Midstreamer

[Josh Lyle @Josh_C_Lyle]

Things they don’t tell you about starting/buying/running a blue collar SMB:

1. You need to be a technical expert in your field. Good blue collar employees will sniff out a poser real quick, losing all respect for you. I get multiple calls a week from my guys seeking technical guidance. You better be able to answer their questions.

2. You need to be good at sales. “All business is sales business.” If you are a technical expert but hate being a salesperson you will not succeed. I often jokingly get told I should be a used car salesman or could sell ice to an Eskimo by my employees and some clients.

3. You will not succeed if you remain a one man/crew show. You likely start out that way, but if you are afraid or unable to grow beyond yourself and a few workers you will not succeed. You can have a comfortable life that way, but you will not “get rich” as they like to talk about on here. My first year in business (2018), I hired my first employee in March, but ended the year with 8 employees. We did $1.23M in revenue that year, but had only done $174k of revenue through June.

4. You will constantly be dealing with employee relations/turnover. You will be stolen from by an employee. You will have a bogus workers comp claim filed against you. You will end up reluctantly giving a mediocre employee a pay raise because he has another offer, and though you would love to replace him, he is doing an okay job and you would be worse off without him. You also will tell yourself you can’t fire that mediocre employee for months on end, and then finally you will and realize you don’t miss him at all and find your other hardworking employees were judging you for keeping him around for so long.

5. You will be super stressed out because you don’t have enough work and will be convinced you are not going to succeed. The same week you will be super stressed because you have too much work and you will be convinced you will ruin your reputation by not being able to complete the work you won.

6. You will have a bad job/client that will suck dry all of your profits for months on end. You will not be able to sleep for nights on end worrying about it. You have to get up the next day and still complete that job that is costing you $5k, $50k, $500k or more. We completed a project in 2023 with a contract value of $1.4M where our direct cost (COGs) was $2.0M.

7. Clients will waste your time. You will bid a job multiple times with multiple different scenarios only to have a competitor swoop in at the 11th hour with a lower bid and be awarded the project. Will you have a good attitude when that client calls you up the next time to bid the next job?

8. Each year your employees cost you more (if you aren’t giving them raises someone else will…so many folks on X are starting SMB’s now remember), insurance goes up, lawyers/accountants increase their fees, taxes increase. You have to keep growing just to keep up with these increased costs of doing business.

9. Long hours…you will work really long hours and no one will notice or care. Hopefully your 14 hour days will only feel like 10 hour days because you ultimately enjoy what you are doing and building.

10. At some important level you have to have a passion for the work you are doing. In my early 20’s I left the Air Force because I had a passion for building. I loved being a Civil Engineering officer in the AF but they were too far removed from the actual construction. I then went to a large commercial GC working for them for 11 years building some amazing structures, but I still felt one step too far removed. Now I am the subcontractor directly responsible for framing the walls and hanging the drywall and I love it. Zero chance I would have had success if I just did this because X told me I could get rich.

[jameson (big deck energy) @jamesonhaslam]

Notes to Myself

Dear Jameson,

You started West Coast Deck just about 4 years ago, and it’s time for your annual summer break. Most people give the advice that they themselves wish somebody would give them or that they would like to receive - I sat down this week and made a list of a few things I would tell you if you hired me as your business coach.

If your name isn't Jameson, but you’re in the messy middle of the SMB world ($3-7M of revenue), some of this might be valuable to you. Not sure if this will reach any of you as it is Friday going into a holiday weekend (America forever!). If you're neither of those things, put your phone away and go buy some fireworks. As always, buyer beware.

Get Your Head Right

Remember that problems are blessings. No work means no problems, and no work is the wrong type of problem to have. The presence of problems is evidence of good things happening to you. Remember that. Attack them with joy and optimism, and it'll help your mental state.

While problems are evidence that you have work and good things are happening for your business, you should also pay very close attention to them without letting them disturb your mental state. Just like action produces information, chaos can also tell you that maybe something's broken. Something isn't working, and somewhere you need a course correction. Pay attention to chaos. Lean into it, try to control it, and believe that when chaos exists, you're able to improve it and get to a better state.

Action produces information, and that information can be used to improve things. Don't wait until you have all the answers before you move. Move first, then learn from the outcome.

When You Woke Up Today, Your Business Was Dead

Every day you wake up and your business is dead by default, and you have to breathe life into it. The way you breathe life into it is by going out and hunting new revenue. This will never stop. You can never rest. You can never take a day off. You always have to be hunting more, better, higher-quality revenue and new projects. Never stop hunting. If you can't accept that and you're not willing to do that, just close up shop and go home.

There is nothing more important to your business than new sales. Nothing comes even remotely close as a distant second. Not only do sales bring revenue, they bring energy, excitement, and momentum. They improve your mood. They improve your team's mood. They also provide information about how to improve your business.

You need an offer: the offer could be a square or rectangle deck. It doesn't have to be rocket science. The way that you turn it into a rinse-and-repeat business is by developing a sales process.

When people say "sales process," it means that you take control of the sales dialogue with a set of steps that you repeat each time you go on a sales call.

You're not just showing up loosey-goosey, listening to somebody talk about their problems, trying to diagnose the problem, and haphazardly offering a price. You are the driver of the outcome, you are the expert: You show up, you listen, you provide three solutions or options, you make it easy for them to buy, and then you ask for the order. That's a sales process.

Also: if you cannot look a customer in the eyes, present pricing (multiple options) to them in person, and then ask for the order, you should close up shop and go get a job somewhere. If you don't have the balls to do that, you don't have any business being an entrepreneur.

Crumbl Cookies >>> Wedding Cakes

Lean into uniformity and repeatability, particularly with respect to the type of jobs you say yes to. With decks, this means trying to find as many squares and rectangles as possible and avoiding super crazy custom projects where you'll be developing brand-new skills that you'll never use again. Try to find things that you've done before, then do them faster, better, quicker, or cheaper.

I think I've already said this, and I should probably make it the number one point and say it three different ways until sundown. The way that you make money in a home services business—or selling some sort of home improvement product—is with a rinse-and-repeat offer that you just do over and over again.

Reinventing the wheel and being high craft is a good way to generate word of mouth and maybe always have consistent work, but it's going to be subsistence work that barely keeps the lights on and is a pretty stressful way to live with no safety net.

If you can figure out a rinse-and-repeat offer that, pardon my French, any idiot can install, that's when you can really make money for yourself, create enterprise value, take care of your kids, and put money away for the future.

CHOP WOOD, CARRY WATER

Similar to how you should do everything you can to avoid super crazy edge cases and custom work, do everything you can to establish consistency for your team on a day-in and day-out basis. You should be doing your very best to perform the same activities every single day. A day on a West Coast Deck job site should look and feel the same every single time.

Your job as the manager and leader is to perform the same set of activities every single day: review the same KPIs, do the same actions, perform the same sales activities. Every behavior throughout the organization should be governed by a set of standard operating procedures—or, said differently, a set of consistent behaviors for how you do things. Every production site visit should go exactly the same way. Every sales meeting should go exactly the same way. Every day, in terms of the communications your team receives, should be exactly the same.

Chop wood, carry water. Figure out what works, then just do it over and over again. Making micro-adjustments and micro-improvements along the way leads to victory.

BE THE THERMOSTAT, NOT A THERMOMETER

Your entire team looks to you to set the temperature of the room. Your customers look to you to set the temperature of the room. It's your job to make everybody believe that it's going to be okay because it is going to be okay. You're in charge. You always make things happen. You always win in the end, and you need to be the one who makes your team feel that way.

Connected to the idea of being the thermostat is that it's not enough just to have the energy. You have to make a conscious effort to transmit that energy to your team through constant communication of: positive feedback, constructive feedback, compliments

Tell them you're excited about what they're doing. Tell them you're stoked about their efforts. Just be a source of energy for them and communicate it verbally.

If you're not on site with your team, this can happen through: group messages, video content, phone calls
Make sure that you consciously give kudos.

ON TO CINCINNATI

I try to tell my team that my job is to be a high-performance, high-demanding sports coach who's trying to win the league championship. You/re not there to baby them and be nice. Your job is to create top performers, and sometimes that means giving hard feedback and always pushing them. We're not a family; we're a team. You don’t win the Super Bowl by skipping out on conditioning drills.

SHARPEN THE AXE BLAH BLAH

This is a Stephen Covey (sharpen your saw) or Abraham Lincoln (spend most of the time sharpening your axe) thing: you need to do everything in your power to keep yourself in top operating condition - on all dimensions. Don’t be so vain as to call yourself a “cognition athlete” but you better take care of your body so that your mind can handle the load you’re carrying.

You can get lost going down rabbit holes on this, but most of them boil down to:

>get good sleep
>try to eat well
>drink lots of water
>lift heavy weights
>go for walks on the beach

I should probably have led with this. You just have to take care of yourself. If you don't take care of yourself, you'll burn out, you'll run into health issues, and you'll lose. You have to start by winning here.

STOP NEEDING TO BE LIKED

Another thing that will hopefully happen for your in your journey as a business owner is that you’ll evolve from wanting everybody to love you—and thinking that universal affection from employees, partners, investors, and clients is what will make your business successful—to becoming somebody who understands what the real drivers of profit are for the business and then being ruthlessly protective of those things - and realizing that this has nothing to do with being nice and being liked.

A lot of that comes from shifting from being nice to being, for lack of a better term, right—and making the correct decisions for maximizing profit.

You grow to understand that it is only through maximizing profit that you can maximize benefits and outcomes for your team members, yourself, and your customers. I know that's not universally true, but I think in the case of this specific type of micro business, when we are profitable, we do a better job and generally produce a better product for our customers. We're able to give our employees better stability, better benefits, and better working conditions. As the owner, you're in a better mental state, which makes everybody's life better.

BE THE CLEAN GAS STATION

There are a million different places for people to get gas. Most have a bunch of grime and gunk and gross bathrooms. You want to be the place where people feel comfortable eating off the floor. You don't have to be Buc-ee's, but you want to be the clean gas station with the best snacks.

CHEAP AF FTW

The last thing I'll say is that you cannot be too frugal as an owner, operator, or entrepreneur.

Sure, you'll see people online talk about the things you need to spend money on and how you have to spend money to make money. In your case, you need to pay attention to every wasted screw, negotiate every last deck board, and save costs wherever you can so that you can invest money into the things that really move the needle: your people and the quality of craftsmanship that you bring to the market.

Being frugal also protects you against the inevitable unexpected expenses that come with running a business. It is an essential way of living for an entrepreneur. In a business that doesn't have software economics or massive economies of scale, it may be the only durable way to produce consistent profit—by building a low-cost provider whose internal cost structure is as lean as possible. (highly recommend the book Art of Profitability for additional reading on this)

TL;DR

If you want to have 1% outcomes, you have to do things that 99% aren’t willing to do. BUT, for SMB, you’re not figuring out how to go to Mars: you’re figuring out which single task, if repeated 10,000 times in a row, will give you the outcome you want - and then somehow figuring out how to find the strength to avoid distractions and just putting in those 10,000 reps.

Anyways, I hope you have a great fourth of July. I’m proud of you, and rooting for you. You got this.

-Jameson

[Blueprintsmb @blueprintsmb22]

The biggest adjustment (and I was warned) from going from a white collar W2 life to business ownership in the blue collar world is meeting people who are incredibly irrational and find that being irrational is their favorite way to frustrate those that color within the lines.

At some point, I'll share this SMB story but the one thing about Wall Street W2 life is that everything people did made sense even if 1) made them come off as an a$$hole or 2) was illegal. The motive? Usually money or protecting the illusion they were doing well.

In the blue collar SMB world, some people wake up trying to create problems for others instead of actively trying to improve their own current bleak life situation.

[Ryan Cohen @ryancohen]

The Hollow Men

American capitalism is rotting from the head down. We have replaced the "Owner-Operator"—the risk-taker-with a new, parasitic class of corporate bureaucrat: The Risk-Free Insider.

By "Insider," I am not referring to a specific title. I am referring to the entire administrative state that has captured the modern corporation. This includes the Directors who exist solely to collect fees, the Executives who exist solely to collect bonuses, and the Managers who exist solely to hire consultants.

These are the hollow men of the boardroom. They are masters of PowerPoint. They wear the right suits. They say the right buzzwords about "governance" and "ESG." But they are mercenaries fighting a war with someone else’s ammunition.

In a functioning economy, authority is tied to liability. If you make a bad decision, you lose your own money. That fear of loss is the only thing that keeps a business honest. It forces you to cut waste, obsess over the customer, and stay late to fix what is broken.

Today, we have severed that link.

We have rigged the game so that heads, the Insider wins; tails, the shareholder loses.

If the stock goes up, the Insider collects a massive performance bonus. If the stock crashes due to their own incompetence, they are fired with a "Golden Parachute" worth tens of millions. They are gambling with the house’s money, and they never leave the table poorer than they arrived.

This looting starts in the boardroom.

We have normalized a "Country Club" culture where directors are selected based on social profiling rather than their ability to build a business. The modern board member is often a professional tourist—paid an average of $350,000 a year.

Let’s be brutally honest about what that number represents. The average director is paid nearly five times the GDP per capita of the United States. They earn more for attending four quarterly lunches than the vast majority of Americans earn in five years of hard labor.

And for what?

Most of these directors are "over-boarded," sitting on three or four boards simultaneously. They treat directorships as a gig economy for the elite. They fly in, rubber-stamp a compensation package they didn't read, and fly out. They collect checks from companies they do not understand, do not use, and certainly do not love.

They are not there to ask hard questions. They are there to be collegial. They are there to protect the other Insiders.

And what happens when these boards hire executives who also have no personal capital at risk?

We get the Delegation Economy.

When a Risk-Free Insider faces a crisis—bloated expenses, a broken supply chain, or a stale product—they do not roll up their sleeves. They hire a consultant. They pay a strategy firm millions of shareholder dollars to produce a 100-page deck telling them what they already know.

This is not management. It is intellectual money laundering.

They use shareholder capital to buy an insurance policy for their own careers. If the plan fails, they can blame the consultants. They delegate the work because they are terrified of the responsibility. They would rather preside over a slow, comfortable decline than risk a bold mistake.

While American Insiders are busy optimizing their severance packages, our global competitors are optimizing their products. They are not slowed down by bureaucracy. They are not waiting for a slide deck. They are outworking us.

If we continue to fill our C-suites with administrators instead of operators, we will lose our edge. We will see iconic American franchises hollowed out by fees, managed for the benefit of the Insiders, while the true owners—the shareholders—are left holding the bag.

The time for polite governance is over.

If we want to save the American economy from mediocrity, we must demand a return to the "Owner’s Mentality." We need leaders who treat shareholder capital with the same reverence they treat their own savings. The era of the Risk-Free Insider must end.

[John Arnold @johnarnold]

The enormous caveat is that OPEC just publishes the numbers given to them by its members without any independent audit. In late 2000s, Chavez tripled the reported reserves without commensurate new exploration, seeking increased int'l and domestic prestige. 300 billion is made up.

[Midstreamer @midstreamer]

@paulswaney3 INTEGRATION

[Midstreamer @midstreamer]

@alt_w_v_g More people need to read this post... Should also factor in “one time” things that would never happen, but actually happen frequently à la trucks/equipment get stolen, customers sue you, employees get arrested, etc. Ownrship can be a lot of fun, but need to plan for the worst

[Midstreamer @midstreamer]

@SMB_Attorney 2/2 How is TTM EBITDA highest since 2022, with lower revenues?

When factoring in interest payments, taxes, deferred maintenance capital and normalized working capital (current owners likely depleted inventory).,. I’m guessing cash flow in year 1 for a new buyer is negative.

[Midstreamer @midstreamer]

@SMB_Attorney 1/2 A few additional thoughts… how do you lose over $1mm of revenue from 2023 to 2024 but only lose ~$100k of EBITDA. Yet from 2024 to TTM gain ~$700k of revenue and EBITDA doubles.

[Midstreamer @midstreamer]

@SMB_Attorney How do you not format the numbers on the Y axis of the bar chart… Sloppy and lazy.

[Connor Showler | SEO & Marketing Master @ConnorShowler]

Another Wednesday, another Sneaky Backlink:

- 72 DR 🎯
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Comment "SNEAKY" + Like & Repost to get the link via DM.

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[Midstreamer @midstreamer]

@ConnorShowler Sneaky

[Midstreamer @midstreamer]

@InsolventShitCo Now comes the hard part… Making it up LCC. Saw that UDoT is closing the road at 10pm and they’re not sure it will open tomorrow bc of avalanche risk.