The Big Picture
Time is short and so many things need to be done that were not fully anticipated. I thought I was going to have a lull before closing to get my house in order, research more on the macro business environment in which this business operates. Do some prospect research into new potential customers, etc. I was wrong, things are staying really busy and most of it is critical and needs to be done yesterday.
The date for closing is June 30th. While I have yet to get to a signed Asset Purchase Agreement (APA), Lease, and Seller note, they are all written up. The APA has been back and forth with redlines, etc., and both the seller and I are ready to sign it once the bank has blessed it. So many small things that could potentially make a difference. With all the minutiae of a 50-page legal contract not including the lease, seller note, etc. which will be added to it. It becomes really hard to see the forest through all these trees.
An example, the work in progress was simple in concept, the seller goes through all that is currently going on in the business and then assigns a percentage complete to it. Then I take this number and either accept it or reject it. In theory, I could have added a true-up language to the APA so that after I am the owner, I could still negotiate this number. The reality is that if I spend my time trying to second guess his estimates, I am not likely working on the business. The big picture is that the way that we agreed to do it will essentially true-up the numbers anyway. Because at the end of each of these jobs, we will both tabulate all the hours, and materials that have gone into it. Then we will divide those on a ratio of how much was before closing to how much was after. To ensure we were both on the same page, we added an example into the contract. The even bigger picture, is that this is a legal contract that will only become applicable if one of us decides to go after the other. Call me a fool, but I chose this seller because I don’t intend to use this document other than to assuage the bank.
Another example, the first redline back from the seller changed the language that the assets will be in good working order, to As-is where-is with and understanding that it will be in good condition. This at first seemed like a huge change. I stewed on what, I assumed, was a massive shift that could cost me considerably. Then I thought through the likely implication. The seller is not trying to screw me, so even if an expensive piece of equipment breaks, the cost to fix it is likely less than $40K. This might seem huge, but in reality the repairs done to equipment in the last couple of year only added up to $1200. So with this range, it seems easy to accept the uncertainty of the equipments condition, plus as said earlier the seller is not trying to screw me. Do I really want a long-drawn-out battle over the potential for a small sum of additional outlay? Knowing which battles to fight is an important skill that I am always working on, especially around the house.
Yet another unexpected twist is the name of my corporation. I chose Sleepy Creek Holdings, Inc. Unfortunately, a typo by Mysolo401k had my name being Sleep Creek Holdings, Inc with the state, while it was Sleepy Creek Holdings, Inc with the federal government. This change took nearly two weeks with an expedited correction from the state to fix. Full credit should go to Mysolo401K for fixing this error in all hast after it was discovered. This error rippled, as the local bank I established my corporate bank account with would only use what the state had on file. To compound this, making it too close to my LLC name of Sleepy Creek Capital, caused lots of confusion.
As a side, my freezer recently died. We noticed the ice cream was really soft. Uh, oh. I threw everything that wasn’t ruined into coolers, and opened it up to see if I could locate the problem. I suspected maybe a thermostat or evaporator fan, but alas it was the compressor. So now I had probably $1000 or more worth of food (with the crazy food prices these days it is most likely considerably more) defrosting in coolers. It, of course, was almost 8 pm at this point. Frantically looking online, I discovered that the Lowes near me had a single model that was as big or bigger in stock. I called to make sure it was actually there. I then had to clear my trailer to be able to transport it home. Fun fact, if you move a fridge or freezer and don’t keep it upright, you are supposed to wait a day or more for the oil to settle down to the compressor. We made it to Lowes about 30 minutes before they closed, and loaded up a brand new $1000 freezer. Ouch, inflation sucks. We got home and managed to get it operational in no time. All the fruit and ice cream had to be thrown out, but all the meat and veggies survived. But since we were forced into buying a bigger unit, we had more space, and I decided to use bins. I scrounged around the house and found enough bins, so instead of the pile method we had used before, we now have a nice clean bin setup. We could have waited for it to be delivered and by then thrown out most of the food, or bought a lot of ice and kept it changed for a few days until delivery. Instead, we chose to act swiftly, and it is my hope that this grit will enable me to be a successful business owner. Keeping the big picture in mind, we saved most of the food, and now have a better setup.
I have my corporation setup and funded with my contribution, the asset purchase agreement is ready to be signed, my insurance agent selected, my life insurance policy issued, the closing date is set, and First Bank of the Lake is working hard to ensure that closing will occur on time. I have a ton to complete before closing that is a little over two weeks away. Likewise, I keep having to tell myself to consider the big picture as I scramble to get things around the house ready, such as replacing my car’s wheel bearing and brakes, and setting up an above ground pool. Also, my youngest recently really got into go karting, so we had to go out and buy a better go-kart since the one we have is a 1-seater, and he is not ready to drive quite yet. We lucked out and found a 2-seater nearby, and he hasn’t wanted to stop riding around in it since.