The Home Service Expert Podcast - How A 10-Man Team Can Operate Like A 200-Person Company With The Right Processes

Episode Date: May 8, 2020

Tom Howard is ServiceTitan’s vice president of customer service and the co-founder of Blue Collar Profits. An experienced home service entrepreneur and consultant, Tom owns multiple residential and commercial service companies in California, including a pest control company and an engineering company. In this episode, we talked about business forecasting and planning, marketing strategy, lean management, business management training...

So we basically get everyone involved and we get buy-in from them. Well, first we explain to them how finances work and we have a financial training for them. Every person from the guy that sweeps the warehouse floor up to the CEO and make sure that they understand revenue, cost of sale, gross margin, overhead, and net profit. Those five things, revenue, cost of sale, gross margin, overhead, and net profit. If you learn those five things, you're going to do okay reading the basics of a financial statement. And then we go through and explain to them what our numbers were before. Then we build budgets for the year.

What do we expect to do in revenue? What are our costs of sale going to be? What's our overhead going to be, including advertising, including office staff salaries? By the way, I published to my guys what my salary is. I'm not bashful about it at all. And then they start to realize what it takes to make money in the company. 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. Today, I'm with a good friend, a great business owner, and actually someone that I've got to know a lot over the last year. His name is Tom Howard. He's an expert with business forecasting and planning.

He practices marketing strategy, Excel, lean management, leadership, business management training. He was a speaker at one of the last Pantheon that Service Titan has, which is a huge honor. He's a Service Titan Vice President of Customer Service. He's got another company called Blue Color Profits. He's the co-founder there. He owns a company called Lee's Air Conditioning, Heating, and Building Performance President. Dustin Pest Control Incorporated, President and co-founder. He's a home service entrepreneur and consultant, owns multiple residential and commercial service companies in California, including

pest control and an engineering company. All three companies tripled their revenue or better in the first four years after Howard purchased them. Tom, I really appreciate you coming on. It's a pleasure to have you. Thanks, man. I really appreciate being on. Yeah, this is so cool, man. I mean, you've talked about so many things that right now we're in the middle of a crisis. And I think this podcast is going to be able to deliver a ton of value. And it's times like these where you either sink or swim. Talk to me a little bit about, without giving us too much information about your privy to the information you know, but you guys put out a lot of stuff through service site on what you're doing as a software company. But talk to me a little bit more about what you're doing as a business owner through these times and what's your prognosis on everything.

Well, I'll tell you, it's kind of a scary thing. I decided to buy my business partner out late last year kind of a rocky time. You really want to make sure this thing runs, but I really want to take the opportunity to service tighten. And the company had been kind of running without me for a while because I was off doing consulting and things. By the way, I've since sold the consulting company and I'm no longer part of Blue Collar Providence,

just to clarify. But at any rate, I said, yeah, I'll take this opportunity to service tighten. So all these things are going on. I'm buying my business partner out. I'm leaving my company, my air conditioning and plumbing company. I still own it. And I'm going to go work at Service Titan. Oh, and then we're also going into the slow season for air conditioning, which is February, March. So probably the worst possible time ever for something like coronavirus, COVID-19 to happen. And the president that I put in charge, by the way,

is my brother-in-law. He started businesses with me before, but he has three days of training in air conditioning and plumbing. He had no industry experience before I gave him that three days of training. I said, hey man, here's the keys, I gotta go. I'll be watching it remotely.

We do use Service Titan so I can see all my numbers daily if I need to, or even up to the minute if I need to. So really in a tough position. And then this coronavirus hits. So I got a call from him. He says, hey, what do we do? And I said, you know what we're going to do? We're going to do what we've always done. In January, we had a record-breaking month. And I'd only been at the company for two hours for the whole month. February, we had a record-breaking month. We actually beat our budget by 50%. And then March came and we were just rocking it. And then all of a sudden, about mid-month, my town went on lockdown. We were listed as essential service and we're doing fine on residential, but on commercial, a lot of the commercial businesses

we serve are completely shut down and can't let us in. So he said, what do we do? And I said, what we always do, we have our budget. We're going to look at our budget. We're going to forecast out and say, what is this going to do to our bottom line? Or what is this going to do to our top line revenue-wise? If we know that half of our commercial accounts are shut down, we're going to take those out of the budget. And we're going to look at what we got to do on the residential side to make up for that. And so that's what we did. We started driving into it. We looked at what we had to do. We did have to furlough a few commercial technicians in this time. And we know that that's going to be a short time because as soon as it gets hot, we can use them on residential if we need to. And we're focusing on that. We were really immediately tempted to start cutting

everything, including advertising. And we looked at our budget and said, well, if we're going to have to generate this extra money in residential, what are we going to have to do over there? Don't cut advertising. Let's push on it. Let's make sure we do what we can and move forward. So that's basically what we're sticking to right now. I love the idea of continuing to advertise. I actually just bought a lot of TV at a fifth of the normal price is because they're stocked with inventory. But what do you do when it hits and it hits hard and literally everybody's staying in? I mean, it hit New York and New Jersey. It's hit Louisiana. It's hit Florida. And I've heard plummeting numbers from huge companies, $100 million plus. Just the day it hits, it's not like this, oh, we're seeing it a little bit, a little bit, a little bit more. It's like, boom, 50%. You know, what I've done is I've got precautions to go 10, 25, 40, 50, 60, 70%. And once we hit that, we push a button. We know exactly what we're going to do. You know, the Senate and the House just passed this bill for relief, but

I know we're optimistic, but I thought it was going to get better. And now I'm, I'm cautiously optimistic. You know me. But I think the problem is that a lot of people are like, this is just like anything else we've been through, but it's uncharted territory. And the fact is it could get worse or it could happen one day that the Z-Pack stuff makes it all better. I, for one, I'm just, I'm praying and I'm hoping,

but I know if I'm not doing great, which right now we still are, other companies are closing their doors because we're making the necessary decisions weeks before we need to make them. But yeah, I think what doesn't kill you makes you stronger. I know that's not the best phrase during now, but Tom, I'd love to hear a little bit about where you've been and what caused you to make some of the decisions and buy lease out and Where you started out as and let everybody know your history a little bit Yeah, so I think you had two questions. There's like what do you do if it hasn't hit you yet and also

Ended with give me some history and I think I can answer both of those really well because we've got data from service titan and I Can also just give you the history first. So on the history I started out in the industry when I was like 15 years old. I got a job because some guy came to my house to fix my fridge. I asked him if I could get a job and basically ended up three hours a day after school, I go over and I clean tools and clean the warehouse and sweep the floors. And I'd run some parts at night once I got old enough to drive and did light service work and that kind of stuff. And I used the trades to get through college. I went on a religious mission. I paid for that and then came home and said, all right, well, going to school, I went to college for finance and got out.

And the whole reason I went to school for finance was to get away from air conditioning. And one thing led to another. I ended up coming back and realized it wasn't as bad as I thought. And I bought a company in 2012 called Lee's Acutex Service Inc, which is now called Lee's Air. And we were about 1.8 million sales in 2012. We were 1.6 in 2010 before I had come back and then bought it in 2012. And then we grew it to about 15.3 million in 2019. We do plumbing and air conditioning. And, um, that's kind of where I came from, my story. And I've, I've worked in, you know, on the East coast and on the West coast and everywhere in between, uh, least just happens to be in Fresno, California.

So we kind of knew that stuff was coming down the pipe when this was happening. We saw that San Francisco had been going on lockdown and we saw that Washington was having similar ideas. And I have one meeting a month with my company and I happened to be at that one meeting in Fresno and I was notified that, hey, we're getting locked down tonight. So if you want to leave, you better leave now to get back to service tight in LA. But when that happened, it wasn't a giant deal for us because we already had the data on what was happening to other companies in lockdown areas. And I would definitely be thinking about this now. What is going to happen when it hits? Because

you're basically bracing for impact. And you want to know what to do as you're about to hit that wall. And our data shows that cancellations, job cancellations spike right after a lockdown or something like that. I think people realize the severity of the situation at that point, but they quickly come back down a couple of days later and level off within days. We checked it on New York. We checked it on California. We checked it on Washington. In Washington, it was like after the first coronavirus death,

all of a sudden, bam, it shot up. In California, it was after the first lockdown. Anyway, it does stabilize that initial hit. I wouldn't take that to be what's going to happen long-term in your area. I'd wait a few days after that, be what's going to happen long-term in your area. I'd wait a few days after that, see what's going on, get your bearings straight. That's what we knew to do. Secondly, we're seeing that revenue isn't dropping off in a lot of these places as much as we thought it would. In some places, it's only 5%, 6%. We also have companies that are doing

really well right now. I actually was on a webinar with Aaron Gaynor from the Eco Plumbers in Ohio and Radiant Air Conditioning and Plumbing in Texas this morning. One of them's up 50% this year and the other one's up 60%. Aaron's been in a lockdown mode for about two weeks now and he's still just going strong.

One of the things that you should know is that in your industry, if you do routine maintenance or something like that, I know in garage doors, Tommy, you've been talking about that a little, that's probably the most hit area right now because a lot of people are deferring maintenance. So I'd immediately be focusing on demand service and putting my marketing dollars there and finding those calls coming in. Both of those places said they increased their advertising and they haven't dropped call volume. They're soaking it in.

So that's probably what I would be focusing on as soon as possible. Get on the demand side as quick as you can. Keep your head level and see what the numbers really come out to. Try not to get too emotional and stick to a budget. Make sure you keep that advertising engine going. So the advertising makes sense. I just see out there, obviously, you got to make the cuts. You got to make overhead cuts because I see a lot of companies that they say they got big hearts and every company should have a big heart. Make sure everybody's fed

with water but the government's actually making it easier to lay people off which is a good thing because if there's not work to be done it shouldn't be up to the business owner to go into their savings account if they have one i mean where do you see you're connected everybody at service science talk and there's some high ups there where Where's the end? What do you see the economy, the stock market? Because I don't think we've hit a recession yet. The first quarter, we're unscathed. I think April is going to be bad, but May, June, that's when we start to feel what the heck's going on. That's when we know that people have been out of work and they're not

spending and everybody's tight. Yeah. I think what we're definitely saying is you will have to make cuts and you may have to lay a few people off depending on what trade you're in and what you're doing. I'm not against that at all. I'm saying just make sure you're really looking at the data because with us, when that first hit happened and we could have laid off three quarters of our staff and if I had, it would have been really hard to get back going when we really only needed to lay off about five or 10 people out of 70. And I do agree, though, once you have that data, you need to act quickly. You need to make the cuts in overhead as best you can. And sometimes that means staff, sometimes it means other things.

Just try to make sure you're making decisions based on data coming in and get the data as quickly as possible. At ServiceSite, we do have a, we call it MicroSite, which is a site that we're holding to hold information for them. We can give it out later in the podcast on where to go, what to do, what other people are doing across the country. And yeah, it's helping a lot of people get to where they get a contractor playbook for that. But additionally, when talking to people about how long it's going to take, ServiceSan has a lot of data analysts, and we use them for marketing and market analysis and stuff for business, normal business. And we put them on tracking this data and doing everything we can to

figure out what's going to happen. There's a few ideas here. One is that we've realized, like I said, at least on the air conditioning side and plumbing even, people still call in for demand and they'll still have you out there. On garage door, I mean, if you can't get the door open or something's wrong, you're going to have to get that taken care of. So we know that as demand rises, at least for air conditioning, that the calls are going to come in and you're going to need to have people there to answer those calls, regardless of whether or not the coronavirus is still going. We have found that in places where there aren't lockdowns right now, like Louisiana, it's just they didn't cancel

Mardi Gras. It still happened. Things started spreading and now it's spreading really quickly. The one thing to be cognizant of there is that in all these places where it's spreading quickly, including Italy, once a lot of people start dying, people get pretty serious about lockdowns. Aaron said that in Ohio, Aaron Gaynor, that I interviewed today, he said, man, in Ohio, the first week we were on lockdown, I mean, it was just kind of this passive thing. The next week they said, hey, we're really going to start enforcing this. So it's something I would start thinking about, but we're looking at the spread. We don't believe that this is going to be over by Easter. We don't believe it's going to be over by mid-May. We believe it's going to take a lot longer than that. We're trying to be very positive about a

lot of things, but we're also trying to be very realistic the virus just simple mathematics Tells you that if we're growing by 15 to 20 infections per day It's going to take a while to basically get through the whole u.s. Additionally at that rate of growth We are concerned about how many people are going to end up in the hospital and how many people are going to die and when that starts happening, I think that laws are going to get a little tougher and we need to be aware of what's going on. What I'd be doing now is saying, okay, if PPE isn't that big of a deal for you right now, you're not worried about the masks as much

or gloves, I'd start worrying about it. I'd start trying to find them because it may get to the point where the government says, if you don't have X, Y, and Z, you can't go in someone's home. So it's just something to be aware of. Yeah, that's a good point. I didn't even think about that. So there's a lot of things that could happen, right? I know the vaccine is a long shot, but what are your thoughts as far as, I guess, this Z-Pak and some of this other stuff that's out there? I mean, they're showing good signs that

it might fight the virus and be successful. Yeah. I mean, there's a lot of things going around out there. The interesting thing that we have access to is we have investors that have a lot of money and those investors protect all their investments as best they can. And Servicetime happens to be one of those. For us, it's been a great resource for getting information and finding out what's going on around the world because they have investments, I'm sure, in all kinds of places.

The bottom line is they're saying it's not just about whether or not they can prove something works. It's about how long that will get to us. So I think it was about a week and a half ago, they started testing a vaccine in Seattle. Well, in Washington State, I guess the Israelis had worked on it. China is claiming they have a vaccine that they're testing.

You know, Z-Pak could help. It's up in the air on that. However, if you think about it, just like we have with the masks, distribution becomes a problem. So it'll take, they're saying about 30 days to prove that a test works, that a vaccine works. If it works, if it does, then it has to go into production. Then it has to go into distribution. You've got 300 plus million people in the United States. It takes a while. So I would say, I don't think this is going to go over in like a month or so, or even a few weeks. I'd say it's going to be longer than that, even if we do have a cure that comes around. So what I'd be doing is I would make sure that I'm

really focused on, hey, I might have to get through this in the long term. If I need to get a line of credit right now, do it. No bank wants to hear from you the day that you need the money. They want to hear from you well in advance. Cut your overhead as much as you can, but focus on pumping up your people, making sure that they're optimistic about it. When they interview POWs that made it out of like Vietnam, they say, how'd you make it through? Who died off first?

And they always said, well, the optimists always died off first. And I try to be optimistic, but at the same time you say, well, it's going to be done by Easter and then Easter comes and it's not done. It's demoralizing. If you tell all your people, hey, it's going to be done by May 1st and then May 1st comes, it's not done. It's demoralizing. And eventually you just kind of like lose hope.

If you plan on living this out for six months and it gets done in three, guess what? You're going to be doing really well and your team's going to be motivated. Hey, we beat this thing. We got through it. So I'd be talking to them, talking to Aaron from Eco Plumbers and Brad and Sarah from Radiant this morning. They said, man, when this was coming, we got our whole team in there. We talked to them and said, are you guys ready to serve people? Are you guys ready to make this happen? Are you guys involved? If you don't want to be here, let us know. There's nothing against it. We can move that on now, but the rest of you, do I buy in from you? They went and got buy-in from every one of their

employees. They got together and said, what are we going to do about getting masks? If we have to sell our own masks, let's do it. They ordered some UV lights online that are for cell phone cleaners. It's basically a box that you can plug in in your truck that has a UV light in it, right? Well, they gave them the masks and after every time they go into someone's house, they can take the mask out, off, throw it in the box, turn the UV light on in their truck, and it'll kill the viruses and bacteria on the mask in between calls. I mean, they proactively did stuff to make things happen and make sure that their employees felt taken care of and so their employees would be positive.

Cause the next thing that will happen is if you start getting employees that are sick, you get employees that won't come to work. It might not be a demand side problem anymore. It might be a supply side. Yeah, that's great advice. I've definitely had a lot of come to Jesus with our staff and they all have been very supportive on everything. And, you know, there's only so much that's in our control. So take advantage of what's in our control, but there's some great advice. I mean, look, there's nobody right now that I've talked to.

You've got QuickBooks. You've got a lot of things. We've got insurance. We're asking for a lot of favors right now. What can you do to take, extend our payments? You know, cash is king right now. And there's going to be a lot of people that go out of business. And there's going to be opportunities at the end of this. It's kind of survival of the fittest right now. But I think the smartest thing is to cut your biggest costs. There's this quote that I talk about a lot. I forget who it's by.

It's like Thomas Edison or somebody or maybe Henry Ford. But it said, stopping advertising to save money is like stopping a clock to save time. It's like, it doesn't really exist. So, but obviously don't go crazy on radio when nobody's driving, you know, don't do a ton of billboards when nobody's driving. You got to be kind of smart about it and you got to get good deals because right now inventory is going through the roof and people are ready to make deals. And when we come out of this, they'll still be ready to make deals. You know, but let's just talk a little bit more positive for a little bit. You've been able to grow companies really, really fast. I think you're a really easy guy to work for. One of the things that I talk a lot about when I talk

about you is you give a lot of autonomy. You let people make their own choices unless they're failing. You don't have to micromanage as much. Tell me a little bit about how you've been able to grow all these businesses so fast in little time. Yeah. I mean, the funny thing is, is that you're growing faster than I am in most cases. So I got to listen to you on a lot of that stuff. But in the case of being able to walk away from my company or companies, because the pest control company I really haven't been involved in very much at all, we basically get everyone involved and we get buy-in from them. Well, first we explain to them how finances work and we have a financial training for them. Every person from the guy that sweeps the warehouse floor up to the CEO,

and make sure that they understand revenue, cost of sale, gross margin, overhead, and net profit. Those five things, revenue, cost of sale, gross margin, overhead, and net profit. If you learn those five things, you're going to do, reading the basics of a financial statement. And then we go through and explain to them what our numbers were before. And we build budgets for the year. What do we expect to do in revenue? What are our costs of sale going to be? What's our overhead going to be, including advertising, including office staff salaries? By the way, I publish to my guys what my salary is. I'm not bashful about it at all. And then they start to realize what it takes to make money in the company. I run into a lot of guys that say, oh yeah, I can't tell my

guys my numbers. If I tell them my numbers and they'll think I'm making like $5 million a year. And I start laughing. I'm like, well, I already think you're making $3 million a year. So I give them the truth. It's probably less than that. Anyway, so we give them those numbers and then we set their budgets. And then we bring in all the people in the company, including the managers and say, all right, let's say you're the plumbing service manager. Your job for this month is to bring in, let's say it's just $100,000 of gross profit. Okay. If you hit that number, here's your bonus. And we go to every single guy in there. Here's your gross profit contribution that you need to bring in for your division. And this is what you got to hit. And here's your bonus. And then everyone below that,

we have a company-wide bonus that if we hit numbers, then they get paid out as well. So basically at that point, everyone has the incentive to make this thing happen everyone has the reason to to lift where they stand there's a talk that i read a long time ago called lift where you stand where a bunch of people were like they're trying to move a piano from one room to another in a church and uh everyone's kind of arguing about it and they're each pushing different ways and finally one guy says everybody just stop, put your hands on it, lift where you stand. I think that's what we have to do in a business is if everyone knows where they need to be, everyone just needs to shut up, get down and lift. But the problem is a lot of people don't know where they need to be. And a lot of people don't have direction. So as long as you've got that budget written up and they know where it is, and they have an idea of what the financials are, they can do that. And I left my company in

December completely. And like I said, we had a record-breaking month in January, record-breaking month in February. And we're actually going to beat budget in the month of March. It's actually going to be the highest March we've ever had, even with the fact that we were in lockdown for half of it and we had to lay people off you know in the last week of the month so well i think it's great i mean i've had a really solid march but i see the writing on the wall too you know you bought a lot of businesses the first day i met you you talked a lot about extermination companies and the multiplier, and you really understand the technology side around a business. How do you decide on what businesses you want to buy? What do you look for in a business when you go to buy it? It's really the model that makes

sense to me because people say, well, is there money in restaurants? Is there money in real estate? There's money in everything. If you're a good real estate investor, then invest in real estate. If you're a good restaurateur, then invest in restaurants. I happen to be pretty decent at service businesses, so that's what I stick to. I really like the pest control side because it was a recurring business model, which I was really attracted to and said, man, I'd really like to get into that. I hear people in our trade a lot say, oh, well, there's no money in new construction. Well, personally, I avoid new construction. I don't like

it at all. I really don't like that model. I don't want to wait for 120 days to get paid and all that stuff. But to say there's no money in new construction is just crazy. I mean, look at Lennar Homes. They're doing all right. I think they're going to be okay. They do millions of houses across the US. There's money there. It's just what meets your desires and your capabilities and what matches up with what you're good at. So that's what I look at. And then outside of that, if I'm looking at a company within that market, then I just

start looking at financials and things. I typically like to go in and it's not that I like to do this. I just had to do this. I would go in and buy companies for next to nothing that were in the toilet and try to fix them. I wouldn't really do that if I didn't have to. The problem was when I started doing this, when I bought Leez Air, I didn't have any money. So it wasn't completely in the toilet or anything, but the owner was willing to carry the note. And so I said, you know what? I'll go with that and see what I can do. So I had to build it from there. Same thing with the pest control company. Pest control company was on the

verge of going out of business. So I got it for pretty cheap. And now it's worth about 20 times more than what I paid for it, which is really good. Yeah, that's huge. So a lot of the businesses that I think you're buying and the businesses that I buy, they don't have good systems. They've got business coming in, which is huge. They're getting the phone calls, but they don't have really any organizational charter structure.

They don't have processes or standard operating procedures, manuals. They just, they lack organization. And you go in there, the person that's getting 15 calls, and you could double their call volume and put those things in place and give them the ecosystem, which is partly ServiceTitan and QuickBooks and stuff like that, then it's easy, right? I mean, is that what you look for? Yeah. I mean, best case scenario, if they were already on ServiceTitan and things like that, I'd be really happy about it because it's a lot less

work. But if I go in there, yeah, and they don't have all those things, I know I can just dump those things on top of it and make this thing make money. I know I'm going to make a ton of money at that point because they're going to be undervalued before that. Once I put in all that structure, once I know ServiceTitan can automatically track all their phone calls and tell me exactly which advertising campaigns are making money and which ones aren't, once I can set up automated reports to send me data every single day on which technician is performing, which one's not. I personally use QuickBooks Online. I have service type and exporting to there. So I can have an app on my phone

that tells me how my financials are every single day. Once I have that going, I mean, I can really pour the gasoline on top of the fire and have that thing burn really well. The problem with going and buying something that already has it is that, you know, they're probably already in a pretty good situation. With big private equity groups though, they're the ones that want all probably already in a pretty good situation. With big private equity groups, though,

they're the ones that want all those things in place before they get there because they don't want the risk of having to deal with trying to turn this thing around and fix it. They want to see what's your earnings right now, how much can we increase this by maybe building advertising, giving you some capital behind you and some expertise. So they're actually wanting companies

that already have service titans set up and those things in place. So you've seen all these different home service companies. Why don't you share some little nuggets of wisdom that you've learned over the years, whether it comes to managing standard operating procedures, marketing? Why don't we just go through each phase from the call center to the CSR to the dispatcher to the tech to marketing? So talking about like nuggets on each individual. Yeah, just go through some of the stuff you've learned. Yeah, well, I'd say on the marketing side,

you and I have talked about this a hundred times. Getting scrappy is just the best thing you can possibly do. I don't know another way to call it, but we can get into that for a second. The guys that sit there and think through these things, they find in the finance industry, we call arbitrage. So they're like, hey, not a lot of people are paying for X, Y, Z because they don't see the value in it. Tommy, the stuff that you do all the time, it's all just you're finding, every time I hear you talking about, it's like you got some brilliant idea that where you three companies at the top that you could pay for ads for and you could get ads for really cheap because people didn't realize how Yelp was working. We found HomeAdvisor. We built an in-house calling tool that basically intercepted if an email came in from HomeAdvisor, it would automatically do an inbound phone call to us. And as soon as we pick up and do an outbound phone call to the customer, that really changed the way our advertising worked with HomeVisor because we'd almost always be the first person to call them if they put a lead in. Or we do things, I was

talking about billboards when I first got back to Lees and we didn't have a lot of money. It was the middle of the recession. I mean, really, our unemployment rate in Fresno was around 18%. And I just called every guy I knew that had lost out on building opportunities in the recession. A lot of them bought land to develop because real estate was booming. And then it died. And I thought, well, they got all this land available. I might as well call them and see if I can go put up a billboard. And a bunch of them just let me do it for free. So I bought some four foot by eight foot billboards or the coral plastic things and printed the billboard on it. And then I got some 12 foot long four by fours. And I literally went out there sometimes at night digging holes and putting these posts in the ground and putting billboards up. So the funny thing is one of them, we put it up in 2011 and it's still there to this day. And it's on a major street corner in Clovis, California. The funny thing is even the owners told me of the property said, Hey, he said, if you get busted for it, you're paying the fine. I said, okay. And no one ever busted me for it. It was just fine. So anyway, on marketing, I'd always be looking for those spots

where certain people aren't doing it. And just because not everyone else is doing it doesn't mean it doesn't make sense. If you can do the math on it and it makes sense for you, do it. No matter how crazy it is, no matter how stupid it is. I remember I was talking to you, Tommy,

once I had regular billboards out and we were talking about flipping the billboards upside down because someone was doing that just to get attention. And I was listening to you talk about it. I said, yeah, I'm going to do it. You're like, are you sure? I said, yeah. And then all my billboards, I called the ad company. I said, hey, turn them all upside down. And they said, okay. They thought I was crazy, but it got the attention that I needed. So on the call center side, yeah, I'd be looking at true efficiencies there because a lot of people get stuck in their ways on old systems. Especially, I'm speaking for the air conditioning industry here where we have CSRs separated from dispatchers because that's something you had to do in the past to be efficient.

Back then, though, you had like CB radios and cell phones that you had to do in the past to be efficient. Back then, though, you had CB radios and cell phones that you had to call in to get your next call. And that's not really necessary anymore. And we also have technology now that allows you to have a CSR just put the calls on themselves, a dispatcher. Maybe you have one dispatcher for 10 CSRs and kind of look for overlap, maybe rezone things a little bit. But you should be able to streamline those things

and get them a lot more efficient so you don't have to pay twice as many people to do the work that you used to have to do. Instead of having a CSR, put it on the board, then dispatcher moves it around and gives the tech each call. You could just have the computer system automatically, in this case, service Titan,

notify the tech after it finishes the last call where his next call is and just keep letting them go. The only thing I will say about that that I'm a little skeptical of is, I've had management here that has said, let's have this person do this, this, this, and this. And what happens is they do okay at everything, but there's no one that owns it that says, I'm going to call each customer after I do a happy call. I'm going to make sure I've got optimal, the best guys running the best jobs or the guys with the extension ladders running. And technology will help you do that. But what I find is, well, this person has extra time.

Let's just have them do this. And what we find is I'd rather have a person that's only one of them just own that job and have, there's a depth chart to make sure someone else knows that position. But I'd rather have one person own it and be reliable for it than I would, hey, they're going to do a little bit of this, a little bit of this, and they got time to do this. And that's just, that's my take of the only thing that gets away is when you put somebody, hey, well, you got time for these five jobs, you take them. Well, you're not good at any of them. We suck at it. There's no KPIs to, you know what I mean? Yeah, a hundred percent. So I think that falls on accountability. And I believe that 99.9% of problems within a company are management problems.

And I think if you don't build a culture of accountability, that's going to be a problem. And I think putting people doing exactly what you said, Hey, this guy's got time, have them do it is not a good idea. I don't think you get real efficiency there. I think you're going to cost yourself money. I was talking about more on the CSRs. If you have a CSR and they're taking in the call and they're putting it on an unassigned area

or a separate area, then a dispatcher has to go and move it into another area constantly. There are people that talk about getting the right job to the right person. I think that there's ways to make sure that you could do that and still streamline the process and not have to do as much as you had to before. Obviously, all the big companies I see are doing outbound calling and

they're getting really good at it. All of them, they're training their CSRs to spend a lot of time on those people and making stuff happen. I think the cool things that I'm seeing right now on some of these larger companies is more of an automated process for refilling trucks and getting them the parts that they need. Lease is doing a bin system where actually our supplier fills a bin, gives us the bin for an install. We use what we need and then we send it back to them. And they deliver these bins every day at 2 a.m. And that way just eliminated a person that has to get on these trucks and count inventory or a warehouseman that has to do it himself or our installer putting in an order for these parts.

That's exactly it, Tom, is you've gotten lean and with that became efficiency. But you've also got someone, they do inventory. They drop off that big thing, use all the parts. They have a person. That's all they do. And guess what? This brings us back to my favorite thing, Henry Ford. They're good at one thing. They're masters of it. So I knew we weren't good at inventory. And you know, my favorite story about, and I don't mean to cut you off, but I love this story is Henry Ford. He drew a big six on the floor when they were doing their model T's for the day crew, the night crew came in, they're used to doing four.

The night crew is always slower than the day crew. They did seven. But then he erased it. He put a big seven in chalk. They asked what that is in the day. He said, that was a night crew. They did eight. And what happens is not only do they put pressure and performance on, but they also gave them you're great at putting this tire on the front left. The front left tire is what you do and you've maximized it. You've got, and that's what I think we became is by learning lean, the lean concepts. See, I used to buy a thousand widgets. Now I only buy them

on demand. And I know we're not inventory specialists. Let's go to someone that's better that does this for a career. You know what I mean? And a lot of times now you can negotiate the prices as if you bought a thousand and you're only bringing in a few at a time and letting them keep them on their spot. Or maybe you're doing it on consignment because you're committing to it ahead of time.

If we get creative in our negotiations, we can get good pricing without having to bring them in all at once. I think the interesting thing about lean is it's like they took like the Henry Ford model and then they added a few pieces to it. What we do with lean is we try to make it so you can't screw something up called like idiot proofing. In lean management, they call it, it's P-O-K-E-Y-O-K-E. So I don't know if you call it Pokey Oak or Pokey Oak or whatever, but you build things in the process to make things not

screw up. So let's just take like the Henry Ford model. So let's say that like one guy's job, and we do agree, you want one guy that's really good at one thing. So one guy's job is like drilling the holes in the frame for the door, for the hinges for the door, right? Sure. And the next guy is drilling the holes in the hinge for the door or drilling holes in the side of the door. Then the next guy paints the door.

Next guy takes it to the dryer. Then the next guy puts the door onto the frame and bolts it on. Well, what happens when it gets five guys down and you go to bolt it on and the holes were done wrong in the first place. That was the deficiency with the assembly line is that you'd get five, six steps down the way way realize something's screwed up You try to minimize as much as you can but then you have to stop the assembly line

Go back maybe throw away those doors because you can't undrill a hole, right? And realize like oh crap. What do we do? So toyota actually kind of pioneered lean management and There's actually a chevy guy going. Well a toyota rep went to a chevy factory and he saw they were actually it was doors at the end of the assembly line at the chevy factory and he said what's this guy doing he's got like a rubber mallet and he's like tapping the sides of the doors and any auto guy knows like especially older cars when you hang a door like you've got to make sure it's just right so all the lines and all the creases on the body style are completely lined up.

And the Chevy guy said, look, we do that to make sure all the lines are completely clean so we have a quality assurance process before it goes out the door. And the Japanese guy kind of tilted his head at him. And he said, well, why why you don't have a quality assurance process to make sure that the door's lined up before it leaves and the japanese guy looked at him he said we made damn sure that that door was right when we designed it yeah and he looked at him kind of like wait what and so if we build processes in place that are kind of idiot proof so you can't screw it up like in this case we always worried about the installer going and saying like okay these are the parts i used for the day like what if they didn't order the right parts what if whatever anyone that's ever done that knows that your inventory is off by like two days from now because they're going to forget

something whatever they're going to order extra crap because they are what they are let's just take it out of their hands and let's make it so like we don't even have to order it. We take the bin, we drop it off at the supply house, supply house checks it, fills it up, sends it back. Like not our problem at that point. We even got to the point where it's like, okay, we have one bin for split system installs and one bin for package units. These are the two different types of air conditioners we offer. We realized, well, what if you could make a mistake where the warehouse guy puts the wrong bin on the truck for the day? Okay, let's get rid of that chance to make a mistake. Let's just combine all this crap into one bin.

And then he can't screw it up. You just take the bin and put it on there. And we're able to use data to narrow down what was used on every job so that we had the least amount of stuff we had to have in the bin. And then we can make sure that we could fit everything into one bin and not have to have two different bins. You're good to go. So we basically try to streamline it where all the parts down the way, like, what are all the mistakes you can make? And let's try to make it so we can't make those mistakes. That makes sense. Ah, ton of sense. So there's a lot of stuff here, obviously. One of the things I've heard is finding good leaders. If you want to build trust, you got to have somebody that people respect. I've seen some of the best managers in the world, but they didn't get the respect of the team. And they're

great. They know the processes, but they get mad and they lose people all the time. And they actually end up costing you a lot more money than you'd ever think possible. How do you pick and choose leadership that's gonna be able to go through this and be your right-hand man, if you will? Yeah, I mean, I think it's interesting because I get a lot of guys that say, man, my employees don't listen

and they just don't think right. They don't think like a business owner does. They make dumb decisions all the time, and they just don't think right. They don't think like a business owner does. They make dumb decisions all the time and they're constantly frustrated about it. And I ask them things like, well, do they understand financials? No. Are you kidding me? They don't even understand the basics of stuff. How are they going to understand financials? Okay. So they don't understand your budget then? No. Do they understand parts requisition and ordering? No. Well, do they understand unemployment taxes and do they understand

workers comp? No. So, if they don't understand any of that stuff, why in the world do you think they're going to think like a business?

If you haven't given them that knowledge and you haven't trained them on any of that stuff, why do you think they're going to make good decisions like the decisions you would want them to make? Because you have Why do you think they're going to make good decisions like the

decisions you would want them to make? Because you have data and information that they don't have. And so I think if we sit and we bring these people in, most people I have found want to do good things. Usually they just don't understand what to do and they don't understand the why behind what they're doing. And so if they don't understand the why behind what they're doing. And so if they don't understand the why, they just do crazy stuff that's off the rails that makes you question like whether or not they even have a brain, because they just made the decision they had with the information they had. Sometimes the only information they have is like, hey, you know, I want to get home and watch the football game tonight. But the way to counteract that is, it's like, hey, here's where we're at. If we don't hit

X, Y, and Z, we're not going to get a bonus. Well, all of a sudden, that football game becomes less important and they start thinking through like how they're going to make stuff happen. You know, one of the things I think is that we all, at one point in our lives, said, we're going to hire this messiah to save the day. We're going to find the person. And I've seen people, and after the fourth one, I go, maybe it's a you problem. And most of the time, the owner's got to get out of his own damn way. Number one. Number two is I've heard people say, and I remember hearing this story is, you know, what happens if I train them and they leave? Here's the ultimate question, Tom, is what happens if you train them and they stay? Wouldn't that be amazing? So people are so worried. I'm teaching them my

business. They're going to go steal it here. You know how much time I spend thinking about my competition? Absolutely nothing. I don't care. We do a competitive analysis where we'll call to just see what their prices are here and there. But ultimately, there's about less than 1% of my time gets, what are they doing? It's literally, what am I doing? I'm the innovator in this industry. I'm the one everybody's going to be chasing. And I know that sounds cocky, but we've got a great team. And I talk to guys like you every day. Most of these guys that are my competitors and gals have never built a network. They're not wondering what's going on in other industries. They're going, well, why does he do that? What makes him think that he's got it? He can do that. I said, I'm not. I learned this from Tom and I learned this from a

bug company. A good friend of mine owns a really huge, he does all the stuff for 25 franchises for Moxie down the street. I go visit him every other week. I do this stuff. I'm learning every other industry because I'm like, wow, I never thought of that. That could work in garage doors. And then they get mad and they go, well, you're changing it up. It's supposed to be like this. You can't do it that way.

And I just look at them. They get so mad because they're so focused on what I'm doing rather than themselves. But you can't charge customers that. I'm like, well, I don't work for my house. I don't have my mom working for me anymore. I actually pay for my employees insurance and my customers are happy. And they go, well, you can't hire that guy.

He's the number one guy in the world at Google. Well, yeah, I did. Sorry. He came on my podcast. I bought him on and that's what we're doing. And he's fixing stuff. So they spend more time focused on other people than themselves.

And that's the absolute worst leaders I've ever seen. And most of these guys that I'm talking about are still in the field every day. They don't know how to run a company. They don't know how to hire properly. Best thing I can tell them is read a lot of books, go visit a company that actually knows what they're doing and where you want to aspire to be. You know, Tommy, I can't tell you how many times I've seen you doing something and I screenshot it and send it to my marketing director and be like, hey, get on this. You got to do it right now. We actually have a term at Lee's, you know, most companies do R&D, you know, research and development. We call it rob and duplicate. And there's usually somebody out there that's doing a lot smarter and faster than you are. Just

do whatever they're doing and take it. And yeah, I mean, we've literally stolen stuff from you so many times that I can't even count it. Yeah, that's what it's all about. I've taken a ton of stuff from you and you've gone out, you've had blue collar profits, you're big in the home service industry. You've gone out and you've seen companies. I love to hear, look, you've worked with a lot of people. Some of them weren't even using the mobile version of Service Titan and doing tens of millions of dollars. So for me, I think the biggest mistake I see most people is they don't have a budget, which I used to hate that word, and they don't understand their finance department. They don't understand P&L, balance sheet, income statement, cashflow.

That's the biggest thing that the owner's got to force themselves into and have management that understands that as well. Today, we had our financial quick check. I know what's in the bank. I know our loans out there. I know how much we owe all of our vendors. I know exactly our P&L.

Did we meet our mark? Did we have an accelerated mark? Did we have a if we kill it mark? And with all this stuff going on, we hit our mark, but not the mark I'd like. It's not the accelerated mark. Then we have an accelerated mark. Then we have if we kill it mark. And with all this stuff going on, we hit our mark, but not the mark I'd like. It's not the accelerated mark. But tell me a little bit about what you've seen over the dozens and dozens of businesses when you were at Blue Collar Profits. Yeah. I mean, are you asking if some of the things I've seen that were poor or some of the things that I saw that were good? Some of the things that were poor. Yeah. I mean, I think definitely not having the budget.

I'd say that probably 90% of the people that I ran into that were less than 5 million in sales didn't have a budget. And they'd say things like, yeah, but that's what big companies do. And I kind of laughed and went, guys, how do you think they became big? Like a friend of mine is Dave Geiger. He had one truck about 30 years ago. He owns Horizon. Well, he's got investors now, but they've got over a thousand trucks. And he never went to college or anything else, but he did. He learned how to run those budgets and things and how to make it happen. I think also underutilization of tech, like what you're talking about, if somebody already has ServiceTitan and they're paying for it and they're still

using paper invoices on manually entering them into ServiceTitan, it's just mind-boggling to me. I mean, a lot of us have a lot of opportunities out there where they can get in and use what they already have to their advantage and make huge strides. With ServiceTitan, you can be a 10-man show with 10 people and make yourself look like you're a 200-person shop instantaneously because you have access to stuff at your fingertips that only gigantic companies had before that paid millions of dollars for it. The tech that you already have, definitely is going to sound crazy and off the wall, but not only advertising, but also everything else, including like credit card charges and things like that, where they say, oh, that's a ton of money. For instance, man, I paid like 20 grand last month in credit card charges. This is insane. Or 3000, whatever it is. It's like, dude, that's a percentage of revenue. I get it. But if you stop taking that,

your financing fees or your credit card charges, you're not going to sell jobs, which means you're going to go down. So you get to have this star on your chest that says, congratulations, I didn't pay $3,000 last month in credit card fees, but you lost like $50,000 in revenue. Tom, that's only a piece of it.

You know what they say? Service Titan is kind of expensive. And I say, let a piece of it. You know what they say? Service Titan is kind of expensive. And I say, let me ask you this. We book a couple hundred calls a day. If I had a call center representative that was losing me on average, let's just say each one of them, I've got 20 of them that lost me two calls a day. That's 40 calls because I wasn't inspecting what I expect. 40 calls a day. The average job, let's just say 500 bucks for the sake of numbers. I'm losing 20 grand a day. That's like saving pennies watching $1,000 bills fly over your head. And these people, they just don't understand they're working with this. They're driving a

Ferrari, a brand new one out of the assembly line, but they're stuck in first gear and they can't get out. That's what I find probably the lot of guys that you've worked with and gals is arriving this brand new Ferrari, and they just can't get it out of first gear. They don't understand where the clutch is. They don't even know how to drive it. It's like any other tool. You know, if I get a new fancy, like an air conditioner with digital gauges, right, or you could have something fancy to program a garage door to do some awesome stuff, right? You can get a tool like that. But if you don't do any research on how to use it and don't spend any time learning it really well, that tool is useless in your hands.

And I think the same thing with service titan or anything else, any type of marketing, tracking, whatever, if you're not using it, well, at that point, yeah, you're sending a Ferrari and you don't even know how to put the key in the ignition. You're just like showing people like, hey, look at my Ferrari. Well, congratulations, but it's not going anywhere. You know what I mean? Sure.

Well, listen, I know you got to get going. So let's just kind of wrap this stuff up. A couple last questions. If someone wants to get ahold of you, Tom, what's the best way to reach out? Reach out to me at T Howard. That's Tom Howard, but T-H-O-W H O W A R D at servicetitan.com. Okay. Secondly, give me three books top of your head that you really enjoy that the audience will get a kick out of. Could be about anything. Oh gosh. Yeah. I think that, um, the four hour

work week by Tim Ferriss was one of my favorites and it was a game changer for me never split the difference it's a negotiation book about a former uh fbi hostage negotiator it's uh fantastic and influence by uh cialdini robert cialdini, yep. Yeah, those three are fantastic for me. And then finally, I'm just going to give you the chance to take the floor with, I'll let you close this out with anything you want,

but probably some advice that we can implement right away. Absolutely. If you are a ServiceTitan user, I'll just tell you right now, if you're not using Marketing Pro during the crisis right now, I'd definitely be doing it.

We've seen big gains with that. ServiceTitan's offering it for free right now for if you're not using Marketing Pro during the crisis right now, I'd definitely be doing it. We've seen big gains with that. Service Titan's offering it for free right now for three months, no obligation of any kind. We just are honestly trying to help out with the COVID crisis. You can send out emails from it automatically to your people, letting them know, hey, we're in business. Here's some offers we're doing. We had one guy that sent out emails of 2,700 people. He sold over 50 indoor air quality devices on that one email to his people. I'd be doing that like right away. Number two, if you don't have a budget made already,

put some numbers down on a sheet of paper or use Microsoft Excel or Google Sheets, whatever you got. Google Sheets is free. And start building a process and building a budget saying, hey, this is what I think I can do. In the middle of this COVID crisis thing, just put on realistically what you think your revenue could be, what percentage of costs you're going to have, and then your overhead and figure

out your net profit. I'd do it right away and start figuring out how much money you're going to spend for the next several months to get to where you need to be. That's amazing advice, Tom. Listen, you are a great man, a great friend and a great business owner. I really appreciate you coming on today. I think the audience got a ton out of it. Once this thing's over, we'll have to do it again. Appreciate you. All right. Thanks a lot. Hey, I just wanted to take a quick minute and thank you for listening to the podcast. You know, most people don't understand this, but the way that the podcast has grown is when people subscribe and they leave a review. So if you would please, please, please, Wyatt's top of mind, take a quick minute to subscribe and leave a quick review. It'll help

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