Acquiring Minds: "Year 1 in a $300k SDE Services Business"

Host: Will Smith
Guest: Scott Crosby, Owner of American Services (St. Louis)
Date: February 23, 2026

Episode Overview

This episode dives into Scott Crosby’s first year after acquiring a small HVAC and Refrigeration Services business in St. Louis with an SDE of under $300,000 and 4.5 employees. Host Will Smith interviews Scott about his unique career path, acquisition journey, lessons learned, and the rollercoaster experience of taking over, turning around, and investing in a fragile small business. Scott shares tactical advice for searchers, including actionable networking strategies, deal structuring pitfalls, and rebuilding teams—sometimes from scratch.

Scott Crosby’s Pre-Acquisition Journey and Defining Moments

Varied Career Path

• Politics → Media → Construction (CEO for 9 years) → Media (TV Production) → Software Sales.
• Defining Moment #1: After college, chose a low-paying politics job over a higher-paying sales job for the long-term benefits of relationship-building and leadership experience ([06:11]).
• Defining Moment #2: Catalyst to buy a business arrived when his employer withheld a significant commission, reminding him of the importance of controlling his own destiny ([09:17]).

  “Do I want to be in charge of my own destiny? …When you own the company, you can't really stiff yourself out of commission.” – Scott Crosby [10:16]

Early Exploration of Acquisition

• Dabbled in business buying in 2017 but paused to create and produce a TV show (“Remotely Working”, Amazon).

  “Running a business is definitely akin to making and producing a TV show. …That experience actually has helped me a lot in dealing with stress.” – Scott Crosby [13:08]

The Search Process: Philosophy and Tactics

Buy Box and Financial Parameters ([17:49]–[19:24])

• Geography: Within 2 hours of St. Louis.
• Industry: Liked blue-collar; industry-agnostic; preferred small businesses ($250k–$500k SDE).
• Self-funded: Sizing the search to match personal/family financial comfort.
• Customer Type (Key Insight): Advice to explicitly choose between B2B vs. B2C, aligned with your skills and happiness.

  “I'm a relationship guy. My whole life has been B2B. …I really wanted to build and buy something where I could build relationships with the clients.” – Scott Crosby [19:37]

"Top 50" Relationship-Building Strategy ([24:31]–[31:35])

• Make a list of 50 influential connectors in your target market (not just business owners).
• Reach out for meetings. Each connection leads to more introductions.
• Over time, this generates direct deal leads, community presence, and long-term business allies.

  “That 50 quickly turns into several hundred. …That list is still bearing fruit." – Scott Crosby [25:18]

• If not comfortable networking, reconsider acquisition. Being a local connector is core to operating a small business.

  “If you're not willing to do that, you might not want to buy a business.” – Scott Crosby [30:57]

Lessons from LOIs and Deal Process ([31:44]–[36:05])

• Submitted 4 LOIs; 2 accepted; 1 closed.
• Cautious about buying from owners under retirement age—unpredictable commitment, more likely to back out.
• Red flags are often validated at closing—walk away from bad deals, bad brokers, or bad people.

Underutilized Search Resources

Economic Development Resource Centers / Small Business Development Centers (SBDC) ([36:14]–[40:07])

• Free local governmental agencies invaluable for searchers and entrepreneurs.
  • Help connect with SBA lenders.
  • Offer free access to financial planning software (Live Plan).
  • Make banking and community introductions.
• Underclaimed by the searcher community; often a first-call resource for new buyers.

The Acquisition: American Services St. Louis

How the Deal Came Together ([41:21])

• Found via broker email blast. Office 8 minutes from home.
• Built rapport with seller; submitted LOI at $800k vs. $1.2M ask—seller accepted ([42:27]).

  “I put it into my analyzer… offered $800k, [they] took it the next day.” – Scott Crosby [42:27]

Deal Structure and Financing ([49:52]–[54:59])

• SDE: ~$275k.
• Purchase price: $830k (including inventory).
• 10% seller note, split: $40k standby (equity), $40k 5-year amortization at low interest (in hindsight, not ideal).
• Out-of-pocket: $40k plus post-close working capital injection (~$50k) when a large job forced early vendor payments.
• No line of credit (mistake—hard to get LOC or credit cards with a new entity and asset sale).

Notable Quotes

“I wish I wouldn’t have done the second half of that [seller] note… first-time buyer mistake.” – Scott Crosby [50:18]

Post-Close Surprises and Cash Flow Lessons

• Delayed cash from a large win created working capital pain.
• No LOC meant limited financial cushion during slow season.

  “It’s nearly impossible to get [a line of credit] once you buy a business and close… nearly impossible.” – Scott Crosby [54:43]

• Advice: Always, if possible, get an LOC at close.

Ownership: Tough Transitions and Radical Overhaul

Team Crisis and Rebuilding ([64:09])

• Inherited 4.5 employees; quickly realized most had to be replaced.
  • Key technician unreliable; another left abruptly; office processes old-school.

  “Pretty quickly realized we did not have the team to really even service the clients that we have, let alone, let’s go grow this thing.” – Scott Crosby [65:31]

• Used temp labor and recruiter to stabilize over the summer.

Operational Improvements (10 Months In) ([73:13])

• Office & Tech Modernization: Renovated office, replaced fax and paper with CRM and digital systems, payroll streamlined from 6 hours to 15 minutes.
• Team & Onboarding: Built new team; implemented best-in-class onboarding documents and SOPs for back-office and customer processes ([73:59]).
• Finances & Reporting: Built robust cash-flow tracking and reporting, much deeper than prior ownership.
• Training: Formalized technician training programs; invested in employees.
• Raising Prices & Benefits: Brought hourly rates toward market, added benefits (health, retirement, uniforms)—all major investments.

Quote

“The greatest joy I got was when our three new technicians told us it’s the best onboarding experience they ever had in their careers.” – Scott Crosby [73:53]

No Owner Compensation (First Year)

• Made a conscious family choice to reinvest all profits, not take a salary until stable, planning to start small payouts after year one ([68:52], [71:19]).
• Many improvements were capital investments or sweat equity.

“We agreed to go a certain amount of time without a paycheck, so we’ve been building up and saving… still dumping everything back in to the business.” – Scott Crosby [69:15]

On the Trade-off

“Not taking any money out but working full time, more than full time, in the business does mean that the effective purchase price of the business is whatever your time is worth.” – Will Smith [71:16]

• Scott: “Fair. Yeah, for sure.” [71:31]

Lessons Learned & Tactical Takeaways

Practical Search & Diligence Advice ([62:06])

• Bias for Action: Don’t wait for perfect systems; start making calls and connections.

  “Just start making phone calls and emails. Who cares how you’re tracking it?” – Scott Crosby [36:14]

• Control the DD/Closing Process: Act as your own project manager; never be the cause of delays.
• Meet the Owner Frequently: In-person meetings beat email every time.
• Have Owner Rank Employees: Ask seller to rate each employee A/B/C. Discount the rating (A=really B, B=really C, etc.).

  “I did not do that… would have known a little bit about the team I was getting.” – Scott Crosby [80:17]

• Start Selling Immediately: Even when unsure of the team, start building pipeline on day one ([78:43]).
• Buy Receivables if Possible: To avoid reconciliation headaches.
• Don’t Overlook “Small” Owners: Owners near/at retirement age are more likely to close; young owners more likely to bail ([33:05]).

Reflections on the Small Business Rollercoaster

Stress and Reward ([86:04])

• Scott describes the emotional challenge: team turnover, cash worries, client bankruptcies, family pressure.
• Work is “high highs and low lows,” describes moments of “fetal position, tears” but greater meaning and autonomy.

  “The worst day I've had running the business has been better than the best day I had working for someone else.” – Scott Crosby [00:00], [05:50]

The Bigger Dream

• Vision: Build a $15–20M business portfolio over 5–7 years, eventually shifting from operator to capital allocator.
• Next steps: Focus on growing the current operation, then consider bolt-ons and further acquisitions ([82:02], [83:20]).

Notable Quotes & Memorable Moments

• “If you’re not willing to be out in the community, you might not want to buy a business.” – Scott Crosby [30:57]
• On price negotiations: “I didn’t even pay attention to the asking price… did a bottoms-up valuation and sent it along.” – Paraphrasing Will Smith [48:56]
• “Sweat equity was definitely part of it—but we also invested quite a bit back into it… moving forward, we did some things that are now coming to fruition.” – Scott Crosby [76:38]
• “It’s much more fun to make a sale when you own the company.” – Scott Crosby [87:05]

Key Timestamps

• [06:11] — Scott’s career-defining choices and early career values
• [09:17] — Motivation to buy a business after commission dispute
• [13:08] — Producing and running a TV show
• [17:49] — Search parameters and buy box
• [24:31] — “Top 50” networking method for deal flow
• [36:14] — Economic Resource Centers as hidden gems for searchers
• [41:21] — Finding and structuring the American Services acquisition
• [49:52] — Break down of deal structure and financing
• [64:09] — Realization: inherited team must be replaced
• [69:15] — On not taking a salary and reinvesting everything
• [73:23] — Foundation built in the first year: tech, onboarding, training, reporting
• [78:43] — Start selling immediately, even amid team turbulence
• [80:17] — Employee ranking exercise in due diligence
• [86:25] — Emotional realities; the “fetal position” moments
• [87:05] — “Much more fun to make a sale when you own the company”

Conclusion

Scott Crosby’s candid account is a blueprint for both the exhilarations and hazards of “small small” business acquisition. He delivers a wealth of tactical tips for searchers—from how to systematically build networks, to avoiding rookie deal mistakes, to the emotional realities of rebuilding a team and modernizing operations from the ground up.

Contact & Resources:

• Scott Crosby is open to connecting with listeners ([88:46]).
• Linked resources: Scott’s deal analyzer spreadsheet, journey notes, onboarding template, and LinkedIn.

Final Thought:
Ownership is a long game full of curveballs, but for Scott—ownership, autonomy, and community are worth every sleepless night.