The Home Service Expert Podcast - Building a Sellable Business to Grow Faster And Consistently

Episode Date: April 22, 2022

Doug Howard is the Director of Consulting Services at Remodelers Advantage Inc. He is an expert in small business strategy, process improvement, and growth planning. He has more than 25 years of experience as an entrepreneur, coach, and leader. With his expertise in the home remodeling industry, he helps business owners overcome challenges and develop strategies for successfully navigating growth. In this episode, we talked about sales profitability, leads generation, employee training…

everybody's kind of familiar with the sales funnel. You have so many leads, they lead to so many good opportunities. How many you're going to close, getting down to how much you sell. And it sort of gives the notion that any lead gets sort of the same amount of value in that process. But then when we flip it upside down and say, okay, if the actual projects that we got, the contracts that we wrote, right, where do they actually come from? Because there can be a lot of really good lead sources that will generate leads and activities and even proposals and may never, ever go to contract. Or they go to contract and they turn out to be the projects that we would least like to do again, either because of profitability or type. So we're always flipping

it around saying, okay, that's fine. We want to track all that stuff. But at the end of the day, tell me the 10 best projects you had last year, work it backwards and figure out where they came from. We want to do more of that. Welcome to the Home Service Expert, where each week, Tommy chats with world-class entrepreneurs and experts in various fields like marketing, sales, hiring, and leadership to find out what's really behind their success in business. Now, your host, the home service millionaire, Tommy Mello. Welcome back to the Home Service Expert. I'm your host, Tommy Mello. Here in Phoenix, Arizona, and I've got my buddy here, Doug Howard, who is in Maryville and also been traveling all day and been on coaching calls.

So Doug, it's a pleasure to have you on the show. Thanks. It's great to be here. So Doug is an expert in small business strategy, strategic planning, process improvement, growth planning, and home remodeling industry. He's based in Sykesville. Sykesville? Yeah.

Sykesville. I didn't want to screw that up. Sykesville, Maryland. Remodels and Manages, Incorporated Director of Consulting from 2017 to present. Growth Team Strategies, Business Consultant, 2012 to present. Doug's a leading authority on small business strategy, specializing in the home remodeling industry. For nearly 25 years, Doug's worked for owners of growing businesses to help them overcome challenges and develop strategies for successful

navigating growth. He owned his own small business consulting for nearly 20 years with offices in Alabama, Arizona, Virginia, and Maryland. Doug, I'm excited to have you on today. Do you want to just start out by giving us just a quick background of where you've been, where you're going, what you do? Sure, Tom, and I appreciate you reading that exactly the way my mother wrote it. You know, that was awesome. Yeah, no, I went to business school, came out, decided corporate life wasn't really

for me. Started with a small business accounting company. I was really their marketing guy. Marketing was my background. But I always tell people, if you put four accountants and a marketing guy in the room, the marketing guy buys the company. So I did. And it was a great run, but the business became more about accounting and taxes and that kind of thing. And I was really all about business growth and how do businesses grow. My dad had always been self-employed. And when I was about 15, 16 years old, we lost the family business. You know, it just blizzard of 78 hit New England.

He was in the landscaping business. And I learned a lot about like, you know, what the numbers mean and what happens when, you know, you're good at what you do, but maybe the business side really needs to be stronger, more reinforced. So about 2017, we'd sold off the business that we had. We'd grown it. And it was time to really kind of move beyond the accounting and tech side. And then we partnered up with Remodelers Advantage, came on board with them. And I've been working really exclusively with home remodeling companies since that period of time. And aside from the craziness of the last couple of years, it's such a fascinating industry because there's so many processes and so many handoffs and so many folks that are great at what they do.

But these businesses have evolved out of many different ways. just the business fundamentals and processes and numbers and things like that can really make a big difference in how folks perform, who they can employ, how they live, that kind of thing. So it's been a great experience. Yeah, it sounds like you've been through a lot. And the fact that you consult so many people, you know, I'm sure we're hearing the same things every day. It's hard to find great people. It's hard. Supply chain is not up to standards of what it should be. What are some of the bigger questions that you get on a daily basis? And by the way, you know, I'm a garage door guy. People always send me tweets on Twitter of supply chain and builders are saying garage doors are the worst of anything that they deal with appliances. They deal with carpet. They deal with, you know, crown molding, you name it. And garage doors are the worst of anything. They deal with appliances, they deal with carpet, they deal with crown molding, you name it.

And garage doors happen to be the biggest frustration. Yeah. I'm not a center of that. But just curious, some of the questions you get and what seems to be the biggest problems out there. Yeah, I mean, you touched on two of them, right? How can you attract talent in this environment? And can you really get good people? Another is how do you plan and schedule anything with the delays that can happen with materials? Another big one right now that's evolving is how do you not burn out the team that you have when people are generally outselling what they can produce and people are hard to find,

you know, so we're trying to keep the stress level of the organization, you know, down. Pricing's a big deal because costs are moving so quickly. You know, if you do larger projects and it takes three to six months to go from estimate to design to production, you know, those costs can move a lot during that period of time. And then, you know, I just think the whole idea of just processes themselves, how can we get things to be repetitive efficient those kinds of things are really on the forefront of everybody's mind yeah you know it's i'm a weird guy because i say i always hope it gets worse because when when the times get really bad that's when i play my best game okay it's the fan when stuff gets really really difficult is when i come 10 times harder when covid happened

i doubled my marketing campaign everybody else dropped out i tripled literally like crazy i said doubled and tripled but i literally spent a fortune on marketing so there's a lot of things that i can't imagine i i love being really good at one thing i'm a master of garage doors. I know them inside and out. When you're dealing with a complete remodel or just building a house, there's a lot of things that go into it. What are some of the key performance indicators that you look at that you teach and you focus on? Sure. So one is really the profit margin that jobs are estimated at. And then of course, the profit margin they end up being when the job is done. So how much slippage occurs in that period of time? A lot of time frame measures. You know, can't finish a job? Because that all adds costs as these jobs need to continue to be

supervised. We can't finish closing them out. We look a lot also at where are there delays in the process? And some folks have some really, really good measures of that so that they know that there are things that they can be doing upstream to help clients do a better job of making selections or getting those critical things ordered way in advance or, you know, making sure we're open the boxes when things are delivered so that we don't sit there with something that, yeah, we have the item and the day we go to start construction, we open the box to find out it's broken or the wrong thing and now the lead time to get it replaced is significant. So lots and lots of operational measures that are really guides, but they all stem from,

we like to look at processes from end to end. We do a lot with lean, you know, process improvement, eliminating waste. And a lot of it is really, how are we measuring the flow and where's the waste coming in and the solution to those things are almost always somewhere upstream something we could have done earlier that's now giving us the lesser of two evils that we have to choose from you know now that we're in the production yeah you know i was at a uh a little bit uh what was it like a um i was at an event yesterday it's called rhino x and they had some legends there in the home service space leland smith with uh service champions uh kent goodrich paul kelly with parker and so it's literally just uh david geiger all 500 million dollar plus companies terry nicholson was there

and they talked a lot about the ability to negotiate with the vendors and how important it is to ask for rebates. And Ken called it a, uh, it wasn't a rebate. It was upfront money. He asked for a million dollars from his manufacturer upfront to go with them for a three-year contract.

Wow. Yeah. And he got it. And these guys, I think the air conditioning companies started out in the early nineties with Nextdoor, with Frank Blau and another guy, what's his name? George Brazil. And I've traveled the whole country. I've been to Canada, been to Mexico, been all over the world. But I'll tell you what, I spent a lot of time with the biggest, best home service companies.

I've literally spent days with them and success leaves clues and i'll tell you what there's nothing better than air conditioning that is the model i mean those guys get it they get kent just sold for 21 times ebita 21 times is that insane is that that is crazy you know i just i'm fascinated with this stuff and i want to talk to you a little bit about that through this conversation but i was sitting down with a conversation yesterday where it was like 10 of us in a broken out group and we were talking about recruiting and i just want to touch upon this subject because it's a big one yeah and uh this guy named trey williams mcwilliams said to me, he goes, you know what we do? We actually interview the wives and we get them to make a good commercial of my husband's a better

father, a better husband. He's home more often. He's happier. He's recognized. We've got savings. We're out of debt. We bought a home. How powerful is that? Isn't that great? No, that's great. It's great thinking though. You You know, what we're seeing now out there, I mean, a lot of people feel like you just can't hire talent. And that's not what we're seeing. You have to be very creative. You have to work really hard at it. And you have to be in a continual recruiting mode. But you really have to be able, just like we do on marketing for projects, you have to be able to distinguish yourself in the mind of the potential employee because they have a lot to choose from right now. And I think that we've seen some people doing some stuff with video. We always like to promote the concept of employer of choice. You know, if you have to be able to differentiate yourself or explain why someone should work for your company as opposed to somebody else's,

you know, we tend to be very good with that, explaining our products and services, but a lot of companies really struggle with that, especially smaller companies, to define that in the, you know, in the recruiting process. And so I think that makes a lot of sense. We see people doing a lot more on social media, and that whole video, the whole notion of a video, I think really speaks to the fact that right, the people that are looking for changes in work aren't just looking for money and benefits. They're looking for work-life balance. They're looking for opportunity. They're looking for just a whole host of things. And in some companies where things are just so slammed right now, that's actually causing some of their better people to look for some of these alternatives so i think that sounds brilliant because it paints a picture right it sets a differentiating factor for sure well doug here's the simple truth is the best employees of the world aren't looking to switch companies but when their wife or their husband's nagging them to switch because they found something better they'll at least look at it and there's a old

movie by mel gibson called what women want yeah and in that movie they talk about the softer side of sears yeah when that whole notion came out it changed the whole way people do business you know it's crazy because there's eight people coming through our shop today there was five yesterday i have my competitors come they look at my screens they look at my crm they know our stats they know our budget every employee here has access to our income statement and balance sheet i can give two shits and either people look at me and say you're the biggest idiot in the world or there's something special because why do you give everybody everything?

And I think it's important to just let everybody know this is where we're at. People used to hate me. You know, people used to, they used to think I was a bad guy. I took advantage of people until I showed them we've got to take care of our employees. And that,

that takes a lot of money. The number one question we get when we hire an experienced technician and i tend to hire non-experienced technicians do you have new trucks because they've been broken down before and an old ass truck and it's crazy that people would ask those questions you know yeah yeah but it's what's on their mind so yeah that makes a difference i want to ask a couple questions here that uh we're getting through facebook and i got i got lots more here so sure good what are the key metrics one needs to measure for remodeling lead gen by canvassing so what do we need to measure you know i do canvassing too i do door knocking and i got a guy lenny gray that works with me is what i do is we

just knock on the door and say hey we, we're not here to sell anything. We'd like to lubricate your garage door at no charge. And we'll put a sticker next time you need us. We're able to bulk 30% of those for a tune-up. It's pretty crazy how it works. I don't know anything about remodeling. I'm not going to pretend I do. What does that look like, remodeling by canvassing?

Yeah, so, I mean, a lot of people will do stuff where they'll canvas, like, a particular neighborhood. A lot of times, folks, when they have a project in a particular area, will look at something in a radius around there because people will see the trucks and that kind of thing. Some people do a really good job of kind of using a version of that. They send out sort of these pardon my dust letters. In other words, we're going to be doing a project in your neighborhood. We'll have trailers in your neighborhood. We'll have trailers in the neighborhood. We're going to try to be very good stewards of not blocking your driveway and blah, blah,

blah. But if you ever have any issues or questions or concerns while we're doing a project in your area, reach out to us. It is amazing how many of those kinds of contacts stir some activity where people then start asking questions about what projects are you doing? What else do you do? Those kinds of things. And some it's more direct. You're just canvassing in particular areas. The biggest thing for me always with measuring metrics for anything in the sales process is making sure that at some point we reverse engineer things. In other words, you know, everybody's kind of familiar with the sales funnel. You have so many leads,

they lead to so many good opportunities. How many you're going to close, getting down to how much you sell. And it sort of gives the notion that any lead gets sort of the same amount of value in that process. But then when we flip it upside down and say, okay, if the actual projects that we got, the contracts that we wrote, right? Where do they actually come from? Because there can be a lot of really good lead sources that will generate leads and activities and even proposals and may never, ever go to contract. Or they go to contract and they turn out to be the projects that we would least like to do again, either because of profitability or type. So we're always flipping it around saying, okay, that's fine. We want to track all that stuff. But at the end of the day, tell me the 10 best

projects you had last year, work it backwards and figure out where they came from. We want to do more of that. Right? Well, that's a great point. You get such bigger money from a remodel. I always tell people Google is God. Just so you know, Google is God. There's four algorithms. It's the best lead source there is. But I'm also doing a million other things. I'm sponsored ads on Yelp. I got to tell you, I kind of hit a dead wall with Thumbtack.

I know that is okay for remodeling. Angie's List, HomeAdvisor, Groupon Living Social. These lead sources, they're a certain type of customer. And I shouldn't say this out loud, but I really don't love those customers. Yeah. But I'm really good at my sales process. So I don't say it matters as much. But what are some of the lead sources that you found are extraordinarily better than others? So I like to cheat the process a little bit, right? And go for something that's

really powerful. So we find where there's opportunities. So let me give you a good example. I have a guy who was the very first consulting client I worked with when I first started with Remodel was Advantage. So this guy had a home remodeling company, was doing larger and larger projects. And when we looked at his most successful projects, he was in Maryland and they were on the waterfront. So if you do any projects along the waterfront, Chesapeake Bay area, very heavily regulated, you really have to understand setbacks and regulations and all that stuff, right? So he changed his logo a little bit and some of the color and some of the images that he showed. And then we got the notion as we were

brainstorming things that we could do to have him exhibit at the Annapolis Boat Show. Okay. Now, not everybody at the boat show was his customer, but everybody that was his target customer was at the boat show. Because if you have a house on the water and you have the money to invest and you like being on the water and they have the second largest boat show in the country in your backyard, you go, right? So guess how many remodeling clients were exhibiting at the boat show then? Well, I don't know. None. None. Only one, right? So everybody walking through, he gets exposure to. And at one point, we actually had a couple walking by and the woman said to the husband, you can look at that boat, but not before I get my kitchen. And we said, whoa, come on over here.

We can save this marriage. And so the bottom line was he picked up prospects that led to over a million dollars worth of work from that one show. I think the investment in the show was in the thousands of dollars a couple of days. The next year, they didn't have the show because of COVID. Last year, or this year, this spring, well, 2021, they did the show again, and he got like 21 really great leads, and he was still the only remodeling company at the boat show. And so we've been able to emulate that in other ways. People working with certain types of groups or certain types of activities, or for some

reason, their customers, they do a really good job with cardiologists. And so someone sponsors their annual awards dinner. Finding a niche where there's certain customers that you know you can go back to repeatedly while you're doing all the other stuff you do is the least expensive, most effective. And those folks appreciate your expertise in that industry. So they don't mind paying for the value of your services. You know, that's really interesting. I got to keep telling myself in my head, the average ticket is so much higher because I literally scour let's call it whatever you want to call it i tour the internet all day long and no one does a good job on google and i gotta be honest with you

the largest lead source in the world by far 70 of the marketplace is google they don't have good videos they don't have a good website they don't have google local service ads on they don't have to maximize they don't answer their phone properly they don't they have an ivr there's so many things that if you just focused you know everything you just said though reminded me of uh dan kennedy there's a good book called no bs about marketing to the affluent yep and he talks about boat shows. And he talks about... Oh, sorry.

Yeah, no, he goes in and says, where is your best client? Where's your avatars hanging out? And, you know, I always flip this on its ass. I say, where are my perfect employees hanging out? Because I'll tell you what. Follow me here. And I want to hear your comments on this. You got a CSr a and b

mitch and murray mitch and mark yeah murray you know a movie yeah glengarry yep boom always be closing so great one's at 60 one's at 90 booking rate yeah they take 20 calls a day 300 days out of the year. The average ticket's $500. Do you realize Mitch loses the company $900,000? $900,000. Two CSRs. I think sometimes we look at the wrong

things. We try to get parts cheaper. We try to get a 2x4 for a better price. But we're missing the big picture. What are your thoughts on this? It's a great question, I think. Well, yeah. I mean, I think, you know, a lot of times when you look at the differential of someone that's pretty good and someone that's exceptional, the differential, you know, in terms of compensation and that kind of thing sometimes seems daunting. But when you overlay it on the differential and what their performance can be, it's astounding. And that's why I always like to have, you know, to me, I always like to make sure

that folks have some measure of competitiveness to them, some measure of, you know, wanting to have some incentives, because to me, what that says is that we're going to align our, what we're about, right? We're going to align our interests because if I do better, you do better, right? And that's one of those things that I think in the right environment, it can really make such a huge difference. And, you know, I saw that in my, I always tell people I had a company, you know, for what, 20 some odd years. When I look back at what made us successful or not successful, things we did well, things

we failed at, it almost always came down to people. Who we hired, who we didn't, who we didn't hire that we should have, who we hired that we shouldn't have. Those extra good performers is a big deal. And for most service businesses, I think really the biggest asset they have is the sum and the capabilities of the folks that they have. It's not about big assets. It's not about real estate. Their place in the market is the talents that they bring to the table. You just nailed it. That was just amazing. And it just solidifies

everything in my mind. I was listening to a podcast by Alex Ramosi. He wrote a great book called The 100 Million Offers. And what he says is he was interviewing a billionaire. And this billionaire says, listen, he says to Alex, I hit the peak, the ceiling of where I could go. And I hit it for three years. And I just decided, I took a chance and i decided to give some phantom equity away and i hired a new cfo a new coo and i got a new cmo and i gave them a percentage of the company and he goes i sat back and watched as we 10 times what my ceiling was 10 times what my ceiling was yeah yeah and i see guys out, even listening to this right now, that say, I can't afford to hire somebody that's good.

See, something inside of us wants to be the best one that works for us. We hired someone better. It was funny, for years, we had a certain amount of growth in the accounting and tax business. But all of the principals in the company, there were three of us, were also doing the accounting and tax business, but all of the principals in the company, there were three of us, were also doing the accounting and tax work. And then we sort of gave way to say, you know, there are people out there that are better. They're better tax strategists. They're better accountants. They love this stuff. They're passionate about it. And as soon as we started handing that off, I was twice as likely to go out and sell something like that, like a complicated project, if I knew I didn't have to do it and the person doing it was way better at doing it than I was.

And so it really does. It opens up your thinking to say, hey, my job is to set the stage, right, to let the rock stars come out here and do their thing. But, you know, in doing that, you don't have to always be the rock star and the person setting the stage. Well, my number one job now is identifying my weaknesses. Literally, hiring around it. Literally, I can tell you, people ask me what my biggest success is. I say all the time, I'm the biggest failure you'll ever meet.

I fail every day, all day, every day. But here's the deal. I'm willing to jump in. I just got a new thing for my key ring. Check this out. Those of you that are listening can't see this, but can you see that? Yeah.

My stepdad says I got balls. Oh, there you go. Okay. That's what those are. I just wanted to put it all on the line. You know, there's a lot of people that say... Now, that came from Glenn Gary, too. All right. Yeah. You know, I play that scene.

I play that scene when he said the leads are weak. The leads are weak. You're weak. So I got to tell you, I actually saw that on Broadway as a play about 10 years ago. Live performance. Yeah yeah it was pretty amazing i literally like i quote movies yesterday i played a big section of the office when they're role-playing and there's nothing better than to make people laugh and but people i just asked my head of hr i got a new head of hr and i said am i over the top sometimes and she said no she goes your passion oozes out and i'm obsessed i'm obsessed with my people

i love them so much that's awesome they're the best anybody could have yeah question for you why must businesses be always improving when they say, don't fix it if it's not broken, right? How do we improve from day to day? What are the best tips you would say? Yeah, I mean, I think, first of all, competition changes every day, right? There's new technology. There's new innovations. I just came back from the International Builders Show.

The entire Orlando Convention Center was full of new products, new ideas, new ways of doing things. So I think everybody has to be continually looking at those opportunities. But here's the thing, and this is what really struck me when I got involved with remodeling. There are certain businesses that you can do where one person or maybe a small group of people can really deliver the product or service. Remodeling and construction in general requires lots of people, lots of handoffs, a lot of the people that really impact your customer's experience. Some are subcontractors that don't even work for the company. They're suppliers. There's lots of things going on, and there's

dozens and dozens of systems systems sales processes and change order processes the accounting process and in every process there's some element of waste right things that add value to the process and things that don't add value to the process like the waiting time between steps or the defects in our process so we have to go back and redo something that's why we love the lean process because it really takes waste out of those steps so i always tell people any process you have in business is very similar going to a there you go yeah very similar to go into like a hospital emergency room right you go to an emergency room for a typical stay in an emergency room if they don't admit you it's about four and a half hours, right?

And if I said to you, well, what would you consider the value-added time, if I describe value-added as the time you're seeing a doctor, getting a prescription, or having a test run? Well, it's about 45 minutes of that four and a half hours, right? And people are like, oh my gosh, that's terrible. And then I say, okay, when you have an eight-week design process, do you have someone locked in a room for eight weeks? Or is that just how long it takes and how much time is actually spent on doing the actual design? And guess what? The numbers are pretty similar. Where we get all balled up is all the back and forth, waiting for selections, waiting for a quote. The difficulty in that is every additional bit of waste that we have in a process,

there's only one of two people that can pay for that. Either the company pays for it or the customer pays for it, right? And so at the end of the day, the reason we need to be continuously improving is because there's that upward pressure on costs, but the best opportunity that we have to improve process for the customer and profits for the company is looking for that continuous improvement, continually working those processes over. I think that's where we see people really get a leg up on this stuff. Yeah, you know, right now we're in this time frame of exponential growth, and I feel like just technology, the things that we're able to do do we are trying to set

ourselves apart and it's the customer journey is what matters there's nothing more i hate you brought this up but going to the doctors filling out a bunch of shitty paperwork waiting 30 minutes then waiting in a room like why like i i'm a garage door guy i'm a home service guy but i might get into the medical field for one reason to get rid of this wait time. Bullshit. Yeah. Yeah. Cause I can't stand it. And you know what? They act like it's just the way it's always been. So yeah. One of the funny things is sometimes the biggest innovation that a hospital

will have is they'll unveil the, they'll have a ribbon cutting for their new waiting room. And basically what it says is we're never going to solve the problem we're just going to make you more comfortable while you're waiting that's all yeah and literally like the deal is is i've got a stethoscope or whatever it is that i put on upstairs when i do my orientation i did one three days ago and i said you know the doctor he walks in, he always leans up against the counter the same way. Like he owns the place and he asks you all the questions. He says, Doug, how often are you smoking? How often do you drink?

When's the last time you worked out? How often are you working out? He checks your heart, looks in your ears, checks out your nose, looks at your throat, makes you cough. Sometimes if you're old enough to take a finger in your ears checks out your nose looks at your throat makes you cough sometimes if you're old enough to take a finger in your butt sorry but i trust the doctor you know why he gives me a diagnosis he writes it down yeah i never say how much is this prescription i've never once said that i don't get prescribed a lot of stuff but i'll tell you this whatever he says i need i go or she whatever they say i need i go fill it up yeah it's not even a question and if we treated people like that when we enter our domain which for me is the garage door

for you it's really just helping you know remodelers and builders they trust you and how important is trust no it's critical and you know the remodelers and builders, they trust you. And how important is trust? Yeah, it's critical. And, you know, the more complicated the project, people are paying for and they're expecting, frankly, that you're going to guide them through the process. And so people need to not only want to gain that trust from a marketing standpoint, but they need to deliver on guiding folks through the process. One of the things with remodeling is most people don't do a large remodeling project more than once or twice in their whole life, right? And so they don't even know what they're getting into.

And so the ability to take someone and say, listen, trust in our process. We know what's around the next corner. We're going to get you through that is a big difference between just somebody that's installing something or finishing something or whatever. And for a lot of folks, that's a big part of the value that they bring to the table. I mean, right now I'm getting a house built and I got to be honest, she, this lady had everything amazing, all planned out, showed me. And I said, I don't really care it looks good all of it's fine she goes what do you mean what do you like and i said i like all of it it's it's easy and i said but i'm gonna need 3d

renderings of i want to see it all because i don't have the ability my brain doesn't work that way i can't see this little sample and picture it like i just can't and i said even if i could i'll eat seafood i don't care what you give me my girlfriend doesn't like anything i mean she does but i just go with the flow but i'm like i keep sending the lady that's doing all this i keep sending her tiktoks of what i like it'd be tough to be in your position because i gotta tell tell you, basically what you're doing is you got to be good at a really good delegator. You got to know and hold people accountable. But basically all you're doing is you're the contractor hiring subs for

the most part. You got to make sure it's task by task by task. And what a lot of people don't know about that industry is the drywall guy can hold up the paint and the painters are ready i mean there's all these things that require there's a series of events and really what it comes down to is time management but well it does and right now the challenge especially if someone's outside your company if they're a subcontractor you can have a one day delay from one subcontractor but then it might throw off the ability to get that next person that was supposed to come in

the next day you may not get it back for a week. You know, it's not like everybody shifts the way you do. So, so I got to ask you though, Tommy, now is Mello your last name or is that your stage name? Yeah, that's my last name. People are like, I'm Tommy Mello, not so mellow. Okay. You know, I love the idea. There's a great book. It's called Built to Sell. John Warlow. John Warlow. Warlow.

Yeah, Warlow. And I got this notion. This year, our budget's $151 million. And to be honest with you, I'd like to take 20%, which comes out to a little over $30 million. But it's on a scale that's growing, but I want to be fricking super profitable. And profit is a by-product of just running a company that cares. Care is the big word there. We talked about care yesterday a lot. How do you build a company that one day you don't have to sell it? If I have a, I'm going to have kids. I don't have any kids yet, but I don't want to give them a piece of shit.

I'm going to say, Hey, this is the worst thing that's ever happened to me. This is why I went gray. That's why I'm not together anymore. Here you go. Yeah, right, right, right. Yeah. Yeah, no, I totally get it. Yeah. So actually, so we subscribed to a program called value builder. It was actually a program that John created, you know, after he came out with his book and all. And so every business, the profitability or the sale price, if you will, of any business, and even if you're giving it to the next generation, like you said, you want its value to be high because you want it to be able to stand on its own, right? I mean, that's what you want for the future of your employees. That's what you want for the next buyer or if, you know, someone is going to sell their business. But all of that's going to be a derivative of two things. One is how much is

the business cash flowing? What kind of money is coming out of the business? And then there's a multiplier, right? So you look at an average of what the business is, and some businesses will sell for two times or three times or four times. Like you said, that one sold for 21 times, right? And so what determines where you are on that spectrum? Well, some of it's driven by the industry. Is it a growing industry or not? Is it a desirable kind of industry to be in? But a lot of it comes down to things that are sometimes a little bit counterintuitive. Like, for instance, if the business owner has got a really strong personality, right, and a lot of the business comes from referrals and they love working with that business owner, that actually can have a negative effect on that multiplier because the multiplier is really trying to determine what's the likelihood that this cash flow is going to continue when the current owner is a different owner, right? So you have a favorite restaurant you go to, and the owner is the chef, and he's the Saturday Night Maid or D, and he's got a great personality,

and it's where you go for your 25th anniversary, that kind of a place, and that business sells, he has a harder time justifying a multiplier than Kentucky Fried Chicken does. Because the day after that Kentucky Fried Chicken franchise changes ownership, there is no difference in the likelihood of someone buying chicken there the day after as opposed to the day before. So when we look at how do you make a business more sellable, more valuable, it's things like how do we build the value of the company beyond just the owner? Sometimes that's in the way it's named. Sometimes it's like the leadership team.

Sometimes it's the company being committed to a set of values that you get no matter who in the company you talk to, right? Systems, processes, repeatable processes. That's really, really a big deal because, again, how much of this is likely to continue when the owner's not there or when the owner changes hands? Those are also all things that will help the next generation, like I said, even if the business is just handed over to them. So a certain number of things that we look at and say, okay, also, is the business reliant on just a very small number of clients or is it more diverse than that?

Do we have a good array of supply and subcontractors and things like that? Or are we wholly dependent on just a few relationships? So when you look at those eight or 10 things and you really start to focus on them, you can take a reasonably successful company, but really enhance its value tremendously by getting it to put those kinds of things in place. Yeah. You know, I think you nailed it. And I always explain the multiplier of what I love the most. And if I went and talked to anybody here, they love it. When I go out of town for two weeks, they set records. We did better when I'm gone. I'm the gas. I'm the throttle. I literally turn up the

heat and I want exponential growth. But the deal is does the business run without you? And it bothers me sometimes that I walk in here, Doug, and I see that it lights out.

And I see it right away. I see a fan blade moving at a different rate than the other one. I see a flooring tile. That's just, just out of place or messy. Just the little things. And, you know,

I used to work at cheesecake factory as a bus boy. Okay. Bathrooms. And I just noticed little things. And it really bothered me when things are out of place and just the simple things. And what do you got to are out of place and just the simple things and what do you got to do to get to get the buy-in to get the culture to get the everyone else to feel the same way and i know it's almost impossible and you could do equity incentive programs or

phantom equity but what do you do to give that ownership mentality of just kind of what the hell like do you guys care yeah it's hard know, I think that's one of the biggest challenges. But, you know, I always tell people, to me, two of the biggest challenges of being a leader in an organization or a company is, A, being able to paint a picture of where the company's headed, you know, that vision of the future, something that you can see more clearly. Right. I just came back from Disneyney world this past weekend right and most people don't even realize walt disney died before disney world even opened right and on the day it opened someone asked his brother you know and said to his brother well i'd assume that wall wasn't here

to see this and his brother's answer was something to this effect oh he saw this as clear as you're seeing it today or none of us would have ever seen it, right? It's that vision. But then the big challenge is getting people in an organization to understand what piece of the puzzle they are, right? So the analogy I always give, give or bought, like, you know, tickets to a sporting event or a concert, right? You go online and you pick your seats, right? And then most of these apps now you can click on the seat and it'll show you what your view of the field is going to be or your view of the stage from that seat, right? I think a big part of leadership is not just showing the big picture, not just painting the picture of what it's going to be, but me saying to Harry or Susie or Johnny or Margaret, whoever. Now, let me show you what that looks like from your seat,

where you're headed, how you can impact it. Sometimes I'll hear leaders say like, okay, our goal this year is to do 8% more than last year. Most people don't know how to get out of bed and be 8% better than they were last year. We've got to assign that to some sort of, this is what it means in your world. This is how you contribute. Then there's certainly just that attention to detail. I think some of that is just being the owner, but also I think a big piece of it is when someone has the confidence that they're making their contribution and they know what things are supposed to look like, they're much more likely to step in and do it. And, you know, it's so funny.

I did a lot of work with startups years ago, and people would always say to me, you know, we don't talk about customer service. And everybody knows that customer service is the most important thing, right? You never talk to a business owner that doesn't know customer service is the most important thing. And then you go out in the world and say, okay, if everybody knows what's the most important thing, why is it so terrible? Right? When people offer really good customer service, I mean, it just sometimes jumps right out at you. You know, but a lot of times that's because a leader has painted the right picture and they've also not only motivated, but they've really given people the latitude to go that extra mile, you know, to create that raving fan. You know, in my book, in the Home Service Millionaire, I wrote a whole

paragraph about creative justification. We create reasons why we do things. Oh, the reason why is because of COVID. Oh, the reason why I suck today is because of this or that or the other. Or, hey, in my market market. The garages aren't attached to the home. So people really don't care. Oh it's tax season. Oh Christmas is coming up. Oh. Oh.

Oh Oklahoma is different. Than Arizona. Bullshit. All your excuses that I hear all day long. Are victimization. And they call it creative justification. I. I've had people steal from me.

And they said because I bought the unit at the time And it came with a free keypad That I didn't pay for it So therefore They're not going to steal it It's crazy to me I saw Mike Tyson yesterday He was in

That event that I was at And he said Consistency beats determination every day he said i was ready i was always ready i worked out enough i say larry fitzgerald great he's in the nfl he's a wide receiver and he said i've caught over 1400 passes but i've caught over 14 000 in practice and they looked a lot better than some of the stuff i've done in a game right and i think that's so important we literally tell people go ride along this guy for two weeks then you're on your own oh i know we got to continuously train yes yeah well and there's such a coaching element to it

yeah it's funny the very last call i was on before i'm on with you today was with a client they're just hiring somebody we went through this whole hiring process and it's like okay now what are we doing with this person they're coming on they're going to start we are big believers of very much mapping out that 30 60 90 day beginning process with any new employee what do we want them to know and what do we want them to be able to do at the end of each one of those intervals? You know, a lot of times people make the mistake, they'll show somebody every bit about what their job might be at some point. So at the end of 90 days, they know 10% of a hundred things, as opposed to knowing 90% of four or five things

where we really can see what their performance is and they're gaining confidence and they're making a contribution. And so I think that's a really big thing. And I think that also, I would say, you know, sometimes we expect like people will connect the dots, you know, and I really think that the leadership has to do that to a great extent. A really good coach, right, knows how many laps you got to be running in August to know that you're still going to have legs in December, right? Now, you ever go, like, you're a high school football team out on the field, and they're like, well, when are we going to play a game, right? Like, why are we running laps? Why are we doing it? But if that coach knows, as I'm sure Tyson experienced and others, you know, I need to do this much off the field

because in the fourth quarter or at the end of the game or the end of the season, I'm going to still have legs. We got to do that for our people too. We got to give them the processes, the training to say, you know, trust me, you do this, you'll get this. And you may not always get, you know, the right outcome, but I guarantee you, if you don't do this, we've got no chance of getting the right out. And I think that's the big thing. You nailed it. Yeah, absolutely. I wholeheartedly agree. If you guys want to get a live summary of what we're doing and the key takeaways, go to homeserviceexpert.com forward slash D Howard. That's d for Doug Howard. So homestayhomestexpert.com dhoward. And if you

get a chance, I hate to ask this is the first time I've ever done this, but if you get a chance, pop a review in there, it helps the podcast out. I feel like if someone were to sit me down, there's certain things that I feel like I cheated in business. I've gone and hung out with the most successful companies in the world and they actually kind of bled off on me. I've got some cheat codes. I told my guys this morning, I said, guys, I'm going to pay you 200 bucks a day to ride along with the best technicians in the world. All you got to do is ask. I'm giving you guys the cell phone of the top 10 technicians that all make over a million dollars. They don't make a million dollars, but they all do over

a million dollars of revenue. I said, all you got to do is ask who's going to take me up on it. I feel like I've got some cheats that like, literally, like if someone were to ask me and I went on a podcast, I would tell them them these are the five things. What are your five things, whether it be marketing or a certain KPI or a certain way to hire? What are some of the cheat codes you have that everybody should be asking you about? Yeah. So Victoria Downing, she's the president of the company of Romano's Advantage. And she has a phrase that I love. She says R&D stands for rip off and duplicate. Right. So we are big believers in and that's really the community that Remodelers Advantage is built with the peer groups of really going out and finding folks that are excellent at what they do. They're bigger than where you are and really, really getting some firsthand exposure to folks that have already fought the same battle.

They've already gone through the different phases. You may do things very differently, but there's so many great lessons to be learned out there. That to me is always a great place to start. The second thing I always really, really promote is, or really advocate, is a five-year plan. I just think when people can look down the road, and not just about the business and projections and things like that, but like, what do you want to be doing? What do you want your role to be? Where do you want to be living? What do you want to be driving right? I got to get to my daughter's wedding. It's in Los Angeles. It's next Saturday at two o'clock. That thing's happening whether I'm there or not. If I don't get far enough on the first day of travel, I adjust the second day. I leave earlier. I take a different route. I drive faster. But the destination and the timing of getting there is not the variable. It's the foregone conclusion.

A lot of folks in business just go out and work really, really hard, right? And where they end up is the variable, as opposed to saying, no, here's the picture. Here's the time frame. This is what I want. Now, what does the business have to do? What is it going to take for that to happen? And if I start kind of sliding off of that in the first year, or even thrown totally off with something like COVID, you know, the people that had a five-year plan when COVID hit were the first people to recover because they knew how far off track they were,

right? And so to me, that's a big deal. I think the whole idea of putting a huge emphasis on talent and just always be recruiting, you know, I always tell folks, you would just never wait for your last job to be done, to go out and market for your next project. And yet that's exactly what we do in recruiting. We wait till there's an opening. And of course, because you need a project manager today, the stars are going to align, the heaven's going to open up, and probably one will walk right by your door just at the time you need them. And it's like ludicrous. Of course, that's not going to happen, right? But when you're out there continually talking to people, keeping that short list of folks that might want to come to work for you one day, and then something happens and you call, you know, I call you up and say, hey, Tommy, I didn't think I was hiring this soon,

but something came up and we've got an opportunity. And if you're still interested, blah, blah, blah, those kinds of preparations are huge. And then I just think really getting into that mindset of continually improving processes, like just the things that we do can always be better. I also think that when you look across those things, they're the things that really, to me, create a lot of the fun and the energy and the passion that most service businesses really need to stay at the top of their game. You know, you said something there that I just can't emphasize enough of to build the recruiting machine. You know, you think about the military, you think about a sports recruiter that goes into college ball they go out and they find they measure

they go get it they get what they want they look a recruiter is not a hiring manager a hiring manager goes on indeed and goes on zip recruiter and goes on career builder and monster and a bunch of other bullshit a recruiter goes and finds out who they want all the time. They make attributions. These are the attributes I want from an employee. You know, you said something earlier too. I like competitive people. I only want somebody that's either they were in the symphony, they played a sport, they practiced and they love to win. They know what it's like to win or lose. Cause if you don't care, if you win or lose, I'm sorry. I'm a capitalist.

I'm not a socialist. I believe in winning. I do not like to lose. And I do not give participation trophies. And when I have kids, if they lose, I'm going to say, shit, next time we're going to do better. You didn't do good today. I'm sorry. I'm not even going to my parenting. I got a great'm a kid really bad here. I got a great dog.

Yeah. You know, I love your five-year plan, too. I think it's genius. The fact is, you know, Walt Disney, he was a dreamer. And what I love about Walt is he had this huge imagination. But, you know, he's nothing compared to Roy, his brother, who knew exactly what was in the bank account exactly how to get things done exactly how to make that dream a reality a lot of people

i find don't have the right integrators they don't have the right people to get the stuff i've got this weird thing called adhd i'm sure you can imagine i haven't stuck to any of the script but i think it's really great and i need somebody to pull me back down to earth as much as possible i mean it drives people crazy they're like what are we even talking about how did you go from this to this to this this i'm like easy okay we needed to be talked about i don't know my staff used to call me hurricane doug they said you know about twice a week, he blows in here, shuffles, which accounting firms, they did not like that at all. And, you know, would create the whirlwind. And it's like, yeah, but that's where the opportunities are, right?

That's where the advantages come. Well, I'll tell you this. I'm really, really impressed with some of your foresight and just the ideas you have is just outside of the box some of the stuff you know getting the right clients i always tell people doug if you went to the nicest steakhouse every night for dinner and i had another let's just pretend you had a brother a fake brother tim and tim only liked mcdonald's he was used to paying ten dollars for his meal you used to paying a hundred dollars for your meal if i bring used to paying $100 for your meal. If I bring you to McDonald's, you're not going to be impressed by the $10.

You're going to fucking hate it. Excuse my French. I'm trying not to swear on this podcast. Oops. And he's never going to be happy with his $100 steak because he's used to paying $10. So I think it's so important, like you said, to find the right audience and make sure you're advertising to the right customer. People used to ask me, who's your client? I used to say anybody with a garage door. That's not what I say now. Right, right, right. Yeah. So we use a term called QUIP, Q-U-I-P, right? When we talk about marketing, it's how do you qualify yourself on things that are

unique, important, and provable. Because in a service business, the things that set you apart from another service business, they're easy to say and hard to do. And so we'll really, really work with clients to say, okay, what's unique about your company in a way that it's important to the customer, right? And can you prove it? Can you prove it with a testimonial or a Google review or an award that you won or a roadmap of your process or whatever it is. And the more you dig into that, you find what it immediately does is it makes you much more attractive to certain clients and much less attractive to other potential clients. And that's probably a very good thing. You know, it really allows you to hone in on being able to be the very best for the person that's going to most appreciate that hundred dollar meal at the steakhouse i'll tell you what i read this book

the other day by ryan holiday called growth hacker marketing and it made me just think outside of the box like for example i don't know why i'm telling everybody this because there's a lot of garage guys that listen but why not go to the biggest dealerships of one of the hardest cars to program? The home link is Audi. And why not just give me a hundred bucks? I'll go there. Let's put this baby in a good home, the garage, and I'll program it for you. Make sure everything's good.

I think that's going to be an easy win. You know, the other day I was in Houston and I got the chance to go see a guy named Howard Partridge. And he is a student who trains Zig Ziglar training. I mean, it's all from Zig Ziglar. And he said, there's five points that you need to nail. Number one, reputation. Number two, experience. Number three is training training number four is systems and number five is your guarantee if you get good at showing those to your clients and you could show them why the price becomes irrelevant and i think that's super important you know this guy went up to the front of the class and he said i've known how Howard for 20 years. And he said, I remember one day I looked at his carpet cleaning business on Angie's list. He goes, it was all five stars except for one category.

It was two stars on the price, but five stars everywhere else. He goes, that's how I knew I was getting the right coach. And it's interesting because I love that story. Yeah, I'm not going to be the lowest price price my dad always taught me you could be the best the best warranty you could be the fastest or you could be the cheapest pick two out of the three here's what you get yeah you can't be on three yeah the worst marketing plan i ever came up with when we really early on we had the accounting practice was we had the slogan taxes done right for less. Well, first of all, everybody expected their taxes to be done right. And all we did was position ourselves to the people that wanted them for less.

And it was the worst idea I probably had in 25 years. We corrected it pretty quickly. But, you know, it sounded so good the first time we said it. And it looked great in print and it was really really dumb you know what it's funny because my company's called a1 garage door service why because it mattered in the phone book a long time ago so if somebody wants to reach out they want to learn a lot from you obviously you know your stuff they want to get to know you they want to find out how to be a better contractor what's the best way to do that so they can email me at doug d-o-u-g doug at

remodelersadvantage.com or they can go to www.15minuteswithdoug.com and that'll put them right into my calendar and they can sign up for 15 minutes and we'll chat and get to know each other a little bit i love it and if you were to let's not say the e-myth because i get that every day but if you had to give me three books i love michael gerber he was on the podcast but three books that really stand out and they really get you ready to be successful what would those three books be yeah i mean i think one's a kind of a standard i always love the book good to great for simply because it gets people focused jim collins yeah i think uh raving fans is a great great book because it gets people thinking and then there's a book by dan heath called upstream and it really talks about talks about how you can solve a lot of the problems or make a lot of improvements

by looking at things earlier on in the process, further up the river. And we talk about upstream a lot. Awesome. You know, we talked about a lot of stuff. I didn't get to a lot of stuff. I never know what I'm going to go to next because it depends on the person I'm interviewing and talking to. But I'm sure there's some stuff you probably wanted to talk about.

So I'd love for you to just kind of any advice, anything we might've not hit any final words of just getting the listeners out there to go do something, take action. Typically this will get 25,000 downloads a month. So you're talking to a lot of people from everybody to painters to window washing to concrete leveling to you name it. So if you want to do encourage them, what would be your final and take as much time as you need?

Sure. Yeah. I mean, I think all the concepts of what we're talking about, creating a more sellable business, the five-year plan, the recruiting and all of it come down to really one simple thing. Most businesses, when they're out there, they're lucky to kind of just weather the storm. You know, we heard a lot of that over the last couple of years. The really, really tuned-in businesses get good at predicting the weather, you know, kind of figuring out what things are going to look like and really where to make their move. But they ultimate the best customers, the best clients,

the best businesses, they're determined to create the weather. They determine how many sunny days they want to have. And a lot of that really just comes down to saying, you know what, I'm going to decide what the end looks like. I'm going to decide the kind of values and culture, the kind of people I want to have around me, the kind of customers I want to work with, and really build the business models, all the things that you can learn from others, all the things you can read about in books, and build that into something that says, this is what I want to create. And I think the people that commit themselves to doing that, they stay passionate right through the very end. and they create some great organizations.

I love this. Don't weather the storm, predict the weather. I actually had to write that down and take a picture. That's what I was doing. Yeah. And the last step, which is the most important is then create the weather you want. That's the big deal. I'm going to determine going into next year, how many sunny days we're going to have.

I love this. Listen, so, you know, I don't get out very often to Maryland. But if I do happen to find myself there, can we hang out? Absolutely. You call me, get anywhere near in this region. We'd have a good time. And it's 4862 is the last four of your digits? Yeah.

Cell phone, okay. So, listen, I'll tell you guys, don't be shy. Reach out to Doug. Doug, what kind of consulting do you do out there? Do you do just any home service or is it more about remodelers? I mean, the vast majority of folks, I come in contact with the remodelers, but over 20 years, I've worked with any kind of business. So I work with a pretty broad array of folks in the construction industry, some designers, some architects. I mean, it really is a pretty broad range.

Well, listen, it's been an honor to have you on here. I've got a lot of notes. I definitely need to read Upstream. It's the one out of the three books I've heard of it, but I haven't read it yet. If you read the story on the very first page, you'll read the rest of the book. I'll leave it at that. All right, done. How's that for a tease? All right, I'm in. Doug, thank you so much for coming on the show today. Sure. My pleasure. It's great. Hey guys, I just wanted to thank you real quick for listening to the podcast. From the bottom of my heart, it means a lot to me.

And I hope you're getting as much as I am out of this podcast. Our goal is to enrich your lives and enrich your businesses and your internal customers, which is your staff. And if you get a chance, please, please, please subscribe. You're going to find out all the new podcasts. You're going to be able to ask me questions to ask the next guest coming on. And do me a quick favor, leave a quick review. It really helps us out when you like the podcast and you leave a review. Make it four or five sentences. Tell us how we're doing. And I just wanted to mention real quick, we started a membership. It's homeservicemillionaire.com

forward slash club. You get a ton of inside look at what we're going to do to become a billion dollar company. And we're telling everybody our secrets, basically. And people say, why do you give your secrets away all the time? And I'm like, you know, the hardest part about giving away my secrets is actually trying to get people to do them. So we also create a lot of accountability within this program. So check it out. It's homeservicemillionaire.com forward slash club. It's cheap. It's a monthly payment. I'm not making any money on it

to be completely frank with you guys, but I think it will enrich your lives even further. So thank you once again for listening to the podcast. I really appreciate it.