From Sales Freefall to $1.2m/Month | Ryan Adams Interview

Ryan Adams, welcome to Acquiring Minds.

Thanks, Will. Thanks for having me.

Ryan, you bought a paint company, actually a dealership for a coatings brand. We'll get into exactly what that means, what that business model looks like. But things went south early. You did 1.1 million in sales in the first seven months of your ownership. Not a lot, not enough. For the last two months, you've done 1.2 million in sales in each month. So, you've turned things around. We're going to learn how. Start us off, Ryan, with a little background, please. What's your backstory and how did buying a business come across your radar?

Yeah, absolutely. Um, so, you know, I was in the military straight out of college. So, that's like my, you know, main seven, 10 years after I, you know, left college is what I did for a profession. I left uh the army, landed here in uh in Jacksonville after, you know, my first couple jobs uh and then was getting the itch to start my own business and uh, you know, bumped into a couple investors uh, another buddy. We kind of started doing a search fund kind of like thing that it was really like informal and it, the search fund like wasn't on my radar at the time and it started to become that over that six months and then once, um, you know, we weren't finding deals that were interesting to the investors but they were really interesting to me and uh, I decided to go out on my own and uh, and and found a deal that worked for me uh with my own balance sheet.

So, and so say just a little bit more about your 10 years in the military, why you left, and then also why buy a business rather than start one from scratch.

So, first, first a little bit more on your background because you were at Ander, which of course is one of the highest profile names in in defense tech. Um, so that's an interesting background. Give us a little more.

Okay. Yeah. So, uh, when I was in the military, I was an infantry officer and, uh, you know, spent a lot of time in the regular army and most of my career in, uh, special operations with the 75th Ranger Regiment. I was a platoon leader and company commander with them. Uh, did, uh, eight deployments, uh, one to Iraq, seven to Afghanistan. So, that accounted for approximately, I don't know, 40, 48 months overseas, something like that.

Um, wow. And, you know, by the end of that 10-year career, uh, I was, you know, looking to the next thing in my military career, and I just, I was burnt out, you know, um, there was, there was a lot of combat time in there. Um, a lot of stress on the family. I had two kids at the time. I now have four and I was wanting to grow my family. And, uh, I just, I was burnt out is is really the the main reason for for getting out.

Thank you for that. So, you were burnt out. Burnt to a crisp, I remember you saying in the pre-call. So you, you pivot out. What's your first step before you truly get out of of defense land altogether?

So I had, I had always kind of envisioned owning my own business. I didn't know how that would realize itself. My grandfather is a serial entrepreneur. He, he, you know, um, came came over when he was 13 from Italy or 16 from Italy, you know, with his parents and uh, by like 18, he had bought a small like, um, uh, uh, gas station in Northeast Pennsylvania. Um, turned that into a car dealership. Like, just started like going to auctions, buying cars, putting it on the gas lot like, "Oh, I can use this extra space to like sell cars" uh, at the same time. And then grew like a big car dealership, big, like very big for for his area and bought real estate and did all this other stuff, no high school diploma, um, you know, no GED and just, just made it work and and he's a great guy and I look up to him um for for doing that. So I, I, I looked at myself as like having come from Notre Dame, you know, this special operations background. I've been given all these gifts and tools, you know, because of, you know, the work that he did early on in his life. And I'm like, if he could do that, I, I certainly am am kind of wasting some of this, you know, business school at Notre Dame, you know, operations understanding and and getting after it in special operating. I can combine that into business ownership. Didn't know how that would manifest itself, but I did healthcare operations when I got out and then I did project and program management for an energy company um after that and then I went into business development and sales at Anderole. So I kind of like miss, other than marketing, I kind of did like everything you could do like in, you know, in the corporate. I didn't do HR right there's other other, you know, other niche things, finance, but like some of the core business functions I started to feel what that would look like and by the time I was done with and I'm like, I, towards the end, I was like, I, I just really, I, I think I have the tools to go do this. I also really missed the ownership that I had in my Ranger company or in my Ranger platoon and like owning that mission and having the agency to go out and execute.

Give us just a little bit more on that kind of quasi search fund arrangement you had with investors and how that led to you ultimately buying a business solo.

Yeah. So, a friend of mine um from the Rangers, he was actually my company commander when I was in uh first Ranger battalion and uh, you know, he, he was connected with an investor, high net worth guy who was a partner with another high net worth guy and and they were like, "Hey, you know, maybe maybe you guys can find something, we acquire it, and you guys go like own and operate it." So it was like the reverse ETA, like we weren't looking for ETA, but they're like, "Hey, you should consider this this model and let's go try this." So, for about six, seven, eight months, we were kind of looking at, you know, deal flow for them. One night, I was uh sitting here in Jacksonville, um, having looked at a couple good deals, and I was just like, you know, I really want to, I really want to go just do something like now. I was so invested in these businesses we were looking at, I could see the scale and the growth that me or anybody else could like apply to it. And I started getting really invested in like, "I know how I would go execute this. I just got to figure out how to like get this thing acquired."

Okay, Ryan. Great. So, you decide that maybe this dynamic, informal though it was with these investors, um, wasn't wasn't really working out, wasn't coming to fruition. So, so then what, what's your next step?

Yeah. So, the next step was like, kind of that day I had that realization where I'm like, "I just, I, I want to try to go at this myself." I, I pulled together my personal balance sheet. This was like in the evening. It was like in one afternoon, I was just frustrated. I'm like, "All right, I'm just going to pull together my personal." This is like December 2022. Pull together my personal balance sheet. I look at it. I go, "Okay, I, I set my deal parameters, right?" Like, I set my left and right for my deal parameters. I was like, "All right, what funding source?" I'd always heard about SBA. So, I kind of looked, dove into that that afternoon, that evening, and I'm like, "Okay, here's the parameters for the SBA." Like, did a deep dive, couple hours, like understanding that. Okay, here's my, here's my parameters. Like, I can do this. I can basically do a full SBA, um, assuming that I have to put the 10% down for the, you know, five, five and a half million, um, and, uh, or there maybe there's going to be an opportunity to do some seller financing.

You said you thought you could do a full, take advantage of the full 5 million from the SBA. Does that mean that you had, uh, enough balance sheet to do half a million bucks of equity?

Yeah. Yeah. Exactly. Yeah. Okay. We had investment properties, things like that. Some of that might have had to be liquidated or leveraged. Like, I hadn't thought through that fully that evening, but I was like, "I, I can figure this out, you know," based on, and I'll, I'll get to that point, you know, when I, when I get there. I also had Anderoll with potential, you know, um, um, liquidation event coming up that that spring as well.

So, you, you look at the SBA, you have the, you know, you, you figure out what you can afford, what your buying power is, right?

Yeah. So, so that night, same, same night. So, same afternoon, evening, I'm doing this math. I, I text the business broker uh that I had been working with on, you know, looking at other deals here in in Jacksonville. And I was like, "Hey, here's my parameters. Uh, here's what I think I could do on my own, and if I find something that works right, like I'll go out and do this, do it on my own." And he goes, "Great. Um, I'll let you know. I think I have something." And like the next morning he sent me Rhino Shield, uh, coatings company is what it said on the sim. Uh, you know, it didn't, because, you know, selling your brand, your local brand there, you've owned it for 25 years, don't want your employees knowing about it, so it didn't say Rhino Shield. Uh, it wasn't super explicit what was happening inside of it. You know, did the, got the NDA out there, got it in it, still didn't say Rhino Shield, uh, under the NDA, but, um, the, the numbers looked right and I was like, "Hey, I would love, I would love to meet with the owner." That was kind of my next step. I was like, "I just want to meet with this guy and see what this is all about."

And what was it all about? So, what is, what is a coatings business? Give us some bullet points around around size, numbers, history, etc.

Yeah, so, uh, Rhino Shield, uh, here in Jacksonville is is one of the oldest Rhino Shield dealers in the in the network. Uh, there's a network of like 40 to 50 other dealers. Uh, and this one had been around for 22 years at the time. This is the end of 2022, beginning of 2023 is when I was getting into this deal. So, yeah, the coatings company, it's a painting company. Like, so, just for people on the podcast, like, we do do painting. We use a ceramic, acrylic, elastomeric coating that goes on someone's house. It's got a 25-year warranty. Um, it's kind of meant for stucco and Hardy Board and cement applications. It can go on other things as well. So, um, it, it is a paint. We like to say it's not paint because paint doesn't come with a warranty. Paint doesn't protect. Paint doesn't reflect UV rays. Ours, ours does. So, we like, kind of say it's not paint, but we're a painting company. It's just a really high-end product with a with great longevity and has a bunch of other value propositions compared to like just a Sherwin Williams, you know, one-gallon bucket, you know, out off out of a Home Depot.

So, and so any, I can get any color then? I can mix any color in-house?

We have our own mixing and tinting. You know, when Sherwin Williams mixes your color, Home Depot, we have those same machines at our at our facility and we, we tint our stuff to spec and we can match.

So, a premium paint product that has all this, all these protective character.

Correct. Correct. Okay. So, you'd asked about financials. Um, yeah, you know, I, I, I meant to look this up before the, I kind of know them off the top of my head, but essentially from 2000, or from 19, 20, 21, you know, it was like 3.8, 5.4, and then like 4.8, kind of in that order, uh, or 4.5 of total topline revenue, right? And you're going through COVID, remember? Like people haven't forgotten about COVID, I'm sure, on this podcast. Like, I said, that was like the big COVID bump, you know, for the home service industry. This business was no different. So, I'm aware of that. Um, and so the 2022 numbers were missing from that because it, the year hadn't closed out yet. I don't even, I think I, it had like the first two months of 2022 or something because the listing had been out there for a while and it was listed at $5 million, by the way. We hadn't talked about that yet.

So, and Ryan, so that, that first of the three numbers that you just gave us, what was it? 3.8? That was a 2019 number. So that was kind of pre-COVID.

Yeah. Where the business, you know, if we, if we try to, yeah, you know, carve out with a COVID effect, it's a $3.8 million business.

Yeah. Is that, is that one way to think about it? Essentially.

Yeah. Essentially, that's kind of how I would look at it, you know.

S, yeah. And so I don't remember what the SDE, the SDE values were, uh, the seller discretionary earnings were, um, on those numbers. I remember where it landed, uh, after the 2022 numbers came in. So, forgive me for not knowing that off the top of my head, but, um, when I guess I can get into like the initial discussion with Rick, which would be interesting, who is the old owner. Um, you know, definitely.

But, but can you give us how profitable is the company and, and so roughly margins? You said you don't have SDE.

Uh, I don't recall SDE. I don't recall it for the, um, for those first three years. I recall it in aggregate once we added 22, in which it dropped significantly. It basically went from like, I mean, basically 18 to 20% SDE margins to, great, a bit less than that. Um, so people can do the math, I guess.

Yeah. So, it's a high teens net margin business, not including your own salary.

Yeah. Okay. Great. Super.

Yeah. So, tell, so, so you meet the owner. What, what does that conversation look like?

Yeah. So, uh, you know, met Rick, great guy. Still talk to him. Still text him all the time. Um, you know, him and his son had had started a, uh, garage floor coating business that was becoming like the next hot thing, or these, you know, epoxy polyaspartic floors, you know, with the flake and everything on your garage floor. So, they had started building this business and brand together, um, as 50-50 partners and I think Rick was just looking to get out of the Rhino Shield business, um, because, you know, Rick, I think Rick's 65 or he was 65 at the time, like early mid-60s, and was just kind of wanting to help his son with that business, but not wanting to like run a full other business full-time separately from that and just focus on the garage floors and and take his exit. So, he was kind of just ready to be done and wanted to go focus over there, maybe play a little more golf. Um, so, uh, he, we, when we met, it just, we just kind of hit it off. He's just a really good guy. He's a salesperson by trade, so he's just really, you know, easy to talk to. Um, he really liked my background. Uh, you know, that I wanted to make this a family-owned business and, uh, he, he just probably thought, you know, and he told me that that I would be a great fit to take over this his baby, right, that he's owned for 22 years. So, I, I think that's critical, a critical point for people is like, you got to go meet the owner as soon as possible. Just going back and forth, you know, on price and LOIs and all this stuff, like, I think it's critical to, uh, establish that relationship early on, and, uh, I think that was critical to my success in being able to acquire the business, uh, early on.

Ryan, the, was it not a bit of a flag that he has two businesses and presumably if an owner wants to focus on one, they want to focus on the more desirable of the two? So you were getting the lesser of the two businesses. Is that not one framing that somebody could have here?

Yeah, absolutely. Um, you know, and I, and I thought about that, like, "Hey, am I, you know, am I am I getting into the the wrong business here?" But, you know, I weighed his state in life. Um, there were some other personal things going on in his life that I won't share, uh, you know, here, you know, different health things with family and and stuff like that. Um, that, you know, when I, and that's what I wouldn't have got having met him, right? So if I didn't meet him, and so piecing all that together, it made a lot more sense why he was wanting to divest that and and grow that other business with his son. So that whole story, that whole thing, and and Rick was a very genuine guy on it. I think he's a high integrity guy. I took him at his word and and I think it, it is, it is true. And obviously, I was able to do with the business what I was able to do with it. So it kind of all worked out, but it was a thought. Uh, but all the other pieces at play there, it made sense why he was leaving the business.

So I said at the top that kind of the business model of being a dealer, uh, what, what does that mean? So let's get into that a little bit. Um, in contrasted as you, as you explain this to us with franchising.

Yeah. Yeah. When you and I first talked about this, uh, it was an interesting conversation, right? Like, so I didn't realize this at the time, the difference, right, between a dealership and a franchise. So the, the difference really comes down to the platform that you have as a, as a franchisee, um, from your franchisor. So, franchise or comes in and says, "Hey, Ryan, I want you to to open up a, I don't know, Chick-fil-A, Chick-fil-A, McDonald's, right?" And it's like, "We have the entire blueprint. We're doing all the marketing for you. We have the whole HR background for you, insurance, all that stuff. You just need to go out there and kind of like own and operate it, right?" Um, but we're going to charge you a royalty because our platform, we built it, it cost us something. So, you're going to pay a premium to buy into our thing, you're going to pay a royalty on all the things we that we're doing for you and, uh, but you're going to get some of the upside with it, right?" Um, so with the dealer model in contrast, is a lot of these dealerships don't have a platform at all. These are independently owned businesses. Rhino Shield was no different. Rhino Shield Jacksonville was no different. Um, there is no centralized marketing program. There is no centralized call center. Uh, there's no centralized QAQC program. There's no like centralized CRM and automations and all these other like things that are going on in the background. You have to build all of that. You're just going to buy your product from us and you figure out the rest. So the biggest difference is one, that the second one, you can have a lot of upside because you're building the whole thing. You're not paying a royalty. You're just paying for product and that's it. And you can grow that business and take basically all the upside. Franchise, you're, you're sharing some, a lot of the upside with, with, uh, so you're a little bit capped in that way.

And so what are you getting? You're getting the exclusivity. You're getting a territory. Nobody else in the Jacksonville territory of Rhino Shield can sell Rhino Shield.

Correct. Correct. So the, the manufacturer owns the IP for the product. They manufacture it, supply it, and I have the exclusive right to market and sell that product in my territory, which is loosely defined by like DMAs, uh, designated marketing areas. So, Jackson, greater Jacksonville, Gainesville area, Orlando, Tampa.

Yeah. Yeah. And now, so your point about the contrasting this with a franchise system where the franchisor is giving you all of this infrastructure, "business in a box," quote unquote, is something that we'll often hear franchises described as. Um, but one of the big things you, um, are also getting, at least in the, in the highest profile franchise systems, is the national branding. The golden arches, of course, the canonical example. Um, you know, you just open a McDonald's and the people will come. Um, is, are you getting that here? Are you, are you relying on Rhino Shield to like, to do the marketing of the brand? Because otherwise, otherwise why sell Rhino Shield and not every other product as well? Why not just be a reseller of Rhino Shield plus Sherwin Williams plus?

Yeah, that's a good question. So, no, the short answer is no. Um, there's no real brand, um, you know, marketing being spent on brand now. They've spent money on, you know, the, the fonts and the brand guidelines and the icons and the logos and all that stuff, like, yes. So, there is like a brand guideline, but yeah, each Rhino Shield dealer is responsible for doing their own brand building within their market area. So, um, they, they don't really have that centralized, uh, marketing effort. Um, they're trying to capture a lot of the lessons learned from dealers and sharing those with the dealer network to try to lift everybody up, but there's no like dedicated, you know, million-dollar a year marketing, you know, national campaign marketing spend to do TV and all and billboards and all that stuff like that. That doesn't exist.

And so why would you not? So I assume you are bound to sell just Rhino Shield. You can't sell competing products, or can you?

It wouldn't benefit me, uh, to, to do that. Um, like, I, I could sell Rhino Shield and my painting company, like, I could be a painting company, right? And like, I have this Rhino Shield vertical within my company and then like interior, other exterior products, like, I could do that in, in theory. If you want to ask why, why I currently don't, I can answer, I can answer that. But yeah.

So, so why is this, why is kind of being a dealer model where you're, um, just selling Rhino Shield superior to just being a painting company and offering your customers a portfolio of options, one of which would be Rhino Shield?

Yeah. So, um, one, it comes down to focus, uh, being really focused on marketing and selling one thing because as a home improvement, home services company, if you are not treating it like a marketing and sales organization, that's what we are. We're not a painting company. We are a marketing and sales company. That's what we do. We, we don't, we don't paint homes. We market and we sell Rhino Shield. Um, now, we do paint homes and we get a lot of five-star reviews and we have really good delivery on on everything we say in the sales process, but we treat our company like a marketing and sales organization because that's what we are and that's how you scale. I'm sure people have read the, you know, "$100 million leads" or "$100 million offers" from Alex or Mosie. So when you talk about high ticket, premium, it positioning, right, scarcity, all those things, Rhino Shield, where it's priced and where it's positioned and its value on the market, really aligns with with that methodology and which I really fully, uh, believe in. And so trying to compete on price with all the other painters is not where I want to be. My margins and my ability to sell product, uh, at our high ticket, uh, level with complete differentiation from everything else in the market is, is what's allowed us to grow and scale as quickly as we have and so that would be a distraction selling the, you know, regular latex paint. It would also be against everything we say in the sales process for Rhino Shield. We essentially kill paint in terms of its quality and its and its cheapness, right? Um, in our sales process and then we're like, "Well, but we actually sell it over here too, on the other side of our business." So, it kind of competes with that, uh, that whole value proposition that we're offering.

How many employees are here and what, what does your your manpower look like to actually deliver these projects?

Yeah, so we, we have, um, basically seven full-time or eight, eight full-time people. I have like a GM, I have a, a sales manager, I have a marketing person, I have a call center person, um, I have, uh, uh, three operations people. So maybe we're at, we're at 10 now full-time. And then we have, uh, we're up to nine, independent sales reps, 1099 sales reps. So when I say FTE, like, you know, they're 1099. So we have another, so call it 20 maybe full-time people working on this. Uh, and then the paint industry, uh, is is very 1099 heavy. So, all of our crews are are independent contractors. Many of them have been with us for, I think the last time I did the average, it was like eight years or nine years. They've been with us for a long time doing jobs with us consistently, uh, kind of every week. Um, and so we have, I think we did 13 jobs last week. I was just having a meeting about it. So, I think we have 15 or 16 total crews, uh, in there.

And so, question. So you sub, you sub out all the actual painting work.

Correct. Yeah. To our certified, trained professional installers. Yeah.

And do they come with Rhino Shield shirts on? Do they arrive at the home?

They, they do. Yeah. So they have all their own trucks, their own equipment, right? But they, um, they have, uh, uh, our, our shirts, our hats. Um, it's all of our, our buckets and stuff. Um, so they, of our product. So they show up with all that, our yard signs. They put all that out for us and many of them go from our job, you know, one Rhino job to the next Rhino job to the next. On the weekend, they might paint cabinets in someone's house. You know, they, they do other jobs too for themselves, but their exterior painting work primarily comes from us.

And how do you quality control them? Because from the customer's perspective, they're still experiencing, you know, their, their experience with the paint, the painters is going to be associated with you and your organization, even though in your own mind, they're subs. So, how do you, um, and and so much of, you know, like you said, marketing is top of funnel all the way through to end of project really. It's not, it doesn't stop at conversion, it goes all the way through to delivery and getting them leaving a good review, uh, for the next person to your top of funnel. Yeah. So, how do you, um, and and why, and just let me also preface this by the reason I'm pressing on this so much is again, Ryan, is because so many searchers look at kind of blue-collar businesses, trades businesses like this, service businesses, and the hard part is the actual service delivery and, and, and it just doesn't seem, I'm getting the picture here that that's not something that, um, is that much of a challenge in your business. And so how have you avoided the pain that so many other folks running blue-collar businesses, um, can't, which is, you know, managing the crews, making sure the work is actually done right.

Yeah. Yeah. A lot of good questions in there. I'll try to hit all of them. It starts, it starts with people. It starts with hiring the right people. So the fact that I sit here, you know, so nonchalantly talking about how our marketing and sales organization is a direct reflection of how good my GM and my operations director are, or my production manager, my service manager, and all the crews are that are running that side of the program. I don't have to worry about that. Um, you, we've gotten 200, we had 88 five-star reviews when I took over the business. So, four a year for the 22 years that Rick ran it. We average about five a week now, you know. So, um, it's just a much different program and and it's, it starts with hiring the right people who care about that. And then it, it, it also, you know, it goes back to our core values. That's one of our core values that we write for the company that we talk about. I just, we just graduated a new sales class. Uh, I met them for the first time on Tuesday, kind of like towards the end of their sales training, and the first thing I did when I sat down is I handed them a printout of our core values and that was the first, that was the first five minutes of my conversation with, first 10 minutes was like, "This is who we are. This is who I am. This is who I kind of expect you all to be." Um, and so it starts, it starts with that and delivery excellence is one of our core values, um, whether it be outward to the company, whether it be internal to some report, you know, we're providing each other or having a conversation about. So it starts with that, it starts with people, it starts with core values for that delivery. The next thing I would say, it becomes incentives. How do you incentivize those people to want to do those things, to make sure they're doing those things? Um, so the profit sharing that my operations people have, that their KPIs are around five-star Google review rates, like, wow, that's why we get five or six a week now because I made it an incentive, incentive for how they're incentivized to grow their bonus structure and to grow our business, right? So, um, one with the leadership there, and then on the crew side of things, how do I keep, how do we keep them incentivized? How do we keep them invested? Well, one, we pay them a percentage of net sale, the net sale price. I don't pay them a price per square foot. Like, okay, you make a $120 a square foot on this this job. No, they get whatever we sell it at, they get 20% of the net sale price. That's what they get. They're owners, right? Like they're not really, right? But if you get a percent of the business, you are, you're an owner, right? You have some ownership in that. And 20% of net sale for a Rhino Shield job is a lot more than they're making from anybody else they might get a lead, a lead from. So we're paying premium and giving them a percentage and they feel invested in that project. "I'm getting a piece of Rhino Shield this job. I'm an owner, right?" You get a percentage of something. Salespeople, you get a percentage of commission. Like you're an owner. It's different than equity, but it's, I, I consider it ownership, right? And they do too, in a lot of ways. So, there's that. That 20% of net sale is contingent on you having an 80% Google review rate. If you drop to 75, you're now at 19% of net sale. If you drop to 70, you're now at 18% of net sale. You drop, you get where I'm going with that? So, like, there's conversations weekly with our crews about the importance of that. Um, now, that doesn't necessarily mean that they're doing it right. There's, there's a whole QAQC side of this that's that's, you know, we got to talk about as well. But they're not putting the paint on so thin that the customer notices and then they're not giving us a five-star review. Like, they're doing a pretty good job. They're cleaning up the job site. They're doing everything we said in the sales process, or else we wouldn't be getting those five-star reviews. So it comes back to incentives with them as well. And then the constant conversation around that delivery excellence that we emphatically emphasize all the time. Mhm. Um, and then as far as the QAQC side goes, you know, it, it's a part of our business that we're really trying to to hone in, um, as we, as we grow and scale, you know, having more touch points with like back office people to get out and spot check, you know, wet mill thickness, uh, on the application of the process. You know, even if it's just taking pictures, you know, before, during, and after each of the steps of the application because there's a priming portion of it, there's a top coat portion of it, uh, there's a thickness requirement that we have. So part of that can be managed with the amount of paint that's going out the door or not, like how, how much paint they have left over at the end of the project. Could it have gone on too thin? We also use tools like, uh, Hover, you know, which or EagleView, which people are familiar with for measuring roofs and walls and stuff, so you can get really accurate measurements. So we know like very accurately how much paint should be used on a given project because of these accurate, you know, 3D renderings we're getting. And so if too much product is being used, well, where's that going? Is it being stolen? Or, you know, if not enough product is coming back or too much product is coming back at the end, "Hey, I had this left over." It's like, "Well, how do you have anything left over? We gave you the right amount to do the proper amount of coating on there. Did, did you go too thin in some places?" So, there's some checks and balances there, but when your territory is like seven hours from tip to tip, you know, it's, it's pretty, uh, it's pretty hard to be on every single project. So you got to rely on good people and making sure that they're incentivized to to do the right thing always.

Remind us again the terms of the acquisition or the, what it was selling for and how you structured the deal, and then we'll get into the transition.

Yeah. So, um, you know, it was originally listed for five, $5 million. That was pre-202, you know, end of year numbers. So this was beginning of 2023. So to not have those numbers yet was a pretty critical piece to the whether or not I was going to do an LOI or not for this business. Um, so after I met with Rick the first time, it was like, "Hey, you know, I'd love to get an LOI. Like, let's, let's get the 2022 numbers in. I'm sure you're going to be closing the books." He's like, "Yep, give me a week or two." And, uh, they, he did that. Got the 2022 numbers in, and they, they weren't where he wanted them to be. Um, they weren't where obviously I was expecting it to be, kind of returning back down. I think it ended up being 3.2 or 3, like it, it really kind of dropped back down even below some of the, like the, the 2019 numbers.

Yeah. And so waiting, waiting that, um, that new number against everything else, um, you know, I kind of landed at this 800-ish SDE, like, kind of weighted SDE, I would call it. And, uh, for me, the multiple, I obviously wanted it to be under three, maybe 2.5, you know, trying to figure out where that would be. And so landed at like 2.8, whatever, some, it was 2.8, 28 something. I forget. You can do the math. I don't do public math well, but 2.5 million was what I had in my head now for the new number of what I thought the business was worth. My broker comes back and goes, "Hey, man. I'm so sorry. Like, yeah, that, that's just not going to work. I'm, I'm sorry. The deal is not going to work. I'll go find you something else." And I was like, I was like, "Well, dude." I was like, "He said, Ryan, he said, 'It's not going to work, the $5 million original purchase price. He's basically obviously this isn't worth $5 million. This, it's just way off.'" And I was like, "Well, have you asked, have we asked Rick like what his new number is?" Like, he's a reasonable guy. He's definitely wanting to get out of the business. It's been on the market for 18 months and he knows what he has now. He, he understands it. So, like, just let's just ask him. Where does he think he's at now? And Rick came back two days later, I think, and was like, 2.5. And I was like, "Done." I was like, "I was right there. I was like, let's just do it." You know, that was kind of what I thought was fair. Anyway, I literally did the same math. He did the same math. He clearly was seeing the same thing I was seeing and we had an LOI out within a few days, you know, and this was January, beginning of February 2023 and we closed June 9th, June 14th, uh, tomorrow, uh, 2-year anniversary. So, in 2023, yeah.

Yeah, that's good timing. Not planned.

So, you get the business for two and a half million.

Um, yeah. So, we get into the business. Um, you know, take over on the, the 14th or, or 15th was the first full day and, you know, met all, met, met everybody, all the, we had two sales guys at the time. We had one ops guy, we had one lead setter, and then we had, you know, seven or eight crews and, and a, and a service manager. And so, you know, relatively small company. I'm like meeting, you know, now I have to trans, you know, because the marketing's turned on. So, I'm taking over the marketing with the TV stations. I got to get a new ad out maybe with me in it. Like, there's all sorts of like, because it was an MA marketing machine at the time, albeit all broadcast, you know, radio and TV and stuff that was kind of underperforming, and one of my core thesis was like, "I'm going to take this into the performance marketing age." Like, I didn't know what that meant at the time, like, but I was like, "I'm going to do Meta marketing. I'm going to do TikTok. I'm going to do Google." Like, I'm going to get better on Google, YouTube, all the things that he wasn't doing. Uh, how to actually go implement that, I was going to learn that really hard lesson over over the next, you know, six, seven months, but, um, there was just so much to do on the marketing side to make sure that the leads were coming in that I totally discounted, and this is a big part of the conversation, how important the sales leader of that organization, uh, is, uh, to running a marketing and sales business, home service business. Rick was a 20-plus year Sears in-home sales person. Like anybody who knows, you know, the in-home sales Sears guys sell and siding and all that stuff back in the day. Like those guys wrote the book on how to, how to do in-home sales, right? And so for 20 years, he just inherently either went out and sold himself, you know, wrote the sales program, held salespeople accountable, did the sales meetings, recached, trained them, went out there. I had zero of those skills. Zero. I still have very little of those actual skills to go out and sell my own product. Uh, I have done it. It's kind of fun, actually. But, um, taking Rick out of that organization, taking Rick out of my company as the sales leader, he's effectively the sales manager. Replacing him with me was horrible for the business. Um, so if you want to ask more questions off of that, uh, I'm, I'm not quite going on a tangent yet, but like that was the big, I'm like, I'm focused on marketing. I'm going to make sure we're doing the right things that bring leads in. I'm going to start pivoting that marketing from like the old school linear TV, radio, take some of that spend and I'm going to start like figuring out performance market. Like that was my focus going in and sales just tanked 16% close rate over seven, over seven months.

So, and reflecting back, Ryan.

Yeah. Well, and reflecting back, what do you think the diligence miss was here? And, and if I'm being too harsh, but, but was it that you didn't, you know, was it one of these where like you should have pressed harder on, okay, how does money actually enter this organization? And that would have uncovered his, because he was, this is kind of a story of a key man, key man risk. Yes. Uh, and the key man in this case happens to be door-to-door sales, or not door-to-door, but home sales, in-person, in-home, home sales, um, and, and underappreciating that key. So, so anyway, how do you look back, what, what question should you have asked or could you have asked that would have uncovered this dynamic?

I, you know, I honestly haven't thought much about that of what I could have done differently in due diligence to realize that, um, because I don't even know, I, I don't think I fully understood, you know, maybe I could have talked to one of the other Rhino dealers early on, you know, maybe I could have asked for that, because, you know, we'll get to the part of the story in December 2023, seven, you know, six months into ownership, when Danny Hoey in North Carolina took me under, under, and he'll watch this podcast, um, he took me under his wing and was like, "You have a sales problem. I know how to help you solve it." You know, because he was a Sears in-home sales guy. Like, all these guys came from the same, they were all cut from the same cloth. So, you know, maybe in hindsight, asking the dealer, right, because this is a dealer model, asking the dealer that I'm about to enter into an agreement with. I bought Rick's dealership, but I also have to sign my own dealer agreement now with the manufacturer. Maybe what I should have done was had a more candid conversation around like the sales process in the organization and, "Hey, could you connect me with a couple guys?" And they absolutely would have, because they connect people with me now, you know, so it's like, I should have been more like pushy, and that was one of my feedback to them, you know, years, you know, a year later was like, "Had you done this for me, I wouldn't have suffered or almost gone out of business or whatever." So now they're trying to push new dealers towards guys like me or Danny or or Jim before the sale closes or as it, you know, so I think that's the real takeaway there, especially since you had that dealer network. Um, I can't speak for other businesses that are just by themselves, but that was some, that was a miss, uh, I think, and you're not being too harsh. Yeah, it is what it is. The other thing is, um, this would be, uh, this would be a, a similarity to a franchise network. Before we talked about the contrasts, but the similarity here would be that, in both dealer, uh, businesses and franchise businesses, you have all of these other owners around the country that you can learn from and in fact talk to, hopefully try to talk to before you buy the business and understand as much as you can, absorb as much as you can from them, before buying the business. So, there's this baked, this pre-baked network of other owners that you can lean on both before and after your, your acquisition. Um, which is a, a, a happy dynamic in both, I guess, dealer businesses and franchise businesses.

Great. Okay. So, you get into the business and what, what, and sales just start declining? What happens? Talk, talk to us about almost going out of business.

Yeah. So, um, well, one, one key piece of, like, as you're transitioning and as we were closing, I think it was like five days before we closed or a week before we closed, my SBA loan officer, Jeffrey Tanner, great guy, really loved working with him at Central Bank Florida, by the way. Um, he, he, he came to me and he was like, "Hey, you know what? I was thinking about this. You should take 300K in working capital instead of, you know, instead of 100 or something." I forget what I had it at. I blocked it out of my mind because it was so stupid. Um, and that's not being too harsh, that's being like, kind of nice. I think it was like 70 or 100, right? And he's like, "I think I would feel better if you took 300K working capital." And I was like, "Oh, well, you, you'll give me that." And at that point, I'm starting to think like, "I should probably just take whatever they'll give me, you know," um, on top of this loan. And so he's like, "Yeah, let's go 300K." And he, he kind of knows this, but like, probably needed almost every single cent.

Of that 300k working capital, or else we wouldn't you and I wouldn't be having this conversation. I wouldn't have gotten seven months down the road. So, working capital requirements for your business, multiply whatever the number is you come up with by five. Um, would be three to five would be my recommendation. Um, you're being too conservative because you're thinking, "Oh, I don't want to take more money than I need." Um, but you can't go get money later. It's really hard to get money later when your bank account's going like this. So, you're in a position when you're buying that business at that time to like, whatever you can get, take it. And if you just pay it off early, great. You know, but if you can get more working capital to sustain you through any any kind of bumps, uh, take it. And that was a big lesson learned for me that thank God he said that, you know, I thanked him for that later. Um, so anyway, yeah.

Um, no, it's it's such a great point. It's such a great point, Ryan. Thank you for highlighting it. The working capital and being undercapitalized is a well. Managing working capital is so hard for first-time business owners and being under. And as a consequence or related to that, or maybe the reason that you find that you're cash-constrained is because you don't have enough working capital to begin with. The business is undercapitalized. Also, um, a problem. So, great point to highlight. And then, and getting that extra working capital, that 300 in your case. So, that comes with, um, a monthly expense because it's basically more loan. Um, but it's in the grand scheme of things relatively small. Correct. Yeah. When you're looking at a 2.5 million loan, uh, or two or 2.2 after my deposit, um, tacking the 300 back on to put it right back at 2.5 essentially is like, kind of makes sense. Exactly. It's not that big of a deal. Yeah. Great. Thank you. Loan loan, uh, SBA lender. Thank you, Jeffrey. Thank you, Jeffrey. Jeffrey. Jeffrey. Yeah. Thank you, Jeffrey. Cool. Okay. All right. We still haven't gotten into the the the collapse here.

Yes. Yes. So, okay. So, first seven months, um, I I'm obviously seeing that close rates aren't where they need to be. We're not generating sales. We didn't do over 200k in sales in any of those first seven months. Um, in fact, one month, one of my sales reps went 1 for 24. Uh, I think it was in the month of November, and that was when I was like, "Oh crap." Like, this, like this is not good. And and the other sales rep, who was the better of the two, uh, like took a two-week vacation during that month. So, this other sales rep that wasn't doing a good job was getting even more leads than normal and was just doing really bad with them, uh, really bad things with those those leads. So, man, I'm smiling about it now. Never thought I would. Um, but yeah. So, so bank account is is is dwindling down. You know, I'm I'm finding myself in a cash crunch. I'm due in the runway. I like I know how much time I have left at this pace, you know, basically end of January. If I don't fix something, or February, I was like, if I don't fix something, we're we're done. Like, it's just not going to work. I'm going to have to recapitalize the business somehow. Like, I'm trying to figure that out. So, I actually used like I I actually used a QuickBooks like short-term loan during that time. Like I just looked at what can what can I get right now before the bank account goes down. Got, you know, like a $100,000 like short-term loan from them to tack onto it just to give myself a little more runway. I was getting whatever I could into the bank account to make sure that I had enough to sustain as long as I could. And I and now I'm like, the clock is ticking. I need to figure this out. Um, so this is November 2023, about 6 months in. I know something's wrong. I reached out. I've been reaching out to Amco. The the Ryan, sorry, let me let me let me interrupt real quick. Yeah. Um, so when you say one of your sales reps, he basically had 24 leads and these are warm, good leads. These are these are homeowners who have raised their hand to say, "I'm interested in your product." And he goes and visits them, right? It's an in-person sale, and he just closes one of 24, so 4%. Um, and that is not sustainable. That's quite disastrous. Um, the good news is though, you know, you say to yourself, we got the leads. You know, if I can just if I can move the one of 24 to three of 24, anything but or five of 24. Yeah. Um, you know, you can you you can you can quickly claw your way way back to real revenue. Um, but also, how are you thinking about this in terms of like, what's going wrong? I knew we were generating leads. We were setting appointments. My lead setter was setting appointments. So, those were those were set appointments. Like they left the form fill. They called in. We scheduled an appointment at their house, set all the conditions for you to go out to the house and be there, and you, you know, you don't close it, right? Um, I knew we had a closing problem. I knew we had a sales problem, and I had been so focused on generating leads, generating leads, generating leads. Um, and at that point, we're starting to get Facebook and YouTube leads. Like, we're starting to transition and and and even like more like we're getting, I'm I'm like generating more leads and we're selling less. So, I'm immediately think, "Oh, it's it's lead quality. It's something I'm doing with the leads." Like, I start thinking about that and I'm just like, you know, it's it's not that. We should be closing more than one for 24. So, I knew we had a sales problem, and I mentioned that to the manufacturer, and they connected me with Danny up in North Carolina, and they're like, "You should talk to Danny." So, they gave me his number. I texted Danny. I mean, if we want to go there, I don't know if I answered your question about the, uh, Yeah. No, no, perfect. You did. You did? Yeah. Enter Danny. Enter Danny. Yeah.

So, uh, my lifesaver. I tell him that all the time. So, um, I they gave me Danny's number. It was a Friday night. Uh, I just dropped my kid off at baseball, and I'm just wondering, I'm like, "Did I make this huge mistake?" You know, I put my family at risk to do this thing. It was a very kind of dark moment. And, uh, just dropped my kid off at baseball, and I'm sitting in my truck, and I'm like, "All right, I'm going to text Danny." Text Danny, "Hey man, I'd love to set up time to chat with you." Um, and he's like, "How's now?" This is like 7:00 at night, you know, it's dark out. He he goes, "How how's right now?" And I was like, "Okay." So, I call him. He picks up, uh, and we talked for two hours, uh, right there while my kids playing baseball, um, about, you know, everything that had to do with the business. He started off with like, "Hey, what's your wife's name? What are your kids' names? You know, how old are they?" You know, um, getting a little emotional, honestly, talking about it, um, because he deeply cares about people, uh, in his life, and he didn't know me at all, and, uh, he wanted to understand me and, uh, understand who I was, who my family was before anything else, and, uh, and and that's that's a really good lesson for business owners. So, then we got into the business, right? Like, okay, how are leads? What's the cost? What's? So, I had all these numbers, and, um, he's like, "Yeah, you have a sales problem." I'm like, "Yeah, I have a sales problem." You know, so he quickly identified that. We talked about benchmarks. He's like, "Okay, so your gross margin's good. Like, you're delivering on the the the product." Um, and, you know, you're doing all the right things there on the operation side. He's like, "You just, you just have a closing problem." Um, so he talks through his whole process, sales process that that they go through, how they set appointments. This is just all on the phone in that two-hour period. I'm taking notes, right? And by the end of it, I was like, I was like, "Man, I'd really love to just come up and see how you guys are doing things." He's like, "Yeah, we'd love to have you." I was like, "Can I come up Monday?" And he's like, "Sure, come stay with Lynn and I up here in Charlotte, and, um, and we'll I'll walk you through what we do." So, I booked a flight there in my truck. Um, texted my wife after I booked the flight. I was like, "Hey, I'm going to see Danny in North Carolina on Monday. Um, I I got to figure, I got to figure this out." And so, I fly up there on on, uh, Monday morning. First thing, he picks me up to the airport. We go straight to his Rhino Shield office, and we sit down in his office, and I just take notes for two days. He walks me through the sales process, shows me the sales kits that they used to sell. Our guys weren't even using these sales kits, right? Like, like things, products, things to show people in the house of like who we are. It's like very obvious now. Um, well, what presentation are you using? I don't even think they're using the presentation. They're just winging it. Like, all these things that were just like the blocking and tackling just wasn't happening in these in-home sales things, right? So, he walks me through all that. I take notes on everything, and I leave there. I couldn't sleep. The the night I stayed at his house, I couldn't sleep because like I knew I saw it. I saw the direction I need to head. He he enlightened me and connected the dots. You know, he'll tell you he didn't do anything for me, right? He's very humble in that way, but like I had to figure it out myself. But he connected the dots, and I couldn't sleep that night because I knew exactly what I needed to do when I got home to the business after being with him for those two days.

What does he do? What what do you come home and start implementing, and how does it turn around? Yeah. So, you know, I looked at our sales presentation. I was like, "Hey guys, are we using this?" Yes or no? Like, okay, well, let's update it. Let's make sure it's got all the right information in here. This is a sales presentation. So, like on an iPad, like, "Hey, here's Rhino Shield. Here's who we are. Let's add our Google reviews there. Let's like, let's fix it and make it what it needs to be." Um, are you guys using the sales kits? What sales kits? Like, no, we don't use those. I'm like, well, we have two of them in the back here that I bought with the business. So, like, we're going to start using these. This is how Danny is. So, we I kind of retrained my sales staff based on what Danny. Now I had this like feeling like I could kind of be the sales manager. And I was like, "Here's how the sales process should go. You're going to use the heat lamp. The heat lamp shows our reflectivity. It's this cool little demonstration we do in the house. You've probably seen it if you've bought windows. Anybody here on the podcast who's who's bought windows, I'm sure they busted out a little heat lamp to show you the the xenon inside and right, and all that." So, we do something similar with Rhino Shield. So, all these cool things that help us build the value in the home, they weren't doing. So, implemented that right away. Uh, started, uh, we call it dispoing a lead. So, telling me what happens after an appointment, like was it a demo, no sale? Was it a, you know, was it a no-show? Like, what happened in the home? We weren't like dispoing the lead in front of each other. So, there was no like internal salesperson accountability to what happened on an appointment. Like, I would have to call the sales rep to ask them what happened at their 2 p.m. appointment at 6:00 at night. Like, there was no internal feedback loop. Bad on me, right? I I feel I feel stupid even saying that, honestly, at this point in my life, but, um, that was one thing Danny was doing that I took back. And, uh, you know, close rates kind of came back up like pretty quickly. We're like, "Okay, we're selling a little bit." I was like, "Okay, I kind of know what I'm doing here." I grabbed a bag, I started going out and running that sales program, and I sold a couple, you know, I was like a 50% closer for like the four the four I went out on, right? But I was like, I I I need to feel the confidence in this process. I need to take this. I need to be the sales leader. That's what I walked away with in December. But I quickly realized, you know, I'm not really long-term the best fit to be the sales leader for the organization. I I think I need to find a pro that can come in to my business and go and help me build this sales team. So, I put a job application out for, you know, an in-home one-call-close sales sales professional. I wanted to get another guy. I wanted to get a third guy so that you could have some competition. If I had two guys and the worst guy, and the I couldn't fire the worst guy because there were too many leads for the one guy, I needed three to be able to have some sort of like parity and like accountability. So, I was going to hire this third person, and, uh, when I put that job wreck out, I got a bunch of guys in, started interviewing them, some good fits, some not. And then a guy messaged in and was like, "Hey, I'd love to do this position." But he was like, sales VP, in-home sales, one-call-closer, 25 years experience. I was like, "I don't need a sales manager right now, but maybe I do." And so, I hired that guy. Um, even though he was like, "I'll come in and be a sales rep. I'll just sell at first, and, you know, if it, if I become your sales manager, great. I think I can, but like, I'll just show you what I can do." And, uh, he came in, and he, we talked a lot. We went to Arizona together so he could see the sales training program out there and what they were doing. And, and we came back, we revamped our presentation. This is in January 2024 now. And he's like, "I got this. I I know I know how we're going to do this." And he went out and closed like seven of his first eight jobs at a much higher price than like, we repriced everything. Um, and he was selling them at like a really high price, and I was like, "This is how Rhino Shield is sold, right?" And so, yeah, we got, I quickly promoted him within a couple weeks to the sales manager. I'm like, "We need to revamp our whole process here. You need to help lead us to the promised land with these two other guys I have, and, uh, and and we need to we need to turn this thing around." Uh, and we and we did. And that's kind of where where it started to like go the correct direction. And, you know, within, I think by that April, that that March, we did 700K in sales. Like, that that March, you know, there was like very quick. And that's a busy season for us, right? So, it was like, very quickly, we did like a lot more sales. And that's when I was like, "Okay, here's how like, we're going to be okay." Um, and so I I'll let.

Were you so excited? Relieved? Are you so excited at this? Relieved, I guess. I mean, I because I'll be honest, Will, like, you know, I'm looking at, you know, the MX bill coming up. I'm looking at the working capital in the in the business account, and I'm like, this is going to be tight, you know, like making these payments, you know, and I'm sure other business owners have been there, you know, we've all been there, I guess. But yeah, it was it hit right when I needed it. And it's the bias for action is is the takeaway there. The bias for action, man. Like, I can't thank Danny enough for just he he he understood the urgency. He saw it. I explained it to him. And so when I said, "Can I come up Monday?" He was like, "You need to come up Monday." Like, he agreed with me. And then turning that into action as quickly as possible, um, was what saved the business. So, once you identify the problem, don't wait six months. Like, fix it now. Do it now. Do what you can. Yeah. Yeah. Yeah.

Um, Ryan, just, uh, one one of the things that we always consider when evaluating a business is is how, um, challenging hiring is for the service delivery. And as you've said here, this is a marketing and sales organization. And so your salespeople, as you as you just finished describing, were really are really the lifeblood of this business. Um, how when I hear a home visit, what do you call what do you call it? The one visit sales closer. What What is that that phrase you keep using? Uh, a one-call close. A one-call close. Yeah. Yeah. Um, and going into the home or whatever. I, um, feel like that's maybe not a lost art, but it's done less than it would have been done in the past, I assume. Although maybe maybe not for home stuff. Anyway, how hard is it to find those people? How hard is it to to to find people who can go into a home and sell well these days? Not as hard as you would think. Um, don't look for them on LinkedIn, and don't look for them on ZipRecruiter. They are on Indeed, at least right now, as of the time of this podcast. Um, that is a lesson learned. I've spent a lot of time and money looking, uh, on LinkedIn and ZipRecruiter for these people, and for whatever reason, in-home sales people are on Indeed. Um, so that's a really great way to find them. They come as soon as we put a job posting out. I think it was four days for this most recent round of, uh, people that came in. We found five, uh, in three days. Five really good quality in in in three days on on an Indeed thing. And Indeed has some things where you can search for what you're looking for. So, like, if we're looking for an Anderson window guy, or we're looking for, you know, someone who, or like Erie or O West Shore Homes guy, like other places we know run the one-call-close program, um, because we want that type of salesperson. You can go kind of target those people and try to pull them in and send them a message like, "Hey, saw you're on Indeed, worked for Anderson, would you consider applying for our thing?" So, you can do some outreach too. Um, so, not that hard to be honest.

Great, Ryan. Well, we have covered a lot. We're getting toward the end here. Um, you, so, just to round out the kind of the reviving the business and putting it on a growth path, you got to $700,000, uh, in that, I guess, that first month after starting to figure things out. Um, I at the top, I said you've done 1.2 now for the last two months. So, has it just been basically steady growth since coming out of the crisis? Um, not really. Um, I think there's been a lot of ebb and flow of that. Like, we started off on this 700, you know, like 500, 700, 700, and then it dropped back down, and then it just kind of, we never really gotten higher highs above the 700. There were a few months like that, but it, it was our average because you said it was high season, too, wasn't it? Yeah. And then it kind of dropped off. And, um, you know, what I, you really have to understand the point I'm going to make is, you really have to understand all the levers in your funnel. And in a home service business, there's a raw lead. There's then an appointment that gets set. There's a lead that gets issued. So, that's after the appointment gets confirmed. So, that lead gets issued to the sales rep. The sales rep then demos it, which is when you go in the house and you put your product on the table, and you, you try to give them, you give them price, and then they either close it or they don't. And so, there's a lot of focus that gets put on the close rate. What is our close rate? What is our close rate? But what I failed to recognize for many, many months is that our appointment set rate was ticking down and down and down and down and down. So, I was setting 19 appointments for every hundred raw leads that were coming in. That's not good. So, I'm like, "My cost of marketing is climbing, but my close rate's really high." And my net sale per lead issued, which is another really important metric. It combines your demo rate and your and your close rate into like a a number that's better than close rate. Um, so, how well is that sales rep doing? Is their net sale per lead issued? I give them a piece of paper to go to a house. What do they do with it? Do they find an excuse not to demo it, or do they demo it and get the job done 40% of the time? you know, so, um, the next problem that I had to solve in my business was my cost of marketing was going up. So, my return on ad spend is is is going is going down, right? So, cost of marketing is like a percentage of your P&L, right? ROAS is kind of how you look at it in the marketing world, which is if it's going down, that's bad. It's inverse. So, my cost of marketing was going way off benchmark. So, we were going like, it's supposed should be 15% for me in my benchmark. We were like up over 20, and it was ticking up, and I'm like, "I go to my sales manager. I'm like, "Hey, like, we got to solve this. We're our our appointment set rate is going down, down, down, down." He was overqualifying leads. We were overqualifying people on the phone and only setting the best appointments instead of setting as not as many as possible, but like opening up the aperture to get our guys more opportunities to sell. So, we were really focused on this like 55% close rate. NSLI is super high, but I'm like, but my cost of marketing is continuing to climb. And it was because we were overqualifying leads, and that appointment set rate was not where it should be. And so, I'm looking at, man, great close rate, great NSLI, I should be making more money. What's going on? Well, we're setting less and less appointments over time. We're getting too prescriptive. Um, we're generating a lot of sales resistance on the on the set call with people. We weren't using good scripting, and we weren't we weren't willing to innovate and change. And so, I ultimately made a change at the sales manager position because we kind of couldn't solve that problem, and I expected him to help me solve it. And was he overqualifying leads so that he would show a good close rate? Exactly. 100%. I will say, regardless of what his, you know, his intent was, you know, in the back of his mind, uh, Ryan failed to set the appropriate incentives, um, so that everyone was aligned in the right way to to to achieve the best results. And I fixed that, um, is is how I'll, I'll phrase that. And you fixed that by removing this person. There were coaching conversations around it. There was some attempt at, uh, uh, incentive tweaks that ultimately didn't didn't land well with this person. And so, and then there were some coaching conversations around, "This needs to improve." Because the mantra was, "Well, you just need to spend more money, and then we'll sell more jobs." And I'm like, "Yeah, but I can't spend money when my benchmark, you know, when the P&L line item for marketing is is going through the roof. You're making money, the sales reps are making money, Ryan's not making money, the business isn't making money." So, um, it, after coaching conversations and trying to get it, the kind of the "not broke, don't fix it" mentality was really shining through. And one of our core values is innovation. Um, and so, "not broke, don't fix it," and innovation don't really don't really, uh, meet well. And so, it was kind of like a lack of core value fit at that point, and the unwillingness to, uh, the the lack of, uh, willingness to to move the needle on those things because, hey, if it's not broke, don't fix it. Well, it's it is broke. Our definitions of broke are different. Your close rate and NSLI is high in your mind, but what really matters, the P&L, the bottom line is way off, and it's broke. And the reason is because of the appointment set rate. And if you're not willing to work with me on how to fix that, I'm going to have to find somebody who does. And that's ultimately what we did. And then overnight, overnight, we had the first $1.2 million month, the month I, the month we made the change. So, I was right. I was right. You know, we were leaving, and Jim Williams out of Arizona told me this, and it always resonated with me. He goes, "I think you're leaving money on the table. Like, that close rate and NSLI is too high." He's like, "It's great, but he's like, it's just too high. Your appointment set rate is probably too low." He was telling me, he's like, "You're leaving money on the table." And I always thought about that for like a year until I finally made the change, and he was right. I was leaving money on the table. We were,

Ryan, I I recall, I think on this point, a line that you said in the in our pre-call, "The best salesperson is not necessarily a good sales manager." Was that encapsulating this very thing we've just talked about? I think so. Yeah. Yeah. And also that a bag-carrying sales manager doesn't necessarily have, I say bag-carrying like actually goes out and sells as well as leading the team. Uh, the incentives aren't aligned well there. You know, they can, quote unquote, whether they're doing it or not, poach leads from their, like, they're incentivized at the end of a month to go out and just sell themselves to bring the business in as opposed to selling through their team that they're building. And so, there's a lack of incentive there of like, if the only way the sales manager makes money is if the team does well, that's probably good incentives. If the sales manager can still make money and the team's not doing well, that's probably not a good situation, and that's the takeaway. Yeah.

All this digital marketing, were you doing it yourself, or had you? I think one of your team now, you mentioned earlier when you said when you described the org chart, there's a digital marketer. So, was it always a third-party hire, or were you learning digital marketing yourself? I I did the thousand hours on YouTube and all sorts of different courses, Coursera, and all that stuff to to really deeply understand it myself. And I started my own campaigns, you know, inside of Meta, you know, Facebook and Instagram, uh, on my own. Um, edited those videos, uh, myself with CapCut. Took the class on CapCut on YouTube, got it all edited up, vertical video, dropped them in there, and started getting leads like crazy. People like seeing my face, people like the value proposition I put on there. I had fun writing the ad copy and, and the scripting, and, um, you know, I after I did it and kind of proofed it out, uh, I realized I was like, "Hey, I probably need to find a third party that can help me scale this and maybe has a little more, you know, time to to go after and figure that out." And I did. I've gone through a few agencies since then, landed on a really good one that I've been working with now. And, uh, and but yeah, I, I, this is I'm on my third agency. I've fired two, um, taken it back over myself, gotten it back to where I want it, and then handed it back over a couple times. So, I I feel pretty confident in my ability in that realm these days.

Well, well, let me and let me press you on that, Ryan, because like like with anything here in our world, it's like you, you know, not only capital allocation, but resource allocation, your time allocation. Um, why did you think that learning all that stuff yourself, really getting in the weeds of marketing was a good use of your time rather than outsourcing it? Now, we know the end of the story that you've outsourced it a number of times, and they just haven't done a very good job. That's part of the reason, but you didn't know, but but you didn't know that at the time. But you didn't know that at the time. And it's just there's a lot to learn today in digital marketing. It is its own function. Yeah. Um, I would I would say this. I would say the biggest driver for me going out and figuring out myself was that the big dealers, Danny, Jim, the guys who are doing Arizona, you know, they were saying, "You can't sell Facebook leads," or they're not they're not high-quality leads. They're tire kickers, or whatever they're. And so, I'm hearing that and I'm going like, "Okay, I take that, you know, with a grain of salt. I I just don't believe that." And so, I know they outsourced their stuff, and I was like, "Maybe outsourcing it is the problem. Maybe they didn't understand what the third party was doing." You know, because when you're managing TV ad buys, like after doing that for 20 years, you understand, you know, oh, if if I'm not, you know, doing it with the nightly news, and it's like, you know, it's crap spots, like they can, you know, they understand the nuances of buying media, right? And so, they can hold a third party accountable to like, "Hey, I'm not seeing, you know, I'm not seeing it when it should, like, what do the logs look like?" Like, they understand all the internal workings of that. You need to understand the internal workings of performance marketing. You can't just rely on those people. Um, you have to understand it yourself. And so, I wanted to go understand it so I can hold potentially a third party accountable someday to, um, what what I know. And, and what I found is that every third party is just trying to get you the lowest cost per lead. And they'll tell you they're doing a good job as long as they're producing you the lowest cost per lead. The lowest cost per lead is is not the metric. I hold all of my third parties accountable to cost per appointment set. How much did it cost me in marketing to set an appointment? Because if I if I if I set an appointment, we've got them on the phone, so we we have good contact, so we we've talked to the person, they have a need, they have a want, they want our, you know, they our our thing can solve their problem, and they're willing to set an appointment with us. That's a qualified lead, right? And now I could potentially send a salesperson out on that. So, if you're just driving to the lowest cost per lead, and you have no idea what your set rate is or what your cost per appointment is, like, what are we what are we really driving towards? And so, all of my agencies that I that I use, I talk to them about cost per appointment based on the medium that we're buying, which is which is a qualified lead. Qualified lead, cost per qualified lead. On the e-commerce side, it's really easy to track that. They're very used to tracking that, you know, with all the interconnections with, um, uh, what's what's it called? Like Shopify, like connects directly with Meta. So, it's really easy to see all the different steps of your funnel inside of Meta. With a home service business, your CRMs aren't connecting in a way that's that's allowing you to see an appointment set, a demo, a sale inside of the Meta platform. You have to use other other tools to be able to see it. Marketing agencies that are helping home service companies aren't used to seeing aren't used to that requirement from a from a business owner, and that is my requirement. So, I had to help them solve that problem and figure out how do we how do we see what our cost per appointment set is? Like, is your CRM doing the right thing? Are we giving Meta the feedback loop? Um, optimizing a Meta campaign on a scheduled event versus a lead event or a demo event versus a a scheduled event, it helps drive the algorithm to find more of the people that you want as opposed to just saying, "Hey, lowest cost per lead," and you're not generating any sales off of it. So, a lot of a lot, I mean, so many lessons learned there. Um, and I'm still learning.

Uh, Ryan, you know, the the thing about you learning digital marketing is that as we have, uh, as you emphasized before, you are a marketing and sales organization. So, so you are really, it, the owner should have a very deep understanding of what the the other lifeblood of this business is, which is the funnel optimization. So, um, it, it, you know, in some sense, it was an an incredibly valuable use of your time, not something to be outsourced when function number one is funnel in this business. Absolutely. Um, the other big lever you pulled, and we still got a couple minutes here, Ryan, you cool on time? Absolutely. Keep it rolling. Awesome. Because there's some some some great topics here to hit. Another big lever in your growth has been territory acquisition. Mhm. Talk talk to us about how that unfolded and how it moved your numbers. Yeah. So, that was part of the core thesis as well when I bought the business. One of the big ones was performance marketing. You know, transitioning to lead gen through that. That was one of the big core thesis. The second one was, uh, territory acquisition. Um, so, you know, when you buy a business at a multiple that you buy it at, and you take a loan, like, you got to have some growth, you know, some some some growth, uh, aspirations if you want to be able to service that debt and maybe make a little bit of your own money, right? So, um, that was always part of it. Uh, I kind of set a 24-month goal for, uh, moving into an adjacent territory or growing into a new market. Didn't know which one it would be exactly. There was somebody to my south in Orlando that I knew was not doing a lot of business, despite Orlando being like a 3 to 4x size DMA relative to Jacksonville. Um, and so that was kind of like in the back of my mind, like, "Hey, maybe I can buy that guy out or whatever that looked like down the road." Um, and so I set a two, I set a 24-month goal for that. And, you know, I ended up meeting that guy, uh, at a dealer meeting at the end of TW, at the end of my first year, and started talking to him about it. We started texting because we're adjacent territory. Um, and just kind of struck up a relationship with him. Was really trying to stroke his ego, like playing this, um, like subversion game. My my Green Beret friends would be proud of my guerrilla warfare on this guy, like getting him onto my team. Um, because when May came around, so less than 12 months after the acquisition, I had teed it up and gotten this guy so excited about like retiring and moving on to his next thing that he offloaded his territory to me for like pennies on the dollar relative to what I got Jacksonville for. Um, and so in May of 2024, I bought that business for 250k. Um, and, you know, my manufacturer helped me out a little bit with with that, uh, acquisition, and, and, yeah, and, you know, kind of advertised out some some some earnout stuff over time and got into that for really kind of cheap. So, I I basically like 3xed my customer base, uh, with a, you know, a 10% investment relative to my initial one. And that's Wow. Yeah. And on top of that, Wow. And and on and and on top, well, sorry to interrupt, what was his revenue? Um, I mean, understanding that he wasn't, he wasn't, you know, he was not fully actualized there in his market, but it was like, so what was his revenue? He had done like 3 million over two years or three years. Like, I was buying a piece of paper. I wasn't, I wasn't buying, like, I didn't buy any paint tinters, mixers from him. He didn't even have that. He was still having like a factory like do it separately, a third party, like he wasn't running it like a real business. So, I I literally, I like, basically acquired nothing but a piece of paper. That was it. There was no, there's really no brand equity in that market either. He wasn't doing a lot of marketing. He was actually poaching a lot of my leads, which was a totally separate story. He was coming up into my territory and and running leads that they were landing on his Google business profile because they were like closer to him, and he would just go run those leads instead of giving to me, which is what we're supposed to do as part of our dealer agreement. So, there was all sorts of weird stuff going on, and that was just, it was really an opportunity cost thing of just get them out of the way so I can get in there and start marketing there. And we've blown that market up big time. Um, so, well, this is one of these, this is just one of those where it's like, you had at this point, you had the sales, the sales playbook dialed in. You had your funnel dialed in. It's just now it's just like, let's turn on more acquire or turn on more markets, and you can just rinse and repeat, right? Or do I oversimplify? No, you're not oversimplifying. That's that's basically exactly what it was. And the funny thing was, as soon as we did that, almost overnight, we were getting adjacent and spillover leads from the Tampa market because, you know, with performance marketing, you can't target like only people in that DMA. Like, if someone drives from Tampa over to Orlando and back that night when they're sitting, like, if they've driven anywhere along I-4 that's touched the DMA, like, they're going to get bleed-over things. So, we were starting to get leads in Tampa. And so, I called the manufacturer, and no one owned the Tampa market at all. So, I was like, "Can I just like ink that too as part of my new ter, like, I mean, I'm already getting leads, so why don't I just turn it on over there?" And we just inked the deal. So, I ended up getting Orlando and Tampa almost at the same time last June. So, June 2024, and started marketing in both those places, hiring sales reps in both those locations.

So, so Ryan, why for somebody listening here, um, you've given us, I mean, you haven't, you know, given the playbook in excruciating detail, but high level, what you were doing wrong, what you're doing right now, what Danny taught you, what you've what you've taught yourself in marketing, and funnel optimization. So, somebody listening who is attracted to running a marketing sales organization, it's a good business buyer fit for them. Um, why should they go try to buy their local their local Rhino Shield dealer? Yeah. And or call the manufacturer. It's pretty. Call the manufacturer and, um, and say, "Hey, can I get a terri What territories do you have that are available? Can I, you know, can I sign up?" Um, Oh, man. I better get a finder's fee if they get any good dealers out of this, uh, out of this podcast. Yeah. So, that that kind of that really, and it's a serious question. Um, yeah. Um, yeah, I mean, I I think Rhino Shield is a great business. Um, you know, when I looked at investing in a business, I I wanted home service. I don't really know why. Like, I had invested in real estate. We've done home flips. I was I just kind of liked home services. I I like I like that idea. Um, I wanted it to be high ticket. So, I knew I wanted it to be an expensive thing. Scarcity, you know, uh, premium, right? Premium positioning, like all the stuff that Hormozi talked about, I had read the book. So, I like wanted that. Uh, and I wanted to have high differentiation, something that's different, and Rhino Shield checked all those boxes for me, uh, to be able to market and sell. Like, if I was just selling regular paint, you know, competing on price with other painting companies, that that that wouldn't be as exciting to me. Um, and so those those three things are what makes Rhino Shield a cool business. And there's probably other businesses out there like that, you know, selling, Yeah, um, high ticket, high differentiation home service products. Um, and so any one of those, I think, could be great.

And and how, Ryan, could somebody convince themselves because obviously this all hinges on there being enough demand in a market for Rhino Shield. So, we don't have to get into like, you know, what terms you're bidding on or or what have you, but how can somebody get comfortable that there would be enough demand to turn on a digital marketing funnel and start getting leads in their market? You know, that's a good question. You know, Jim's run the playbook in Arizona, not as much with performance marketing. He's he's like the radio TV ninja. I don't know how he still produces the amount of leads he does from TV. Like, I've run almost the exact same ads, just with Florida homes on it instead of, you know, Denver homes or whatever. And I'm just not nearly producing the same amount that he does. So, it, it's, it's market dependent, too. But, um, the the Oh, that's a key point. That that's a very important point that it is market dependent. So, so what works for you in digital marketing in Jacksonville won't necessarily work for me up here in Northern Virginia. I mean, I I hesitate to say that it's like going to vary that much. Like, the guys, the guys in Boston, their their cost, their ROAS is through the roof. Like, their their performance marketing campaigns are, I'm like, "Dude, how do I get the cost of marketing that you guys are getting?" when they turn theirs on. So, uh, I think there's a messaging component there. I think there's a brand awareness component. Like, they've been there for 20 years. So, when they turned on performance marketing, like, people might have seen them on TV or radio, and now it was like, "Oh, there they are again. Let me, let me, you know, the call to action's there." So, it's so nuanced. I think it should work and could work anywhere. Um, it, it's really the ability to follow through. One, to track the data. Is it working or not? What is my cost per appointment? Is is everything in my marketing spend and funnel aligned with the P&L line item and and the marketing spend? Is it all lining up? One, and what is? And being able to like track that and see that quickly and make a decision on that. And then two, the leads are going to come. You got to be able to sell it. You got to have your program in place. You got to have the the sales program in place. You got to have your pricing locked in. You got to have good salespeople that know that know what they're doing and know how to close, uh, you know, at a at a good rate, 40, 40% you know, or, or, or higher. Um, you can produce all the leads you want, and you will in whatever business that you're trying to do, if you don't have a good sales program to follow through with those leads, you're you're not going to make money. You know, you're almost go out of business like me.

One other thing that strikes me about Rhino

Shield and and your digital marketing here, Ryan, is that we hear in home services, particularly in the in the hot and very crowded home services like HVAC, plumbing, that those are very competitive online, that everybody's just killing each other for for leads. Um, and that those industries all recognize that it that that it's all about a basically digital lead generation game. Um, and so and there's a lot of private equity in that space. So there's a lot of there's a lot of money that can just out compete you on, you know, bidding for leads online. Doesn't feel like it feels like this is still uh a pretty unsophisticated market to compete on digitally, which is happy for you.

Yes. No, absolutely. um you know and I would say that a lot of those um you know you can leverage like a lot of demand um demand capture platforms like Angie and all those other things for for potentially even HVAC and and other things like and bathrooms and doors and windows and stuff with with our business those things like don't really work because people are looking people who are on those platforms are looking to compete on you know for businesses that are competing on price and so Yeah, we've positioned ourselves as like just something different. We do see other painters like doing the digital marketing thing and it's awesome. They're doing a really good job at it. Um, so but yeah, I I would say yes, it's it's relatively uh unsophisticated. Like you'll see the the big franchises are kind of doing it now and they have a little bit of a playbook for it. Um, but at the end of the day, we have a different value proposition than them. So someone sees us, they're seeing those same painting ads, they're in the market and they're going, "Wait, 25 year warranty? What's this about?" the insulation. Oh, you know, kind of weather proofing, hurricane proofing. Um, let me call those guys, too, you know, and so it gives us a chance to get our foot in the door and and show show who we are.

Great. Ryan, close us out with the the vision looking forward. So, where do you think you can get this? So, so let's first of all, 1.2 million understanding that maybe you're not going to do that every month from now until eternity, but that is what that would be 14 million 14.4 million uh if if annualized. if you hit that. So, you're probably a $10 million business now. Fair to say.

Yeah, we're shooting for 10 million by end of calendar year. Um, but $1 million kind of the floor now with our program. Um, we're moving into West Palm next week. So, um, excited about that. And we got some other potential like kind of minor acquisitions, other territories that I won't mention exactly where on on the podcast, but, uh, we'll we'll be in a couple new markets here uh, in the next six months, I think. So, I'm pretty excited about that.

And are you thinking are you just thinking, you know, 6 months and a year ahead or are you thinking do you have a grander vision here for five and 10 years? Um, I do have a grander vision. You know, I we we want to be the largest uh you know exterior home coding company in the in the country. And so, that's our 10-year vision. We run the EOS model. That's what's on our vision uh vision tracker organizer for that. For anybody who runs EOS, uh that that is what it says on there. And um how how we get there, what that looks like, you know, do we franchise out our platform, you know, under the manufacturer? That's been an idea. I don't I don't know. Or do we just bring it all in house? Like look at Premier Home Pros. Um those guys are those guys are building a you know a Westshore Homes like behemoth like basically overnight, right? Or so do we just figure out a way to keep it in house? Um and I I don't know. We don't know exactly how that's going to play out. We have some ideas, but it just starts with really hammering in on the processes. We just rolled out our brand new sales training process with our first class. And you know, guy went out yesterday and he's one for one. He closed right away, right? So, like developing a repeatable process for training our people, whether it be in the op side or sales side, is like really what we're really focused on right now. And once we hone that in, that'll give us the ability to scale. And uh so TBD, we'll see how fast we can move.

Cool. Well, really exciting the progress you've already made, Ryan. Uh especially just having to to go from a a big decline and um some fetal panic to to figuring out what was broken and and correcting it and being off to the races. Thank you for sharing it with us with such transparency. If people want to reach out, is LinkedIn does that work for you?

Yeah. Yeah, LinkedIn's great. Would happy to connect with everybody. I'm sharing a couple nuggets now and again, u mostly on things I screwed up. So, if you like hearing some of this stuff, I'll share some stuff on LinkedIn. But yeah, please connect with me, DM me. Um, I'll help out where I can.

Super. Ryan Adams, thanks a lot for coming on Acquiring Minds and congratulations again.

Thank you, Will. I appreciate it, man. Hope you enjoyed that interview. Don't forget to subscribe to the Acquiring Minds newsletter. We send an email for every episode with an introduction to the interview, a link to the video version on YouTube, and soon key takeaways, numbers, and more essentials from the interview for those of you who don't have time to listen or watch it. Subscribe at acquiringminds.co. You'll also find all our webinars there on the website, both those we have coming up and recordings of past webinars. At this point, there are over 30 webinar recordings, a wealth of information on all the technical nitty-gritty of buying a business. acquiringminds.co