Host: Unlike my typical guest here on Acquiring Minds, Mike Loftus started his landscaping business from scratch. At some point around the million dollar revenue mark, he got curious about acquiring another landscaping business as a means of growth. And once he did that first deal, there was no looking back. He was on the acquisition entrepreneurship train. He's at around $4 million in revenue now with three acquisitions under his belt, and he has lots of wisdom to share about making it all work, both generally and with landscaping specifically. Enjoy my conversation with Mike Loftus. 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. As we all know, reviews count for a lot online, especially for a young podcast. If you get value from Acquiring Minds, can I ask that you leave a review, even just two sentences? I read every one and I've made it easy. Just go to ratethispodcast.com acquiringminds ratethispodcast.com acquiringMinds thank you, Mike Loftus. Thank you for joining me today on Acquiring Minds.

Guest: Thanks for having me on, Will. Really appreciate it.

Host: You are the owner of a commercial landscaping business in Orange County, Southern California, and your path is a little bit different than that of a typical Acquiring Minds guest because you discovered acquisition later after you'd already founded your business. So you are actually the founder of your business. But once you learned about acquisition as a path for growth, there was no going back. And now you, like me, are an evangelist of acquisition. You've made three of them to grow your firm. So a big enthusiast. So we're going to hear that whole story and we're going to talk about the business of landscaping. You're actually my fourth guest who is in that business. Adrian Pinto, Mike Bodkin, the Chenmark family, all people involved in landscaping. And when we first connected, I actually said, mike, I'd love to have you on, but let's push it out a little bit because I just don't want to overdo it on the landscaping. But then you were such a fun conversation. I was like, forget it. Let's get you on sooner. So I'm looking forward to this. Yeah, let's, let's kick it off with your quick bio on you and tell us how you got into the business of landscaping and we'll take it from there.

Guest: Sure. First, I want to be thankful that you can group me in with these three other monster. Awesome, awesome people. But so I guess a little background on me. I went to SMU In Dallas, actually, on a football scholarship. Got my finance degree, came back to California, and I had no idea what I wanted to do. I just couldn't be in an office. So I was thinking about what I like. I'm like, two things I like is plants, and I like working outside. I like, I just like being outside. So my dad did real estate development, and he was like, hey, well, you know, commercial landscapers, you know, they, they do really well. And that's outside all the time. And, you know, that's about plants. So I'm like, okay, well, I don't know anything about it, so let me go give it a try. So I worked at a major landscape business here, one of the biggest ones, and that at that time, before they sold, for about almost two years, driving a crew of guys, learning the business, the real nuts and bolts of the business on the ground level. And I actually never even went to, like, any management levels. I just was like, I'm out of here. I got to do my own thing. So I went and got truck equipment started, just banged on everyone's door. I was doing any job I could get my hands on, to be honest. First few years, and then it kind of started to get some steam built up. I built it up to a little over a million dollars organically, without any acquisition. And I kind of randomly thought about like, hey, well, maybe I could buy one of these companies, and, you know, that would be a way to grow. And then I just kind of dove into this world that, you know, all of us on here talk about all the time and learned a lot.

[4:28] Host: Cool. Well, let me, let me dig into a couple of the details on your founding story. So when you were knocking on doors, you were doing the landscaping work.

Guest: You were, yeah.

Host: You were your own crew.

Guest: I was the head of the crew. It was kind of like one guy turned into two guys. And then I kind of slipped away a little bit, hired a few more guys, stepped away more, and at a certain point, I was not doing any of the work anymore. And that was probably in that third year I had stopped like, you know, bringing plants to jobs and like, actually having any, like, touch on the business physically. And that was more of a bidding and managing crews and kind of managing customers. So it was not quick, but, well,

Host: in three years time. Three years, did I get that right? That you went from zero to a million dollar business that you're managing and not you're working on the business? Not in the business as much. That seems like not that long. I mean, that's pretty Productive. Three years.

Guest: I hold ass, man. I think there was two years in there. I didn't take a Saturday off, but I loved it. I was just, like, looking at my friends are going to Lake Havasu and Arizona and, like, hey, man, like, come out. I'm like, no, I'm gonna make $700 tomorrow. You guys don't get it. Like, I need to make this 700 because I need to save for this next truck. And I was just scrappy. I was just really scrappy. I bought my trucks on Craigslist. I was, you know, trying to pick up guys for these kind of jobs, and we're working Saturdays, and just any way to put the pieces together just to kind of get to the next step. And the beginning was get the next truck. And then after I made my acquisition, it was like, okay, I got to save the money for my next acquisition. So kind of changed the mindset, but same scrappiness, I guess.

[6:10] Host: Yeah. And it's primarily residential in these early days or a mix?

Guest: Early days was a mix of commercial and residential. I'd say it was probably like, 60, 40 residential in the beginning. But I kind of took that money I was making in that and was getting out of the residential game and getting more into commercial as time went on.

Host: And when you got to a million bucks after those three years, what do you think your earnings were, approximately?

Guest: Well, I wasn't paying myself, but I was effectively the manager, I'd say on a million, I was doing. I was knocking on 200 grand, something like that. Very similar to. If you look at a lot of businesses in this industry that are for sale, when you see, like, an owner, operator kind of guy running it, you know, So I think hovering around 200.

Host: You know, actually, before we get into how you discovered acquisition and then how all that unfolded, let's actually. To your point, the point you just made, let's dig into this a little bit. What you hear over and over and over about really fragmented businesses like landscaping is that the founder, owner can't, you know, they can't get beyond a ceiling. And that ceiling actually usually sits around a million bucks. They can't figure out how to get to the next level. And so you got to that level, and then your way out or way to crack through that ceiling was to start acquiring. But do you have any thoughts on that? Like, is it. Could you have grown past a million bucks to 2 and 3 million, like, without acquiring and. And. And. Or. Or also, do you have any thoughts on, like, if I'm an acquisition Entrepreneur looking at all these million dollar landscaping businesses for sale where the owner hasn't figured out how to get bigger. What. What is my opportunity as the entrepreneur to buy those businesses? Or should I not? Because they're, they're just too small. And you really want to buy a business that's already gotten larger than that. Just talk to me about all that.

Guest: So I definitely think there's some shelves, I guess, for a better term along that journey from, you know, zero employees to I have 54 now. So there's all. There's some different shelves there for sure. I guess it depends on what your strengths are, Will. Uh, my strengths are not organizational. I don't like computer, busy work. Um, I have no, my. I have no problem going and doing a bid. I don't want to type it. I'm a horrible typer. I. I'm slow. Um, that's not. It's just not how my. Those are not my strengths. So the quickest I could get an office manager, the better. I mean, once I have my office manager, I had so much more time, and that time allowed me to grow the business. So I paid for it. You know, it wasn't cheap, but I was a lot more organized and I could grow because I had that extra time and brain power just to go for it. I guess if I got any advice for somebody looking at these, it's definitely doable. You know, those owners do have a lot more figured out than people want to give them credit for. As far as, you know, the way the routes are set up, you know, the people that he has working there, you know, some of the trucks, equipment, all that is the goodwill. That's. They always say, call that goodwill. And they're in the routes and stuff. There is definitely value there. And, you know, I don't think that that should be like overshadowed by an app or something like that. In the beginning stages, you know, when you get bigger, there's different things you got to install. But there's definitely some ways that you can get better. I mean, all three acquisitions I did, none of them had a website. So let's start with that. Well, I mean, they're small, but great business. They made money, no website. And the guy would be like, yeah, I call everybody back, you know, every few days or so. I'm just like, wow. Like, you email your. You mail your invoices, like, so, you know, get online QuickBooks, like, you know, call people back the same day that they call you. You know, I always tell this to guys that are younger. Listen, you're you know, you're a wizard on your phone. You know how to text everybody, everybody back, be on Instagram, all this stuff, that same energy, you put that into contacting your customers on your phone and that's a, you know, advantage that a younger person will have over maybe someone that's older, that doesn't want to mess with their phone or isn't good at responding and stuff. So your lack of experience can sometimes get, you know, it can be supplemented by, you know, the fact that you can communicate and just, you know, I don't know the answer yet, but I'm going to get on, I'll be over there tomorrow and we'll, we'll talk about it. Or like, I'll change your invoice real quick on my phone and then I'll send it back to you right now. Then they'll be like, oh, wow, like normally it would take a week for me to get something mailed to me, right? So those are definitely advantages younger guys can have when they jump into a business that's around that million dollar range in revenue at least.

[11:06] Host: So now talk to me about your learning about acquisition. So the way you characterized it was like it kind of occurred to you, huh, maybe I can buy one of these businesses. Now I've gotten, you know, I've got, got some serious experience under my belt. So tell me how all that unfolded and then tell me a little bit about that first acquisition.

Guest: Sure. I looked at a few of them and, you know, for different reasons, I didn't like them. One was I didn't like it because the guy only had construction work and I wanted reoccurring revenue. I wanted to buy a business with a route, with, you know, buildings that they're sending a bill to every month. Not just bid work construction, where you have to keep winning it. There's nothing wrong with bid work construction, but it's something you got to go. If you're not selling, you're not making money. Whereas with the maintenance, you can kind of maintain and have a cash flow that's pretty steady. So those for one or two of them, I didn't do those because of that. Then I looked at one that I really liked, but the guy didn't. He thought I was too young. He told me that to my face. I'm like, okay, well how old were

[12:16] Host: you then and how old are you now?

Guest: I was on the first one that was, I was like 26, 27? Yeah, 27, 30. I'm 31 now, so. And then the last one I Was sitting down with me. It was me and another guy and the other guy owned like a, like a tire shop, like, but he was older and he wanted to go with the tire shop guy. And I was like, okay, well I guess, you know, my offer wasn't good enough or you're going with him. And then I remember I was with my brother, we're actually in Hawaii together and I'm sitting on the beach. I get the call from the broker. I'm like, why is this guy calling me? Hey, the other guy dropped out. Like, you still want it? I'm like, absolutely. Like I'll be back Tuesday or whatever, like. And we were in the office next week and we kind of nailed down the details and I was wiring money, you know, 30 days later, so.

Host: And can you, can you remember any of the financial details of the business or in the transaction and how many employees and what you like so much about this one? I mean, was it mostly maintenance work?

Guest: It was almost all maintenance work. I like that it was all commercial buildings. I guess over in California, at least commercial buildings are the least amount of headache in my opinion of all the building maintenance that you can do. You know, they, they're running a no BS business in their $5 million building. They have no time to worry about you or, or like if you're doing what you're supposed to be doing, they're not going to call you, they're not going to complain. You can just get in there, do your work and send them a bill. And you know, they pay the bill like it's electricity or the water bill and that's just doing the basics. Show up, mow the lawn, keep everything clean and if they do have a problem, just be on it. But the details of the business. So all three of them, the revenues were between 500 and 800 a year in that range. The first one I think was close to 600 a year. And he was like, hey, I'm making, you know, 150 grand. All the add backs seemed pretty legitimate, you know, like, hey, this is my personal car, you know, this is the gas I used. You know, we put our grocery bill through there, just you know, the normal stuff that you see on there. And I didn't have a problem with those. And you know, I literally all the money I had scraped together for the previous few years that was extra, I was going to wire pretty much without, like I had my working capital for everything and this nugget and it was nerve wracking to be honest. You never, you know, you don't do it till you do it. And I remember walking out of the bank after I wired the money just like, oh, my God, like, you know, I just wired, you know, it, 50 grand or something, and I'm like, I don't have, like, a house to look at after, you know, Like, I feel like if you, like, paid someone, you know what I mean, it's less tangible. It's just, you know, you're buying a cash flow, and once you understand buying a cash flow, like, truly understand that and the value, it's less scary. Definitely after the first one, it's a lot scary. A lot less scary.

[15:29] Host: Yeah.

Guest: But, yeah, I wired the money, and I just. I just told myself, I was like, you know what? I will not mess this up for lack of not trying and not going for it. So. And I just jumped in and made relationships with the eight guys or whatever that he had, and those. I think six of the eight still worked for me, so it's kind of cool. And I think, like, 80% of the accounts or something like that I still have.

Host: So this would have been about four years ago.

Guest: Yeah, four and change.

Host: And Mike just stepping back a little bit again. So when you. It occurred to you, this idea of acquisition, was it because just kind of like, oh, that might be interesting, or was it like, oh, man, like, it's taken me three years to get to a million bucks. To get to 2 million bucks is going to take another three year. Like, what was it? Was it impatience or was it just kind of like, oh, interesting idea or. Or what?

Guest: Yeah, I think.

Host: Why then, like, why in that moment did you decide to start looking to buy a business?

Guest: A little bit of impatience, and definitely part of it was just curiosity, you know, like, going and checking out these businesses is exhilarating for me. I love it. Even if it's one that I don't end up buying. I think it's an experience, and I learned something. Every single seller I meet and broker, I'm learning something, and I take that with me on the other meetings. So I guess curiosity and also impatience. I'm, you know, not overachiever, but I just really like pushing the envelope. I really like going for it and just being like, what's the worst that can happen? You know, like, I believe in what I'm doing, and I'm gonna go for it, so.

Host: Cool. Cool. So you complete this first acquisition. What was the integration like? That's always so tricky.

Guest: This guy had this computer from, like, 1993, I think, and that's how they were sending. They're putting invoices together by like 15 minute increments. And just like it was way too much going on for really what was happening. So they were like trying to teach me how to do this. In my mind. I'm like, I'm not doing any of that. Like, I'm going to use my online QuickBooks and you know, these customers, like, well, they're used to getting it mailed, all that stuff. I'm like, well, they're going to get used to an email because I'm not doing that. I'm not going to mail out, you know, 60 pieces of mail every month and you know, wait for the checks like that. So I, that was, that was the opportunity.

Host: That was one of the opportunities in the business and immediately improve things.

Guest: Yeah. And also having. There's a few things I learned that you need. Gas cards. This guy wasn't using gas cards. You gotta track the trucks. Another thing I learned the hard way, emailing invoices is an easy one to do. Letting clients be able to text you on your work phone is another one. This guy had literally a flip phone and no website and he ran the whole business. So I'm like, okay, I think I can do it a little better than this guy. And you know, he might have had maybe some knowledge of being in the industry a long time, but he didn't get with the times kind of deal. So that was definitely. It wasn't as big a deal as I thought. I thought these people were like, oh my God, a new landscaper. Like, I'm gonna go get quotes for new people. But honestly, no one cared. I'm like, hey, I sent a little like a letter email out to everybody, like, hey, I'm the new owner. I bought this blah, blah, blah, landscape. Here's my new contact information. If you need me, you want to meet with me, great. And maybe a third of them even wanted to meet or cared. Like, I just started sending bills and kept the guys and you know, eventually I met more of the clients. But I guess you care a lot more about it because you just bought it, right? Like you just invested in it. So it's like really important. And to them it's like, yeah, we send you $562 a month, like whatever, you know. So I think the.

[19:28] Host: Did you change the name?

Guest: I did, yeah. So what I end up doing is all these are asset sales. So I don't want over here workers comp, as you know, is a big deal. So I don't want to Take any of those liabilities. So basically everyone was fired on a Friday, in effect, and then hired on a Monday. Transfer all the truck titles and just give them a new P.O. box and say, hey, you know, all these guys are now hired at my company. And you just send the bill 30 days after that and start going, great.

Host: So how, how long after this acquisition closes do you feel like you got your arms around it, you've integrated things, you've improved the business and you're like, wow, I guess I kind of know what I'm doing here. Let me go out and look for a second acquisition.

Guest: The first 30 days, you know, you're still pretty, you know, like, hey, am I doing this right? Like, you know, am I operating the right way? Am I changing the right enough stuff? I think a lot of people talk about that on there is like, how quick do you change things or how fast or what exactly you change or, you know, all that stuff. So I kind of figured that out on the fly. And I'd say, what did you figure out? I figured out that I was worrying more than I needed to. And, you know, you take care of the main things, you're gonna be fine. You know, make sure, like, try to make sure all the guys stay. Try to make sure that, you know, if clients need to get a hold of you, you get a hold of them. Send the bills on time. You know, really basic low level stuff. And I think after the third month, I was like, okay, no one has left. All the guys are here. Like, you know, it's all good like that. You know, I can, if I can do the first three months, I can definitely finish out the year the same way. And I think I was, I always looked at them. Ever since after that three months, I haven't stopped looking at deals or meeting guys that have businesses and see, you know, saying like, hey, when you do want to sell, I'd love to talk to you. And you'd know. I think one of them actually was, I haven't actually told anybody this. So I was like, okay, there's biz Buy Sell, right? And say all it is is broker saying, I, you know, I got business for sale. So I decided to make my own post on Biz Buy Sell and say that I'm looking for a commercial landscape company to buy. If you're a broker, please call me. Kind of like just literally one of those. And I had a guy who was selling a property management company for a family and one of the sons owned a landscape company and they were selling that at the same time. And the guy was more of a higher level broker. Like he wouldn't normally post anything on Bizycel or anything. And he actually found me on there and he didn't want, he's like, once we met one time, he's like, you're gonna be the buyer. This is, you know, this is a fair price. I'm, you know, I got bigger fish to fry over here trying to sell this big, you know, property management company and you know, you're just a little piece of this and you know, this is easy, you know, done. And I was like, wow. Like I actually posted that thing on there and it actually worked.

[22:42] Host: Wow, I'm a genius.

Guest: I mean it was like, wow. And my brother was laughing. He's like, he's like, he's like, you're not going to get hits. I'm like, I think I'm going to get somebody. Like, I don't know. I just had this feeling.

Host: Oh, and wait, Mike, but how. Yeah, can you. I've never posted anything on Biz by Sell, but I assume that the only thing that you can post is a for sale business. So like when you're filling out the fields, like all of it is oriented toward a broker listing a business for sale. So how did you shoehorn? You know, the opposite. You know that you're basically a buyer into the fields that they wanted you to fill out.

Guest: I, I just kind of filled it out the best I could and then I just in the description was like, just talking about like what I'm looking for, you know, the sizes and kind of the income and all that kind of stuff. And my thinking was like, if you're a broker and you know, normally they would just post it, but also if you're, if you Google like landscape business, selling, landscape business or something like that, like business going to be one of the top ones coming up. Yeah, yeah. So I, I don't know how he just, I think he just did a Google search, found it. He's like, hey, well this guy, let me give him a call and I talked to him for 30 minutes and he's like, you're a perfect candidate. Let's meet next week. I got all the numbers. You know the guy, you know, I'm selling this property management company in 45 days and this is selling. So like that's a. He's like, I grind him like 50 grand on the price and he's like, it's fine, let's do it. And I was like, okay, well, good thing I've been Saving my money because I was, I was on, I thought I was going to do one, you know, every 18 months or like, you know, in your mind you make up like when you're going to do the next one, which I'm sure like John Wilson has said to himself. And then like, you know, and Mike too actually I've heard him talk about this like, yeah, like we'll do the next one at this time. And then like the deal comes, you're like, oh, that's like a year early or you know, so you never know when these are gonna pop up.

[24:28] Host: I think that's just the, the a function of like you get in the business and opportunities just present themselves. This is another theme that I hear over and over and over again. It's like, it's hard to find that first business and people, you know, the search process takes forever it feels like. And then all of a sudden you're in the business, in the industry, word gets out in your little geography or in your industry that you just bought a business and all of a sudden you get all this inbound and it's just like, wow, this is easy all of a sudden.

Guest: And there's so many like unconventional, cool ways that these guys are finding people and email blasts and just like all these different like you know, looking at the contractor websites and like scraping the data and you know, just like so many cool ways. I hear people finding these off, off market deals. Mine just happened to be, you know, putting, you know, showing up and posting something where people normally wouldn't post it, I guess. And I don't know that that would work again but it worked once so that's enough for me.

Host: Yeah, no, that, that's super cool. That's a great little hack. And you know, I'm also surprised that BizBuySell let it through because I assume there is and maybe I'm wrong, but I would have assumed that there's a human that looks at every listing that goes on bizbuysell. And so if they saw something like that that was so unconventional or not the way using BizBuySell, not the way that they attended that they would have been like, eh, sorry, no, maybe it was years ago.

Guest: So maybe Biz By Sells really got a lot more juice down and they really scrape through and like delet. But I think it was just like if you pay the fee, like they just kind of put it up there like if. As long as it's not, you know, something weird. So I, yeah, I don't know that it would work again, but yeah, it worked once.

Host: So that was acquisition number two.

Guest: Yep. Okay, that was number two.

Host: And then. And so in these acquisitions, aside from this clever thing that you did on posting yourself in biz by sell, were you mostly just looking at biz by sell, or were you also. Were you starting to do any of your own, like talking to brokers?

Guest: Are there.

Host: Are there broker. Actually, are there brokers who specialize in landscaping companies? It's such a fragmented industry. I could imagine.

Guest: Not necessarily, no. I mean, these guys are selling all kinds of stuff. You know, ice cream shops and just every single, you know, they're just taking what they can get in and they sell them. I'm sure like over the years they've sold license companies, you know, but I wouldn't say that there's brokers that just do landscaping or like route oriented stuff.

Host: Yeah, yeah. Okay. So you acquire and then just tell us real quick on your third acquisition, how big was that and if there's a story there.

Guest: The third one, I was a little far. It was like an hour from me. But the guy had. The assets were really good compared to what the price he wanted, so the risk was lower. And it was also commercial. So that kind of outweighed the distance from me problem. And it was within my range, you know, a few hundred grand. And I, I just jumped on it. I felt like I. My risk, my downside was really low because I'm like, okay, worst case, I lose half the customers and I got, you know, 120 grand worth of assets that are. I know the street value of this stuff. And I did the. I calculated back of a napkin. Hey, this truck, this much, this mower, that's like, I know I wouldn't. If I lost, I wouldn't lose a lot. That makes sense. And I knew I already had office staff, so I'd have to send bills out. The guy, they had kind of an account manager kind of guy there, which I ended up retaining, which was huge. And one little hack for that, one that I did was that main guy in the beginning was kind of, you know, had thinking about leaving. He didn't know. And in my mind I'm like, you're. This is an hour away from me. I need you. Like, so I overpaid him, you know, I gave him like a $6 increase. I'm like, you're not going anywhere. In my mind, I'm like, down the road, if it doesn't work. Well, I'll figure it out then. But I can't afford for like, this. This manager kind of guy, to leave, at least in the first, you know, year or so. So I end up giving him golden handcuffs. And it's worked great. And he ended up, you know, you develop that relationship in that time and let him get to know you as a person and then also as a boss, and he ended up liking it, and he still works for me, so.

[28:46] Host: So you started and you had about a million bucks in revenue that you'd grown organically, and then you acquired, I think you said the businesses all range from 500 to 800 in revenue. So let's say you've added on, what, another million and a half? Two million?

Guest: Yeah. It's closer to 2. 2 million bucks.

Host: Okay. Okay. So is the business out about 3 million then?

Guest: So I've grown another million bucks organically, so we're pretty close. We're at about 4 million bucks a year. And the organic stuff was off of accounts that I had bought. So they had like, oh, we have another building. You want to do it? Like, so you kind of got that. And then I also, off of my. Just kind of doing, like, very basic networking. Like, oh, like, you know, I know this girl who went to my friend's high school that I met at, like, a bar, and we were just talking, and she's like, oh, I do property management. I'm like, oh, like, sweet. Like, she's like, you want to bid, like, four buildings? I'm like, hell, yeah, I do. So you kind of just like, are you meet this guy or you go, I did a guy's house one time over here. He's like, oh, I have, like, four, like, three buildings. Do you want to do those two? I'm like, yeah, so you kind of just, you know, longer you're in it, you kind of, like, just kind of get stuff. And then you also get. You know, when you buy a route of buildings, sometimes this building's like, hey, you know, it's time to rip all the landscaping out and get everything brand new, which is just dollar signs, you know? So you could go and have a building that only pays you, like, 800 bucks a month. But, you know, the owner hits you up or the property manager, hey, we're going to do it all. We're going to do everything. So you could go get an $80,000 construction project off of that little, you know, 7, 800 bucks a month kind of client. So the more buckets you have, the more different clients you have, the more chances that you can get that extra few hundred grand in revenue on the construction side? Yeah, because they don't bid it out. You know, they're like, oh, you're my landscaper, so you're going to do the project. And, like, great, sweet.

[30:51] Host: And a building that would do, like, rip out their landscaping and kind of start fresh. How often do they do that? Like, once every decade. Like, if you amortize that big $70,000 spend over years, would it be. What would it come out to?

Guest: Is it depends who you provided by.

Host: 10 years?

Guest: That's what you ask. I mean, you know, I have a building in LA that they switched. They got a new tenant, a big tenant. It's actually these guys that spun off from SpaceX. They're literally building rockets or they're building like, yeah, rockets in this big building. And the owner of the building was a maintenance customer of mine, and he calls me aside, we meet out there, and he's like, whatever these rocket ship guys want, you're doing it. Like, this is like, I'm spending. He's like, I'm spending.

Host: Elon Musk. What? Elon asks. Elon Guess.

Guest: Yeah, and I'm like, okay. And, you know, we end up doing, you know, 150 grand at one building. And that was like, you know. Yeah, maybe you don't get those all the time, but you land one on, you know, a building or a business that you bought, you know that it just kind of ripples out. Like, you know, I have probably like 230 buildings that we do every month now, so I'm just waiting for one. Like, I have. I luckily got one other one where it's actually a Fortune 50 company and they have, like, their budget increased. And the guy's like, hey, we want to take all the grass out in the property. I'm like, okay, well, that's like 700 grand. So it's like you could hit. It's like, you know, you're playing like, the. The slots. Like, you just need that one to hit. And you're like, okay, well, I'm already sitting at the table playing slots. So, you know, you get one and it really makes the whole picture look a lot better. So.

Host: Yeah. Yeah. Well, Mike, now, so you're somebody who started a business and organically clawed your way to a million bucks on your own before you discovered acquisition. And now you've acquired three businesses, more than doubling your revenue. Talk to me about how you feel about acquisition. Compare acquisition through growth versus that first million bucks that you where you grew organically on your own.

Guest: Organic is very difficult. It's gonna test you, it's not sexy, it's not perfect, it's arduous. And, you know, I don't know that I would do it again. You know, if I was, you know, gonna go into a different industry or whatever, I would definitely buy first and then build. I'd build. I'd buy one big one and then bolt on from there, to be honest, if I had to do it again. But I did have a good operational background walking in, but I didn't have the M A experience like a lot of these guys do. But if I was a young guy, like coming out of college, I would do. I'd be like, you know, Mike Snell. I'd co work at an M and A shop, probably a small one, and just go do deals, watch deals happen. Watch, watch the interactions, watch how people negotiate. You know, understand how the attorneys fit in. You know, just. There's so much learning there that I just did by doing it. It'd be cheap learning to have somebody go pay you 100,000 or whatever at a job that's doing deals, just to learn how deal flow works and how that process transpires, because it really would help. It would have been really helpful to have that to go in to start doing acquisition. But I kind of learned that by trial and error. I mean, just this morning, although I,

[34:23] Host: I will say, Mike, that like, when I asked the, my guest, who are former PE people and have transaction experience, they'll say that, like, yeah, the M and A stuff, yeah, it's, it's technical. A technical advantage that I had. Yeah, it, it helps. I, you know, I know what a deal looks like. I've done. I've seen much bigger deals occur in private equity, maybe many of them. But they'll say, well, first of all, that in this S and B market, it's very, very different. So, yes, I, you know, the, the broad outlines, I understand a lot better than somebody who's never done anything in a transaction. But still, there's a lot of learning that I do because it's. Because the nature of these deals is so different. But the bigger thing I was going to say is that they say, you know, they'll say the M and A piece. Yeah, it's important or whatever, but it's, you know, the operational stuff, I feel like, is actually more valuable because you can learn the M and A stuff, you know, 10 hours with YouTube and, you know, you can learn a lot. Maybe, maybe that's, that's an exaggeration and you're only going to do one deal well, you'll, you'll start maybe if you're, if you're successful, you might do another and another. But you know, you really, for that first business, you're just going to do the one deal and then it's all going to become how well you operate. And many of these former PE folks don't have operational experience and they're really intimidated by that. They've never managed anybody. They'd never run a crew and stuff like that. Like that.

Guest: Sure.

Host: So they'll, they feel the opposite that you do. They wish they had the operational chops. They overvalue the operational stuff and undervalue their M and A experience. And you're. So maybe the grass is always greener. It's as simple as that.

Guest: I don't know if you're a young guy too, listening. I mean, another thing you could do is, you know, out of college, do 2 years M and A, and then go to an industry that you're, you've done a lot of research on that. You really like that. You're like, okay, I'm going to buy one in here. You don't say anything, but you go to a big company that does that and you just work there. You're going to take a haircut on what you're making. Absolutely. You're going to get paid crap, but you're going to get, you're going to learn how to manage people. And you know, this is a, this is a journey. You know, use this probably like work a few years M and A, maybe a few years managing at a company and industry that you want to get into and then make an acquisition. And I think you'd be pretty, as prepared as you possibly could be to jump into that industry, especially for like a landscaping one.

[36:43] Host: Well, now, well, talk to the people like me, for example, who, you know, the opportunity to go work for an M and a firm or a PE firm or a business that's rolling up landscaping companies is gone. So they're looking at buying a business and they're hearing about landscaping, landscaping, landscaping all the time. They have neither transaction experience nor landscaping experience. What would you tell somebody who's completely green haha, about buying a landscaping business?

Guest: I would say it's, it's about effort, you know, it's, you have to have a, you know, you have to hit a certain low bar of, you know, you know, putting things together and like basic smarts, I'd say. But after that, it's, it's about effort and want and just going for it, like just jumping in and, and also when you're doing your negotiation to buy wherever you're going to buy, really get to know the seller and make sure that the seller is a good guy who's interested in probably helping you to that next step. And I've spoken to a few guys that have done it and different stuff, like plumbing and different stuff. And they, the ones that have done well, they've developed a great relationship with the seller. And also, you know, ask for a little bit longer of a training period. You know, sometimes they always put on the biz by sale, like, you know, two months or two weeks or whatever. Try to, you know, say, hey, give me two months, include in the sale or whatever, and then I'll pay you as a consultant for, you know, six to six months to a year just to kind of get me, get me going. And that is invaluable. You, you got to do it. If you're green, you have to do it. And in the beginning, do it his way. You might in your mind be like, I, this is, you know, why to do it this way. Why do it this way? Just accept how he's doing it because he's hitting the cash flow that you're buying. You're, you know, you're, you like what he's selling, so he must be doing some stuff, right? So you just jump in, you listen to that guy, you get on his hip and you just listen and you just shut up. I mean, that's the best way I can put it, is listen, shut up, and work hard. And you'll be surprised what you pick up in six months to a year with that guy kind of next to you. So that's part of the, you know, when you, when you're buying the business, you know, you ought to make sure he's like, oh, I'm moving to Idaho tomorrow. Like, ah, well, you know, that is not really what I'm looking for because I need someone to help me for this first beginning period. So that'd be my suggestion for someone that's green is find the seller. Molding with the seller is a big deal. And then also just keeping him on board and maybe a more advisoral role in the beginning is a big deal.

[39:35] Host: And what would you say about commercial landscaping and the appeal of it? Would you. Would you tell somebody who's looking at, you know, all sorts of different industries to, to become an acquisition entrepreneur? Yeah, commercial landscaping is a great opportunity. Come over, come into this, get into this. Or would you say, you know, you gotta be like me, you gotta Love being out in the sun. You gotta love working with plants. Like, you really gotta love the business to be successful in this business. What would you. What would you tell somebody? Is it. Is it good for anybody, or is it only good for, like, a certain type of person who loves this stuff anyway or whatever?

Guest: No, I think that if you're driven and you really want to get after it and really have your own thing, you'll make. You'll fall in love with it along the way. Once you. Once you start things, start working. I think one thing that isn't talked about a lot for landscaping is how close to the knife's edge. Most your employees are, you know, saying that, hey, you know, we'll get you your checks tomorrow, even though they thought they're getting them today. That's like a death sentence. Like, there's certain things you just can't mess with. These guys are on the knife's edge. They have no savings, nothing. So, you know, when you tell the guy, you look him in the eye and you say, hey, your checks and be on Friday. I don't care if you got a pawn your car, you better get the money there, because that speaks volumes. And then that consistency is going to build up trust. So I guess that's one thing that's maybe a lot of guys that are looking at buying a business aren't really. They're not as close to. Because they don't in their network. How many people do you know that are like, literally knife's edge? Not like, oh, well, after paying my car payments, I got some money or in my apartment, Like, I'm talking about like down to 100 bucks. Like, they just don't have that much money. And understanding that. And, you know, they're providing for their families, man, they got three kids, they got a wife, and you just got to take it serious. I don't think it's pressure. I think it's just responsibility. So you got to take it seriously and do what you say you're gonna do. Because these guys, if once you break the trust, it's over. Like, it's just. It'll go badly for you. So that I guess that's my. My take on it.

Host: Yeah.

Guest: So it's not doable. It's just is different. Especially if you're in like, the most. These guys are looking at this stuff, have a college degree of some stripe. You know, they've kind of aspired to be on a certain level in the rung in the ladder. And, you know, we're talking about the first rung here, almost everyone that works these businesses is levels below you and in socioeconomic, you know, standing. So you not saying you have to go to their level, but you need to, you know, be understanding of where the, where they are because that's, that's your lifeblood, man. Without my employees, I am in a world of hurt. So I guess that's my, my take on that.

[42:42] Host: Yeah, that's great advice. One of the two other themes that you hear about landscaping over and over, one we've already touched on that you want to a business that has as much recurring, which would be called maintenance revenue in landscaping as possible. So you don't have to go out there and keep selling and selling and selling. And in fact, your sba, SBA lender might not finance a business that doesn't have a certain threshold of, of maintenance business. Then the other that we always hear about, of course, is better to get commercial landscaping clients and residential. You concur, right?

Guest: Big time. Okay, yeah, that's.

Host: Now what about, yeah, what about size? So you said earlier, like, if you were, you know, you'd probably buy something bigger if you were just starting out. So if you're so for the audience who had, you know, they're not starting with a smaller landscaping business or any landscaping operational experience and let's say, you know, they're able to buy a three or four million dollar business, is that the size you'd recognize, recommend. What would you recommend?

Guest: I maybe this is not the take that most people say I would buy one that's they're selling it for about a million bucks. Oh, and that's, I know it sounds small to everyone that a lot of people that listen to this stuff or that other guys that buy them.

Host: Yeah.

Guest: Just because, you know, it's a lot of debt and you know, people don't talk about the horror stories as much on Twitter. Like, you know, a lot of these, a lot of people that, you know, go on this podcast are on that, that Twitter game. And it is, you're putting your, your balls on the line, man. And you want to make sure that, you know, you get a good multiple, that you like the seller and all this stuff. But if you do find the right one, that's 3 million bucks and you don't have a lot to lose. And it's like, I, well, I'm not, I don't have a house that I got to put on or, you know, I'm just like, hey, this is my chance, I'm going to go for it. Then by all Means, you know, but I'd say you want to be like million to 3 million, probably somewhere in there, and you can get a pretty damn good business with some good staff. That's really going to help you learn things that you maybe wouldn't have before you walk in.

Host: One of the other things I think that is appealing about acquiring a landscaping business is that, as I understand it, there's a handful of big national acquirers.

[45:07] Guest: Right.

Host: So if you, if so, yeah, if you grow your landscaping business, there are some obvious exit opportunities. What do you know about that and can you share with the audience?

Guest: Sure. There is a lot of money going into this. A lot. And with certain thresholds, you start getting people calling you. I mean, I, I'm surprised. I've had a handful of guys call me a few bigger operators with, you know, few hundred people that are like, hey, Mike, you know, asked around about your business, I know kind of what you're doing, how big, how big you are, and if you're in the business, if I had told you how many people work for me, they back into the numbers pretty quick and they kind of know, okay, well, he's got 50 guys, does about this much, makes about this much. You know, I'd be willing to pay this much. So they kind of back of the napkin can tell you what they'd pay for it. And I've had a few guys like, hey, Mike, like, you know, you want to cash out? Or you, you know, had one guy who was trying to put like, buy five companies at one time try to buy mine. And I was like, you know what, appreciate the offer, but, you know, I, I want to be the guy that has 500 people. You know, I want to do the Chen Mark deal, maybe not do all the other businesses that they have, but more, less, less Holdco, more roll up, I guess. But that's, that's today. You know, we're in 2022. You know, you, you asked me in a few years, it might be a different answer, but so I guess it's a lot. There's a lot of money out there chasing stuff, especially when you hit that seven figure ebitda. I mean, that, that's when you start getting some really good, really good looks.

Host: And so spell that out for me. So at 4 million, if you don't want to share your exact EBITDA today, but let's just start here. So at 4 million bucks, a landscaping company doing $4 million, much of which is recurring maintenance revenue, what would your EBITDA look like? And then let's say 5 million and 10 million. What does your EBITDA look like?

Guest: So with the right staff in place, right, you're not hanging on by your fingernails working 70 hours a week. Like right now we're in that 6 to 700 range. But a caveat to that is I work 20 to 25 hours a week because I put the right staff in. I want to get bigger so I have some Runway. When I do, you know, bring it, buy a big one. I've been really, I've been actually have one I might buy that might double everything. So I might be jumping right back in and doing my 50 hours a week or whatever. But, you know, in my mind, you have to, you know, begin with an end in mind. Some of my dad's always said since I was a kid, where do you want to do with this? Do you want to just keep it at, you know, this certain size, then, you know, you don't need the staff, like, do it all yourself and, you know, make, make more money and just, you know, have a lifestyle business. But in my mind, I want to have pieces set up and in the right place for, you know, when I met a hundred people, 150, 200, you know, and going up to that, you know, 10 million bucks. 15, 20. So that's my approach. I don't know, it's. Everyone thinks about it differently. I also like, you know, the quality of life. Things big for me. You know, I'm in Southern California. I like going to the beach. I like taking naps. That stuff's valuable to me. It sounds dumb, but it's true. Like, I like, you know, having a lunch and taking a nap and then getting back into my work. So. And some people might not value that. Maybe they want every single dollar and they don't care. So, yeah, I like taking my mom to lunch and not rushing out of there and just enjoying the time and enjoying the, you know, I've risked a lot, you know, and now it's, now it's coming to kind of fruition and you got to enjoy it, you know, I think, yep,

[49:07] Host: I totally agree with all of that, but I'm just smirking because you sound like a middle aged guy who's 15. He's like, well, now I'm going to relax a little bit. But you're 31, dude.

Guest: Yeah, it's not really the relaxing. It's more the Runway. Like, I want to have Runway to. When I do pull the big sba, I still haven't done it. And pull the big sba trigger and go for it. That, you know, I don't have chaos, you know, what I already have is pretty set up and good to go, that I can really focus on the new acquisition and making sure that things really go along smoothly and that I have the right staff and that, you know, by buying this other business, I don't disrupt my business. I already have. So that's been kind of important. And I know that now I'm only working this much. It's going to fluctuate up and then probably down again. It's going to kind of be an ongoing change because I'm going to continue to buy these and, and get bigger. So.

Host: And so to be clear, you just said you haven't done an SBA loan. So those three acquisitions, the financing was some other configuration other than sba, and they were small.

Guest: So, you know, it's really not even on SBA radar, I think. I mean, if you found the right lender, you probably could pull it off. But I, you know, I use a few different types of financing to get the deal done and you know, these guys are retiring, they want to be done and there's just not a lot of people buying these small ones, so ended up working for me, you know, and, but also that there's a big downside that a lot of people talk about on here for buying small stuff. But I have the operational knowledge, so I didn't have a problem with, you know, oh, well, there's only like seven guys, like who's sending the bills, who's else if I already have all that? So it's kind of. It's easy to bolt on little ones.

Host: Yeah.

Guest: If you already have a system. So it wasn't a problem for me, but I could see if you were green, it wouldn't be as good for you. So.

[51:06] Host: And what are the typical multiples for a million dollar. For a million dollar landscaping business? I mean, is it typical three or is it. Is it less two and a half

Guest: to three, you know.

Host: Okay, so like, like any other.

Guest: Yeah, most. Most stuff.

Host: And Mike. So like if you were able to get to $10 million in revenue, is that, what are you at then? A million million and a half? Ebitda?

Guest: Yeah, it's somewhere in that range. It depends on kind of how much construction you're doing. If you're a little heavier on construction, you can definitely get up to 1 5. But that is going to take more staff, more touch. It's going to take more touch from you to make sure you get to that million and A half. If you're heavy maintenance, I mean, there's a way that you could be, you know, million, million, two and, you know, not be working as much, to be quite honest, and have less, less people to oversee. So it's all about kind of how heavy you are in construction or maintenance, kind of like which pedal is, know, closer to the floor. So it's somewhere in that range at 10 million bucks. And that's, you know, obviously when you're paying everything above board, you're doing everything correctly and you have the right staff in place.

Host: So and, and when you're at that range, you said, or that range of ebitda, you said that multiples start to get really interesting from the bigger acquirers. What sort of, what sort of multiples have you heard about for a $1 million EBITDA landscaping business?

Guest: I've heard four to six. It just kind of depends on the interest. And geographically where you are is also important in my mind because there's just, you know, in certain areas, San Francisco, you know, parts of Florida here, Texas, like, there's just more interest because there's just more money around and there's other big companies in the area. And the more big companies in your area, I think the better your multiple is going to get because it's not like you have a big, you don't have a bidding war per se, but it's very attractive as a bolt on for someone that's huge. Like, you become the bolt on. Right. But if you're in a more isolated market, I think it's going to be harder to get a higher multiple. But that's just my take on it. Just kind of reading the market

Host: and we're about a time, Mike, but just talk to me a little bit about the seasonality of landscaping and how that varies from geography to geography. We talked about a little bit your year round, but if you're in the Midwest, for example, you're not going to be year round. So talk to me how that factors in.

Guest: Sure. And, you know, all my guys that are, you know, Midwest and, you know, Northeast already know this. But, you know, with my business, I have, I'm working365 with the same guys. I don't lay anybody off. We don't have a down season. We. I keep everybody going the whole time, which makes it really easy to not have a bunch of turnover and maybe not lose good people over a season. So it's one less thing you got to worry about. I guess with warmer climates is, you know, okay, like spring's coming, like, we gotta hire more people again. So I guess it's less work when you have the same people consistently throughout the year. But that's just from, you know, me talking to guys that are doing it in those areas. And there was challenges of, like, you know, fluctuating 40 people to 20 to 35 to, you know, it's kind of a, you know, you know, hire, hire, hire. Let people go, hire, hire, hire. You know, it's kind of a cyclical deal, which, frankly, I just don't have to deal with. So it makes the business a little bit easier, I think.

[54:46] Host: Great, Mike. We discovered each other on Twitter, as I have with many of my guests. What's your Twitter handle?

Guest: My Twitter handle is Sign the Fronts. That's just a homage to my dad. It's something that he always says with his business, that he always has to sign the fronts of checks when he's paying people. And he's not signing the back. Yeah, he's not signing up with the back. So it's just. I was thinking about Twitter handle. I'm like, I'll just make fun of my dad just messing around. So it's cool. Yeah. Sign the fronts.

Host: Is my Twitter at Sign the Fronts, and is that the best way for people to get in touch with you, or is there. Is there another way?

Guest: That is the only spot I. This is the only social media that I have really, I appreciate, I think really brings a lot of value. I think LinkedIn is pretty crap. I think everything else is, you know, Instagram's for showing off, Facebook's for our parents. You know, and I think Twitter is cool because you can really get into a niche. You know, if you were talking about self storage, you can talk all you got. You know, you can follow 400 guys that only talk about storage. And there's so much learning on there. And E commerce, I mean, there's just all kinds of little. Just slices that you can really, you know, get out of. You know, I don't want it, like, I don't want to see political stuff. I don't want to see, you know, the gossip column. I don't want to see news. I don't do any of that. I just want to help, want to learn, and I want to see what people are talking about and, you know, how they're doing things, how they approach it. And I've learned a ton. I've only been on there maybe, like, four months, but it's. It's pretty cool to also see other people doing it and. Because sometimes it does feel like you're kind of on an island doing your own thing, but when you're on there, you can kind of see, like, oh, it's cool. Like he made acquisition or this is how they structured a deal, or this is the SBA lender they used. All that is, I think, great to, to kind of stay on and, and keep learning, you know.

Host: Absolutely. And feel less lonely because it can certainly loneliness is, is one of the complaints about this path, for sure.

Guest: Yeah.

Host: Well, Mike, thanks for coming on and sharing about your your story and your business and every all of your hard won knowledge in landscaping. This has been great.

Guest: Hey, man, thanks for having me on. It's been great. Paul.