Rich Jordan | Strongpoint

SMB lesson:

Day after acq. announcement, heard rumblings that our senior plumber felt job-insecure and betrayed by the transaction.

Big problem when my largest vulnerability is the skilled trade talent.

Was giving a friend a 2nd set of eyes on his biz financials today.

$8m rev HVAC business
25% gross margin 😬

3 business units, but all financials blended:
New Construction
Commercial Service/Replace
Residential Service/Replace

Looking at the margin number, I assumed the business was primarily construction. Had to be.

Q: "What's the breakdown of revenue here? How much is NC?"
A: "1/3rd"

Whoa. So two scenarios then:

A) he has A LOT of work to do on the service/replace side to get margins to a reasonable place

B) if we assume that service/replace is at a ~40% GM, then that part of the business ($5.4m) would be generating ~$2.2m of GP before NC. That's 27% of total revenue. And $200k above where blended GP is sitting. So what is NC doing to drive total GM to 25%??

Q: "How much of your office staff is dedicated to New Construction?"
A: "Most of it."

He's got some homework to do to break out the financials above GP by business unit and to make sure NC work-in-progress is accruing properly, but damn.

$6m revenue HVAC business we recently acquired was missing 55-60% of inbound phone calls on any given day. ~1,500 missed calls per month.

New cars, homes, and babies are the sign of a confident team.

The nation, 25 years ago: