The Home Service Expert Podcast - Q&A with Tommy - Taking Control of Your Finances Through Smart Debt Management

Episode Date: February 16, 2024

Tommy Mello is the author of Home Service Millionaire and the founder of A1 Garage Doors, a $200 million-plus home service business with over 700 employees in 19 states. Through HomeServiceMillionaire.com and the Home Service Expert podcast, Tommy shares his experience and insights to help fellow entrepreneurs scale their businesses.  In this special episode of the Home Service Expert podcast, Tommy answers your biggest questions about investment opportunities, leveraging manuals, loan management, growth strategies…  

Well, your focus should be, unless you're not only the top salesman, but unless you're like five times better, it should be to get out of the field. What actions are you doing to grow the business? Do you have manuals in place? Is your marketing dialed in? Are your meetings great? Are you inspiring the people every day? Are you good at recruiting? Are you getting enough leads to grow the lead volume? You networking out there, drumming up business, recruiting A players and sharpening your current guys. When you're still in the field, it's so hard to like, hey, I got to go run this call. No one else is going to run it. You're not training anybody. Now, if you're using that time to train, great. If you're using that time to build manuals, say, hey, I'm going to go do this job while I'm building the manuals. Great. But if you're just running jobs to create revenue without training, without writing manuals and SOPs and checklists, that's a waste of time. 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. Today is 2024, January. It's going to be a good Q&A. I'm excited about this one. So you guys know the book, homeservicemillionaire.com forward slash podcast. Great first book I wrote. And then if you haven't seen the course, course.homeservicemillionaire.com. And if you're not part of the Home Service Expert group, you need to join that today. Home Service Expert. Type that in on Facebook. Join it. It's free. You could ask questions there. I wanted to tell you guys some of my goals this year. Going into this new year, I've got a few things. Gross close rate. That means service to sales. We're trying to increase that dramatically. As the visionary, it's my job to see that that gets done.

To upgrade and recruit. If somebody's got a will to succeed, I'm going to find a way. Somebody's got a will, I'm going to find a way. But they've got to have a huge will to succeed, or it's my job to get them up or out. I don't believe in performance improvement plans. I believe in moving people up if they want that. If they want to get better, I'll help them. If not, I don't believe in tenure. I believe in merit-based moving up the corporate ladder. EBITDA, I want to grow by 7%. Technology, we're redoing all the technology, getting things dialed in. Acquisitions, I've taken the lead on that. Got a great team behind me. Going to be buying a lot of companies, partnering with a lot of companies, growing our EBITDA and personal brand. So this is going to be good. First, I want to start out by saying

I try to inspire my team, right? So I found a couple of clips that meant a lot to me, and I want to share these clips with you. So hopefully you could hear these in the microphone. One of them is by Gary Vaynerchuk. I'm going to turn up the volume here. And let's listen to this one how do i know that the person i'm gonna hire is don't take it gary i've got really good hiring advice learn to fire fast you guys have your ego tied up in your hiring you think you're so good at hiring and then you hire somebody and they're shit but you make pretend they're not because firing them admits that you were wrong so it's's your own ego. So what he's saying there is our ego gets tied up in hiring. We bet on somebody and we want to fix

them. We know we can get them better, but it's really causing damage to the company. I mean, you think about that and you think about it. Like if you make a mistake in hiring, you've got to just figure it out, right? Holding somebody on saying they're going to get good in six months of coaching. In this economy, can you really take the time to fix people or do you hire the best? So get better at hiring and don't let your ego get in the middle. And number two. And you can never have any team chemistry for this reason. Mediocre people don't like high achievers and high achievers don't like mediocre people. Mediocre people don't like high achievers and high achievers don't like mediocre people. Mediocre people don't like high achievers and high achievers don't like mediocre people. So if I went into your company, do you have a little bit of both? Do you got the high achievers

and keeping the mediocrity level that these people that just want to get by, they hate to be last, right? But they don't want to be first aspire to be number one, one of our core values. Those are the people I want to surround myself with. I get really excited about this stuff. I had a whole discussion with Garage Door Freedom this morning, and it was all about inventory. One of the other things I wanted to talk about today is if I walked into your shop, how much inventory do you have? Probably too much. You probably are making a big deal about you're saving five bucks by buying a thousand units. When the inventory gets old, it gets weathered, it gets aged, it disappears. You should be in just in time going into this economy. You should be focused on getting lean and not have... When I was small in business,

I used to say I could sell those old units even though they're expired or whatever it was. My mindset's completely shifted. The time that it would take to try to sell old shit, just get rid of all the old stuff and start ordering just in time. And people are like, what about COVID? What about when we ran out? Well, if you're planning on World War III or nuclear war or something crazy or COVID happening again, and you're building your business around what if, that's a mistake. So you should be building relationships with your vendors, making sure if something does happen, you're going to get first right of refusal

and have that on paper. I want to read a question here by Art Tatar. It's my third year in business and we are going to do right under 600,000 in revenue this year. I wanted to know if it's a good idea to take on debt to keep growing. I know we can break a million next year, but we need to level up big time. Well, here's what I would tell you. If I was under 10 million, I would never, ever, ever take out a loan because the mistakes you make are that much bigger when you have a lot of money. If you told me exactly what you were going to put the money into, and let's say

you took out 300 grand and you put 20 grand in and took out 50, I say, okay, put in another 100. But a lot of times you got the money and all of a sudden you're like, I'm going to build a training center. I'm going to order 10 more trucks. I'm going to overhire for where we're going to be. And all of a sudden you start losing money. When you're small in business, you can't afford to make big mistakes. So if you don't have a lot of money, there start losing money. When you're small in business, you can't afford to make big mistakes. So if you don't have a lot of money, there are smaller mistakes that allow you to keep going. Now I can make a hundred thousand on mistakes

and not think twice. Like we invested 300,000 in the hockey team in Las Vegas, Las Vegas Knights. We want that to go great. I hope it kills it. If it doesn't, we learned. If it does, we'll do it in 10 other markets. We can't afford to experiment a little bit, but when you're small, you got to stay lean. And when you're borrowing money that doesn't belong to you, bare minimum, you need to be

making 10%. If you're not making 10%, do not invest in growth. If you drop below 10%, do not invest in growth, invest, figure out how to get more profit. 10% is that threshold. So remember that. Okay. Nathan Simon said, I'm a sales manager for an HVAC company in Milwaukee. I was wondering how your techs present the review request. We currently have a service tight

and automatically send it over after every call. Do you have certain verbiage that you use that message techs? Hmm. Wondering how your text present review request. I don't understand the question. So what happens if you're asking about reviews from the client, ServiceTite automatically sends that out.

ServiceTite automatically... A lot of people pay their people for reviews and I'm okay, but that's your job to get reviews. So I'll incentivize if we got a new Google My Business page, which is a GVP, and we need to get like 90 reviews on there, I'll give them 10 bucks a review to get those reviews. But then it's all organic. Like they do a great job.

It's on their scorecard. So we're tracking that anyway. Like I'm not going to pay you extra to show up on time. Some people give, like I will say with CSRs, we had to pay them to not take off on Mondays. Like they can take PTO whenever they want. So we needed to incentivize them. Mondays is a big day, but I'm not going to pay a technician to get good reviews. That's part of their job. It's like, I'm not going to pay you more to have a high conversion rate, but we do have prizes and

contests and gamification. So I find it hard to pay people extra to do their core job. Matt said, how do you discuss your performance pay structure? Intrigues me. I'm actually just about to implement my own performance pay system, but I'm still not totally satisfied. And I know how to handle the fact that we have employees making a high hourly rate and will achieve up to a 10% performance-based bonus on top. I'd like to find a way to increase the performance pay and reduce the hourly somehow. Well, the way that you do this, Matt,

is you run them both simultaneously. And you start out with a core group. Let's say you start out with three of your technicians or your CSRs or your dispatchers. And then what you do from there is you show them. It takes some math. And you got to make sure you're getting to the desired outcome.

Higher performance, higher conversion rate, higher average tickets, five-star reviews, less warranty work, all the good stuff. So you're going to focus on what's going to move the needle in a way that is allowing you to make more money for the company, higher EBITDA, more job satisfaction, higher retention rates, and also pay them more. The more the performance, the more you could pay and you're still winning. So I want you to think about that. And what's nice about Microsoft Excel is you can kind of play around with the numbers and do a lot of hypothetical based on historic data. And you can kind of crunch the numbers in eight different ways to figure out, I make way more

money and the tech makes way more money or the CSR makes way more money. So it's one of those things where you got to sit down, you got to be good at math. Most successful people that are really good at business understand math, they understand equations, they understand formulas, they understand algorithms. And you just got to play around. Now, I'm no Excel genius, but I understand formulas and how I want them to work. And I work with really smart people to kind of move things around and shift them. And not to mention, I got a team. I see OO Luke and Brian Davenport, like the team I have have basically built the performance pay on their own

the last few years and they'll run it by me. I'll change a couple of things here and there, but for the most part, the team's learned how to do that. A lot of help from Al Levy learned a lot on how the manuals work. He's got a field supervisor program. I mean, if you guys haven't heard, Al's a very smart guy. You just got to pay attention and do what he tells you. Yeah, so the question was, how does your tech ask for reviews?

Well, the best way to ask for a review is to tell a personal story. You show them a picture of your kids. You say, this is the reason I fight. This is the reason I show up on weekends. This is the reason I do what I do. I want to give these guys a great Thanksgiving. I want to give them a great spring break. This is my everything right here. When you give me a five out of five, and hopefully I lived up to those expectations, people actually find me online and they request me. So if you take a picture of me working, it means the world to me. If you let the world know

I did a good job job because when they find me on Yelp, Google, Angie, whatever it might be, they request me. It gives me job security. It helps me feed my little ones, my everything. It's got to be a personal story. It's got to be the technician asking for the review about his big why. I'm saving up to take my dad on a fishing trip. Every review I get, I get called before. People call up, they see the reviews, you leave a good review. Hopefully, I gave you I get called before people call up. They see the reviews. You leave a good review. Hopefully I gave you five out of five service. It mean the world to me. People leave reviews for people, not companies. How do you prevail your techs from being more

motivated by upselling versus over-servicing? By upselling over-servicing. Well, here's the deal. I think that comes down to education. You're saying just fixing the problem versus fixing the entire system is it takes a lot to get them to believe in the parts. So we do a lot of like mojo calls. We talk about worn out parts. We got to get them to believe that it's the best thing for the client. Replacing the door after 10 years old and it's dented and it's oxidized paint and the trim's falling apart, anybody can fix it. But is it really best for the client to not replace it? Should you kick the can down the road or should you restart the clock? We say these things, we practice these terms, and we say them so often that once you hear

something enough, you start regurgitating it. And our meetings are pretty much the same all the time. We bring new speakers in, but they're mainly the same KPIs, figuring out mindset, motivation, what gets you up and trying in the morning. Why do you buy in so much? And I get guys that say, there was a time in my career at this company seven years ago when I used to run one full day of recalls a week. And then I decided I'm just going to fix it right. I'm going to look at every single part, do show and tell and fix and replace everything that has any worn, any damaged parts. And,

you know, brakes do not work without calipers and rotors. It's a system. And most things work off of systems. When you got an older HVAC unit, you still got an old capacitor. You got an old blower fan. You've got all kinds of stuff that can go bad. Is it really efficient to fix that when you got 10-year-old parts of

everything? When you've got a car and it's 90,000 miles old, you bring it into the dealer, they replace all the belts. They'll replace sometimes the timing chain. They'll put in a new radiator. They'll put in a new battery. Nothing's failed on it, but they want to get in front of it before it fails. So everybody knows that about their car. So if you could use these examples and analogies, people understand that. When you buy a tire, it might be rated for 20,000 cycles, which are miles, might be rated 30, might be rated 40. What type of buyer are you? Do you want it to last 40,000 miles with a warranty from Discount Tire? You might pay $1,200 or you can pay 500. And anytime it gets a puncture, you're paying another 500. Two types of buyers, you got to deliver value. You're not doing your

self-credit if you're not able to convert that customer. That's why we give options. Like we say, if you're not giving options, you're giving ultimatums. Looking to scale the business from one location to 10, what key performance indicators should I focus on to measure growth effectively? Additionally, what personal and roles to hire? Well, listen, if you're going to grow, you got to be extremely profitable. And 10 locations is not easy. I'd set a short-term goal of the second location with a lot of emphasis. The first location is easy. It's the easiest location. It's where you grew up. It's

where you live. It's where you go to church. It's where your kids go to school. It's where your wife knows people. Your husband knows people. It's where your family is. So first city is easy. Second city is harder. Focus on that second one. And then I'd go, okay, how do I get a third? Then how do I go to five? One to 10 is a little ambitious because sometimes you make mistakes. I opened too many stores too fast, didn't have the right leadership team,

didn't really have the systems in place from the mothership and had to close four markets. Now I'm going back to all four of those markets, but timing's everything. You gotta be very, very careful on how aggressive you wanna get on growth markets. Now I'm going back to all four of those markets, but timing's everything. You got to be very, very careful on how aggressive you want to get on growth because if you're not profitable, you could lose everything very, very quickly. You might have a nest egg of $2 million saved up. You're putting it into growth. All of a sudden you got a million. You're like, I'm still going

to grow. And all of a sudden the money starts running low. It's hard to get a loan in this economy. And you're like, well, I grew too fast. And now I don't have the right people, the right processes. I don't have enough money to keep going. So now you shrink back up and you lost two years where you thought you were going to grow. I recommend making one market massive before you go to the second one, because there's still a lot of opportunity in your current market. Did you feel like you're at the level, the highest level of your market? Did you capture enough market share in your current market? Because if not, it's not

easier in another market. It'd be easier to take more market share where you're currently at. Why do people want to go to a new market before? If you're doing two or three million in your current market, do not grow. Focus on that market to your 10, 15, 20, $30 million. Best advice ever. Oh, here's a good one. I invested in the seven power contractor manuals. Any tips on getting the most out of them? I'm excited to set standards in my business and be able to pay my techs more. So just like anything, I had a levy right next to me building the manuals, paid him a lot more money than you spent. So this is kind of a self-motivating manuals, right? So you got to sit down, you got to do

the hard work. Al gives several hours for free, so you call him when you get stuck. You got to get the core manuals, the CSR dispatch, tech heavy, technician manual, install manual done. And then you need to read it every day with your guys. You got to have the minister leads page, read it out loud, make it part of your culture. And if anything goes wrong, I need PTO. How does PTO work? How do I get time off? What happened when I broke down? Hey, I just came with a new tattoo on my face. All that stuff's in the manuals. You need to read it out loud and make sure everyone knows what the rules and regulations, how they win, how they get paid, how they take inventory. All those things are in the manual.

And now there's a good job of laying out what you need to do with inventory, what you do with facial hair, how you do with breakdown of your truck. There's an index in the back, but you got to do the work. Luckily, I had him in my office pushing me every day to finish it. I had Adam and Brian. We worked on them every day until they got done. We made them part of the culture. We read them every day. And now on them every day until they got done. We made them part of the culture. We read them every day.

And now they're still part of what we do. And that set us up for the systems to grow, the SOPs to think through how we wanted rollers installed to do it the safe way and get the same outcome every time. Because before everybody was doing rollers differently, they were doing springs differently. You got to be very careful. But what I would say is you got to make time every single day to work on them. No distractions. Turn off your cell phone, work with two managers, and get down and get through a large section

at a time. When you get stumped, use Al. He offers the ability to call him. Most people, they buy that. And because it's work at your own pace, nobody gets it done because it's not fun. It's boring as hell. What are the policies and systems in the business? You got to think through them and think what's going to last forever.

What is this company going to look like in 10 years? How do I make every market walk and talk the same way? And I can tell you that it's not fun for a guy like me. I like marketing sales. I like growth. I like motivating. Manuals are like operations, but man, are they important? If you want, can you imagine a McDonald's everywhere you went,

the Big Mac tastes a different way. The fries were always different. Like they've got systems to make sure it might not be the best food, but you know what you're getting. So manuals create that environment to know at least when this guy goes out in this market, it's going to be the same as another market or the guy goes out on a Saturday. It's going to be the same as the guy that worked on a Friday. So that's what it does. All right. We are currently in new construction market and resi and commercial. Would you suggest getting into servicing and replacing doors or should we just focus on new construction?

I mean, I never seen a new construction company. The problem with new construction for most people is it ebbs and flows with the economy. Interest rates go up. They continue to go up. Usually, houses don't sell as fast. So the reason private equity stays away, commercial is a completely different animal than new construction. Different truck setup, different insurance, different AR, different hourly pay. I mean, no offense, because I know a lot of people, we do anything we could get our hands on. You want to pay me, I'll figure it out. And I talked about this in one of my Instagram reels.

But if you guys go to official Tommy Mello on Instagram or TikTok, I went ahead and took a gate job. And it was a solar keypad. We installed it. I kind of know how to work on that stuff, but not very good. And I had a warranty call the first week. Then I had two the next week. And this happened for a year. By the time I got done, I had lost $20,000 and paid minor to go fix it. Might've been a minor action. And the fact is taking everything on that I can make money is not a good solution. So many people, they say, I'm going to charge 2X. If I pay 500 for a door, I'm going to sell for 1,000 on new construction. And then when they pay their hourly people, they pay for gas, they pay for the truck, they pay for the insurance to get a workman's comp claim.

There's no money left over. And what's nice about the builder is they're just going on to the next schmuck that's going to charge very little and leave you with very little profit. And I'm not saying it's wrong because there are builders that say, I want it done the right way. I want you to put quality parts and I'm going to pay you for that. And I'm going to pay you on time. The big guys typically don't. And it ebbs and flows with the economy. Commercial could be great, but you know, I was at a big commercial company that does garage doors. They bid on big, big, huge jobs. I mean, a lot of them were four to 500,000. They only get 30% of the bids. They got to be able to read the blueprints,

do the bids and not make any money for the ones they don't get. It's a completely, like if you can't go into a biz, if you can't get to 10 million of profit in commercial or new construction, what's the point? I mean, I think you should pick one, get a huge, go to the next one. The reason HVAC does plumbing and does

electrical is because they got a shoulder season. They were forced into doing multiple trades. Everybody in the garage industry, they're like, oh, I wholesale. Oh, I do Home Depot and Lowe's. Oh, I do new construction. Oh, I do commercial. Oh, I do service. And it's like, where do you make your money? Well, we don't even know. We're not really sure. Like if you don't have a good CFO to even know where the money's coming from, and I'm not discouraging you about staying in those, you might be extremely profitable, but demand work in garage stores and HVAC and roofing, they don't go away. I don't care how bad the economy gets. If your door's not opening, if your AC is not working, if your hot water heater is broken, you're still going to get it

fixed. That's why these businesses demand driven are so great because we know, well, the service work will always be there. I went through 2008, nine, 10. I've been through COVID. I've been through the tough times and service never slows down. That's why it's recession-proof. Corey said, Tommy answered the review question along with the upsell question. Training, if you train three to four to five X a week and role play, it will solve issues with reviews and upsells.

Practice how you want to learn to handle these situations. Great advice. Hey, Tommy, you had mentioned about a month ago that the market for home service was showing a downturn in a few trades. Is your network still reporting a downward trend? Well, we're still on the shoulder season for most. Look, winter, landscaping, pest control, HVAC in particular, windows, everything kind of declines. In garage doors, it's not quite as bad.

But in the winter in Milwaukee and Detroit, nobody's replacing doors like they will be in the summer. So are we seeing a decline? Yeah. I mean, interest rates have come down. I expect them to come down. We've got good news in the economy. Wall Street's doing great.

Ultimately, do I believe it's going to be a soft landing? Yes. Do I believe that everybody treated last year like it was 2022? Yes. They went balls to the wall, started doing acquisitions, decided we're going to invest in growth. And the leads did not come as easy as 2021, 2022. Therefore, we hung out with some people we probably shouldn't have kept on. We kept on the people thinking we're going to grow into this. So we had all these extra people we were keeping around saying, we're going to grow into this. So we had all these extra people we were keeping around saying, we're going to grow into this. We're going to grow into this. And you didn't. And you didn't make a good profit. You saw month over month drop in revenue.

So you compare this January with last January. And the right mindset is to get super lean. And if you don't crush last year, but you make a good profit, you're doing great. I don't know why everybody wants to continue growth in the best years we've ever had in home service. It was like the lottery. It was like everybody was calling demand. They had enough demand in two years to equal 10. And we just assume it's like saying, I know the stock market, you know, the S&P 500 to

24.5%, 24.8. It's like, I'm going to put all my money in the S&P this year because it went 25% last year. It's cyclical. It doesn't always work that way. So you got to get either very creative with how you're going to do it. You got to top grade, get lean, train, double down on training, get better at recruiting, get a better price on parts. You got to do a lot of things right if you're going to grow in a downturn. And one out of a hundred companies are going to do that. Not very likely. When you're buying and building, it's easier because you can apply principles to existing revenue and calls coming in.

But acquisitions are not easy either. They're very, very difficult. Integrations, taking a whole different mindset of a bunch of people and turning them into the same culture and vision as you have. It's not for the faint of heart. Most of the companies I know have failed at it. The biggest ones I know are not doing good at it. Like they're taking a pause trying to figure out how to get everything walking and talking the same. They'll kind of fib to everybody and say, yeah, we buy great companies and let them operate alone. We let them operate on their own. We just assist them with resources. Bullshit. No one wants to buy 10 different companies from 10 different vendors with different CFOs in the company, with different leadership

teams, with different missions, different visions. No one wants to buy that. You could have multiple brands that work on all the same systems, the same call center, get the same insurance on the same workers' comp. You can't have five CFOs and five CMOs in a different structure. It doesn't make sense. Anybody that believes that maybe there's some use cases out there where that works for you by a group of good companies that all walk and operate different. But if I'm a buyer, I'm like, wait a minute. If I call a portfolio company and I get a completely different on a different CRM, different truck makeup, different everything, like no one wants that.

If I'm a big investor in the best PE companies, they're not going to buy this scrambled crap. You need to unify the company. That's, I just went out on a rant. Let's see. Andrew said, I just got my C20 license and started an LLC as a small business with not much capital.

How do I generate leads in the beginning? Andrew, there's nothing better than word of mouth. You go out there to B&I groups, you go to the chambers of commerce meetings, you shake a lot of hands, you stop at a realtor's office every morning and every night, you go meet with builders, you talk to the people that... There are certain people we all know that you call when something breaks. You need to learn to identify those people. You got to ask every customer for three or four reviews instead of one and say, I need one on Nextdoor, I need one on Google. I need one on Yelp. And I need a Facebook video. You've got the time to do that. You're going to have to do things for less money.

When you go to a home show, say I'm doing a $29 tune-up for everybody. It's my first year in business. I'm a hard worker. Get them to buy into your story and why they should invest in you, the small entrepreneur, David versus Goliath. If you got to go out there and meet the people every single day, become a networker. You need to invest in easy things like get your Google My Business in a good area, get a lot of reviews, post on it every day, get that working. Then you need to get LSA working. And you need to start, have a great website, have a great brand. When you have an ugly-ass brand because you can't afford a good logo and a good name, you're going to work 10 times as hard.

But if you're starting with very little money, you probably can't afford Dan Antonelli. But so you get a shitty rap by a cheaper company. And then you never... It's almost like save more money and go at it the hard way and get your name out there. And don't go after the entire metro. Figure out where the money's at and focus on those there. And don't go after the entire metro. Figure out where the money's at and focus on those areas, networking in those specific areas. If I was in Phoenix, I'd split it up into eight grids and I'd focus on one of the... I'd focus on Scottsdale and Paradise

Valley. But here's the deal. If you're not good at sales, going into those markets, going into Paradise Valley, you might want to start in Tempe. So understand what your strengths are. It's grit, it's discipline, it's showing up every day. I tell a lot of people, Andrew, don't start a business if you're barely, barely making ends meet because you're going to have a job for the next 10 years. You could have a job making 200 grand if you're good at what you do. Save more money, invest that money because it sucks to be just trying to make payroll every week unless you go run jobs. You wonder why you get stuck in the truck. That's why. If you're not in the truck, you don't make money. If you're not on the phones, you don't make money. If you're not out there trying to

figure out how to drum up business, you're not making money. Well, you can't go on vacation. You can't have relationships. You can't be a good father or a good mother. You can't. It's very, very hard and it's not for the faint of heart. How often do you think you should have meetings? Also, how often should you make your team role play? Well, you could have a lot of meetings, but the difference is we probably have 25 meetings a day. I'm only involved in one or two a week. Meetings are a form of communication. Email is a form of communication. Slack is a form of communication. Depending on who needs to communication. Slack is a form of communication. Depending on who needs to make decisions,

I think that meetings could waste a lot of time because there's another person. We'll have a meeting of 12 people. It only took three people to be in that meeting. And then it's a brainstorming session instead of here's the decision we need to make. Here's the SWOT analysis we've done. Here's where we think we should move.

Do you agree? Those are the type of meetings and they're quick to the point. Then we'll have brainstorming meetings and we'll have an agenda on those meetings. But I'm fine with a lot of meetings as long as there's a point and there's the decision makers that need to be there. I think it was Elon Musk or Jeff Bezos that said, if you're in a meeting and you don't feel like it's important to you and you got stuff to do, you're allowed to walk out of any meeting. Because man, there's this clock I used to have and you can find it online. You put what everybody makes per year into the clock. So you might have 120,000, 50,000, 200,000, 120,000,

and 60,000. And then it assumes 40 hours a week. Most of us work more than that. And it tells you every minute how much it costs you for that meeting. And it's crazy how expensive meetings could be when you put 20 people into a room that are high paid individuals and don't have any type of arrangement of how the meeting is going to be due, like an agenda. Here's the meeting we're having today. Here's what we need to get figured out. Here's the options that are presented. There should be a lot of work that go into meetings. Not we're going to have a meeting and figure it out when we have the meeting. Those are never good meetings. And then as far as role play goes, I mean, listen, it's heavy, heavy, heavy in the beginning. And then depending on the KPIs and what you're doing, not everybody needs

to role play every day. Like literally if Wayne Gretzky is great at this shot, he doesn't need to practice it as much as he might need to practice something else. So certain people on my team, they don't need to practice as much, but I want them to practice with others to pull them up and I'll pay them to do that. And then they'll correct them. They'll say, no, no, no. Here's what I say. Here's why I'm number one.

So the top guys role play with the other guys. And some of the guys don't do great at role playing. Cause it's not a real life scenario. So sometimes, sometimes you need the top guy to take the other guy out. And then after the job work on, Hey, let's role play what you did there.

And hopefully you got it recorded in Arizona. Only one party needs to know you're recording. And then you can play back and say, here's three of the things you could have done in that scenario. And usually if I'm out there and, and I don't always recommend this, but if they're about to lose a sell at the senior tech takeover, but it's hard to learn. Sometimes you got to be okay with a zero as a learning experience. And I hate to say that because I try to earn every client's business, but sometimes you got to be okay to walk away. You can't please everybody.

And even though you can save it, it might teach the tech a better lesson to walk away. You can't please everybody. And even though you can save it, it might teach the tech a better lesson to walk away. And it's a lesson they'll never forget. I have one tech and I spend about 10 hours a week in the field. A lot of what you say makes sense, but some of it doesn't apply to me at this specific time. What should be my focus at this stage of the game? Well, your focus should be, unless you're

not only the top salesman, but unless you're like five times better, it should be to get out of the field. What actions are you doing to grow the business? Do you have manuals in place? Is your marketing dialed in? Are your meetings great? Are you inspiring the people every day? Are you good at recruiting? Are you getting enough leads to grow the lead volume? You networking out there, drumming up business, recruiting A players and sharpening your current guys. When you're still in the field, it's so hard to like, hey, I got to go run this call. No one else is going to run it. You're not training anybody. Now, if you're using that time to train, great. If you're using that time to build manuals, say, hey, I'm going to go do this job while I'm building the manuals. Great. But if you're just running jobs to create revenue without training,

without writing manuals and SOPs and checklists, that's a waste of time. You should get other people to do that. And if you need to do that to make money, which I had to do that, just consider that it's a job. Some people don't have a business yet. They still have a job. Let me define what a business is to me. A business will run without me for at least three months of never looking at the CRM or showing up to any meetings. I could go to Tahiti. I could go to Chile.

I could go to Africa. I could go anywhere in the world for three months. Business runs fine. We still grew. I wasn't here. That's, even though you have an LLC, a real business works without you. That's a business. That's my definition. So your goal should be to run something when you're not there. There is one thing that you said in the past, I made wrong hires and send

me back trying to keep them on staff. They are great now, but I noticed I was and still am the bottleneck. They are great now. Yeah, listen, I could turn anybody into a great employee if you give me long enough. I could teach anybody how to read, but it might take two years. Take a foreign exchange student that never, you know, from Asia

or another country that's not even close to the English language. It's going to take a long time. I'm not saying they can't read, but how much effort is it going to take for me to get them to read? Very great. And so you can teach anybody anything. IQ matters and EQ definitely matters. EQ is how well I relate to others and communicate. It's more of the street side of stuff. It's eye contact. And I'd rather take somebody with a high EQ that understands how they make people feel. High IQ isn't required in home service as much. High IQ is great if they

can figure out stuff, but the CFO position needs a high IQ because they're looking at things, solving problems, looking at the future, looking at the past, making critical decisions. And typically, CFOs don't have the highest EQ, but they're great at math and setting up tables and figuring out how to get discounts and rebates. So I would say, usually, it's the owner getting in the way. It's pride. Don't hire people like you. Figure out your superpower and hire people that you suck at doing inventory. Hire that person. You're not good at organization. Hire that person. You don't need to become great at everything. That's the falsehood of business is I got to be great at all these things. You need to be a great delegator, a great leader, a great visionary.

You need to hire people that are better than you at everything else. Tommy, I appreciate all that you do. I own a residential remodeling company north of Denver. We are an established, quick-growing company and we'll do about $3 million in 2024 question. I was encouraged to get an SBA loan to help us break through some of the current barriers. The loan would go to office and support staff, better training for our crews, implementing our great new branding, truck and wraps, et cetera. Looking to borrow about 250,000 thoughts. It's like I said with a loan, when you look at your finances,

a great CFO would be able to say, this money is going to compound. If you're going to make three to $4 million, you're making 10%. You should be making 100 to 125,000 a quarter. Why can't you do those things with that money? I would be very, very disciplined with that 250 grand. I'd put 50 in and see how much I get back out.

And it's always a deficit every time I put money in because you're still gonna end up paying interest. Now the SBA is a great vehicle to get ahead. I did an SBA loan. I did an SBA loan on this building, the building next door. But that was an asset that actually went up dramatically in value and I didn't have to pay rent. So instead of paying rent, I paid my mortgage, use the SBA loan to put it into place.

And now the building's worth twice what I paid for it. It's, you know, these buildings are paid off now, but you know, an SBA loan to buy a building is a great investment, great investment to upgrade vehicles. If they're not breaking down all the time and they're an asset, great investment. But to say, I'm going to put this into training, if you get the wrong trainer, all of a sudden, when your business is small, every dollar you borrow, you're paying interest on it, really hurts you more

because you make bigger mistakes with more money. And if you don't have the money and it's not producing money, you learn lessons hard. You can screw up your credit. You could never be able to buy a house. You learn lessons hard. You can screw up your credit. You could never be able to buy a house. It takes seven years. Small, implement small money. Invest a little bit and see how much you take out. I am slowly growing my company, looking to hire our first sales rep and

project manager. My brother and I have been doing jobs since we started. What do I need to prepare for in this stage of growth? Well, my buddy Tom Howard was involved in a company in Vegas and Fetchatech. And Dan Henson and I did the branding. And what they figured out was they had two rock stars. One rock star, Brent Buckley. Then they got another rock star, Phil. And these two guys could do a million bucks a month. The first key hires of a business, you better get rock stars. You want to have explosive growth,

make the company worth a lot of money, pay more, recruit harder, give them equity in the company, whatever you need to do to stack the deck to get those right guys. Because poor performers, usually what we do is we say we can only afford an apprentice at $17 an hour. And then we're telling a kid that's 20 years old, never touched a tool to go out there and be a top performer because we just don't have the money. When have we paid a little bit more? I mean, how much of a difference is it when a guy selling a 510 unit for 20 grand versus six grand? Well, that's what Tom Howard had guys doing. And people will say, no one would pay 20 grand. Well, you're wrong. We live in a capitalistic society called the United States of America. People have a right to pay whatever they want. These jeans cost 130 bucks. I know jeans that

cost 500. I know jeans I could pick up for 20 bucks. So, you know, people pay $500 for Jordans. People pay $1,500 for an iPhone, but they complain that somebody is too much money. I can go buy a phone for 60 bucks or I can pay 1,500. People buy what they want. They get behind a company. They want to know that their warranty is going to be legit, that it's a safe person in their house. Anybody that thinks you can't charge a high amount of money. All my buddies have Rolexes. All my buddies go to expensive steak dinners. There's so many weak minds that keep lying to themselves. Oh, I could never charge that. I couldn't sleep at night. Well, how do you sleep at night not paying your guys shit? How do you sleep at night knowing everybody's driving used trucks? How do you

sleep at night knowing you're using the third best CRM because you couldn't afford the best? How do you sleep at night knowing you can't afford the marketing to make the phones ring to keep the people busy? This weak mindset on these Facebook groups drives me nuts. It drives me freaking nuts. Oh yeah. Literally the excuses I see made is they can never charge that. Well, you live in your house. You work out of your house. Your wife works for you for free. Your daughter's taking inventory. You pay her $10 an hour and you brag about how you hold your prices down to take care of the customer. When you can't even afford workers comp, you can't even afford to pay people as W2s

because you can't afford the taxes. You can't afford to put your business in the right LLC or S-corp or C-corp to get it figured out correctly because you can't afford the lawyers. So many people brag about charging very little. I know there's people that gouge and they're literally overcharged because they don't deliver the quality. That's not okay either. And there's always bad actors in the space. But when you got a good legitimate company paying W-2s, letting people retire early, putting their kids in private school, buy homes, putting in performance pay models to let them earn more in their life, you get economies of scale. You don't need as many people to drive the numbers you want. And I just, anybody that says, oh yeah, I hate the big guys

because they're charged more. Well, they've got systems, they've got recruiters, they've got trainers, they've got an HR team. Do you have an HR team? Most of us don't want an HR team, but my point is you got to have nice things in your company if you want to attract the right talent. And saying you charge too much, Pizza Hut charges too much, but you still order it. You know, everything you get, Home Depot makes a really hell of a profit. Ever looked at their annual report? I just don't understand. Just because somebody charges a lot doesn't mean they're bad people.

You're the bad person by not charging enough and taking care of the people around you, period. If you are a licensed plumber or electrician and you do not have any capital to start a new business, but you do have systems and experience in running a business. You understand everything involved from marketing to SOPs, to culture, to vision, to mission, to values. How would you go into business in 24, 25? Well, that's the thing I always say. If you're underfunded, when you get started, you're actually doing yourself a

disservice. If you got those kinds of skills, you can go make 225 grand anywhere you go and probably get a piece of the action, whether that's profit sharing or equity. If you're that great, I'd go work for five years. And I tell that business owner, I'm going to start a business in five years, or you can give me equity in this business and I'll grow your business. Why start with zero? I know this is the American dream, start a business, but you've got to work saturdays you've got to work sundays you got to get your ass out of bed on thanksgiving and still run those calls if you got no money you're sol you've got to perform and you want that stress on your family

most businesses fail and i'm the probably the only person giving you the hard truth because you will see people that start a business with nothing. And it took me 17 years. It took a lot of blood, sweat, and tears. It took a long time to get to this point. You guys don't know the struggle. It's real. So if I'm that good in business and I understand all this stuff, right now there's companies begging for you.

Begging. They'll pay you top, top, top dollar. They'll give you a 401k. If you don't have 500 grand in the bank, go earn it for three years, right? I don't know. Hopefully, if you learn all these things along the way, hopefully you bought a couple of houses, you could take an equity line and you got money. But if you still don't have anything, why does it make sense to take a loan out or work on a shoestring budget? I don't think it's the right decision because I had to stay in the truck till 2013, 2014 for the first five, six, seven years. And that's what it's going to take to be successful. You're going to be working in a job for your own company either way, but you're

not going to sleep. You're not going to take vacations and you're going to affect relationships. Just my two cents. Now, can you make it? Yes. Do I have every belief in the world that I'm pushing you to do it? Yes. But you got to be very strategic, can you make it? Yes. Do I have every belief in the world that I'm pushing you to do it? Yes. But you gotta be very strategic, very careful, very limited growth. Focus on profit, stack dough, stack money. Work in the field, but save all the money.

Problem is when you're on your own, you got this great feast or famine. You get a great month. You're like, dude, let's go out to eat. We're gonna go to Hawaii on a trip. We're gonna buy that second. We're gonna buy that RV, whatever it is. And then you have that bad month. The leads just don't come in. And you're like, shit, I just spent too much money last month. I hired two guys and it just doesn't hit. You got to have a good amount of money in the

bank. They say six months to pay all your bills, including payroll and all your inventory. That's if nothing came in. I know you're into acquisitions. What is your buy box for acquiring existing companies? Love your stuff, man. Thanks, Jim. I mean, listen, I try to buy companies that are growing. I try to buy companies that get in a lot of leads. I love the companies that have... They're running seven or eight leads a day because I only run three or four a day. So I can automatically double the technicians. They could take their time on the job. I like companies that are starving for people rather than starving for leads.

Some companies that have been out there 30 years, I buy all residential service and door sales, retrofit. I'll dabble in a little bit of commercial and new construction as long as it's less than 20%. And there's not a lot of companies out there. I mean, unfortunately, you think there's thousands that I could partner with, but there's just not. Buying the right company, staying disciplined, waiting for the opportunities, that's half the battle. I think when people are in my shoes, they're like, I need to buy, I need to buy, I need to buy. Shit, if we can't buy, we're just going to grow organically. We're going to greenfield into new markets. We've got the model. I don't need to buy.

If I'm putting $2 million or $3 million into a company in a market, let's just pretend I was buying somewhere in Delaware. What if I put $3 million into marketing? I could probably build that same thing up. So there's choices here. So I do have a buy box. I love to buy, especially if I could take their KPIs and increase them. Average ticket conversion rate, booking rate, cost per acquisition. If I can affect the outcome in those KPIs, I'll buy them all day because I might get back my return in a year to 18 months. If I'll do that, I'll do that all day. When you master Greenfield and get good at it, that's what PE, that's what any investor would love. They got a formula to go into a market within two years, they're at 2 million of EBITDA. That's nuts. And that's a great investment. I'll get behind a company like

that all day long. Hey, Tommy, happy new year. At what point does it make sense to introduce new employees, managers for each department, i.e. service installs? It's a good question. So what I like to do is I look at capacity. If one of my guys are running more than four jobs a day, like let's say it's 4.1, I need to hire two technicians. Get it back to three as it starts coming back up. Now it takes two months for me to hire a tech. It takes one month to find them, one month training in their market, one month to train them in Phoenix. So it actually takes three months. So if I'm seeing we're getting like 3.7 jobs on average that day for a week, I need to hire two guys in that market knowing it's going up because I know what my marketing is doing. We know in our budget how many calls we're

going to get per month in each market. And it's our VP of marketing's job to make sure we hit that budget. If we're hitting over that, which is a great problem to have, we get more leads. We still got things. We can lower our pay-per-click. We'll lower our pay-per-click because it's expensive, but we know we can get more leads. So then we'll go into a hiring. And capacity planning throttles everything. And it's a tough thing to get correct.

I got jobs. I've got technicians. Sometimes I need more tech. Sometimes I need more jobs. I'd much rather need more techs than more jobs. So it's called capacity planning. And you got to have some ratios that you look at to say, this is the threshold of when we need to hire.

What do you do with your personal profits, real estate stocks, et cetera? So I invest in other businesses and I've got a pretty big stock portfolio. We mostly invest in S&P 500 things. Real estate's tough because you think real estate is set and forget it. And sometimes it is, but for the most part, it's a lot to manage. I'm not at the point of my life where I want to buy a bunch of real estate. In fact, I'm selling a lot of real estate. I'm holding onto this building, the building next door, two apartments. One of the leases I have, my dad's house and my two houses.

Kind of a lot of real estate. But in the scheme of things, I'm selling a dozen houses. It's too much to manage. I'll do okay on the real estate, get it back in. If I can make 7% of my money, I'm doing great. And then I invest in companies. I think I could really affect the outcome in, and a lot of the investments that I'll make in home service, I could double, triple, quadruple in three years, some of them 10 X. So, you know, I've only got so

much time in the day. So if it's a great leader and I could do, you know, I've got my own Tommy Mello ventures, TMV, and I've got people that work for me in there that I'll set them in to go make the changes that need to happen. They're very sophisticated, smart people. And my job is not to go in. I'm the CEO of a one that's where my core lies. I don't have time to go work all day in someone's business, but I do have a lot of knowledge.

And typically I can see where things need to go. I've gotten pretty good at reading reports, but most businesses I invest in, they don't have the right reporting in place. Once it is, they'll know what to work on. They're great owners. They can solve problems for themselves. How much revenue should a company be making before you hire a CFO? That's a tough question. I think profitability should be in the millions, otherwise get a fractional CFO. But when you get the right person, they'll do FP&A.

They'll help you understand the ratios and where you should be focused on. They'll help you get better payment terms, which gives you more cash flow. They'll help you get larger rebates. They'll help you renegotiate deals. They'll tell you when to grow and when to pause. The earlier, the better.

I went through five CFOs before I got the right guy. So make sure you get the right person who's in your top five circle. You know, that's a tough one because I hang out with like on my cell phone string, there's Ishmael, Chad Peterman, Cristiano, the gainer. I mean, this whole group, Chris Hoffman, there's Chad Peterman. The guys in this group, very, very smart guys. And we rely on each other a lot. And then I've got Al Levy. I talk to him quite a bit. I've got Jody Underhill.

I've got Jim Leslie. I've got a lot of core people at A1. Then I've got my personal team, which is a personal CFO I talk to several times a day. I mean, I wouldn't call it a top five because now I've got so much going on. The bucket's so full, it's running over that I could have a bigger... I've got to communicate with more people.

But the conversations are not long. If it's who I hang out with, I mean, Gaynor comes to my house quite a bit. I'm with Yano at a game every other week. I mean, great people. I was talking to Ishmael several times yesterday and we're just working through things. But yeah, the way I feel is I just had on the podcast. The podcast is kind of my inner circle. I had Adam Coffey. It's coming out soon. Killer podcast. I learned a lot, bought his latest book. I mean, I use the podcast to hang

on with successful people and then I keep in touch with them. And typically, I'll get someone on the podcast that I want to learn from in that specific niche. Adam Coffey, PE guy, great CEO, trains people on how to do buy and builds. So I learned a lot from that one. I think you guys will really dig that one. Are there any sales conferences you have found helpful

and would recommend to go to? We're in the home service space. I mean, I like Andy Elliott a lot. I think he's motivating. I think he's got things that work. I think most of the people that have gone to his conferences work. We did a thing for the freedom for the trades. And I think there's a lot of great people that have come to that, that really care that it's not just a big sales pitch. You got to be careful because most of these guys, they're always selling something. So everyone's selling something. That's why they go on stage typically. So just be careful you don't get in bed with the wrong person.

What are the pros and cons of having employees drive their own trucks? What are the pros and cons of having them take the trucks home with them? Well, driving your own trucks means you're 1099 means you can't force them to get them wrapped, which means there's no symmetry between your trucks, right? You got a fleet of mismatched trucks. It doesn't really make an impact to the community or how people perceive you or demand that higher average ticket. I don't like that idea. And I did that before. And then, not having to take the trucks home, everybody's got to drive into work.

Certain things this works for, but for me, we're in 22 states now. You look at the location, if they had to all drive them back without driving home, I could dispatch. In Phoenix, we got guys all over the map. So I could start them right here.

They only got to go get inventory once a week. They got to come to the A1 meeting once a week. So it's better on gas. It's more flexibility. It's way better to hire. It's easier to hire technicians to say, you don't need to drive to work and drive home every day after a hard day of work. I'm a big fan of letting them take them home. How do I make sure to give every activity the time required for finishing it? How do I delegate? Do you delegate? For example, if I plan on reading a book and didn't finish it, do I move on to the next day of course? What were you doing in your early chapter starting from making your bed? How do you structure a lot of activities in your calendar? Oh, I don't start a new

book typically, unless you're two completely different books. I can read two books at once, right? Sometimes I'll be like, I've had enough of this book. I want to switch to something different. Right. And some stuff is mindset. Mindset's easy to read versus a tactical book that you've got to actually take notes and figure out, okay, this is what to do next. But I think you finish one thing before you start the next. Entrepreneurs, we got 20 things going on at once, but we never finish anything. So learn to finish things before you start the next thing. You know, the company size now, we've got 25 things going on at once, projects,

and I'm not leading any of them. I'm involved in a lot of them. I know what's going on, but it's not my job as the visionary to be running everything. And delegation, you know, the eight steps of delegation, I've shared a lot on the podcast. L.E.V. taught me is, what do you need to do? Who's involved? Why does it need to get done? What's the why behind it? What is it trying to solve? Does everybody know why we're doing it? What resources do you have? What do you get? What kind of reward if it gets done on time? When is the check-in status to make sure it's on plan to finish in the timeline? And getting them to sign their John Hancock on it,

knowing that they took responsibility to get that done. And then you got to check along the way to make sure it's getting done. Man, these good questions here. I'm in the exterior cleaning business and my market has literally 100 hundred new companies. We are holding our own and still turning a profit, but wanting to grow and get off the truck. What advice do you have for me? I have one time full guy and he's a rock star. How can I build around him? Well, everybody says, listen, there's 700 garage door companies in Phoenix. I mean, you're going to have competition. How do you stand out?

One of the things I learned to focus on is I kind of keep my blinders on. I don't look at other companies. I don't care what they charge. Maybe to a fault, I focus on what's going on in my four walls. I'm focusing on what I can't control, not what I can't control. A lot of people spend all the time daydreaming about Israel and what's going on in Ukraine and the traffic jam they're in. They don't focus on when I go to work, here's what I'm going to get done. This is a KPI that's been dropping. If I get my booking rate to 90%, what is that going to do for the company? This is the biggest, best thing I need to get

fixed. And once that's fixed, and once I got a plan to have checks and balances, then I can move on to the next thing. And I think focusing on things out of your control is the wrong thing to do. I've got competition. You know how many people listen to the podcast that are like, I'm going to start a garage or a business. Good. Hopefully one day I partner with you. I don't care.

I literally, the more the merrier, you're not going to affect my business. I don't care if a billionaire comes into the space. Good luck. Grant Cardone's teaching people how to do home service. He's a real estate guy. Good luck. He makes all the money from the conferences. A lot of you guys pay that guy hundreds of thousands of dollars a year for what?

I like him. I went to his conference. But put me in a room of home service with any of those guys, I'll bury their ass. I've been through it. I worked in a truck. I've done payroll. I've done inventory. I've stayed up late at night fixing garage doors. I know my shit. I've been through it. I worked in a truck. I've done payroll. I've done inventory. I've stayed up late at night fixing garage doors.

I know my shit. They never lived through it. And anybody going to come into my industry, I know this shit. I've been doing it. I've made every mistake in the book. I know integrations. I know leadership. I understand culture.

If everybody could just... Do you know how many mistakes these PE guys make? Do you know how shitty they are PE guys make? Do you know how shitty they are at operations? You got to be very careful who you get into business with. The PE company got behind me in a big way. They're actually really good at operations, but they got behind me because they know there's a lot of lifeblood of the company in me and vice versa. So they got behind the founder, the leader, the guy growing, and they got behind my team in a big way. But most PE companies are like,

if we go buy a bunch of shitty companies and combine them, we'll be worth a lot of money. It doesn't work that way, PE guys. I have a lot of people that listen to this are like, oh, I'm going to, I got $5 million. I'm going to go buy a grunt or a track or whatever, roofing or gutter companies. Good luck.

You know how many board seats I get offered? Would you jump on the board? No, you guys suck. And I can't go on any boards because I got a contract. I work for A1. I'm an employee here, even though I'm the largest investor in the company. At the end of the day, this arbitrage move, this financial engineering and using debt only works if you understand operations, integrations, and culture. And a lot of people miss that. Tommy Berry here from 505 Junk. Thank you for giving us your time. We are implementing RocketFuel, mainly visionary for myself, CEO. My business partner will be the integrator. Lastly, we have some of our partners

moving into the director of sales role. And after 10 years of running our operations, do you have any advice on this type of leadership changes at the top of the org chart? Well, what I would say is be very defined, stay in your own lane. If you're willing to give up control, you've got to allow people to fail. You need to know it needs to be all written out

what your responsibilities are. You need to hold each other accountable without pointing the finger. I never want to see marketing point the finger at operations or vice versa. We work as a team. When you get bigger, it gets siloed and people start blaming the CSR department

and the dispatchers and the technicians and where's recruiting and marketing is not getting us the leads. That's everybody's problem. We need to work on this together instead of pointing fingers because it looks like shit when you're like, you didn't do your job,

but you still need to hold each other accountable. They agreed to do this. What are we going to do if it doesn't work out? Are you going to step down as the integrator, as operations? Because we're going to need a good person in the spot. What happens if you're a bad visionary and the vision is taking you guys, you need to be willing to step down too. I mean, the company needs to grow.

It needs to be profitable. It needs to have revenue growth. It needs to grow in size. And if that's not happening, someone's going to need to move out. And this is why partners, this is why father and sons don't talk. This is why husband and wife get divorced. It's money.

And when you're losing it, it causes drama, causes pain, causes relationships, causes lots of bad stuff. So well-defined boxes, who's going to be doing what, what the responsibilities are, what the KPIs are of that department

and hold each other accountable and have a plan if it doesn't go right, who's going to be doing what, what the responsibilities are, what the KPIs are of that department and hold each other accountable and have a plan if it doesn't go right. Who's going to be doing what? How do you get out of that? Because if it's not written down, there's going to be problems. So the better you communicate right now and have plans, this is what a marriage, when you get a prenup, it says, we're planning for the best, but if we get a divorce, here's how it's going to work. And it's a document that explains everything, how the money's going to travel.

That should be done in business when you get into a partnership. How do we resolve this? How do I buy you out? How can you buy me out? What happens if this happens? What happens if something happens to our health? Do our kids take the company? How do we, do we have key man insurance?

All these things. And they never come up until it's a bad time. Just like every business relationship, we buy a company, we've got a bunch of insurance policies. We've never had to use them. It's what happens when something bad happens. That's usually 99% of the time,

you don't have to touch it, but the 1% you do, it needs to be communicated. How do you do taxes on retail or wholesale? So Arizona makes you pay on wholesale. In other states, we pay retail. It's all up to the state. You've got to pay taxes to the tax code in your market, in your county, in your state. Federal taxes work differently, but typically federal taxes are one thing, state taxes are another. Sometimes you've got county taxes. I don't get to dictate how I pay taxes. We just follow the tax code. It's called gap accounting, general accepted accounting principles.

And that's what we practice. We get audited every year. We do an internal audit from a big four bank, completely audited, not just reviewed financials, completely audited. Because when you're growing like we are, we're taking money, we're getting loans, we're getting growth capital. We're using growth capital to buy good companies. So let's just say we got five times leverage. If we buy a company with a million dollars of EBITDA, they're going to give us $5 million loan on it. If we pay six, we got to come up with the extra million out of pocket. We're able to borrow the five, put one in and we're maximizing our leverage. And that scares people. But when you're a company my size, it kind of makes sense to grow this way. And you go into the next deal and then eventually do an IPO. And then you're using,

you're raising capital from the stock. But I don't, I don't recommend it for the faint at heart. We pay lots of money every quarter, lots and lots of millions. And we've never had a down quarter though. So, you know So they invested in the mindset, the leadership, the culture. But now there's all these bridge loans and these literally the PE companies that were on like a three-year arm, they're all about to lose everything.

They're literally saying, take the business for free, just take on the debt. That shit's going on left, right and in between. There's so many deals right now. I mean, it's crazy because people didn't predict interest rates to go up. They thought they were just going to grow. And now they're stuck between a rock and a hard spot about to lose everything.

It's happening. It's going to be a lot of disruption in the next two years. A lot of opportunity as well. Given the diverse financial landscape and the unique challenges that individuals face. Could you riz into more comprehensive and actionable strategies for Gaiat attaining financial wealth? There's some typos in there. I understand home service. I know that if I could make the phone ring

and I know how much that call costs and I understand the price model and I understand the performance pay and I have great training, I don't think there's any way I'll make more wealth than investing in home service companies. I like a diversified portfolio, some real estate, some stock. I've got some in PE. I've got a well-diversified... A1 is still my biggest investment. And what Adam told me the other day is there's this 130 rule. If you've got your age plus the percentage of capital of your net worth in your company, so let's pretend you're 40 and you got 90% of your net worth wrapped into a company,

that's 140. You should take chips off the table. If you are at 70% and you're 60 years old, that's 130. You should take chips off the table. His other rule is if you have 4 million of EBITDA, take some chips off the table. Because there was a company that was going to sell for a couple hundred million. They were in the movie theater industry. COVID happened. All of it's gone. He had a deal going to be hundreds of millions of dollars boomed to zero because you never know. World War III happens, an atomic bomb goes off, communications go down, anything can happen. You don't want everything in one investment forever. You want to be diversified. Diversification is key. Great news on implementing L systems and implementing that. Just reading here,

Tommy, I'm currently working with my dad to help grow his carpet cleaning company for 20 years. What percent of net profit should I delegate to marketing each month? What percentage of net profit? I don't say profit, I say revenue. I think 10% is the magic number. There are markets that I spent 20%.

There are markets that I spent six. Am I trying to make market share? Am I trying to stay... I think 10% keeps you at a continuous small growth rate. If I'm going to go to 25%, I'm just going to say I'm not going to make profit in this. I'm taking market share. I'm trying to create repeat business. If I'm in the carpet cleaning business, I'm trying to create memberships. I'm trying to get more people to use this on a regular basis to build the book of business. And once it's enough to. I'm trying to get more people to use this on a regular basis to build the book of business. And once it's enough to where I'm bringing in 20% bottom line, now I continue to grow more. And that number should be getting bigger and bigger and bigger. And the biggest

thing I'll tell you guys is you don't need a $100 million company to retire. Figure out what you want and build a company you could sell within five years and maybe roll equity. Like what would $10 million mean to a lot of you? A lot of you like, no, I need more than 10 million, but you're bringing in a hundred grand a year. You're bringing in 200 grand a year, build a business. You get it to 2 million, five X that's $10 million. People are selfish. They don't have an exit plan. They don't want to take care of the people to help them get here. You get a $2 million dude, get five, six, seven, 10, $12 million, roll 30%. The check for the 30% will be bigger than you got for the 70%. Like, why would you, what do you want to put your family through for the next 20 years? You think the economy and the market and the United States of America with

the AI, the robotics, the stuff that Elon Musk and Jeff Bezos and all these monsters are working on, if you don't have a five-year plan or less, you need to recalibrate your idea. And you need to figure out how much you need. And the quicker you get that money into your bank account, the better off you're going to be. A lot of people are like, no, I'll never sell. Okay. Well, your kids are going to miss you.

Hopefully your wife stays with you. Your husband stays with you. The people that work for you are never going to miss you hopefully your wife stays with you your husband stays with you the people that work for you are never going to get equity that'll never evolve because you're never going to divest and pull some chips off the table so you're selfish seriously built to sell build a business to sell it period well i'm going to keep it in the family bullshit your kids don't want your business trust me you might say my son loves this business. Okay. Well, very, very seldomly is an exception. And this business is not going to last forever. We live in an ever-changing time. I'm telling you this, in the next 18 months, AI is going to be handling my phone calls. Like if you don't think evolution is happening

at a faster pace than it's ever happened, you got another thing coming. I mean, literally at the end of the day, if you guys think we're going to be going to Google in 20 years for home service and five years, even like guys, I'm starting to diagnose stuff over the phone with pictures. We're working on so many advanced things. And like, you just see, like people are like, oh no, I got a 10 year plan. 10 years. you don't even know what's going to happen next year. You don't even know the economy. You don't know interest rates. It's an election year.

Like we don't know if the border is going to still be open. We don't know what the hell is going to happen in one year. Now we got 12 million new people that are working in this country. And I'm not against it. Literally at the end of the day, I want people to come into this country. I don't mean to go off on a rant, but I'm saying there's a lot of unknowns that you don't know about. Three years should be the top of your plan. Five year max.

Figure out what you need to do and do it. Quit screwing around. Go out there and figure out how to generate leads and hire better people and train more. Top grade today. Right size your business. What are you thinking? This is the time.

Oh yeah. Well, if we just wait another, if you're not making 15, 20% figure out how to do that shit now, no more excuses, no more. Oh no, we're going to get through. This is not a good economy. If you can't grow in this economy, good luck. Your business will never be worth anything. If you're waiting for your special day of your magic day, it's not going to happen. The magic's already gone. We went through four years of dramatic growth where you could poop in a corner and make money. You put a hat on that says, I do HVAC. You were balling. You could have an unwrapped truck and a dune buggy and still make

money. Now it's actually hard. You're going to watch people falling left and right. I mean, this is the hard truth. I'm not here to sugarcoat it. I'm telling you guys, it's not easy. You've got to think harder, work harder, work stronger, delegate more, give more to the people that you create a funnel of happy people that want to work for you. You can't accept second best. This is not for the faint at heart. I can't tell you guys that enough. Everybody sees this dream.

It's happening. It takes hard work. A lot of people are at the right place at the right time. And right now is not the right time. Right now, interest rates through the roof. Right now, what's going on in the economy right now, seeing banks fail. It's not going to be easy. I'm prepared for it. I'm excited for it. There's an opportunity for me. And I'm not saying you can't do it. I'm just saying that you could just fart in the wind a few years ago and make money. Now it's actually difficult. So I'll be honest with you

guys. You're just going to start a money in a depressed economy. You're going to work your ass off. Be ready to work nights, weekends, holidays. Be ready to give up relationships. Be ready to just strap down and freaking work your butt off. When you're done working and you better listen to two podcasts or read two books a week. Because if you're not growing fast, if you're not learning, you don't get great consultants around you, you're not investing back into the business, you're going to be working 80 to 100 hours a week. And you're going to be doing that for the next five years. And then you'll succeed. But if you think you're just going to say, oh, listen, I hired a general manager and I got a good fractional CFO. What now? It's supposed to

happen, right? No, it's hard freaking work. This shit's going to hit you hard in the face. You're going to fail. You're going to fail again. You're going to fall down. You're going to tell people are going to tell you you're worth nothing. You're no good. You're going to lose your house. There's a good chance you're going to have to get your blood drawn to get an insurance policy. An SPL loan is not going to go good. You're going to have interest. You're going to have somebody complain. You're going to have a guy steal from you. You're going to get a police report the next week this shit's not easy if it was everybody and everybody wants to do it everybody says i want to do a business because i want freedom i want what they have yeah 20 years later i'm just being real some of you guys don't want to hear this some of you guys

are thankful for it either way i'm fine with it because i don't lie i'm not going to pretend this is easy i'm not going to tell you guys in sugar coated that it doesn't work. Nine out of 10 businesses fail and they lose 10 years of their life. Then they go back to work and they lost 10 years. They got a divorce. They don't, they haven't had a close relationship with their kids. It's not easy. You need to get educated. You need to work hard. You need to show up. You need to know what your plan is. It doesn't need to be this year. It needs to be this month and this quarter. It needs to be this quarter, this month, this week, today. What are you doing today in your business?

What are you doing today? I know what I did all day. I'm literally growing Garage Door Freedom. I was on a different podcast learning about something else. Guess what I'm doing? I'm going to talk to 80 CFOs tonight. I've talked to two people about acquisitions today. I literally have a plan every day of what I'm doing. I've talked to two people about acquisitions today. I literally

have a plan every day of what I'm doing. I talked to Luke, my COO for 30 minutes. We talked about how we're modifying the price book. We're talking about things to move the needle dramatically. I said, listen, I'm not going to let any guys sell stuff until they get good at their core KPIs. Then they get the right to sell these new things. Me and Luke talked about it today. We're moving the needle. I know what I have to do this year. I know what I need to do today to get where I want to go. I can't answer a whole lot more questions,

but I just wanted to let you guys know, I love you. I'm not complaining. I'm not telling you guys you aren't worth anything. What I'm telling you is get your shit together, get focused. Wear blinders. Nothing is going your shit together. Get focused. Wear blinders. Nothing is going to stop you. Nothing outside. You're going to get an idea.

Oh, I should go into windows. Oh my God. They've been asking me to do their chimney cleaning because I got a gutter cleaning cup. F that. Focus on your core. Get huge in your current market before you want to franchise or license it out. Everybody's got a great idea. Oh, I figured out something. want to franchise or license it out. Everybody's got a great idea.

Oh, I figured out something. I'm going to license it. No, you suck. You're not very good. You haven't grown into any other markets. No one wants to buy your bullshit. Okay. Get really good at what you do.

Own your market. Go on the second one. Go on the third one. Have a whole system, a whole suite of opportunity that I could have a turnkey business. Then you can franchise. Everybody's like, well, you don't understand. I got this great idea. I know you do. We all have great ideas. I'll give you a great idea. I got a million of them, but I got to focus. I got to keep my head down. I got to grind. I got to keep on doing what's working and not have distractions. That's what you guys need to hear right now. Trust me. This is the year you right

size your company. You don't focus so much on getting a deal from your vendors. You've doubled down on training. You market. You double down on marketing of the stuff that's working because you got attribution. You invest in the best employees and pay them appropriately. You'll find one great employee could run circles around three bad ones. So you could pay them more because they're doing three times the work. three times the work. This is what you need to hear today. Going into this new year, I hope it's a great year. I hope we kill it. I hope everything happens great, but that's not what they're predicting. It's not going to be an easy year. Everybody's fighting for leads. Everybody's trying to be a self-employed,

go out there on their own. And then what do they do? They do it for cheaper and people hire them because they're cheap and And that's fine. Those aren't my customers anyway. But you guys needed to hear this. And I'm not sorry about it. I don't really care. Some of you guys might never listen again. That's fine.

But I'm never going to lie to anybody and say, I say plan for the worst, hope for the best. So hopefully you guys are ready to make some tough decisions. You're not just like, I'm going to double down this year and I'm going to grow, grow, grow. If you're making 20%, put 5% into growth and continue to grow. But if you're barely making ends meet, you do not have profit coming in every month, stacking in the account. Why would you want to grow?

Because it's not working. What are you going to duplicate the stuff that's not making you money today? That's an evidence of insanity. I don't get it. I'm okay. It worked out earlier. It's a good day. Had my protein shake.

But it's a cold hard truth, guys. It's what you needed to hear, hopefully. If not, I apologize. You can go home and cry because you're probably still living at your mom's house. No, I'm kidding. But I love you guys. If you need anything, the questions are amazing.

All you're going to do if you got questions is go to homeserviceexpert.com forward slash questions, write them in. My book Elevate right there is elevateandwin.com. And if you want the takeaways from this podcast, go to homeserviceexpert.com forward slash bonus, and you'll get the cliff notes. I appreciate you guys.

I think everybody listening, you're here for a reason. If you listen and you implement some of this stuff, you'll be successful. It happens all the time. I talked to a pest control company doing 17 million, started listening two years ago. He's like, dude, I did a few things you said, and it wasn't me. He just implemented a few things and boom, he's killing it. It's not hard, but this economy is tough, man. See, I'm going to go out and hire a bunch of great people and get the

branding done and then go out there and pay Google. And then I got to go to these events and then I got to get the right CFO. And then I got to come up with performance pay. and then I got to go to these events and then I got to get the right CFO and then I got to come up with performance pay and then I got to do my manuals and then I got to figure out a way to get new trucks and this and that and this and that and then it adds up and then powerful meetings and then what happens if someone quits and I got a workman's comp claim and now someone's stealing gas? I mean, listen, this is not easy. I can handle a million things at once. I'm high stress, high anxiety. I do better with it. You put me under pressure, I'm better. A lot of people, they don't want this. You don't want this, but you will do better. You keep listening. You keep applying some of these little principles.

I promise you, this is the real stuff. This is no sugar coated. This is what works in this industry, in home service. Throw me in pest control. Kill it. Throw me in landscaping. Kill it. Throw me in gutters. I'll kill it. But it takes time. You got to make the mistakes. You got to fall forward, get back up and be determined to keep your head down and focused. Focus, focus, focus. Have a plan written down and execute. Execution. Get rid of your ADHD for a week and just get your freaking manuals done. Go hire somebody. Nobody's applying. That's good.

I'm on Indeed. I'm on Glassdoor. They go out to Denny's, go out to Chili's, go out to Applebee's, show up and recruit, go to a B&I meeting. I never will let excuse. Well, no one's applying, so I can't find good people. Bullshit. I will go out to your market and find an ace in the hole today.

I've proven it over and over again. You send me into a market. I will have an ace by the end of the day because I don't, I don't accept excuses. Anyways. I love you guys. I got to head out and I love this. I love getting some of this stuff off my chest and I appreciate you guys

listening. I hope you guys have a wonderful, wonderful day and a killer January. Thanks, guys. 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.