Chasing Financial Freedom
Chasing Financial Freedom
The Art of Buying and Selling Businesses: A Masterclass with Tim Swackhammer
Eager to decode the intricate art of negotiation during an acquisition? Join me as I catch up with the dynamic Tim Swackhammer, founder and CEO of Mold Medics Franchising. From being a second-generation entrepreneur to leading an established brand, Tim takes us through his riveting journey, sharing his invaluable insights on the growth of the indoor air quality industry, the acquisition process, and his transformation post-acquisition.
In our candid chat, Tim doesn't just unpack his experience with acquiring Mold Medics by Threffel Brands. He divulges what larger companies like Threshold Brands seek when scouting for potential acquisition opportunities. Listen in as he unearths the contrasting approaches of entrepreneurs and big businesses towards investments. Beyond being a brand manager for Mold Medics within Threshold Brands, he also breaks down his day-to-day role, focusing on system and process development alongside training.
But there's more. Tim's insider perspective is a treasure trove of practical advice for budding entrepreneurs contemplating franchise ownership or starting a business. He elucidates the process of self-franchising and onboarding new individuals under Threshold Brands while also sharing his journey of balancing his time between several businesses and family life. We also touch upon resources to tackle mold remediation issues and ways to connect with Mold Medics Franchising. Don't miss this exciting conversation that promises to be equal parts informative and inspiring!
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from Chasing Financial Freedom podcast. I hope you guys are having a great day. Today on the podcast we have Tim Swackhammer, and Tim is an indoor air expert or quality expert. But a little bit about his background. He's the founder and CEO of mold medics franchising as the highest rated mold remediation contractor in Pennsylvania. He's overseen more than 1,700 mold removal projects as well as countless other indoor air quality services, including radon mitigation, air duct cleaning and various types of environmental testing. Sir, welcome to the show.
Speaker 2:Yeah, thank you very much for having me on, I appreciate it.
Speaker 1:You're more than welcome. I know is a little bit of a wait, so thank you for waiting.
Speaker 2:Yeah, absolutely.
Speaker 1:Cool. So before we get into what you're doing, you shared some good news. A little bit about yourself, and then we'll start jumping into some rabbit holes.
Speaker 2:Yeah, you had hit a lot of the high points. But, tim Swackhammer, I've been in franchising and entrepreneurship pretty much my entire adult life. I'm a second-generation entrepreneur. My father really raised me in that entrepreneurial environment. He had some independent businesses as well as some franchise businesses while I was growing up. So I got to see that from the kid of the entrepreneur perspective and Started working in some of his stores whenever I was a little kid. And then really as I grew up, got out of college and everything ended up falling into kind of the family business with him as well as my other brother and we Really took off and grew the existing brand that we were in.
Speaker 2:I expanded that and then as the years went on we wanted to get into more different things and one thing led to another ended up coming across the home service space and indoor air quality specifically and Really recognized that there was a lot of opportunity out there for a very customer-centric brand in the indoor air quality space, because so many of the Brands out there are beholden to insurance companies. They work specifically with insurance companies when there's water loss or a fire loss or something like that and really saw an opportunity to focus on the indoor air quality and the how that's impacting the occupants of the home and Really a different spin on the indoor air quality space than what a lot of the other brands do. With that, we started mold medics and been growing it ever since, and that's actually pretty cool. As of May of this year, we were actually acquired by Threffel Brands, which is a group of other home service brands all in the franchising space, and that's been a really interesting transition and I'm really excited about the opportunities that creates for the growth of our brand.
Speaker 1:So going back to the beginning, how did you really find yourself in this space? I know you did some research, but what kind of grew you? What pushed you to that direction?
Speaker 2:Yeah, so we wanted to get into something else. We were in the retail space previously and really identified home services as a Industry that we wanted to operate in. We found a previous franchise that we were involved with that Worked with for a little bit and got to see a little bit more firsthand on the home service space, but that didn't end up panning out very well. But through that's where we identified the needs within the indoor air quality space specifically and we're able to start up mold medics. How big is that industry? Do you know?
Speaker 1:So it's a huge industry.
Speaker 2:One of the recent estimates I saw was Three to seven billion dollars for mold remediations alone, Not including the radon air duct cleaning and some of the other verticals that were in. That's crazy. That's pretty big you guys get acquired in May.
Speaker 1:This podcast is all about chasing financial freedom, so you're finding some of that. Talk to us a little bit about how that all came about and that the whole product. I don't want to say process, but walk us through how they acquired you and what that looks like for others that Potentially could go through this in the future. Yeah, it really started.
Speaker 2:It was a kind of funny.
Speaker 2:It worked sort of two different ways.
Speaker 2:On one hand, from going to a lot of the local freight or the national franchising expo's, especially a lot of the ones for emergency emerging brands, we were on some different contact lists.
Speaker 2:So we were getting some emails from a couple of different private private equity firms that were looking to expand into the space and didn't really Give them too much thought until came across Riverside, which owns threshold, and seeing their focus specifically on the home service side of the business. That really intrigued us because at the same time we were looking to grow our footprint through franchising and we had done a couple of different things. And we had done a couple things but hadn't really put our foot on the gas from a franchise development standpoint. So we were looking for some different external partners that could help with that, whether that be franchise brokers or franchise sales organizations to help with that franchise growth. And Basically, one thing led to another, ended up in a conversation with threshold and Riverside and just saw a lot of the synergies that we'd be able to Create from a franchise development, accounting, marketing, all those different things that would allow us to grow the brand so much faster as Part of that group versus doing it all on our own.
Speaker 1:How did that? How has this acquisition affected you, as I'm guessing you were the CEO, were the single owner.
Speaker 2:Yeah, so my father and my brother were all partners in it. We made all the decisions. That being said, it was always my baby. It was always where I spent the majority of my time and really focused on, so it's been an interesting transition, just as we've gone through. Seeing a lot of the different ways that they do things, seeing a lot of the different benefits they're able to provide from a shared service model has been pretty cool, but it's definitely different than a standard entrepreneurial endeavor in that there's all different types of reporting structures and everything, and it's allowed me to really focus my role more I'm now a brand manager within Threshold for Brands for MoldMedics and really allowed me to focus a lot of my time on developing the systems and processes and training to be able to really grow the brand.
Speaker 1:Do you think your role has? When I say role, you've gone from being the entrepreneur leader. Do you still feel like you have that type of role as being the brand manager?
Speaker 2:Less. So now for sure and to be honest it's intentional we're also very active in other industries. We've got a lot of real estate endeavors. We have a number of other businesses that we're involved with as well and, to be frank, before the acquisition, I just didn't have the time or energy that was really required to be able to grow the business the way that it needed. So by joining up with Threshold, there's a lot more resources there that are able to take the reins on some of the other aspects of the business that I wasn't best suited for or, to be frank, didn't really enjoy doing, and allows me to focus on the parts of the business that I really like.
Speaker 1:So can you outline some of those? What are some of those tasks or focuses that you didn't want to, you didn't like, I should say, and the ones you do?
Speaker 2:So really my big focus and what I really enjoy doing is systems and processes. I really coming in. It's why every business that we've came into has been completely unlike the others. There's not really a lot of carryover, but I love going in and learning the business and figuring out okay, how do we best optimize what we've got here to make it as scalable and as repeatable as possible? Very typical kind of ADHD I don't like doing the same process twice. So if there's something that I can get in there and I can figure out a way to make it simpler, to automate it and to make it that much more teachable to others, that's really where I that's what I enjoy, what I really enjoy doing. I've been allowed to focus a lot more on that and allow a lot more of the standard administrative type duties A lot of the HR, the financial, a lot of the admin. Allow that to go to other professionals. That there, that's where they excel.
Speaker 1:Are your brother and your father in the business still?
Speaker 2:No, they still serve on a little bit of an advisory role, but they're not actively involved in the business anymore.
Speaker 1:So let's go back and we just touched on some stuff, but I want to paint a picture for the listeners. There's entrepreneurs, small business owners out there that probably have not gone through an acquisition phase in their business cycle. What would be some nuggets? Let's go with three nuggets that you'd want to share if somebody was going through that or was thinking about going through that.
Speaker 2:Sure, yeah, it was a very interesting endeavor for us as well. We had been involved in some acquisitions on a much smaller scale in terms of buying and selling locations within a franchise brand things like that buying and selling some smaller independent businesses but this was definitely the most robust due diligence process that we've been through by far and as far as a couple of the nuggets or a couple of the things that I would want other people looking at that to be aware of first and foremost, just really do your due diligence on the company that you're talking to Find out as much as you can about them, about how they operate. One of the things that made me very interested in threshold was how many former founders were still with the company, in some capacity or not. Some of them they're still operating the brands that were required. Founders have moved up into different roles within threshold brands, overseeing multiple brands, all kinds of different stuff.
Speaker 2:That was one of the things that really indicated to me that this was a good company to work with, because if they're able to leverage that talent of those founders who, myself included, don't always operate in a more corporate environment in the best possible way, there tends to be a little bit of a battle there between the entrepreneur mindset and more of a corporate America mindset, but seeing a company that's able to really identify those skills and leverage them, that was something that was very interesting to me.
Speaker 2:Definitely, do the due diligence, learn as much as you can about the company that is acquiring you or is looking at it, and try to get as much as you can determined upfront. We wanted to make sure I know from talking to others who were in a similar situation there's been a lot of retraiting in some of those deals where, throughout the diligence process, the terms that were agreed upon previously change a lot, and that was not our experience at all. They held very true to the terms that were initially negotiated and, as with any deal, there's going to be some stuff that comes up. But through the process we were able to establish really clear lines of communication and make sure that we were operating on the same page and even when something came up, figure out a way to get through it and make sure that we got to a resolution that worked out for everyone.
Speaker 1:It's a very how from start to finish. How long did the process take About?
Speaker 2:five months, that's not too bad.
Speaker 2:Yeah, it was definitely longer than what I had initially anticipated and I think they they set the timeline pretty aggressively up front just to Try to help keep things moving fully. Knowing that it's gonna likely extend is definitely an Exhausting process there. They are part of Riverside Capital, which is a large private equity turn or private equity firm. They Left no stern, no stone unturned, so to speak. They definitely did a very in-depth dive into the business, wanted to really understand what it was that they were buying, and it was interesting. I did learn a lot about the business too and how a company like that looks at it and what are their concerns. What are the things that they're focused on Versus what I'm focused on as a small business owner.
Speaker 1:Where's some of those differences that they focused on?
Speaker 2:so a lot of it. Some of it was stuff that we think of as more Regulatory things like cybersecurity was an interesting one. That not that our cybersecurity was bad, but it definitely compared to what they're looking for. There were a lot of gaps there that they identified as things that could be buttoned up and really improved upon and really looking at things with Part of it's having more knowledge and having more experience in the franchising space and these emerging brands as they grow, identifying with some of our systems or some of our processes. Okay, this will work for the next X number of years, and I didn't identify sort of the specific market markers for when things will need to be, when reinvestment will be made to swap out, say, our CRM, how long that's going to be useful for versus when it only need to move to a more robust or enterprise level system. So a lot of things like that. Just to be frank, we're so focused on Just building what we've got right here we're not always looking as far down the line as we probably should.
Speaker 1:The difference in how far they look down the road versus what you were doing. What would you attribute that to? Is it because you were knee-deep in the business on a day-to-day business and they are looking more of a 30,000 foot view, or is there other Aspects do you think that are in that decision, or how they actually run the business?
Speaker 2:I Think it's a little bit of both. I think it's definitely them looking at it from a different perspective. They're looking at it, yeah, for more of a 30,000 foot view, but also because they've got more of an established history and Growing these different brands that are able to better project different growth curves and have more experience to know when some like the different systems, when they'll be outgrown, when additional personnel will be needed, whereas when you're doing it, and especially if it's the first time that you've done that, you don't have that experience to really tell you Okay, this is what I'll need to add, this type of this is what I'll need to backfill this level of support or this is what I'll need to step back from these types of duties. So it's a lot of the, the experience that a typical entrepreneur will Gain as they go or gain, sometimes secondhand, just with a mentor or coach.
Speaker 1:They're able to give a lot more detailed analysis on that's got to be a huge benefit to grow the brand and that's probably a lot of relief off your shoulders. So today, as More of a brand person, what is your day-to-day look like compared to what it was when you were running the business?
Speaker 2:Yeah, so really my day right now. We're in an interesting period. We're very much ramping up to be ready to self-ranchises under threshold brands. So it is a lot of training, training new brand individuals, training new onboarding people, training new trainers, to make sure that we are set up for success as we onboard those franchisees. So it's been very heavily invested in Working with the people that are going to help scale the business, as well as really going through and Re-evaluating all of our different processes and procedures or those things that we talked about earlier, that is this something that worked at one or two units but doesn't work at ten, or is this something that we just need to Augment or improve upon so that we can scale it out to 30 or 50 units? So it's been a lot of for the introspection on the business and Figuring out what things need to be improved upon, what things need to be replaced altogether.
Speaker 1:Have you guys got to the point where you brought franchisees on, or you're just getting there?
Speaker 2:We're just getting there. We just got our new FTD under threat for brands finalized, so that's going live later this month and we're looking to begin onboarding franchisees before the end of the year.
Speaker 1:Wow, that's really cool. So what do you play? How do you play a role in all this? When you're working with franchisee, are you the face of it, or is there somebody else doing the work and you're coming in the background?
Speaker 2:How does this work now. So there's somebody else that does a lot more of the initial franchise contact and the franchise development portions and I'm serving as more of a both in the support and systems role, as well as more of I don't want to say a figurehead, because that implies not being as involved, but more of a leadership on the core tenants of the brand, how the brand operates, why we do what we do, doing a lot more of that rather than specifically walking somebody through the process.
Speaker 1:Does that? How does that fit into your? I guess how to say this is do you enjoy this instead of running the day to day business? Is this more enjoyable, or is there something else that you're trying to add into that puzzle so you can have that ultimate dream job?
Speaker 2:Yeah, so it's both. It's more enjoyable for me because I'm less involved on a day to day, getting my hands in every single portion of the business, which is necessary, I firmly believe, for entrepreneurs, especially whenever you're early in the growing process and you want to understand how the business works and everything. But it is exhausting, it takes a lot of time, it takes a lot of energy and it's definitely now moving into a bit more of a lifestyle position for me. I also just had my wife excuse me, just had our fourth child. Congratulations, thank you, thank you. So, yeah, I've got four kids with under six years old at home, so I'm able to go into more of a flexible role where I'm able to spend more time with them. I'm able to be a lot more involved there, in addition to helping out more with some of our other businesses that we're involved with. So it definitely fits with what I'm looking to do a lot better than being the hands-on, very involved guy from start to finish.
Speaker 1:It does make a huge change. I haven't got there yet. I understand that because I'm in every aspect of the business. But, man, in some of the other businesses I can literally just be hands-off, and it's very nice to see that and give you some more time back. What other businesses are you in? I know you mentioned some like real estate and so forth. What else are you guys in?
Speaker 2:Yeah, so we do a variety in real estate for predominantly vacation properties. Okay, we've got vacation properties variety of places on the East Coast. We do some development and construction on that side as well. We have a family entertainment center that we acquired during COVID that was a really interesting endeavor as well as we're franchisees with wireless zone, which is a Verizon wireless retailer. My brother predominantly handles that side of the business and we're area representatives for KidStrong, which is a franchise in the children's enrichment space.
Speaker 1:You've got your hands full there's a lot going on there so how we can go back around and you're wanting to spend more time with your kids and your family. How are you balancing that out now that you've got one position that's giving you that space, but it sounds like these others have some dedicated time that you've got to put in.
Speaker 2:Yeah, so with the other businesses it is a balance between myself and my brother predominantly. My father really serves in more of an advisory type capacity at this point. He's a little bit bigger on the real estate side, but so there's some balance between the two of us. But also with these other businesses, which mostly are newer, with the exception of the wireless stores, it's been very conscious as we've been getting involved with them, that we don't have an unlimited amount of time. Our attention is split between a couple of different endeavors and we need to have good management structures in place to be able to do that. It's interesting because as a business owner looking at it, you do have to look at it as okay, I could do all the work myself and get a higher return, but there are only so many hours in the day, so instead I need to onboard and train and develop and adequately pay people who can do more of those responsibilities, who are going to take more ownership in the business and be able to grow it with more limited input from me.
Speaker 1:Are these businesses started from scratch or did you buy them? I know you the family center I know you acquired, but were the other businesses started from scratch?
Speaker 2:They were mostly franchises that we started our local offices Okay Businesses from scratch. With the wireless stores. There have been a couple that we did through acquisitions, some that we took over, a lot that we opened ourselves, so really a wide range there. And then the vacation properties. That's something my father initially started back essentially the same year I was born. It was a funny story transition from doing tent rentals in Myrtle Beach to then going to tow behind the pop-up campers and then to full RVs and then eventually to condos and then from condos to houses. So it was really cool seeing that progression during my childhood too, as the properties just kept getting more numerous and bigger as time went on.
Speaker 1:So if you had your druthers and I'm just going to throw it out there and let's say you're starting all over and you're going to start businesses would you start a franchise or would you start a business from scratch? And why?
Speaker 2:Me personally probably start a business from scratch, depending on exactly what part of my life I'm in. If I have more time and I've got more energy to vote into it, I would probably go that route because I'm fairly confident in my abilities on the marketing side, on the systems and processes side, that I think I would be able to grow and develop something there to be bigger than I would within a franchise system Going back 10 years or without that experience as an entrepreneur and as a franchisee and franchisor. Definitely the franchising side, because through franchising you're able to learn from others' mistakes. You're able to scale something typically much faster and with a lot more limited knowledge.
Speaker 2:Essentially, with a, if you're doing an independent business, you have to be responsible for everything You've got to know the finance, the accounting, the marketing, the systems, processes, whatever it is that you're selling. If it's real estate, you have to know all of that, whereas whenever you get onto the franchising side, there's a lot in a good franchise. There's a lot more support in place and a lot fewer levers that you need to pull. There's a lot fewer things that you actually need to really know and understand to be able to have a successful business. It really depends on how much time you have, how much experience you have and what you're looking to get out of it.
Speaker 1:So that'll lead me into my last question we'll land. This is if someone's looking to be a franchise owner or start a business, what would be three nuggets you can give them to start their search, or that initial point of jumping off and making a decision at that fork in the road.
Speaker 2:Sure. So if you're between those two options at first would be a fair amount of introspection on yourself and understanding how controlling are you? How much control are you going to want to have over the business? I know it sounds silly, but that's where I see a lot of franchisees myself included, as a franchisee can get themselves into trouble is they want to have complete control over everything in the business, and for most franchises that doesn't work.
Speaker 2:You're buying into a system. You're buying into generally operate the business, not to create the business. And if you're going to come in and you're going to try to recreate everything from scratch and constantly go against what the franchisor recommends because you want to do things X-way and they want it done Y-way, that's not going to work and you're not going to be a good fit in a franchise system. But, particularly if it's your first entrepreneurial endeavor, you want to learn, you want to understand, you want to know more or you have more limited time that you're able to devote to it.
Speaker 2:I definitely think franchising can be a much better option for you because there's a lot less that. You're still an entrepreneur, you're still in control of your own destiny, all of that, which is great, but there's just so much less that can distract you, and what I've seen in my experience is a lot of whether they'd be franchisees or independent entrepreneurs come in and they'll find a lot of comfort in certain parts of the business, or they'll find that it's very easy for them to focus on a lot of parts of the business and they may not be the parts of the business that really matter. A lot of times they'll get very focused on a lot of the administration stuff and not focused enough on the sales then, and with a franchise they're able to direct you a lot better to no. These are the three, four, five, 10 levers that you need to be pulling in your business, the different activities that you really need to be focusing on to make it successful and not chasing every shiny object that comes across your desk.
Speaker 1:That is for sure. With the difference between a startup and a franchise, would you say the capital outlay initially is more or less than a franchise when you start up that fresh business, or you think they're about the same.
Speaker 2:It really depends on the business and the industry.
Speaker 2:I think they can end up being very close because the amount of time and energy that you have to spend on doing things that the franchise already provides in a good franchise system, that's always going to be a deal.
Speaker 2:You're always going to be ending up on top between just the franchise fee and whatever we're occurring royalties they are In most cases. If you're to redo that all on your own, you're probably going to do a worse job of it. Number one. Number two is probably going to cost you a lot more money because, if nothing else, the franchise or has economies of scale that you as an independent business person can't match. So you're going to be able to get a lot more value out of that from a franchise system than you would going out and trying to do it on your own. Again, a lot of it comes down to opportunity cost. Every minute that you spend evaluating different accounting programs or project management programs or whatever versus things that the franchise is already going to provide and then train you on, there's a big difference and there's a big opportunity cost there.
Speaker 1:I can't. It's probably been several months, but I don't know if you've heard a book that's called who, not how, and I can't remember who the author is, but it specifically talks about that. I've had it in my library forever and I read it several months back. What is his name? Oh my gosh, I don't have to check that out. I'm not familiar with that one. Who, not how. And it's all about.
Speaker 1:If you're going to grow your business or you're going to try to go get something done, always focus on the how, which bogs us down and it never gets us to the finish line. If you try to go out and find the who that has those skill sets like you've talked about, you're doing the skills and you're doing things that you enjoy, that you're good at, and you've let other people take on other tasks that they're good at. That's how you scale and you grow your business. We don't do that, even in corporate America. Entrepreneurship one of the things I joke about is I'm a two-time failure at entrepreneurship because I wasn't trained in corporate America how to be a leader, how to be a fisherman. I needed to go out and fish and eat and feed myself on a daily basis. I was fat and happy, but we always focused on the how, not the who. It's a very powerful book.
Speaker 2:That's good. I'll definitely check that out. I think that can be a very difficult balance for a lot of people to achieve, because I am a firm believer that you don't have to be doing everything, but you need to at least understand how things are going. You need to understand how things are going to work because if you don't know how PPC marketing works and you go and hire a PPC firm, a lot of times you're going to get sold a false bill of goods and you're not going to know how to properly evaluate success. That balance of how far down each rabbit hole do you go to have enough understanding to be able to properly evaluate success but not get yourself bogged down to where you're doing everything yourself.
Speaker 1:That's just a fine balancing act. Check out that book. It's good. It really walks through the different nuances of why we're stuck on the how instead of the who. It was an eye-opener for me. Sir, I thank you for coming on, but before we wrap this up, where's the best place that people can get a hold of you? They want to reach out and talk to you or whatever.
Speaker 2:Yeah, you can find us online moldmedicscom. We're also on pretty much all the major social media channels. We've got a pretty decent following right now for particularly indoor air quality issues. To help if you're having mold remediation problems or anything like that, we've got a variety of different resources available there as well.
Speaker 1:Cool. Well, thank you, sir, for coming on. It's been an honor, it's great conversation and I hope you have a great day. Awesome, thank you, ryan, Appreciate it.
