n today's episode you will learn how one entrepreneur took a small garage door contracting business and quadrupled it in just 3 years.

Mike Heath, along with 2 silent partners, bought Stateline Products in the St. Louis area. It was doing just $250k of SDE, split between the husband & wife owners.

It did about $2m in revenue a year; it's best year ever was $2.5m.

In the very first year of ownership, Mike & team got it to $7.5m. In 2023, they pushed revenue to $9.5m with almost $1m of EBITDA.

Those headline numbers sound amazing, and they are.

But it wasn't without pain. Some of the core features of running a construction business Mike learned the hard way, namely:

  • ‍Cash flow management (what else?) and how challenging it is when your vendors' payment terms are shorter than your customers' terms.
  • The existential perils of having a bad estimator.
  • Cyclicality. Yes, revenue got to $9.5m in 2023, but this year, 2024? Revenue will more than halve, down to $4.0m. But he's projecting it'll be back up above $9m in 2025. So this business may be "boring" but such dramatic swings in sales are anything but.

Also, a big contributor to Mike's progress here was his operator, a friend he already trusted who was unhappy working in a nearly identical business and looking for a change. Listen for how Mike structured his operator's compensation to incentivize him.

Now despite the pitfalls of taking over a small contracting business, I maintain that this is a remarkable win and one that should be studied, maybe even emulated if you happen to like construction.

Mike and his partners bought this business with an SBA loan, so they only had to bring about $50,000 of cash collectively to own a business that just a few years later can generate close to $1m in earnings in a good year. Even accounting for down years, Mike's own time working on the business, and the equity granted to the operator, that's a remarkable return on equity.

See what you think. Here's Mike Heath, co-owner of Stateline Products.