I Turned Down a $10M Offer to Buy my Business
I think to myself, what could I have learned from someone sharing the nitty details and the behind the scenes of growing a business, sharing what was actually the tough times? So, I want to share those moments as much as possible.
Why is it “Do or die” time for the business?
This will go against some of the things that I've always talked about in terms of being very frugal, living within your means, not going into debt, and being conservative financially. So, what's going on over the past few months? It has been a wild ride. We've grown Augusta quite substantially and I've really been investing heavily into the businesses at this point in time.
We almost have a hundred locations at Augusta Lawn Care. This is the time for most franchises when it becomes "Do or die." You either scale up from here or you drown and die. And usually it's because you lose momentum and then, you eventually become obsolete and you no longer have the money to invest in the business. You don't have enough inertia to carry 300 or 500 franchise locations and become profitable.
Venture capital knows this, private equity knows this. And so throughout 2021, I was approached many times by private equity firms wanting to buy out the majority stake ownership of Augusta Lawn Care. And I've made it very clear - I will never do that. I've promised that to the franchisees because I feel like I'll lose my control of the brand and what we're trying to do with the industry.
So, What Did I Do?
That said, I turned down an offer to buy a majority stake ownership of Augusta Lawn Care and put the valuation above eight figures, above $10 million. so it was a lot of money and not going to lie. I didn't expect that much in terms of valuation. We are relatively young, but growing very quickly. We have an established brand. In that moment it was like, “Well, I know we need the money and I know that this is going to be really, really challenging the next 12 months if we don't take the money...”
I decided that I would actually go into debt instead. I'm going to go over $1,000,000 in the debt. And just to be clear, I am personally backing this loan with my own real estate. I'm not putting this debt on the businesses.
This does not include the headquarters that we are going to be building for Augusta.That's going to be a 504 loan SBA - totally separate. So let me explain why I went into this much debt and what we're going to use the money for.
What Was My Thought Process?
As the visionary, as the leader, you kind of know where the business is going.You know what your plans are. You see certain benchmarks and you have a lot of confidence in those things. And you've been with yourself as a business owner for long enough to have a lot of confidence in what those projections and your plans are going to be.
If I lost all my money, I would live in the same place. I live in a one bedroom apartment. I just moved in. I actually own the apartment complex and I live in a one bedroom place there - I really love it. But if if I lost all my money, I'd probably still live there. It's one of the cheapest places in town that you can possibly get. I like my standard of living wouldn't change a whole lot. I did just buy a new car. It's a Honda Civic. It was my first non-business, non-Augusta vehicle since I started the company.
What Are The Two Things I Won't Risk?
My biggest concern... the thing that I will NOT risk is the security of the employees and the jobs I've created. The other thing I won't risk is the course of the company. The company is still dependent on me being at the forefront, driving things forward, making sure it's financially and economically viable, ensuring that we continue to grow the brand so that it continues to be a better and better return on the investment for the franchisees.
So those are the two things I will not risk. That was the big determining factor when taking on this debt. That is the line I won't cross. How much debt I take on puts myself at a potential loss, but it's not going to hurt any of the employees. We will never lay anyone off because of this and it won't put any of the franchisees in financial harm. That was the challenge in determining whether I take this debt on versus raising money from other outside sources.
Why Didn't I Take The Money And Run?
Why didn't I just take $10 million and and continue to grow the business, own 20 or 30%, and be happy?
I could just be the CEO, still have the channel, and all the rest of it. The bottom line is this: Me having $10 million more in my bank account is not going to change my daily life. I love what I do. I love going to work. I love the people I work with. I love creating content. So, why would I ask for a bunch of equity and give away the thing that I love the most, which is the business and being able to dictate change in this industry? I would never want to give away the reins and the control to somebody else.
I do not want someone else telling me what to do with the company when I know what's right in the long term. I know that it's very clear to me what the 10 to 15 year plan for Augusta Lawn Care is, and I've shared that with the franchisees.
What is the Long Term View?
However, most venture capitalists, most private equity firms, they think in terms of five years max. Usually, it's more like 2 years, 2 to 5 years. And I know what they would do. They'd raise prices, they would take away the flat fee model, and they'd almost double the prices at the command center. In the short term, they would make a bunch of money and everyone would live happily ever after I would be so mad because that's not the goal. That's not the end vision. Is not just extrapolating more cash is a matter of the goal of August is to change the level professionalism in the industry, period.
And I believe that we're going to be able to do that in the next 10 to 15 years. And I truly believe that in 5 to 10 years, people will say it is stupid not to join Augusta Lawn Care. I truly believe that. People laughed at me really hardcore when I said that two years ago when we first started. It's going to become more and more clear as we invest in the moat, the thing that makes us unique and makes us different.
What is the money going towards?
1. We need to get the franchise to profitability. And I've been very clear with the franchisees on where we're at with all of this. They know that we don't make money. We're still growing very quickly, but “Growth sucks cash.”
So when we're growing crazy and doubling the number of locations around North America, it takes a lot of cash. So, we've got to get the franchise to profitability. And this will allow us to scale command center and become really, really massive. We will be able to grow the number of staff that's on hand to be able absorb all the calls for the spring rushes. When you have hundreds of locations, it's not as though you get a few calls. In a few minutes, you can have a thousand calls dropped on you.
And so how do we absorb that? And so, no, I looked at the past few weeks like there's not a single voicemail that's gone to any location across Augusta Lawn Care for weeks. That's awesome. But in order to do that and to do that through the spring rush, we've got to massively scale that up. You've got to have training and systems in place, tracking and recording phone calls, getting quality control, and constantly bringing on new people.
2. The other component that I need the money for is P4P software. I truly believe it is a software that encompasses all of the the components of a pay for performance model into one system. It changed my business and made it much more profitable, allowed me to step away from daily operations, and it allowed my employees to take over and be more accountable for their actions and make more money. A lot more money. The mindset that it encourages allowed some of them to become business owners and managers and move up in the organization.
How is The Progress on The P4P Software?
I think within 12 months we can get there. And for everyone that has joined P4Psoftware.com, I'm very grateful because every single dollar and a lot more is being pumped back into the product. My goal is to be able to take certain key data points based on efficiency, based upon overtime, based upon which employees are most efficient on certain types of services.... I want to be able to use all of these data points to be able to tell the business owner what they should be doing their business, who they should be working with, based upon their skill set and efficiencies.
That's all coming down the road. But we're at the very, very infant stages of that. We're still trying to roll out the mobile apps right now. We just rolled out Android. iOS is coming out in the next couple of weeks. We've got to integrate with QuickBooks. We got to really improve the reporting and the dashboard.
I want to add profit sharing and open book management, integrating that into the software so employees can actually see how much money is in profit sharing and how that is affected as the time goes on.
Why Am I so Confident in The Company?
Augusta Lawn Care, in the next 10 to 15 years, will become the leader in the lawn care industry and it'll be extremely hard to compete with them if you do not adhere to the standards and the rules of the game that we plan to put in place. I truly believe that without pay-for-performance, it will be extremely difficult in 10 to 15 years to hire anyone that wants to work outside in the heat and in the cold, in the landscaping industry, or any home service improvement industry.We have pool companies already using the software. We have roofing companies. The other day, we were talking to some pressure washing companies.
And so I'm just very much in the long term game. If you listen to any my content, you know that I think about the long term all the time and I try very, very hard to not make short term decisions.
Whether it's religion, relationships, or business, I am always thinking very long term. I truly believe that in the next 12 months, I will be called either a genius or an absolute fool for turning down millions of dollars and accepting millions of dollars in debt. I'm either going to be called a fool or a genius, but at the end of the day, either way, I'll be glad I made this decision.
And that's the thing that gives me peace. I can retain control of Augusta Lawn Care because that's so important to me. And then to make a positive impact on other business owners the same way that I was able to have with P4P.
If it doesn't go as planned, I know that I've not risked too much to where I have to lay off any individuals. Again, the franchisees will be just fine. We will still continue to grow. It'll be okay. I personally would lose out. I would lose real estate and things like that if everything went bad, though I don't think it's going to happen that way. This is going to make a positive impact on other business owners and it will absolutely lead to a 10 to 15 year massive payday for my franchisees and for myself.
What is The Difference Between Rich And Wealthy?
I hope all this encourages you and your business to think about the 10 or 15 year term, not the next quarter, not next week or month, or getting bought out. Grant Cardone, said something interesting. I take a lot of what he says with a grain of salt, but this was good:
“Rich people sell things and wealthy people never sell.”
And I really took that to heart. It helped me a lot because I am not going to sell. I'm not interested in becoming rich. I am extremely interested in becoming wealthy and being able to do a lot of good with that wealth. So, I'm doubling down on that. I am putting all chips on the table for this one.
Conclusion
I look forward to what 2022 has and the years beyond. And I appreciate all of you that have supported this journey. It would not be possible without the franchisees. It would not be possible without all of the local employees that have made this happen. And they have stayed true to me even when we were struggling. And it would not be possible without every single one of you that has supported me on all the different platforms.
The equity from the real estate investments I made is what I'm going to be able to leverage and I'm going to be able to lean on. And so at the very worst, I personally will lose my real estate. Meanwhile, the best case scenario is: This is going to change the lives of my franchisees, myself, and other business owners in this industry over the next 10 to 15 years.
I truly believe it's worth the risk. You to have risk in your business. You have things your sacrificing and I always say...
Sacrifice or regret - you choose.