Episode Summary: #185 From Roofing to Riches: The Blueprint for Business Growth
Hosted by John Wilson and Jack Carr
Introduction
In episode #185 of the Owned and Operated podcast, hosts John Wilson and Jack Carr delve into the intricacies of scaling home service businesses, with a particular focus on the roofing industry. Released on April 10, 2025, this episode explores the challenges and opportunities within roofing, HVAC, plumbing, and the broader holdco (holding company) model for business growth.
The Idea of Buying a Roofing Company
John kicks off the episode by contemplating the acquisition of a roofing company, expressing both enthusiasm and concerns:
John Wilson [00:00]: "So Jack and I are like, should we buy a roofing company? Like my dream business. Dream with me, Jack."
He highlights the complexity of managing multiple facets in HVAC compared to roofing, ultimately questioning the viability of roofing as a sustainable business model.
Challenges in HVAC vs. Roofing Business Models
John contrasts HVAC and roofing businesses, emphasizing the additional layer of complexity in HVAC due to service installation:
John Wilson [20:05]: "One of the reasons that I find HVAC complicated and drains complicated is because it literally is complicated. ... you're optimizing three things."
In roofing, the focus is primarily on lead generation and sales, making it seemingly simpler and more streamlined.
Utilizing Hatch for Lead Generation
The discussion shifts to lead generation strategies, with John sharing his positive experience with Hatch:
John Wilson [00:00]: "Every single lead that you have gets worked. ... it's freaking awesome."
Hatch's automated multi-touch outreach across various channels has significantly ramped up their outbound campaigns, providing a scalable solution for managing leads and sales effectively.
Holocamp Event and Holdco Model
John and Jack talk about their event, Holocamp, which has seen consistent growth and sold-out tickets. John explains the holdco model they employ, managing multiple businesses under one umbrella to drive growth through acquisition and incubation:
John Wilson [01:38]: "...we are running two different things again. ... it's all one problem."
This model allows them to leverage synergies between different business verticals, optimizing resources and maximizing growth potential.
The Owned and Operated Pro Community
John introduces Owned and Operated Pro, a new community aimed at enhancing business operations through a buying group, leadership training, and personal development:
John Wilson [04:35]: "It allows us to continue to develop our leaders through peer groups. ... peer groups have just been such a big win for me."
This community not only benefits members through better discounts but also fosters a collaborative environment for leadership growth and continuous learning.
Synergies in Holding Multiple Businesses
The hosts discuss the advantages of owning multiple synergistic businesses, using real estate agents as a prime example:
John Wilson [08:40]: "If I'm a high performing real estate agent, I probably have like a title agency relationship ... we have this whole like ecosystem built around one thing."
By building an ecosystem of related services, businesses can enhance their core operations, increase revenue streams, and create a robust support network.
Real Estate Agents as Holdco Success Example
John elaborates on how successful real estate agents manage an array of related businesses, creating a hub-and-spoke model that ensures sustainability and growth:
John Wilson [09:18]: "I look at trucks. But I can't tell you before I bought this company... I don't know a single roofing company."
This model contrasts with the decentralized approach of many holdcos, emphasizing the importance of integration and cohesive branding.
Analyzing a Roofing Company Listing
John and Jack critically examine a roofing company for sale, identifying several red flags in the listing's financials and business operations:
John Wilson [23:02]: "Yeah, $3 million for roofing with an average ticket of like 15, 20 grand. That is not a big business."
They scrutinize the unrealistic cash flow claims and question the valuation metrics used, highlighting discrepancies that suggest overvaluation or misrepresentation.
Valuation Red Flags in Roofing Companies
The hosts dissect the valuation of roofing businesses, pointing out the pitfalls of using seller discretionary earnings (SDE) versus EBITDA:
Jack Car [23:20]: "SD. A million dollar SD on $3 million gross. That is crazy margin net margin that they're claiming."
They argue that such high margins are unrealistic for roofing companies, where the operational complexity and market dynamics typically result in lower profitability.
Buy vs. Build Strategy in Business Growth
John advocates for the "buy vs. build" approach, emphasizing the cost-effectiveness of acquiring existing businesses over building from scratch:
John Wilson [28:10]: "...how my brain works. What would it cost me to replicate $1.3 million inside my business? And the answer is sure not $810,000."
Jack counters by acknowledging that while larger acquisitions might not be impactful for big companies, smaller deals can still drive significant growth for smaller businesses.
Commercial vs. Residential Roofing
The conversation shifts to the differences between commercial and residential roofing, with Jack expressing skepticism about the scalability and loyalty in residential roofing:
Jack Car [30:15]: "I can't tell you before I bought this company in any of the last cities I've lived in. I don't know a single roofing company."
They discuss how residential roofing lacks the repeat business and brand loyalty seen in commercial sectors, making it a less attractive acquisition target.
Conclusion and Future Topics
Wrapping up, John and Jack reflect on the challenges of the roofing industry and reiterate the importance of strategic acquisitions that truly add value. They hint at exploring other tier-two industries like water quality and duct cleaning in future episodes:
John Wilson [42:11]: "I do think generator businesses... I think we should dig into it."
They encourage listeners to visit their website and engage with their community, promising insightful discussions in upcoming episodes.
Notable Quotes:
- John Wilson [00:00]: "Every single lead that you have gets worked. ... it's freaking awesome."
- John Wilson [04:35]: "It allows us to continue to develop our leaders through peer groups. ... peer groups have just been such a big win for me."
- John Wilson [20:05]: "One of the reasons that I find HVAC complicated and drains complicated is because it literally is complicated. ... you're optimizing three things."
- Jack Car [23:20]: "SD. A million dollar SD on $3 million gross. That is crazy margin net margin that they're claiming."
- John Wilson [28:10]: "...how my brain works. What would it cost me to replicate $1.3 million inside my business? And the answer is sure not $810,000."
Key Takeaways:
- Strategic Acquisitions: Focus on acquiring businesses that offer significant value and synergistic opportunities, avoiding overvalued or misrepresented listings.
- Holdco Model Benefits: Managing multiple synergistic businesses under one umbrella can optimize resources, enhance growth potential, and create a robust support network.
- Lead Generation Tools: Leveraging automated tools like Hatch can streamline lead management, ensuring every lead is effectively nurtured and converted.
- Community and Peer Groups: Building a community like Owned and Operated Pro fosters leadership development, continuous learning, and mutual growth among members.
- Realistic Valuations: Critically assess business listings, especially in industries like roofing, to identify genuine opportunities versus inflated or unrealistic valuations.
For more insights and actionable advice on growing your home service business, visit www.ownedandoperated.com.