Podcast: Use an Exit to Revitalize Yourself with Troy Schuette
Building a successful business is step one. Just don't lose yourself once you've finished climbing those stairs! An exit can help you find the passion you may have lost along the way. Troy Schuette tells you how.
About the Host
Ryan is an entrepreneur, podcast host of the show Life After Business and the co-owner of Solidity Financial. Having personally experienced the hazards of selling a business, he joined up with his friend Brandon Wood to educate others on the process. Through their business (Solidity Financial), they provide a platform for entrepreneurs called The Value Advantage™ that helps in exit planning, value building and financial management.
About the Guest
Exiting your business with zero regrets is a goal that many of us have. Today’s guest, Troy Schuette, owned a waste disposal business for 23 years. He made his decisions carefully so he knew he’d be able to exit happily without wishing he’d done things differently. He’s going to talk to us today about the process he went through, from creating his valuations to choosing his buyers to finally signing his closing documents. You won’t want to miss Troy’s story!
If you listen, you will learn:
- How and why Troy decided to become an entrepreneur.
- Where Troy got his passion: Garbage, recycling, and scrap were not actually his passion, but they were the vehicle for his passion.
- Some of the pitfalls of growing too quickly, as well as what finally clued Troy in that he had lost his passion.
- How Troy, with the help of his father, decided to sell and how he determined the value.
- The mental process that Troy went through to choose a buyer.
- Some of the lifestyle changes that went along with exiting the business.
- The emotions that Troy went through on the closing date.
- How Troy told his employees about the sale of the company.
- What Troy did to let his brain rest after he exited his company.
Ryan: Welcome back to the Life After Business podcast. Today’s guest name is Troy Schuette. I had a ton of fun talking to Troy. He is in his mid-40s, he had a waste disposal business called Elite Waste Disposal for 23 years. He grew the company up to 25 vehicles and trucks and 40 employees.
Troy walks us through the whole sales journey from why he decided to sell, how he came to his valuations, what are the emotions he dealt with as he was picking the buyers and actually signing the closing documents and what are the key variables that allowed him to make that decision so that way he could exit happy.
I can truly say that from talking to Troy, he knew all the decisions that had to be made so he could calculate what he was gonna do next and knew what he was getting into instead of having regrets. He had zero regrets and he shares all the different details of the journey. This is a must listen, I really hope you enjoy the interview with Troy.
Good morning, Troy. How you doing?
Troy: I am good, how about you?
Ryan: Doing good. I’m excited to have you on the show today. You and I have gotten to know each other through our local peer group Allied. You have a really interesting story to share with our listeners today but before we get them to jump into it, can you go back to the day that you decided to be an entrepreneur and tell us how you ended up starting your business?
Troy: I was attending college and went for about a year and a half and decided that I was essentially burning my parents’ money and told them that I was gonna take a break because I had no clue what I wanted to do. I took a job hanging drywall, of all things, really good money but back breaking work, I respect those guys a lot because those guys are going to do it their entire life, it’s difficult.
My boss at the time told me, he said, “Hey you know what, the money is gonna start getting good,” I was 20 years old. “The money is gonna start getting good here and look at me, I’m 40 and I look 80. You don’t wanna do this for your whole life, find something else.” That sparked the, okay, what the heck am I gonna do? Am I gonna go back to college? What am I gonna do? After we would hang the houses with dry wall, there was scraps leftover and these guys would come in with a truck, they’d come in and pick up the scrap drywall and haul it away and I’m thinking, “I can do that.”
For the listeners that are old enough, do you remember the show Sanford and Son? I bought one of those trucks and started scraping drywall. That evolved into waste disposal and residential collection and commercial collection and roll off dumpsters. 23 years later, we sold the business. But back to your original question, what made me decide to be an entrepreneur, I think it was my first client, maybe everybody was this way when they started to be an entrepreneur.
The first thing that attracted me to it was money and freedom. I saw the owner of the drywall company that was my first client and he was wealthy, he seemed to be able to make his own decisions when he wanted, where he wanted, do what he wanted and that’s what I wanted. I thought, “Here’s a vehicle that can at least get me started there.” I never imagined that the company was gonna be around for 23 years, I thought I’m gonna do this for a while. I was making a lot more money that I was hanging drywall, doing scrapping. I thought, “I’ll do this for a little bit and I’ll go back to college and then figure out what I’m gonna do.”
The boom of the construction market hit, we started at 1994 and we rolled it all the way to 2007. That was a great way into the construction industry for the roll off dumpsters. I guess the biggest thing that got me to be an entrepreneur was money and freedom. We’ll probably get to this. I think the thing that I learned along the way and many other people, I might be a slower learner but I learned along the way is yeah the money's great and the freedom is great but what I lost in the end was the passion and being excited everyday. That is what revolved into the selling, I guess.
Ryan: Let’s peel that back. I was talking to a guy yesterday about that where the passion, it’s what drives us as entrepreneurs. Where did you get your passion? Was it customer service? Was is you trying to change an industry? What was it that jumped you out of bed every morning?
Troy: That’s a great question. It’s garbage and recycling and scrap drywall were not my passion, they were the vehicle for my passion. I don’t think I recognized consciously what my passion was until about five years before we sold. I loved the sales cycle, I loved the growth. We were growing at 25% clips a year, my hair's on fire, I love that. That’s what fueled me. I think what happened was we got to a point, as every business does, you can outgrow your cash flow. We got to a point probably two to three years prior where I sat down with our CPA and she’s like, “Listen, you’re knocking it out of the park here.” I’m like, “That’s great.” She was like, “But you gotta slow down because you’re gonna outpace your cash flow.”
Ryan: Worst thing to say to an entrepreneur isn’t it, and a typical CPA saying it too.
Troy: My wife, she knows me well. We’d all sit down with the CPA and they’re telling us this story and I’m looking at Stacey and I’m like, “Now what? That’s my thing. I love growing businesses and that’s what’s fun, now you’re telling me I gotta stop what I love doing.” But there’s always the negative minutia in the background where you were dealing with just stuff, daily business stuff and that never sparked me, like operations and all of that. I had an operations manager, he dealt with that and I loved it. He’s like, “Just keep growing this business. We’ll take care the back end stuff.”
Ryan: What was the specific technical reason that you’re outgrowing your business or growing too fast? Was it you didn’t have the correct financing? What was the reason that they gave you?
Troy: It was such a capital intensive business, our return on sale was a long cycle. You have to outlay capital and your return might not come for nine months before you’re starting to break even on that certain customer, on the residential side. The cycle of the garbage business is you grow, grow, grow, grow, grow, let it catch up, grow, grow, grow, grow, grow, let it catch up.
Ryan: Is that because you’re financing the trucks and all that, the inventory in order to actually get the accounts?
Troy: Yeah, you’re paying the sales person, you’re paying them full commission, you’re paying for the carts and you’re only able to charge $20 a month. When you got $50 in carts or $100 in carts and $50 in a sales rep, it doesn’t take long. It takes a while to recoup that. Basically the customer acquisition cost is really high. Essentially, what happened is we were at a stage in the business where we were at that 5 year cycle. We were at a point where we say, “Are we gonna dive back in and do this again for another five years or is it time?”
What we discovered was the guy leading the charge, being me, didn’t have passion for it anymore to go grow it again and didn’t wanna do it for another five years. That’s what it was gonna take. You have to go on five year cycles because you’re drawn on capital and what not and then you have to wait for all the return back into the coffers, so to speak, and then it’s valuable again.
Ryan: A couple of questions on that, was it that you weren’t passionate or was it that you didn’t wanna take the risk?
Troy: Calculated risk is how I would refer to what we did, there was a system to what we did. No, I just wasn’t excited about it anymore, I wasn’t excited to dive back in and do it again. It’s trying, it’s trying on the owner, it’s trying on everybody to go through that because it’s gotta be aggressive growth. In that business, trying to grow at the rate of inflation, it just can’t be done, you will get ran over. You’re competing against some pretty heavy duty companies, worldwide companies. You’re the little guy trying to compete against the big dogs, so to speak.
Ryan: Where were you when it hit you that you weren’t passionate about it anymore?
Troy: My home office with my wife.
Ryan: What triggered it?
Troy: A conversation after that CPA’s meeting. She made the comment and she goes, “I’m really worried about you.” I said, “Why?” She says, “Because that’s what fuels you, the sales. What are you gonna do now? I don’t want you to go into operations,” because I’ll just mess everything up. My operations manager was doing a good job, I gotta find my new passion. We tried to search for something that I could do because they said, “Give it a couple years.” A year is what they said first and ended up being two from that point until we sold.
After we got through that first year, it really gave me time to think about, I’m 45 years old right now, that gave me time to say, “Is this really how I wanna wrap up the game, so to speak?” I think if I would’ve kept going, I think that’s what I were stuck with. I don’t think it would’ve satisfied me personally.
Ryan: What were the resources or the people that you leaned on or explored that helped that mental journey?
Troy: My father was in the financial world, in his career, trusted mentor of mine. I started, first of all, obviously with my wife. But then outside, my father was a great mentor of mine and just went through with him what was going on with me. He was a CPA and evolved into other things, he had the financial background. We started talking about what this thing might be worth then we engaged our CPA and brought him into the loop of this is what we’re thinking, what do you think this thing is worth. We started talking to the potential buyers, we talked to the guys that we knew would come with cash and we wouldn’t have to finance it.
The biggest thing we were concerned about is we knew we could find somebody that would give us a reasonable offer. The other thing we did when we started out, just to back up a little bit is we actually started out just saying, “If this thing isn’t worth what we think it is, what do we have to do over the next five to ten years to get it to be what it’s worth?”
Ryan: Before you go into that even further, let’s stay on that topic. Before you even got into the valuation, because I wanna hear how you valued the company, did you think that selling it was your only option? Did you ever think about keeping it and then using it as just a cash platform?
Troy: We did, we thought about that. It was gonna require some investment from Stacey and I personally to grow it to the level that we want it to, again. We had three different options, we keep it as I guess the ATM machine. We hired a GM and bring that in, we dived back in and grow it, obviously, we can do that. And then we looked at do we keep it with the intent that we’re going to sell it at a certain date, at a certain strike price or is the offer good enough. You know what, it’s time and we wanna sell it. My wife is awesome, she just said, “We gotta find your passion again because when you’re firing on all eight cylinders, I can get a lot done.”
Ryan: You’re probably more fun at home too.
Troy: When I’m excited about something, it’s a lot better, just as most entrepreneurs. I don’t think I’m unique in that aspect. I don’t know if I answered your question.
Ryan:You did. There’s this constant debate that I hear back and forth between business owners whether they’ve sold or not, whether they got the business or not. There’s like you should just keep it and let it run, which is ideal. Again, it’s a cash machine, an ATM, like you were saying but there is that mental energy that you’re still emotionally tied to it. If there is gonna be a capital requirement and stuff like that, you can’t actually just keep it as an arm’s length as you want it to. I think, laying it out like you did, there are different options but sometimes it is black and white when you really want it to be more gray.
Troy:People suggested, keep it as an ATM machine and you hire a GM or whatever to run the operation, I still think you’re always tied to it because I got all the risk on the line. We had 25 units that we were putting on the road everyday, that’s a huge risk. I always shared with our drivers that they’re driving a lethal weapon down the street. I know that not everyone could possibly take that as seriously as I did. Part of it was driving that too is that there is a lot of risk in that business, you’re putting $250,000 trucks on the road. It’s a high risk business, great returns. I think that had something to do with it as well, with the hiring of the GM route just because I’m still on the hook, there’s a liability there that I have.
Ryan: We had 26 technicians out on the road and they do stupid stuff.
Troy: I respect their drivers, that was a big thing in the sale. We wanted to make sure we kept everybody on.
Ryan: Now that we understand why you decided to actually sell it, how did you guys go about determining the value of it?
Troy: Through our industry, we have associations and whatnot, I talk to other people that had sold businesses and whatever. There was a time back when there was heavy consolidation in the early 2000s where they were paying just on revenue. All the acquirers wanted the waste managements of the world and what not, they wanted revenue because they’re building the business. I thought that was the way it was gonna get valued and they were paying high multiples. There was numbers thrown around of 18 to 24 months revenue, pretty lucrative. I won’t give you the details of our operation but we didn’t get that.
Ryan: Our old industry went back and forth, it all depends on the buyer and how they actually peg it to the value. It sounds like your industry is very similar. Office equipment industry, you have all the capital outlay and then it was all about the maintenance. The strategic buyers are coming and they just knew that they could run everything more efficiently. That was less concerned about the EBITDA than it was about machines in the field or the contract values. Did you guys have contracts? I guess this is another question.
Troy: Yeah, we did. We had municipal contracts on our resident side. On our commercial side, we had individual contracts with all the customers.
Ryan: Once you realized that it wasn’t on revenue, first of all, how did you figure that out?
Troy: Back in the 2000s, there was 18 to 24 months monthly revenue but still really nice. When I’m going to these buyers that I know are potentials buyers and just talking with them, they’re like, “What do you think it’s worth?” It’s back and forth. We start talking about that and how things were, they said, “That’s a thing of the past.” The first guy I’m talking to, I’m thinking, yeah okay. I went and talked to two or three other guys and they all told me the same thing. They were all either [00:23:02] with each other or that’s the way the industry changed.
Ryan: How are you finding those guys to talk to?
Troy: It’s known in the industry who you gotta talk to. I have had other business owners, peers, that had sold, just talked to them, “Who is the person I gotta have a conversation with?”
Ryan: Were they strategic competitors or were they actually brokers?
Troy: No, I’m sorry, I guess I didn’t say that. Yeah, they are competitors. That’s really the best thing to do in this business because there’s a lot of economies of scale because the chances that these acquirers are already driving on your streets or driving your routes with their trucks are [00:23:46]. They essentially can eliminate the trucks in the routes and they get their return pretty quick.
Ryan: Did you fear that they would shake up the industry or spread rumors or steal customers or anything while you’re doing that?
Troy: We have confidentiality agreements, we engage attorneys for that. I guess those can be broken too. Of course there was a worry but once I started talking more with them, I’m dealing with corporate in Arizona, I’m dealing with corporate. They don’t even know who I am, only the local guys know who I am. Our business, it didn’t get to the local level until we had letter of intent and things signed. Then, we were at a point where it’s like, “We gotta engage the local team.”
Ryan: As you’re having these conversations with them, how did they explain to you how to get to the value?
Troy: They’ll have you fill out this extensive questionnaire and you basically lay everything out there. You fill out this questionnaire and they come back with a number.
Ryan: Was is to get to EBITDA or pretax income?
Troy: The things that they looked at were EBITA, age of the equipment, quality of the team members because they were buying ours not to integrate into their current operation, they actually bought it as an expansion because they bought our building as well. Stacey and I owned the building that the company leased from us. They bought the building as well and they’re actually keeping the operation there.
It’s somewhat strategic but they bought it for expansion. In their case, it wasn’t just about the revenue or the EBITDA, they wanted to make sure that they had good equipment there as well to continue growth. There was an expansion play that is still paying out today.
Ryan: As you’re referring to the buyer here, how did you pick them? Because you said you started talking to the three, how did you narrow down to that one? Did you wanna play people against each other because it sounds like you didn’t use a broker, you’re navigating the waters yourself.
Troy: I think I might have used a broker but it was my first sale in the business, you live and learn. You did a lot of things right but there are some things that we might have done different, I don’t know. I’m sorry, what was the original question?
Ryan: You’re talking in the tense of you had this buyer that you filled this questionnaire because they had the expansion. You went from three or a handful down to one, I’m curious to your mental process on how you picked them. Was it how much you thought that they were gonna pay or did you have other variables that you want to make sure you checked off the box to make sure that you picked that one?
Troy: I would say the biggest thing was ease, Stacey and I judged the ease of working with the initial person that we talked to. You’re dating in the beginning but you get darn close to marriage by the time you’re done. It’s intense, very intense process on both sides from the time that we agreed on the price until we closed, it was just over two months. We cranked it out and we had that done at the end of December.
I think the biggest thing is we asked ourselves, “Who do we wanna work with?” Because I think the price could’ve gotten to the same number with all of them, if we continued to negotiate. I think that the company that ended up buying it, they assured us, we ended up getting it written into the purchase agreement, but they assured us that they’re gonna keep all the employees. I would say that’s the hardest part today, I might have zero regrets about the sale but I would say that’s the hardest part. There are people that I would like to still see everyday and helped us build that business.
Ryan: You have no reason to call them anymore. It’s like, “I wanna go chat with you but there’s no specific professional purpose of the call.”
Troy: We go to lunch once in awhile, we’ve done that or whatever but they’re doing a job. They got a job to do, they got different people to report to now, you don’t wanna hold them up on that either. But I would say that those two things that the fact of who we’re gonna work with and felt that if the person at the top, which we were dealing with corporate, was good and easy to work with, we felt that chances are the organization as it got down to a local level was also gonna be that or at least we hoped and we always could’ve backed out.
The other big thing is the employees, it was really important to us that they were taken care of. Contractually, we got that written in at least for the first 90 days. It turned out to be that they have kept them all.
Ryan: I wanna jump in as we’re going through the process. As you get this dollar amount, what I went through personally when we went through our acquisition and then everybody else that I talked to, you get this dollar amount. What you actually put in your bank is usually significantly different. You wanna beat your chest about how cool that girl’s talking about this, and then 12 to 18 months later you’re like oh crap, it’s not exactly what I thought. Did you have anybody helping you understand is that dollar amount gonna be enough for a runway to do something else? How did you financially look at that picture on what you’re gonna be doing afterwards and whether that hit your current lifestyle?
Troy: I spent a lot of time, like I said, I didn’t get a degree in accounting by any means but I had a father and a mentor that did and was a CPA. I’ve talked to him before because I think understanding the numbers and knowing the numbers in your business is the most important thing, in my opinion. You gotta know the numbers on a daily basis, he actually taught me everything I know about accounting and I’ve suggested going back to college and he says, “For what?” I said, “To get my accounting degree and maybe take some more business class.” He says, “For what? You know everything you need to know because you’ve done it live.” He said, “I don’t know that you’d gain anything out of that because I know what you know.”
Numbers were a big thing to me, it was always driven into me, the tax consequence. We obviously did strategic planning as far as our tax planning every year and make sure we’re within the rules of the IRS. But at the end, you pay it. One way or the other, the IRS wins. Knowing what that number was was crucial to me. It’s that, “How high do I have to get these numbers so that I can get to my number that I’m okay walking away with?” We backed into the equation and said, “If we get this, this is what your potential tax liability is.” Obviously, we worked with a CPA as well.
Ryan: You’re trying to get back into that net proceeds.
Troy: And then you gotta ask yourself, “Is that okay? Do I feel that I can do better than that in five years? Ultimately, do I wanna do that?” I think the answer of can I do better than what we got in five years, maybe was the answer. Did I think that I could find something that I would wanna do that I could be more passionate about? Absolutely. That was the thought process. Backing into the answer I think is key and understanding the tax consequence is huge because it’s a big number.
Ryan: It’s too big.
Troy: They always win no matter what.
Ryan: It is crazy. I could go down the rabbit hole and I won’t. You said earlier that you made a calculated risk because if you know those numbers then you know what kind of risk you’re putting on the next five years. Did you figure out all the lifestyle stuff that you were doing to the business? Did you have that factor? Were there any surprises that you didn’t realize?
Troy: Yeah because you realize, “Oh wow, now I gotta pay for my own cellphone. Oh wow, now I can get reimbursed for my lunch.” All of these things. Yes, to answer your question, because the numbers were driven into me and my other mentors as well just telling me, “Operations is one thing but the numbers drive operations or vice versa, sometimes.” But the bottom line is the number is what keeps the company alive. I was fortunate in the fact that my mentors, being my father and others through peer groups and other training that I did, was always driven into me that you gotta understand the numbers.
I knew the P&L and the balance sheet inside and out. That is where I spent a lot of time training even with my CPA, sometimes I would answer questions when we were doing our month end review before she would tell me what the answer was. I was fortunate in the fact that I understood the P&L well. Yes, I did factor all of those things in as well and said, “I’m gonna lose these things. Because I’m gonna lose these things, I gotta get more for the business.”
Ryan: I talked to a guy yesterday and he was saying something about one of his friends that he sold his business and the guy goes, “For the first time in 30 years, I found out how much a car costs.”
Troy: It’s a whole different ball game. There’s a lot of benefits, as we all know, to business ownership. You gotta factor those in when you’re gonna sell.
Ryan: Let’s continue down the journey of selling. Now you’re at the table, you’ve chosen the buyer, you get the price going. Walk us through the emotions that you had on the day of closing.
Troy: Intense is how I would describe it. We were supposed to close on December 16th. We had a 1:00 deadline for a lot of reasons, banks, whatever, there was a deadline. We’re a quarter to one and we’ve got two hours left of work to do, at least. I’m saying, “This thing is never gonna close.” Everybody, attorneys were involved, the closing company is involved, the title company because we have the building and everything and it blew apart. I’m sitting there thinking on Friday night, “Oh my gosh, I’ve done all this work and this thing is not gonna close.” The buyer is assuring me, “Monday, we’ll get this done.” It’s a long weekend, I’ll say.
Ryan: What were the hang ups?
Troy: I don’t recall all of the details but it was dotting the I’s, crossing the T’s type of stuff. The frustrating part about it as I was saying on Monday, “We don’t have the stuff done yet.” Due diligence type of stuff that they were still going through, that wasn’t approved yet. We have this hard deadline because we didn’t wanna get into the Christmas week because we knew we were gonna lose a bunch of people on vacations and whatever. We really needed to get it done.
It was mostly dotting the I’s, crossing the T’s type of stuff, just agreements and certain through ups with the accounts receivable because we obviously had a large accounts receivable that we were dealing with. When were the bills gonna get cut off, transferring those, transferring vendors, all of these things that I didn’t necessarily think had to be done before closing but I learned that they did. There was a lot with that and the closing statement.
The biggest thing was the closing statement. They had wrong numbers down, we had some debt that we had to pay off, there are wrong numbers down on what the debt amount was to pay off. We had to redo the closing statement, that was the biggest thing, I think, my memory, was getting the closing statement accurate. Eventually, the buyer will take care of the closing statement and it ended up being that I made up the closing statements that the factor was that you guys agree.
We finally all agreed on the 19th on Monday and ended up taking it right down to the wire again at 1:00. I think at 1:05, they hit the button and it was done. To answer your initial question, long answer, but the emotion at first is high five. Stacey and I are high fiving, we’re excited. I still get chills about it right now because it was such an intense journey and then you go, “I don’t have a business anymore.” That can come in two tones, “I don’t have a business anymore!” and “I don’t have a business anymore.”
It’s that push pull tug on your heartstrings, so to speak, because back to the scrapping and dry walling, it was me. We built the thing up from nothing and now to see the entity gone. The name of the company was Elite Waste Disposal, what hit home is when within 30 days, our attorney had to change the name of the company and we couldn’t use that name anymore. We had to change it to EWD to finish up tax returns and close out everything. When you start seeing that, there is no Elite, that really hits home because it’s like, “Gosh, I built that and there will never be another Elite again.”
Ryan: Which one of the “I don’t have a company anymore” were you? Were you the excited or the confused?
Troy: Excited, definitely excited. I had my attorney telling me when it was done that afternoon, he says, “I’ve done a lot of deals. Six months from now, you’re gonna say it was the best decision in the world, or you’re gonna regret it.” I’m a little over nine months, we’re coming up on nine months right now and zero regrets, it was the best decision for me and my family and, honestly, for the employees. I still talk to my managers and a few of the drivers and whatever, I think they’re better off too. I think they would’ve been good with us but some of them already have promotions, that’s exciting for me and that’s a feel good thing. A little self-serving but it’s a feel good thing. While they were frustrated with me when we first said we were going to do it…
Ryan: How did you tell them?
Troy: That was a tough morning. In the garbage, we start really early, we had a 6:00AM meeting because that’s when we get going. Two weeks prior to the sale, we didn’t have any money in the bank yet but we had to tell them two weeks before because there are things that we had to do from an HR perspective.
Ryan: That’s terrifying.
Troy: Terrifying. I’m gonna announce it. We told the employees and we said, I wanna have a long meeting, but we only had shy of 40 employees. My wife and I stood up in front of the company and told them what we did or what we’re going to do. We told them, “You can’t talk about it for two weeks.”
Ryan: That must have been a long two weeks.
Troy: I respect their employees so much because not one person said anything. There were things flying around on Facebook and rumors and all the stuff and our employees were responding back with, “I have no idea what you’re talking about.” They were fantastic and they had the best interest to make ensure that it didn’t get out as well.
Ryan: In what fashion?
Troy: They wanted to make sure they were gonna keep their jobs. For them to keep quiet, it’s hard. I said, “Go ahead and talk with your spouses about it because it’s an emotional thing.” But our significant others or whatever, close friend, be careful who you talk to because if this gets out, it could all blow up. We got a company that everyone in the industry knows we’re gonna sell but we’re not selling, how vulnerable you become in the industry. That was very nerve wrecking. We told them all and then immediately we had the local general manager and HR director come in, they were in the parking lot and they came in immediately.
That was the best decision we ever made. Having the two people from the acquisition company, local people, the people they were gonna deal with locally was the best decision. We made some good decisions but this one was a really good one.
Ryan: What did they do that made it one of the best decisions?
Troy: The anxiety level was extremely high in the room by the time I was done because I’m telling them “you’re gonna keep your jobs” because that’s the number one fear. Pay is gonna stay the same, benefits are gonna say the same, they’re gonna honor your vacation, they’re gonna honor your tenure here, your years served, they’re gonna flow right into their system. We had it setup so that they didn’t lose a thing but there’s still fear.
Having the local guy come in and being able to put a face with this large company, they do $10 billion in revenue a year. There’s fear because you hear about all the corporate and whatever. This guy and this HR director calmed everything down. Hearing it from them that, “You’re gonna keep your jobs, we need you, we need good people. None of your benefits are gonna change.” Having the HR director tell them “None of your benefits are gonna change, none of your pay is gonna change.” All of those things were so calming. You just watch the employee's’ shoulders start to sag again.
Ryan: Whose idea was it to bring them in?
Troy: Theirs, they’ve been through enough acquisitions. I trusted because I hadn’t, it was my first. They said, “Troy, this is the best and we’ve been through this. I’m telling you, this is the way you wanna do it.” I trusted them. It ended up working out. We had that little glitch or a problem with the not closing on the day but that wasn’t our acquirer’s employees necessarily, that was more of the closing company and that type of thing, that didn’t have anything to do with this. It proved to be a fantastic transition.
My wife told me to be available for the first three months and there was a sliding scale, 35 hours a week the first month, 25 the second month and 15 in the last month. I ended up going in the first week to debrief the GM. I think they called me in one time after that and asked me to come and sign over the titles to the trucks.
Ryan: Was that weird?
Troy: Yeah. I joked with my peer group, they were great counselors as they always are for me and I said, I could look at this one of two ways. People are gonna look at me and say “what the heck did you do all day?” or I can look at it and say, “I had a really well-oiled machine that didn’t require someone to be running it all day long.” I like to go with the latter, it makes me feel a little better.
Ryan: Does that make you rethink about maybe keeping it and letting it become an ATM, do you not have any regrets on that?
Troy: No regrets because I still got the liability. The problem, as you know, when you run a small business is that it’s very tough to separate emotion. I still looked at all my drivers. I didn’t look at just my driver, I knew their wife, I knew their kids and then I would always think, “Is my safety guy doing everything he needs to be doing?” They did a good job but ultimately, I’m still responsible for the safety guy who was responsible for the drivers. Ultimately, I think I would’ve always been concerned and felt responsible.
The garbage industry by the Department of Labor is the sixth most dangerous industry. There’s a lot of deaths, a lot of loss of limbs, there’s a lot of things that can happen in the industry. I think that fear that I would be completely removed and then get the call that John is gone because he was crushed by a packer, I don’t know that I could’ve looked to his wife in the eye and be okay with it. I think emotionally, that was a lot of the driver. I don’t think I could’ve disconnected enough.
Ryan: It’s been nine months now, did you do any mental prep about what you’re gonna do next? The fact that you have so much more mental capacity and freedom because you’re not worrying with that kind of stuff, what do you fill your thoughts with and what is the game plan for the next act?
Troy: We had until the end of March with our transition which didn’t end up being a lot for me, a little more for my wife, she upped on the financial side with more of the in the weeds type of stuff. I was working on a 1031 exchange trying to exchange into another real estate property and ended up not panning out. That didn’t end up coming to fruition until probably the end of May. I started talking with Stacey about what’s next and what do I do. I always heard former business owners saying, “Take time off.”
As much as we’re all entrepreneurs and we want the next thing, we all want the next thing, we’re wired that way, we can’t help it. Take the time off and let your brain rest. I did that and I took off June, July and all of August and up until the kids went back to school. It was the best decision I have ever made.
Ryan: You actually did let your brain rest?
Tory: Yeah, I took the whole summer. There were little things here and there just because you talk to people, getting more wired to be business owners but nothing to the effect of what I was doing. I really let myself unplug, we took a bunch of vacations, took a long 18-day vacation out at Houston, just spent some time bonding with the kids and my wife, just having that time together because as you know, when you’re in a family business, the whole family is involved. Through the sale, the kids, they know what’s going on, they could feel there’s something happening.
I think taking that time off and then getting myself to a point in the day and saying to myself, “Do I take more time off or do I start looking at things?” You’re excited again. I’m rejuvenated, I’m excited about looking into different opportunities. That’s what I’m doing right now. You do a lot of soul searching through this process. You start asking yourself questions about not necessarily what do I wanna do but who I wanna work with, who do I wanna spend my days with. I came up with I wanna spend it with business owners. I don’t know what that looks like yet completely.
I started with like-minded people, that’s what I started with. That evolved into what are the like-minded people, well they’re other business owners. I understand business, I’ve been through, as you mentioned earlier, the school of hard knocks and have learned a lot along the way and have just become essentially lifetime learning, I love learning new stuff. I’m really excited about what I’m gonna learn next. Learning from other business owners and hopefully helping them, make their businesses better.
I made a lot of mistakes along the way, I would like to help people not have to go through that pain of those mistakes and help them through the process of if they are gonna sell. These are the things that happened to me, what you’re doing is awesome. I love that you’re starting something off because I think people need that, they need that help. I would love to know more about you.
Ryan: I would’ve loved to know more about me before we sold too.
Troy: I think what you’re doing is great and I could see myself in some type of that capacity but I do know that I wanna do something.
Ryan: What books are you reading or who are you talking to that’s helping you in this process? I think that’s the biggest challenge that people have. When you were on vacation for those three months and you wake up and you’re pulling out is it newspapers? Is it books? Is it people? What are the top one or two things that’s helping you?
Troy: I truly unplugged, Ryan, for those three months. I didn’t do a lot of reading, I forced myself to let my brain rest and not do a lot. I really just spent a lot time asking myself, “Who am I? What do I represent? What value can I provide to others and make an impact?” A lot of the things I’ve heard before on your podcast is what do we wanna do, I wanna make an impact, I wanna make a difference. I think I have the skill set and the ability to make a difference with other business owners because I’ve been there and I’ve done that.
Not a lot of books but I would say more just reading publications, things as simple as the business journals. I would read that then I’d be conscious about my emotions while I’m reading it. Does reading about business even excite me anymore, it fuels me and I gotta stop because I know what rabbit hole I’m going down. When I put down the papers, I’m like, “I got this idea.” I can fly out really easy. The next thing you know, my wife is going, “I thought we were taking the summer off?” Getting back in the business reading books, I’m intrigued by the EOS, I never had time to actually read through Traction and things like that.
Ryan: You actually did unplug. I think you’re doing, Troy, what I think a lot of people struggle with which is asking the intrinsic question because if you’ve got the money, you’ve done the first shebangs, now it’s really asking about what the whole picture is all about. It’s a tough question, I don’t think you ever really answer it.
Troy: I would agree. I think it’s an evolution because you start with, you ask yourself, “How do I wanna spend my days?” I love golf, how do I wanna spend my day? What’s gonna fuel that fire of growth? What do I like doing? I love growing companies, I love talking to business owners, such as yourself, and what not, we have so much in common. How can I do that? I can remember, I saw three circles. The definition of retirement is you’re doing something that you love everyday, you’re extremely skilled at it and bonus, someone pays you for it. That’s the definition of retirement, for me.
If I can find that where I wake up everyday and I’m excited, I feel like I’m gonna make a difference and someone paid me for it too. That’s just icing on the cake but come in full circle back to why did I get into the business, it was the money and the freedom. It’s funny how now, in the back end, the money is the last thing. But you’re in a different position too after you sell the business. It came to me. You can’t have that attitude. I feel very fortunate and blessed that I’m the position I am because it’s exciting that at 45 years old, I get to write the next chapter. That’s exciting.
Ryan: I love it, I absolutely love it. I’m definitely putting that down, those little three circles, that’s fantastic. Troy, what is the best way for our listeners to get in touch with you?
Troy: Because I’m not in a company yet, I’ll give you my gmail, [email protected]
Ryan: Troy, I had a blast having you on the show.
Troy: Thank you for having me, Ryan. I really enjoyed it.
Ryan: I hope you enjoyed the interview with Troy as much as I did, I absolutely just had a blast talking to him.
Three of my top takeaways from talking to Troy about the things that I think he did really, really well and that are applicable to everybody. The first one, how he self-reflected on what his passion was and realizing that he didn’t have the passion anymore. I think it’s a big struggle that I’ve dealt with and a lot of other people that I know, they’re stuck in their business and they have to either double down because their industry is changing or whatever it might be is that really knowing what gets you out to bed and what you like doing.
Obviously, sales was Troy’s deal. Knowing that he was not gonna be happy without sales, it was a huge deal for him. Growth and creativity in growing, being a huge driver for him, trying to find that satisfaction without the business was gonna be tough for him. The second thing that I think allowed him to make a very good decision on how all of this journey went for him was knowing his numbers. Obviously he repeated it a lot because it is that important. You need to know your numbers to be able to make that calculated risk.
Guys, if you understand that you no longer have any passion in the business, then you need to know the numbers so that you can weigh the risk of doubling down to keep your passion or whatever it is. Knowing the value of your company and knowing how much you need to walk away with net proceeds, money in the bank and what your lifestyle needs to look like, it’s huge because how do you make any good decision if you don’t know those numbers, because that is the scorecard that allows you to make the decision of what you wanna do next.
The third thing I just have to say is that retirement three circle idea, because knowing who you wanna spend your day with is so important. If you can take the financial need away and the risk that a business has or whatever your current situation is, then it’s all about what is it that you like to do and who do you wanna be surrounded with. I think that is literally the dream of anybody and it’s no longer retirement, it’s just waking up and having a blast all day long. I do believe that getting paid, it’s showing you how well you’re doing whether you need the money or not, having some metrics on, yes, I am a doing good job for the stuff that I love to do.
I hope you enjoyed the episode with Troy. I look forward to next week.