Investing Industry Expertise to Grow an Existing Business
By the time he purchased Cincinnati-based Merchandising Services Co, Mike Buschelmann had acquired a wealth of same-industry expertise, having worked in the consumer product services business for more than 30 years.
Merchandising Services helps convenience stores plan and execute in-store cooler and center store resets according to suppliers’ planograms, which show exactly how and where their products are to be placed and displayed. Among its clients are the retailers as well as food and beverage suppliers and vendors.
In his previous job as a national account manager for a beverage company, Buschelmann had contracted with Merchandising Services to place his company’s product, and he got to know the owner well. When he learned that the owner was preparing to sell about four years ago, Buschelmann was interested. “I’d been in the corporate world all of my career, but I always wanted to have my own business.”
Over the next couple of years, as he thought about buying Merchandising Services and how he would finance it, he considered taking on potential investors. “Ultimately, though, I knew I didn’t want to have a partner,” he said.
Putting the business plan together was one of his biggest challenges, Buschelmann said. “I used some online services, read some books and talked to many people; I relied heavily on my past experience managing large divisions within corporations.”
Once his business plan was complete, his accountant suggested an SBA loan might be appropriate for his situation, and introduced him to an SBA lender at Huntington. “From the beginning, the SBA people at Huntington were really helpful. They did a good job of explaining everything, every step of the way,” Buschelmann said.
“This deal was interesting in that there wasn’t much collateral,” said Huntington SBA Product Specialist Robin Washienko, who helped Buschelmann obtain his loan, “Most of what Mike bought was intellectual property; he was essentially buying the company’s customer book. He came to us with such deep industry knowledge, and a really good plan for what he wanted to do with the company.”
After he bought the company early in 2014, Buschelmann said, his biggest challenge was understanding how to manage cash flow. “It was daunting that first year; I had plenty of sleepless nights.” The work of in-store product placement is sometimes seasonal, he said. Plus, “a lot of our customers want to pay us only after we’ve finished a job, 12 weeks later. The line of credit I got with the SBA loan was strictly to help meet cash flow needs.”
In just two and a half years of owning the business, Buschelmann has more than tripled its size, far outpacing his original projections. “The biggest unknown was—and continues to be—the potential for retailer consolidation: If one of the chains that we work with buys a smaller chain, we may suddenly be doing business with stores in that smaller chain, too. That consolidation has accounted for a lot of our growth.”
Today, with 64 full-time and 200 part-time employees, plus the ongoing support of the former owner, Buschelmann is looking forward to continued growth, and anticipates his company will be about 40 percent bigger in two more years.
“There are about 150,000 convenience stores in the country; we service only 4,000 of them,” he explained. “There’s a lot of room to grow.”Since buying Merchandising Services, he said, he’s never looked back. “I’m thrilled. I work a lot, but I have better work-life balance than I ever did before. I like the people here: We work hard, but we have a lot of fun, too. And I like knowing that this business supports the families of those people.”
SBA 7(a) loan details:
- Loan: 10-year term loan; line of credit