People have been asking me for a while about leasing commercial vehicles and how we scaled our fleet as we grew. Fleet is tough, its one of the biggest barriers to growth for truck based companies.
Great question and there's a lot to it, here's the start:
When I bought my families business we had not been growing so fleet needs were minimal.
Our business always bought used vehicles between 15-20k and put them on the road. They ended up being maintenance heavy and we would ride them until they died.
So they looked terrible.
In 2018 I bought another company and we merged. That company also bought used and rode til they died.
The end result was we had to make a ton of capex in a short period of time to have a usable fleet. We probably had 15-18 or so vehicles at this time.
I began looking at buying the vehicles outright and we discovered we needed 7-10 almost immediately.
I didnt want the debt on the balance sheet.
I didnt want to buy used vehicles and end up in the same place.
I wanted to solve a big problem, not delay it.
My goal was to create an "easy button".
I wanted to be able to send an email and within two weeks have a brand new truck wrapped, shelved and inventoried on my lot.
I wanted quick turnaround for when we hired.
Once I had a vision for what I wanted and didnt want, leasing was the obvious choice.
Brand new vehicles: looks great to customers, works great for recruiting techs, no maintenance, easy vehicle onboarding and management.
We got what we needed out of it.
We used Enterprise and I recommend. If you want a connection to them, drop a DM. I'll link you up with our team.
If you want even more info on this, we just dropped a pod that we deep dove into this subject.
I have written 3M in LOIs in the past 30 days across 3 different companies.
2 accepted.
Here's the play by play:
🧵
Deal 1: Small plumbing co - tuckin
700k sales
150k NOI
5 Employees
Good contracts (restaurants, recurring backflows)
Good assets (earthmovers, jetter, equipment, clean trucks)
I was into it. I presented 175k SBA. Quick shot down.
Back to drawing board, here's the 2nd round:
I took the weekend and thought about my risk. The big risk was employees leaving so I constructed a deal that mitigated.
New deal:
300k
Seller finance
I subtract 20k per employee that quits, not fired
Seller was into it but ultimately decided to not sell. Hold for next year.
So every week we have a real estate meeting to discuss our current holdings, problems, opportunities, etc.
Today we had some discussion for our 2-5 year timeline, which includes potential acquisitions.
One big problem is I'm not sure what to buy.
Listening to @moseskagan decent MF deals are hard to come by and I'm finding the same in Ohio.
I like Multi Family, but only if the deals are right, and they're not.
Listening to @sweatystartup I want to jump into some storage facilities, but even that market is starting to get super frothy with people fleeing MF, office, and retail.
Also I'd be competing with the current REITs who own a large amount of self storage, and rolling up more.
Some discussion last week about promoting techs to managers and why I have never seen it work. A few folks asked for a more in depth look.
Here’s how I look at it:
When a SMB owner realizes they need an Ops/service manager it’s a big deal. They’re making a brave choice to step away from day to day. To trust someone with their business and staff. They're saying, “I take this business seriously and I’m ready to grow”. Time for next level.
If this is your first OPs/Service manager hire then it is one of the most important hires you make in your business. Why on earth would you promote someone who’s qualification is wrench turning and not leading teams?
This is a very long thread. @SamtLeslie asked to give the playbook for service companies so here it is. Follow it and you’ll get to 5M+ in a few years.
This is pure operations playbook.
No leadership, financial or HR discussion. Enjoy.
Industry:
Doesn’t matter much. @sweatystartup has an awesome list of service industries on his website that will get the job done.
Trades:
If you are under 3M and in multiple trades you’re doing it wrong. I was there and it was a mess.
Businesses under 3M don’t have good system, managers, effective onboarding, training, hiring practices, or pricing methods. If you did then you’d be bigger.