Trice, a twenty-something from Dorchester, Maryland, on Maryland’s Eastern Shore, in the 2+ years since beginning his business has amassed nearly 900 Facebook followers (with 4.5 star-rating), over 1,000 clients served, and a revenue base with margins far exceeding his expectations. He has two full-time employees and is recruiting two employees for current and near-term projected business. He expects to continue to add employees because of future business growth. From beginning with a pickup truck and small trailer, his equipment investment now includes a custom-built flat bed, a custom-built pickup truck and a 16-foot box truck.
The on-line registration for SCORE services began as most. “I have just started a power washing/roof cleaning business. I offer house washing, roof cleaning, gutter cleaning and brightening, deck staining, residential/commercial concrete cleaning, and truck fleet washing. I am looking for advice and help with writing a business plan, setting goals, and growing my business.” So began Eric Trice’s foray into entrepreneurship.
Trice had been employed as a full-time employee of a construction company. He had an arrangement that allowed him to do pressure washing on the side with some flexibility in his core hours at his employment. At the time he was billing enough that provided a good second income but it was significantly less than needed for him to justify leaving his employment and committing to the new business as his full-time work. His early question was “At what time can I logically transition to my own company and make the leap from my steady job?” Based on Trice’s personal needs we calculated that if he had visibility for replacing at least half his income within a few months and with a good growth pipeline, he would make the jump. He made that jump in May, 2016.
Following Trice’s success in applying his energies and acumen to growing the business through good sales, marketing and service, he had to find other employees early-on. As is typical of many of the businesses that rely on unskilled employees, he has struggled to find talent with personal skills, work ethic, and ambition to match his expectations. Staying true to his emphasis on solid customer service, he has only hired employees who share his enthusiasm for the business and his commitment to service, expecting that sustaining growth through high-quality service is more important than revenue growth that might not be sustainable based on high-quality service. He pays more than prevailing market wages for ‘like’ jobs.
Because Trice needed confidence he could do this business full-time based on expectation of revenue and cash flow, we constructed a budget that focused on his business lines by type of job and volume he had done historically and his projection as to what he could generate if he devoted full time effort to his business and implemented the sales and marketing efforts. By the end of 2016, a year and half after making the jump, he had generated revenue that was 325% MORE than his run-rate at the time of his transition. For 2017 he continued to see exponential growth as he has in the first half of 2018. His expectation is that based on the current run rate he will end 2018 grossing nearly 600% of his full-time salary prior to starting his business. After just two years of operations, cash generated from his business is sufficient to provide an income that is a multiple of his previous full-time job, free cash for continued investment in more equipment, and working capital for additional staff to accommodate growth.
He has growth in business sufficiently that he needed to break out residential from commercial clients for marketing and service focus and has considered venturing the residential line with an employee, selling a portion of the residential business, or monetizing all of the residential line allowing him to focus more on the higher-growth commercial line. He and French discussed various M&A considerations including valuations, risk, control, transition structure and other transaction considerations so that Trice would be able to move in a direction that affords him flexibility in deal-making yet mitigates risk through various covenants to be built into a deal.
Trice’s request for mentoring was sent to Ed French, Eastern Shore Assistant Director and mentor for the Mid-Shore Chapter that includes Dorchester County where Trice’s business is based. According to French “I saw at our first meeting that Eric fits the profile of a potentially successful entrepreneur and engaged SCORE client. He had a passion for his work, was very customer-centric, by experience demonstrated a strong worth ethic, articulated a vision, and could conceptualize how the business model would develop. And, he clearly showed ambition as well as having generated some income from part-time entry into his new endeavor”.
The first session was by phone with Trice describing his vision for his company and his business anticipated business model. They reviewed the essential business plan components that most directly affected his potential for success. Within a week he sent French a draft of a business plan and a day later Trice was returned a marked-up draft with recommendations that clarified the business model, competitor analysis, customer acquisition, and marketing plan that dealt with sales and marketing. Discussion regarding the operations and business followed the conceptual construct as both knew this not to be a working capital- or major capex-intensive fixed business at start-up because he already had the essential start-up equipment and he was the sole employee. The variable-cost items represented a single-digit percentage and was not material, thus the focus on revenue and managing fixed costs with growth. The focus on sales and marketing recognized that the competition is keen in this business because there are no barriers to entry. Anyone with a pressure washer and a means of moving it around could get into the business without much capital and little risk. They endeavored to position Trice so at he could create growth and sustainability through a strong business acquisition and retention model that focused on assumed good service but outstanding sales and marketing. Trice had created a brand with an image, including trade name and visuals.
Following extensive email exchanges to refine the business plan Trice and French met to review the plan and get into the details of a customer pipeline analysis, the SCORE financial projections worksheets, pricing consideration, margin analysis, construct of comparative analyses, and related operating considerations for him to work on as a home work assignment. They did sales role playing for cold calls and reviewed direct and indirect sales methods, specifically planning for a carve-out every day for handling new and follow-up sales calls to be sure they didn’t get lost in the milieu of Trice doing the work and not dedicating time to business development. Trice stepped up to the plate with attention to details and time management so that he could focus on the carve-out time for sales and marketing and ample time for getting the work done.
The story for Eric Trice and Absolute Pressure Cleaning is a relatively new story, but after just two years it is a solid growth story that has potential for exponential new business. As he continues to grow his revenues, add employees, and equipment, Trice is confident that he has in a short time created the sustainability that was the goal in the beginning. According to Trice “Beginning a business with no business experience is a challenge and risk. Having SCORE available to lean on for guidance and support, and as a sounding board periodically has provided the ‘how-to’ and the encouragement that made my story a good one. I am excited to see how the next several years develop, expecting continued exponential growth in business and my employment base.”