Two and a half years ago I wrote about “How I Got Out of Wood Flooring, Then Started Again—But Better,” sharing how I came to a crisis point with my wood flooring business and left the industry—but then realized it was where I needed to be, and I just had to structure my business and my life differently. Since that time, even with the volatile economy, it’s felt like we’ve been on an apex for the business, with it running just the way I like it and being profitable with high-end custom clients.
My son moved to Phoenix three years ago, and as my wife and I visited, we started to look around the area and think, “We could live here.” We’re Midwesterners and can deal with the winters here in Michigan, but they are dreary. In our on-the-deck-coffee-conversations, we spent more time dreaming about the possibilities.
During our summer visits to Arizona, we began looking at Scottsdale-area real estate. I told Stephanie, “If we’re going to do this, I have to sell the business.” I have a friend who is a broker for small businesses, and when I told him we were thinking of selling, he said he would advertise on a website that has small businesses for sale. I wrote a synopsis of the business in 10 minutes, he put it online, and it immediately caught the eye of the now-owners. I had said it would probably take six months to a year, but two days after listing it, I was sitting at a Panera Bread with the now-new owners of Kingstree Flooring, Jake and Spencer, working out the details. We agreed in theory at Panera on June 1, and on June 19 we signed the actual paperwork in the attorney’s office.
The sale happened so quickly because a combination of factors came together.
Jake and Spencer had known each other for a long time. Both were working corporate jobs—Jake had 300 reports in the manufacturing world, and Spencer had a Midwest sales territory and wanted a steady home schedule for his family. Jake grew up doing concrete, and Spencer builds fine furniture as a hobby. They were looking to buy a business together, and Kingstree Flooring immediately piqued their interest.
About 15 years ago I handed over all the accounting for the business to my wife, Stephanie. Since then, all the i’s have been dotted and the t’s have been crossed. We had paid all our taxes, and everything run through the business was legitimate. We performed high-end profitable work, and I’m frugal, so all of that immediately made the business look attractive. Jake and Spencer had their accountant inspect the financials, and then their attorney looked at things, and everybody gave it the stamp of approval. It was clear: The business makes this much money, you should be able to make this much money or more, and they said, “Sign us up.”
With the clean books, we were able to immediately put a value on the business. The general principle is two to three times annual flow-through income. We had just picked a number at the low end of range, because we thought a niche business would only be attractive to a very narrow list of potential buyers!
When you aim at high-quality all the time, you build great relationships, and then 100% of your business is repeat business and referrals. You have excellent customers who trust you. There’s always a market for that, and I think that was a selling point for Jake and Spencer. They wanted a job where they could go home at night saying they did honest, physical work, made good money and also made people happy.
I went to all of my builder and designer clients in person to introduce the new owners and tell them about the sale. I explained that the new owners were high-quality individuals who would not let them down. The transition went well because Jake and Spencer were an excellent match for Kingstree’s clientele.
I already had months of profitable work in the pipeline to ease the new owners into the business. As part of our contract, I agreed to work for them for 90 days or more to teach them the business and the skills, with the understanding that even after that time I’m available to consult if they need more help. Of course, there is a lot to learn, from moisture to the products to the mills, but as we started I could already see areas where their skills and experience would serve them well in wood flooring. In many ways, they were better than me and had skills and experience that would take the business to the next level.
Some days, looking over my résumé (the first I’ve had to write since 1994) and interviewing for jobs, I miss the routine. That’s a long time working in an industry, building strong relationships and being in charge. The transition was swift and, six months later, we feel like we haven’t caught up with the big changes. But I’m glad we made the decision to move to a warmer region, especially when I think about Michigan winters. So, the warm weather wins the day, and we take the inevitable life changes in stride. The business continues, and the new team is transitioning well. The clients are being served, and high standards are maintained for the next generation. It’s better than I could have imagined.
