Business #10 was flat out a business of opportunity. My mentor had seamless gutters put on his home and during the process he asked the installers about the business. The foreman explained that they pull a trailer from job to job that extrudes rolls of flat aluminum into gutters of custom lengths. These gutters are then installed on the spot. One crew can do two jobs a day and bill out up to $2000 a day. This seamed to be a low overhead, easy-to-operate business. After that discussion with my mentor, I was on the lookout for a gutter business.
Not long after this, I was given a tip that someone was interested in selling his gutter business. I was not told the identity of the potential seller so I had to cold-call some businesses in the area using information from the contractor’s licensing board. I eventually identified the owner that was thinking about selling his business. His response was, “Maybe, but not yet.” He wanted out of the industry to pursue something else, but his new venture was not up and running yet. I stayed in touch with him for many months, calling occasionally to see how his new venture was developing. I even had him replace gutters on my house and I was impressed with the crew and the quality of the work.
After 8 or 9 months, the owner called and said he was ready to sell his business. Given that our relationship was now quite strong, the negotiations went smoothly. We did the typical 50% down, 50% over 5 years at 6%. The matrix was 65/0/15/20.
At the time of the acquisition we did installations directly for home owners and also teamed up with roofers to sell new gutters with the new roof. I hired my new son-in-law to manage the business and he landed Home Depot as a customer, which increased sales by 30%. We added another gutter machine and a second crew to keep up with demand.
Things were going well until the housing market crashed. With falling home prices, people were less motivated to make improvements to their homes. Home Depot started to put the squeeze on their wholesale contractors, which left us with little or no margins. Things looked pretty grim for a while, but the market is recovering and things look much brighter for East Bay Gutters.
Interestingly, after my son-in-law moved on to go to law school, the old owner came back to work as a manager. His venture did not turn out as he planned and he was looking for a job. He worked for me for a few more years before finding another job.
The business has had its ups and downs, but it really turned out to be a neat little businesses that can be expanded. We are looking to reinvigorating the business even more with a new marketing campaign.
Keys To Success
- If you can, take the business for a test drive
- Patience will save you money
- Quality relationships always prove to be valuable