The Home Service Expert Podcast - How Looking Beyond Experience Can Help You Find the Best Employees

Episode Date: July 26, 2019

Jim Olsztynski served as the editorial director of Plumbing and Mechanical from 1984 to 2011. A prominent writer in the industry with years of experience under his belt, he recently came out with a book titled Bumps On The Road To Riches: How to Avoid the Big Mistakes that Kill Small Businesses. In this episode, we talked about leadership, recruitment, customer service...

I've been around for decades. I've attended literally hundreds of educational programs, conventions, conferences. And I go into these programs and who do I see in the audience but the top people in the industry? You know, the smartest guys, the guys who run the legendary companies. And these are people who could be teaching these classes, and a lot of times they are, but they're always in the audience. And, you know, you ask them, well, what are you doing here? 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 Tommy Mello. And today I have Jim Olstinski on the line. And he is an author. He's done a lot of writing. He actually was the director of plumbing and mechanical 1984 to 2011. And he just came out with the book, Bumps on the Road to Riches. How to avoid the big mistakes that kill small businesses. Jim, your last day was a little bit difficult, but I'm super excited to have you on the line today. How's your day going? Thank you. It's going great. Looking forward to chatting with you and your audience.

Yeah, we've got a lot of plumbers and HVAC guys that listen to the podcast. I think we're up to about 10,000 people a month. Super excited about it. And tell me a little bit about what got you writing for the plumbing and HVAC service providers and just what's gone on since then and caused you to write the book? Well, I'm a writer by trade. I have degrees in English and served as editors for my college newspaper. And ever since, even while I was in school, which seems like millennia ago,

I had articles published in various local publications, usually for pitiful amount of pay, sometimes just because I enjoyed writing for an audience. I landed in the plumbing and HVAC industry simply by luck of the draw. At the time, the owner and publisher of Supply House Times Magazine, which is the leading trade magazine for distributors of plumbing and HV equipment. He was an industry legend named Charlie Horton, and he was advertising for somebody with my credentials when my resume landed on his desk. He hired me soon out of college, and I knew very little about plumbing or HVAC or the distribution industry, but I'm not totally stupid. So I learned as I went along and I soon learned editor of that publication until, I'm looking at my timeline, might be a little fuzzy, but at the time, Charlie passed away back in, oh, I believe it was 1989. And his widow ran the company for a couple of years.

But then our magazines got split up. Supply House Times got sold to another company. And I continued with the BNP as editor of Plumbing and Mechanical. And things stayed that way till around 2002, I believe it was, when BNP purchased Supply House Times. So I turned over to become editor of Supply House Times, retained the title of editorial director of Plumbing and Mechanical, the editor reporting to me. So I was editorial director of those two magazines, as well as, for a time, a magazine called PM Engineer, which was part of our stable. And I also published a paid subscription newsletter called PHC Profit

Report. I think some of your listeners are familiar with my publications and me. At least, I hope so. Well, you sound like you've... The fact is that you've probably dealt with more contractors than all of us combined. So you've got a lot of knowledge because you've interviewed so many people and you've got to actually be able to write about it. So that means you understand it. So it's pretty exciting to have someone like you that's seen people that have failed and seen people that have just grown up and on to be the most successful HVAC plumbing and different trade people out there. So this is going to be a really, really great podcast. Well, I wanted to hear more about bumps on the road to riches,

how to avoid the big mistakes that kill small businesses. Cause I know you told me half of it was for the stuff you've written in the past. Half of it was just being a consumer and seeing these people and these different trades make these mistakes and some of them that are just killing it out there and you were able to separate that as well as being on the consumer side yeah well over the years i wrote a regular and when i was the lead editor of both supply house times and plumbing and mechanical i i wrote a regular editorial column that would focus on various issues facing the industry month after month. These were monthly publications. Later in my

career, I wrote a column called Smart Business that was syndicated within the construction division of BNP Media Company, my employer. And it was picked up by a number of magazines in that division. Snips was one, Walls and Ceilings, National Driller, Roofing Contractor are ones that immediately come to mind or may have been one or two others that I forget since I've been kind of semi-retired since 2011. And then for a period of time, I wrote that paid subscription newsletter called PHC Profit Report that I believe was very well received. And my book grew out of a selection of articles I had written for those publications over the years. I organized it around various themes and included some new material about businesses that I just came across in the course of my casual reading and just basic interests. And yeah, and the inspiration for my book came not only from these professional experiences,

but hey, you know, I'm 72 years old. I've been a customer buying goods and services from numerous companies over the years. And part of what makes me a journalist is observing what people do right and wrong. And I've incorporated a lot of my observations from the customer perspective into the book as well. Yeah, I think that's very, very important because the customers are the lifeblood of our company. One of the things I noticed that you talk a lot about here is there's a big difference between managing people and actually being out there in the field doing the work. And it's a common misconception that the former is easier to do. So, you know, it's hard to

manage people. A lot of us start out as a plumber, as a garage door tech, and then we decide this can't be so difficult. Let's go ahead and start our own business. And I was just in Colorado Springs recently, and my cousin's got a business, a garage door company, and it's all the same. I've been doing this long enough. I know the trades are pretty same as the others. So I just noticed that he works all day.

He runs the jobs. He does the estimates. And I talked to him about it. I said, you know, the old cliche, you're working in your business, not on your business. So tell me a little bit about your experience with that. Well, a lot of people in the trades know how to operate some very complicated machinery. But there's no machinery as complicated as human beings. And it happens that your best trade worker gets promoted to foreman or your best salesman gets promoted to sales manager. And what happens is you weaken both positions.

You know, it's too often. And too often people in small businesses get promoted to supervisory positions without the slightest bit of training and management. And dealing with people is very, very complicated. And my experience is mostly in the construction industry. And construction industry may be one of the worst, construction and construction services, because construction people are renowned for being rough, my way or the highway type of bosses. They aren't the touchy feely types, you know, who are going to be very concerned about the personal feelings of their workers. And I don't know, there may have been a time long ago when that worked, the my way or the highway worked. But I think when you're dealing with today's workforce of millennials and Generation Xers and people who are lawyered up, who take offense and get lawyered up at every little thing that someone does that they don't like, it becomes much more complicated.

You know, management is more an art than a science. I often think of supervisors, a famous quote by, there's a famous quote, I can't remember offhand who originated, but it said that managers gain authority from above, leaders gain authority from below. And I think that's a very profound observation. You know, you can become a manager because the owner of a company appoints you as one. But nobody in the ranks is going to really follow what you say or really believe in you unless you treat them like they want to be treated. Yeah, I think businesses have changed a lot now. I got a call yesterday from one of my employees and she said, one of my supervisors is really upset that some of the other call center reps make more money this week than she did. And I said, well, she's on a salary and the other people are on a bonus program and it's unlimited. But I said, a lot of the people in there are making minimum wage because they're not hitting their bonus.

And I said, if she wants to do that, there's highs and lows to that position. But I'm more than welcome to put her back in that. I've been thinking a lot about it. Compensation programs have a lot to do with some of the problems I see with management. I do think you're absolutely right when it says, hey, this guy's killing it. Let's go ahead and make him a manager. Some of my top sales reps could never make the money that they make now if they move to management. And they don't really make a great manager. They're not the best leaders in the world. So it you know, they may deserve it. In some ways, their job's more valuable and sometimes even harder than the manager's performance. Conversely, some people would prefer to be managed. They would prefer to deal with the administrative side of the business

rather than be out in the field calling on people. And maybe that's what they're good at. So, you know, managing is an art, not a science. There have been many, many books written about management by people far smarter than me. And yet, you know, none of them have perfected it. Yeah. You know, there's a lot of problems I find with building the company from the bottom up. And I find that most people do top down, but it's hard to do bottom up. But if you start with the bottom, most of these companies are more successful. They have a say in where the company goes. They have manuals.

They have organizational charts. And they understand where they're at in their lane. And they know how they can excel. Right. But I think, again, you've got to be a people person to be a manager of somebody. You could be the best technician in the world. You could be the best wrench turner. But if you can't relate to people, you're going to fail in any kind of a supervisory position. Yeah, what we do is we actually do several different personality profiles

before we'll put somebody in a management position. We'll ask them how their co-workers think about them, how approachable they are. Even in my field supervisor position, it's more about who can really rally the troops and be a coach to these people. Because what I find is a lot of these guys that are out there in the field, there's some women joining the field, but it's mostly guys. They just want to talk to you. And they almost feel like we're their parents. They want to hear from how mom and dad are. They want to know that I do good. And it's funny how this whole business

turns into like a family. They want to hear a lot from the owner too. They want me to say, hey, you're valued, you're important. But my old cliche is, if I spend five minutes with every employee, that's about 1,200 minutes or something like that. So I don't have that much time in a week.

Yeah. One of the things I point out in my book, I mention it several times in the book because I think it's so important and I've seen it violated so many times, is a lesson. And I'm not the one who originated. There are very few new ideas. What I do is pick up ideas from people and translate them and transmit them to other people. But you always praise someone in public. If somebody does something right, give them the praise where everybody can hear. But if you have to criticize somebody, do it in private. Pull them in your office. You know, pull them in out of your shot of somebody.

Don't go yelling at them in front of coworkers. That just destroys any motivation, any rapport, any good feelings an employee is going to have about you. Yeah, that's a great tip. What's the biggest mistake that most supervisors do when they're evaluating the performance of their employees? Yeah, again, performance evaluation is more an art than a science. I think one mistake is to rely too much on metrics to evaluate performance. Every business has different metrics. You know, how much did you sell? How many calls did you make?

This and that. But sometimes metrics don't measure things that are totally relevant. One classic example, I once heard of a company where inside salespeople were evaluated on the number of calls they made. Well, they made a whole bunch of calls, but they didn't sell very much because they were too anxious to end each call and get on to the next one. On the other hand, evaluating people entirely subjectively doesn't work very well either because there you're at the mercy of the personal prejudices of a given supervisor.

So I think you need to find a balance between relevant metrics and other hidden factors like how well does an employee get along with customers and coworkers, just to take one example? Sometimes that's worth more in the long run than a few dollars of extra sales by a prima donna who turns people off. Yeah, you know, that's the problem is that the top salespeople usually do become prima donnas. And it makes sense. I understand why, but they usually end up not being team players. And that's when it really gets in the way. What happens is a lot of times I've fired top performers

and everybody else congratulates me and says, we're going to try so much harder for you now because we really, they were getting the best jobs. You had no idea how much they talk behind your back in the background about this and that. Sometimes the one thing I found is I need people that I could approach I need them to be positive if they have a will I could find a way but if they're always pessimistic and nasty

that's when it gets difficult even if they're top performers yeah and you know every company I mean you have to worry about the the morale of everybody else on the staff so everybody else see somebody getting away with stuff? You know, they're going to try to get away with it. Conversely, they think if you're too quick to fire someone who's very popular among the staff, but maybe the performance is lagging a little bit, that can be a bummer, too, with the people who remain. So, again, there's no magic formula. It's a mixture of hard numbers, the metrics of a given business, evaluating that versus the interrelationships that go on between the people who work for you and their co-workers

and your customers and your suppliers and everybody else. There's so much to making a really, really successful home service company. And anybody that's done it out there, you got to really clap your hands and say you've done it because there's so many intricacies that go into a big home service company. And the one thing I find is a lot of business owners think they make $200,000 a year for their business, but that's what they pay themselves. So take them out of the picture. You pay somebody $100,000

to run your job that you're doing. Your company only made $100,000 and $100,000 is maybe worth a three times multiple. Your company's only worth a quarter million dollars. And I just find it like people think their company's worth

a couple million when it's only worth $250,000. And it's crazy. They're like, well, you don't understand all the blood, sweat, and tears that went into this. And I look at them and I say, I can only look at the last three years worth of numbers. And if you think it's worth a million dollars, then it's going to take me 12 years to get that money back based on what I'm seeing here. And that doesn't make sense to anybody. So I think that anybody that's looking to sell in the next five years really needs to do some investigative work on how to value a company. But I want to go back to the hardest part. The number one complaint I hear is, Tommy, the economy is great. I don't hear a complaint about that, but

unemployment rate right now is so low. Everybody's kind of leaving me going on to the next best thing. Everybody's offering more money. People are just ready to switch companies now because they don't want to be held down. And everybody's paying more and more. And I know it's not only about... I always tell people it's not paying somebody a salary is only one component of it. What kind of benefits they get? What kind of people are they around? How do you treat them? Are they gamification? Do they have an opportunity to succeed? Are you letting them drive a brand new truck?

Are they driving a really old one? Are you covering their gas? Do you have ice machines at your office for the summer? Stuff like that. What's the most important piece of advice you can give home service business owners in hiring the right people? Don't get hung up on experience. Find someone with the right attitude and aptitude and train that person to perform. If someone has a high mechanical aptitude, and there are tests that enable you to figure that out, you can teach someone with a high mechanical aptitude the technical side of the trade, but you can't teach personality.

And I think this is especially important for service company owners whose technicians deal with customers in the field. Now, okay, I understand that sometimes you're in desperate need of someone who knows what they're doing. You know, you've got a truck standing vacant and you can't afford to train someone for scratch and you need immediate help, immediate performance from someone. But then don't be hamstrung by arbitrary numbers when it comes to experience. Like, for example, I always see ads in the papers for plumbers or the like specifying three years experience or five years experience. What's so magical about three years or five years or 10 years? Most people pick up the basics of a

trade within a year, and they may turn out to be better performers than someone who's been doing the work for 10 or 20 years, but keeps changing jobs because he's a knucklehead. All right. And I know a lot of plumbing companies and HVAC companies that are always looking for help. And they pass out business cards to people that wait tables on them, you know, in a restaurant or the truck drivers who deliver goods to them. If these people have good personalities and know how to deal with people and if they want a good job, they'll hire them. And within six months, you know, they help them out in the field doing at least basic, you know, service work. And for most of them, we'll tell you, they've had much more better experience doing that than some plumber who's

been around for 10 or 20 years and has had six different jobs because either he can't get along with the employer or he's stuck on doing things the old way or for whatever goofy reasons. I see that a lot. I see people jumping jobs. And I used to, younger in my business and I used to younger in my business. I used to just hire people with only experience and I used to, I still will hire somebody if they've got experience, if I could steal them or if they just moved here from another company. But for the most part, when you're coming in, I'm hiring you solely on personality and the fact that you have confidence,

you can look me in the eye. That's why I love servers. That's why I love bartenders. I love bus boys because they've worked in the eye. That's why I love servers. That's why I love bartenders. I love busboys. Because they've worked in the field. They've experienced other people's... They've worked with different ethnicities. Tough word.

They've worked all over with different types of people. And they make such good service people. And they come in knowing what I expect of them. So they're not like, Well, this isn't what I'm used to. And you say, well, you're going to need to use an iPad. You're going to have to have a good driving record. You're going to need to smile when you talk to my customers,

ask questions, put up stickers. You're going to put a sign on the front yard. There's a lot of things to ask. This isn't a nine to five. Well, they're not used to a nine to five. Number one. Number two is they go, this is, they don't say this is BS. I never, you know, because they never had a previous job.

They don't know any better. So I definitely think coming in fresh and just having these expectations and knowing them up front, I think it's kind of like a lot like dating. You get somebody that comes in and if you change everything, when you're dating somebody and you say, listen, I'm going to start going out all week, i'm going to go out on the weekends i'm going to join a softball league and a and a volleyball league and i'm going to golf this day they say i didn't sign up for this they say what happened why are you changing so much this is way more than i signed up for

so a lot of times you'll see as you start making these huge spurts and growth that some of the people that are coming up with you are not the they're not going to because they're going to say this is bs i didn't sign up for this so you change as you grow i mean have you experienced that oh absolutely let me tell you some of the best labor markets that are kind of hidden from well first of all not exactly hidden and sometimes it's difficult to connect with them. But military veterans make some of the joined when they were 18 years old, and maybe they served four or five years, and they're still in their early 20s, but they are disciplined. You can pretty much count on them being drug-free, at least more than the population at large. And they've had jobs with enormous responsibility, driving tanks and working on equipment, you know, worth millions of dollars.

The other thing that a lot of people don't realize is there are any number of college graduates and college dropouts who would make great candidates for the trades. So many people are being compelled to go to college nowadays because of peer pressure and their parents forcing them. Let me share an anecdote with you. Long ago in my college days, I told you I have a master's degree. Well, I had a teaching assistantship. I used to teach basic writing classes at the University of Illinois. And I had one student who just didn't get it. He wrote terrible papers, and I could barely understand what he's trying to tell me.

And I, like every other instructor, I had special office hours. So I invited him to come see me for an hour. And I tried teaching him the tricks of my trade, which is writing. And his eyes were kind of rolling around looking really bored. And I, you know, I could tell he wasn't really focused. And I said, well, tell me, what do you plan to do after college? He says, I don't know. He says, well, why did you go to college? He says, because my mother wanted me to come. And so I said, well, what would you like to do? I like to work on cars. Well, there you go. He probably would have made a

great auto mechanic, but he was not happy in college. And there are many, many people like that out there. And if you can somehow tap into them, I don't know exactly how you do it. Maybe put job opening notices or invite people to come interview on college bulletin boards or advertise in college newspapers. They usually cost very little to advertise in college newspapers. They usually cost very little to advertise in. But there's a big group of people out there who should be working in the trades, and they're sitting there bored in history and English classes in colleges across the land.

So let me ask you this question. If you had an Army base nearby, I like this idea because there's all kinds of great things that come out of this. But I've had positive and negative experiences because I didn't think I... Maybe I didn't do my due diligence. But when it comes to hiring somebody in the military, should you go, maybe talk to the commanding officer and say, listen, if you get... This is what I'm looking for. I'm looking for somebody that can handle a lot of responsibility. I'm looking for somebody that's great face-to-face, that are confident.

They don't have PS, whatever that is, when they come back and they're always pissed off. Because I've hired a couple of them. But do you think there's like some type of way to really filter those and get right to the top? Because I never thought about that. Yeah, I don't. I'm not sure how successful it would be going to commanders because they're worried about the troops that are on duty. You know, I think they're not focused on what somebody is going to do after they leave the service. There are various websites available.

And I can't think of any offhand, but Troops to the Trades is one, I believe. And there are various websites, you do a little job searching about hiring military veterans. I think you'd come up with a number of sources and that might be one way to go about it. But yeah, I mean, it's hard to find good people, but there are some good people out there. And here's another, I'll tell you one of the best tips that I've heard from the people, my contacts in the plumbing and HVAC field. Volunteer to teach and maybe even get paid a little bit at vocational technical schools. You know, if you're the owner of a service, of a service business, devote your activity,

teach one or two nights, teach your trade in a VOTEX school. What this does for you is, first of all, it enables you to identify who are the best students in the class. And they get to know you and you can invite them. You get the first pickings of this crowd. And a lot of guys have had a lot of success with that. I love that idea. It's a little bit more tough in the garage industry. You know, I really think the biggest mistake I see about hiring is people hire when they absolutely come down to needing somebody.

They go, I gotta go find somebody. Where the most successful people I see is they've got a huge net out there. They email every customer hiring them. The back of their truck says hiring great, amazing people. They've got... They're posting on social media when they don't need people. They're doing open houses.

And the best thing they do is they go above and beyond. So the other day, I was interviewing somebody on the podcast and he said, Why would somebody work for you, Tommy? He goes, Give me a few reasons. And I was thinking, I'm like, well, I've hired Dave Ramsey to come and teach and his whole class and his software. So I want to make sure my people live debt free.

I said, we've got three new homeowners in the last three months because I had a guy come people pre-approved. And I just started going through all these things. And luckily there was a lot of things there. But most people tell me, well, I supply a truck and I pay for gas. And I'm like, what else? Because in this day and age, you got to be able to give employees a lot. And it doesn't need to be... Everybody always says, well, how much money? How much money?

How much money? But I've seen companies that are people at minimum wage and have people lining up because of all the camaraderie, the culture, the things that they're learning, the classes they get, the leadership. And I think most small businesses leave that out. You're absolutely right. And, you know, a lot of guys, about hiring people before you have a need for them. The best companies in the field are always recruiting. And they have to because, first of all, it's not easy to find these people. We're talking about all these ideas, but even then, even among the servers and everybody else,

there's not one in a hundred that you're going to really find is what can make the grade. But once you do find somebody like that, you can create a job for them. If you have a service business, train someone. And once they're trained to the point where they can operate their own truck, expand your business. Grow your territory. Buy a new truck for this person and grow your territory. The other thing is that there's always going to be attrition. I don't care how well you treat your people, how well you manage your business. You're going to lose some. Some of them are going to move away. Some of them are going to change careers maybe. Some of them

are going to think that they're better off working for somebody else. So you're going to lose a certain amount. I don't know what the exact number is, but I would guesstimate at least around 10% of the people every year you're going to lose just for natural causes and you need to replace them. So yeah, I'm a big believer in the always recruiting syndrome. Well, I say instead of ABC, I say ABR. Instead of always be closing, I say always be recruiting. That's right. The big change that I see going on right now is people will leave if they don't feel appreciated. And that's probably the biggest thing. There's what's called the five love languages of business.

And it's understanding what your people need inside the work. They spend over half their time here at the office or within the company. And like I always say to go shopping for a really nice bed, you're going to spend a lot of time on that bed, probably a third of your life. So don't cheap out on that stuff. So, you know, I love meeting somebody face to face.

I love hearing about their last experience, what they didn't like about their last job. I love walking them to their car and make sure it's organized inside of there and it's not a pigsty. If they treat their car like a pigsty, they're going to treat their desk and everything else like a pigsty. So I think it's really, really important to do the right hiring and don't do it when you're desperate. And have people... Because here's the thing. There's a great book out there. It's called Top Grading. And A players love A players, but they don't love B and C players, and they won't last very long if you're going to force them to be around B and C players.

So pay your A players more and make sure that B and C players... Too many times people build a culture that they could let B and C and D players make a lot of money and that's why they stick around. Well, you'll start losing A players really, really you know there's an old adage that says the customer is always right and for me I always agree with the customer even though I know they're wrong because it's not worth getting a ppp complaint I thought literally left one-star yelps customers wrong but I don't win when that happens so what is your experience but I don't win when that happens.

So what has your experience been? Nobody can ever win an argument with a customer. What's likely to happen is the customer gets a pee, leaves you, and then tells everybody else what a rotten company you are. I once read, and again, I cover this in my book, but there was a study done on customer service one time, and they found out that, on average, when a customer is well-served and well-satisfied, that customer tells an average of five other people about your company, and that is great. So you treat customers well, you're likely to get five referrals out of it. But here's the downside.

They also found out that if a customer has a bad experience with your company, he's going to tell an average of 15 other people about it, right? So you need to get three times as many people raving about your company than you do who are going to criticize your company. And that's why customer service is so important. And, you know, the best companies in the field do things for their customers above and beyond the call of duty. I've heard it referred to as the wow factor, okay?

Like a lot, because let's face it, okay, a plumber or an HVAC technician comes to your house, you know, he's okay, he treats you well. He does the job, fixes the problem, charges you what you probably think is too much because everybody thinks everybody charges too much. But people are basically satisfied. So people are basically satisfied with your performance, but their mind is what they expect for the money they paid. So what are the wow factors? Things like, well, now a lot of guys, this is hardly a new thing, but it's just come about where people leave the job cleaner than ever before. I've had people who, they make little notes about the names of people's pets or they bring dog treats to the house, if asking permission, first of all. It's a good idea to, you know, let fast service call the customer, you know, like before your

technician arrives. Say, you know, okay, he's on his way, you know, he's going to be there in about an hour and then when it's another half hour, you know, he's going to be there. Little things. You know, some people do things even like they'll ask the person, do you have any light bulbs that need changing? Do you have any little thing around the house that needs fixing? A doorknob loose or something like that? These are tricks that the very top performers perform for their customers. And then people will say, then you have, okay,

the old time, oh, I don't have time to do all that stuff. You'll have the time if you charge what you need to charge to make a good living. I mean, if you're selling your services on nothing but the basis of price, nah, you don't have time for anything then. A hundred percent. Say that again. Tell that to the listeners. I need to hear that again. Yeah, if you don't charge the price you need to charge to make a good living for yourself and your people, you're never going to have time to do the job right.

You know, and you're always going to be living hand to mouth. They shouldn't even be in business. I'm going to say, Jim, they should not be in business because they complain. It's all over social media. They say these people charge too much. You know why? Jim, if you were to come to my office right now, I could introduce you to some people. I could introduce you to my marketing team.

Then I could walk and I could show you all my dispatchers. Then we could walk into my door ordering team. Then we could go into my accounting team. Then I could go into my recruiting team. Then I could go to my call center team. Then I could go to my warehouse team. Then I could go to my nighttime team. And there's a lot more people.

I've got general managers. I've got service managers. I've got the installation managers. This is a real company. When people criticize you about the prices you charge is because they don't have a real company. That's right. That's right. And most guys go into business, they don't have a clue about business. All they know is they're getting paid, just to pick a number, $20 an hour, and they see their boss charging, you know, $100 or $200 an hour for their labor, and they say, hey, man, I'm going to get rich. And they don't understand that, first of all, they're working 40 hours a week. You know, if they're going into business for themselves, they're probably not going

to be able to book 40 billable hours a week, all right? And secondly, if they go into business for themselves, there's a lot more involved than simply doing the work. There's the marketing and the bookkeeping and the legalisms and all that goes with it. And, yeah, one of the great things that has happened since I came into the field, and when I first started covering the contracting end of the field, and I go back to like the 1980s, almost everybody was billing on a time and material basis. And then some of the innovators in the plumbing and HVAC field started doing what was called flat rate pricing. Other people have different terms for it, you know, value pricing or job pricing or whatever you want to call it. But go into the house, give an estimate of what you're going to do to perform.

And your estimate is based. It's not, you know, hit and miss. There are books that help you out about how many hours it should take for you to perform, you know, certain types of jobs. And more and more people are doing that these days. And it's really upgraded the industry. I see so many more people nowadays that, you know, they're driving real classy service vehicles, not beat up old pickup trucks. You know, they're wearing booties when they come into the house rather than tracking mud. You know, they wear sharp uniforms rather than their butt crack

showing with trousers. So the industry has largely been upgraded over the years, but there's still the bubba's out there who show up with a cigar hanging out of their mouth. Yeah, you call for a plumber. Yeah, those are tough because they're going to be around for a while. I find that when the economy is good, a lot of these people come work for companies. And when the economy is bad, they break up on their own. Have you ever heard of a guy named Frank Blau Jr.? Frank Blau is one of my oldest and dearest friends. I recruited him back in the 80s to write a regular column for Plumbing and Mechanical magazine.

I love Frank Blau. Well, you know, he teaches a simple lesson. Me and Alan Rohrer are pretty close. And it's pretty simple. Add up your billable hours and your materials. Buy nice computers. Keep the air conditioning cold in the summer. Have nice desks.

Have outings with your employees. Add everything up. Be able to pay when the economy turns. And then throw 20% on top of that. And that's how you charge. Not because everybody else is charging this. And there's another good book called Raving Fans. And I'll tell you what. It talks about

why do people go to golf courses that are 10 times more expensive than the local little par three course? Why do people go to the most expensive organic safe way out there or whatever it is with grocery stores? Because the way they get treated.

And people always think it's about money, but I'll tell you what, in my double blind study that we did with 500 customers, the number 9 thing was the price. That's right. Number 9. They cared about the components, they cared about the safety in their families. They cared about the timeliness.

They cared about what the warranty looked like. They cared about the mess that they left. You know, price, 90% of people make price number one, and it bothers me. Yeah. And I want to share with you a Frank Lyle story. I told you, Frank's a good buddy

of mine, you know, and he, you know, he and I, you know, been collaborating for a number of years and going way back, I think it was the late 80s, early 90s, you know, Frank Blau used to put on his seminars, his business of contracting seminars, a business of contracting was the title of his column that he wrote for our magazine. And he was putting it on for a trade group one time. I remember it was in San Francisco. It was a convention of one of the industry's trade groups. And Frank Blau used to start off his seminar by showing people his W-2 form. And he showed people how he earned over $100,000 a year. Now, back then, that was a lot of money, right? And he

starts off his seminar, and this is what you have to do to be successful in all the things you were just talking about. Well, we went out for a break at one time, and I'm walking out of the room, and I overhear these two plumbing contractors, but they should be plumbers, talking to each other. One says to the other, ain't a plumber in the world worth $100,000 a year. And I was just stunned by that attitude. I mean, here is somebody, it's a matter of self-esteem. What is it about their self-esteem that prevents them from emulating this guy who's showing them how to be successful and how they can enjoy a good life like so many of their customers do.

Their customer, they don't care. Their customer will go out and spend $5,000 for a carpet or $5,000 for a new sofa. But God forbid you should ask them to pay $1,000 to get a water heater replaced. I mean, they go bonkers at that. Well, I always give the adage is, you know what it really costs to make a pizza? I mean, you get in the flour, the water, you build the dough, and you throw some pepperoni and cheese on there.

It's about 60 cents. Yeah. But you're happy to spend 22 bucks at Domino's. But God forbid, like you said, we paid $200 for something and we charged $1,000 for it. Well, you didn't think about all the indirect costs. And that's the biggest mistake I see. All my employees, it's very, very common for me to go in and start taking a whiteboard out and say,

Guys, how much is service type? How much is this person making? How much is this, this, this? So let's add the parts up, which is great. Now, I love that Amazon came out with Amazon Home Services because you see the springs pop up on there. Then it says $180 to install them now. So it's just kind of interesting.

Like people, a lot of things I do is I'll take pictures at Ace Hardware of parts because Ace Hardware is still priced pretty reasonable as far as they're not as cheap as Amazon because it's not coming from China. And I take a piece of angle iron that costs $20. And if I want to charge $40 to the customer, I just show them, go buy two pieces of this at Ace Hardware. And I'll go ahead and do it for you because you're going to spend $40. I'm charging you $45 right here, right now. Right.

Yeah. And then they're going to spend their time going to spend $40. I'm charging you $45 right here, right? Right. Yeah. And then they're going to spend their time going to Ace Hardware. They're going to burn some gas and they might get the wrong size and they're going to have to take it back. And yeah, all of that. Yeah.

And you know what? Here's the deal. I asked for this, Jim. I asked for drug tests and I don't say this in my ads, but you're going to be drug tested. You're going to be background checked. Number one.

Number two, you're going to smile. You're going to talk to ads, but you're going to be drug tested. You're going to be background checked, number one. Number two, you're going to smile. You're going to talk to my customers. You're going to be presentable. You're going to have a clean driving record. You're going to be able to do sales with body language, eye contact, and confidence. And then on top of that, I'm going to need you to do all the mechanical side of it because while you're there, you need to fix it. So I'll tell you this.

I've got a master's degree in business. And I'll tell you, most of the people that work for me are better than any of the people. I don't want to discount the people because I've met a lot of amazing people in my master's program. But I'll tell you what, these people that work for me, they're honest, they're hardworking. There's not a nine to five and they can get their way through obstacles. And to say, maybe in the day of 70s and 80s, home service was, hey, anybody with no brains could go do that. But now, it's completely different. It's getting there on time. Now, customers care more about their time or more about our time than we've

ever been. And time is so much more important. And I always tell the customers, look, we made a mistake. I respect your time so much. Here's what we're going to do for you. And obviously, there's a certain way to deal with a set customer, and there's tons of them. And you made this deal that's going to tell 15 other people. My experience has been, and I remember the stat I had was 22 other people. But now they go on Yelp. They go on the BBB.

They go on Merchant Circle Nextdoor. They go on... I could give you Angie's List, Home Advisor. They go on Google. They leave bad reviews on Facebook. And now it's exponentially bad. So I have a whole team dedicated to getting in front of this stuff.

And one of my reputation managers came to me last week and he said, I just, Tommy, I can't give any more of your money away. He goes, I'm so sick. These customers are insane. And I said, Bruce, this is not your call. This is my call. Give them all their money back. Give it all back. And he goes, well, Tommy, there's just, we don't have any control. I said, Bruce, I put this amount into our revenue that'll be returned.

And I know it annoys you and it's not right, but guess what? We're the top rated company out there for a reason. When I get five Yelp calls, 10 Facebook calls a day, and five off of Google and everywhere else, how much more money do we make by giving that couple hundred dollars back? And I give thousands, tens of thousands of dollars back a week. Yeah, reputation management. There's a business you never heard of 20 years ago.

You're right. And, you know, Thomas, customer service, I think, is the easiest business skill to master. You know, you don't really need to hire expensive consultants or acquire any special skills. Just abide by the golden rule. Treat other people like you want to be treated when you're a customer. I'm oversimplifying because there are things a small business can do to improve customer service, like training how you want employees to react with customers, establishing scripts for dealing with callers and so on. But customer service is basically a matter of attitude.

Be nice to people. Listen to their complaints without arguing. Do your best to fix any problems and hire people who exhibit these traits if they are to be in contact with customers. Pretty simple. I don't think you need any special training to deliver good customer service. You would think it would be common sense, and that's what bothers me. Whenever I go out of town, I was in Dominican Republic, and I started videoing all the McDonald's, the Burger King, the Taco Bell at the airport because I was so impressed.

I'm like, what they've done is they created a process. And by the way, I was there. It's called Punta Cana. The reason I was there is because my sister

won a huge award for selling insurance. So she said, she goes everywhere with her husband. They travel so much. He's an executive at GE. And she just said,

he's already taken this two months off. We got it all planned out for the year. Can you go with me? It's been a long time since just me and you hung out because she's got kids. I said, yeah. So I got to talk with all these all-star performers in insurance. And I said,

what's the key to success? And they said, you know what the key is, Tommy? We follow the program. They've created an amazing platform to get trained on to do exactly what they say. I mean, the training, the manuals, the due diligence that they put into this has just been so profoundly successful. If you don't follow the program, it doesn't get done. So my point is, I've created the same program at AA1 and I love talking to successful people when they kind of break through that invisible door. And I say, what happened? I'm like, you are absolutely just night and day. You're amazing. What's the secret? They say,

it took a long time, but you keep beating the same drum. And I finally figured out, ask the questions. This is a beautiful home. How long have you lived here? Tell me exactly what's going on with your garage or when was the last time you had it looked at? They say, start with the beginning. What'd they call us out for? A keypad? You don't tell them everything else that's bad on the door because we haven't even evaluated and did our checklist yet. And I love hearing from other companies and other things that if we just follow the program... Now, the program is always not perfect. It's ever-changing. But if you follow the program, you're going to be successful. And if you're a good company, you build a program.

Am I right? Absolutely. And I'm sure you know Al Levy, right? There are no of them. Oh, yeah. Al Levy is a consultant for me. Yeah, yeah. I wrote an article about his company way back when he was in the oil heating business, you know, back in New York. And one of the things, and I use it in the book, again, it's in the book. I got his permission. He wrote job descriptions from step one all the way to the end. You know, step one, ring the doorbell. You know, I mean, and he goes into every job procedure and there are about 22, 23 steps for, you know, just something simple like, you know, a standard clean and check, you know, on an oil burner.

And I mean, yeah, once you do that, and then you have something to sell if you do try to sell your company. You mentioned earlier how people overvalue their company. They think, well, I've been in business 20 years and I know a lot of people, but what really is that worth if they're not going to be working? How many of those people buy from them because he's good old Joe and has been servicing them for the last 20 years. Yeah, you got to have a system. Well, and that's the problem is I've bought companies and those guys, they're not worth anything because the minute they go away, those are the relationships they built in

their community for a long time. Now, they want to stay on for a couple of years, great. But here's the thing. If I leave the company, my goal, there's a good book by Jim Collins. It's called Built to Last. That means you're setting your company up. He talks a lot about Jack Welch from GE and how he was able to leave his company

and it continued to grow. And then he gives another 10 scenarios of CEOs leave the company or presidents and they fall apart. Well, here's the thing. I want to build my business. So if I leave, here's something that really cool that happened. So we moved into a big company, a 35,000 square feet building.

And I was out of town for the last two weeks. My number two, the general manager, was out for the last four weeks. My number three just had a baby. He was out for the last two weeks. So during all this stuff, the top three people in the company weren't even here. And we didn't drop a beat. I mean, there's a couple of things that happened like furniture decisions that I would have not made, but stupid little things. Which goes into delegation, right?

So many people dump and not delegate. That happened on this because I was like, just make a good decision instead of really going through the motions. But it's kind of fun to know that your top three people... Think about this, the people listening. If your top three people left, how would your company look after three, four weeks? And I love that question. And what does it look like? And if you got a good business, and it depends on the size, if it's 10, 20 people, I suspect it would be in a bad position.

But once you get over 100, I think that's really doable. Jim, by the way, I love this stuff. I got to tell you, this is what gets me just so excited. You know, I came in today on a Saturday. I sense your enthusiasm. That's great. You know, and I'm just, it's fun because you know all the same people I know. So, you know, you've been an editor for a long time.

You've got to know a lot of these people. And it's really cool that it's a small circle. Like, look at Jim Abrams. I don't know if you know, do you know who Jim Abrams is? Yeah. Yeah. I don't know him well, but I know who he is. And I've chatted with him from time to time. I mean, those guys, they made her, they did a revolutionary thing in the HVAC plumbing electrical business. And that's kind of Terry, Terry Nicholson and all those guys. I mean, it's crazy. Direct energy, you know, and just Alan O'Rourke and these legacies.

I've learned a lot just by listening to these successful people and applying it to my industry. Yeah. One more thing I'd like to interject, okay? And that is that, you know, I've been around for decades. I've attended literally hundreds of educational programs, conventions,

conferences. And I go into these programs and who do I see in the audience but the top people in the industry? You know, the smartest guys, the guys who run the legendary companies. And these are people who could be teaching these classes. And a lot of times they are, but they're always in the audience. And, you know, you ask them, well, what are you doing here? He says, you know, if I pick up one good idea, one little idea, it'll pay for my trip. And then you talk to the guys who can never attend because they're always too busy. Because, oh, I don't have time and I don't have money to go to, you know, to attend some conference or convention, you know, where I might sit in

classes, seminars, and learn from people and make networking contacts that I can talk to. And I hear this over and over again. I don't have the time. I don't have the money to travel. And, well, if they invested a little time and money to travel, they'd be able to do it over and over again, you know? It's amazing. You're right. Are you familiar

with ServiceTitan? Yeah. ServiceTitan is our CRM. It's kind of taken over. There was a couple other huge, huge softwares. And I think software is a big... I think in the 80s, obviously, in the 90s, software wasn't really as important. There was QuickBooks in the 90s. But software now does the text messaging to the customer. It makes sure to leave a review. It tells us how long guys spend on certain types of jobs.

See, I think you're right when it comes to key performance indicators to not look at them as they're the everything. Because I look at guys and I say, what's their willingness to change? What's their aptitude to listen versus hear, you know? Yeah. It's just interesting because there's so many facets we could talk about. And I know, tell me a little bit about, so you pulled in all these articles into this book that you wrote, and then you also gave a lot of perspective on what makes a great home service company. Tell me a little bit about your perspectives on what you've noticed that really blew your mind.

And tell me some of the things that really annoyed you that should have been done. Well, the things that really blow me away are the way through the course of my career, how many sophisticated service companies have arisen. You know, we could say, yeah, the bubba's are still out there and they probably always will be because there are a certain number of people who want a job done cheaply, you know, but I think the industry has grown in sophistication. You see these service trucks, they're bright colors, you know, all around the place. There are organizations now to help service trucks, they're bright colors all around the place. There are organizations now to help service contractors. I write a blog for, I don't know if you've heard of Nextar, but they have a subsidiary called ExploreTheTrades.org.

I write a blog for them trying to entice young people into the trades. There's the Service Roundtable. And there are so many groups right now that are relatively inexpensive. Are you familiar with the Service Roundtable? Yeah, very familiar. I'm actually going to attend it this year. We're really looking forward to it. Yeah, well, Matt Michelle, the guy who started it, he and his staff, they have one of the best staffs in the world. And it costs something like $100 a month to belong. And you get access to their website, which has all of these business and training tools around.

And you get to meet people who have made the mistakes that you're making, you know, a year before. And they can tell you how not to do it. They have an online forum where people talk about problems and they get responses from people all over the country about how to deal with it. And for a hundred bucks a month, it's a no brainer. And yet I've said many people their way over the years, but there are some people say, yeah, okay, I'll check them out. But they never do because it's going to cost them $100 a month. And hey, $100 is $100, you know? Yeah.

I mean, I don't know. It's just that attitude that has to overcome. I hate it. I hate it. Yeah. I mean, if I told you between you and I, and I guess we're on the podcast, but I've paid several hundred thousand dollars, yes, last year for consulting through everything I've done and coaching. And I got to tell you, to get on a podcast with a guy like you and the gold nuggets I could pull from this is like... It almost means...

I would pay thousands of dollars for opportunities like this. But the fact is, we get to share this with everybody. We get to tell them about your book. We get to tell them where to go to buy it. And it's so fun because a lot of people, we get into these deep conversations on the podcast and you've been doing this since 1984. And anybody that doesn't want to listen to you and understand where you've been and where you're going? Actually, I've been doing it since 1977. I started plumbing and mechanical

in 1984 as its founding editor, but I had seven years before that. So I'm an old-timer, man. But I think young, or at least try to. Yeah, it's crazy. And what other tips? Because here's the deal. What I always try to do is I always try to give gold nuggets away on the podcast. Real quick, I'll tell you one of my things.

I had a $70 million. This is probably the best that I could give is I have people come into my business and criticize me. Of course, they tell me how good I am and blah, blah, blah, blah, blah. I don't give a shit about that.

I care about the 30% of what they say is I need to improve and get better. And I showed, I'm an open book. I came in, I showed him my financials and he said, dude, he goes, you want the good or the bad? And I said, I'm an open book. I came in, I showed him my financials and he said, dude, he goes, do you want the good or the bad?

And I said, well, always the bad. He goes, this is horrible. He goes, you're losing so much money in five of your markets. He goes, why do you want to stay in these? And I said, well, they take time to turn them around, they're newer markets. He said, look at this,

you're in 12 states, 20 markets. He said, if you were to take your time, because you only have three things, you have time, money, and energy. If you were to take your time and energy and pour it into one of your great markets, how much more could this grow than this? And I said, okay, that's a good point.

And then he showed me 10 more examples. And here I was kicking myself, literally. It was probably the best lesson I've ever got, a one-on-one, after showing somebody that knows their stuff by the anchors. But that was a gold tip for me. What are some of the things that really stick out

to you? You know all the same people that I've studied. So it's really cool to get you on this podcast. Yeah. Well, good. Well, I've enjoyed chatting with you, Thomas. It's been a pleasure. And yeah. I have a few more questions for you, though.

Sure. Okay. Go right ahead. Okay. So if somebody wants to get a hold of you and they want to read the book Bumps on the Road to Riches. Right. Just go to Amazon.com, put in that title, and they'll take you to the page, and it's there.

Well, I'm ordering one right now. And then tell me a little bit about if they want to get a hold of you personally and they want to just get your feedback, what's the best way to get a hold of you? I'd be happy to talk with anybody anytime. Email WRDWZRD at AOL.com. That's Word Wizard without the vowels. And by the way, that handle was given to me by Frank Blau. Frank Blau's been calling me Word Wizard for years and years.

And that email, I don't even like AOL, but I still have AOL because it's bookmarked all over the country. But that was my original email when the email first came out. I guess it was back in the early 90s or something like that. So I adopted Frank Blau's Word Wizard handle. That's my email address, wordwizard, without the vowels, at AOL.com. And my phone number, 847-915-2329. That's my cell phone. I'm happy to talk to anybody at any time. Except when I'm out playing golf, then I'll

call them back. I mean, at 72 years old, so much knowledge. If you had to tell us about, this is what I do with every podcast guest. If you had three books, the most influential books that you could tell somebody, and you know, I know a big one is working on your business, not in your business. What is that?

The E-Myth. But if you had to give three books that you want these people to read right now that are listening, what would they be? Jim Collins, Good to Great. I'll tell you one of the best books about marketing is by Dan Hollihan. Dan, are you familiar with Dan Hollihan? I'm writing him down right now.

I might have his book. What's the title? Well, he's an expert in a specialized niche. He and Al Levy are good buddies. What's the title? Well, he's an expert in a specialized niche. He and Al Levy are good buddies. He's written many books. Almost all of them are worth reading. Some of them are technical to the hydronic heating field, and if you're not in that field, it might not prove relevant.

But one of my favorite Dan Hollihan books is called Just Add H2O, and H, then with the number subset two, and then O, O-H with an exclamation point. And it's about marketing. He's just a magnificent writer and he's written many other books. But if you Google, or if you go to amazon.com and put in Dan Hollahan, H-O-L-L-O-H-A-N, I think you'll find, he started to write fiction too.

And if you're into fiction, he writes some good stories there too. But in terms of business books, that is one that I would recommend. And he writes with a lot of humor. And you know what, for plain novices, I think Dan, Frank Blau's The Business of Contracting is... Now, I don't know. I'd have to look it up. I don't know if he sells that on Amazon or not. I'm not sure about that. I think of it... I know he... Isn't it called The Game of Business or something like that? Well, that's the one that was written by Alan Rohr. because i haven't read it to tell you the truth but um he has written the the business of contracting and okay did i give you three yeah well there's a frank blau book here somewhere and then there's a dan

hellahan and then we're gonna definitely we got the justIST at H2O. So, yeah, yeah. Perfect. And the final thing I do is if you want to leave the crowd with one good thing, you know, just one last thought, I'm going to give you the floor to talk to the audience. Okay. One last thought is invest in training and education. I'm not the one to originate this saying, but it's been said many times. I've heard the argument many times from people. Well, you know, training costs time and money, and then the people up and leave, and they go to work for a competitor for a few dollars more, who pays a few dollars more.

Why do I want to do that? And, of course, the classic answer is, well, what if you don't train them and they stay with you? And that, I think, is my final thought. Well, I got to tell you, this has been a pleasure, Jim. And I can't wait to talk more to you because it's just fun when we just got these inner circles out there. And where are you located now, by the way? Chicago area, Mount Prospect, the suburb of Chicago. Awesome.

Well, it was a pleasure. I appreciate you coming on. Definitely check out your book. We'll get you back on. We'll talk all about the book. How does that sound? Oh, wonderful, Thomas. Thanks very much.

Hey, guys, I really appreciate you tuning into the podcast. I want to let you know that my book is available right now on Amazon. It's called The Home Service Millionaire. That's homeservicemillionaire.com. Just go to the website. It'll show you exactly where and how to buy the book. I poured two years of knowledge into this book and I had 12 contributors. Everybody from the COO at Home Advisor to the CEO of Valpak and of course, Ara the CEO of ServiceTitan. It tells you how to have the right mindset and become a millionaire and think like a millionaire. It goes into exactly how to turn on lead generation. Have those phones ringing off the hook for the customers that you want to be calling where you can make money and get great reviews.

It also goes into simple things like how to attract A players. Listen, if you want a great apple pie, you need to buy good apples, and you need to know where to buy those apples. And it also talks about simple things like knowing how to keep the score. You should have your financial check every week. You should know exactly what's coming in and out of your account. You should know when to cut advertising that's not working. And more than anything, you should know how to cut employees that aren't making it for you. Listen, you might

have a big heart, but this book is going to show you how to make decisions built on numbers. I hope you pick up the book and I really appreciate everything. I hope you're having a great day. Tune in next week. Thank you.