The Home Service Expert Podcast - Know Your Numbers: The Role of Financial Clarity in Growing Your Business

Episode Date: July 21, 2023

Ian McCarthy is the CEO of the Blue Claw Group and president of the National Basketball League of Canada. Having a diverse professional background that includes accounting, landscaping, and basketball, he has an impressive knack for understanding the financial intricacies of running successful businesses. Known for his unique insights into company metrics and the art of navigating financial nuances, he has grown his landscaping business into a multi-million dollar company. In this episode, we talked about the importance of understanding your business numbers, leveraging technology, building better connections in the industry…  

Honestly, it's like really the key to success is understanding your numbers. And it sounds cliche, but I mean, every company has different numbers because your overhead is different. How your company is structured, how many crews you have to share the hours that have to recover that overhead, your geographical area. You know, in a lot of these landscape Facebook groups, the number one type of question is, how much do you guys charge to do this? It's somebody who has a customer, they want a deposit check, and they don't want to do the work of, one, knowing their company's numbers, two, doing a proper estimate. So they're looking for someone else to give them an easy answer so they can go write a proposal and get a deposit check. And sometimes those are the worst jobs because, you know, you could be taking jobs and make money on the actual job, but you're really not making money as a company, you know, because you have to reach a certain gross profit at a certain volume and with a certain overhead. And so the accounting system doesn't care if you're clearing brush or building a beautiful, you know, outdoor living space.

It really couldn't care less about what work you're doing. It's just mathematics. And unless a business owner is willing to invest in paying attention to those numbers or hiring someone to pay attention to the numbers, they might as well be in Vegas at the roulette table. 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. Before we get started, I wanted to share two important things with you. First, I want you to implement what you learned today. To do that, you'll have to take a lot of notes, but I also want you to fully concentrate

on the interview. So I asked the team to take notes for you. Just text NOTES to 888-526-1299. That's 888-526-1299. And you'll receive a link to download the notes from today's episode. Also, if you haven't got your copy of my newest book, Elevate, please go check it out. I'll share with you how I attracted and developed a winning team that helped me build a $200 million company in 22 states. Just go to elevateandwin.com forward slash podcast to get your copy. Now let's go back into the interview. All right. Welcome back to the Home Service Expert. You guys know who I am, Tommy Mello. I'm here with Ian McCarthy. And Ian's an expert in sales operations, pricing, accounting,

and marketing. He's based out of Massachusetts. He's the chief executive officer of the Blue Claw Group, the landscaping construction division. He works for a while and he's based out of Massachusetts, Cape Cod. In a few short years, he's going to landscape company and hardscaping company in the multimillion dollar business, as well as being featured on the cover of Lawn and Landscape magazine. He also helped start the Canadian Basketball League, and I was just talking to him, and he also has a pickleball and a pool company, correct? Correct.

So Ian, thank you for coming on today. Hey, thanks for having me. I appreciate it. So why don't you just tell us a little bit about your business, how you got started, and where you're going with the business. Okay, no problem. So basically, I started Blue Claw Associates, which is the landscaping company in 2018. And that sounds very recent and it is, but I actually started in landscaping in 1996, coming out of an accounting background. I bought one of my accounting clients in Nantucket and that's how I got into landscaping. I grew that business,

expanded to Cape Cod. So I had two different locations and sold it in 2006. It was about a three and a half million dollar company at the time. That's where the basketball thing came into play because I bought a minor league basketball team. Kobe Bryant's father was the coach. In the beginning, it was a hobby, but eventually it migrated into a bigger and bigger business opportunity and i landed in canada in saint john new brunswick in 2010 and helped start the national basketball league of canada six years later you know we're in there i'm the president of the team and chief operating officer of the league any guy who loves sports i'm living the dream right i'm the actual guy that gets to pick the players and sit courtside and all that. And then my third child, a daughter was born and my wife had to have her in the U.S. because of medical situation.

So the baby's born back in Cape Cod. My oldest son was getting ready to go to college at University of Massachusetts. So long story short, they didn't really want to return to Canada. And so I had to make a decision. And in 2016, I moved back to Cape Cod, where I had had my company before, and had a reunion of my former employees who were all at different companies. And they encouraged me to start a new business. So in 2018, I launched Blue Claw Associates. Sweet. And you guys are how many employees today? We're about 75 all combined. Awesome. And what CRM do you guys use?

We use Aspire. Okay. And tell me a little bit about some of the, you know, we just went through COVID. I think if you couldn't make money during the last three, four years in the United States, in the home service industry, you may want to rethink business. But tell me about some of the hardships kind of starting that business up. It's five years old now. You started it right before COVID started.

What were some of the challenges just getting going on it? Well, in the beginning, so I never landscaped. I was like, like I said, in accounting. So I didn't really have the option to just dive in and start doing the work and building landscapes like many guys start out in the field. So when I started Blue Claw, I started with two employees and basically I was trying to find the next job, the next job, the next job. And a lot of that was word of mouth. And I had to support the crew and go find the next job. And so my previous company was built on relationships with architects and designers

and builders. So while they were working, I would go out and promote. And it took about a year to really build some strong relationships to where we started getting larger projects that were just automatically being sent to us through these relationships rather than having to constantly find the next job find the next job find the next job so you know while i was having fun the first year i was kind of wondering like hey is it ever going to get back to where my old company had peaked at with you know about 40 50 guys and a real business and you know of course starting a business from scratch and bootstrapping it all that comes with challenges in and of itself. But as we started to build relationships and get larger scale projects, that's right about the time COVID hit.

And while there was that moment where nobody was sure what was going to happen, then it ended up being rocket fuel to the home services industry. In our area, everybody wants pools, hot tubs, fire pits, outdoor fireplaces, pickleball courts, and all that kind of stuff. So we started doing landscapes that incorporated a lot of those elements. And that's what led us to starting our own pool company and then eventually buying Boston Tennis Court last year. That's fantastic. I love hearing these stories. You run a training course called Know Your Numbers, where you don't have to guess about the profit that you need to make. And there's a good book by Michael McAuliffe, Profit First. And not knowing KPIs, not knowing your numbers,

looking at only what's in your bank account. And then, you know, Parkinson's Law is if it's in there, usually you'll spend it. Right. Not understanding a balance sheet income statement, cash flow, not understanding what a delayed draw term loan is. It's like the blind leading the blind. We become such good workers in our business that we forget to work on it. You know, what do you say to some of the people? We get a lot of downloads, usually we're getting 40 to 50,000 downloads a month. And there's a lot of people that listen to this podcast that just, they say, you know, I just don't like the numbers. That doesn't get me excited. It's not what I like to do. But what do you tell those founders and owners and management teams? Honestly, it's like really the key to success is understanding your numbers.

And it sounds cliche but i mean every company has different numbers because your overhead is different your how your company's structured how many crews you have to share the hours that have to recover that overhead your geographical area you know in a lot of these landscape facebook groups the number one type of question is how much do you guys charge to do this? It's somebody who has a customer, they want a deposit check, and they don't want to do the work of, one, knowing their company's numbers, two, doing a proper estimate. So they're looking for someone else to give them an easy answer so they can go write a proposal and get a deposit check. And sometimes those are the worst jobs because, you know, you could be taking jobs and make money on the actual job, but you're really not making money as a company, you know, because you have to reach a

certain gross profit at a certain volume and with a certain overhead. And so the accounting system doesn't care if you're clearing brush or building a beautiful, you know, outdoor living space. It really couldn't care less about what work you're doing. It's just mathematics. And unless a business owner is willing to invest in paying attention to those numbers or hiring someone to pay attention to the numbers, they might as well be in Vegas at the roulette table. And that's the hardest part because I'll tell you that was the last thing. And in my master's program, I did analysis of income statements and we looked at Home Depot's annual report and we studied the stuff, but it didn't apply for some reason to me. It didn't click for home service until I got a great, great TFO. And then you get a great controller and then you're talking to a great CPA and understanding tax advantages. And I think

the hardest part is people don't understand how they're supposed to pay. They go, yeah, I pay $22 an hour because that's the going rate. And I sell a job for this because that's what my competitors are doing. So I lower the price a little bit to do a little bit more for a little bit less because that's what the market tells me to do. But those companies don't have the same overhead. And if somebody's charging a lot more, usually they're ordering materials better. It's systematized.

And the owner doesn't need to be there to make the company run. And the number one question is, how do you figure out the pay? Well, all my pay is based on my pricing. So all my performance payer, I use sold hours. So if I bid a job, the average technician could install a garage door in three hours. I'm paying them for three hours if it takes them four if it takes them one right and i think understanding scorecards and performance pay and how to sell with sold hours is the first part of building a price book right and a lot of people are like well i can't sell for that price there's no way anybody would buy well you're not comparing

apples to apples i go to a steakhouse called State 44. Most people that listen to this podcast know we spend a lot of money. It's not uncommon to spend a thousand bucks for three people. But yet it's got a three week wait to get in. And yet there's no way you're getting in there without a reservation.

So some people have this notion of I got to be the best price to have business. And you'll never make money. Walmart is an anomaly. And a lot of people want to be Walmart. They say it's just everybody's price shopping me. Well, where are you advertising? And what service are you delivering? Is it apples to apples or can you sell oranges?

What do you say? If somebody is competing on price, and I don't think you are, I think you're doing it on their schedule. Contractors I love, they get it done on the schedule that I need and they get it done the right way. They use quality parts. They give me a great warranty. They got a drug test and background. They show up with a truck that's reliable. That's not going to break down. They've got great brands. They drug test and backgrounds, all that good stuff. I don't care about price. I want to know this is an investment into my home. Right. We focus on branding as opposed to advertising because branding really, it takes away fear of doing business with us. So we invest money in full

color brochures, both online and printed, that show testimonials of customers. They show completed projects. They show architects that we work with. And when we meet with a client, we give them that high-quality booklet, you know, which is 30, 40 pages of beautiful work and testimonials. After they've had a week or two to review that, their fear of doing business with us is much lower than Johnny come lately who just gives them a scribbled out proposal and a business card. Or we have a video production person who does the reels and the TikToks and YouTube videos. So if you look us up on social media, you see drone footage and well put together imagery.

And that's all branding. So we're going to probably scare away the low end clients. They're going to say, oh, they're probably too expensive for me. But it's like the adage, you know, do you see Ferrari advertisements on TV? But the wealthy people who want a Ferrari, they know where to get it and they're willing to pay for it. And like your steak dinner, you're willing to pay more money because you already know the experience you're going to get is high. So versus like going someplace where you have no idea and you're

taking a risk of whether or not the service is going to stink, you're giving value and you're branding your company at that high level. I think a lot about this branding, marketing, and direct response marketing. We run about 18,000 jobs a month now, but we also invested a lot in our logo and the billboards and the TV and the radio and to make sure our vans are driving billboards. And when people see us, we try to portray, we're not the cheapest. We're the cleanest, most reliable.

It's going to be an experience. We offer coffee on the way. We text the customer on the way. It's automated through service Titan. And I think for your case and the same thing with roofing what's your average ticket in the construction side it's probably 75 grand 100 grand so you you're a lot more quality over quantity right and and our leads are coming from generally landscape architects so they've already had a client make an investment with them in an elaborate design.

And they recommend us to their client to be the installer. So we're already a lot of times we never even meet the homeowner until we're into the project because this architect trusts us. They know we're not trying to compete with their design phase. We're not trying to criticize their design. We're going to work as a team. And because of that, they will push us over even the homeowner's landscaper and say, oh, no, no, no. If I don't work with Blue Claw, I'm going to have to charge a lot more management fees and be there every day. These people I trust, they're our unpaid salesperson. Once you've marketed and built a relationship

with design professionals, even some high-end builders will go to bat for us. They're our unpaid salespeople. And so the carpet's already rolled out by the time we meet the client with this model. How do you feel about affiliate deals? Because I think it's a win-win, but you never want to be disingenuous. And I'll just mention one thing. I want to follow up with that question, but I pay about 10% of my revenue goes to marketing. And I do not mind giving that 10% as a marketing fee and being upfront about it. These people, they go to bat for us, but we stand with them.

We're partners. We're partners in crime here. But I don't think you have to do that. You built the business where you didn't need to do that. But what are your thoughts on that? Well, we do it on a case-by-case basis. Landscape architects who have a stamp and are certified, generally, it's against their code of ethics because they signed a contract with the client, so they will not try to represent both sides but then there are other let's call

them designers who just they design it but they may not necessarily have a supervision contract so they'll kick it to us and ask us to pay them a commission same thing with certain builders either we'll go through them and they'll mark it up or they'll have us build a client and money makes the world go around so i i'm like you i don't mind paying that as long as I know up front what it is going in. There's a guy named Marcus Sheridan that wrote a book. What the heck? He wrote a book recently, a couple of years ago called The Visual Cell, but the first book was called They Ask, You Answer.

And he spent years writing an article a day, finding great before and after pictures. And he's got a company called river pools and it's the highest rated website i've ever seen he's two years out right now he's booked out two years and what he did is he built a buyer's guide so if you go to river pools you can download his buyer's guide it goes against the different styles of pools but what he did is it goes in for different pricing, longevity, salt versus chlorine versus there's different. And he just explains all these things you'd ever want to know. But in HubSpot, when you send this download, it creates a link that's trackable in HubSpot. So, you know, every page that person went on

and he figured out that if you spend more than 20 minutes in the buyer's guide, you'll be an 80% or higher conversion rate. And he knows who to send out to that home. Because if someone's looking for, I don't know much about pools, but a graphite pool or whatever it might be, he knew the expert. He knew exactly what they were looking at. He knew if they were looking for financing. So he got a pre-approval before he got there. But I think it's genius because you're using technology, you're educating the customer, and you're making sure the customer is prepared to make a decision when you get there. Have you ever read that book? I haven't, but I'm writing it down now.

I think you'll really dig that book. You know, I look at gross profit. We try to stay in the low 60s on gross profit. I definitely, I'm obsessed with KPIs within the CRM, conversion rate, average ticket, our booking rate, our cost per acquisition. People always ask me, how do you pay for management? And I've got a system. I pay 100% of their salary is bonus. And 50% of that is gross profit. And 50% of that is

based on revenue growth. What are your thoughts of what you should be paying attention to? And what's the best way to pay somebody in a COO or general manager position? I mean, we've gone the salary route. Being a new company, but operating at a high level quickly. We acquired some people that were in similar positions at other companies. So we offered them a package to come over, you know, that was obviously better. culture that the company has and how they're treated and whether they're trusted, entrusted versus being micromanaged and, you know, critiqued a lot. You know,

they say people will quit bad managers, not companies. And so I try to build a feeling of trust and let people do their job within their silo. But there, we provide health insurance, 401k, paid vacation, PTO, sick time, you name it. We have actually dental, life, and disability. So we bury them with benefits. That extends to the

crews as well. And that's very expensive, but I don't have labor problems. Every other company around me complains that they have labor problems. And, you know, with Aspire and the accounting that we're doing, we're able to benchmark and be able to give them incentives to be rewarded based on the performance of their individual division. So we have like the guy who runs the maintenance division. We have project manager, construction manager, assistant project managers. And then we have people in the pool company and the tennis company that they manage their own area and so each one of them is kind of rewarded you know accordingly to how that goes i think that uh what i learned from my buddy i'll leave you the seven power contractors is the compensation has to be simple enough to go explain to your significant other how you get paid it can't be pull out your calculator and get ready to do the quadratic formula.

I think a lot of people say, well, if you do this, you get reviews and you sell service payments and you do that. It's like, it shouldn't be more than three to five things tops. My scorecards are five things for almost every department. And I spent a long time figuring out how to pay and motivate the right things.

And if somebody makes a lot of money and I've got a lot of people making well over 150 grand, like I've got over a hundred people, at least to make over 150, I probably have three dozen that make over 250. And I get excited when they make money because it means I'm good. And a lot of people go, shit, this guy made more money than I did. Well, that means you didn't figure out the compensation program because you both should be able to win. You should be able to rejoice when somebody's making great money. And you want them to be self-motivated and self-managed. Last month, I went home and there was a blue claw gardening crew and trimming the hedges at my house. And I saw them, I waved to them and I said, I don't even know who those

people are because my maintenance manager, he hires and fires and staffs and sells the jobs and he's grown the division. And I said, you know what? We need to have a cookout at my house with the maintenance people because I want them to know who the owner is and I want to get to know them. But I thought, isn't that an amazing thing that you can have a company where people work for you, but they take ownership in their role and they're able to even hire, fire, and grow the division within your company without you having to make every decision. A hundred percent. And I just met four new people today.

I did an orientation for the 21 new techs here. And I feel bad because I don't get to meet everybody. I mean, I've been out of Arizona more than I've been in Arizona. One interesting thing that I learned, if you look at private equity, if you look at public companies, public companies do stock incentives, right? Where you could buy options. Private equity puts equity incentive programs together. So I did that a few years ago and I had a way to get vested equity in the business. And I never seen people run so quickly because we had a plan on when we were going to bring in an investor and 25 millionaires came out of that process. But what I loved about

it so much is they were owners and we're creating a plan right now for about 60 or 70 people in this program. And you'll be able to earn your way into it. And I'm expecting sparks to fly. We're granting them here in the next month. We've already granted about 25 people. But ultimately, they walk around and say, yeah, I'm invested into this company. And it works for three reasons. Number one, it's the

right thing to do for people that work their ass off and they should have the owner title next to their name number two it's the best retention tool i've ever seen and number three is the best recruiting tool that if you work hard your first year you could have ownership of the business and it's not a little bit of money it's life-changing and there's a plan for the next event to happen. So you know what we're working towards unless the economy collapses or something out of our control happens.

In that case, we're buying companies for pennies on the dollar. They're going through that because we're well financed. But that has worked really, really well. And I'm not trying to hire people for less money per se, but it's great when they're sprinting

at the same direction and they treat everything like it's their own. Right. And they've earned their way to that, to get there. So is there areas of the business that provide an opportunity to reduce costs and improve the bottom line that you've noticed? I mean, most of our costs are going to be labor costs in our business. So being able to have an estimating department that produces man hours for each task and then sharing those with crew leaders and managers so that they're able to work with a goal. A lot of contractors will say, here's the job, go do it. And they don't really give them any score or benchmark or relevant information.

You know, it'd be like playing the Super Bowl and having the scoreboard turned off. But I found that when you give the crews the information of what they're shooting for, and then you kind of build a culture where they learn that their ranking within the company is based on their adherence to those billable hours. If you're not doing P4P, obviously P4P is in a perfect world, but when you're paying hourly, but doing fixed price jobs, you want to try to marry up the payroll rate with the billable hours, you know, to, to have a hundred percent. Yeah. That's the key. That's where most contractors go out of business is they're not paying attention to that. And the guys are working? They're actually in our government system. They're incentivized to take longer and work slower to get the overtime

and get time and a half. And so then their labor is out of control and that's where they lose money. So that's what we focus on. I'll tell you what, if I was involved in the government, I would not reward people to use everything the government gives you or you won't get the same next year. You'd be rewarded for getting optimized and you'd be rewarded. It's so funny that most of the people in charge of running the government have never run a business. And that's why we're in so much debt as a country. I won't go into politics because it's neither right nor left. It's just there's a way to stay on budget. There's a way to pay off debt. And when you have more people paying into the system rather than living off of it, if they're able and capable,

we'd be much better off. I'm not saying people are lazy, but if I was incentivized to stay at home, I promise you I'd be doing the same thing. When you set your revenue goals, I talk a lot about budgeting. And I used to be five years to 10 years ago. I was like, don't put me in a box.

I'm like, I know my KPIs. I don't need a budget. But over the last few years, I've learned to really love a budget. I love exceeding budget. I love setting stretch goals. I have three budgets, good, better, best. What do you think about budget setting and what's the best way to go about doing that? So this is the backbone of the Know Your Numbers workshop. It's an Excel spreadsheet where basically we have companies put their information in starting with their overhead. We call them yellow sheets. They're like a digital yellow notebook where you budget, you know, fuel and you calculate it as organically as you can from every truck, how many miles it drives, miles per gallon, tool purchases planned or new crews that you're launching, replacements, contingencies for auto repair, like any kind of overhead item.

Using the P&L previously as a guide, but we're not just copying that because we're trying to project what you're going to spend this year. So if you have solid plans of launching another crew, we want those expenses in there. We want to build in flub factors and then really, you know, your overhead salaries. But when you get into the production and landscaping and other contracting businesses, it's based on how many man hours are available. It's a limited production capacity. So that's the number of hours that you have to work, that you have to recover your overhead and profit. And you hear people out there that want to multiply their business overnight, but they're not necessarily prepared to multiply their truck, their employees,

their tools, their machines, and all that kind of stuff. So really, we budget based on production man hours. We calculate what rate they need to be charging at that level of hours to equal profit. So there is sales budgeting, like I want to sell this many contracts, but really we want to know what the production capacity is. And then it's sales department job is to go fill those hours. And if you want to grow the company, you either need to increase your rates or you need to increase your production capacity. Yeah, or you need more qualified leads because every time you guys are sitting not at a job site, you know, one thing everybody always asks me, they're like, how do you keep so many great leads coming in?

And I say, there's one thing that I know will not change your algorithm. Yelp might change. Google might change. Angie might change. Social media might change. But I'll tell you one thing that can't change is relationships and grassroots approach, going out, meet the people, shake hands, networking. Your network is your net worth. And I think a lot of people, they never learn the skills it takes to go out and get it and meet people. And these takes longer to manifest these relationships. It took you a

year and it's hard work, but if you enjoy it and you're good at relationships, you don't mind spending the time. It's something that's very hard to take away from somebody. And I love what you said about that because you go build relationships and that way you don't depend on anything. And I think that that's important. How much do you dedicate percentage?

And I won't say marketing, but just in general for whether it's your pamphlets that are 30 to 40 pages or what percentage of revenue do you spend going out to build relationships and whatever your marketing might be? I would say we have about 1% in business development, 1.5% in marketing and branding. And very little of that is actual advertising. You know, we may do a design magazine or something just to be seen next to other clients of ours,

but it's not, we're not advertising. We don't use any of the online platforms. Not to say that they're completely bad because my son, he uses that a lot in his window cleaning business. Those are little one-time jobs. We're trying to build, like you said, relationships, either long-term maintenance contracts

or high-end installations. So what do you consider being a good percentage of EBITDA? What would you say is like you're doing amazing, your bottom line profit? Well, we use the 10% as a good marker for a fully counted for contracting company. That means fully depreciation. Obviously EBITDA excludes depreciation, but the average net, I think in landscape contracting is two to 4%. And in the reality, along with

restaurants, it was named landscaping and restaurants were the two highest rate of failure type of businesses in the country. So there's a lot of moving parts. There's a lot of things that can affect net profit that the contractor thinks everything's going to go beautiful and the trailer breaks and it rains and then the materials don't get delivered and the employee quits. And there's a lot of moving parts. And so if you can push out in a contracting business, 10% on the net end, it would probably be higher than that with an EBITDA, maybe 15 to 20. Then you're looking at anywhere from a five to 10 multiplier, possibly, if you were looking for an exit, depending on the type. If you're a maintenance company, obviously you're

on the high side of that contracting on the lower side right now is a hot space for acquisitions hvac plumbing electrical i've seen multiples double that obviously i'm very interested in software because you get a huge multiple on road it sounds like you've got experience with with mergers acquisitions. What are your thoughts on buying businesses? So we've bought several in the past five years. And one of the biggest, of course, being Boston Tennis Court. It attracted me to a 50-year-old company. It had a great reputation.

The name Boston, that's kind of a sports iconic name anyway. And the founder was almost like the godfather of the industry, past president of the National Association, etc. But I look at buying related businesses or same type of businesses as a way of growing overnight or filling out a market where you're partially in and now you can fully be in. Unlike in the case of us where we're stretching towards Boston, now those construction clients want maintenance. It's too far. If we were to buy a maintenance company overnight, we could rebrand it and then have that service be able to be offered. So I prefer to buy companies where an owner is retiring or for some reason needs to move away or needs to sell the company rather than someone who doesn't need to sell and they're just sitting back you know waiting for the highest bidder now when you're selling you want to be in that

position obviously it's buy low and sell high if you ever watched marcus limonis the prophet that was one of my favorite tv shows where he would go into a business that had solid fundamentals but there was something disconnect and he could fix it up, you know, repolish it, rebrand it, and then re-systemize it. And then it performs at a higher level. So I enjoy that aspect of it a lot. So I talk a lot about this in the podcast, but talk to me a little bit about Greenfield organic growth versus acquisitions. Well, I mean,

the organic growth is a sign that you're running a healthy business because it means that you're retaining clients. So you're doing something right and you're attracting new clients. But it does take time. So it can be slow or it depends on which department you're talking about. But buying a business, you have to evaluate the fundamentals of the business and whether someone's selling because the ship is sinking. In that case, you may just be buying clients that are,

you know, you're going to have a low retention rate or is it a really solid business, but the owner is looking to move on to something else in life. And therefore you can slide in, you know, maybe keep him as an advisor for a while and still maintain the business that was successful. So I think each opportunity has to be evaluated on its own merit. But I think there's a tremendous upside in accelerating your business goals through acquisition.

A substitute for organic growth. If you're not growing at all, going out and pursuing acquisitions is not going to make you a successful business. A lot of people I know are like, I think I want to start a franchisor or go buy companies like you're doing. And I say, you don't even have 3% market share. You don't even have your own backyard in control. Everybody thinks they have the best thing since sliced bread. They say, listen, I'm onto something here. And I'm like, you're not doing 10% bottom line. You have low penetration of the market share. Your KPIs aren't dialed in. Your books for sure aren't dialed in. They want to be an owner. They want to be a

franchise, but they don't want to do the work. They don't want to be good leaders. They don't want to have a good culture. They think it's going to be easier. If you don't have your own house in order, and exactly as you just said, you're not gaining market share, and you don't have employees that are lasting very long, there's a high turnover rate, don't go out. You're just going to make the fire bigger. And I would say if you can't grow Greenfield into at least three or four markets, you're not in the position to take on a company. Now, there's two thoughts. Mine's a lot different than yours, and they're both right. If you're saying I own the customer, I want to take the maintenance, I'm going to do their

pools and their fireplaces, you're going to own your population. I say I'm going to own broad shores, retrofit across the country. And 24 states now will be in 35 this time next year. Because I decided we're going to be great at one thing and go all the way across horizontally. You're just saying I'm going to own this and own it vertically. And I think they both work. And you get to know clients. You build a really great business. It's so much easier. Phoenix is four times larger than my second biggest market because I've been here for a long time. I started here. I've got a lot of relationships here. Now we've got other,

it's not going to grow as fast as the other markets, but I'm telling the people that are listening that if you do not dominate the market you grew up in, where you have relationships and where your employees have been for a long time, you're not going to be able to recreate that market very easily. It's a lot more work. You don't have boots on the ground and you're not going to be able to recreate that market very easily it's a lot more work you don't have boots on the ground or you're not there right so it's it's an interesting topic what's some mistakes you think happen obviously buying bad deals that are withering down not doing proper diligence not having a great integration team i think is the biggest problem because employees quit they're like why are you guys changing all this stuff? It's not properly communicated. What's going to happen? Everybody's saying, this is my life. I've got a family. You're going to buy this? What's going to happen to this business? What

changes? And if you don't do that properly, you'll watch that big investment that you probably took debt to get fall apart. What are your thoughts on that? I totally agree. I mean, your primary business needs to be thriving before you even expand. Like even if you just want to expand that, if it's not thriving, you need to stay home and work on the primary business. When your primary business is a success, it opens up so many other doors because when people do their homework on you, they want to be a part of your operation or they want to trust you with their business if they're looking to sell. For us, we look at it with Blue Claw and the overhead that we've established and the systems with Aspire, with the staff where we have an estimator, we have project managers, we have accounting people.

Those other companies don't have to have all those same things because they're all kind of shared so there's an economies of scale with the other companies which actually can make those second and third companies more profitable than if they were on their own because they'd have to recreate a lot of that admin but if your main business is not thriving then you're just basically going to be spinning in the wind you're not going to make forward progress and unfortunately even in the same industry just landscapers in general when they see they don't make money they think the only way to make money is to just grow bigger and what they don't realize is that if they're

not tracking their man hours and they're not pricing and estimating properly, all they're doing is just making a bigger and bigger and bigger problem, a bigger and bigger financial problem. Yeah, I've seen it happen so many times where people buy a business and they think, wow, we're going to kill it at this and we got it all figured out. And I think sometimes, you know, my favorite businesses to buy are businesses that are doing great with a very low marketing budget. Right. They've been around for 30 plus years, but their KPIs are whack, meaning that they don't spend any money on marketing, but they run eight calls a day. It's wham, bam, thank you, ma'am. To make any money, they got to run a lot of jobs, but they've got stickers out there for the garage industry. They've been around for a long time. I think those are great because I turn on the marketing engine and the branding.

The best brander I know who did my brand was Dan Antonelli with Kick Charge. He spends so much time and effort figuring out the color scheme, the mascot of the company, making sure your billboards look like your yard signs, look like your website and the colors. There's no competitors to match your colors in that market. It's a science to build a great brand. Study after study after study, a thousand percent increase since they rebrand. I see this every day with him.

Like he calls me up and shows me a brand and I'm like, it just looks great. And then you got the guy in the broke down white truck he says i don't need to that's a bunch of crap i get plenty of business without it but the whole perception when they see you on the road and you pull up you might be doing okay i guarantee you unless you're working with a lot of contractors i don't think if you build if you're going to do a landscape contract that every guy has to show up in a perfectly wrapped truck because you've won that bid but when those trucks are driving around, your brand identity is so important.

Right. Yeah, I mean, I was just consulting with a company recently. It was considering a name change, and he wanted it to be, I'll just call it ABC Hardscapes. And then he said, yeah, I'm going to put my tagline, irrigation, landscaping, and tree work. And I said, well, why are you naming the company ABC Hardscapes? You're basically, you know, you see Johnny's mowing, but we do bobcats and stone walls and ponds. You know, the brand has to be all-encompassing. So I would much rather have a name that's flexible to be a list of services or kind of identify what you do, but not limit you to

one thing but then you plan on offering 10 other things so it needs to be you know clearly communicated our company name is not normal blue claw associates people don't at first they're like do you sell crabs but it makes people ask and it makes and people remember it and a friend of mine said hey how come you don't have your phone number on your truck i said i don't need them to write down my phone number they see the crab they immediately remember blue claw they google it they press call it dials my number why do i need to put my number on the truck you know you need something that's going to stand out be memorable and make people notice you don't just be johnny's mowing and bobcat service definitely something that stands out people can only read five words at a time even on a billboard

they're not going to write down your phone number on a billboard they're going to remember there's a piece of your subconscious which is the 95 where we lock in thoughts. And it's right above your left ear. And what happens is brand identity when you're searching. And you might type it. We love clients that type in A1 Garage Door Service. But if you're Garage Door Repair, Phoenix or Atlanta or wherever, and they see us, they go, oh, that's the brand we see everywhere. A much higher click-through rate.

I'm really into analytics. And you mentioned something earlier that you guys do a lot of social media and i do a lot of social media for my personal brand we do tiktok instagram linkedin facebook youtube and twitter what do you think works best uh for the home service niche and i know it could vary but is there anything that you're like dude this one's hands down the game changer? Instagram. Instagram. Instagram.

And I actually use it maybe in a way that people never thought of. But when I want to target landscape architects or designers or builders, I'll go on my competitor's Instagram and I'll look at the list of who they follow and who's following them. And I'll go down that list because anybody that they work with is going to be following them or

they're going to be following them. And if you know, when you go down the list, it'll give you a button for people that you aren't following. So any of the people that I might want to work with, I just click follow, follow, follow, follow, follow. They get a notification. Blue Claw Associates just followed you. They're going to look at me and see that I'm a landscape contractor, same industry. And nine times out of 10, they're going to follow me back. So now they're going to get a stream of my project videos. Six months later, when I show up at their office with a brochure wanting to introduce myself, they're going to say, oh yeah, you're Blue you're blue claw i know you i follow you on instagram you already know everything about me so it turns cold leads

into warm leads without having to like bang the door down so what's the best way i'm just curious i've got my thoughts on this but do you have to hire a professional film crew or do you set up like tripods or do you got the gopro or what's the best way do you put it into a reel that's less than a minute the before and after like what have you found is the best thing that works to get the content and get it edited correctly so i have an employee that's all he does is drone videos video editing reels tiktoks youtube and he basically every day he just goes to whatever site is at the right stage to be filmed and it doesn't have to be the finished product it could

be the crew working in progress we want people to see how our sites look and things that are in motion you know and then we will do the ones after but he basically that's all he does all day long and then we're big on hitting every platform so i don't want you to post a youtube video and then that's not anywhere else i want youtube video i want that maybe a shorter version in a reel i want another one in instagram another one on tiktok so that they're all kind of firing at the same time in different places do you do look like audience and spend money on paid or just organic? Just organic.

And is there a reason you don't want to do a lookalike audience and load up your database? Because that algorithm could actually identify who to feed leads to. Well, so if we were to pay for ads, it would be hitting more people than we would actually really want to service, to be honest. But it's a very difficult thing to target people here because our clients are wealthy, second homeowners, and they don't register on social media that they live here. They live in LA. They live in New York.

They live in Boston. They come here for the summer for two months or two weeks. So if you're hitting an algorithm where they live here, that means it's a blue collar year-round person they're not our target so it's more or less for the professionals like the architects the designers the builders and then if we are meeting with a high-end clientele and they do their homework because most people will look you up they'll see a stream of content that shows that we do quality work one of the things I recommend a good book,

if you want to check out another book, it's called No BS About Marketing to the Affluent by Dan Kennedy. And what he really talks about is knowing your avatar. And I'd imagine in Cape Cod and some of those areas, what are those people doing? Most of them fly private. Most of them go, they have their boats and understanding where they hang on, how to get in front of them. But one of the things that you've done really, really well is identify your target audience and build relationships that are closest to them. So like for me, I've been thinking a lot about who could be an affiliate partner of mine. Well well pest control why because I could leave a little sticky thing in the garage with their logo on it and automatically

text message them this company will come out for $99 for the entire inside and outside that's an affiliate deal but also the number one entryway of pests is the bottom rubber on the garage door so they'll send to their clients replace your bottom rubber gets me in the garage gets my sticker. Right. Why would you paint an old garage door that's funky and dented? So you've got a painting company that's saying, listen, here's the five things you need to do before we paint your home. Look at your garage door, see if you love it because we're painting it. Or do you want to replace it?

So one thing I found is you can't train painting companies and you've got to have it automated through a CRM to make it seamless. And you got to have attribution. And that's one thing I focus a lot with marketing is attribution models. I got 6,500 call tracking numbers. Yeah. I know what's going on with every single marketing source and what's working and what's not. So I love what you're doing with social media. I love this podcast so much.

I think that listeners probably know this, that I get more out of it than anybody because I get to ask my questions, I take notes, and then I put stuff into action right away. I don't say, well, we've got to really think about this and whiteboard and maybe we'll get started sometime next year. I say, okay, here's what we're going to do. And sometimes it doesn't work. But I guarantee you one thing.

I hit a lot of home runs. And unlike baseball, when you hit a home run or a grand slam and you get four points and four runs, sometimes you hit a grand slam that's worth a thousand runs in business. I use this as my medication. I use this as my meditation. I use this as my just ideas. And that's why it's so great.

Well, Mark Cuban said you only have to be right once in business. But if you never take any swings at bat, you're never going to hit a home run. You know what I love about social media is I'm getting a bigger influence. More people are paying attention and I'm hiring the right people. And it's opening up so much doors. I want to be on Grant Cardone's or just on Bradley's podcast. I don't mind paying to play. I'm not paying to be on theirs.

But it's about exposure for me. And opportunities come and find me now. And the fact that I get to have my own podcast that jump out once a week and I get to ask guys like you that have been very successful and I get to take things from another industry and apply it to my own.

And I get to figure out my weaknesses and have people come in that are experts in my weaknesses. So I get a lot out of this and I appreciate you in that are experts in my weaknesses. So I get a lot out of this and I appreciate you coming on. I got a few more questions here. So aside from knowing your numbers, are there any other strategies that service home service entrepreneurs can implement in their business to ensure guaranteed profits? That would be what we call building better connections. And that's the business model of partnering with other people in your industry to get clients versus just directly trying to advertise to every consumer.

And so we do an event every September here called Building Better Connections where we do project site tours, office facility tours, show how we run our business. And then we do a conference in a hotel where we bring in landscape architects, designers, business developers who do this for a living, who can teach contractors how to go from a few hundred thousand to 10 million, if that's what you want, in a short period of time through these partnerships. You know, and Pete Vargas, you mentioned Grant Cardone. Pete Vargas runs the 10X wing of Cardone's business, and he preaches OPS, other people's stages. So podcast, that's somebody else's stage, putting your sticker on another business, like you mentioned with the pest control.

That's a stage. So stages can help accelerate your business, get other places. If an architect is representing us to clients, we're using their stage to get to that homeowner that we may never have been able to meet and reach directly. Wealthy people don't call contractors. In our part of the world, they have other people call them. So you need to build relationships with those other people and then um i was talking about this earlier how during my orientation i was talking a lot about financing and i would never use the

word do you need financing ian you look like a guy that needs financing do you need fight no you never say that you say hey listen uh did you want to use your money did you want to use our money today you want to see if you qualify for one of our promotions? It's quick, simple, takes about two minutes, and it's other people's money. And, you know, even with inflation the way it's going, I mean, a dollar today is 80 cents in two years. Why don't you just use our money? The way the global economy is working and done correctly, your average ticket will go up 40%. And I think people miss that and they go, yeah, yeah,

if they needed financing, they would have asked for it. But financing, you're always going to assume and present in monthly payments. And watch what happens to your average ticket. Watch what happens to your conversion rate. And I know your customers don't need it, but every single customer is a finance buyer. There's three personas, low interest, no interest, and low payment. And if you offer me three years, same as cash, I'd be a fool not to take that. And people say, or I'm working on credit card

miles bullshit. The fact is I've got a lot of guys that are really amazing with money that work here at a one. And if they get a TV, same, same as cash for three years, they're doing it. They're paying it off on month 35. I mean,

so, and here's, what's nice about financing is our finance partners give the maximum approved. So if I were to run you in and it said you qualified for a hundred grand, a lot of our customers go, well, what else can you guys do? Well, we can do your floors. We're going to get the storage going. And all of a sudden those tickets, and I'm not like, let's use all your money, but they're like, listen, why not? We've got the

money in the bank. This is an investment into our home. We'll enjoy this more. I don't sell things people need. I don't agree with that at all. I sell things people want. Are there any books, Ian, that have really shaped the way you think about? Are there a few books you can name? I mean, there's the E-Myth Revisited and Napoleon Hill and Dale Carnegie in the Bible, but is there any books that really stood out that helped shape your way of thinking in business? I think, well, you did mention, the revisited with Tony Bass for landscape contractors is very good. The E-Myth for landscape contractors specifically. The One Minute Manager was pretty informative in terms of being able to manage underlings, for lack of a better word, but be able to get the most out of your people without being perceived as a tyrant or, you know,

old school dictator. I would say that those two management books, for sure, at my level, in terms of small businesses, operating small businesses, and I tell people all the time, there's a number of good books in the industry of landscaping. Dave Tucker wrote one, The Beautiful Business, for lawn and maintenance companies specifically now i can go into accounting books but that would bore people yeah there are several accounting books uh one of my favorite books in the world is by ellen roar how much should i charge another by her it's a simple book is where did the money go right and you mentioned profit first and i think that's a great program as well yeah it is if someone wants to get a hold of you ian

what's the best way to reach out so blue claw group is my consulting company blueclawgroup.com and then the landscape company blueclawassociates.com would be the easiest way to reach out. I'm on Twitter, LinkedIn, Facebook. So every social media you can think of. And we talked about a lot of great things here. I do really appreciate your time. I took a lot out of this podcast. I'm sure there's some things we didn't hit. And I wanted to give you a few minutes to talk about whatever you want to leave some of the listeners with any last thoughts or things that you want to make stick yeah I just

you know I got into the consulting space by accident I joined a group of landscape contractors called the goat gang they're a Facebook group it's about 1100 company owners in there it's a guy from San Jose California he's a very big YouTuber for landscapers. And it was the fact of the members interacting with each other and a lot of them reaching out to me, wanting me to help them. And then by helping a few of them and then creating some events, I kind of realized it was a mission to basically educate as many of the younger, newer contractors

because they are flying completely blind. You know, it's actually scary out there because they're just copying prices. They're winging it. They're running out of their checkbook. They're not doing monthly bookkeeping, let alone getting financial statements. And so I'm just trying to bring that fundamental awareness

that they need to be focused on their numbers, on their accounting, because that is the core basis for how to be successful. Even all the things that you talked about, which I actually want to learn a lot more about what you do. And a lot of the things you mentioned struck interest in me, but I think a lot of the smaller, newer, younger, you know, guys that just left companies or their dad was running the business and they're 21, they need to really find out what they don't know and realize that numbers and accounting is what's going to give them a platform for success. Because even if they are good at marketing and growing their company, it could be a big failure if they don't have their numbers in order in the beginning. And so that's kind of my mission is to help people, you know,

avoid some of those lumps that I took growing up in the business, you know, coming from accounting into a contracting space. I never set out to be a contractor, but this is what I ended up doing. I actually found that I love it. And so, yeah, just giving back and being a part of national associations, I think is important too. You know, NALP. And now we're in pool company association and sport builders, things of that nature. So it's definitely

become a passion. I love it, Ian. You did fantastic. We'll definitely stay connected. Appreciate you jumping on the podcast. All right. Great to have me on. Great to meet you. Thank you. Hey there. Thanks for tuning into the podcast today. Before I let you go, I want to let everybody know that Elevate is out and ready to buy. I can share with you how I attracted a winning team of over 700 employees in over 20 states. The insights in this book are powerful and can be applied to any business or organization. It's a real game changer for anyone looking to build and develop a high-performing team

like over here at A1 Garage Door Service. So if you want to learn the secrets that helped me transfer my team from stealing the toilet paper to a group of 700 plus employees rowing in the same direction, head over to elevateandwin.com forward slash podcast and grab a copy of the book.

Thanks again for listening and we'll catch up with you next time on the podcast.