My dad started this company almost 15 years ago. From what I gathered, he is doing ~$5mm in revenue and can hit post-tax profit of ~10-12%. He appears to hate his life and the insurance companies mixed with the home owners angst is a lot. He says he is hitting a stride with B2B business (property management, etc).
Pros of the business: my dad is great at tech and organization. He has updated all the systems and appeared the company is running well. It is hard for me to pass up at my age (29) the potentially of owning/running this company. I am currently doing corporate and doing it really well, but getting an itch to make some real money and eventually get out.
Cons: the business is not where I live and I love where I live. I do not have kids, but very stable relationship and we own in NYC. My dad is a horrible manager. I know most of his problems arise with his inability to emotionally manage a team. Also, I hear the restoration business is just horrible to begin with.
Questions:
- Anyone have any experience dealing with a successful restoration company?
- Is this something I am being naive to not take over and capitalize on this?
- I have construction experience, but I am now very very white collar and live a bougie corporate life. However, I flipped my own properties and use to own a paint company in college. I also feel my management skills are extremely good in comparison and I have experience building amazing teams. However, that is with my corporate overlords providing great talent. Am I totally naive on the work of this?
- Is selling a restoration company even feasible? I am seeing it is mostly franchised and I do want to build it to a place that is worth selling. However, I don’t know if this is a market that works that way?
- I also see climate change as a headwind in this industry and potentially a reliable way to keep business coming in….
I am happy to answer and all questions. I would love all input and thoughts.
Thank you
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I had a client I worked with for a few years and one of his businesses was fire and water damage restoration. This business occupied most of his time.
You need lots of vehicles and equipment that requires constant cleaning and maintenance. It’s shitty work. Expect high turnover.
You are correct. There is consolidation and many franchises.
Can you sell it?
It’s easier if the business owns its premises. Otherwise, it’s all about financial history and free cash flow available to new owner.
Your company will only be as good as the man doing the work. Get a right hand man and pay him GOOD. Most white-collar people can’t understand that the laborer is doing the hardest and most important part
Water and flood restoration?
Right now there are PE companies buying restoration franchises - probably private companies too. Hard to say if this will still be a hot market when you’re ready to sell. In my experience an owner has a lot more control to build and grow a company than they do to sell it - till you get up above 50M revenue. So here’s how I’d think of it.
You’d be giving up a lifestyle you like in a place you love.
Unknown how the move would affect your SO and your relationship with your Dad (sometimes taking over Dad’s company changes things a lot - sometimes not).
The benefits are you’d get to scratch an itch of getting your hands dirty. And maybe get a chance to strike it rich if you grow it and sell it. You didn’t say if your income would go up or down right away. Does Dad’s post tax profit include a salary to him? If not, that needs to be factored in but it’s also a pink (maybe red) flag that he’s playing fast and loose with the books.
They say there are 2 kinds of jobs - one you take a shower before work and one after work. $5M in construction is some of both but be ready to be in the field. You’ll make more? less? than you make now? Some of that depends on the arrangement w/ your Dad, if there’s debt to pay etc and how well he keeps the books. If you nor he have ever bought / sold a company before there’s a lot of things you need to pay attention to for it to be “fair” things like who owns the AR and AP? How will you deal with maintenance of equipment if he’s been deferring it? What if employees decide to leave? It’s not a clean as buying a car or a house.
I work with a searchers who come from PE or banking and buy a blue collar company and it’s a real culture shock. It can be quite lucrative - at least after the loans are paid off but there are a lot more things that you can’t control. And it often gets worse before it gets better. Happy to have a 1:1 conversation - DM me if you want or email john@CEOBootCamp.com
As someone who has done and is currently doing exactly this I would encourage you to stay out of it. I took over my dads business from him in a similar field and it’s is extremely taxing on the family dynamic. Also ignore anyone telling you to hire a manager it will need to be driven by you to be profitable. For a number of reasons I would strongly encourage you to make your own way. Feel free to do me for follow up.
I own a remodeling business, my former business partner moved to Texas about 15 years ago and started a restoration company that does extremely well. He’s asked me to come be apart of it several times but my whole family is here (in VA). While I don’t make nearly as much as I would there, leaving everything I know and live behind for more money isn’t what I think will bring any happiness. As far as business goes, running a company takes a lot of business know how, which he has, but one of the most important things I learned from an old school contractor in my town years ago, was that to be successful, you have to know your limits and admit when you aren’t good at certain things, and hire people that do know those things. Next, customers will always be a pain in the ass to some degree. Every now and then you get the unicorns that just love everything you do and give you no problems along the way, but they’re few and far between. With the experience you have, if it were me, I’d at least consider becoming a part of it, bc to answer your question, selling a restoration company is absolutely feasible, especially with a good name and reliable employees. Tough decision, but it seems as though you could potentially come in as the management your dad needs.
I don’t think you should take over the business. Firstly you know nothing about it. Secondly you have to give up whatever you are doing now to do it and I think you will resent it.
Working in corporate is great because you have a fixed role. You just do that role and everything else is someone’s problem. Being a business owner for a small company means all the problems are yours. That’s likely the reason why your dad hates it.
My advice is either hire/promote someone to run it or sell it. I am leaning towards selling it.
Depends where the business is in. If in Florida I would just sell the biz. Lots of states getting strict af with insurance billing.