Tired of your marketing getting little results?
Get the 5 steps to get more subscribers, engagement, and SALES this week! (And make it EASY!)

I NEED THIS!

Ep. 134 Saving a Failing Business

by Torie Mathis | Smart AF Show

Saving a Failing Business

What do you do when each month you have money in and money out, but nothing left? We’ve seen businesses think they’re doing okay because they have money coming in every month, but if there is never anything left over, what can you do?

In this episode, Torie Mathis and her cohost Sean, talk about what steps you can take to save your failing business and how they are turning around a new business they just bought the owner out on. Why would they buy out a business that is upside down? Follow them on their journey and find out!

Listen or watch the full episode below:

SUBSCRIBE + LISTEN TO SMART AF ON:

EPISODE TRANSCRIPTION –

(transcription is auto-generated)

SAF 134

[00:00:00] Torie: Yes, there’s money coming in, but it has to be enough to actually like cover everything and then hopefully you get paid. And I think especially like solo preneurs or like small businesses, they just see that like money’s coming in so I’m doing okay. But the health of the business might not actually be okay.

Hey, what’s up it’s Torie Mathis, your host. And I am here with the one and only show Mathis, founder of Miles Through Time Automotive Museum.

[00:00:29] Sean: What’s going on?

[00:00:31] Torie: Recently we have taken over another business. And so that means that we are a new business owner. So before we took over this business, we actually looked over all of the numbers of the previous business. So we could kind of get an idea of just kind of the baseline of where they were at. We knew the business wasn’t being ran, how we would run it, but we really didn’t know exactly what was going on and, you know, After go after going through all the numbers. And I’m like pretty good at like building spreadsheets and being able to kind of see how things are connected and do some projections and things like that.

And looking at it, I don’t think that he had any idea, really what was going on with the business and with the, with like what money it’s actually like leftover because you know, it’s more than how much money the business is making, because it’s really easy at the end of the day for there to be no money left at all.

And for you to be actually in debt at the end of the month. And you really can’t go by how much money bank because the bills could be coming. You could be owing things. It could be a lot of money at some time. You could’ve started with money. There’s a lot of things going on. And I think that there are people that look at their business and they only go by, well, you know, we did $25,000 in business last month. Like we’re doing great. And really that’s not the case.

[00:01:57] Sean: Very much. So in this particular case.

[00:02:00] Torie: And so I think that you really need to be able to look at your business in a way that you really know what’s going on. And by us looking at the spreadsheet, we can see that, you know, we built, we can kind of see what was going on with that business.

And, you know, Sean has been working really hard at getting up. It’s a antique market. Right. Like they were doing more like flea market, he type cheaper stuff. So we’re going to try to make it a little bit more high-end and have it be a little bit nicer antiques and be at antique market rather than a flea market.

And so there are individual people’s booths in there. And, you know, I was only looking at how much money was coming in for all the booths. But, you know, Sean went through and looked at each individual booth rental and realized that there was a lack of consistency. When you’re not consistent with your prices, it’s hard for you to tell what’s working and what’s not because you probably don’t even know, like there wasn’t a flat rate across everything.

And, you know, I noticed this with our business too, because rather than having like a product for example, like web design. I always want to do everything custom because I feel like everybody’s different. And so I’ve always built these, these individuals. Products, individual packages for people. And you know, that’s really, probably not the right way to do it because looking at it across the board, you really can’t see how much money you’re making.

And it’s really not a way that like you could take over and sell something. If there’s not a set rate. So like for the couple of times I did and it’s, it’s difficult. And I’m sure that there’s a lot of people that have a hard time with those types of things, but with the booths like that, because he was inconsistent with how much he was renting it out.

That means whoever was working for him, couldn’t rent a booth out because everything was like a negotiation between him. Whereas Sean is really trying to get it flat, more flat across the board. And that allows somebody else to come in and be able to actually do it because there’s a standard. Do you think that people lack standards in the business that they’re doing?

[00:04:06] Sean: In general? Yeah. Oh yeah. I mean, it’s, it’s easy. What it is is its complacency, you know, it’s, you know, even in the case of, of the business that we took over, I mean, It was the guy there just on a whim going, yeah, I got this spot. I got this spot or moving them to, I mean, he’s got a different location and bouncing between the two and it was more of a, just plug them in here.

They’re happy. It can go, you know, and instead of, you know, having grid pattern laid out and, and having everything assigned to it already and then giving, empowering the people that work for them to be able to do this stuff, instead of it had to be him. And, and what happens is he just ran super thin, you know? And so, and that could happen to anybody it’s. It’s actually, you know, it’s a little bit of work to be super organized, but to get organized, I should say, because once you’re organized, life is easy, but to get to it, it, it does put a little bit of work in it. And, you know, in the case of this business that we’re talking about, he never did that.

And I think a lot of people wind up doing. Especially when you can easily get overwhelmed with so many things you need to do. You start cutting corners, and the minute you start doing that, you get unorganized. And then it’s just it’s, you’re, you’re chasing your own tail, you know, trying to just do things, you know, and maybe that’s not the right way to do it, you know, and for him, it was like, it was better to collect $50 and give this person as a spot than to try to figure out, you know. Where they should go based on their square footage and feel what is their budget, what are they even trying to do?

You know, there’s a lot of things and, you know, by no means, are, are we going to do all of this? Perfect. But I also anticipated learning from every mistake we make and improving on that. And I’ve already made mistakes in this whole process to try to figure stuff out. But I think once, once we get all this completely organized just making these simple changes that should have been organized from the beginning, literally turns this business into a, a business that’s not losing money.

[00:06:16] Torie: Yes.

[00:06:16] Sean: And, and then we can go and compounds, you know, and, and improve and improve to hopefully make it a. Very liquid in business.

[00:06:24] Torie: I can remember working for a contractor and I don’t want to say which contractor it was, but I would job costs like what the project was cause it’s kind of like mine that, you know, every single job was very specific.

And so they were built packages and I would job cost it and figure out how much it would be. And like at the end of the day, you’re losing $75. Like it would be like a $10,000 project, but if you actually started breaking down, they would, they were just looking at us like I was making $10,000 and everybody’s working.

But at the end of the day, they were losing money, and they kind of reminds me of this, like, yes, there’s money coming in, but it has to be enough to actually like cover everything and then hopefully you get paid. And I think especially like solopreneurs or like small businesses, they just see that like money’s coming in. So I’m doing okay. But the health of the business might not actually be okay.

[00:07:17] Sean: Yeah. You need to like, you need to look at the money that’s coming out more so than the money that’s coming in. I think, you know, cause even when I was first doing Miles Through Time and it was a for-profit business, I was doing consignment. You start looking at the money that we started bringing in, which then also, you know, the partner that we had was going, Hey, you’ve got a bunch of money coming. Not taking into account the amount of money that was coming out.

[00:07:45] Torie: Doing consignment, you would take, you know, you took $50,000 for a car, but you pretty much gave all of that.

[00:07:53] Sean: Damn near all, except for 10%, which now this, this antique business is the exact same concept, right?

[00:08:00] Torie: 10%.

[00:08:00] Sean: You know, and the guy that owned it before. He even things coming out of his mouth was like, oh, these, they got all these sales, you know, thrown out gigantic numbers. That sounds sweet, right? Yeah. Yeah, man, like high numbers, like 16 grand a month.

[00:08:18] Torie: There were months that were higher than.

[00:08:21] Sean: He’s not getting 16 grand a month, like not even close.

[00:08:26] Torie: Yeah. So looking at the cars, when you were doing consignment, I think you did like a quarter million dollars worth of business that year, the business didn’t make a quarter million. Like you didn’t take home because so much of that was consignment. You only kept 10% plus the cost to do business to sell these cars. What was it per year?

[00:08:45] Sean: It was six grand a year just for the bond and insurance, just to be able to do it, that doesn’t even include the actual license itself or what comes with that in Georgia. There’s no broker license, which is essentially all I would have needed. You have to get a dealer’s license.

And with that comes a building with its own entrance, phone number all these different things to make it. So it validates an actual dealership. Even though that’s not really what my business was, but it made it very difficult to. And I almost didn’t even get it all because the whole museum thing, and I’m like, ah, yeah, I talked him into it, but know it.

[00:09:25] Torie: Had to be separate business, right? It had to be its own business. You couldn’t just latch it onto which

[00:09:29] Sean: apparently is why around here. At least there’s a bunch of little offices in, in buildings and, and you’ll see, you’ll see, just. It’s their dealership door, you know, cause they’re doing brokers stuff, you know, so they’ve got cars on a lot and they might be selling them on Facebook marketplace or going to auctions or something like that. But they don’t actually have the actual physical lot in business, which is what they want in Georgia.

[00:09:55] Torie: People pay, especially that kind of annual fee. It’s hard to know. Remember that you had to pay that annual fee or like you had a partner that he just sees that there’s money coming in every month, but then you forget that, you know, $500 a month, if you broke that $6,000 down, at least is going out just to be able to operate the fact that you’re selling cars. And so it’s easy to get caught up in the money coming in without realizing like you said, the money that’s actually coming out.

[00:10:27] Sean: The time, you know, even, you know offering storage. It was, you’re only charging $125 a month for storage, which isn’t great or isn’t bad, I should say. For everybody, you know, it’s cheap for the person storing it. And it’s a nice little chunk of money for me as a business owner, until you take into account the amount of work involved in having these cars in there and you know, the amount of in and out and the cars that needed to be moved and you know, say I, I needed to go all the way up there to prep it, to get the car out just for him to tell me, oh, nevermind. And I mean, you start taking into account all that time. Like it really. Wasn’t worth it.

[00:11:10] Torie: It’s easy for people to say open it’s just my time. No, it’s just, you’re tired. Like that’s all you have. Really, if you think about it in a stuff is taking you, you know, so much time, like if you actually break it down, You’re making $8 an hour or $5 an hour as the business owner. Like you gotta realize that it’s not just that you can’t make that excuse that let’s just a little bit of time.

[00:11:33] Sean: Well, that’s why ultimately in the end of 2019, I had made the decision that I wasn’t going to do it anymore. There was, it was just, there was no opportunity that I saw in that location that I could ever make money.

[00:11:51] Torie: That guy was just saying to, oh, well that other guy, he sells cars. Hema is like a million dollars. He, you know million dollar business.

[00:11:58] Sean: Shaking every time I

[00:11:59] Torie: hear that, just because you heard that somebody is selling something or is it making so much money? They’re not, you don’t know the full story of how much it’s actually coming out in order for that business to run.

[00:12:14] Sean: Right.

[00:12:15] Torie: So, yeah, we sold, we did a lot of printing for many, many years for people, and these would be huge print jobs like thousands and thousands, $10,000 for a print job. And so at the end of the year, when you looked and you saw how much money we were making, it looked really great, but we were only making some of those jobs like 25% on or 10% on or however much it was that it was almost like we were a bank.

We would take their money by the printing and give them a. And so it looked like, you know, we were making you a whole bunch of money, but if you look at it at the end of the day, like it, it’s not as much. And with I think with the cars, but with the printing as well, like there is a high probability that shit is going to go really bad because you, even if you were there physically printing it or you, if you’re managing the printing, like there is a chance that it’ll get lost or damaged in shipment.

All kinds of things can happen. And so all that. And so, yes, we’re making a lot of money and yes, we have a lot of money coming in, but the time and the liability involved in it is super, super crazy. And I think we had to make that decision that we don’t really push those services anymore because the liability part of it for me is incredibly stressful. And I don’t really want to deal with that too much. So we just do still do some printing, but we don’t push. But looking on the outside, you can be like, printing is a great thing because you could make new, you could be a million dollar business, but a million dollar business making 10% might not be the best plan there.

[00:13:51] Sean: We’d have to, we’d have to be doing millions of dollars of print business. And then you start getting into the amount of time it takes to, to deal with all that kind of stuff. Is that ultimately the two of us couldn’t do it. So now. Now you’ve got to pay somebody else to do it. So now you you’re, you’re making less, or you’ve got to make that much more and have that much more liability on everything. It’s not always about the money.

[00:14:17] Torie: No. And you really need to realize that it’s the money that you take home. The money that you have left over that is the real power number that is, is saying if it’s successful or not, not that you’re a millionaire.

[00:14:29] Sean: When before I went to Afghanistan and we both lived in California and it was right when Torie was making a bunch of decent money doing the whole real estate publishing magazine and everything, I was making pretty decent money working for Pepsi. And ultimately it was, it was pretty cake job for what I was doing other than it was. Yeah, what I was doing, which wasn’t what I wanted to do.

[00:14:52] Torie: It wasn’t utilizing your skills.

[00:14:54] Sean: It, you know, if you just looked, you’d go, you’d look at what money we had. Like, you know, at our age we were making pretty damn good money. I mean, anybody could have looked at us. In fact, people didn’t go, you guys don’t deserve it. But really I see there wasn’t even the lifestyle that we wanted, you know, tour, it was driving an hour damn near an hour to get to her job. And one direction. I’m working late at night and on call and not really enjoying my day whatsoever, cause it’s not even challenging.

And so although we make money, good money, it’s not what we wanted to do. Now, if all of it was about money, we’d still be doing that because it was good enough. But the lifestyle we have now, you know, not necessarily thinking of the specific dollar, you actually make more and have even more time to do family things, you know, going on trips and just being able to do stuff like this right here. You know, if, if we’re still doing that other stuff, we couldn’t do it. Definitely not as easy. I don’t know. People get so caught. I got family members that are caught up on that dollar and the retirement and all that kind of stuff. It’s not all that it cracked up to me. I mean, you, you can live a fantastic life without having to put this astronomical number to it and, and, and be miserable until you get to it. Like you can be happy now. Yeah. So there’s all kinds of things you can do.

[00:16:23] Torie: So when you started looking over the numbers for the new business, which is a Vintage Garage Antiques, you can look us up online, we’ve got some stuff starting to, to get out there. You’ve made some changes and we’ve run some new numbers. And so, you know, even if a business is, is not making money, it definitely can be turned around. What are some of the things that you’ve turned around.

[00:16:45] Sean: Well right off the bat, it was, it was getting everybody equal, you know, rather than somebody paying, you know, 30 cents a square foot and somebody else paying a dollar and somebody else paying 70 cents and we just made it flat rate for everybody. But then it was even more muddy because nobody knows what they’re paying for, you know? So not only do they not know what their rate is, but they don’t know how much space they’re supposed to have. And I found out that this is a very common problem, with the vendors in there. They have no idea, like they know they’re paying, you know, $50, but they have no idea how much space they’re supposed to actually have, or they had, you know, one size and then they got moved to some other space, which is like twice as big, but their rating never changed. And so I’m looking at it from a real estate standpoint. The only real source of revenue, because again, coming from the consignment cars I know 10% doesn’t add up very quick.

[00:17:52] Torie: You know, we can be very misleading.

[00:17:54] Sean: We’d have to sell, you know, over $40,000 worth of cars or merchandise in there just to pay the rent for this place.

You know? So it’s not real practical at this point because sales are nowhere near that. So our only, our only thing we can do is optimize the square footage, which is a complete cluster in there. So I’ve spent hours and hours and hours going through multiple times because I’ve got to figure out where the current vendors are, where they should be, and rearrange everything and line it all up. And ultimately I wound up finally getting it all done and finding a ton of extra space.

[00:18:37] Torie: Well, I think something to say there is that like when we first did it, I got all the numbers and that gave us a snapshot right. Of where the business was. And if it’s your business or you’re taking over a business or whatever, like you have to know where you are and then you have to know where you can go. Like we asked how much square footage is available to be rented. Well, no, How well what’s everybody paying? Oh, no. Well, I don’t know. You know, like nobody really knew what the snapshot was.

[00:19:03] Sean: Or it was the inflated numbers that aren’t even close to that. Yeah, telling us what we want to hear. True.

[00:19:09] Torie: So one of the first things that Sean and I did is that we went there and we measured everything off and we drew out a two scale map and then Sean went through and started finding every booth and figuring out like how much space they actually have, how much they’re paying.

Well, then what does that equate to? Well, that equates to how much they’re paying per square foot. And so then we had a more accurate snapshot of this is really what’s going on. And then Sean was able to say, okay, well, if everybody paid the right amount of dollar, a dollar 25 or whatever, we’re going to, what would that look like?

And so things you can kind of figure out where you need to go. Once we mapped that out, once we got rid of all of the extra space that wasn’t used now, Sean knows what possible. And now the plan is there and now Sean just has to work the plan.

[00:20:00] Sean: Yeah. I mean, it’s, it’s, you know, we can set whatever goals we want, but if we don’t know how we could possibly get there, that goal is garbage now knowing exactly how much footage we’re working with. It’s it’s as simple as. Plug it in the numbers, into the bile that created and seeing what it says. And if we change it, tweak it a little bit more. There it is it’s populated. So then it just comes down to a supply and demand, you know, and, and, and that’s why at this point now the entire, now

that I know that aspect of the business, now it’s focusing on appearance.

[00:20:38] Torie: Well I think though, for a lot of people, when they like you, if your business isn’t doing well, if you don’t have money left over, if you’re stressed about money, like, you know, it’s not going right. So once you can figure out where you’re at and where you need to go, then changes have to be made. And Sean had to make some serious changes and Sean had to confront people that haven’t been paying a lot. And I think that that can be a really scary thing for people to have to shake the tree to shake

[00:21:05] Sean: things up. I’m not a fan of it by any means.

[00:21:08] Torie: That you have done such a great job at like, this is how it’s going to be. And what Sean found is that the people that are really unhappy probably aren’t the greatest people to be in there anyway, because so many of the people are like, really? This is what we’re doing. Cool. I’ve been holding back because this hasn’t really been professional. This hasn’t really been a real.

[00:21:33] Sean: Which is the most common risk response that. I would have never anticipated. And most people that, that was their exact response.

[00:21:43] Torie: They are holding back because the previous owner wasn’t marketing it, wasn’t taking it serious. Wasn’t because this was like, he’s got another, the guy that had it before has another antique market that’s doing really well. This was just like his overflow when he kind of was doing it. It just really, wasn’t like a hundred percent his thing. So this is. Know, this is more of a hundred percent like we’re really going at it. So it’s really nice that like the people that want to do it, they’re fine with paying more. They’re excited to pay more because Sean explained the vision to them and they’re ready to go. They’re like, we’re going to bring more stuff in. Some of them were like, give me more space. I’ll pay more.

[00:22:21] Sean: It’s actually crazy how much more some of these people wind up paying and they’re. Yeah. I mean, there’s, there was one particular that I would’ve never guessed. She have been okay with it. Just looking at her, her specific sales. Based off of what she was paying for her space, what her sales were and how much space she actually had. I thought there was no way she was going to keep it. And not only is she keeping it, but she’s actually going to ramp up everything she’s doing. And that’s exactly what I’ve been trying to portray to all these people is that, you know, it’s not about just having stuff in there.

I mean, you have to work this thing, you know, I’m going to put in a whole lot of effort to ensure that. I’m going to make it as successful on my end as possible. And I expect the exact same from them. And if they don’t want to do it there, they’re hurting themselves.

[00:23:14] Torie: Well, there’s some people that had such a good deal in there. They weren’t even trying to sell stuff. It was cheaper than going and putting the stuff in storage. They weren’t even trying to sell stuff. They were just storing things. So once you, you know, Why do they have some of this? Like, we don’t want this crap stuff in there. They weren’t even trying to sell it. So sometimes when you mark your stuff down so much, because you’re just trying to make it, you’re actually putting out there.

[00:23:41] Sean: Yeah. There’s a whole perceived value with this. You know, when you first walked into the building it was an immediate let down. I mean, I would have been bummed if, you know, if it wasn’t our museum in the back there and we walked in and you’re like, eh, this place sucks. We didn’t have any control over it until you walked through the red doors into the museum. Like there were, we had no control over what the atmosphere was. And so that’s, I mean we’re fixing that now because that, that first impression is, is huge. Even already, what we’ve moved. So what you see when you first walked in or walked into the building? I mean, it’s already had a profound impact. I mean, it’s pretty neat. I, I want it all finished right now.

[00:24:26] Torie: You have quite a ways to go though, still a lot of stuff going, but the, the confrontation, the raising prices ended up being such a positive and it has to be done.

[00:24:40] Sean: Some of these people, I, you know, that that did have a little kick back. I flat out, told him, I’m like, look, I can keep it the same and we can all leave or we can get on the same page and we can all be successful. I tell people I’m an open book. I’ve been this way with the museum the whole time. Like my whole intention is expanding the museum. And if taking over the antique mall means is what I have to do to do.

Then that’s what I’m going to do, but I’m gonna put it all out there and we’re gonna, we’re going to go full force, you know, as great as we possibly can. And you’re either with me or you’re you know, by, and I have, we hired, we hired a full-time manager Jenny there. And I told her too, I’m like, you you’ve got full power. Like, you don’t need me to do any of this kind of stuff. If somebody’s giving you a hard time, tell them to leave.

[00:25:31] Torie: But intentionally we have had to make things standard. Like if you can standardize things, if you can make processes and that’s empowering, not just yourself, but your employees too, because before the employees that were there, they couldn’t do anything. They always had to wait for him or. Well it also made it, I think, hard for the employees because things were so non-standard what did that one person say? Like, oh, I’ll just wait and talk to Sean. I’m like, you can’t just like dismiss the employee and just go and talk to the owner like that. This is not how a business needs to work because.

[00:26:08] Sean: It’s a good point too. We are the owners. I have no intention or interest of being an employee. I have an antique store, not what I want to do. You know, I probably wouldn’t have, you know, doing this brick and mortar business if it wasn’t for the museum, but here we are. But that does not mean I want to work there, you know? So although I’m willing to do things to get to where we need to go ultimately that is not our role. You know, and knowing that, that, that we are the owner of this business, not, not the employee and not that there’s anything wrong with being the employee, but in our particular case, that is not how we set it up.

[00:26:53] Torie: And of your business that you had to be the employee. We have moved beyond that season and yes, you are going to have to be there. A few months or whatever to get like everything going, but you’re setting it up so that you are not the employee and not putting it out there that any of these vendors can run Jenny over and just go to Sean oh, well, Jenny don’t, don’t worry. I’ll just go talk to Sean. No, you’re going to talk to Jenny. Like Jenny needs to know that what Jenny says is what Jenny says, and that Jenny has the authority, but because these processes are being in there because you’re standardizing things, you’re really empowering Jenny, so that she has the tools and the authority to do what she needs to do to be the manager.

[00:27:34] Sean: Which also enables her to take ownership. I mean, she, yes, she’s an employee, she’s a manager, but she also can own that thing. I mean, it’s. She, she can put it under her wing and, and it’s, it’s her baby as well. And I want her to feel like that, you know, it’s, my interest is in the, in the cars. So standardizing it and making it so that Jenny can do her, her employee, right. That works underneath her and relieves her can do it and anybody into the future, it’s like they can go through and, and know exactly what needs to be done. And I don’t have to go there and hold anybody’s hands. I mean, I, I honestly, I don’t have time for it, much less want to do it.

[00:28:19] Torie: So knowing where you’re at, knowing where you’re standing, figuring out, like what’s even possible empowering your employees. Like these are really cool things that, you know, Sean’s had the museum, which is brick and mortar, but this is like a real brick and mortar business that, you know, having managers and employees is definitely going to be an adventure and a what kind of keep you up on what’s going on? Yeah. And anything that we have that maybe it’ll help you with your business. Like it’s, we’re definitely willing to share it and hopefully you’ll join us on this journey to see kind of where this goes. We’re really excited to see where it goes and what this is going to be.

[00:28:54] Sean: Okay. And again, it’s vintage garage antiques that’s Facebook, Instagram website, all that kind of stuff. And I will be documenting everything. So you’ll you you’ll actually, if you wanted to follow along, you’ll see exactly the changes that we make to, to turn this a losing business into a successful one.