#184 From Survive to Thrive: Scaling Your Home Service Business for Maximum Growth

Summary

Owned and Operated - Episode #184: From Survive to Thrive: Scaling Your Home Service Business for Maximum Growth

Host/Authors: John Wilson & Jack Carr
Release Date: April 8, 2025
Podcast Description:
The Owned and Operated electrical, HVAC, and plumbing business growth podcast is hosted by John Wilson and Jack Carr. These two Home Service Business owners bring you weekly podcasts and daily content with multiple perspectives, actionable advice, and insights into an ever-changing industry revolving around advertising, lead generation, and more. Join us every Tuesday for topical conversations that unlock the potential for your business growth.

---

1. Overcoming Initial Growth Challenges

Timestamp: [01:11] - [02:18]

John Wilson opens the discussion by reflecting on the company's impressive financial milestones. He highlights achieving a $3 million monthly revenue target, a figure he matched from 2019, and anticipates doubling that in July. This surge raises critical questions about the scalability of their existing processes and whether their team can handle a 50% increase in volume.

John Wilson [00:00:00]: "Every year we achieve this new thing. So like our first $3 million a month, like that's as much revenue as I did in 2019 and we're going to do that in July."

Jack Carr concurs, emphasizing their ambitious goal to scale to $15 million within two years.

Jack Carr [00:00:17]: "I only have to jump into our 15 million in two years. Let's do it."

---

2. Financial Performance and Gross Margins

Timestamp: [02:34] - [07:23]

John delves into their financial performance, revealing that they've maintained a higher gross margin of 50% in Q1, compared to their typical high 30s. This improvement stems from better sales mechanisms and rigorous process optimizations, despite challenges like undertrained HVAC personnel.

John Wilson [02:34]: "Gross margin was actually good. Like, we're finishing up Q1 at 50 gross margin, which, like, typically I'm in the high 30s."

Jack adds that focusing on gross margins inherently discourages over-discounting, allowing the business to maintain profitability even when offering discounts.

Jack Carr [03:06]: "By focusing on gross margin, you inherently don't sell by discount, just naturally."

However, John notes that selling by discount is a strategic move, enabling them to offer competitive prices without jeopardizing margins, thanks to improved sales processes and cost management.

John Wilson [03:39]: "We do sell a lot by discount. It's just we built the system to still hit margin with discount."

---

3. Hiring and Training Strategies

Timestamp: [11:02] - [19:36]

A significant portion of the discussion centers on strategic hiring and training to support scaling. Jack outlines their proactive approach to hiring before the busy season kicks in, aiming to add two headcounts per department based on their staffing needs projected for the upcoming months.

Jack Carr [11:25]: "All we are doing to ramp for summer is hiring, we're picking up, you know, two headcount each of each department..."

John complements this by introducing their Staff Planning Worksheet, a tool they've developed to forecast hiring needs accurately. This worksheet helps them anticipate staffing requirements a year in advance, ensuring they remain ahead of demand spikes.

John Wilson [13:37]: "I made it when I was $3 million. So it is very unsophisticated. Like the number of people I need... an average time to fill is I, I need this position to. This hire has started as 35 days."

Jack emphasizes the importance of early recruitment to avoid last-minute hires that often result in subpar performance and higher turnover rates.

Jack Carr [16:20]: "Most of our bad hiring decisions are because we hired too late into the busy season and we needed someone. You can't train, can't train him."

---

4. Inventory and Vendor Management

Timestamp: [19:52] - [25:38]

John and Jack discuss the critical role of inventory management in scaling operations. John explains the necessity of having sufficient equipment and parts on hand to meet the anticipated increase in service demand.

John Wilson [24:12]: "How do you have generators you need so a one day job doesn't turn into two? Or how do you have all the HVAC equipment and consignment and are your VMI set up or your inventory set up so that you can just continue to ramp out parts."

Jack echoes the sentiment, stressing the importance of maintaining open communication with suppliers to ensure a steady supply of high-ticket items, which are often the bottleneck in scaling operations.

Jack Carr [22:51]: "Making sure we have the conversations early with our sales rep. Like, hey, we sell, we sold x amount of 17 sear inverters last year... make sure that they're going to hold it."

John adds that consistent communication with suppliers, regardless of company size, is vital to prevent inventory shortages that could impede growth.

John Wilson [25:08]: "We meet once a month to go over exactly this. I don't even think that's a size thing. I think that's just important."

---

5. Leveraging Technology and Outsourcing

Timestamp: [08:16] - [38:37]

The conversation shifts to the strategic use of technology and outsourcing to enhance operational efficiency without increasing overhead costs. John highlights their partnership with Hatch, an automation tool that streamlines lead outreach through multi-touch channels like text, voicemail, and email.

John Wilson [21:46]: "Every single lead that you have gets worked. Every invoice that you leave gets retouched and rehashed and it's freaking awesome."

Jack expands on the benefits of leveraging overseas talent and AI to manage non-core functions, allowing the business to scale without the proportional increase in overhead.

Jack Carr [36:15]: "As we move into an era where the leverage from AI and the leverage from overseas talent is growing at such an exponential rate... you could hire a marketing manager for $2,400 a month and then actually be effective."

John concurs, discussing their selective outsourcing approach, where they maintain core functions in-house while outsourcing roles like accounting to overseas teams for cost efficiency.

John Wilson [38:25]: "We have no desire to bring that discipline in house... our controllers in house, but, like, the rest of our accounting team is overseas."

---

6. Mindset and Growth Projections

Timestamp: [35:09] - [40:23]

Towards the end of the episode, John and Jack reflect on the rapid growth trajectory achievable through consistent, strategic decisions. John shares his journey from taking full ownership in 2019 to reaching impressive revenue milestones within six years, emphasizing the importance of compounding the right decisions over time.

John Wilson [33:18]: "Our first $3 million year or our first $3 million a month, like, that's as much revenue as I did in 2019. And we're going to do that in July."

Jack adds a motivational perspective, encouraging listeners to stay positive and recognizing that significant growth can be achieved within a few years through disciplined strategy and execution.

Jack Carr [35:09]: "The point of this, John, was I was trying to stay positive for everyone listening coming out of Q1 that, like, you are only a few years away from a better."

John reiterates the potential for exponential growth, citing peer examples like Rich Jordan, who scaled his business from $900,000 to $24 million in five years, underscoring the potential within the home service industry.

John Wilson [35:32]: "If you can continue to compound the right decisions, you can move."

Jack concludes by highlighting the transformative impact of technology and strategic hiring on scaling, suggesting that businesses can achieve unprecedented growth by integrating AI and overseas talent effectively.

Jack Carr [38:37]: "There's a huge opportunity there and it's earlier than ever before."

---

Key Takeaways

1. Strategic Hiring: Proactively recruiting and training staff before peak seasons ensures that the business can handle increased demand without compromising on service quality.

2. Financial Discipline: Maintaining high gross margins through disciplined pricing and discount strategies allows for sustainable growth.

3. Inventory Management: Effective communication with suppliers and maintaining adequate inventory levels are crucial to capitalize on service demand during busy seasons.

4. Leveraging Technology: Automation tools like Hatch streamline lead management, while outsourcing non-core functions to overseas teams reduces overhead costs.

5. Growth Mindset: Consistently making informed, strategic decisions enables rapid scaling, transforming a business from survival mode to thriving.

6. Continuous Improvement: Regularly reviewing and adjusting processes, financials, and staffing needs ensures the business remains agile and prepared for growth opportunities.

---

Notable Quotes:

• John Wilson [00:00:00]: "Every year we achieve this new thing. So like our first $3 million a month, like that's as much revenue as I did in 2019 and we're going to do that in July."

• Jack Carr [00:00:17]: "I only have to jump into our 15 million in two years. Let's do it."

• Jack Carr [03:06]: "By focusing on gross margin, you inherently don't sell by discount, just naturally."

• John Wilson [13:37]: "I made it when I was $3 million. So it is very unsophisticated. Like the number of people I need..."

• Jack Carr [16:20]: "Most of our bad hiring decisions are because we hired too late into the busy season and we needed someone. You can't train, can't train him."

• John Wilson [24:12]: "How do you have generators you need so a one day job doesn't turn into two? Or how do you have all the HVAC equipment and consignment and are your VMI set up or your inventory set up so that you can just continue to ramp out parts."

• Jack Carr [36:15]: "As we move into an era where the leverage from AI and the leverage from overseas talent is growing at such an exponential rate... you could hire a marketing manager for $2,400 a month and then actually be effective."

• John Wilson [35:32]: "If you can continue to compound the right decisions, you can move."

---

Conclusion:
In this episode of "Owned and Operated," John Wilson and Jack Carr provide invaluable insights into scaling a home service business from survival to thriving. By focusing on strategic hiring, maintaining financial discipline, effective inventory management, leveraging technology, and fostering a growth-oriented mindset, they outline a comprehensive roadmap for entrepreneurs aiming to achieve maximum growth in the plumbing, electrical, and HVAC industries. Their real-world experiences, coupled with actionable advice, make this episode a must-listen for business owners poised for expansion.

Transcript

[John]

Every year we achieve this new thing. So like our first $3 million a month, like that's as much revenue as I did in 2019 and we're going to do that in July. Do our processes make sense and will they work at double our volume? Hey, are you good? Are you good at 50% more volume?

[Jack]

I only have to jump into our 15 million in two years. Let's do it.

[John]

You'll honestly, you'll probably do it. So a big goal for this year as we prep for busy season is foreign.

[Jack]

Just answer the phone is one of those phrases that's always easier said than done. I know it was hard for me in my business because the phone always rings while you're out in the field trying to get something done or it's 8pm and you're trying to get your kids to bed. Well, I have the solution for you. I'm extremely excited today to announce quick staffers your go to solution for building a high performing, cost effective customer service team. We are placing CSRs who have been pre trained on proven home service SOPs and scripts, the same ones that Wilson and I use in our business. For a limited time, we're offering $500 off your initial placement cost for the first 10 signups. See link in the description below or head over to quickstaffers.com for more information.

[John]

Welcome back.

[Jack]

Welcome back to owned and operated. I'm taking over, John. You, you. You can own the welcome back.

[John]

I've had a good run.

[Jack]

Yeah.

[John]

When I've had a good run.

[Jack]

When we're. We're dealing with ro. With other legends. But it's my time now.

[John]

Yeah, yeah, yeah.

[Jack]

What's going on, man?

[John]

Dude, like Wednesday, March 26th. You know what that means, Jack?

[Jack]

I have no idea.

[John]

We're at the tail end of my least favorite part of the year.

[Jack]

Oh, yeah. Q1's almost over, dude.

[John]

We are five days out. We're almost there. Almost there. So. Yeah, no, we're. We're feeling really good. We're feeling really good. Quarter one's wrapping. I mean, April technically is our hardest month.

[Jack]

Really?

[John]

But our sick. Oh, yeah, yeah. By. By kind of a long shot, but. But we're going into April stronger than we've ever gone into April. So we feel great.

[Jack]

Why. Why is it I feel like April wouldn't be your hardest month because you can actually lean on maintenances? No. That's surprising for me to hear.

[John]

Yeah, I mean we might be better at it this year. Last year was our first year, like getting decent at it and we have a way better, like, sales mechanism this year. So actually, I really don't know how April's gonna go because we broke most of our rules this quarter. One with how we. How we've managed so far.

[Jack]

What do you mean by that?

[John]

Like, gross margin was actually good. Like, we're finishing up Q1 at 50 gross margin, which, like, typically I'm in the high 30s. Like last year I was in the high 30s.

[Jack]

Yeah.

[John]

Yeah. It's because we had some H Vac guys that didn't know how to sell to mar. So that basically dragged the whole company down.

[Jack]

Yeah. I mean, I think it's also right. Your team has graduated from. And it's mostly your focus. Right. By focusing on gross margin, you inherently don't sell by discount, just naturally. And you're working on pricing to get gross margin down and you work by discount.

[John]

We do sell a lot by discount. It's just we built the system to still hit margin with discount.

[Jack]

Yes, that makes sense. So when I say sell by discount, I mean like, over discount. If you're planning in a 10% discount. Right. That's not really a discount.

[John]

Yeah. Or. Or like, like we talked about a couple episodes ago, how do you give a huge discount but be able to plan the rest of your organization around giving that discount? Like, how can you give it and protect margin by buying better or having labor that makes, you know, works within that.

[Jack]

Yeah, definitely agree. The nice. I mean, maybe it's geographical, but April, actually, the month always is like a little spike for us because we start our maintenances, we get our first 80 degree days of spring, and like, that's when we catch all the leaking coils and compressors out and all like, the big jobs.

[John]

That's May for us. Yeah, typically. But we. We might be able to see it happen in April. I mean, the big wins this year, I'll give some Q1 wins because we're sitting here just like, oh, my God, we made it. This is the first year ever that we have never even had to bring up the topic of a layoff of any type. Like, didn't even come up. Yeah, I mean, we dialed in our lead gen, we dialed in our install, we dialed in our sale. Like, we've. We have next leveled on all of those three things, which is, you know, we've talked about that a ton on the show, but huge win. And it's honestly been a huge cultural win because around the office, like, everyone in electric was like, dude, last year, we were doing nothing. Like, last year, like, they had to lay four guys off this year. Like, we're. We're ramping up hiring in March because To keep up with what we're selling. So just huge win. And plumbing is the same thing. Plumbing is just like, oh, my God. Usually we're dead in the water. Like, we have 12 installers. We need to jump to 14. Like, we do not have enough. Really big win there. We also didn't have to talk about reducing overhead salaries. I think the reason is. And we should dive into this again because somebody. Someone in the owned and operated pro community just asked me about this, but, like, hey, walk me through, like, hiring remote again. Like, the reason we didn't have to reduce overhead salaries is because we aggressively moved more positions remote. Yeah, like, that's it. That was a huge win for us. We were able to. It, like, made the business more defensible.

[Jack]

You. You know what's interesting? And. And I don't. I mean, I don't want this episode to be honestly talking about remote hire and all that, but what I noticed, which is super weird and makes me feel uncomfortable about having so many remote employees, overse my expectation and understanding of the actual square footage I need now is so much vastly different and than I imagined. So when I saw your shop the first time, you guys were still using local CSRs, dispatchers, local everything. And your bullpen was stacked. Like, there was desks everywhere. And I was expecting, oh, I'm gonna need to do that too. And then, like, if you watch that video on the Facebook group where I walk through my office, it's mostly empty because I have a few managers and that's it. Like, all the csr.

[John]

Well, I think you change what you use it for.

[Jack]

Yeah.

[John]

Because what you'll end up using it for is conference rooms. We have three conference rooms, and they are used. Like, it's. Sometimes it's really hard to find a room, Training rooms, a technical training room. I think you just maximize it. Like, gives you more options.

[Jack]

Yeah. I just mean, like, the. From a point of view of, like, just expectation to reality is I was expecting. Needing at this point in. In my journ, an additional, you know, seven to eight desks here with people sitting in them full time and is really like, oh, no, they're just at home.

[John]

Yeah.

[Jack]

So super weird. But yeah, I mean, that. That's. Those are some big wins. Any others?

[John]

I mean, net profit was huge.

[Jack]

Yeah, that's. That's our biggest win is just we saw we actually were able to realistically and accurately capture financials and know if we were winning or losing. And we know we won every month in Q1 as a business and as H vac. We also know that we lost a few months in plumbing, which. Yeah, like that's the first step though, to changing it.

[John]

First off, how dare you. Like, plumbing doesn't lose. It doesn't lose. Plumbing is the golden cow. Like, I don't understand what you did wrong.

[Jack]

You know it. That's a good question. And it has a lot to do for us personally with training. Training. And we weren't doing full evaluations, so we were showing up and doing, you know, half ass. Hey, we change out the cartridge for 200 bucks and you can't run a business changing out 200 cartridges. Like it's just never going to work. You're never going to sell anything. Our excavator didn't move for like three weeks and I about ticked a hole.

[John]

Yeah.

[Jack]

Drank a monster energy and pulled a Kyle and just put a hole in our wall somewhere. Sorry, Kyle's. But yeah, like a real, real. But the realization came from actually knowing our financials, which is the first time in three years that we've been able to do it accurately and consistently.

[John]

Yeah.

[Jack]

So super big.

[John]

Dude, that's. That's awesome. That sounds like a huge. That sounds like a huge one.

[Jack]

Yeah. And then it's the first time too. And I know like complete understanding and transparency that we've only been in business three years, but it's our first time coming out of Q1 positive from a net perspective.

[John]

Yeah.

[Jack]

So really excited about that. Because normally negative and then you have to dig yourself by like June, July you're out and August you make some money and then you try not to lose that money the rest of the year. This year we're like going in up.

[John]

I know.

[Jack]

Which is awesome.

[John]

I had the same conversation with my controller like an hour ago and yeah, it's sweet. I think we're exiting Q1 at 10%. Which. Which like. Yeah.

[Jack]

Huge.

[John]

Huge.

[Jack]

Especially at your size. Because I mean, realistically. Right. With the smaller you get, the easier it is. I can imagine. Like the.

[John]

The bigger it takes a lot. Well, it takes a lot. And that's why. That's why I think like the biggest wins were like sales process, keeping the board full. Just like how do you sell properly? And then overseas hiring. Like those were the wins, obviously. Like I'd say there's dozens of other things I did last year to make sure that this exact thing happened. And if you list to like April to December episodes all of last year, like you will listen to me solving this problem so that I can sit here today and say here's what happened. But like, yeah, negotiating the up expense lists, the every monthly renegotiations, SaaS reductions, sending seas things overseas, keeping the board full. Like in my mind, nine months of my year are set. Like is me spending time figuring out January through.

[Jack]

Yeah. May and I mean honestly, it wasn't an overly rough. From a temperature standpoint either. It wasn't like a super terrible winter.

[John]

Yeah.

[Jack]

That blizzards and destroying home. Like it was a moderate winter, to be honest. At least for us.

[John]

For us it was cold.

[Jack]

That's good. You guys got some negatives for a while. Yeah. Because you were out in the field. So now though, as we're moving. Right. And I, I kind of want to attack this from a holistic point of view. A 32,000 foot level as you're moving into summer or out, just generally out of a season into another season. Because I know, you know, I, I don't think electrical has the same issues that plumbing or H vac do as you move out of Q1.

[John]

Yeah, it does.

[Jack]

Does it?

[John]

It's the exact, it's the exact same cycle.

[Jack]

You know, it's super interesting you say that because I was talking to roofers. Roofers said the same thing. Guys who do fencing, guys who do fencing said the same thing. Landscaping, irrigation, landscaping, they all say the same thing. Like Q1 is hard, just home service tough.

[John]

Yeah. Q1's tough for home service.

[Jack]

Yeah. And so as you're moving into Q2, like, how are you thinking about trainings and like the changes in business from a systematic point of view? How are you viewing those changes to like ramp and to kick gear into place so that it's no longer about survival, it's about thriving. I'll start, you know, because it's easy, it's probably easier for me to start.

[John]

Our answer is actually probably simple too. But go ahead.

[Jack]

Yeah. I mean, so realistically from, from our point of view, all we are doing to ramp for summer is a, we're hiring, we're picking up, you know, two headcount each of each department, which we have needed them at the end of last year. And we, our budget shows that we're going to definitely need them this year. We just didn't want to bring them on in Q1 when we didn't have the leads. And so now are all of our guys are packed. Like they're doing maintenances. We're packed, we're overflow, we're losing Jobs because we can't get there fast enough. And so we're ready to hire again. We've actually been posted for a while, so that's a big change, is just start the hiring process before you need it. And then the second bit is training. It's we are flipping everybody's mentality because they've been training or they've been training for the winter sales, and now we're getting them ready for the summer sales process and giving them their revamp on why you have to explain certain things and go back into that refresher course. So, I mean, I don't know if I'm missing something or if we should be looking at something else as well, but really, for us, it's two categories. It's hiring and training. Hiring, training.

[John]

I would only add one more category on there, I guess maybe two. I would add two. So for us, and we've been doing this. We're on our fifth or sixth year of doing this. Discipline. We use what we call a staff planning worksheet, where it details out roughly the budget by month of hey, in April. And I guess I'll go into the why. So, like, If I have 10 sales plumbers right now, come May 1, I will have enough demand for 13. Now, you can measure this in a few different ways. One, how many leads are we buying? What percentage of leads are you buying? So for us, if we're buying 40% of our leads for a team that's tough to hire for. Like, there's a lot going on there. Like, what happens if I have a shortfall of leads? You know, you're more likely to see, like, feast or famine. Yeah, because if I add a guy on there, suddenly it'll be 50%. And if there's a slow day, it's a whole thing.

[Jack]

If I'm buying my leads, you can't turn the dial.

[John]

Turn it up. Yeah, you can't turn it up. So, like, you are already at like, 30, 40%. Like, you are stretched on the available leads in that market. Most likely for our size at least. The other thing we think about is literally the more simplistic one, how many days out of my booked. Like, if I'm booked four days out. Like, booked. 100% booked. Dude, you need to hire two people. Just, like, go hire two people. So you can use either. Either one of those to measure. But, like, come, come May, like, our demand for all of our service departments will jump up by three or four per team. And there's six teams, so that's 18 people. And then we will need to then add installers to support what they sell. So right now we're in big time hiring mode. And we, we started earlier than ever this year again because we talked about how strong quarter one was. Like, we actually ran up against our staffing limits in Q1, which we did not expect. Like, electrical install is understaffed. Whereas, you know, a year ago we were doing layoffs of that team. So, like, we didn't, we just didn't expect it. Yeah, we didn't expect it. And it's the same thing with plumbing. So, like we have a shortfall of two for each of each of those teams and then we're going to add another net to also to each of those teams. So right now the biggest thing is hiring. And we try to forecast a year out for hiring. It's obviously not always correct, but that staff planning worksheet gives us something to work on. So, hey, I know that in next April I'm probably going to need two more people in trucks in H vac service. So I want to start recruiting for them in February when other companies are doing layoffs.

[Jack]

Yeah, I mean, you talked about it. I know. I remember talking about in January, February is you were saying people were actually knocking on your door asking if you were hiring. Yeah, they had walked ins.

[John]

Yeah.

[Jack]

Just crazy. So is this, is this forecast sheet that you. Is this something you created internally? Is this something that you've received from nexstar?

[John]

I made it when I was, I made it when I was $3 million. So it is very unsophisticated. Like the number of people I need. Yeah, it's number of people I need. And then like a red light, green stoplight system for like, hey, you have 60 days to hire this role. Because our average time to fill, I think is 35 days. So if so we give like an extra month. Basically an average time to fill is I, I need this position to. This hire has started as 35 days. So something to track as you're, as you're measuring. Because the, the bigger you get, the more you need to know, like, okay, if I need people in May for busy season, I need to start recruiting in March.

[Jack]

Yeah.

[John]

But honestly, the biggest mistake that I see really is just ramping up hiring because it's really hard to unclench yourself out of Q1 like Feast or famine type of mentality. And our April to March is whiplash.

[Jack]

Yeah.

[John]

Like, it is a 40 to 50% revenue jump in 30 days. So it is just like you go from like struggling to Keep people busy to holy shit, what's happening?

[Jack]

Yeah, the other.

[John]

So it's hard to like unclench it and hire well.

[Jack]

And then I think what you get on the back end of that, right, is like, what's the quality of text that you're picking up in February, March versus June. Like you're not getting any good technicians in June, in my opinion, because they're all busy, they're all working, they're all making money, they're all happy. When the technicians aren't happy is when you know the, the giant private equity company can't keep them busy. They're not making money in February. And then that's when you get attrition and you pick up the killer tech, not the middle of June.

[John]

Yeah, well, I agree. And I also think it puts you behind the eight ball. Because what we used to experience is we did not start recruiting early enough because we were so nervous because Q1 was bad. We didn't want to bring on the payroll, we didn't feel like we could support it. But then, oh my God, it's July, I'm booked out for two weeks on this team. I can't keep up. And we make bad hires because we're in a rush to get someone in a truck and then we lose them anyways.

[Jack]

And you can't train, can't train him.

[John]

You can't do anything. So most of our bad hiring decisions are because we hired too late into the busy season and we needed someone. The other thing, I'll, I'll put a plug in. And this is a way that we like, really we are being extra conscious about this this year, like communicating with leadership, but a big temptation where we have lost a lot of net profit over the years. How about that? That's a better way to put it is we get really busy in the summer and we start hiring administrative payroll to backlog the summer busyness as full time positions. And then they get laid off in the slow season because suddenly it doesn't make sense and they didn't do that good of a job anyways. So because we couldn't train them because we hired them in peak season when everyone was frazzled. So a big goal for this year as we prep for busy season is over. Like, hey, let's check our. Do our processes make sense and will they work at double our volume? Does our staffing make sense and will it work at double our volume? And if it doesn't, how can we support those functions with an overseas hire or a software? Like how can we, how can because what will typically happen for us historically, but we're going to beat it this year is our summer net profit will jump up to like 15, 16, 17% because we add more overhead to support the additional revenue. And our big focus this year is how do we add no overhead and how do we drive 25 to 30% months?

[Jack]

No, I think that's a great. Yeah, I think that's definitely possible, especially as you outgrow your experience.

[John]

I have peers doing it. Yeah, I have. I have peers doing it. So now we're really focused on, okay, if we're short staffed here and we're already feeling it in March, we're definitely going to feel it in June. Let's handle that now and let's absolutely do it overseas or with AI.

[Jack]

I mean it makes sense. Yeah, completely. Why, why wouldn't you? And so, okay, so I think that that all makes sense. So that was. The extra category is like hey, hiring and hiring properly in administration, not only text roles.

[John]

My fourth final category was materials. Like are you. So I'm going to give, I'm going to give like real revenue dollars here. That way people can understand the difference for us. Right now in March, I'm running four H Vac crews full time. Well, maybe do half a million to $600,000 this month in H Vac. In July we'll probably do 1.3 million in H Vac. It's a lot of money. Yeah, like company wide revenue this month is a hair under 2 million bucks. We're expecting to hit $3 million in July. Like that's the level of difference. Like it is a million dollars of difference of jobs completed, invoices, parts out the door, equipment. And how do you have that stuff on hand so you can be efficient during your busy season? How do you have the generators you need so a one day job doesn't turn into two? Or how do you have all the H Vac equipment and consignment and are your VMI set up or your inventory set up so that you can just continue to ramp out parts? So that's the stuff we spend a lot of time thinking on. Now do we have enough packouts to go from four crews to eight crews or are we going to be trying to figure that out in June? Earlier this year we started an outbounding campaign and we really didn't know where to begin. So we were using dialing on the phones, we were sending text messages, we were trying emails, tried a couple of different softwares and ultimately we ended up with Hatch Hatch has been an awesome partner for us. We started with them about five or six months ago and we've just continued to ramp. Every month we add three or four more automations. And my personal favorite thing about working with Hatch is Hatch comes out of the the box ready to go. With Hatch you get automated multi touch outreach across text, voicemail, drop, email and a ton more. So every single lead that you have gets worked. Every invoice that you leave gets retouched and rehashed and it's freaking awesome. Check out usehatchapp.com OAO.

[Jack]

Yeah, parts constraints a real thing too. I mean especially when you're, when you're moving that kind of volume I can imagine because it's a constraint for us and we're not moving that kind of volume well.

[John]

And I think the challenge is it's on a dime.

[Jack]

Yeah.

[John]

Like you go from like April where we'll do half a million in H vac to May, we'll do 1.1.

[Jack]

Yeah.

[John]

Like it's on a dime. Like you have to be able to double your volume within a few days and be able to withstand the shock of that in order to like fully capitalize on the season.

[Jack]

Well, I think a big part of it too, right. Especially for a lot of us who don't have VMI or don't have vendors just in general that work inside our warehouse is we're reliant on a singular vendor to be able to give us whatever parts and pieces and everything that we need. But they're, they like their problem is the same as yours where they're running this, this distribution warehouse at 15, 20, 30, $100 million. And like they have the same, same issues. And so making sure that as you can stem that off though, 100 right there.

[John]

Because what you should be doing and what we're already doing is, is like we're communicating. Hey, we're prepping for our busy season. You can do this. Sophisticated or not sophisticated? Sophisticated is here's exactly the number of furnaces that I'm going to move between these dates and like we can guess that within three to five unsophisticated is hey, my volume jumps up a lot. Do you have the parts on hand to support me? These are the job types I tend to do. I tend to do a lot of sump pumps in April. Yeah. So like hey, do you have 500 sump pumps ready to go or am I going to be held up by you? Do you have 50 generators sitting around? Am I going to be held up?

[Jack]

Well that, that's, I'm more focused on those bigger ticket items. Right. Because that, that's where they actually run out is making sure we have the conversations early with our sales rep. Like, hey, we sell, we sold x amount of 17 sear inverters last year. We sold this many dual fuels last year specifically for H Vac. But I mean it really, it transcends industry. Whatever your large ticket item is making sure that they're going to hold it. Because what we've seen between, you know, the Seer one to SEER two changes and the big changes in now in refrigeration, we want to make sure that they're holding the 15 and 17 seer. Yeah.

[John]

Can they, can they support you?

[Jack]

Can you support us? Because if you can't, we're going to go somewhere else. And so that, that's what we do.

[John]

And then that's perfect. March, April conversation. Yep. And days of inventory on hand and roughly the number of boxes you're gonna move. And like for you, it's, it's, it's not that hard. It's like, how many, how many water heaters did I put in of June last year? Okay, add, add 10. You know, how many air conditioners did I put in of June last year? So it's not hard to get that number because you can just go off of number of jobs. So maybe you did like 20 jobs or 15 jobs in June.

[Jack]

Well, I mean, we, we work with the same distributor here, so they, they have the actual number of X, you know, SKU that we moved last year. And so it's just reiterating with them like, hey, make sure we're going to do this again at 35% more. So you need to be able to supply this at 35% more because we're going to do it again.

[John]

Yeah.

[Jack]

At least that's our plan to budget to get to where we need to go. And so you, you need to make sure to have this. Because I don't want to buy it from a different distributor and they don't want to sell. They don't want us to buy it from a different distributor. So they'll hold it. But I do think it's an important conversation to remind them because. Right. They're dealing with 6, 10, 12 contractors. And so the squeaky wheel really does. I mean, in your case, you, you kind of are the, the big shot. So they're going to make sure that, I mean they're going to make sure that you're happy.

[John]

That definitely helps. Helps. But for a Smaller wheelchair. Yeah, I mean, like, I, I personally, yesterday I met with our primary H VAC supplier. We meet once a month to go over exactly this. I don't even think that's a size thing. I think that's just important. Like, hey, here's our projections for next month. Are you guys, you guys good? Today I meet with our secondary H VAC supplier. I meet pretty consistently with our plumbing and electrical. We're getting used to it, but it's sometimes it's literally once a week. Like we meet once a week with our plumbing supplier to make sure that they're good and to make sure that we're good.

[Jack]

Yeah, I think you're, you're, you're going to my point. As I'm saying, if, if you are a one, one million dollar plumbing shop, if you tried to meet with your supplier once a week to be like, dude, shut up.

[John]

No, Art, ours did at one. Habit. Yes.

[Jack]

Oh my God.

[John]

We actually got in that habit because we had, we had a few vendors that sent their salespeople to call on us once a week. And at the time I thought it was annoying. I was like, oh, this is just trying to sell me stuff. And later I was like, oh, no, this is actually really kind of important. And them having a pulse on my business every week is genuinely helpful.

[Jack]

That's where I was going with it though, was like, if, if you are not talking with your distributor once a month frequently because they think you're too small, pull a john and, and call them once a week and say, hey, we're going to do this.

[John]

I mean, we, yeah, pop on over on your route. Just tell me what day you'll be here, tell me what time. But that's what we tell our vendors. Like, and it's just because other people set the precedent, like, hey, I'll be here every Tuesday at 11am and then every Tuesday at 11am till the end of time, that person showed up.

[Jack]

Yeah. And they bring food sometimes.

[John]

Eight, eight years later, still does.

[Jack]

Do they bring food?

[John]

I don't know about food.

[Jack]

I mean, sometimes, sometimes, sometimes you tell them, no, but I need that grub. I think that's an important thing, though. As you start moving into summer, you're making sure that they're ready. Just any way that you're doing it, emails, calls, making them stop by, that you're prepping yourself and prepping them for the amount of volume you're going to do of whatever product that you want to sell or you're going to sell. Super important. Super important.

[John]

Yeah. 100. But no, yeah, we're. We're pumped. I'm really excited for.

[Jack]

I didn't think of that one though. I need to, I need to reach out to them and give them our summer prep stuff.

[John]

Yeah, I mean, limiting, limiting overhead and like communicating with the team of like, hey, are you good? You good at 50% more volume and like, and even better, like, what's going to break if I added 50% to your workload? And then how do we, how do we just solve that now with an overseas hire? So we don't actually add that much overhead because like our goal this year we had a few positions, we wanted to add net new positions and we decided on them. This is our first year we're doing this. So like, I don't know if it'll work, but we're trying to be like extremely disciplined about it because this is just our, it's our habit. Every summer we expand our OPEX salaries and we're, we don't want to do that this year. We feel like we've outgrown our overhead. So we should be able to accomplish new records with the same overhead salaries through automation, software, AI or overseas hires. We'll add some of that in.

[Jack]

But yeah, I mean, that's your people leverage and your technology leverage. Like, you have to utilize that so that you're not doing exactly what you're saying. I could see that becoming a massive issue.

[John]

Hundreds of thousands of dollars a month of overhead. When we've done it wrong, like, it's like a hundred grand. So we're trying to figure out this year, like, hey, how do we, how do we deliberately. We have two positions that we want to hire this year, American in office. And one of them we already hired. We hired a dedicated sales trainer, which, like, that's going to be awesome. And I'm, I'm like super excited about that. Yeah. And then we have a sales coordinator. So like our two. Two. And we just hired them and those are our two only positions. We're going to be hiring American in office this year. So, like, we'll find out.

[Jack]

Yeah, no, but dude, I, I want.

[John]

To be able to get on here and say that we clipped a 30% month in July.

[Jack]

That'd be super cool.

[John]

Yeah, that would be especially.

[Jack]

Like, that's stupid amounts of money that I can't even comprehend.

[John]

Like it's 900 when we, when we're.

[Jack]

Like, yeah, we got a 10 month and we close like 20k and it's like, wow, great job. But 900.

[John]

Yeah, it's a lot. Well, the bigger the business get, like we'll cross a million EBITDA year to date. In April.

[Jack]

Yeah.

[John]

Like in like the first week of April and it's like holy smokes, this is crazy. That's crazy.

[Jack]

Yeah, that is crazy.

[John]

That is crazy.

[Jack]

That's cool though. Yeah. I mean what, what people. What I talk to people a lot about too. And this is side bar is. Yeah, yeah. You've been doing this for a while but you haven't been doing it that long. Like the business wasn't. Isn't a 15, 18 year in the making business to get to the size you are. Like realistically for most people out there, like myself. Right. When I try to encourage myself to keep going, some days I'm like oh, I'm three years in John's. What nine years in. 10 years in nine. Yeah, nine years in. So like in another six years, like that's not that far away. Or in another three years. That's not that far.

[John]

I would even like another way to measure it. I had two stages of ownership and the second stage is the more important stage. So like yeah, I bought, I bought the business 2016 but I technically bought about half the business and I co ran it with my dad who was very growth like allergic old school and I bought. So it was actually 2019 that I took full ownership of the business and that was $3 million. So it's been six years since $3 million. And actually 2019 I think was like two point. Might have been 3.1. But yeah, like yeah, 1,000% or whatever.

[Jack]

Point being is stringing enough of these, these good decisions together.

[John]

Yeah.

[Jack]

In the same time it's taken me to buy this business to here in another three years, like the potential to be in the 10 to 15 million range really is probably unrealistic. Probably.

[John]

Yeah. Like in 2020 we did four some million dollars which is where you are at like mid to high four millions. And this year we're going to do 31.

[Jack]

Yeah.

[John]

So like it really is a couple years. It's not that it's. It's amazing how fast it goes.

[Jack]

Yeah. Time in. In the seat and time kind of on the train or on the bus is. It's a long time to get me wrong. Like multiple years of giving up your life and stress.

[John]

Yeah.

[Jack]

And I don't think it ever stops. I'm sure. But like in like the grand scheme of things. Not that long. Really. Not that long.

[John]

Yeah. Well and, and I, I was reflecting on this this morning. I, I get caught up in this a lot, because I think sometimes I ruminate a lot. I've always been, like, a reflector, so, like, I'll just like. And I've been in the. I have only owned the business since 2016 and all that, but I've been in the business for, like, my entire adult life. Like, I'm. I'm on 16 years in the industry. And, like, we're. You just look back at the journey and you're like, in January, we. We did, like, hundreds of thousands in net in just January. And that used to be an entire quarter of revenue. It was actually more than a quarter of revenue from when I bought the business. It was like four months of revenue, and I did that in one month of net.

[Jack]

Yeah.

[John]

And you just. You're just like, holy.

[Jack]

Yeah, we passed this month. Sorry to cut you off. We passed this month. Our first year's gross revenue in the first quarter of my third year. And so it's crazy. Same thing.

[John]

It's crazy. Yeah. You just look back and you're like, oh, my God. Oh, my God. You know, and. And I'm. I'm looking forward to it being like, every year we achieve this new thing. So, like, our first $3 million year or our first $3 million a month, like, that's as much revenue as I did in 2019. And we're going to do that in July. And it's just like, wow. And it. I get caught up in it because you just, like, sit there and you're like, hi. Oh, my God. But I can't. I can't wait till we're 100. And I'll be like, holy shit. Like, I remember when I crossed $7 million, it was 2021. And that was like, I can't believe I'm over $7 million. And we'll probably do that in a month. So in.

[Jack]

The point of this, John, was I was trying to stay positive for everyone listening coming out of Q1 that, like, you are only a few years away from.

[John]

Yes, a better.

[Jack]

Better. I'm relatable.

[John]

I'm relatable.

[Jack]

No one's relating to your $100 million story right now. If. If you know Roger Wakefield listens or something, maybe he will. He'll relate to you.

[John]

But, guys, I am relatable. But it was, like, only a couple of years ago, I was running a $4 million business. Like, it's only a few years. So it does happen fast.

[Jack]

That's the point. And it's like, hey, out of a garage to 7,000 square feet. 7,000 square feet to needing a 15 to 25,000 square feet, it's like three.

[John]

You're probably two years away.

[Jack]

Yeah. So that's the exciting part is realization that, you know, you're. You're in the trenches every day, but when you actually stop to ruminate and look back like, it really isn't that far. The timeline is much shorter than a lot of people actually realize. Yeah.

[John]

I think if you can continue to compound the right decisions. You know, Rich Jordan's another great example. He's super inspirational. He did 900,000 of revenue when he first bought his business, like five years ago. 2019, I think, or 2020. Like they're going to do 24 this year.

[Jack]

Yeah.

[John]

Like, that's insane. It's just insane. So, yeah, if you can continue to compound the right decisions, you can move.

[Jack]

Yeah. He was a similar situation. He's another one of the people I look at and go, that's crazy. Yeah. Sub million, like what we were. And then I think it was 2020. In five years, he's gotten to the 24.

[John]

Yeah.

[Jack]

So it's my goal. I only have to. I only have to jump into our 15 million in two years. Let's do it.

[John]

You'll honestly, you'll probably do it.

[Jack]

I think we'll get close.

[John]

Like breaking 5 million. A lot of, you know, obviously we have a workshop. Hey, guys, we have a workshop. But breaking 5 million, a lot of good stuff happens because you get to bring on you sort of between 5 and 10, you get to, hey, bring on full recruiter, bring on full marketing team or like marketing manager, ops manager. And a lot like that stuff is the big wins in that zone.

[Jack]

To be honest with you, I think that's changing too. Like, I know you say that because of that's what you did. And like, that's historically true. But as we, as we kind of move into an era where the leverage from AI and the leverage from overseas talent is growing at such an exponential rate. Like, I. I truly think that most people in the 3 million range could probably hire a marketing manager for $2,400 a month and then actually be effective and driving lead generation.

[John]

I think a very tactical one, potentially.

[Jack]

Well, so if you were to pay Scorpion, how much would you pay Scorpion from?

[John]

I don't know.

[Jack]

For. For specifically for management. Not even for ad spend.

[John]

I think that we had this discussion in a group chat the other day, and the issue that I have with it is like, you don't know what you're doing yet. As A business and it's hard to outsource a discipline.

[Jack]

That's true.

[John]

Like I don't know how to hire.

[Jack]

For that because you have to have someone build the systems and yeah, you got to build that they can.

[John]

So like if you're a small company, I don't know. Like, obviously I think agencies get like a lot of like bad rap Scorpion like being the prime example of that. But up to a certain point I feel like you have to. And then yeah, you bring on an internal marketing manager and maybe you internalize stuff. Maybe you use an agency. I don't know.

[Jack]

I, I view it the same way as I view utilizing overseas CSRs in conjunction with Avoca. Right. You bring on the marketing manager but the marketing manager at a 3 million or 4 million dollar company isn't doing like full marketing management. They're not like they're not owning everything, they're just owning probably SEO, Google business.

[John]

Yeah.

[Jack]

Aggregators, like maybe Facebook page. But I do think that you could drive meaningful change and have someone building those systems for you if you're not strong in that suit earlier on now than you historically have ever been able to.

[John]

I think so. And I think it's just picking what you bring in house. Like we still, we still agency ppc. Like we have no desire to bring that discipline in house.

[Jack]

I wouldn't ever do that.

[John]

Yeah, yeah, yeah. Or like I think paid meta. I think there's a good argument there to running that it depends on who you're like who are they strong with?

[Jack]

Well the other thing is like maybe the marketing person that you bring on isn't even doing the traditional digital marketing. Maybe they're more focused on like content creation and strategy versus I can agree with that.

[John]

I can agree.

[Jack]

And so you put someone in charge of. I mean what. Sam Leslie is a great example. It's like he has done an absolutely amazing job converting a. Yeah. Like a channel that not very many home service industry folks use and that's YouTube. Like he has cracking the YouTube code with a videographer and overseas talent.

[John]

Yeah.

[Jack]

So I think there's huge opportunity there and it's earlier than ever before. And whether that's in accounting or you know, just the same as like I wouldn't hire a c. Like an overseas CFO right now at 3 million. Like that wouldn't make sense. But like you could do overseas and we've talked about this, so I'm not going to beat the dead horse. Staff accountants but like staff accountant or assistance or.

[John]

Yeah, I mean like our controllers in house, but, like, the rest of our accounting team is overseas.

[Jack]

Yeah. So if you started early and got a staff accountant a little bit early to. To make your books right, to start prepping and designing and building the systems, like, awesome. But I wouldn't go, like, I'm never going to do anything outsourced again. Too early.

[John]

Yeah. Well, that. We talked about moving from Q1 to Q2, talked about prepping for summer. Feel like we covered some good stuff here.

[Jack]

Yeah, no, this was awesome. I mean, I got some, some value out of it. I'm definitely going to go reach out to some vendors.

[John]

I think we're like, hey, up, up your inventory.

[Jack]

Yeah, do it. It's more. So make sure you have what we need.

[John]

Yeah, yeah.

[Jack]

Because I don't want to go freaking hunt for it. It's always the worst thing in the world. Cool. That's awesome.

[John]

If you like what you heard, give us a five star review. Wherever it is you listen to shows, make sure you check out our YouTube channel. It is, like, starting to clip. We got some good stuff going on over there, which is a lot of fun. Our YouTube podcast episodes are like, actively growing, which is a lot of fun. Compared to, like the Spotify apples and stuff, it's growing way faster. So I think you're gonna start to see us on the tubes.

[Jack]

Is that what the kids call it?

[John]

The tubes? That's what the kids call it. Yeah, that's what the kids call it.

[Jack]

Awesome, guys. Appreciate.