8 Expectations I Got Wrong in My New Venture
As I was getting ready to start my new venture as President & CEO of Southeastern Home Services, I wrote an article titled 8 Lessons I'll Take With Me From Ingersoll Rand/Trane. In writing this, I realized I had far more than 8 lessons I could write about. I also realized that I had likely forgotten a lot over the course of nearly 16 years. It struck me that taking a bit of time to step back and evaluate things like this more frequently, while in the heat of battle, is probably valuable.
Therefore, having acquired 2 businesses in the last ~45 days, I thought I should take some time to think and write about expectations I got wrong going into it. Not all of these are total misses, but they are definitely examples where my expectations didn't 100% align with reality, and there's something to learn from that.
1) Owner Talent - In both of our acquisitions, the previous owners have retained equity and are still actively involved in the business. I had the opportunity to meet both of them before the deals closed. I could tell they were extremely hard working, understood the trade (HVAC & plumbing) very well, and had great relationships with employees, customers, and suppliers. However, I subconsciously put a cap on my expectations. This could have had to do with education, perceived business acumen, leadership styles, or the fact they thought they need to partner with us to continue growing their business. It's hard to say the exact reasons.
The reality is both of these guys are way more intelligent, talented, and skilled at what they do than I ever imagined. In hindsight it should have been obvious, you can't start a business and lead and grow it into 8 figures revenue without knowing what you're doing. I'm glad my expectations weren't high enough here, both owners continue to impress me every day.
2) How Hard it Would Be - I went in with the expectation this would be the most challenging thing I've done up to this point in my career. It has been, and then some, and it's still very early on. Anyone who's done any form of SMB acquisition will stay the same, so it's probably not that helpful for me to repeat all those reasons. Here are a few challenges that relate specifically to our approach, that I probably didn't fully appreciate going into it...
In another 45 days we'll have gone from 0 to 3 companies and no employees to close to 200 and that pace of change/growth is hard
There's also complexity in our offerings. Both HVAC & plumbing vs. just offering one trade. Residential new construction (RNC) and service. One of our companies even does some manufacturing, so it's really several businesses in one
More people means more unique personalities to get to know and work with
The three companies have different everything...software, systems, processes, even something simple like the email program
Wanting to dive in deep for relationships and understanding, but getting sucked in too deep to give attention to bigger priorities
I'm still having a lot of fun, but it's hard. Helpful to remember this great quote by Teddy Roosevelt.
3) What Would Matter Most to Employees - I knew this was coming for several months before the acquisitions actually closed. So I had a lot of time to research, plan, discuss, and try to define priorities and things we would focus on right out of the gates.
What's surprised me is that for the employees in these businesses, the seemingly small stuff has made the biggest difference. Some quick examples...an ice machine for the shop, calling a CSR on her birthday, running a part to a technician and taking him to lunch, having emails setup for new employees right away, etc. It's a good reminder to balance the big picture thinking and major priorities with doing the little things well and getting some quick wins.
4) Lack of Process & Structure - I knew that coming from a Fortune 500 company like Ingersoll Rand/Trane, this would be a bit of culture shock. However I felt like leaving corporate jobs and moving into field sales/service offices that operated fairly independently would mostly prepare me for this and would feel similar...
It's been WAY different. Nowhere is a process actually documented in writing. There are a few areas where a process is being followed, but it's tribal knowledge. And other areas it's the wild wild west. I could give countless examples but a very simple one would be at Trane, if you wanted to know who reported to who (i.e. org chart), you could access that easily through our systems. Same thing with job titles and descriptions. Not the case here. If you were to ask me for a list of all employees at one of our companies, the best I could do would be to pull up a dated list someone had sent me. Job titles, role descriptions, contact info, no chance...yet.
5) Depth Needed to Learn Business - There's a concept I think I've written about before called the OODA Loop. You can look up the history yourself if you're interested, but the steps are observe, orient, decide, and act. One tenet is the more repetitions you get at something, the quick you can orient to a situation and then decide/act. I've found this very true in business, the more I've seen the more quickly I can assess and acclimate to a new situation.
I overestimated how much this would help me and how quickly I'd be able to learn these businesses. Partly due to the previous point about lack of documented processes, but also for other reasons, learning these businesses has proved more challenging that I imagined in my head. Certainly my prior experiences have helped, and I'm getting there, but it's taking some time.
6) Pre/Post-Close Misalignment - A key part of our approach and structure is having a separate deal team (WhitneyWilder, the family office) and an operating business (Southeastern Home Services). WhitneyWilder and SEHS are in constant communication, but even with that there have been some points of misalignment with leadership at the portfolio companies.
Fortunately everyone is on the same team and there's certainly no malintent. But we've probably all played the telephone game, where it's amazing how much a simple message can get confused over the course of multiple conversations with different people. This just reiterates the need to overcommunicate and not to assume anything.
7) Lack of Accountability - This isn't a dig at anyone in particular, I've just noticed a lower say/do ratio and less reliable follow-through than I've been used to in my career. I think this once again ties back to the lack of processes. Most everyone is busy and working extremely hard, but personal organization systems aren't great and balls get dropped. In a small business training is harder to justify, and things like onboarding can be limited and not very thorough. I think this is an area where I can lead by example and provide some coaching to make some good progress. Nonetheless it was a bit of a surprise vs. my expectations coming in.
8) Concepts Much Harder to Implement Than They Appear - In the months leading up to these 2 acquisitions, I created a list a mile long of things I wanted to implement. Things like a training department, digital marketing, creative solutions to recruiting, branding, call recovery system, a company intranet page, etc. I picked these and others up from podcasts, SMB Twitter, books I read, articles, and conversations.
Some of these are broad, but even within these, you can identify what appear to be some "quick win" projects. Invariably, actually implementing one of these is FAR harder than it seemed when you first learned about it. You have to contend with current software systems, people, data integrity, competing priorities, and many other obstacles. This has been sobering. That list is still alive and well, but the sequence and timeline to implement is going to be longer than I believed going into this.
There you go, 8 expectations I got wrong, I'm sure in another 45 days I'll have another 8 but that's what makes this fun...living, learning, and adapting!
Here are some of the favorite things I've come across the last couple weeks:
· Article - Investors Continue to Target HVAC and Plumbing Firms by Brian Hartz – A bit of a shameless plug since I was interviewed for this. Media interviews is something new to me but it’s been fun to learn about and get Southeastern Home Services some press for what we’re doing
· Movie - A Quite Place Part II – I’m surprised I missed the sequel on this one until now, after liking the first movie. Very suspenseful, I found myself closing my eyes or tensing up a few times during this one. As good or better than the original in my opinion. We watched on Amazon Prime
· Article - How One Fast-Food Chain Keeps its Turnover Rates Absurdly Low by Bill Taylor – I’d never heard of Pal’s Sudden Service, but it’s clear reading this that they’ve built something special. The approaches discussed apply to any business or industry. “Hire for attitude, train for skill”
· Movie - Hustle – I’m a sucker for sports movies, especially basketball which was my first love. This one is pretty good though with Adam Sandler as an agent scouting for international talent for the 76ers. Good movie for a night you don’t want to think too hard but just watch something fun and enjoyable. Available on Netflix
· Twitter Thread - Birthday Advice for 24 yr old from Brent Beshore – This is fantastic and insightful no matter your age. I’m guessing all of us can identify at least a couple of these where we could improve and put more focus
· Quote – Discipline is just choosing between what you want now and what you want most. Augusta Kantra