SHUTTING DOWN a $1.2M Business...

Hate to say it. I think you should try to get out of business today. We're in Washington visiting Casey with Epic Lawn and Pest.

Has it been kind of stressful? Hell, yes.

We have to get a business loan. I go, if we don't get a business loan, we're not going to make payroll. We're going to get shut down because we don't have money for L and I. And he was like, well, I don't want to.

Is there a rush in it to see how we can kind of keep going with it? Sure.

The business is on Track to make $1.2 million this year, but they have no money. We have to collect $120,000 F tomorrow, like, within a week.

I know.

To make payroll. They have hundreds of thousands of dollars worth of overdue invoices. Why do we keep doing service if we're not going to get paid?

I want to go choke some people.

They took out a shark loan to make payroll this week.

I mean, our business loan that we got was only enough to actually get caught up.

I told her not to do it. She did it anyway.

Casey bought the business and has no idea about his numbers.

It's all wrote down. Lawyers, blah, blah, blah. Oh, here we are.

They know they sold you a bill of goods because they were bleeding cash every month until the day they sold it to you. This is the business Turnaround show. My name is Mike Andes. I'm the founder of Augusta Lawn Care. We have over 190 locations around the world, and I travel the country fixing struggling businesses. Our goal is to give Casey a strategy to turn around the company in the next six weeks. All right, so here's the road out, and I would give it a 10% chance of working.

That's horrible.

All I could think about is how I crashed in the back all night. It was terrible. Luckily, there's nothing around for us to hit. That's good. I don't know if that's too bad. I think that's good. Should we dump? Yeah, I can help you.

I think.

It's funny how many people commented that they also wouldn't be able to do this part. It's the worst part.

Oh.

We'll be there 20 minutes late, Keasy. Don't worry about us. Just out here hauling poop around. Got an acquisition. They're doing like 3/4 million dollars. Looks like he added, like another $250,000. Got a bunch of debt. He's paying the owner back.

Put everything together as an llc. Both companies, you know, hillbilly Hollers, does DBA as, and then, you know, we have the LLC with epic lawn and Pest.

He's got his wife and two office people in the office and 22 employees on a business, $1 million in revenue, and it has net 60 for payment terms, which is people don't pay. But 60 days after you send them.

The invoice, me and my wife are supposed to pay ourselves. But that seems like a struggle on itself, too, just to kind of keep. Keep things running.

We have $1.2 million in annual revenue. There's 22 employees in the field. Let's assume everyone works full time, but completes about 1500 budget hours of work every single year. That's how I came up with a $40 per hour rate in the back of my head of what they were actually charging. And I can't say raise prices because they're all doing a bunch of commercial work on places like Walmart. They just need the minimum level of service completed, and so they're usually going to go after the lowest bidder on a contract.

Financial struggle. That's the biggest one I'm looking at here. Kind of need some help. I would really appreciate that. I mean, if you're interested. It'll be great. Thank you.

What I want to do is probably gut a lot of their bad services and low profit margin work, but I probably won't be able to because of all the debt and overhead they have. They need to have, like, at least a million and a half revenue to be able to sustain that.

Do you guys know where Chris is at?

Cool. Somewhere out here.

Come on. Mikey poo. Are you alive? How's it going, buddy? You alive?

My first year in lawn care was with him. I was a CNA for 17 years. So two totally different things coming into everything. And so it has been a major, big change for all of us.

Gustavo. Adrian.

Did they leave already?

Oh, Ford's still here. Oh, Jim.

They met. What time is it?

Did we show Ulysses for next time how low it goes? Need fuel. You got it. I'm gonna go, you guys.

So this is my sister, and she is the billing administrator. Yes. Well, what I do is I. I pay bills. I make sure the guys have money. I do the banking. I do taxes. I do payroll. I do bids. Kind of help Maria. Maria does all of the scheduling. She's pretty good at what she does. Raquel does all the billing.

Commercial billing.

Commercial billing. Because that can entail a lot. Yeah.

Commercial billing is the biggest headache for sure.

Yeah.

Yeah.

I. Gustavo number here, so, yeah, I.

See that roll out.

Okay.

It must be a little tired, babe. I'm gonna let them know Larry's not.

Showing, so they got to work together. Who did Xavier go with? Is he still here?

No, I think he went with the boys.

Nate.

Him?

How?

Well, maybe not. I don't know. Maybe he is here. I don't know. It looks like he's not here.

And then just getting people to show.

Up for work, it's like.

Well, I have people who kind of fill in.

I think Kenzer's still sleeping. Irrigation.

I don't know.

He's. He normally gets up, what, seven?

At seven. How's it going, everybody? Good, man.

Thanks for having us out.

Appreciate it.

Casey.

Raquel.

What was her name?

Raquel.

Raquel, Candice. Nice to meet you.

This is a crazy cool spot you got. Do you live on site?

Yes, I do.

Okay, nice. And so then this is kind of shop space up front back there.

Cool.

That's super nice though. Like, is it an acre?

Yes, I think it is.

Yeah.

I don't know. I just walk around it all day. What do I do next?

Did neighbors give you any trouble or. Not really.

You know what, they're quiet.

Good.

So I owned Hibli Haulers up in Yakima. I started that when I was 20 years old. 19, 20, 21, things went bad. I was young, right? You don't really know much. Got out of it for a while. Was drilling water. Well, drilling for a little bit. That was 16 hour days, 20 days straight. I was like, I'm better than this. Wanted to come back home. So I worked for the city of Yakima for like five years doing garbage, driving around, doing more out all I need to smell fresh cut grass. I seen all these other guys doing landscaping and stuff like that. I was like, I know what that's like. I miss it. So then me and Candice, we've been together now four years and she's like, babe, why don't you do what you like to do? Do what you know. So what do we do? We did it. Started to hillbilly haulers again. And we landed like 12, 12 commercial accounts, apartment complexes, over 100 plus thousand. I was like, okay, cool, we can make this work.

And that was that old lawn care.

That's. Yeah, lawn care, lawn care, junk removal, irrigation, fertilization, called on a Z sprayer. And I was like, oh, I met him. I called on this. I'm gonna make a deal. Okay, cool. We could use it because we got the other spray truck. And I was like, I'm tired of walking. I'll take it. Thanks. A week later, dude calls, goes, hey, Casey, you interested in taking over this company? I was like, what are you talking about? I was just like, what? So we had a sit down. He goes, I'm going through a nasty divorce. Do you want to take over? I was like, how? Okay. How do you do all that? It depends on what it costs. So we did it. I'm not going to go through bank. It's coming out of the business every month. We signed papers for so many years. So we got a five year plan through escrow. It's all wrote down, lawyers, blah, blah. Here we are.

That was all the pest control stuff.

Fert pests and what they do. Yes. I brought with us a street sweeping in and junk removal. But up there still irrigation, the lawn care, side trimming. Same thing they do here. But we just implemented it all into one. So now we're all one big company. It's an LLC S Corp thing.

How far away is the service area for like the Hillbilly Haulers originally?

Well, that is an hour and 45 minutes. We service Wenatchee to Prosser. That's the Yakima side. Epic side. Does everything from Benton City to College Place.

And so you still service over there?

Oh, yeah. I got crews up there with trucks and they have.

Do they have a separate shop space up there then? Oh, okay.

It's just not as big as this. It's smaller.

Got it. And do you go up there very often?

Every other week? Every other day. Okay, I'm back and forth.

Okay. All right. They have two locations. One in Yakima, Hillbilly Hollers that has four employees. And the second one I'm at now is in Kennewick, Epic Lawn and Pest with 18 employees. They do like 10 different services that I've seen so far. Yet the shop and the equipment are fun and cool. But what I really want to know about is this acquisition. How long has it been since the acquisition?

I took over in me and Candice. We took over January 14th.

This year.

Yes. Oh.

So it's been very new and.

Well, it's crazy because the old owners were never. They weren't really present. On a good year, they made 750. On a. On a better year, they made 1.1.

Okay. And what do you make with just your previous business last year?

That one, we were at 175, something like that.

Oh, wow.

Because we just. I just started.

Oh, wow. So you really acquired 175 to 1.2 million. What's the monthly payment for this one? We.

It takes out of business. This one is seven.

$7,000 a month. We just take it ends up for five years straight.

Yep. 300. And we got this for 350.

350. Yeah.

Yeah.

That's not bad. No, I mean, you got all the trucks and equipment and everything. Do you get all that signed into your name? Awesome.

Cool.

That's good.

Yeah. And those sweeper trucks went out, right?

They gave you a truck instead of payment?

Yes. $48,000. We.

For a street sweeper? Yes. How is that even possible?

So Alf, that's a third party I was talking about through the Walmart thing. They. They owe us right now. They're. It's been a struggle. That's the. The cash flow is the hardest part. Those guys owe us over 90 some thousand right now.

That's the property management company for Walmart. All street sweeping or do you own and mowing? Oh, you do mowing too?

Okay. Yep, we do that too. Yakiman.

And they have a reputation.

Mm, no, no, I don't. I don't know if we're gonna do with them next year. I don't know. But my biggest thing is I want to go tri state. I want to. My hometown's Boise, Idaho. I want to branch out because there's eight Walmarts over there. I've already got a foot in the door. Now I'm just making contact to try to get open that door. Let me put a foot on the ground and do what I'm doing here over there. I'll do it over there for a while. Get it running and just make it just a. You know what I mean? Just to go.

There you have it. Casey said the first location at $175,000. And in year one, which come to find out isn't the case, way more than 175.

Did we.

Yes, we had almost 400. I do the finances. I do the billing.

Okay, so let's assume that that number is correct. That means that they're doing triple the business now doing $1.2 million in annual revenue. He wants to expand in Idaho, but I still don't know if the business even makes a profit. What do we got on the stilts today?

That is. That's my. My pride. That's my hobby. Okay. Race car, drag racing.

Oh, wow.

It gets real expensive. And the way I see it, all of this, my crew, everybody, my family, all comes first. That is later. That is. But I could go crazy and just like woohoo Swipe the car and go. But no, that's.

No.

I don't know. The whole Walmart thing, I don't know. Sometimes I ask myself, is it worth it?

Right. What do you pay per month for the rent?

This one we pay. What is it? I think three.

That's not bad. Not bad?

I didn't think so.

You live here too?

Yeah. So, I mean, it's like being on site. It's great because these guys used to just run a havoc, I heard, you know, but they had no. No structure.

Yeah. Did almost all the teams stay after the acquisition?

Oh, yeah, they all stayed.

Really?

We brought extra on and got it. Stuff like that.

Got it. And then your current crew from like the previous business, they still operate as is.

Oh yeah, got it.

Oh, that's cool. Yeah, very cool.

Got a good team though. I mean, it's just these guys know what they're doing.

They know these guys are not getting things done in a timely manner.

I don't know, it's just. I don't know, it's kind of fun.

And is it your girlfriend or wife? Candace?

Wife.

Wife. And then so does she kind of leave the office in the two assistants kind of thing?

I think so. This computer stuff, not for me. Not my thing. New. It's mostly for the. For the ladies. I'm outside either helping fix things, getting things going, checking sites, doing, you know, driving here. I mean, there's days I'll go out, do irrigation, I'll go out mow, I'll go out, trim, I'll go do what needs done to keep things solid.

From a cash perspective. Like, is it still like we're just trying to hit payroll every time? Is that sort of where we're at right now?

Yeah.

Okay.

Because a lot of we have a lot of commercial properties and most of their payouts are 60 to 90 days. And so when we run seven days a week, the fuel bill and hourly wages.

Well, the factor too is the fact that ALF is so far behind and.

Since we've moved over to EPIC and combined, we don't get payments. And then, you know, and then it's like maybe once every three to six months. This year, I think they've only made two.

In your, in your contract with them, what was the billing terms?

60 days, 60 day payout.

So.

And then every week after the six.

Well, after you waited your 60 day period. And if you bill weekly, you'd get weekly payments, which we've seen that for.

A minute, you know, last year, but not this year.

Yeah, last Year. But not this year.

Well, that's because first we were going through Superior to do Hermiston and Pendleton Walmarts and then the Lowe's here. They never paid us. They're $18,000 behind. Never paid us.

Okay. Different property management company.

No, it was just a subcontractor from alf. So we were basically the fourth. Yeah, yeah.

It's like them, alf, Pendleton, then you guys.

Yes.

So then we cut them out. That's how we got the other ones.

Directly to ELF got it through ALF.

But we're still third party.

Okay.

Yep.

Now ALF is over $120,000 behind on payment as well. So we have the 18,000 over 18 through Superior. We have over 100,000 through ALF.

And they did say that we were going to start receiving payment, Right?

We will see. I told you.

What was the. What was the email they sent yesterday that we're on schedule?

No, he said he was going to try and put us on the schedule for payout. Yeah.

Being as big as we are now, I've seen the hardest part is the money flow. It's easy to go make the money.

Sure.

Yeah, we'll go. We'll go do it. But it's receiving it.

And so what's the level of discussion we've had with them so far? Is it like, are we emailing them? Are we calling them? Are we telling them every time there's a po What's.

They avoid our phone calls. We've tried to call them for months and they avoid it. We send emails and then they don't. They'll email us, like the work orders to get the job done, but they'll totally avoid the question of payment or invoices or anything. And then finally we got a hold of the higher up. Well, no, we got. Actually got in contact with Walmart and they called them and then we got a call saying, you don't do that. You're supposed to talk to us. And it's like, well, don't avoid us, don't ignore us. Don't anything. Because I'm going to go above you if that's the case because you guys are obviously not communicating to everybody who you're supposed to for of our issue.

So did they pay? No. Why do we keep doing service if we're not going to get paid?

And then that one little check they sent us was like 10 grand. I was like, what's that going to do?

So I had to come merge all of the past invoices into this program that we're using now. But the program is not user friendly that we use. Sometimes it works and sometimes it doesn't. Sometimes it'll pull things up that you want wanted to. Sometimes it pulls up something completely different. I had to come strong with this is what you owe, this is what's paid. So it's been a huge learning curve for the both of us. Us taking the truck in lieu of payment.

They gave you a truck instead of payment?

Yes.

$48,000 we.

For a street sweeper? Yes. How is that even possible?

We talked to financials and they said you can take it and we'll use it as a write off. And it's basically a write off.

Why did we take payment with a truck though?

Because we were scared that they weren't going to pay us at all. Because when we were making our phone calls to everybody, so they were like.

Hey, we'll pay 48,000 with a truck.

No. Well. And we were talking to people and they were telling us that ALF was going under.

So why are we still working for them?

That's my stupidity. I didn't want to lose that rapport with Walmart. Even though I get it, it's not gonna help us financially. I understand that. But I feel bad because they don't.

Feel bad for us.

Right. Which we know Walmart pays their bills. This third party is the problem. That doesn't.

But when your third party is paying with trucks, that's like a huge red flag. Right. There's liquidating assets.

I know, I know. In the long. In the midst of things kind of.

But they want you to get on the property because they get paid.

Yeah.

As soon as you stop that, Walmart will not pay them. So the only way to actually have leverage is to stop service.

Right.

One of the things we're talking about with Casey and Epic Lawn and Pest is about their cash flow. And we've created several tools inside of Homeworks, formerly known as Copilot CRM to make sure your cash flow stays positive, including if someone is overdue, like they have this customer owes them hundreds of thousands of dollars. I'm going to charge them fees automatically when I set it from my settings. So if they're 30 days fee, 60 days more fees. Also we have a pay in full option. So anytime a customer is paying a deposit, they have the quick option to be able to just check a box and pay the entire invoice in full deposit thresholds where over a certain dollar amount I'm collecting that money prior to the job starting cards on file requirements. So an estimate can't even get accepted without a bank account or credit card on file. These are the type of things you can do to improve your cash flow and prevent the stuff from happening in your business. Go check out Home DOT works today. I would be very hard with them. I would give them a certain amount of time to respond. I would be having a lien being put on the property because then Walmart gets involved and they will immediately go if they've been paying them and then you're stopping service and putting a lien on their property, there'll be a problem. If you don't think you're gonna get paid, don't keep doing the work. Take off the table. The fact that it owes 100 grand and that's sinking the business, Take that off the table. It's the fact that 90% of our revenue isn't them. And we don't even put our brain space towards the vast majority of the revenue. We're focused on this one customer just not paying us. It's killing the rest of the business. Not just from the cash flow. From a mind share perspective, yeah.

The biggest revenue we got is our fert and pass.

Like as of today. Only thing I have talked about with you is this one customer and I already built it.

That's the only problem we got.

And it's 10% of revenue.

No, it's not. Casey thinks it's the only problem we got, but it's not.

Right.

It's a problem everywhere. It is what it is.

Okay, so let's move past the Walmart customer since there are a lot of other, there's a lot more juice to squeeze.

Yes.

The 4L framework shows the four reasons why every home service business stops growing. It's either a lack of liquidity, cash in the bank, a lack of leads, a lack of labor, or a lack of leadership. From your perspective, outside of that one customer and their massive receivable, where's the current issue in the business payroll?

Because I feel like just making it right and it's stressful and I told, I watch hours. I do all this and it's like these guys are not getting things done in a timely manner. Because I've worked the field myself, so I know what it's like and how long it takes to do things. People think, oh, I know how to cut grass, I know how to do this. It's easy. I cut my lawn all the time. And I'm like, it's not that. It's not that. I promise, you know, Because I've been out there and I've done it. I know. And I tell Casey, like, why are these guys showing in? Us showing up at 6:30, like at night, they start at 6:30, 7 o', clock, get done by 5 when you're supposed to, or 4, whatever. And it doesn't take long to do what they're doing. And so I feel like they're milking the clock. It's been a challenge. It's been a challenge trying to keep them on the straight and narrow and focus and try and love their job like we do. Some people work, right? The quality of work, taking care of the property or the equipment, like, you know, like it's theirs because the equipment's not cheap. Even the maintenance on equipment's not cheap.

Who do they look to as their leader right now? Okay, so you run meetings.

Yes.

And if someone's calling out, who do they contact?

Me.

Okay. And if there's a breakdown throughout the.

Day, who they're contacting, Usually him, but he doesn't carry his phone around. And so they call me. Even the sweepers, when there's a breakdown, they call me in the middle of the night, so my phone's constantly blowing up. We have enough work for two crews, but we have one truck. One's down right now. So they all work together in one truck. And they do all of the Yakima on Wenatchee area, Sunnyside and stuff like that.

Yeah, they get it all done. It's been. It's her son, her oldest son. He'll call. What do I do? Casey, he's like, dude, just keep on track. Just. Just keep going, like. But I'm tired. We all are tired. You want me to put my boots back on? I don't think you want me to do that. For some reason, they just listen to a woman better than they do a man. It seems like, to a point, maybe that's just, you know. But other than that, we do work together. You know, we do. On problems and what we should do here. Like I said, we were both out in the field. We both know some of these younger guys are just. They don't. This new generation seems like they just.

Don'T have the work ethic like we do. They don't.

What do you do?

You know, and their days over there in Yakima, because we alone over there have 25 properties at that crew. It's hard to keep a crew over there because it's hard to find people that want to work hard. And this isn't easy work. And finding people that you can trust is Hard.

The numbers I got were from April. So, like, I'm. I kind of need to reset because, like, that was all way old. So, like, in the bank now, from a cash perspective, what are we at?

We'll make payroll.

So basically, it's like it's floating above zero to get payroll, essentially.

Okay. Barely scraping vibe.

Like books good on paper.

We. Well, we have got. I got behind on L and I. And then with our. Our payroll taxes and with the Department of Revenue, you know, I got behind a lot. And in order. And then I made payroll. And we got so many payments in for the next two weeks. And I barely made payroll again. So it's like I didn't have money. And so she held off on submitting it. And then, of course, you get fined a thousand.

Top of that now.

And so I told Casey, I was like, we're gonna have to get a business loan. Because if we don't pay L and I, they're gonna shut us down. They'll shut us down. If you don't pay your lni, Department of Revenue is more lenient. You can make payments this and that. Set it up with them. If you just be in contact with them. I go, but you have. You have to pay LNI, like, you have to. And we already owed, like, $10,000. And so I was like, we have to get a business loan. I go, if we don't get a business loan, we're not going to make payroll. We're going to get shut down because we don't have money for lni. Everything else. And he was like, what? I want to. It's not a matter of wanting. You have to. Like, we have to.

Has it been. Has it been kind of stressful? Hell yes. Is there a rush in it to see how we can, you know, kind of keep going with it? Sure.

How much do we have in total receivables, like, owed to us now? I know we have the one big, like hundred grand, but how much total?

240,000.

Yeah.

Slow pay, buddy.

That's what I'm saying. It wasn't just. ALF is the one who owes the.

Most, like, half of that almost.

Right. And then there's other properties that owe 10,000. There's one that owes.

And are those all over 30 days overdue?

Well, see, and then it comes back that. So one owes 11,000, but that's a 90 day payout. So every 90 days they make a payment.

The hardest thing coming into this too is that they started the company with no money, basically. Then they come in and Then when they're servicing and paying their employees from March and all those commercial properties are net 90s, 90 day payouts, they're making payroll and all this other stuff. The, the equipment, they came in with a bunch of broken equipment or the company had that. So they're forking out all this money for 90 days and then barely seeing payout. Then it's oh well, you guys change entities. So then it puts you out another 30 to days. So now we're at six months before we even see any payments.

It's nerve wracking. At first we were nervous. How can I put that? I was like, are we doing things right? So then I'm always watching YouTube and you know, Augusta, you know, I've always, I was like, man, how'd that guy do it? Like how did Mike do it?

You know how much that 240 is overdue though?

Overdue? Yeah, 68,000.

So a lot of these people, they're within their term, like their 90 days.

All the Yakima properties, all the apartments, Taco Bell, they're on time. It's the commercial properties over here that we run into the big issues. There's a couple In Yakima, like 2.

How much of our 1.2 this year is going to be from third party? Like I know 10 to 15% is Walmart. Then we got the Amazons. It's like 20%.

I would say at least 50%.

So half of it is coming to Terry Park.

Oh yeah.

Okay. That is sucking 100% of all our time and energy of the business. Is that the third party dealing with third parties?

Yeah.

Yes.

So why do you, why don't we get away from them?

That's what we have been trying to terms with. So this year we're stuck in those contracts. Next year we're talking about. Okay, we're not doing third party because it's a pain in the ass.

Why are you stuck in those contracts? You didn't sign the contracts, didn't you? Yes, you did.

They're year long contracts.

I mean like, was it the previous owner we brought Walmart when we renewed?

Well, they were.

Oh, you renewed. Okay.

So we didn't sign over the business until February. So they were already renewed since November.

Of the previous three year contracts.

But you start a new entity.

No, no.

You guys took over their end.

Yes, only tax purposes because of all.

The, the assets, all of the equipment and everything, the trucks, we would have had to switch over into our name and it would have costed more money. And we're Small business. We were very small and we don't have thousands and thousands of dollars just on and we didn't have the credit to go and apply for a business loan and everything else. And I mean to take this on. So in order for us to be able to take this on with no money down, that's how we had to do it.

By the way, any business that can't get an SBA loan or loan financed probably is an acquisition you don't want to touch. If you need seller financing, it means you probably should not buy the business and that the business might not be worth anything. All right. Are you making payments currently to the previous owner?

Every month.

Does he know about all these contracts and all the rest of it?

Oh, and mind you, when we came into all of their account, they have charge accounts everywhere.

They're all max out charge accounts. What do you mean?

Ranch and home for Seoul.

Oh, all the vendors. Yeah. That's why you'd never take over an entity. I know. Okay.

Damn it.

Okay, so how much in terms of payables? Like things like vendors, all these other things you're talking about, how much is that right now?

I've been trying to make small payments here and there because our cash flow has been so scarce.

Do you know what the total is though? Like Payables?

We know 10 is Rancho.

It's probably like 30,000.

Okay. For vendors and then Department of Revenue workers comp at L and I, are we up to zero?

I have to double check with my financials today because I did see some, some payments come out. I mean, our business loan that we got was only enough to actually get caught up.

Okay, and how much was that?

85,000.

85,000. And that was SBA or bank loan or what was that?

SBA.

What's the monthly payment on the 85?

27 weeks?

2,700. Oh, this isn't an SBA loan then?

No, I told her not to do it.

Oh, she did it anyway.

Where'd you get that, that 85 from?

We personally don't qualify for bank loans because we don't have a credit score of that to qualify for that amount to cover. So I had to go through one that I found on payment process.

Yeah, okay. And everyone's like seller financing. Buy it for 0% down, buy it with no credit and all this stuff. If the business is not financeable from the bank's perspective and you are not finance worthy from the bank, you probably shouldn't be buying a business as a rule of thumb the same way that someone should be having a 0% down on a big house. You probably shouldn't be having 0% down on a business. You have no idea what you're doing. And then how long is that $2,700 per week coming out? Do you know how long it takes to pay off is like a.

Six months, 40 weeks.

40 weeks. Yeah.

It's going to screw us.

Yep. It's going to be 120 some thousand by the time it's paid off.

It's basically like 40% interest.

Right. But we have, we have option to pay it sooner, sooner and, and they will take some interest off or whatever. Going from four mowers that we had just for our crew to now we have so many crews and so much equipment and two sweeper trucks and everything to keep up the maintenance on. That alone is a job itself.

See, mind you, I was, I didn't want to go that route. I was like. But then we were talking about it and she's like, well if we don't do it, this is gonna happen. And then again you're in that. I don't like doing that kind of stuff. Cause like to me it doesn't seem.

Yeah, but you gotta make, you gotta like there has to be cash.

Yeah.

So like I don't blame her at all for taking the 85. When you have payables, which eventually vendors don't give you stuff, eventually employees stop showing up and eventually if you don't pay L and I in department rent, they shut you down.

Yeah. So we had to do it.

You had to do it. The thing is, I believe that 85 is probably needed very quickly again because we spent the money and if we don't A, get money quickly and then B, fix the profitability of the business, we will just keep doing this every three months. When it comes to the 4L framework, my biggest concern is liquidity. They have no money in the bank. They have 30 to 40 thousand dollars of payables. In other words, they owe their vendors money and they're just trying chip away at it just so they keep giving them product. And we just took on $85,000 shark loan that we're paying like 40 plus percent interest on $2,700 per week. In my opinion, even if they paid on time, you're probably running a negative 5 to 10% profit margin. And so not only do we need to collect just to get a breathing room, we also need to fix the business. The trouble is like you're not going to get this 85 again, the good thing is you don't have a lot of credit card debt. The bad thing is this 85k with $2700 a week, that's 10 grand every month. Over 10 grand is sapping us out. Okay, this is gonna be crazy. We gotta talk to the owner that you're paying right now. What's in the clause? What's in the lawyer's contracts?

The thing with that is that his ex wife is not gonna agree to anything.

I could care less. If she agrees, you give the money.

She was the part owner.

Right, but. But, like, what does that contract say? If you don't pay?

If we don't pay, they can take it back.

Okay, and if they take it back right now, is that a bad thing?

It's not something I want to do. You know, I want to be successful. I want to be able to do something and run with it. I mean, I know it's doable. I know it's doable. We just need to be able to collect and stop services that don't pay.

So let's look at this a few different perspectives. I agree with you. Let's stop services, not pay. We'll get to that part. I need breathing room right now. We are. Whoo. We're really close. I just want you all to win. I really could care about cameras. Like, I know exactly the feeling of running $1.2 million, losing money every single week, and realizing, like, I had to go to my manager. Like, we're changing everything right now because, like, it's not a function of, like, oh, this might work. It's like, if we don't do this, we will. We will not have a business in a couple months. I would strongly recommend negotiating on this contract with the previous owners. They have given you a bill of goods. They have given you payables. They give you a business that has a whole bunch of problems with it. Like, it's not like you bought a business that's doing good and is cash flowing. If a business is losing money, it is worth nothing, zilch, nada, nothing.

Well, and that was my argument with them. Like, when they. Because they wanted $50,000 down, and I said, you owe more than in debt, and you want me to take on all of this plus pay you 350,000 plus 50. You're nuts. I go, you're nuts.

But I've seen the good on the other side of the fence about it.

Well, we got to get to the other side of the fence.

So that's why I didn't sign nothing with putting anything down. And because the only way we could really do it for us to be able to afford it is take it on the entity.

How long is the contract? Like 10 pages, 12 pages. How long? Like the one that you signed. Do you know where it's at? I would run that into ChatGPT because. Because I think you should be able to get out of it. And. And the reason is because they don't want to take it back. It's a toxic assets that's losing money.

It is.

Oh, we got the documents.

Let's go.

Let's see how bulletproof this thing is. Is this all of it right here?

I think so.

So my thought process here is to try to find a loophole for them to not have to honor this contract. Have they divorced? Yes. Since then, do they live locally?

No.

These little details inside of a legal contract are super important. For example, if they're paying an LLC that might have got dissolved because of the divorce or is no longer recognized outside the state, that could potentially be a loophole. They have good attorneys.

They know what they're doing right here. Is this what you're. You're trying to look for? So, like the promise to pay?

Okay, so you're paying. Okay, so you're actually paying $7,000 a month because. And they do have an interest rate of 7% on it. To be clear, I'm a big believer that your word is as good as your bond. And if you say that you're going to buy a business, you've got to hold up your end of the bargain. However, I do think the seller had some ill intent and was trying to hide certain things from Casey. And for that reason, I think that it is within the bounds of reason to think that there should be some restitution or some give back from the sellers, knowing that they were selling this business to Casey and he did not have the skill or the capital to. To be able to run it.

We polishing a turd, Mike?

What's that?

We're polishing a turd.

Yes.

You knew that.

I didn't.

After pouring over the document, I realized there's probably not an easy way to get out of this contract. And unfortunately, we don't really have the money or time to go hire attorneys to try to fight the previous sellers. The right thing would be contacting an attorney and trying to get through this. That's going to be a long process. Oh, man. Expensive.

He feels my pain.

Do you have any personal assets? Like, I hate to ask the question.

I Got a home.

Is it paid off?

Nope, we're still on it. That's a long story short.

That is big equity. Is there a lot of equity in it?

I got squatters in it.

Yeah, you got squatters in it right now.

Girlfriend and her family got it. Yeah. Struggle to.

How much equity in the house do you have?

At least 100 or more.

It's worth like 400 and some thousand. Keeps going up in equity. But that's a court battle in itself.

That's gonna cost a lot of money.

Yep.

And we've been kind of putting it off because it's like we don't have the extra when we're so red, you know, like, going towards the red.

I hate to say it. I think you should try to get out of the business.

Is that the best thing? Just go back with hillbilly hollers and do our own thing? Because when we came over, we were in the green. We didn't owe anybody anything. All of our stuff was paid off.

That spray truck was owned out, Right?

Everything was owned out, Right? That's it. And we didn't even have issues with people paying besides alf, you know, and.

Cause you. Oh, man, that's. Your cash flow's just decimate. With the $7,000 going to them, $10,000 going per month to this loan. There's no cash. You have payables up to 40,000 of vendors. It's a toxic asset. The $350,000, they probably have maybe $80,000 worth of equipment, actually. So you paid $220,000, $280,000 for a. Like, literally something that lost money. Oh, man. There's so much inefficiency. You can just look at it. The fact that there's 20 employees and a million dollars in revenue. Your effective hourly rates, like $40 an hour. You'll never be able to make money on that. The prices on those contracts are way too low. Even if they pay, like, that'll get us out in the short term. But then I'd immediately be trying to get out of all the contracts. But we need to be able to make enough money to pay off these. These month monthly payments. So just between the monthly payments, right now we have 10,000. We have 17,000. So we need to be doing 80,000amonth in revenue. Just to pay off the current fixed expenses. Those monthly ones, 60amonth?

Well, no, it's like 70 maybe sometimes. Well, in August was the least. August was our hard month. We didn't see anything really. Barely enough to pay payroll.

So that was like 40. We're a couple weeks away from bad things happening.

Right.

Okay. All right. Do we have any communication with these people at all?

Yeah, with Chris, the. The guy, but not really the female, not his wife.

Okay.

X.

And is he a reasonable person? Have you maintained decent relationships or like, have you gone late on some payments or anything like that?

No, he's. I think he more so avoids you guys. And he was like a pushover when it came to his marriage in the business. That's why the employees ran the company. But yeah, he's more of an avoidant personality.

For sure. Avoiding contact is a good strategy when you know you sold someone a bad. A bad situation. Like if you sell someone a lemon, you delete their phone number after you sell it to them on Craigslist.

You know what's crazy is that we've been here. I was kicking ass. I feel like to a point, we've doubled what they used to.

Well, it's because he was. He was in a president. He wasn't present. He was already ready to be out three, four years ago. He's been trying to get rid of this business for four years.

Yeah, but the worst thing, honestly right now, Casey, that could happen, is you double the business again, you'll lose twice as much money.

All right?

The only way out is that we collect on the overdues and then we use that money to then change the business model. And change a business model means not doing 1.2 or 2 million or 4 million and definitely not going to boys. It is a function of taking what we currently have and making it profitable. We have taken leadership between now two spots where an hour and a half between. That culture will never work at a million dollar sized business an hour and a half apart where the owner's bouncing back between both of them in low margin. No leadership over there. Like both will die. So even if you had a good thing going over there as soon as you came here, that's now going hell in a hand basket. We are firefighting and therefore not being able to be good leaders for them and not being decisive in terms like, oh, these are the services we lose money on. We will not service them, we will not do these jobs anymore, we will not serve these customers anymore. Like we need to be locking in. And I would honestly say if we can't get this in 21 days, 14 to 21 days, I don't even know how, how it works. I'm very concerned by the fact that they don't even know how much revenue they make from Every service. Because if it sounds like later on in the interviews they reveal that irrigation.

I think it was like 500 something. That was a lot.

That's a moneymaker.

And if that's the case, I'd tell them just to cut down to that. But then they told me like 178,000. Even a ballpark. Like, do you think it's around 170? Is there a lot of irrigation?

That happens.

Oh, yeah. So the numbers are all over the place. And if you don't even know how to segment how much revenue you're making from every service, good chance you have too many services. They do everything. Landscaping, ice and snow, pest control, spraying, lawn care, sweeping. And it's only a million dollar business. So technically they don't have a million dollar business. They have 20 services that produce $50,000 each. And that's a horrible business to get into one more payment to them. When did you get the 85 grand loan?

Two weeks ago.

Yeah. Okay. We have to collect $120,000 faster than tomorrow, like within a week to make payroll.

Yeah, well, payroll's already.

Is our. It's coming this Friday, Coming out this Friday.

I have to process it today.

Okay. So I would contact whoever is overdue, not due, because like, they're within contract. And we have. We never take net 90. You will never make money in this business.

That. Those were already. Those were already the contracts here.

Right. So. Right. We've. We've taken on a toxic asset. I agree. I'm just saying, like down the road, we will never take net 90. And if I. Well, it's a third party and we got. Great. We will not service you. I want payment the day I finish work with a credit card on file. And I'm pulling or I'm pulling out. Ach. Nothing more, nothing less. Like, that's it. That's down the road right now. We need breathing room. We need 120 grand if that's what's overdue. We need to say we will not service the property at effective immediate, which means tonight we're not going sweeping, tomorrow we're not going to be doing the lawn. And so the biggest fear I have right now is that we pull like the Trump car. Like, we will not show up and then they just don't pay. Like, okay, great, fantastic. We will not pay them. They'll go out of business. That's what they're banking on.

And then it's like a lawsuit that I have to go and do all this.

Well, we don't have the cash or the long the time.

So then it just sits there.

They know this, they know this.

And then seven years they write it off and. And you were just a bump on the luck.

Yes.

We made a bad acquisition. We can chalk it up to that.

We did. I mean it was like a, it looked good on paper. You know, I seen the vision, you know, over the fence, but behind the fence.

Nothing wrong with being visionary. You just gotta have the skills to back it up and be honest with people about how much you actually know. And he's posing as like a seven figure business owner. Has it all together when he doesn't. And it's fine if you don't. We all make mistakes or like we get into stuff that his business grows so fast that we're like, oh, I don't know what I'm doing. Just don't try to put the facade on that you know everything. You'll lose respect to people really fast. Alright, so here's the road out and I would give it a 10% chance of working. But the alternative, if the 90% chance is that we hand the keys back to the seller and say sorry and then we run the risk of them coming after a person assets. There's a 10% shot in the dark that we can make this work. Stop service at all properties that they are overdue on $130,000. Stop service immediately. Was it Wednesday? No, today's Tuesday. Wednesday. Give them Monday. At Tuesday morning 12:00am it's like after Monday. So give them that business day and say if we do not have money in our account by that time the contract is terminated. You're also going to send another email to the Walmarts and say we're going out of business unless we can pay this. Like this is sinking the business. And so we really hate the fact that we are ruining our relationship with you, but your third party is not paying us and so we are stopping service today and we really hate that because we love you and we love the property, but we are going out of business if this doesn't get paid by this date. And just so you know, here's the email we've sent them. Next thing we have to do, contact the seller and negotiate 12 months of no payment and say look, we didn't want to do this, we did not know we were getting ourselves to. And just be straight up honest. We do not know how to run a $1.2 million business and we are over our skis. We need 12 months and we have every intention to be able to pay You. We really, really do. We really want to, but we need to renegotiate all of the contracts and gut this whole business. And we need 12 months of breathing room. If you're willing to accept that and sign this document, we will pay you in 12 months. And if there's been no bad blood and you mountainous payment, there shouldn't be any reason why they wouldn't do that. Because the alternative is you stop payment now and they have to come take this business over. So they're gonna have to pay hundreds of thousand dollars in legal fees moving back here, hiring gentlemen. They're not gonna do that. They'd rather just walk away from the asset. And so in my like, do they have a lot of money?

No.

No, they don't. Cause they have this business.

Yeah. And that's why too, like negotiating with them with something like that. They will probably disagree because they are kind of money hungry.

Well, they need the money. They know they sold you a bill of goods because they were bleeding cash. Every month until the day they sold it to you. They went from losing 10 to $15,000 a month to now making $7,000 a month from it. That gives us a little bit of breathing room. Enough to at least pay this $85,000 off over the next year.

It'll get better. I mean, we can turn this around. It may seem maybe to Mike, he's like, well, I bet. I see. I don't know. If we just stick to the grind. We've. We've been in worse situations.

Okay, so layoffs. We're going to lay off a bunch of people. The reason is because we expect to cut this business in half in terms of revenue, in terms of number of customers. I apologize. Because either a, we're gonna lose these people that we are not. We are basically threatening with, hey, we're stopping service and they don't pay us and we're stopping service. We would have to lay off people anyways. Also, the next thing we're gonna do is renegotiate contracts because we gotta raise.

Prices dramatically, which we did on Brookdale's for next season.

Now this is a 48 blitz. 40 hour blitz of calling every single one of them like, hey, we're just being honest. We are losing money hand over fist in your contract. The price needs to be this. Otherwise we are going out of business. That's the only leverage you have. You can't just be like, we're thinking about raising prices. We're not making money on your property. They're like, no, like, you Signed a contract. If you're going out of business, that contract means nothing. You guys, the reason they signed the four year contract is because they know you're so underpriced. This is, this is like, this is what I'm saying. Like every one of these has a degree of error of like 50%. Like there's a 50% shot they don't pay you 130 grand. There's a 50% shot they do not negotiate a 12%, 12 month pause on payments. There's a 50% shot that you're going to do layoffs and a whole bunch of other people are gonna leave because they're freaked out. There's a 50% chance that you negotiate the contracts and you need to raise price by 20 to 50% on some of them that they're gonna leave. And that's where I come up with about a 10% shot of this working. But that's the only way it works because you need breathing room with the cash. You gotta get rid of toxic people that you're currently employing. You gotta get some breathing room from this toxic asset you're paying on right now. That they are just thrilled that they signed on. Like you should got the business for nothing because you would have, you needed 200 grand to fix it and do all these. Probably more if they have contracts that are going out years into the future that you're losing money on every single time you show up.

I've been telling him that we need to, to do this for two, three months already.

Yeah. And we won't last another two or three months.

No.

Like as founders, you're always trying to look for a reason to keep going despite the pain. And so he's very optimistic.

I felt like we've done well and now we're just on that path to continue.

But ultimately you need to have an operator and be running by the numbers. I need you to relinquish all control decision making power for the next few weeks. Whatever she says goes.

We got that on camera.

Well, because she knows the numbers. You're going off of revenue and like potential. And we're talking about starting another location in Boise.

It goes off of feelings a lot and we have to tell them. It doesn't matter how you feel about how that person's gonna feel.

Well, that's what got us into this.

Yes.

Healing has got us into a contract, bills.

Yes. It got us in this business. And, and to, to be honest, I didn't want to do it. I didn't want to. I was like no, I'm happy with where we're at, what we're doing. It's just us. Like, I was happy with it. And he was like, well, no, you go big or go home. And I was like, no, I want to go home. No, I want to go home. I didn't want to do it.

I wish home, But, I mean, I seen something else, you know?

Yeah, I want to go to the moon, too, but I just can't afford it. Somewhere in there, I'm sure you could probably make one out of all that equipment. Oh, man. Okay, I get what you're saying. The best case scenario is that by next Tuesday, we get $130,000 in our bank. I'm also very concerned because it gives you breathing room to keep doing everything else. Do not do the other three things. Like, if you get $130,000 your bank, you're like, okay, we don't need to go. We don't need to contact the seller. We don't need to do the layoffs. We don't need to rehearse share contracts. Not true. They need everything spilled out for them. After these, Those four things are done, the business is not fixed. After those four things, there's inefficiencies they don't have paid for performance. They don't have great culture. Like, there's none of that. Now. We are operating from the perspective of we are trying to save the business. That's how you position the team. We don't hate these people. We don't fire them. We're trying to save this business and make sure we all get a paycheck. Because right now, they all believe you're making money hand over fist.

Yeah, right.

He makes them believe that.

Yeah, because he talks about revenue and everything and what it could and this and that. And it's like, I see the vision. Why are you going and telling them.

This like, that's not their business?

It's like.

It's like.

It looks like that, but that's not what it is.

Like, it could be if it was on.

No, it's.

But the thing is, they're not. So we can't sit here and say this and this and this and all this money and sit around here and.

Be all moped either.

And you don't have to be.

But if.

You still gotta keep them up.

No, but not by filling him with false hope. Because now they're like, wait, what? I thought you guys did this. And now you're laying me off because you can't afford me.

You know, it Happens, I guess.

No, they will navigate this very difficult time and still lack the skill to actually create systems in the business. And I saw very quickly that, oh, this is a skill gap, meaning I can solve this cash crunch. And they will be right back in this problem in three months. Because I think most people come in and they're like, oh, you have $200,000 in outstanding. Great. Just put that in your pay, in your bank account, and we're good. And they would be for three months? Yeah. You need to have a team meeting tomorrow. You gotta let everyone go that, you know shouldn't be here and then have.

A team meeting with the people that are left over.

And at that one, you're laying everything out on the table and you're saying exactly what's going on. You're gonna apologize. Because, like, ultimately, they came here for a job, and now that's at risk. Hey, I'm sorry for making it sound like we're growing. And this is all great and amazing. I'm just not great at numbers. And I'm sorry. Like, the numbers have been very clear to me that we are not making money, we're losing money. From the employees perspective, looking in, they think everything is great. The owner's saying how much revenue they're doing, how much better they are doing, and they have no reason to believe that this business is on the brink of collapse. The highest likelihood of you all in two years, both having a job that makes 50, 60 grand a year is probably the safer route. You walk away from this, you hope they don't come and sue you for it, and you go back to Yakima. Any questions?

Nope.

Nope, I can do that.

Okay, well, I appreciate your last comment. I know it's tough when you're in such a low moment. I will give you a huge amount of credit for your optimist, and I'll give you a huge, huge amount of credit for you all staying together. Because I know there's tension and I know that these things have been discussed. And so my ask is that you give each other two to three weeks of grace. Because he's gonna be working out in the field like crazy. You're gonna be stressed and getting threatens, threats, and all sorts of stuff. But we need a few weeks of grace and give it a shot. We gotta give an honest shot. And if it backfires on us, cause someone sends you a lawsuit, whatever, we might not. We might lose the business. I would say it's probably the grimmest outlook I've ever had, though, in terms of chance of success after a turnaround. So yeah, narrowed it down to four things they had to do right away within the next like few days. But all of them are high risk. They can get sued.

I think we can do our best and be successful.

So. We will. Yeah, we will. I'm not going to say we think. I think we are.

We will, huh? Yeah, I will.

That's.

The show. Just by nature of the name, we need to have a solution. So whether or not the solution is high probability of success, you know, that can be determined or like debated, but we'll see.

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