you envision what, like a salary progression? Do you, do you have it mapped out, like, next year, assuming things go well, you'll, you'll give yourself a raise and year you raise again and so on?

[36:01] Guest: I, I, I have goals. I think I have other goals first. Like, we, I did just start the business, did not have a 401k plan or an, an IRA plan for the employees. And so I just started one for all the employees with a 4% employer match. And so my goals, I, and then I have one employee that I would like to compensate more highly. Um, and then I do think probably in the fall, my husband and I will both get bumped from 70 to 80. We have an employee making. We have a very good employee who's worth every penny of the money that we're paying him right now. And he makes quite a bit more than both my husband and I make in the business. And I would like to make, I would like to make the most in my business. But I'm okay waiting to get there. I can wait. It could be a year from now. I don't really care you know what the sad thing about academia is that if I had made like 15 grand more a year, I probably would never have left. Like, I really don't need a ton of money. I now that it's like, well, if I'm gonna make money, I'm gonna try to make money. Like, let's make some, you know, let's. Fine. Like if, you know, if I, if it turns out you have to think about money like this to make it to like have stupid, the ability to do like stupid middle class stuff like take your kids to a national park or like get patio furniture that doesn't come off the side of the road. You know, like, if I have to like actively think about money, then fine, I'll think about money. And I would love to be making, I think I would like to make 250 a year. Three to five years from now is my personal goal for a salary. Like when I've like, like that's my like made it salary and I don't know how. I think the business probably has to be around 4 to 5 million a year in revenue for me to pull that much off of it as fair compensation. And so it's, it's probably five years down the road.

Host: Well, I'm starting to understand you more and more as you talk, Heather. You're, you're, as your appetites change and evolve and yeah, because I, because I don't mean to harp on it, but the 70,000 number is gonna, is, is quite low for somebody taking the amount of risk you were going to. You were going to. And it also, again, it did, it was, it didn't strike me as much of a big change to what you already had. However, you have bigger plans in a relatively short time. Five years isn't that long really. And you were also getting your time back, which we're, which we're also going to get into. So it was a total change in lifestyle, which was a key part of your pain point wasn't just the amount of money you were making or not making, as the case may be, but also the amount of time you were having to give your, your, your, your profession.

Guest: The business is profitable. Like I could easily be paying myself much more money right now, but I don't, I want, I've got like, I've got a plan. I wanted to. And also my husband left his job, which is fine because we would be paying somebody to do the job he's doing in the business anyways. And I get so much more work out of him than I would Any other employee so well together as a family.

[39:06] Host: Tell us about your husband joining. Because you said at the outset it was just going to replace one salary, but now it sounds like he's in the business. So tell us the quick story. Story there.

Guest: He worked for the railroad his whole life. He had a really great job there. And then the railroad changed ownership and it became a terrible job. And so he was looking sort of casually for something else. And when I was buying the business, he saw the writing on the wall that, like, it was going to be a huge undertaking, and he got worried that he was going to let me do it by myself and, like, try to explain it to him on nights and weekends and, like, him try to help me without really being in it. And so he decided to just take the leap of faith and leave the railroad and come on full time to the business so that he could be there from day one and, like, really support me in it. And the business that we were buying wasn't a business that did, like, 250 a year where we were looking at only, like, 125 after the loan. Like, it was a business that was big enough that we could. We could replace both our salaries with it. So he went ahead and did it.

Host: Well, that's. That's a new wrinkle from your initial vision and probably a welcome one. I mean, that's exciting. All of a sudden, becomes a family project. You've got mutual support. I don't know, maybe. Does it add or relieve strain in the marriage? That's probably a question you don't want to answer.

Guest: 100 added strain our marriage had. No, we had, like, the nicest, most lovely marriage. It was so easy. And working together is definitely strain.

Host: Okay.

Guest: His boss is a. The problem is, is that his boss is a real bitch. So that's a. Yeah, totally.

Host: Totally. I'm getting that, Heather. I'm getting out.

Guest: Yeah, it's true, though.

Host: And. But actually, to that point, so are you. So is it, like, there's a pretty clear hierarchy? Do you have to tell him to do things? Because that would be 100%. That could be awkward. Unless you. Are you already the boss of the house? Maybe, like, maybe it's just.

Guest: No, I'm not. That's the problem is that I'm not the boss of the house.

Host: Oh, okay.

Guest: We are. We are 100. We are like a 50, 50 relationship. And we both. We are both extremely independent people. And in our normal life, we, you know, if he is with the kids, he's with the kids. Like, I Am not a wife who's like, did you do this? Did you remember this? What about this? Like, oh, I'm out of town for the weekend. I hope he's okay. Like, I'm like, if I'm gone, I'm gone. I'm like, I don't know what the kids are doing. He's got the kids all the time. Like, my mom will text me or something and be like, what are the kids doing? Or what? You know, something. It's like, I don't know. Charlie's on duty. Like, he's. We are like a 50, 50 household that runs. Both people run very independently. We have a great marriage, but my mom says we're almost like single parents living together. Like, we're very independent and in the business. I am the boss of the business. Like, this is my. This is my business. He is a wonderful human who can. Would not run a business on his own. He would never choose to do this on his own. He does. Like, he's just very different than me. He's not. He's never going to be like. Like, he's like, he would always be happy at 70 a year. He's never going to be like, ask her if I'm going to make money, I'm going to make money. How do I get to 250? How do I get to. You know that he's not, like, competitive. He's very competitive in some ways, but he's not competitive in that way or driven in that way. Well, I feel like, so this is my baby.

[42:31] Host: I feel like now would be a good time to talk a little bit about the philosophy of academics versus capitalism and how you've changed and you've completely embraced it and your. And your husband is teasing you and maybe your previous academic friends are too. Do you under. I don't. I don't even really know what to ask here. I just feel like there will be a lot of interesting tidbits. Do you, do you. Let's start with, do you see capitalism differently now that you are a person, a more active participant in an entrepreneur, rather than somebody who is kind of. Yes, you were engaging in the system in a way, as you, as you explained earlier, but you were kind of at the, at the margins, at the sideline of capitalism, rather than a real player on the, on the field?

Guest: Yeah. No, I still think it's a really terrible thing. I still really. I honestly still think, like, what we're doing to the planet, like, this idea that, like, this is awful. Like, this idea that, like, everybody who Wants one can have this beautiful custom closet. It's crazy, right? Like, it's like we don't have the planetary resources to support this level of lifestyle for everybody. Like, this is awful, but in the grand scheme of things, like, you know, every ev. This is like, it's the air we breathe. Like, we're not getting out of this. It's like, no, you know, none of us and certainly very few people. I know, like one person, I know this like organic farming couple that like live on this piece of property and are just like the nicest humans and like they live in poverty because even if you sell organic produce for as much as you can possibly get for it, it's not enough money to live off and like, but they have a good life, you know, like, they don't have cell phones. I, I love these people so much. None of us are getting out of this without blood on our hands in, in this modern society, not living the way we live. And I wasn't. You know, it was a, it's a facade to think that just because you're in. It's actually almost like a disgusting facade to like be in like an extremely, especially like, elite institution, like critiquing, you know, critiquing society from this like, position of like extraordinary privilege, living these like, you know, extremely consumptive lives. It was, I was participating fully in the system before. I'm just doing so really consciously now with the goal of getting enough resources for myself and my family that I can like, you know, do more things that I want to at least.

Host: Save them.

Guest: Save them. Yeah. I'm gonna buy my latest, what my sibling calls my gross rich person fantasy is that you get. Maine has like 6,000 lakes and there's a surprising amount of like single like lot size islands in Maine on lakes. And you can buy one for like an achievable amount of money. Like you can buy an island in a lake in northern Maine for like $300,000 or something. Like, it's like, it's like it's not pocket change, but it's not like, yeah, we're not talking like Rockefeller money. Like people can do this. So I want to buy an island one day and one of my siblings is like so disgusted. They're like, nice little gross rich person fantasy you have there. I'm like, no, this is not, this is not evil.

[45:39] Host: So yeah, well, Heather. And let me, let me. So aside from the environmental question, and I'm not trying to say that that one doesn't matter something, but there are many Critiques of capitalism and what the consumption does to the planet is a big one. But what about other ones? Because I'm hearing from. That, from your family, you're just being tweaked about. Just, just, you know, rich people suck kind of. That, that's a. That's a kind of a classic, classic critique of capitalism. What about that one? How do you feel being somebody who's like, I want to make 250 a year for myself and my family.

Guest: I'm fine with it.

Host: You're fine with it because you're laughing. You're laughing. You're laughing a lot, nervously.

Guest: Oh, I know. I mean, it is. There's no.

Host: Were you not fine with it before? Have you always been fine with it, or. This is a new Heather. That's my question.

Guest: I've honestly never thought about money. I. Somebody told me once when I was younger, they said, do what you love, the money will follow. And I've just never been interested in money. Like, I've never. I've. I have lived through periods of my life where I made very, very, very little money. But as long as I had enough money to, like, buy Thai food, you know, every couple of weeks, or, like, go to a movie, then I really didn't care. I didn't care about saving for retirement. I didn't care about. I didn't have health insurance until I was, like, 30 years old. As an adult, like, there is some things that I lived with that were stupid. Like, retrospectively, like, it was not smart or prudent to, like, live that way, but I just wasn't. I was, like, grossly uninterested in the idea of making money. I just didn't. I just didn't care. And I found that everything I needed to do in my life, like, all the even stupid stuff, like, because if you don't spend a lot of money on things like health insurance, you can have little bits of money, like little pockets of money to do stupid things. Like, you can, like, go to a language school for a couple of weeks in Mexico, you know, or something like that. Like, things that cost money, like, cost $2,000 or something like that. You can have, you know, and I have. I've been fortunate. Like, I have good family that has, you know, my great grandmother left a little bit of money for my education, and so I was able to, like, oh, have like, a little. I didn't use it to go to college with, so I had it as, like, a little buffer. So I. I always knew that, like, if I, like, broke my leg and couldn't work for a few months, that, like, there'd be money that I could pay my rent or something.

[48:06] Host: Okay. And do you find that other people in your. In your world. I know they're. It sounds like your family's just teasing you a little bit. No big deal. But like.

Guest: Yeah.

Host: Do you find that there are other people either in your family or your old colleagues from academia that, like, are actually quite disapprove of this or are people. Nobody's that petty or. You don't know?

Guest: I don't know if they disapprove of it. They're doing so quietly, I think. I think I found people that were surprised but completely understood. I think most people in academia know how dire it is in terms of, like, how much you work for how little it is. And it's only become more stark, you know. So, like 10 years ago, getting paid 55 was different than getting paid 65 is today. You know, things have changed, like. Yeah.

Host: And what about the, the intellectual challenge or stimulation that small business presents? It's not strictly intellectual like academia is, which is sort of explicitly intellectual, but it certainly seems to entertain and challenge a lot of smart people. How do you feel like your brain is being used now versus before?

Guest: Oh, it's. I think it's really fun. I think my brain is being used in complex things that I am very interested in and in, like, systems and organizational systems and solving problems. And that's very similar to some parts of my work in academia. I've burnt all the way out in academia and I've been taking a break from thinking about things that, like, were things that I used to think about a lot. It's also, like, I used to work a lot on, like, questions of, like, like combating sexism and racism in our society or, you know, the rights of trans people and how people are trying to use scientific rhetoric against trans people right now. And those are all areas that are, like, deeply depressing to think about right now and have not gotten any better. And so I've been taking a break from that sort of thinking and have found that my business presents more than enough opportunity for me to sort of be intellectually fulfilled. And then I've also just been, like, doing a lot of, like, fiction reading and stuff in my off time, which is really nice.

Host: Great. Well, let. Let's circle back to you your life now as a business owner and get a little bit more on the business. So I asked you what your criteria were. What did this end up being? What are the, the numbers behind this. But give me a few stats, give me some cash numbers, like the performance of the business size, employee numbers and kind of like, does this have a retail location? Is it all web based? Paint a picture for us.

[51:02] Guest: All right, this is a great business. So this business is, it was doing about 1.1, 1.2 million a year in gross revenue when we bought, had three full time installers. The owner and his wife were working in the business just like people say. The owner is probably doing the jobs of three people. That was absolutely true. So the way that this business works is that you want a custom closet and so you Google custom closet, Yarmouth, Maine or wherever you live. And our brand comes up. They had 95, five star Google reviews, like very well established local brand. They'd been in business six or seven years. And then you call up, you make an appointment, we come out to your house, we measure the space, talk to you about what you want there, mock it up on this really cool CAD program. You approve the design, the CAD program back ends with the mills and the hardware vendors that we get our stuff through. We order, comes to the warehouse, the guys get it ready to install. They drive out almost always one day install like white glove install in and out. That's the business.

Host: Wow.

Guest: It's extremely simple.

Host: Wow. So the two big kind of work pieces are working with the customer in this CAD program to kind of like design it and play with the possibilities. Step one, step two is, you know, and then you do some stuff on the back end to get all the stuff put in the order. But the big step two is basically the installation. So that's really kind of like, wow, that, that is a really simple business.

Guest: Very simple.

Host: And how are margins in this business?

Guest: They're good. So the owner's profit margin was around 30 to 33% was what their SDE was. And that includes of course like their health insurance and if they had any loans, they were coming out of that, et cetera. But that's what was left over after the business paid all its expenses.

Host: But not paying he and his wife.

Guest: So not paying him and his wife.

Host: That's right, him and his wife. Okay. And so 1.1 to 1.23 full time installers who are not the husband and wife. So three full time installers plus husband and wife. So five people in total.

Guest: Yep.

Host: And now you and your husband presumably have replaced what he and his wife were doing.

Guest: Yep.

Host: And what is an average order look like? How big Money wise?

Guest: About 6, probably about $6,000, $5,500 to $6,500. They go as low. We try to have a fifteen hundred dollar minimum, but I would say the average low end is around three. And then they go as high as, you know, 60, 70,000.

Host: 60 or 70.

Guest: Wow.

Host: And do you have, you have a location?

Guest: Yes, we have a warehouse and then we also have a showroom. And I'm trying to combine the two of these things together. The showroom we hardly ever use. It's a by appointment only showroom. We sell Murphy beds and people really want to pull down a Murphy bed to see how easy it is to pull down.

[54:04] Host: Interesting. Okay.

Guest: Yep.

Host: So. But you don't actually. So you have the showroom and you're not actually actively in there. So how often are you actually meeting somebody there? Like how much in the showroom?

Guest: Yeah, three times a month, maybe for like an hour.

Host: Oh yeah. You really gotta get rid of that.

Guest: It's very rare. Yeah, yeah. The showroom. Well, what we need to do actually is have a bigger showroom that is fully staffed and people can just come to that we or the office manager work out of. And it's I think attached to the warehouse right now is what we're leaning towards.

Host: Yeah.

Guest: Because showrooms. The franchise ran an experiment where they gave showrooms to two locations that did not have showrooms before and found that increased the average ticket price by. It's crazy. It was like 65% or something. The ticket price went up. It was just by having a showroom because people come in and they're like, oh, I do want a pull out hamper.

Host: Yeah.

Guest: I do want shaker doors. I do want this custom color.

Host: Now I can totally see that it does whet the appetite of the customer. But if you're only meeting people in there, three, three people a month, you're making lots and lots and lots of sales of people who never go in there.

Guest: Yeah. Our showroom right now doesn't function as a showroom. It functions as a Murphy bed display center. Basically a real showroom. We would need to have like more stuff in it. We have a pretty big closet set up in it. But we would need to revamp that and also put in a lot of stuff that's not in it currently the show. Creating a showroom would be an investment, but one that would be really worthwhile and then I think should be like on our radar.

Host: Let's talk a little bit about the fact that this is a franchise. So you went down the kind of, the kind of same path of kind of criteria that many searchers do, which is you don't, are not interested in franchises, don't want a franchise, and then some never do. But many people eventually open their minds to it and find one of these wonderful businesses and franchises. That's been, that's been a theme of a number of previous guests. And I became quite interested in franchising because I too was kind of going down that path and opening to my, my mind to it gradually. So tell us about your, your reservations about working with a franchise and then how you open your mind to it and the pros, cons, what you found with this particular franchise. All of it, please.

Guest: I thought that we tried to control the business too much. I didn't understand franchising fees. I thought it would be really expensive. I just didn't really. I really wasn't interested in franchises because I thought it would be like a box model, like out of a box. And I honestly only was familiar with like low wage fast food franchises. They just seem terrible.

Host: Yeah.

Guest: So this business is great. Like this franchise is called Home Franchise Concepts. Yeah, hfc. And they own eight different home franchise like home services brands. If you listen to this podcast and decide to buy into a hfc, you should shoot me an email. Okay.

[57:02] Host: Why can you share publicly when you share publicly?

Guest: Yeah, yeah, I'll get a kickback if you, if I, if we can give the name, I'll get a kickback. So. So they are seriously investing in their franchisees and their, their network. And so they have for instance, like I own this closet business. They have a couple of full time closet designers that they send to European trade shows to make sure that like we're on top of the new market trends. They have the software, which is incredible. They make sure that the software back ends with our mills and our hardware vendors so I don't have to worry about like if Hafele increases the price of their bar poles. I don't have to like keep a catalog with that price in it. It just automatically updates inside my software. And when I switch out a bar pool for a modern handle, the price changes for the customer. Like it's all calculated and then it spits out an Excel sheet of order lists like part numbers that you upload to the Hayflow website. It's remarkable. They have full time like operations managers that I can meet with to make sure like what's my plan? Am I on target for my plan? You know, it's, they have a lot of support, like a lot of support. So I've been very surprised. And then I have A lot of flexibility. Like if for some reason I only wanted to sell mudroom benches, that would be like a crazy business model. But I could do that. Like, they're not trying. They don't really. They don't control my business. And the franchise fees happen to be really low because they're. Their business model is that they make money through partnerships with the mills and our vendors. Our mill price is still really low because instead of being like a million dollars a year is like not a bad size for like a little closet business in Maine. But that's not enough money that a big mill would pay attention to me, you know, so there's 200 of these franchises across the country. So all of a sudden like my purchasing power isn't just my million dollars a year, it's the X amount that we're buying as a network. And so they get to leverage that to get like way better prices from the mills. So it's all like, win, win. As far as I can tell, I'm into it.

Host: What are the franchise fees? If you can say, yeah, I can say.

Guest: So I snuck in under the old agreement and I pay. There's a very confusing brand split that happened that we don't have to get into where I bought one business that immediately split into two. So I actually own sister companies, the Tailored Closet and Premier Garage of Southern Maine. But I bought the Tailored Living featuring Premier Garage. And so I got in under the old agreement. And my. So I pay half of what I would pay, but it is a thousand dollars a month per brand as a franchise fee. And then 500amonth per brand. No, 250amonth per brand because I'm selling, splitting it in half for my national ad fund fee, which is a great deal because they're national ad funds. I like regularly get leads from it. That's by far my cheapest marketing investment. And then a little bit of money a month for a technology fee. Like a couple hundred bucks. Altogether I'm paying less than 2% of my. Of my gross. Great.

[1:00:20] Host: And the way that you drive traffic. So this, there's this fund where they're sending you leads, but I assume you can also control your own marketing budget and do your own Google Ads and all of. Oh, of course, yeah. Cool. And. And so how much. So is. Is this business basically like an. An SEM, like search engine marketing based business? It's like all your leads are coming in through Google searches.

Guest: About 75% of the ones that when we bought it were Google searches. And that is still true. Today is that about 75% of our leads are Internet based SEM leads of some sort or paid social. The paid social is kind of variable quality but worth having I think for brand awareness right now. And the other 25% are either partnerships or referrals. And so what my goal is is to flip those numbers over the next few years and to have 75% be partnership or referral leads and 25% be the pay per click.

Host: Which is another way of saying basically you're fine with the pay per click business, but where you're really going to invest your own growth energy is on all these kind of organic ways to get or the referral business and so on. Like that's where you see real growth opportunity.

Guest: Yeah. Relationships with builders, interior designers, remodelers, et cetera. Where you turn, you know, because somebody, even if somebody goes through every closet in their house essentially like each client is like a one time client. You might see that one time client over the course of a couple of years as they get put little pots of money into redoing their closets. But they're never going to be like a repeat client really. But builders and remodelers are true repeat clients where you know, every year they might have, you know, four, four to six new jobs for you.

Host: Yeah, yeah.

Guest: So that's where I want my time to go.

Host: Yeah. And I want to come back to that before we get too far off the franchising. So, so basically you thought the reason you didn't like it is because you thought franchises would control your business too much. And as you looked under the hood at this particular business, you saw, oh well, these guys don't really control me that much. And so then that was, then you were open to it. That's, it was kind of the short version of how you got into doing a franchise. Yeah. Okay.

Guest: And they made things like really efficient. They had all these like, they had, they had systems. I love systems. I'm a big fan of systems. And the franchise came with all these systems to put in place that were like super efficient and just, you know, it's kind of interesting because like I really like, I, I like expertise. Like I believe in expertise. Like my doctor is my doctor. I don't do a lot like a lot of like Google medicine searches etc. And it's funny that I wasn't open to franchises because in some ways like a good franchise is like you're unloading that expertise onto somebody else.

[1:03:06] Host: That's well put. Yeah, exactly. Okay. And then so going back to Kind of the business overall, not the franchise piece. So you recognize that there wasn't a recurring element to this business. And so your approach to solving this is basically business development. Developing relationships with source, regular sources of customers that they would be able kind of provide you a steady drip of customers. And do you, have you had any success there? Do, do you think that that's like what, now that you're in the business,

Guest: so much room for it?

Host: Yeah.

Guest: Yeah.

Host: Okay.

Guest: He had, so he had organically grown pro 10 to 12, 15 relationships with interior designers. So he had focused on the interior designer community, which is a great community to focus on, and had organically sort of grown partnerships with them. And so we came on and even just those interior designers, I would say, like, I mean we probably have one an install every other week. At least that is an interior designer given to us install, which would be about 10% of the business if we're doing one every other week or so. And then since then I've added a couple of builders, my husband has added a builder and we've joined like the main home custom home builders association and like presented to their builder like builders and beers happy hour thing. And so we've been, I'm like, we're hiring new designers right now because I am so overworked with running the business and being a full time designer in it. But as soon as I can get some designers on, I'm gonna aggressively hit the builder scene here and try to get some of those relationships like really established. I made different pricing levels for them, stuff like that.

Host: You always, one always on the outside of a business is like, I'm gonna do X, Y and Z to pull these growth levers, right? And then when you get in there, you find, oh, maybe this opportunity isn't what I thought. And so as I'm listening to you, like one of the things I might be concerned about is not that that working with builders, working with interior designers is a bad idea, just that, oh, these interior designers are being hit up every day by custom closet people. Like these builders, you know, are constantly being, getting inbound from custom. So it's not going to be so easy for me to, to build a book of business with these folks because all the other custom closet people have, have long since been trying this. Have you found something like that or no? Does it feel pretty green field?

Guest: I'm going to say something. And then I. If anybody moves to Maine and starts a custom closet business, you will have very bad karma from this. So we are, we have a serious early advantage. So Maine, I love Maine. Maine is so great. Maine is so sleepy and Southern Maine is booming. We're having a huge amount of growth. And there are, there's like literally one other custom closet company that's like a one man show in Windham. He's been there for 30. Windham's a very small town nearby. He's been there for 25, 30 years. He's probably going to retire soon. He does his designs and installs himself. He has all the job work he wants and he can always have all the work he wants. He. So there's no. We have no competition. We have the only option for builders. I know, don't tell anybody because I'm like, I gotta lock all this in before somebody opens up a closet by design up here or something. Because there's so many of these custom closet franchises that there's a Cal Closet that's located in Massachusetts, California closets that will sell in Maine, but if you buy from them, their installers have to drive up from Massachusetts to install it. And plus, I don't know how familiar you are with Maine, but people in Maine hate people from away and they especially hate people from Massachusetts and they just. Maine is like very insular. Maine is very into being from Maine. And so the fact that California Closets has California in the name is like a big strike against them.

[1:07:06] Host: Okay. Use those prejudices in your favor there.

Guest: That's right.

Host: So. So there's literally only one other custom closet builder in all of southern Maine and it's a guy with a.

Guest: Yes.

Host: A pickup truck sort of thing.

Guest: Yeah, yeah, yeah. So don't. If you, I swear, if you listen to this podcast and you move here and start a business, you will be haunted or something. Don't do it. No. So we're going to try to. I'm going to try to lock it all up because I know that sometime in the next five years, somebody's going to open an easy closet or closet by design or one of these other 10 million franchises out there.

Host: Yeah.

Guest: And when they do, I want them to have all the pay per click they can dream of. But when they go to, you know, spang builders, I want them to be like, oh, sorry, we work with Heather.

Host: Heather's our girl. We're not.

Guest: That's my plan. Yeah.

Host: Yeah. And so, so did you perceive this when you, when you bought the business or only once you got into it did you realize what kind of a first mover you are?

Guest: I knew that. I like, I don't think I knew how weird it was. I knew because I did. Of course. Like, I researched competition. We also offer epoxy floors. That's our other growth pathway is that we added the garage side more fully. But I don't think I realized that in other locations there's like eight closet businesses.

Host: Yeah.

Guest: Always. Like, I don't think I, I quite understood that.

Host: Yeah. Well, I will say, Heather, one of the, one of the things that you'll hear is that like competition is good because competition signals demand. And so if there's only, if there's only. There were only two custom closet businesses in southern Maine, you might worry, oh, well, maybe that's because this market isn't big enough to support them and there's just not enough demand here. But it doesn't sound like, like that's the case either. It sounds like you have this happy.

Guest: 15 years ago that was true.

Host: Okay, okay.

Guest: 20, 15. 20 years ago that was 100. True.

Host: Okay.

[1:09:01] Guest: Maine changed a lot in the last 20 years. Southern Maine has.

Host: Yep, yep. Meaning more money, more people wanting to do fancy stuff with their houses, more second homes, more outsiders coming in.

Guest: Yeah, more outsiders. So many more. And, and more like a different type of money. Like we've always had a lot of vacation homes, but it was sort of like reserved. I was talking to somebody about it the other day and he was like, yeah, no, when we were kids it was all like old protestant money. It was like not fancy money. I was talking about how we see luxury cars now. And like you never used to see luxury cars around the Portland area and now everywhere I go I see like multiple luxury cars. And he was like, well, the old money wasn't, it wasn't the same. Like the, the money that's here now is different, which I think is true. And I think also like what a custom closet is, has come down in like achievability. Like, I think new homes are being built with like a little room off the master bedroom and like you have to put something in that room. Like you can't. You know what I mean? Like it has a walk in closet now and they didn't have, I don't think walk ins were as common even a short time ago. Certainly not in Maine.

Host: The other, the other thing I would think about the competitive landscape is like, I assume that custom closets are not just offered by independent custom closet brands, but like the Container Store has Alpha. Do you know the Container? And in fact, when I did my model years ago, like I did these alpha. So they have, within the Container Store they can do your closet. And I did that. And I assume that's kind of the low market option. This is. It's not the luxury option, but there's probably that sort of presence in Maine too. Already.

Guest: 100.

Host: Yeah. Okay.

Guest: We don't have a container store, but you could order this off online. Yeah, you could order. You could do something like that online. Yeah.

Host: Let's just return to your vision for growth and then just round out with a couple more minutes on how this transition has been in your kind of in your life and who you are and how you. This new path ahead of you to your growth. The. So you said your fantasy or your new goal, your new gold ring is a quarter million bucks a year in salary to you and that you need to get to 4 to 5 million in revenue to have that to generate enough ste. 4 to 5 million dollars a year in revenue is. Let's call it four times what the business was when you bought it. You said it was 1.1, 1.2. So growing four times means how many. How many sales are you doing a month? Individual deals and sales closed roughly.

Guest: Oh, that's a good question. About 30.

Host: Oh, 30. Wow. Okay.

Guest: About 30.

Host: Okay.

Guest: Yeah.

Host: So you need to get to 120. That's. And that's. That's four, is my math right. Yeah. So that's four. Four a day closing, four sales a day. And so does that feel realistic once you've got all of your, you know, you've got all of your relationships in place and so on? Does that kind of pass the sniff test now that you're in the business and you can kind of feel the velocity of demand?

[1:12:10] Guest: Yes, I think it. So I think one of our primary levers of growth was adding the garages. Nationwide. These businesses are, on average, they're 30% in home, 30% garage floors, 30% garage cabinetry. And he was doing 90% in home, 10% garage cabinetry, no garage floor. So our first, like, growth pathway was like, add garages like that. There's not a huge garage competition here. It sort of implies that we're leaving X amount of dollars on the table for garages. So we brought in a garage guy and we added the garages. And that's an area where it turns out, like, we misunderstood things and we misunderstood, like, you can sell a lot of garage floors up here, but if they're. They have a completely different profit margin without the cabinetry. And so garage floors, if you're really busy with cabinets, garage floors don't make sense in some Ways, like, why would you have two guys go do garage floors and make X amount if you could have them make 3x doing cabinets that day? And so we're sort of like figuring out like how to, how to work that, like how to always sell garage, how to carry things in the van so that we always upsell the floor or whatever it looks like. So. But yeah, I still think, you know, we're on track right now to hit easily 1.5 this year in primarily closets. Like the garage floors are still launching. And I did not think that we would grow past 1.3 ish in closets this year. So the brand split, I do think, allowed each brand to stand better on its own. And we're. The closet side is booming. I think we could have 2 million a year in closets all day long in Southern Maine, maybe 2.5 or 3 before we really start to reach the limit of the market, in my opinion. And then for garages, I think that we could easily have 1.5 to 2.5 in garages. And of course, this means that we have a set of four full time designers, we have two more install teams, et cetera. But I think we could get there. I think we could do it

Host: Great.

Guest: Heather,

Host: what muscles do you feel like. Do you feel have strengthened since you've got. Since you started down this path and which have atrophied?

Guest: Oh,

Host: there's a heavy sigh before answering this question. I don't know what that means.

Guest: Yeah, my. I am not a good manager. Oh, I've managed a lot of people before. So I used to. I managed the lab at Harvard where I had 20 people working for me. They were all Harvard postdocs or upper stage graduate students. And those are different humans to manage than other. Most other humans. The process. I've managed a lot of people in academia and then some people and the state refugee health job. I'm used to working with people that you could give them a task to do that was complex and they would do it pretty independently and they would keep doing it until they figured it out and got it right. Um, and that is not how a lot of people operate. Like, a lot of people really need a task to be broken down into discrete parts. Um, and they want you to tell them what to do at each step more often. Um, so I am reading a book called the Power of Flexing right now. And it's about. My goal for myself is like emotional. I need better emotional intelligence. My, my EQ is really low. You know, like, I'm not Like I'm very direct to the point of I can be like abrasive where I. And not the. My actual employees. It's all worked really well with. But you know, I work with my mom, I work with my husband, I work with my former brother in law is our floor lead. And you know, those especially like when you have the familiarity of somebody that you're family with. I think like I need to, I just need better emotional intelligence. I need to be more patient with people.

[1:16:39] Host: Well, the power of flexing doesn't seem like the message is, is the one you need to hear. The power of flexing, I assume is like when to throw your weight around and how to throw your weight around. No.

Guest: Oh no, no, no, no. It's not. It's how to use, how to use things that are happening in your life to work on specific to like flex a skill that you're not very good at. So maybe, maybe you want to be a better listener and you have like a big project coming up at work where you have to. And so you think of like three different, it's sort of like atomic habits. It's like you think of like different experiments that you can deploy to try to help yourself like flex into this new skill. So I need to, I need to learn how to be a better people person if I want to be a successful manager of this company.

Host: You know, so I'm trying to tease out here. If we talked about blue collar, white collar before and how you kind of laughed at some episodes where people seem like, like the blue collar thing, they're like aliens or something. But I was expecting you to say that you were totally at home in, in a, in a business that's kind of more blue collar rather than like Harvard lab lab rats. But it sounds, but it sounds like actually no, but maybe, maybe the blue collar, white collar thing is. I'm misreading that. It's not about that at all. It's just about, yeah, you have a lot of power and you're impatient with your underling sort of thing.

[1:18:01] Guest: Yeah. Yeah. Well, I think it's funny because the actual like the three employees that came with the business are awesome employees. I never have any problems. Like, we never have any problems. They do their job. They know exactly what to do. Any problems that they have were created because they have two new and semi incompetent designers. So there's a real problem in this business where like the program will let you do things that like are crazy to do in real life. Like, and you have to really There is a learning curve for the design process, and my husband and I are the designers right now. So I think it's only when employees. And I ran into this at my state refugee health job too, when I have an employee that doesn't do the thing I asked them to do or does something different that was wrong in some way, I am very much like, why would you do that? Like, that's not what I asked you to do. And also, like, you've created a huge problem here where that's what you. I don't. You know that phrase, like shit sandwiches? Like, you take that piece of criticism and you're like, thank you for trying to help me with that task. I really appreciate that you put a lot of work in. However, I had asked you to do this and like, you and then like, whatever. I hate that it feels phony. I don't like it. I don't like when people do it. To me, I don't like doing it with other people. However, when you hold power over people, if you're not willing to do some of stuff like that, like, I do think there's a certain type of person out there. Like, just because I feel like it sounds phony and I don't like it, for me, doesn't mean that other people don't find it. Like, obviously people like it because that's how people communicate. And there's a lot of people that do it and like, people consistently suggest doing it. So clearly there's a lot of people out there that prefer that.

Host: That.

Guest: So that's.

Host: Well, that's empathy.

Guest: Right.

Host: Because we all kind of assume that everyone else's brains work the way our do. Ours. Ours do. And so we behave to every. We golden rule it. Like, you're basically golden ruling it. You're trying to treat people how you would want to be treated. Turns out we don't all want to be treated the same.

Guest: Yeah. Yes, it's true. You know, and actually I did have that come up in academia with criticism for writing. So for when if somebody. If I've written something and somebody has editorial feedback, just give it to me. Don't tell me what you liked about my writing. Oh, this was really good. Well said. You know, But I would change this. Just tell me what to change and like, move on with your day.

Host: Yeah.

Guest: But it turns out, like, I have seen people reduced to tears by criticism that was really direct from somebody that gave me the same criticism, and I loved it.

Host: Yeah.

Guest: So some people, really, I. I think it's a general rule. So that's what I'm running into is like. And I've encountered it before, but it's, I think people, my personal communication style is different than how most people operate, I think, and I need to figure out like how to soften it somehow.

Host: Yeah, well, I think you're bringing up, Let me try this out. An interesting contrast between academia and being a small business owner. You had pointed out that in some ways they're interesting similarities in that they're both kind of entrepreneurial. But in academia maybe you're more lone wolfish and you don't. And you can like self direct. It's entrepreneurial in the sense that it's self directed. You're your own boss or whatever. But in small business, while you are a small business ownership, while you are, it's entrepreneurial, you're self directed and so on. You are also a manager and a leader and you don't necessarily need the skills of management and leadership as a lone wolf. But when you're at the top of the stack, you do.

[1:21:38] Guest: I think that's 100 accurate.

Host: Yeah, yeah.

Guest: You can get into team situations in academia, but a lot of academia is very solitary.

Host: Yeah, yeah. What have you gotten better at? What muscle has developed? I'll say, I'll say. Heather, at the risk of flattering you, you talk about business very naturally now. You, you know, you're probably a quick study. That's probably why you ended up in academia. So you, I'm sure you hit the books, you've listened to a lot of acquiring minds. But no, you really, you, you, you seem like a natural. So that's, that's cool. Thanks. Yeah, go.

Guest: Yeah, I meant go ahead. I, I have really enjoyed being back and among like regular people and like regular, like a regular job. Like I like having. I've. And the thing that my finances have gotten a lot stronger. It's. I was a little intimidated by financial statements at first and then I realized that it was like nowhere near as complex. X is like half the statistics that I used to do. My statistical skills have no doubt atrophied, so. But I love, I really love profit and loss statements. I love reading like reading my numbers, understanding my margins. And I am just so excited for when my designers are working and like I'm training these two designers right now and I cannot wait for them to be like up and running and for me to be able to like dive into like really understanding some of these elements of the business better.

Host: Last question for you, Heather. Well, no, sorry, second to last. How's the freedom. Do you feel like you have control over your time now?

Guest: Yeah, I love it.

Host: Okay.

Guest: I love it. I am so happy that I. I cannot express how happy I am that I made this choice. I would be happy having left academia if I worked nights at a parking garage doing security and reading books. Honestly, I'm not joking. And I honestly wouldn't be paid that much different, and at least not in Portland's labor market. But I am so delighted that I made this choice. Like, it's very. As much as stressful as business can be, it's. No, it's. I have a lot less stress and I just love my day to day. Like, it's easy. It's so. It's very easy. I bomb around listening to podcasts and books on tape in between appointments. I run the business. I make sure everything's coming into the warehouse okay and schedule my installations. My employees are really good. We pay them really well. And it's good. Things are good.

[1:24:09] Host: Heather, I have to ask because a lot of people, first of all, sorry, when did you close? We didn't get that important date. How long you been in?

Guest: November 8.

Host: November 8.

Guest: November 8.

Host: So we're almost six months. Yeah. You know, a lot of my guests in their. Their first six months can be hellish. I mean, they can find themselves in the fetal position on the. On the bathroom floor at 2am, which was the title of today's podcast, but. And often that's because there's been a scare or something unforeseen. Doesn't sound like you've had one of those. Why has it just been such smooth sailing for you, do you think?

Guest: Well, we did have one right when we bought, so. Right when we bought. Remember, 75 of the business is paperclip. And when we bought, the brand split happened. The brand split happened November 2nd, and our pay per click went down. Google stopped referring us, and we didn't get a lead for 18 days from pay per click. And I had a heart attack. I mean, I was up all night. I was like, I don't know what to do. I'm gonna. I, like, I'm gonna go. I. I ordered a bunch of door hangers because we don't have enough money to float this business. And everybody in marketing and everybody that knew things was like, relax. Like, like we made a bunch of changes to the Google. My business profile. Google got scared. It's the algorithm learning to trust us again. It'll come back. And then when it came back, it was like somebody turned a faucet on so it was fine. And we've been, you know, really. That. So that was a scare and it was awful. And. But even then I was like, you know, it felt really right in my belly, like, in my gut to buy this business and to do this. And even then, like, I hope that if it had really all gone, you know, south, that I would have had the grace. But I. I felt like there was a one or two moments in the middle of the night where I was like, I might have just made, like, the biggest mistake of my life. And then I was like, well, I guess we'll see what happens. Like, they as all I cared about was like, okay, so let me get this straight. The bank, it's the third mortgage on my house, so you can't force me to move, right? They're like, yes, we can't force you to move. Wow. And that's. I was like, all right, as long as the bank can't force me to move. Like, I'm. I like my neighborhood, I like my house. I'll live here. I'll live here till my kids finish school and then we'll settle up. So. But, you know, all is well. We're paying that note down fast, you know.

Host: Well, all the more reason to. To diversify away from pay per click. Right. And to start developing those relationships. Yeah.

Guest: Yeah.

Host: Okay. So you, you may have just answered it, but any. I think part of your story is not just somebody who left academia to. To buy a small business, but somebody who left a track, a career, essentially a path that they'd been on and really worked hard at and done well at to. To do this. So, you know, so just abstracting away from, from academics in particular, just anybody on a path that's making them miserable or they're not earning enough money in and then buying a small business as their way out. Any, Any message to them or other than, you know, you're so, you're so happy you did it. Anything else you'd want to impart work?

[1:27:11] Guest: I, I'm, you know, I think everybody, it's all going to be independent, like on your own, dependent on your own situation. Me being so happy could also speak to how much work you have to do in academia or something. Like, it could be that, like, you know, I wasn't working 40 hours a week, so I'm still not working 40, and that's okay because it's easier. Yeah, I, I think, like, I, I wanted. My advice, I guess, is like, trust your gut. Like, my belly, like, my gut knows, like, it's I am not a person who sits around and feels miserable. And at the end of. At the end, like, of academia, I knew it was wrong. I knew it had to stop. It felt awful in my belly, and I just couldn't pull the trigger because it was such a big decision. And I'm so glad that I listened to that. And I, you know, I really obviously hope this business works out. It would be tragic if it didn't. But no matter what, you know, life is short. And, like, I'm 42. Like, I've got. Who knows? I could have a day left, but maximum. Like, I don't. I'm, you know, I'm headed towards a different part of life. And, like, I don't want to. I don't. Like, life is too short to sit around being unhappy. Like, give it a. You know, if you really. I'm glad that I trusted myself.

Host: Heather, thank you so much. This has been fascinating for me, personally. I think it. I think the audience will feel the same way if people want to get in touch to ask you questions. What. What's your preferred mode of communication?

Guest: Yeah, shoot me an email. You can shoot me an email@heather.shailoredcloset.com thank you, Heather.

Host: Thanks so much for coming on.

Guest: Thanks, Will. I appreciate it. Thank you for having this podcast. It really did. Hearing all your smart, financially savvy guests do this helped me make that plunge. So it was really, really helpful. Helpful.

Host: I'm so thrilled to hear that. Thanks for saying that.

Guest: Thanks. Bye.