I get this question a lot and the truth is there isn’t just one reason. It was several factors that all came together at what I felt was the perfect time. To put this into perspective, this was not our first offer. We have had regular offers since 2014. Some were good and some were ridiculous. By 2019 I was pretty confident I could sell at any point and time.
At the same time RCS was eight years old, AG was six years old and FBV was three years old. I started them from scratch with zero customers and zero employees, and had built them to a modest size. We weren’t focused on aggressive growth, we were focused on taking really good care of our clients, keeping the business profitable, and not stretching our resources thin. We had zero debt, paid for all our inventory when we received it, and had cash reserves. The business was running well. At the same time, we were getting to the point where we needed to consider borrowing money to grow. To continue to grow the business at this point would have been expensive. We were a two-truck company and were soon going to need a third truck, a third driver, and a layer of management to help run the company because I was being stretched too thin. The cost to pick up customers can be very expensive, especially on the market and vending applications. I had a couple accounts in the pipeline that would cost us almost 100K in new equipment. That’s 100K in cash just to buy the equipment to install into two customers. I was preparing to spend a couple 100K on equipment, people, assets, and inventory. On top of the need at that point to grow more to generate more income. Which would have meant a salesman and even more cash out the door to buy more equipment for the new accounts. No, don’t feel sorry for me. This is just how business runs and I was in an industry that while profitable, requires a tremendous upfront cost to service customers and you make your money back in the long run. We were just on the bubble for our current resources and borrowing was realistically the next step to do that.
I should mention I hate borrowing. I started my career in 2007. I saw the good times for a few months and then I saw the economy completely buckle. I saw good long-standing businesses going under. Not because they did anything wrong, but because their customers disappeared. There was little they could do and that was before they needed 15 trucks all with big payments. They also needed to buy to 50,000 sq. ft. warehouses, and they leveraged their inventory and everything else because that was the smart move. But then there were no more customers, and they still had the big mortgage, they still had to pay for the stockpile of inventory and equipment, and they still had to make 15 truck payments. They could reduce payroll, but they were stuck with debts and that was the end of a lot of businesses from 2008 to 2012. They did not run the business into the ground. The economy collapsed. I watched a lot of good business owners brought to their knees during this time. At the same time the people with no debt and cash were making a killing. Buying businesses and real estate for pennies on the dollar. But no one could take bank loans to make that happen. You had to have cash. All that to say I am really against debt for that reason… I live happily knowing if everything goes to crap I’ll be fine. My cars are paid for, my house is paid for, my business is debt free… everything can go bad and I’m still okay.
I will admit I did try to hire a few people to step up and actually run my businesses. I attempted to train and hand over the reigns, but none of them were capable. Either for lack of motivation, lack of integrity, or simply lack of natural talent needed to be a small business executive. So combine the failure of me to hire a quality manager on top of the complete and utter fear of debt, tied into the need to take debt on… The clear decision from a pure business standpoint was I had taken this business as far as I was willing to take it as a solo owner and executive.
On the personal side, a dad has to factor in his family. Financial stability, what is next for my career. Will the family be okay if I were to sell? We were. Financially we are 100% debt free. The house has been paid off for a few years. Retirement has been funded, our kids’ college is funded. We have a solid cash reserve.
As far as a future career goes, I’m 32 years old. I have about seven ideas a minute for new businesses. Most of them suck, but a few are good. We know as a family I will always be able to do something to at the very least generate a living income. Realistically more than just a living income. I have always wanted to dabble in real estate. Buying and holding commercial properties and rentals. Maybe a beachfront house to rent out since we live in a beach town. Now we have the cash to make that happen. We can buy properties and/or fund the next business idea with cash. And of course a 100% DAD forum has been on my mind for a couple years. So being able to invest the resources and time into creating content for the brand feels almost like a calling.
We talked it over as a family and one of the thoughts that went through our heads was the ability to travel. I don’t mean vacation… but really travel. Explore the country and really get to dig deep into the vast array of geography and history our country has to offer. That was always kind of this nice fantasy to be able to do for us and now it is a real possibility. Again I go back to timing. At this point in our lives our kids are three, six, and nine. By the time we leave in the spring the three year old will be four. So from the kid perspective the nine year old is not yet in his preteen or teenage years where it would be harder to rip him away from his social roots and the youngest will be old enough to actually remember a good amount of what he sees. We really felt like one to two years on the road at this stage of our lives, while we are young and our kids are at good ages, is really an opportunity not many people get. It would be a real regret in our lives if we did not seize that opportunity.
So from a business standpoint. We were on the brink of the next big reinvestment and restructuring of how we operate. The timing lined up there. The valuation for our business was strong and I felt the valuation would actually decrease once we needed to incorporate management and grow because of the extra expenses the business would require to operate. We have been on a strong run economically. I’m not Nostradamus, but typically these good economic times correct. It could be next year, it could be in five years. But there was always the risk that we could correct next year and selling would be less advantageous. In normal circumstances that would not be an issue since we were in a good fiscal position. We would just ride out the bad times. But we wanted to travel and build the 100% DAD brand. So that would really affect the ability to do so and if we waited another four or five years for things to turn around then our oldest would be a teenager and the others would be 11 and nine. Those are much bigger bodies to store, feed, and otherwise travel with.
Timing is important. It seems like all things are coming together. So we took action. Negotiated the sale of our biggest assets and prepared for the experience of a lifetime.
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Blog laying out initial plans for our upcoming tour will be posted next week!!
Like your post. Like your philosophy, Like your reasoning. Good luck! Look forward to following your adventure!
Thanks so much for following along!
– Townsend Russell