Loading
Entrepreneurs and Kevin and Theresa Dermody were in high sprits on a Friday in July 2011, after they closed on a deal to buy a Sarasota fence contracting business.
By Monday those spirits were squashed.
Turns out the business the couple bought, Florida Fence, had some unforeseen financial issues, according to Theresa Dermody. There were debts to suppliers, in addition to some angry customers with partially completed work, says Dermody, who along with her husband, Kevin, owned a successful contracting business for 19 years in Chicago. The couple also ran a farm in central Missouri before they relocated to Florida in 2011. “A fence company made sense to us,” Theresa Dermody says, “because it would allow us to get back into construction.”
Instead, the experience is a reminder to do enough due diligence and digging before buying a business. The Dermodys share their story now, more than four years later, mostly because they successfully turned around the company — with help from their four sons and some key employees.
But those first few months were tortuous. The couple sank their savings into the business, at least $1 million, says Theresa Dermody. Discovery of the problems wrecked her.
“I went into a deep depression,” she says. “There were times I couldn't get out of bed.”
Dermody says she and her husband looked over Florida Fence's books thoroughly in summer 2011. The couple, which found about Florida Fence through a business broker, also spoke with a banker who worked on an SBA loan for the previous owner.
That third-party conversation was a key deciding point for the Dermodys. “Looking back that was our blind spot,” says Dermody. “That SBA loan, because you have to jump through so many hoops to get it, gave us a sense of comfort.”
Dermody says complaints from customers and suppliers came in quickly. The couple looked into what legal recourse they had, but she says there were no options. “Within the first week, a few oopses came out that had not been related to us,” she says. “We had to dig it out of a hole of a reputation.”
That started with repaying vendors and suppliers thousands of dollars. One company, says Dermody, was owed $90,000. It also required face-to-face conversations with customers to not give up on Florida Fence. Says Dermody: “It took a lot of convincing.”
Dermody declines to say how much the couple spent to reshape Florida Fence, which has had several owners since it was founded in 1958. In addition to those first steps, the Dermodys also connected with a few business consultants at their church, Bayside Community in Sarasota. Those consultants helped the company set up sales goals, track customer patterns and find new market segments. (The church, says Dermody, also became her personal savior.)
Florida Fence, says Dermody, is now on solid financial footing. Sales increased about 10% in 2015, and company officials project the 17-employee company should grow at least that much again in 2016.
The firm, which does custom fence work in a 6,000-square-foot facility off Clark Road, is split into three divisions: residential and commercial; repair; and bidding work. Bidding, the newest division, has a chance to quickly become the company's biggest unit, says Dermody. That's where Florida Fence aims to win contract jobs from large-scale homebuilders.
The company is also investing on internal operations in 2016. That includes a new customer management program and new project design software. Projects like that put Dermody back in high spirits — despite the turmoil.
“I'm not bitter,” says Dermody, who cites Jim Collins' famous book, “Good to Great,” as inspiration in rebuilding Florida Fence. “Because of what happened we have learned so much. If it had been easier we would have not gotten good, and would not be trying to be great.”
Follow Mark Gordon on Twitter @markigordon
Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.
Join thousands of executives who rely on us for insights spanning Tampa Bay to Naples.
