The American Dream is alive in Cottonwood Falls, Kansas
The American Dream is still alive. Living where you want to live. Working where you want to work. Many of us dream about it, a select few of us make it happen.
“I’ve been a mechanic all my life and had gained experience and expertise over the years. I saw an opportunity in my community to buy an existing mechanic shop and along with this, an opportunity to make a living in my home community without having to drive to a job away from home every day,” shared Dustin Maddox. “I knew I had the expertise to provide excellent service and saw the chance to own a business of my own.”
For Dusty, this dream became a possibility when he heard that the local automotive repair shop was for sale.
To find out not only what was involved in buying the business, but to decide what a fair price for the business would be and what it would take to be successful he would need some help. Dusty had heard about the Chase County E-Communities program. The Chase County E-Communities program is a program offered by the Chase County Economic Development, Inc Committee to encourage entrepreneurial activity in Chase County. It was created through a Kansas Center for Entrepreneurship Tax Credit program in 2008. Qualifying entrepreneurial projects may include start-up businesses, as well as existing business purchases and/or expansions.
To potentially take advantage of the low-interest loans offered by the e-communities program and evaluate the opportunity to purchase the existing automotive repair shop in Cottonwood Falls, Dusty knew he would need help to get his plans on paper and with the application. To get help he contacted the Kansas SBDC at ESU in Emporia and began working with Lisa Brumbaugh, regional director and consultant. Lisa was the perfect consultant for Dusty’s needs. She had extensive expertise in financing, the process of buying and selling businesses, as well as business valuation – a key to determining initially the value of the purchase.
Lisa provided consulting free-of-charge to Dusty and together they worked on his plans and financial projections. They dug deep into analyzing the market he’d be serving, how he’d maximize billable hours, what taxes the business would be responsible for, and critical expense estimates associated with running the business. They left no stone unturned and investigated everything he’d need upfront to avoid any later surprises.
Several solutions and quite a bit of insight can be generated as part of the business transition (buy/sell) consulting process. Kansas SBDC consultants work with potential buyers of existing businesses to determine a range of purchase prices using recognized evaluation standards. Then as consultants they evaluate how this price range would impact future cash flow of the business helping the client, or potential future buyer, determine if and what is feasible to pay for the purchase. Consultants work with clients to estimate potential fluctuations in sales due to seasonality, what form of legal ownership would work best, and what types of items to be aware of during the actual business buy/sell transaction (i.e. sales contracts needed, list of assets being purchased, etc.). Future profit/loss and cash flow projections often become a make or break point for the buyer to determine if financially the business, once purchased, can be successful.
Lisa worked with Dusty guiding him through the process. She knew that he’d benefit greatly by getting his plans on paper and she could help him out tremendously by pointing out things he may not have thought about as a future business owner.
By working on financial projections early on Dusty was better prepared to not only own the business, but purchase it at a fair price. And on March 10, 2014, Dusty’s Repair went from dream to reality.
Dusty was able to successfully transition the business for himself and his community. The business has surpassed all income projections. The community now has a mechanic and general welder available full-time five days per week. An increase over the previous limited service hours provided by the business he purchased.
And Dusty’s family wins too. The Maddox family can raise their three children in a community they love.
Now what made this truly a success was something you probably don’t hear often. Dusty knew he wanted to own a business in his community, but he was very realistic about his expectations and was not stuck on owning this business at any cost. He wanted it to work the way it should and was prepared to walk away if realistic projections didn’t prove the business could be financially feasible.
By reaching out and getting help and being prepared to walk away, Dusty laid the groundwork to build a long-term successful and a needed business in Cottonwood Falls, Kansas.
Dusty’s Repair is a perfect example of what a small business can mean to a community, how much a community can lend its support through e-community financing, and a supportive local bank. It’s the story of how a small town rural Kansas resident can find a way to live and work in his own community and realize the American Dream.
Dusty’s keys to success:
“Be known and trusted by people in your community. And have a great location that’s visible from the highway and easily accessible.”
About Dusty’s Repair:
Business owner: Dustin Maddox
Business name: Dusty’s Repair LLC
Address: 101 Union St, Cottonwood Falls, KS 66845
About Kansas SBDC consultant
Lisa Brumbaugh, Kansas SBDC at ESU regional director, shares her industry knowledge and experience by consulting in addition to managing the regional center. Lisa has expertise in financial analysis, business valuation, business planning, and business transition. Lisa can be reached at firstname.lastname@example.org or 620-341-5308.