#174 - SMB Lessons + Acquisition Criteria & Links

“When you fall in love with the process rather than the product, you don’t have to wait to give yourself permission to be happy. You can be satisfied anytime your system is running.” - James Clear

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It's been quite some time since I last wrote a post and shared what I've been reading lately. I've been trying to concentrate more on long-form (books, 10Ks, long blog posts) vs. news when I can fit it in between family time with my wife + daughter and day to day ops of our property management & real estate services businesses. In the meantime, I've been taking notes of some lessons I've learned sparring in the jungles of SMB ops.

A year into owning and operating a property management business, we're now up to ~2,250 units under management and up to 11 technicians on staff in our MEP services business (22 employees total). I'm still new to the whole leadership thing, but am doing my best to learn through each experience and serve our customers and our employees to the best of ability every single day. Here are a few contradictory lessons I've learned over the past year of operating two businesses.

1. People care deeply about the culture of their company. Culture doesn't have to be anything intense - it can simply consist of 'No jerks, have fun while working hard, and laugh daily.' Culture is simply the unwritten, unspoken norms and expectations of a group people working towards the same goals. Without a shared goal for a team, culture breaks down into divisiveness. Without accepted norms, teamwork breaks down into confusion and frustration. What you permit, you encourage. It is better to set expectations up front than have to have a difficult conversation later.

2. Exceptions to company policy seem to find a way to come back and bite you. But sometimes you have to cede ground and be flexible to build a better business. Knowing when to take which path is key.

3. You will make friends - and competitors - that you've never even met merely by entering the industry. Take the high road and treat everyone with kindness - you never know when a competitor will become a teammate.

4. The customer is not always right. And even when they aren't right, sometimes it's just better to put aside the ego, take a little off the bill, and move on. If your pricing is right and matches the quality of your service, you will attract the right customers over time and will maintain a sustainable business. Correct pricing ensures profits. Profits ensure that you can invest in your business, your people, and warranty all of your products and services.

5. Good ideas come from the people who are on the frontlines. Not every idea is a good idea and almost every change you make will have second and third order consequences that must be considered.

6. Not everyone who frowns and gives feedback is your enemy. Not everyone who smiles and laughs is your friend.

7. Customer service is what businesses live and die on. People are willing to forgive mistakes if a company is up front, honest, and responsive. If your customer service sucks, your lunch is eventually going to get eaten by someone who cares more, performs better, and innovates faster.

8. Support your people as much as humanly possible. But do not coddle them. People are capable of much more than they realize and as a leader it is your job to bring out the best in people by setting the pace.

For those operating SMBs, I'd love to hear some of your biggest lessons learned over the years through the struggles.

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I am going to end this post with a shameless plug for introductions to small business owners in Eastern North Carolina. I am always interested in connecting with like-minded owners who may be nearing the end of their careers and are looking for a stable post-close outcome for their company, their employees, and their legacy. If you know of any owners in this position in Eastern NC, I'd love to speak with them. I keep all conversations confidential and and can give an indication of interest within 1-2 days of initial contact.

The criteria for the types of businesses I would consider include:

• Located in Central or Eastern NC

• For service businesses, a team of at least 10+ people

• For property management companies, minimum threshold is 500+ units

• Will consider any business with recurring rental or contract based revenues

• Will consider any product-based business with repeat customers

• Will consider a minority or majority investment

• Companies must earn 250k+ SDE

If you are a business owner in Eastern North Carolina considering a sale of your business and they fit these criteria, please reach out directly to me by replying to this email.

Links

Five part series on the US residential housing market and demographic drivers of demand (Part I, II, III, IV, V)

Sam Zell on his investment approach and buying opco's vs. real estate (Capital Allocators)

Bull Market Rhymes (Howard Marks)

Horizon Kinetics Q1 2022 Discussion on O&G / Texas Pacific Land Trust / other topics (Horizon Kinetics)

Physicists rewrite the fundamental law that leads to disorder (Quanta)

Books

The Reformation: A History (Diarmaid MacCulloch)

The 48 laws of Power (Robert Greene)

Jesus & the Jewish Roots of the Eucharist (Brant Pitre)