40% Growth in Year 1 of a Paving Business - Acquiring Minds Recap
Podcast: Acquiring Minds
Published: 2026-03-23
Guests: Eric Donahue
What Happened
Eric Donahue, a former Navy SEAL, demonstrated impressive business acumen by acquiring a paving business in Hampton Roads and achieving a remarkable 40% growth in its first year. The business, initially generating $4.1 million in revenue, grew to nearly $6 million under Eric's leadership. Eric utilized a conventional loan from Town Bank, which was familiar with the business, to finance the $1.6 million purchase, avoiding SBA loans due to their higher fees and longer amortization.
Eric's strategic initiatives included filling up schedules, subcontracting related work such as seal coating and line striping, and leveraging both new technology like tablets and traditional methods like whiteboards. His military background provided him with valuable skills in leadership and efficiency, which helped navigate the challenges of managing a team and equipment. The business saw increased efficiency by splitting crews to handle multiple jobs and clarifying roles between foreman and superintendent.
A significant factor contributing to the business's growth was a competitor's acquisition by a larger company, which reduced competition for smaller projects. Additionally, Eric capitalized on his veteran status to access restricted projects on military bases. To support future growth, profits were reinvested into buying equipment such as crew trucks and rollers, ensuring operations could expand without disruptions from equipment breakdowns.
Eric emphasized the importance of culture change and a bit of luck in driving business success. The transition period included a policy of not making major changes for the first six months to ensure stability among employees. Turnover was encountered as the business became more structured, but promoting from within helped fill skilled positions, addressing the industry's challenge of finding reliable workers.
The paving business, primarily serving commercial clients, benefits from recurring revenue through maintenance contracts, which are highly sought after by large companies to avoid liability issues from pavement deterioration. Eric's foresight in adding $150,000 to the purchase price for working capital ensured smooth operations from the start. This approach, combined with strategic subcontracting and enhanced operational efficiency, positioned Peninsula Paving for continued growth.
Eric's decision to buy an existing business rather than starting from scratch was influenced by the book 'Buy Then Build' by Walker Dybel, which introduced him to the concept of Entrepreneurship Through Acquisition (ETA). This aligns with the skills and leadership experience he gained during his 13 years with Naval Special Warfare Development Group, also known as SEAL Team 6.
Key Insights
- Eric Donahue's acquisition of a paving business in Hampton Roads led to a 40% growth, taking it from $4.1 million to nearly $6 million in revenue in the first year. This growth was achieved by optimizing schedules, subcontracting, and using technology like tablets for real-time updates.
- Eric financed the business acquisition with a conventional loan from Town Bank, which offered better rates and terms than SBA loans. He added $150,000 for working capital to ensure seamless operations, which was a decisive factor in the business's success.
- The paving industry benefits from recurring revenue through maintenance contracts, as property managers and large companies seek to avoid liabilities from pavement issues. Eric's veteran status facilitated access to restricted projects on military bases, further boosting revenues.
- Eric's military experience translated well into business, providing leadership skills and the ability to identify inefficiencies. He faced challenges in the workforce, such as employee reliability, but addressed these by promoting from within and implementing structured processes.