Latest / The SmallBizChat with Melinda Emerson / How to Evaluate an Existing Business to Buy with Andrea Palacio

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How to Evaluate an Existing Business to Buy with Andrea Palacio · The SmallBizChat with Melinda Emerson

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  Three, two, one, zero.
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  Ignition.
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  Lift off.
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  Ending small business failure.
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  Welcome to the Small Biz Chat podcast with the number one small business expert, Melinda
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  Emerson.
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  Melinda's goal is to end small business failure, and she'll give you the information
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  you need to succeed and live the life you dream of.
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  Now here's your host, the small biz chat lady herself, Melinda Emerson.
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  Have you subscribed to the small biz chat podcast?
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  Well, it's time.
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  Every Wednesday, we offer listeners bite sized actionable tips to start and grow a successful
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  small business.
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  In just twenty minutes or so a week, you can get a ton of insight and resources to propel
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  your business forward.
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  Be sure to subscribe to the Small Bitch Chat podcast today.
• 0:58
  Hi, everybody.
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  Welcome to another episode of the small biz chat podcast.
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  I'm Melinda Emerson.
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  I am America's number one small business expert, and they call me the small biz lady,
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  and I am so excited to talk to today's guest.
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  Now listen.
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  If you are a fan of the small biz chat podcast, we would really appreciate if you would go to
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  Apple podcast or wherever you listen to your favorite podcast and leave us a review.
• 1:23
  Now let me say this.
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  Do not leave me any hate mail, right?
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  If you don't like my podcast, keep that to yourself, but if you love it, we would love if
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  you would tell other people why they need to listen to the Small Bitch Chat podcast.
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  We bring amazing experts on this show and we give you insight that otherwise you would have
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  to pay thousands and thousands of dollars to get.
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  We have been doing this for a long time.
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  I have been the small business lady for over seventeen years and it is my pleasure to bring
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  you the Small Bitch Podcast because our mission is to end small business failure.
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  Please allow me to introduce my guest, Ms.
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  Andrea Plasio.
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  Andrea bought and her husband bought a struggling landscaping business with a $100,000
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  SBA loan and 12 employees.
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  When traditional solutions failed, she turned to AI to build custom systems that transformed
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  entire operation.
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  Now she is the CEO of Run Crewless, and they help other service businesses implement AI
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  automation, and she speaks from experience, not theory.
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  And for more information, you could go to andrea placio dot a I.
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  Andrea, welcome to the Small Bitch Chat podcast.
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  Thank you, Melinda.
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  Thank you for having me.
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  Oh my gosh.
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  So tell me the story.
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  I read the story when you sent it to me, but please tell me the story about how you and your
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  husband bought your business and what happened next.
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  Yeah, I'd love to be here and share that with you.
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  So funny story, it actually wasn't a $100,000 loan, was a $500,000 loan.
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  We came into this company bought it thinking that it was actually a great company that we
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  were buying.
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  We didn't think that we were buying a struggling company.
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  We didn't sign up for any turnover or anything like that.
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  What happened is that as soon as we closed, just four days later, the seller who was
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  supposed to train us, who had been through the process just all good, he just disappeared on
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  us, stole $7,500 from a project that was still pending and just disappeared on us, did not
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  train us.
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  And that's where it all started going bad after that.
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  The employees started asking for as a soon as we took over the company.
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  Just about two months in, we had the manager of the company because we didn't really know
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  anything about landscaping, we took over the company, we found that we thought, okay, he
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  knows more than us, let's just have him be the sales manager, right?
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  Then let's just do this, have him do the sales, he knows a lot more about this business and he
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  had not sold anything, so by that time our revenue had significantly dropped from $70,000
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  per month down to $40,000 per month.
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  We went from 12 employees down to two employees before the manager when he realized that he was
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  not selling, he said, okay, I'm leaving.
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  He quit on us and before quitting, he just just gathered all the employees in the nearest gas
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  station and said, these two are not gonna make it, you all better find another job.
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  And that's kind of where it all started.
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  My husband and I, obviously with an SBA loan, you have to back it up with your personal
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  collateral.
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  And when we did that, we're like, well, we now have a newborn because I, when we acquired the
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  business, my first son was six months and I was pregnant with my second son.
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  So it was definitely one of the hardest time of our lives.
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  And I, we just figured out how to survive.
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  At first it was eighty hour weeks just putting in all the work, was doing customer service,
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  marketing, admin and my husband was out there doing the sales and because we were out of
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  employees, he ended up having to do the labor.
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  So just going to Home Depot, find day laborers, come back home, 6PM, sweaty, muddy, Florida
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  heat, summer, and we are just just trying to survive that.
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  So so so clearly you misjudged this person that you bought this building.
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  Clearly.
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  And clearly this person is also a fraudster and a liar.
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  Clearly.
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  Tell me, what were the earliest red flags for you?
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  You know, everything fell apart, there were some things you ignored.
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  So let's talk about what were some of the early red flags of what happened and like how you
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  could have maybe, you know, realized that this person was not, you know, an honest dealer.
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  Definitely.
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  I would say the first thing is that when we started doing the negotiation, at first he
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  accepted the offer saying that he would do seller financing for a portion of the deal.
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  And at the end, like, when, you know, when we asked for a for to reduce the price because the
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  vehicles he had valued them were, like, as new vehicles, and they were really old vehicles.
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  Like, we've already had to replace quite a few of them.
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  And so one of the red flags was the fact that he completely removed.
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  He's like, alright.
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  I'm not gonna seller finance anything because the second you have a seller finance a portion
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  of the business sale, then they're tight.
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  Right?
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  They they know that they can't steal from you.
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  They know they have to to to follow the they can't breach the contract.
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  And what happens is that, like, after he had already breached the contract, we went to a
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  different lawyers and just going into a lawsuit with this would cost us, like, $50,000 to a
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  $100,000.
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  When at that point, we're barely just trying to make it.
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  We don't know if we're going to, you know, if the business is going to completely go
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  bankrupt.
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  And so my recommendation, that was the first red flag.
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  And then the second red flag was that in the middle the the table when we were signing the
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  closing documents, he got mad because he didn't want to pay us for that month's worth of, like,
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  the that month that we were closing for what the customers had already paid for that we were
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  going to be servicing.
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  He just got upset, got off the table, left, and got really pissed and then came back, signed
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  and and we're like, okay, what happened here?
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  Right?
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  So that was a red flag, but honestly, you just the fact that we didn't talk enough with any
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  other employees, we didn't we just we you must have the seller finance just a piece of the of
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  the sale.
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  You cannot let them just get away because they'll they'll leave and they have nothing
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  attaching them to making sure that they actually stick to their word.
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  So tell me about once you realize that you inherited a team in crisis, like once you
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  realize like you could not trust this manager that you had kind of moved into sales, what did
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  you do to try to, you know, how did you keep the two employees at stake?
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  I mean, basically like, what did you do and how did you rebuild the team?
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  Yeah, that's a really great question.
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  So it was a really hard time because we come from an e commerce background.
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  We had an e commerce business for seven years and an e commerce business from a service
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  business where you have 12 employees, completely different game.
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  So the first thing that we did, we're like, all right, so clearly we're losing clients left and
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  right.
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  We lost our biggest accounts.
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  We lost reoccurring accounts that, you know, amounted for like $4,000 worth of monthly
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  revenue, not to mention the enhancements that were like $40,000 per month, they're down to
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  zero.
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  So I would say what we started doing is just I started playing with Google Ads and just trying
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  to figure out how we would get more leads.
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  And what happened is that at first, we lost another $11,000 just because we had no idea
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  what Google Ads was like.
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  And so there's a learning period.
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  Right?
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  There's a learning curve to everything.
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  And so when we finally figured it out, my husband was now doing the sales and he's just
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  trying to, when he's not doing sales, he's out there doing a little labor and I'm just trying
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  to figure out how to get this marketing running.
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  And slowly we just started building the business back up, just trying to get people not
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  to cancel.
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  So just going to to properties and talking to clients and really the client is the one that
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  tells you, okay, this is what's wrong.
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  This is what you need to fix.
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  Right?
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  And some of them will give you the opportunity, others won't.
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  And that's really where you have to just remember that if everybody if it was that easy,
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  everybody would do it.
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  And it is not easy.
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  It is far from it.
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  And you just have to give it everything you got.
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  I mean, after after that, we were we start we build the business back up and we were still
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  working eighty hour weeks.
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  Like, he would come my husband would come home 7PM still just to sit down on the computer and
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  send estimates and quotes.
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  And I was on the phone just trying to hold the babies, trying to speak on the phone, and
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  trying to answer to customers.
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  So that's when AI came in and really changed the entire business because we automated
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  absolutely everything about the business.
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  And and we delegated so many things to AI that allowed us to get our time back, and I
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  completely stepped away from that business.
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  And my husband now works remotely and part time on the business.
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  So talk about, okay, so that's a easier said than done kinda thing.
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  You just like kinda watched over like, what did you automate first and using what tools?
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  I mean, you've done this in law, I mean, AI has only been really big for the last two years, so
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  tell me what you did and tell me what platform you use because I need Definitely more
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  information about what you
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  Melinda.
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  So what happened is that I had this I was getting over 50 calls every single day.
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  There was nobody else I could answer them just because we didn't have the money to pay anybody
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  else because the business was slowly going downhill and crashing into the ground.
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  So what I did is, like, okay, I had this vision that maybe we could put together some kind of
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  customer service bot or a or agent, like, didn't know what that was back then, but I was
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  like, alright, let me try to hire someone on Upwork.
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  So I paid $700 to just get the project started to someone on Upwork.
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  Five months later, I had nothing but a dialogue flow that sucked and it was just nothing,
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  absolutely nothing.
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  So what ended up happening is that I go back and I'm like, alright, let me try to automate
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  at least because we're getting so many complaints from customers saying that we're not
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  doing the job.
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  Let me just automate a process where as soon as the crew goes out to the property and completes
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  the service, we're going to automatically send them pictures saying, hey.
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  We completed your property.
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  This is what the property looked like before.
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  This is what it looked like after the service.
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  And here's this link where if you're happy with the with the service, you can leave a Google
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  review.
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  And if you're not happy, it will take you to a form where you can fill out a complaint form.
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  And so that's what I hired another person to do that, and they did that automation in make.com.
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  That's what the tool is called.
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  And when they built that, I was able to see insight what it what what the automation looked
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  like.
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  Right?
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  The the whole piece, like, single module, what it looks like.
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  And I'm like, it's that easy?
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  This is it, this is it, right?
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  So I start going down this rabbit hole, I go into YouTube University, I just teach myself
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  everything about AI, how I can connect it to ChargePT, how I can connect it using Make
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  iConnect, just different tools, right?
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  And I end up building this customer service agent that I had in my mind, I build it myself
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  using make.com and then eventually just Make is not good enough, so I moved to an 8N.
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  As I moved to an eight n, then Claude comes in and now, you know, everything in all my
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  businesses is built with Claude and I have AI employees that handle pretty much most of the
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  work for us.
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  Now, it definitely is easier said than done.
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  It took me three long years of learning and making mistakes and figuring out how to do it
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  correctly, but I can tell you that it changed my life and that's why I decided to go fully
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  into this business.
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  All right, so tell me a little bit more about what the transition was like when you started
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  using these AI bots, right?
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  Like how long did it take for everything to like click?
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  And did you have to have somebody go in and do some custom code to, like, fix it for you?
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  Like, tell me what the transition was, and then tell me where that business is now.
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  Do you guys still own this business?
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  Did you sell it?
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  What are the revenues of this business now?
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  Like, help me understand how this fixed everything.
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  Definitely.
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  So it took me I would I'm gonna be honest.
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  At least six months to a full year to really get this working to the point where we're now
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  comfortable just letting AI do pretty much most of the work.
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  Right?
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  I mean, that's not labor intensive that the employees are actually doing out there, like,
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  type of work, we have AI doing.
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  So it's booking appointments.
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  So as soon as someone calls the business, it books an appointment directly in our calendar
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  to book them for an estimate.
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  So we go out, visit the property, and provide an estimate.
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  We are sending those pictures automatically.
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  We're ask they're asking us on the phone, hey.
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  When is my next service?
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  It's connected to our CRM so it knows when their next service date is, what invoices they
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  have past due, the quotes that have been sent out to them, absolutely everything, right?
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  So the invoice is being sent automatically, right?
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  Following up for payments, I hated calling people to ask them to pay, like why haven't you
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  paid, we already completed the service type of thing, and so now we have AI calling saying hey
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  just a quick reminder I know things slip by but hey we haven't received your payment what's
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  going on let me send you the link so you can process the payment right now and so that makes
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  a huge difference the amount of time that you spend there.
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  We do still own the business.
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  We, in fact, after we we had listed the business for sale because we were just so
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  completely exhausted and overwhelmed by everything that we had gone through with this
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  business, and we listed it for sale and well, as we're listing for sale, I'm like, okay,
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  let's list it for sale and at the same time, I'm going to try to automate everything and see
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  how that works out.
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  Right?
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  By the time we receive an offer for someone to buy the business, we receive an offer for
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  $750,000 to take over the business.
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  We're like, well, now the business run on its own.
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  My husband's not working because not working Friday.
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  He's coming back home at 3PM, and we're like, there's no reason for us to sell it anymore.
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  At that point, we put a manager in place, and the manager's now handling the sales, the
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  operations, and it was all great for a full year until the manager dropped the sales, and
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  we had to take over again.
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  So now my husband just goes once a week to do sales and just, and now we're acquiring another
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  company to continue growing it.
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  So that's where we're at.
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  It's been a huge journey and definitely a big learning experience.
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  So tell me how long ago did you start run Crewless and are you going after other, you
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  know, kind of businesses in you guys vertical or you like pest control everybody?
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  Like, tell me, like, who are you?
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  Who is your target you know for this business at this point?
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  That's a great question.
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  So when I you know after this whole thing changed my whole entire life Melinda, I said to
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  my husband you know what I always told him when we wanted to acquire this landscaping company,
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  we didn't do it because I wanted to be in landscaping.
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  In fact, I I told him, I don't expect me to ever go out there because I will not do it.
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  I'm always the woman behind the computer, you know, So I so I just told him, you know what?
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  This is this is just not for me.
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  I help you with the marketing.
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  I help you with this, but I just love AI.
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  I I I love doing this, and I wanna help other business owners just figure out how they can
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  get their time back, how they can increase their revenue using, you know, automation and
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  and delegating to AI.
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  And so back in, I would say in July is when I started leaving the company completely, just
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  handing everything over to to my partner.
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  And just two months later, I started my business.
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  I started completely in consulting.
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  And so I started helping other service businesses.
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  So I help just any type of service business, really any like health insurance company just
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  because my family has had health insurance.
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  So I did all of that work for them.
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  I have helped a couple of mortgage brokers, people just in the service industry because
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  there's a lot of labor intensive type of work and that's really where I know that we can
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  bring them the most value.
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  And so what happened is that after I dove into consulting, I found that a lot of people, they
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  just couldn't afford the services and so I started really putting all of this content for
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  free to teach people how to implement it in their business.
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  And so if you go to my social media, you'll find hundreds on videos on how you can
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  implement this in your own business completely for free with free resources on how you can do
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  it on your own.
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  And I also launched a coaching program to teach business owners how to implement this in their
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  own business along with their team, because it can 10x your productivity.
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  Like, it will literally I I right now, I have AI employees that do the work for me.
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  And when I say they do the work for me, I mean, like, they write my social media scripts, they
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  come up with ideas, they come up with, they create the carousels, they create, they do the
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  work for my clients, I just have to make sure, I just supervise to make sure it's all correct,
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  all accurate, so when you learn how to use AI in your favor, it's not about, you know, that
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  fear of, hey, AI is going to replace me.
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  If you learn how to use AI, you cannot be replaced because AI will always need a human to
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  supervise it.
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  So you what you want to do is learn and teach your team to 10x their productivity, 10x their
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  output, right, by just using these tools that are available to them right now.
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  I love it.
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  I love it.
• 18:50
  Alright.
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  Well, tell me what is the best business advice you've ever received?
• 18:54
  Best business advice.
• 18:55
  The faster you move, make the mistakes as fast as you can.
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  Fix the constraint and move on to the next mistake to just move fast.
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  That's the way to go.
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  Make the mistake, Thank move fast on
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  you so much, Andrea.
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  I really think your story is fascinating to me.
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  If anybody wants more information, they can go to andreaplasio.ai.
• 19:16
  Thanks so much, Andrea.
• 19:17
  Melinda.
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  Thank you for having me.
• 19:24
  Thanks for listening to the Small Biz Chat podcast with Melinda Emerson.
• 19:29
  Subscribe to this podcast wherever you listen to podcasts, and join us next Wednesday for
• 19:34
  more fantastic information and interviews.
• 19:37
  You can find more sources and small business success strategies by visiting Melinda's
• 19:42
  website, succeedasyourownboss.com.
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  Thanks again for listening, and we'll see you next week.