Year 1 in a $300k SDE Services Business | Scott Crosby Interview

Deal facts

purchase price

$830,000 (approx)

multiple

~3x SDE

sde ebitda

SDE ~$275k (average; owner paid herself ~$80k plus occasional distributions)

revenue

~$1.5m (prior year revenue mentioned)

financing structure

SBA loan + $80k seller note (split: $40k full standby counted as equity/5%, $40k at lower interest rate 5-year amortization) + ~$40k cash out of pocket; $100k working capital included in SBA loan

notes

Asking price was $1.2m; LOI submitted at $800k and accepted the next day. Business partner contributed a loan to the company (~$50k) post-close to cover a large contract's upfront equipment costs. Asset sale structure. No line of credit obtained.

Why this business

Scott was industry-agnostic but preferred blue-collar, B2B businesses within two hours of St. Louis where he had an existing network. He specifically wanted a business where he could build relationships with clients and leverage his sales and account management background. He liked the 250-500k SDE range and wanted to self-fund without raising outside capital. American Services fit geographically (near his house), was slightly larger than the other deal he was pursuing, and the owner-seller relationship clicked immediately when they met.

What's working

• Implemented CRM and modernized back office, eliminating paper tickets, fax machines, and a 6-hour payroll process (reduced to 15 minutes)
• Renovated office and negotiated the renovation with the landlord in month one
• Built a formal onboarding program praised by new technicians as the best in their careers
• Raised labor rates toward market rate, which had been significantly below market
• Hired four technicians plus a service manager, replacing virtually the entire original team
• Positioned the business around white-glove asset management and capex planning for small multi-location operators (restaurants, senior living, daycares, manufacturing) — a gap the larger facility maintenance companies ignore
• Leveraged temp labor partnership to survive the first summer when a key technician stopped showing up
• Strong vendor relationship management; one major vendor gave better terms than the prior owner had
• Networking and community relationships already generating referrals and new business leads
• Plan to grow revenue 20-30%+ in year two after foundational investments are in place

What's hard

• Had to replace nearly the entire team within the first months — dispatcher, office manager, service manager, and technicians; only one original technician was retained
• Key technician stopped showing up mid-summer (a pattern visible in prior employment records that diligence did not surface)
• Two clients went bankrupt in the first three months, costing thousands of dollars per week in lost revenue
• Won a $100k contract in week one but had not required a deposit; owed vendor 50% equipment cost (~$50k) 30 days in while payment from client was 45-60 days out, forcing a capital injection
• Seller note on a 5-year amortization instead of 10-year created significantly higher monthly payments, which are felt acutely during slow season — described as a first-time buyer mistake
• No line of credit available; the SBA lending bank did not offer one, and post-close credit access was nearly impossible due to the new entity having no history
• Not taking any salary for 10+ months; living off spouse's income and savings
• Slow season cash flow pressure was more psychologically stressful than anticipated, especially with personal financial stakes and responsibility for employees with families
• Employee team quality was lower than expected — lesson: deduct a grade from whatever the seller says about each employee (A players are really B, B are really C, etc.)
• Delayed sales outreach for months because they lacked confidence in the team's ability to service new business — in hindsight, should have started selling from day one

Notable quotes

Tags