From Street Sweep to Solar Leap
Manny Saxena’s Insights on CAPEX and Leveraging Technology for Operational Efficiency
In an excellent episode of Acquiring Minds, Manny Saxena laid out some important lessons from his experience buying and exiting three street sweeping businesses. Manny’s journey from acquiring and successfully running the street sweeping businesses, to moving into the solar energy industry is both inspiring and insightful. Manny’s story also underscores the value of leveraging technology and operational improvements to enhance business performance. His approach to leadership and his focus on working ‘on’ the business rather than ‘in’ it provides a valuable lesson for the aspiring entrepreneur through acquisition. Manny’s success in a relatively short period with the street sweeping business and his ongoing roll-up strategy in the solar industry demonstrate the potential of well-planned and executed business strategies.
2 Key Takeaways
CAPEX in Context. Manny has a bone to pick with people passing on what is perceived has high CAPEX without looking at it in context. You shouldn’t be automatically rejecting an opportunity, you should maybe dig a little deeper. In his case, the CAPEX was for trucks. In Manny’s view, you can buy a truck because it’s not like other types of machines and equipment. Trucks are smart CAPEX, because if he needed to, he could readily sell the truck. The truck market is very liquid. In addition, when he bought newer trucks, he increased depreciation, which increased his EBITDA. And the new trucks needed less maintenance. I think his main point was if you’re looking at the 50k foot view, you’ll miss the details on the impact of the actual CAPEX, and possibly pass on what could have been the perfect business for you.
Tech Infusion. The second key insight was Manny’s ability to ‘tech infuse’ his business. In his case, part of the tech stack was Fleet Management and billing software. Both improved margins significantly. The Fleet Management software reduced the number of customer service calls where complaints arose from folks claiming the trucks never showed up. Before the software, it was standard practice to just resend the truck. Afterwards, Manny could just show a screenshot of the GPS with time, speed, and location of the truck. The software also gave Manny a predictable preventative maintenance schedule and helped with payroll because he knew how many hours the driver was out. Billing issues were reduced because everything was digital. Automatic reminders were sent out and invoices were collected much faster. Not only did the tech infusion eliminate a lot of headaches, it also allowed working capital to go down significantly.
