#185 From Roofing to Riches: The Blueprint for Business Growth

Summary

Episode Summary: #185 From Roofing to Riches: The Blueprint for Business Growth

Hosted by John Wilson and Jack Carr

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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.

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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."

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Key Takeaways:

1. Strategic Acquisitions: Focus on acquiring businesses that offer significant value and synergistic opportunities, avoiding overvalued or misrepresented listings.
2. Holdco Model Benefits: Managing multiple synergistic businesses under one umbrella can optimize resources, enhance growth potential, and create a robust support network.
3. Lead Generation Tools: Leveraging automated tools like Hatch can streamline lead management, ensuring every lead is effectively nurtured and converted.
4. Community and Peer Groups: Building a community like Owned and Operated Pro fosters leadership development, continuous learning, and mutual growth among members.
5. Realistic Valuations: Critically assess business listings, especially in industries like roofing, to identify genuine opportunities versus inflated or unrealistic valuations.

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For more insights and actionable advice on growing your home service business, visit www.ownedandoperated.com.

Transcript

[John Wilson]

So Jack and I are like, should we buy a roofing company? Like my dream business. Dream with me, Jack. Lead sale fulfillment. One of the reasons that I find H Vac complicated is because you are optimizing three things. Roofing is two. I'm convinced that roofing is fake at this point. Earlier this year we started an outbounding campaign and we really didn't know where to begin. So we were using, using dialing on the phones, we were sending text messages, we were trying emails, tried a couple 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 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 use hatchapp.com OAO.

[Jack Car]

Welcome back to owned and operated. Today we have John Wilson.

[John Wilson]

It's me.

[Jack Car]

It's him.

[John Wilson]

I'm back.

[Jack Car]

The man, the man, the legend, the plumber, the Ohio maniac.

[John Wilson]

Yeah.

[Jack Car]

And me.

[John Wilson]

Jack Car should see me on a set of skis.

[Jack Car]

I'm so jealous. I mean that you. You're going to hold go. Like, I know you honestly should be.

[John Wilson]

You should be jealous next year. Yeah, it is kind of funny. Not even funny, but like, so you know, my friend and I, Kelsey, we started holocamp in 2022 and so this is our third holocamp and it's a lot of fun to like build an event that sticks. Like it sticks. Like we're literally on our third one and and we sold out. Like we literally have no tickets left. Like that is in. That's insane. I don't know. Like Kelsey thought, ah, we've got a one or two year run out of this thing and like I'm the third year, like 140 people. Yeah, it's just like totally, totally crazy. So, yeah, it's a lot of fun. For those that don't know, I've been running this conference for three years. This year I, I'm like, we had, we partnered with Michael Gurdley and his team is doing an awesome job. It's been in Cleveland for two years and the whole idea is hold co. So like if you're running a holdco, which is Just run multiple businesses, which is obviously how Wilson ran. For a few years. We ran different P and Ls. We were figuring out growth through acquisition. So HK conf is based on how do you grow with. Grow via acquisition and then how do you incubate new businesses, like start them from scratch based on something else, which is also something we've done, like cut and dry restoration, our restoration arm, that was an incubated business. So it's been a ton of fun. And I'm there next week. It's in Salt Lake City.

[Jack Car]

Yeah, I mean, I think the, the only key difference with what you're doing now is now you've mashed them all together. I, I love the whole club model, especially if you're doing different industries and like. Yeah, you know, it's a great model for a lot of people. Not me at this point in time because I'm in the same boat as you. Like, if you're going to create a brand that, that owns something all in the same vertical.

[John Wilson]

Yeah.

[Jack Car]

Our industry shouldn't say vertical because there's multiple verticals, but same industry and they can all work together. Why wouldn't you run it under a singular brand?

[John Wilson]

Yeah, yeah, I, I obviously agree. We did that. Now, what has been kind of funny is we went from this, like Holdco running different brands to like one company. But with owned and operated, it's almost like we're running two different things again. So what has been kind of interesting for me is as we try to. Because I, I get this question. I'm sure you probably do too. Like, why are you doing this? Like, why are you doing this? And I'm like, hey, that is not a. The way I see all of it is, I think event and I always do this every time I describe it. But the way I see all of it is like, I'm actually working on one problem. It's just that you see it as multiple problems, but it's all one problem. Not you, Jack, but like you, the listener. Where like, like Owned and Operated Pro. Let's take that for, for instance. It's our new community. Honestly, I'm really pumped up about it. But the reason that we're doing it is I have three wins out of Owned and Operated Pro for my core business. So one, there's a buying group component. By combining our buying, we can get better discounts. Namely me. I get better discounts, but so does everybody else. So I'm using, I'm leveraging our members and I tell them all this when they join because it's a win for them too. I'm leveraging your buying power to increase my buying power and it should be a win for both of us. That's a big win for us two. Training leaders is really complicated and the easiest way I've grown over the years is like having friends like you and friends like rich and people that I can ask like, hey, how did you handle this specific problem? And have them in group chats where I can just go talk to them. So I wanted to be able to offer that to my, my managers too, my directors, my service managers, install managers. So that's my second big win is it allows us to continue to develop our leaders through peer groups. And my third big win is I get to continue to develop myself, get to be around peers and I get to continue to learn because peer groups have just been such a big win for me. So to me, I see like, yes, it's a holdco in that we're running like two things. And obviously like owned and operated has workshops and sponsors and there's a revenue driving component here. But at the end of the day it's all like I work every day to try to make it one problem. Like how am I always working on the one problem? Because I do feel like you get farther when you work on one.

[Jack Car]

Yeah. And I think though that, that a lot of that comes from your greater mission is, you know, is that whereas a lot of hold code owners have a different mission. Like for example, I think if you were to ask Brent Bashorn, I think is how you pronounce his last name. Sure. One of my, you know, all time favorite people that I've never ever met. And just like I love his content, owns the, you know, forever hold style, hold co and like really good operators and good businesses from at least from the outside perspective, good insights. And I think he would have like a completely different mindset around it. Like his objective in the long term is just, yeah, you know, different and, and it's interesting.

[John Wilson]

Yeah. And you know, the way, the way sharing on the Internet started was it was a totally different thing. But over it was like last year you and I, we were working deeper on home service and, and I turned to Kristen who helps us run on and operate it and I was like this, this has to become the same thing somehow. Like I have to be able to like, how can, how can every hour of my energy that goes into anything solve all of the problems? Like how can I be working on this over here? And by doing that I can, I can win in Wilson. Which, like, frankly, I think it's worked. Having the joke I have is like, there's nothing white dudes love more than a microphone.

[Jack Car]

And being able to invite a middle aged white guy. If you're a middle aged white guy without a podcast, I'm more surprised.

[John Wilson]

Yeah, yeah, yeah, totally. And I being able to have like the best in our industry on this show and ask them about the roadblocks that I'm about to have to figure out has been one of the biggest growth levers that we've had in our business.

[Jack Car]

Yeah.

[John Wilson]

Because I had a friend the other day being like, are you trying to be a guru? I'm like, no, I'm trying to build a really big home service company. This is actually the craziest shortcut that you've never thought of.

[Jack Car]

Yeah. Which makes a lot of sense because the way that I view quick staffers is very similar in the sense that we have been able to get better talent into my own personal business because I've somebody now recruiting the top level, you know, overseas talent all the time. And so I might or might not have taken one or two off the table just because, like, it's such an opportunity. Yeah. I mean, don't get me wrong, everyone is great that we're putting, but yeah, at the same time, like the ability to have a full time recruiter that's looking for that talent who I can drive to my person, to my other business. Like the synergy, having multiple businesses with synergies definitely, in my opinion, overcomes having multiple businesses without synergies that are just running 100.

[John Wilson]

Yeah, 100. And I feel like real estate agents do this the best. So when I'm, when I'm looking at real estate agents, like, they usually have a bunch of different stuff. So, like, if I'm a high performing real estate agent, I probably have like a title agency relationship where I get a kickback. I probably have a home staging business. I might even have a moving business. I might have a photography business or a home inspection business. So it's like, hey, I'm a high performing agent. I sell $10 million of homes or $20 million of homes a year. And then around me I have this like ecosystem of other ways that I'm still working on the same thing.

[Jack Car]

Yeah.

[John Wilson]

But I, I'm able to like increase my breadth.

[Jack Car]

It's interesting. That's not the direction I was expecting you to take there, but.

[John Wilson]

Well, I just think they do it the best. I think real estate agents are fascinating when you find out about all the different relationships and like equity stakes they have in all of these different things and it makes sense like it's a hub and spoke their, their transaction is the hub. But hey, I have a mold. You know if I'm a real estate agent like they'll, they probably have a flipping business. So if they find the right thing they, they fix and flip. They probably have a retail investment business. So they're just going to rent it long term. They might have a short term rental business, maybe home staging. So they have these whole like multi million dollar ecosystem built around the fact that they sell houses.

[Jack Car]

I was going to say most of our, most of anyone who's who we worked with that are like private non corporation private.

[John Wilson]

Yeah.

[Jack Car]

Large scale renting companies like 2, 300 homes they've been buying since the 80s. They're also real estate age A because they get a better, they get a better terms on there. You know they don't pay the percentage but B because they also get like a really good deal flow of like high quality deals that they can buy too.

[John Wilson]

And they know the industry. And they know the industry.

[Jack Car]

They know the market, they know the sub markets as well. And so it's just like yeah, the, the more you immerse yourself into an industry and every aspect of that industry the better off you will do in the long term.

[John Wilson]

Yeah, I think it's like play games, you know you can win. Like I wouldn't, I would never open up a restaurant. Never say never I guess but like I don't think that's a game I can win. I have no strategic advantage in restaurants.

[Jack Car]

Unless it's a pizza parlor and they are the catering company for Wilson.

[John Wilson]

There we go.

[Jack Car]

And we go boom. Now hey Synergy, come work at Wilson Free Pizza. Our health care is a little bit higher because everybody's a little thicker.

[John Wilson]

Everyone too much dairy. Yeah. Yeah. But I think you just play games you can win.

[Jack Car]

Yeah.

[John Wilson]

And when you're. I like the idea like similar to what I described with Wilson and owned and operated and how I think it's all. This is all actually the same thing and it's just a shortcut. I think like building an ecosystem around one thing works and you know that's what honestly we you know back to Holocaucon then we'll cover what we were actually going to talk about. But that's a lot of what we see there is usually at HK Conf somebody has one big business and then they built an ecosystem of businesses around that one big business. So there was somebody I Met at the. At hoco conf last year. They had a huge E commerce business and then around that they built like agencies for e commerce companies. So like there was a bookkeeping for E commerce, there was a marketing for E Commerce. I hit 20 agencies.

[Jack Car]

Yeah.

[John Wilson]

And altogether it was a hundred million dollar business. It was insane. And like it was every two or three months they spit out a new service provider. They had three pl built on serving e commerce clients. It was fascinating.

[Jack Car]

Yeah. I mean and that's a great point because I think it makes sense when you think about from a logical standpoint, the more energy you put into something, the better off that something will do. The better off you know, the industry, the better off you can network in the industry.

[John Wilson]

Yeah.

[Jack Car]

Like it just makes sense across the board. I just think.

[John Wilson]

Yeah.

[Jack Car]

When there are pulled codes out there though that are just kind of randomized and totally decentralized.

[John Wilson]

Yeah.

[Jack Car]

They'll do the back and. And they still try this model, I think to some extent. Right. They'll still own all the back end bookkeeping. They'll still own all the back end advertising. Like they still try.

[John Wilson]

I just think the leverage is so different. Yeah, so different. But yeah, they do. I just think like, I think leverage is the right thing. Like how, how much leverage can your time have? And if my time can make an impact on this and this at the same time while solving problems in both, like that's a victory.

[Jack Car]

I, I fully agree. And so with this, that's why John is in the market. Oh yeah.

[John Wilson]

Oh yeah.

[Jack Car]

Never mind. Yeah.

[John Wilson]

Dude. Roofing. Roofing, man.

[Jack Car]

Wait, one more point for everyone listening. John, if you. If we host any kind of event like this for owned and operated in the future.

[John Wilson]

Yes.

[Jack Car]

It also needs to be in a ski destination so that my energy while I'm helping people buy businesses and being owned and operated, I can also spend my energy networking while skiing because that's a big. That's a big.

[John Wilson]

There's no easy way to tell you that our. We are going to do a home service conference and it is not in a ski town. It's tough. And. And you know what's even worse than that, Jack? It's also not in a scuba town, which makes me wonder like what the. Am I even doing? No, what am I even doing here?

[Jack Car]

I'm telling. We need to rethink this. Let's take it back to the drawing board.

[John Wilson]

Take it back to the drawing board.

[Jack Car]

So, all right.

[John Wilson]

Roofing. Yeah, roofing is kind of ticking me off, honestly. Like I love all these guys We've had on the show. But, like, roofing is. It makes me mad. It is. And I'm not saying this to be a dick. We have asked people on recorded pods, is roofing harder or easier than H vac plumbing? And everyone's like, oh, yeah, dude, is so freaking simple. And I'm like, what am I doing? Why am I not in roofing? Because you don't have to control the install. You. It's like you're a sales and marketing business and that's all you have to do. And that sounds amazing.

[Jack Car]

Yeah. I mean, you control the install, but, like, from a management perspective and not from a labor perspective. And that's a huge.

[John Wilson]

Yeah.

[Jack Car]

Benefit. Right. At the end of the day, you don't have to hold 16 head count. That sole purpose is installation. And so, like, if. Could you imagine if you took installation out of plumbing or out of H vac? I mean, you would solve 30% of the issues.

[John Wilson]

Yeah.

[Jack Car]

And then you could optimize for different items. Right now you're optimizing for, hey, how do I make sure that the parts are correct and materials correct? And now I'm focusing more on. On advertising and sales versus focusing on the ins. Like, yeah, half of the. Half of the job in service or H vac install is like, how do I set them up for success and make sure that they went out there and installed the unit correctly so that. Because I've got warranty it. And so if you could remove that aspect. I'm like, oh, my gosh, that's amazing. I'm amazing. Forgetting that I'm in front of microphone.

[John Wilson]

Yeah, we. We. I tried to. I still think there's a way. I do think there's a way to do this in plumbing. I brought this up to some friends last year and the idea was like, hey, if I built like an E Commerce platform or like, if I could figure out the lead and I could sell without you going in the home, would you install water heaters for me? Just nationwide, I got a shocking amount of no's, which was kind of funny because I think people are just so used to the whole thing. But I was like, let me be.

[Jack Car]

Your busy work, John. You know what the hardest part of that business to overcome would actually be? It would be getting the contractor. Because you'd have to. You'd have somebody reaching out to the contractor saying, can I drive you 30 more leads per year? And they'd be like, I know this damn guy doing the same pitch that ever that we get 30 times a day. I know on every platform and you're like no, no, I think it has to be real. Like this is actually giving you a.

[John Wilson]

Real part of what we're talking about. Yeah. As we expand our geography geographies we're getting ready to do more locations. Like we're building our own little mini lead aggregation thing and we're trying to figure out what we do with leads and sales outside of our area because we don't want them to go to waste.

[Jack Car]

Yeah.

[John Wilson]

So ideally we, we partner up with somebody but yeah, it is hard to overcome the. Hey, Angie's List has been calling us with the same pitch for 10 years.

[Jack Car]

We're actually going to do it right and correct and really give you like actual leads. Yeah. But no, I'm with you on that one. I think that the, the E commerce. No one's really cracked it yet either. I think there's huge opportunity there especially with water heaters and kind of the more simplistic items. The high ticket simplistic. No one's.

[John Wilson]

Well, we've done it so we've actually, I don't think we've cracked it but we have done it. So we have. We price them on our website and we sell them over the phone now.

[Jack Car]

Yeah.

[John Wilson]

Via the pricing on the website. So we do feel like it is partially scalable. It. I think the bigger issue is like how do you install them?

[Jack Car]

I mean that's the same as we've talked about on here before, the hot water heater pros, that's the same as their business model. Like they have their pricing all on the website. It's. You don't like click to add to cart and then an installer just show up. Like they still send out somebody to confirm everything and then go install same day. But like the. I'm talking about like real E Commerce level efficiency. Nobody's been able to really crack it.

[John Wilson]

There's a couple examples in the south of H Vac.

[Jack Car]

Yeah, I haven't seen them.

[John Wilson]

Yeah, they're actually kind of big businesses like 30 to $50 million. The, the issue is that gross margin is very low. It's like bottom, it's bottom feeding install. So it's like landlord like it's drop ship H Vac equipment and then they pay. It's like hey you can, you can just buy the equipment from us homeowner. You have to figure out what you need but you can just buy it and then for $2,000 they install it. They'll find a subcontractor and slap it in.

[Jack Car]

Yeah.

[John Wilson]

So obviously Tons of warranty stuff. Like nobody gives a. Basically. And very low gross margin. They tried to sell a couple years ago and they just couldn't.

[Jack Car]

Yeah. Cause I know what like H Vac Direct is kind of the same way. They don't actually find the installer for you, so you have to find them. But for like a savvy homeowner, they can go find somebody for pretty low quality but also fairly cheap to go do it for them.

[John Wilson]

I mean, we actually wouldn't even know. Just like Facebook. I don't even know where somebody would like, we would never touch somebody else.

[Jack Car]

We get calls every once in a while and. And the answer is we'll do it. It's going to be very expensive and we have no war on any of it because you. We didn't buy it from us. So like, we don't know if your lines are flushed or anything like that.

[John Wilson]

Yeah, yeah.

[Jack Car]

And so we, we. We've never done one, but we've definitely received the offers to do it.

[John Wilson]

We probably have. I just, I just don't get told about it because I'm sure we just say no.

[Jack Car]

But. Yeah, anyway, so roofing, like commonplace like this is common. They send out a salesperson who sells it. Schedule it over the phone or. Yeah, schedule it. However they schedule it, show up with a project manager and a subcontracted crew. So it's like in the loop. You have three employees who do that work. I mean, there's probably a warehouse guy as well who orders material. Yeah, I would imagine. But the sale, like salespeople could technically do parts ordering on large scale projects like that. Yeah, depends what how much they're selling.

[John Wilson]

So what I want to. What I want to point out here as far as like a. Simplicity of the business. One of the reasons that I find H Vac complicated and drains complicated is because it literally is complicated. There's one extra step. And I know one extra step doesn't sound like a lot, but it's. You're wrong. It's a lot wrong. Like you are like, it's one more thing to optimize for like my dream business. Dream, dream with me, Jack. Lead, sale, fulfillment.

[Jack Car]

Yeah.

[John Wilson]

You are optimizing three things. And that's why I think we knock plumbing and electric just absolutely out of the park is because we can optimize around three things. The moment you add the four thing, it gets really complicated, which is service, sale, install. So that is just more complicated. Roofing is two. Like you were literally doing two things, lead and sale, handing it off.

[Jack Car]

Our Roofers are yelling at you, saying, but you have to manage the program for the install, and the install can be tricky.

[John Wilson]

And I would tell them that we've had three roofers on this podcast that are larger and they have told us otherwise.

[Jack Car]

Whether you're starting an outbound program to keep that schedule full or you need a CSR for your growing business overseas, talent is the answer. It's half the cost with better service. The big problem is how do you find these people and how do you get them trained? That's where Quick Staffers comes into place. We will place talented, trained individuals in your business that will start showing results Day 1 1. Go over to Quickstaffers.com and fill out the interest form today. Yeah, I mean, I think that there, there's an optimization on that fulfillment portion, which is. Yeah, it just looks different. Right. So there still is like that third, but it's more like if you were to held up three fingers, the third one's your pinky. Like it is. You're optimizing training, training the subcontractor to do the job your way and make sure that your, your project manager is ensuring that that's happening.

[John Wilson]

Yeah.

[Jack Car]

But like, once again, you're not holding on to 10 headcount of people up on a roof with licensing.

[John Wilson]

Yep.

[Jack Car]

And all that nightmare, like, that's somebody else's problem. You're not optimizing.

[John Wilson]

Yeah.

[Jack Car]

You're just optimizing to make sure they're doing their job correctly.

[John Wilson]

Did they show up? Did they do it?

[Jack Car]

Yep.

[John Wilson]

Yeah. So it's a dream scenario. I think you have a deal that you saw.

[Jack Car]

Yeah. So. And that's why.

[John Wilson]

So obviously. So Jack and I are like, should we buy a roofing company? I think that's like, you know, as we spent the first episode talking about how to stay focused, the back half of the episode is how to be distracted.

[Jack Car]

Wonderfully distracted at all times. And so I sent John out a couple days ago. This, this roofing company out in Ohio. I think it's South Ohio Classic classic. Asking price, $6.75 million.

[John Wilson]

Yeah.

[Jack Car]

Gross revenue, $3 million.

[John Wilson]

And I would say it says flat three. It just says $3 million. So, like already red flags. Right.

[Jack Car]

Well, and then it says cash flow, a million dollars. So another red flag. Like there's no exact number there. And then once you go into the.

[John Wilson]

Description, by the way, we're screen sharing this, so check it out. On YouTube, we're actually going through this interesting listing.

[Jack Car]

And then with the sd, it's like a million Dollars plus in sd. So now it went from like cash flow which you would expect on a business like this at this price point that it actually was going off of EBITDA and real numbers, not seller discretionary earnings. I mean obviously seller discretionary earnings are real. I mean more so from like I.

[John Wilson]

Would like to add back my marketing budget.

[Jack Car]

Exactly.

[John Wilson]

Because I discretioned to spend $1.8 million in trailing 12 months. So I would like to add that back.

[Jack Car]

Exactly. So there's a lot more funny business that happens in SD that doesn't happen with just pure basic ebitda. And so the fact that they're trying like ste is meant for in my opinion for like a sub $500,000 price.

[John Wilson]

Like yeah.

[Jack Car]

Number a cash flow number. Not for a million plus EBITDA business which this is. I mean assuming, I mean potentially.

[John Wilson]

Potentially.

[Jack Car]

I mean if you're adding like unless the, the owner's taking like 300000 like just it. It just muddies the water. But anyway.

[John Wilson]

Well, I think the weird thing about all of this is like this is a. So when I look at this deal, million bucks of fake cash flow, $3 million of revenue which like for a roofing company and it says establish like if you're a brand new roofing company, great. But this has like established long history. Like $3 million for roofing with an average ticket of like 15, 20 grand. That is not a big business. I don't, I just don't understand like I would have expected this level of a deal like as in crappy like put together terribly to be put up by the seller themselves because no broker would or should take this seriously. But this is actually brokered by somebody.

[Jack Car]

And it's not only brokered by somebody, it's brokered by Trans World which is not like it's not a small brokerage. Like that's a nationwide brokerage firm. I'm sure there's you know there's some kind of 1099 that they do with their brokers maybe so that they're independent contractors. But still like, like you said this is, this is an apps like this is a serious brokerage firm posting this without any real numbers.

[John Wilson]

Yeah. What else do we have inside this description?

[Jack Car]

SD. A million dollar SD on 3. $3 million gross. I mean that is crazy margin net margin that they're claiming.

[John Wilson]

I, I'm convinced that roofing is fake at this point after interviewing all, all the folks we've interviewed. So I think it's all just like fake.

[Jack Car]

But it's not. I Mean, even like a really well run roofing company, are they running 30, bottom line?

[John Wilson]

I don't know. I. I don't know. I mean my take is I thought 10 to 15.

[Jack Car]

That's what. That's where I was. Like, even a 20 wouldn't surprise me. But a 30 is just not something that seems realistic.

[John Wilson]

Yeah, I mean, I just don't believe any of it. It says 3 million DOL. $1,000,000. Like flat, rounded revenue and cash flow. That's weird. Okay, so what, what else do we have? Custom roofs qualities.

[Jack Car]

Every roof is a custom roof.

[John Wilson]

Yeah.

[Jack Car]

Comprehensive service roofing installations, repairs, replacement, inspection, maintenance, custom sheet metal as well as gutter systems and siding. Nothing out of the ballpark there. Local clientele. So they are not storm chasers. Which is.

[John Wilson]

No, no, it says loyal.

[Jack Car]

Loyal.

[John Wilson]

Which doesn't make much sense because like roofs are like one in 20 years. So I don't know how they would be loyal. But. Okay.

[Jack Car]

Skilled team, dedicated professional employees to ensure smooth operations.

[John Wilson]

I mean there's probably literally five employees.

[Jack Car]

Just going to say five employees.

[John Wilson]

Six employees. Maybe four or five. Because the rest of it subs, you know.

[Jack Car]

Yeah, there, there's there's a estimator, There's a salesperson. I bet like a good. Do you know this number? I don't know it off the top of my head. But like a good salesperson in roofing, what should they be doing? So for example?

[John Wilson]

Well, Paul Reese said a couple million bucks each. So we're doing like five or six now.

[Jack Car]

Yeah. So half. Yeah, Hvac's about half. Like a good salesperson. H vac is doing 2 to 3 million as a comfort advisor. Like that's a really good H Vac. Comfort advisor. I could see double. Right. For roofing. Higher average tickets.

[John Wilson]

It's higher average ticket.

[Jack Car]

Yeah. I mean you're not waiting on service, you're just waiting on marketing. So if you can dial marketing and you could fill service schedules or sale schedules. Skill team. Yeah. Six to eight people, well maintained fleet. Okay.

[John Wilson]

Yeah.

[Jack Car]

Because they're maintaining six trucks. Yeah.

[John Wilson]

Probably three trucks. Yeah. I think like it's obviously dumb. So I'm going to answer the dumb part because I feel like I have to. Now I'm going to answer like how to, how to think about that stuff later. But like someone's valuing like not even a company yet, 2.2 times revenue. So I think they literally misunderstood the multiple component.

[Jack Car]

Right.

[John Wilson]

And they multiplied revenue. And like if I just look at common sense, obviously I'm sure everyone's like following along pretty nicely here. But like, look, you've got five employees in a couple of trucks and you're doing one time every 20 year projects. Like that is not worth much.

[Jack Car]

Or they said, hey, if we hit a million dollars in EBITDA, it's worth 6 to 7x, which is what the market's getting. And so then they're like, oh, well, our SD is kind of like, we can. We can massage it to hit a million.

[John Wilson]

Yeah.

[Jack Car]

Shoot for six or seven.

[John Wilson]

Yeah.

[Jack Car]

Somewhere in between there.

[John Wilson]

Yeah. I mean, it. It's a. It's a silly. It's a silly deal. I also think, like, buy versus build is a real conversation that people should be having. So, like, let's say this deal was reasonably priced at a million dollars, which I think is probably like a reasonable price point for this company, maybe even a little bit less. Can you rebuild this in 24 months or in 12 months for less than $900,000? And the answer is like, yeah, yeah, duh. Like, we're talking about a couple of vehicles, we're talking about a few salaries, and we're talking about a lot of marketing. And you will spend less than $900,000 to achieve this outcome.

[Jack Car]

Because the other side to this, which I don't think people understand very well, is. And I didn't understand getting into H Vac is like H vac, specifically plumbing. Close second, but. And then when we were talking with Tim Ryan, pools. Same kind of thing when you're letting somebody in your house on a regular, scheduled basis. Like, they get super passionate about becoming a member and, like, being part of this, this cultish company because you're in their house, like you're with their dog, your. Their families in the house. Like, it's a personalized thing. Whereas when I think about my roof, I know a few of the big people in the area just because I'm in the home service industry. So I look at trucks.

[John Wilson]

Yeah. You see the trucks. Yeah.

[Jack Car]

But I can't tell you before I. I bought this company in any of the last cities I've lived in. I don't know a single roofing company. I don't know.

[John Wilson]

Roofings are like, they're unbranded. It doesn't matter. It's because you only use them once every 20 years.

[Jack Car]

That's what I'm saying. So.

[John Wilson]

So that's why I think, like, if you came.

[Jack Car]

Well, now they're branding. Now they're branding. It's becoming like, hey, it needs to be a slight branded play. From a marketing perspective.

[John Wilson]

I don't even know that it does. Like, I guess I kind of feel like. I don't think that's right here.

[Jack Car]

That is in. In Nashville. I think it's a differentiator. Right. If you. Top dog roofing is the one that comes to mind. Like if you can brand and do a good job with branding and make it a memorable thing. I think in that subconscious like it clicks over time. But anyway, I mean I think this proves the point that you were trying to get at was that realistically there's no like there's no draw or love or like loyalty to a customer base here. Like it once every 20 years.

[John Wilson]

Yeah. Yeah.

[Jack Car]

By the way.

[John Wilson]

Yeah.

[Jack Car]

The fixture firm, the FF&E, do you think they're. I bet they're including vehicles in that. Like that is their vehicle base.

[John Wilson]

It has to be.

[Jack Car]

And so that comes out because what.

[John Wilson]

Else would they have.

[Jack Car]

Yeah. At $60,000 are running around in a bunch of F150s which is what they all drive.

[John Wilson]

100.

[Jack Car]

It's six vehicles. It's 5.8 vehicles.

[John Wilson]

Yeah.

[Jack Car]

So if you cut off 50000 for like actual FF and E at their shop or whatever and material like that. Their shop there, there. Maybe they have like some kind of press or something like they're. They're running five trucks.

[John Wilson]

Yeah. I think this is like I. I don't think a searcher like 6 million would be above probably for a searcher like a six and a. Whatever times multiple. There's definitely. I like, I think a large multiple for a bigger business that is established makes sense. Like there's real value built in some companies. It's just this wasn't it like this was a small company that's trying to get almost three times revenue.

[Jack Car]

Yes. Let's look at a different one just based on like.

[John Wilson]

Okay.

[Jack Car]

This is actually what I see more common is like this is a great one. Hamilton County, Ohio. Same woman is running the. She must specialize in roofing. But this makes more sense. Right. It's 810 in asking price. It's doing 1.3. So almost half of the other company. It's. It's doing half of the revenue of the other company and it's running at.

[John Wilson]

Yeah.

[Jack Car]

A 2250. A 12%. 10 to 12% cash flow. Which actually makes sense. Right. Like that is what I expected. It has the same. You know, it has, you know, two trucks maybe at 60K in FF and E. Yeah. Let's see, let's see. It's been a pillar in the industry for 30 years, which is.

[John Wilson]

Okay.

[Jack Car]

What I think you see a lot is like a lot of these old school roofing companies that just, they don't know how to scale past. Yeah, past that.

[John Wilson]

Yeah.

[Jack Car]

High growth revenue. 2022 is up 30%.

[John Wilson]

Yeah.

[Jack Car]

Year to date. 23.

[John Wilson]

I have, I have fully lost my appetite for like million dollar revenue businesses. Like I feel like, I don't know, like some of the deals I've done to, to get where I am. This is definitely a perspective that's changed. Okay. Like what I did to get here is, is not what I would do to get to the next step. So like, just because I'm saying this, it might not apply to your situation if you're growing and like a million dollar deal would move the needle for you. Great. Pop off for me. A million dollar deal would not move the needle and it would take a lot of energy. But it's really hard to get excited about a deal. Like even $5 million. I'm like, yeah, that would be good, like $5 million. I'm not trying to be like negative, but $5 million would be good. Like 10 million would be sweet. But 1 million is like, like I don't know, do you want 50 grand for it? Like, I just don't see value.

[Jack Car]

John, you're crossing into the unrelatable territory here with 99 of the population. But I get what you're coming from, right? You run a 30 million dollar shop. Like of course 1 million on 30 million is not going to move your needle. Whereas if you're a 1 million and.

[John Wilson]

It'S just not worth that much because like I agree, like this deal is $1.3 million in the ask price is 810. And, and I, I know I keep going back to this, but it's just like 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. It would cost me like maybe 150.

[Jack Car]

Yeah.

[John Wilson]

Like it just wouldn't cost that much money. So I get, I just get, I don't understand the value proposition of deals under $5 million. At $5 million. Yeah. I start to get a lot more interested at like $3 million or $4 million. I do struggle to understand, especially if it's in the same market, if it's in a different market and you're unlocking new territory, I think that's a different game. But like if it's here in my home turf, it's, it's a tough Sell.

[Jack Car]

I just. I mean I'm a disagree just just on like the premise. Just because like a 2 or 3 million dollars when you are 2 or 3 million dollars to double your business if you could do it effectively.

[John Wilson]

I totally agree with that.

[Jack Car]

Yeah.

[John Wilson]

If it moves the needle for you.

[Jack Car]

Do it step change. Right. You can buy past five. From two to five is a huge.

[John Wilson]

You know I totally agree with that. I feel like I said that when I started like hey I did this. I bought a bunch of these companies in order to get here. So like I'm not immune to that. You know I know that this is exactly what I did. It's just like now it's hard to find these deals attractive.

[Jack Car]

Yeah no I get it and you know I even.

[John Wilson]

Yeah. If I was a million bucks I'd buy another million dollar company all day. You double.

[Jack Car]

Yeah. And so that that's the only thing I look at like this one. Like that's the only thing it's good for. It's owner, owner operated like yeah. One owner manages the team and customer service the other owner owner manages all the the paperwork. Financial, payroll, everything.

[John Wilson]

Yep.

[Jack Car]

So it's like hey this is two guys which is what we set up here. That's 60,000 $230,000 used trucks. You know they're. They're generating a million dollar off two people and they installers which when we go down to the bottom total employees 1010 so that I'm guessing they're including the employees in the as the subcontractors though like they don't.

[John Wilson]

I would assume so. Yeah. Yeah I would assume so.

[Jack Car]

They do everything so that's interesting And I'm going to pick up one more real quick to see if it which one it closes closer manages to it's construction company we'll do establish roofing company in Dayton. That one rough. $500,000 for cash flowing.

[John Wilson]

13,000 of cash flow. We should rip into some plumbing plumbing companies Next one. What's the one up in Sandusky here scroll up.

[Jack Car]

Look at that one. That one. This one probably actually makes sense. And it's com. It's commercial industrial.

[John Wilson]

Oh yeah. Yeah.

[Jack Car]

I looked at these before.

[John Wilson]

Oh this is in my home turf. You've just been get. You've just been feeding me to try. This is in northeast Ohio. This is where I'm at 4 and a half million asking price 1.2 cash flow 3.3. I mean I still hate the. I could never buy a home service company for more than its revenue. I couldn't do It Unless that company is like $40 million with a hell of an even but like at $3 million I could never pay more than the one times revenue.

[Jack Car]

Yeah. Because I mean this is like a. I mean this is, this is a more realistic version than the first one we looked at because it's, it's a cash flowing. 1.2, 1.3. Really it's a real number. It's like 1. 1,271,962. They've actually done the math. They actually have a real gross number. 3,382,006. 91. So these are real numbers. And that cash they said hey, we're going to shoot for about a 3x3 plus or minus x. Yeah. Which gets them at like 3.6. So maybe 4x to put them at 4.5 little under that. So maybe maybe high threes. 12 employees to generate that. This I mean commercial though I think is a different beast than residential. I'm not actually sure that they commercial.

[John Wilson]

Is a different beast.

[Jack Car]

I'm not sure they sub all that work out.

[John Wilson]

I don't know. We should have Mills Snell back on. He's got a pretty big commercial roofing. I think we're going to go down a roofing roofing path. Dude. I think we got to do it.

[Jack Car]

I almost bought one in Reno, Nevada. Commercial roofing. Two point. I still it to this day because like we went pretty far. $2.8 million top line. But at the end of the day, you know what? I didn't want to be on a roof. Excuse the language.

[John Wilson]

Especially not Nevada.

[Jack Car]

In, in, in Reno, Nevada sitting on top of a roof in like 110 degrees. So I went in, you know, H vac so that we could sit in an attic at 140.

[John Wilson]

Yeah.

[Jack Car]

You know like solid choices in my life.

[John Wilson]

Yeah. Yeah.

[Jack Car]

Super interesting business. Yeah. Cleveland, Akron, Canton, they. They do your market but in terms of like realistic numbers. Like this is more realistic.

[John Wilson]

Scroll down, scroll down. The business is home based. They're asking $4 million and they don't have an option.

[Jack Car]

Facility, lease facility. 1700 square foot warehouse. Additional.

[John Wilson]

Probably out of their back. It's probably out of. You're probably their warehouse in the back of their house. Business is a home based with a.

[Jack Car]

Leased facility or the, you know the, the owner stays.

[John Wilson]

They have like a random warehouse. Yeah.

[Jack Car]

The owner stays at home, drives traffic.

[John Wilson]

Four million dollar business and they don't have an office. I feel like there is a certain price point of a business where like hey, you should probably Professionalize enough to have an office. Spitball long.

[Jack Car]

Yeah. I mean even if, like, if, if I was to talk to this owner before sale, I would say like, hey, huge red flag if you, if you mention it that way, go rent an office for, for six months. Yeah.

[John Wilson]

Well also that's going to get added back in. That's what I mean, they're like, hey, our cash flow. But like, yeah, you're missing 100 grand of rent. I'm not going to base it out.

[Jack Car]

On this guys, but on like a, on a, on a good note though, like the fact is it kind of proves the point though that this owner at a home based, you know, he is running his office out of his, his, his house and he's doing all the sales and lead gen and probably estimation. And then he has a few other guys running probably project management and yeah, sales. Maybe one guy each. So that's three of them. And then there's nine installers. Like that's the company. And so if you can sub that out, like that's three people. I just, I generate three million. A million.

[John Wilson]

I just don't think that you've built four and a, like four and a half million is, is a lot of money.

[Jack Car]

Yeah.

[John Wilson]

And I just don't think that you've built four and a half million dollars of value as a service company with trucks and inventory if you're running it out of your house. Like, I just don't think you've done it.

[Jack Car]

Also my, my guess because it's commercial industrial, is that he's. It's probably less legion and less legion systems and it's, it's 100 relationships. Like lose a bunch of property managers and, and.

[John Wilson]

Yep. Yeah.

[Jack Car]

You know, and so the minute that he leaves, you lose all a decent portion of it.

[John Wilson]

Yeah, all of it. Yeah.

[Jack Car]

Because all those property managers know another roofing guy. So.

[John Wilson]

100. 100. This was fascinating. Well, next time I want to dive into like water quality or something.

[Jack Car]

Yeah.

[John Wilson]

Because I, I do think generator businesses.

[Jack Car]

Yeah. We were going through like tier two industries and tier two industries to me are extremely fascinating.

[John Wilson]

Oh yeah. Tier two being like generators and then back or like duct cleaning.

[Jack Car]

So like we don't do electrical work, we just do generators. We don't do landscaping, we do turf, we don't do plumbing, we do water filters. And like that's your business. Super interesting. And we should definitely dig into it.

[John Wilson]

On, on a day I'm totally down. Man, this was great. Well, I'll be skiing next week at Hoko Comp. Everybody have fun.

[Jack Car]

Everyone else have fun.

[John Wilson]

Just everyone else have fun knowing that I'm skiing.

[Jack Car]

Yeah.

[John Wilson]

Thank you. Yeah. Check out own operated dot com. Make sure you check out Own an operated pro. There's a big blue button on top. It's been a lot of fun, and we will catch you next time.

[Jack Car]

See you next time.