Buying and Growing a 70-Year-Old Seasonal Business
Sure as the sun rises in the east and sets in the west, seasons change.
While some businesses weather the transition with ease and move steadily along throughout the year, others go through cycles of boom and bust with the change in seasons. Yet, some are perennial gems that stand the test of time.
Andrew Harbin acquired one such highly seasonal business – Venango Awning – and all the unique challenges that come with it.
The awning business, like most blue-collar businesses, has plenty of worker turnover.
Throw in seasonality and you’ve got the potential for serious churn.
Andrew’s solution? Do a second business whose high season coincides with his first business’s low season. In doing so, he managed to smooth over both businesses’ seasonality and retain his trained crews year-round.
Andrew’s Journey to Acquiring a Business
Andrew hadn’t initially planned on running two businesses.
In fact, he was a little over a decade into his career in operations management at General Electric. when he first began to toy with the idea of becoming an entrepreneur.
He stumbled across a viral Twitter thread by Brandon Laughridge discussing acquisition entrepreneurship — buying an existing business rather than starting one from scratch.
“I had never really thought about that. I always thought about entrepreneurship as inventing stuff or starting something from scratch, not taking something over,” explains Andrew.
The idea was intriguing, and it seemed like an ideal way to build wealth that meshed with his skills and experience.
“I felt with my operations background that I would be a good candidate to step into something that was already operating well and take it over and try to grow it and optimize it from there.”
So Andrew dug a little deeper. He spent a few months reaching out to brokers to get a feel for the process of buying a business and did some research online.
Eventually, he encountered a business that sparked his interest, and the acquisition process began in earnest.
Learning Tough Lessons from a First Attempt
A machining business caught Andrew’s eye and, with is background in mechanical engineering, he felt this would be the perfect sort of business to take on.
He submitted an LOI (Letter of Intent) through a broker and waited.
And waited.
And waited some more.
After weeks of nervous anticipation, the broker finally got back to Andrew and told him that they had gone with somebody else.
The experience encouraged Andrew to reflect on what he had learned so far, and on what he was really trying to achieve by acquiring a business. Despite losing the deal, he found himself more drawn than ever to acquisition entrepreneurship.
“Going through that made me realize [buying a business] was what I really wanted to do, and that was when I really buckled down and started to learn about it.
Finding the Right Business, in the Right Place
Buying a business was turning out to be significantly more involved than buying a house, like Andrew had initially thought.
“It sounds easy on the [Twitter] thread, and I thought it was gonna be easy… they make it easy to consume, and then you figure out it’s a lot harder.”
But the effort that had gone into that first deal that fell through made the whole endeavor that much more real for Andrew. He focused more intently on his search and spent a lot of time thinking and talking with his wife about their parameters.
Their family had been living in Texas but wanted to move back closer to home. So Andrew decided to kill two birds with one stone and limit his search for a business to Detroit, his hometown, and Pittsburgh, his wife’s.
With this geography in mind, he set out to find a business that also satisfied his other requirement, at least $300k in SDE (Seller’s Discretionary Earnings).
Finally in early 2021, a few months into his search, Andrew set his sights on an awning business outside Pittsburgh that he found on BizBuySell.
Buying His First Business
Andrew’s interest was piqued when he came across Venango Awning on BizBuySell.
The listing was vague, stating only that it was a service business with light manufacturing, for sale by owner.
Upon reaching out Andrew got a more complete picture. What he was about to attempt to acquire was an awning business dating back to 1946. In 2020, it had done about $1 million in revenue and about $300k in SDE.
His due diligence uncovered that that figure had a PPP loan baked in, leaving the true SDE closer to $250k. While this was below Andrew’s threshold, there was a lot he liked about the business, and he proceeded.
Unlike most listings on BizBuySell, Vengano was not represented by a broker but instead by its owner, and going through the process without the aid of a broker presented unique challenges. Andrew struggled to negotiate with the owner who, since he was not plugged into doing deals from a seller’s perspective, wasn’t aware of what the market terms were and had unrealistic expectations.
“People talk about how often deals die. I think I walked away from this one at least twice during the LOI phase because we were too far apart on value.”
Eventually though, Andrew overcame the negotiation hurdles and bought the business for about 3x its SDE, in the range of $750k.
Settling in and Growing the Awning Business
Now the proud owner of Venango Awning in Pittsburgh, Andrew set out to expand and improve it.
Very quickly he came to understand that the business’s seasonality would be the most significant hurdle to future growth.
“You sell the awnings in the spring, you have a group of service customers that you take down their awnings in the fall, store them in the winter, put them back up in the spring.”
For the previous owner this hadn’t been an issue. He spent winters in Florida and was content to close up shop for the season after hitting his number in the spring.
Andrew saw things differently. He had ambition to grow the business and set out to do so despite seasonal difficulty.
He saw that, though it made up more than 75% of Venango’s business, residential canvas awnings and service had limited growth potential. Selling to businesses, on the other hand, seemed promising.
“Where it can continue to grow is, we’re still very small on the commercial side… If I grew it to 25%, did more metal and aluminum awnings, that’s probably where the future growth is.”
Besides boosting sales, Andrew’s toughest challenge was mastering customer service.
“When you’re servicing 1,000 people in a 5-week window, you get a lot of phone calls.”
The huge wave of seasonal calls was hard to deal with and hiring temporary admins to help manage the crush didn’t satisfy Andrew. Customers were irritated by always speaking with someone different each time they called in.
The challenges were substantial but after a year in the seat, Andrew managed to boost Venango’s revenue to $1.6 million, with 20 employees and margins of about 25%.
“I think it’s gone about as well as I could have imagined. I’ve done some of the things I wanted to do. The previous owner was very, very involved in the details. I wanted to get out of some of those details, grow the team, let them make their mistakes. I knew I was gonna do that before I came in, and I did that. We failed at some stuff but, a year later I feel a lot better about where the team is.”
However, the glut of business during the high season and its intense staffing demands inspired Andrew to seek out a second business, one that could both justify keeping enough people on to deal with high season as well as generate work in the low season.
Deciding on a Franchise Over Buying or Starting a New One
To keep growing his business Andrew had to confront seasonality.
His competitors either kept their businesses small or shed workers during the off season.
“I didn’t like either one of those options. You go through all this effort to hire these people, and I felt like I did have a very good crew, and then just to turn around and lay them all off two months later... [I wanted] to have a steady staff, and not be doing that churn every year.”
Andrew set about finding another labor-intensive business that was busy during his summer low season, but he was unsure about how to get one.
“So starting [another business from scratch] was gonna be hard for me because I’m very busy with the awning business, so I’d almost have to hire someone to then go and start it.”
And buying another business? “I still had some scars from buying the awning business as far as the process of it… The negotiation, the lawyers. I wasn’t really interested in going through that again yet.”
Then in February 2022, Andrew became inspired by several successful franchisees and began to consider that a franchise may be the solution to his problem.
Soon thereafter, he came across Big Jerry’s Fencing franchise and was attracted to their terms.
“I liked what they brought to the table, the processes. The big one ended up being the supplier relationships.”
Besides the franchise, Andrew had only encountered one local fencing business for sale, but when he entered negotiations, the seller wouldn’t budge on the NDA and Andrew quickly soured on the deal.
He settled on the franchise.
Combining the Awning Business and Fencing Franchise
The fencing franchise turned out to be just what Andrew was looking for.
Generally, franchises are tricky for owners of existing business, as they often have rules restricting how the franchise brand can be associated with other businesses. However, in Andrew’s case, the franchisor was thrilled that he already had skilled crews of full-time employees to rely on rather than contractors like most franchisees.
From Andrew’s perspective it was the perfect way to deploy his existing resources to beat the seasonality of his other business.
Sure, he would have to pay royalties to Big Jerry’s Fencing, but the business meshed very well with Venango Awning.
After buying the franchise in April, they were up and running selling fences by mid-May.
“June was like crazy, almost growing too fast. I got nervous!”
It took Andrew and his crews a couple of months to get up to speed on the fencing business, and he had to bring on subcontractors to help with training and to serve as crew leads. But the business is “settling into about $50k revenue per month this year.”
Andrew predicts that his fencing franchise could hit $1 million in revenue by his third year.
Looking Back and Looking Forward
With his awning business doing $1.6 million in revenue last year, and his fencing business expected to pull in $1 million in three years, Andrew is well on his way to achieving his goal of hitting $5 million in revenue, or $1 million in EBITDA, 5 years after his first acquisition.
It’s an ambitious goal. But by leveraging his seasonal flexibility and carefully deploying his businesses’ resources to overcome the challenges of high seasonality, Andrew has admirably set himself on the path to achieve it.
Reflecting on what it’s taken to get there Andrew laments, “It’s lonely. Before, in my mid-level management job there was a row of us similar in age. We went out to lunch together, talked all the time.”
Business ownership offers no such camaraderie.
Beyond that, “There’s a mental health side of doing this that you have to be prepared for… You know, my last job had times where it was pretty stressful too, but when it’s your checkbook on the line it’s a different stress. You gotta be ready for that.”
But despite the stress and loneliness-at-the-top Andrew is happy with the way things have played out.
“I feel great about it. It’s a different kind of stress!”
In fact, after establishing a smooth rhythm with his two current businesses this year, he plans to seek out another acquisition next fall.
“There’s still a lot of work to do, but overall, I feel really good about where we’re at and certainly have no interest in going back to corporate. I’m happy to keep growing with what we’re doing.”