#222 Leaving Finance to Build a Legacy in HVAC

Summary

Episode #222: Leaving Finance to Build a Legacy in HVAC

Release Date: July 11, 2025
Hosts: John Wilson & Jack Carr
Guest: Thomas BB, Certified Financial Planner and HVAC Business Owner

Introduction

In Episode #222 of Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast, hosts John Wilson and Jack Carr delve into the inspiring journey of Thomas BB, a certified financial advisor who transitioned into owning and operating an HVAC business. This episode provides valuable insights into the challenges and triumphs of shifting industries, managing a business remotely, and strategies for growth and acquisition in the HVAC sector.

From Finance to HVAC: Thomas's Transition

Thomas BB shares his unconventional path from financial advising to HVAC entrepreneurship. Three years ago, prompted by his father's need to exit his struggling HVAC business, Thomas decided to purchase the company as what he believed would be a passive investment.

Thomas (00:44): "I was actually looking at it more as a passive investment. Like, hey, classic. The note gets paid off in five years, and then I'm maybe getting 50 to 100 grand a year, passively. Idiot."

Realizing the misconceptions of passive ownership, Thomas recounts the initial struggles he faced managing the business remotely from Austin, Texas, while the company operated in Blair, Nebraska.

Thomas (04:58): "I'm just financial advisor by day now, seemingly also an HVAC operator by day, I can't say by night because I spend a lot of time dealing with it by day and just trying to figure it out and grow something fun."

Navigating Remote Business Management

Managing an HVAC business from 800 miles away presented unique challenges for Thomas, especially during the unforeseen slow season. The lack of on-site presence necessitated the development of robust systems and remote management strategies.

Jack Carr (06:11): "How many people or trucks on the road essentially was how big was the business when you bought it?"

Thomas BB (06:23): "It was two guys, literally my dad and another employee. Yeah, when I bought it."

Thomas underscores the importance of building efficient systems to ensure the business runs smoothly without his constant physical oversight.

Thomas BB (07:31): "I wanted to create something more like that. Maybe work from Italy for a month or go travel around and still run this business. That's kind of what I want to create."

Achieving Growth and Scaling Operations

Over the first year, Thomas shifted from a passive to an active role in the business, implementing strategies that significantly boosted revenues. Starting with $400,000 in top-line revenue, he navigated through hiring and system improvements to achieve over $1 million in revenue within a year.

Thomas BB (09:38): "We ended up doing over a million last year... I think we could flirt with two this year."

Jack emphasizes the significance of incremental growth, highlighting that even a 20-30% increase is substantial in the industry.

Jack Carr (11:11): "A 20, 30% growth is a huge win by any metric."

Strategic Acquisitions and Market Expansion

The conversation shifts to acquisition strategies, with Thomas exploring the potential of expanding his HVAC business through regional acquisitions. He contemplates whether to stick within Nebraska and the Midwest or to consider other regions like Florida, balancing his familiarity with local markets against opportunities elsewhere.

Thomas BB (12:43): "I prefer Nebraska just because it's where I'm from and what I know... maybe have a shop to go to and try it out here."

Jack discusses the merits of regional plays in acquisitions, noting that building a regional footprint can lead to sustainable growth without the complications of managing disparate markets.

Jack Carr (16:28): "If you're able to manage them effectively from afar, you have no geographical bounds on where you can buy. And so there's so much more opportunity."

Hot or Not: Evaluating a Potential Purchase

In the "Hot or Not" segment, Jack presents a potential HVAC business acquisition for evaluation. The business in question has a top-line revenue of $2.1 million with a 5% net margin but lacks essential infrastructure like a CRM system and relies on outdated phone systems.

Thomas BB (23:39): "Sign me up. I'm in."

Despite initial enthusiasm, Jack highlights critical concerns, such as the owner's continued salary obligations and the absence of modern business systems.

Jack Carr (26:22): "You can't run that apart if they need to do a part. You can't meet the vendor... it has to be a Zoom call."

Thomas considers the investment, weighing the low purchase price against the operational mess and potential for recovery.

Thomas BB (30:16): "I probably still would because I'm sick like that. I'm a masochist."

Jack reveals the outcome of a similar past purchase, illustrating that with the right interventions—like raising prices and implementing CRM systems—a struggling HVAC business can experience significant turnaround.

Jack Carr (31:37): "He was able to convert the customer over. He made it a huge focus early on to like use what's in the shop."

Overcoming Challenges and Building a Real Business

Thomas reflects on his ongoing efforts to stabilize and grow the business, acknowledging the initial missteps and the progress made through active management and strategic adjustments.

Thomas BB (36:32): "I want maybe a full year of feeling like I'm doing things mostly right... holding techs accountable, holding sales guys accountable."

He shares his ambition to create a sustainable, profitable business that not only generates revenue but also fosters a positive work environment for his technicians.

Thomas BB (40:13): "How do I create this hybrid where it is a profitable business but it's a place that techs do want to come and stay."

Key Takeaways

• Active vs. Passive Ownership: Thomas's journey underscores the reality that owning a small HVAC business requires active management and strategic involvement, especially when operating remotely.

• System Implementation: Effective remote management hinges on establishing robust systems and hiring competent managers to ensure seamless operations.

• Growth Through Acquisitions: Strategic regional acquisitions can drive substantial growth, provided the new businesses are integrated with efficient systems and managed effectively.

• Learning from Challenges: Initial struggles and mistakes are integral to the learning process, enabling business owners to refine their approaches and achieve sustained growth.

Conclusion

Episode #222 offers a candid look into the challenges of transitioning from finance to HVAC ownership, managing a business remotely, and the intricacies of scaling and acquiring within the industry. Thomas BB's story serves as both a cautionary tale and an inspiring example of resilience and strategic thinking in the face of entrepreneurial challenges.

Jack Carr (39:46): "I mean, most of it's recoverable in a way, shape or form. If every business ran the same then we'd all be doing exactly the same playbook and top line and bottom line and everything."

Listeners are encouraged to subscribe and engage with the podcast for more insightful discussions on growing home service businesses.

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For more information, visit www.ownedandoperated.com.

Transcript

[Jack Wisitions]

You're breaking a bunch of the different stereotypes of, hey, it's going to be passive. Oh, wait, it's actually not passive.

[Thomas]

Not knowing that slow season was a thing or that you could manage it. I'm sitting there almost crying, like, what have I done? I need to sell this thing or bring on some partners. About that time, I stumbled upon the podcast, started listening, and I'm like, okay, let's figure this thing out. Foreign.

[Jack Wisitions]

Welcome back to Jack Wisitions. Today on the pod, we got Thomas bb. Or is it bb? I just call you bb?

[Thomas]

Yeah, like two capital B's.

[Jack Wisitions]

Yeah. Thomas is a, A friend who we met at actually, the workshop, and we were stuck on a long flight back to Nashville together from, from Ohio, but. Good guy. Thomas, tell us about yourself and your business.

[Thomas]

Yeah, absolutely. Excited to be here. Yeah. Now you're probably wishing we didn't meet on the plane. Cause I, I annoy you probably weekly. I, I, I do cautiously try to limit that.

[Jack Wisitions]

Just never an annoyance. If I give you my personal number, it's never an annoyance.

[Thomas]

It's funny. Yeah. I got two phones now for that reason.

[Jack Wisitions]

Mm.

[Thomas]

You know, you gotta. Yeah. So I'm actually a financial advisor. Certified financial planner by day. I've been doing that my whole career. And then about three. Yeah, about three years ago, my dad, then we can make it a long or short story. Came to me, was actually looking for some financial advice on how to exit his business. You know, I'm doing what I do. I had always observed, you can make good money being a doctor or lawyer. But the ones who I observed had what I call real money, usually sold a business or started something. So I was somewhat intrigued. It was a very small shop. He's like, you know, how do I unwind this? I'm like, well, what if I bought it from you? Having no idea what I was getting into, I was actually looking at it more as a passive investment. Like, hey, classic. The note gets paid off in five years, and then I'm maybe getting 50 to 100 grand a year. Passively. Idiot. So, anyway, we agreed on some terms. I probably overpaid, but if you're going to overpay, I suppose I'd rather overpay to my dad. But I maybe didn't overpay because, like, the longer story is my dad had always been an H Vac. His parents had an H Vac company in the small town that we were in. And after my grandfather passed away, that was probably 2012, 2013. Shortly after that, my dad, who was running it had a falling out with his mom and his brother left and started the company that I ended up buying. So it was a much dwindled down version. However, his name carried a decent amount of weight in the H Vac world locally. So from that standpoint, maybe I didn't overpay. But anyway, bought it and spent the first two years treating it like a passive investment. Like, hey, you're going to be the gm. I'll just check in every once in a while and, and make sure it's not blowing up. And then literally this was probably almost a little over a year ago, probably last March or April. Not knowing that slow season was a thing or that you could manage it. I'm sitting there almost crying like, what have I done? I need to sell this thing or bring on some partners. About that time I stumbled upon the podcast, started listening and I'm like, okay, let's figure this thing out. And my wife, who's usually my biggest critic, always like why do you waste your time on all these side projects? Just bring on more clients. It's way easier and less stress. She's usually right. She actually said, you can figure this out, just care about it. So then I spent probably the next year and still in this process trying to figure out what it takes to run an H Vac company. I guess another caveat, that company is in Blair, Nebraska. Omaha, Nebraska. Last year, about a year and a half ago, I decided to move to Austin, Texas. So I'm, I don't know, 800 miles away from where the company operates. So yeah, I'm just financial advisor by day now, seemingly also an H Vac operator by day, I can't say by night because I spend a lot of time dealing with it by day and just trying to figure it out and grow something fun.

[Jack Wisitions]

Probably one of the most important decisions you can make in your ETA journey is which SBA lender. You are going to pick a lender who will be in your corner to get you closed on the deal as well as set you up for future expansion. That is why we partnered with Alan Peterson who from First Internet Bank. He and his team take a how can we approach as well as I personally know they specialize in home service acquisitions. Mention the show or my handsome bald head and receive a reduced good faith deposit as well as a detailed deal review and maybe even a buy side pre qualification, no strings attached. Head on over to alanfib.com that's a L a N F I B dot com or click the link below to get connected that, that's awesome. And it's awesome that you're breaking a bunch of the different stereotypes right out of the gate of hey, it's going to be passive. Oh wait, it's actually not passive. How many people or trucks on the road essentially was how big was the business when you bought it?

[Thomas]

Yeah, so I bought it. It was two Chucks and two trucks. It was literally my dad and another employee. It was two guys. Yeah, when I bought it.

[Jack Wisitions]

Yeah. So way too small to do any kind of passive. And so you realize that at some point, and I mean that's what I was blown away by was actually that you guys have gotten as far as you did running it the way you did just because right out of the gate when you told me that when we first met, I went, oh my gosh, like I am in my business every day. And I couldn't imagine trying to passively run that. But a curiosity for me is, you know, being remote actually has some benefits. Right. Like one of the benefits being that you need to design like very good systems around day to day operations so that it actually runs. Right. It runs and it works without you physically being in the office to hit go to talk to this person to deal with this thing. And so did, did you find that that was a lot of the initial kind of posts close was putting an op. Well, I should say post I want to run this business was putting in this operation so that, you know, it was somewhat automated.

[Thomas]

So it, I don't know, it's. It's like I, I started to care after I moved. And part of the rationale, again, I don't do really anything right. I usually just take the leap and make it massive and then don't give up. And I'm resourceful enough to seemingly figure it out after doing it the wrong way first. But part of the reason I wanted to move was I thought, hey, this will force me to make. It'll force me to be a better owner. And I was probably wrong for the first three months. But then looking back, I actually do think that was a interestingly good call. Now I hear all the guys who are there physically and are probably able to hold the line and have standards a little bit better than me being remote. But I am fortunate to have some good guys. But we had made some small tweaks before I left, but the biggest tweaks have probably been in the last, really the last year, maybe year and two months. But I don't know, it's. I like to do things a little rogue Like, I think of it this way. Like, yes, I want to grow it as big as possible, maybe as fast as possible. But if it maybe takes me five more years to get to that really nice liquidity event, if I want to sell, I don't know. But I was able to enjoy my life a little bit better. Maybe work from Italy for a month or go travel around and still run this business. That's kind of what I want to create, is something more like that. And maybe it takes me five years longer than if I was there in person. But my argument would be I might like my life actually better over those five years. So I don't know.

[Jack Wisitions]

Yeah, no, fair enough. And so now that you've been, you've owned it for a few years now you are actively running it. What does it look like now? What. How does that differ from, you know, even a year ago?

[Thomas]

Yep. So bought it. They were doing about 400,000 in top line. Top line revenue. We were really growing at about. I should know the math because I'm supposed to be a math guy. Um, but I'm really just sell yourself here. I'm really just a sales guy. I'm a great bullshitter. Um, that's my calling card. But we were growing at probably. So year one, we did 6:50 with me just having someone answer the phone and have a CRM. So we grew through that. At that point we hired one guy. So I brought back some of the employees from kind of that old company. Not my grandparents and dad had brought a guy back, did 650 and then that. This would have been last year 24. We were really kind of having trending towards a bad or another, just maybe another $200,000 growth year. Started listening to the podcast, started to put my foot down on the pedal of like, hey, let's figure this out. And we ended up doing over a million last year, which even at the workshop they were going around asking like, hey, what size are you guys at? I'm like, yeah, we're probably not going to hit a million. We're. We're a baby company. And we ended up doing 1:1 last year, which was really cool. And I think we could flirt with two this year. I think got to have a couple of things go right. But I do think we could maybe get 2 million to top line if some things go right.

[Jack Wisitions]

No, that's amazing. I mean even, you know, I think we hear a lot of times too, these amazing growth stories and it always, it always anchors you in your mind. Like you like that's the win. But realistically, right. A 20, 30% growth is a huge win by any metric. And so even like, you know, a million to 1.25 and I that's a win in my book. And anything above that is, is awesome unless, you know, you, you're budgeting for something different. But point being is, you know, that that's, that's incredible. And I mean, it's even more incredible once again, as a rogue operator from Austin running a shop in Nebraska and, you know, running with two trucks and trying to figure out all the systems and everything from scratch. So really, really cool stuff. And I know you've talked with me about it before, but you're continuing to grow the plots, the plan and one of those avenues which for people listening when he's talking about the podcast, he's talking about the owned and operated podcast, which I sometimes moonlight on as well, talking with John Wilson about, you know, growing businesses. But this is Jacquis issions. And so we're going to talk some more acquisitions now. And so as you're growing, I know we, we discussed the potential for an acquisition either in a neighboring city or maybe a different, you know, put it a new vertical like plumbing. What, what does that look like from you and what's your plan around that?

[Thomas]

Yeah, good question. I think about everything a little bit differently and possibly incorrectly than others because I think the private equity playbook would be more favorable to buy more locations or similar trades in my kind of current. Right. I mean, is that essentially the consensus? You, you're, you're getting a value add? If I had a bigger footprint in Nebraska or Midwest versus if I randomly bought one in Florida in general.

[Jack Wisitions]

Yeah. Yes. Yeah, yeah, yeah. So, so generally what he's saying is that private equity likes to do regional plays. So if you like, for me personally, I'm going to be buying and try to buy local to Tennessee. And then if I want to step out a little bit, maybe me, I should buy local to like Central Tennessee, middle Tennessee, step out a little bit. Maybe East Tennessee, West Tennessee is a ne next play. Like we looked at a business that was two hours away. I would consider that still pretty good. And then you have, you know, regional like, hey, Southwest, Northeast. And you'll see this in, in companies like Sila. Sila, who just sold to, they sold from Morgan Stanley 2. Goldman Sachs, I believe. Yeah, I'm pretty sure that's right. And yeah, they're all Northeast. Right. So they're in, you know, and then lastly is like, yeah, one in Oregon, one in Florida, one in Nebraska is a really hard play for a lot of them just because they don't have that regional, you know, they don't have that regional footprint in Oregon when they're down in Florida. It's a different market too. Like harder to, it's different to run. Right. Different types of equipment. So it's, there's, there's some intricacies to it. But anyway there's a lot of really cool operators. I'm just going to preface this that are doing some unique stuff in that, that idea though is they're buying essentially anywhere and they're looking more for size of business and it's more of like a play on buy tertiary markets or third tier markets. So not the city, not the suburb but like a little city way below that, own that city, build it up to 3, 5, 10 million and then get like 5 or 6 of those and then just own forever. Right. Because they, they, they go so deep in these markets that they don't have to compete very hard. The operators don't need to be amazing. They just need to, to be good. And I mean it's very hard for competition because you, you sponsor the, the soccer team and the football team and the baseball teams and so everybody loves you in that company.

[Thomas]

So.

[Jack Wisitions]

Interesting play. Peterman, Peterman Brothers from Indianapolis is trying to do something similar. Kind of similar.

[Thomas]

What's the population of like would be too little.

[Jack Wisitions]

Yeah, I think that they said that he specifically said that he's trying to get them to 10 million. So I mean you could work back on the math from there. I'm not sure what the population would.

[Thomas]

Be like if you're targeting like I can only do cities and 100000 people or 20 a big enough or I.

[Jack Wisitions]

Think my guess is that they're probably that 30000 range because there, there's a, there's a group around here that has a situation like this and someone's, they have a situation like this where they go deep in the market. It's not very far out of Nashville and they're able to really own, I think the city I want to say is 50,000. They're able to generate about 12 million off of it and they're the only ones in it. So. So I think a 50,000 is probably their mark somewhere close to that.

[Thomas]

Okay. No, that's. Yeah. I mean back to your question. Like I'm probably just a little more open to. I think I prefer Nebraska just because it's where I'm from and What I know and it'd be an easier parallel because most of my connections are there. I've also, I'd love to find one near here in Austin just to give me something to do and maybe have a shop to go to and. Yeah, right, try it out here. But I don't know. I get the newsletter that you sent out and I'm always like, oh, how about Florida? And my wife would like that. So I don't know, I just more like plug and play. The right amount of employees, the right employees solve for that and be okay. If it's not, you know, one location, 40, 50, 100 million, I don't know, my thoughts will probably evolve on that. But I'm a little more open minded just because I've, I'm figuring out. I wouldn't say figured out, but figuring out the remote leadership.

[Jack Wisitions]

Yeah, but once you figure out like that's the hardest part, right. And why people don't want to deal with it the way that you're dealing with it. Because you're dealing, you're having to deal with it now. Most people don't want to have to deal with it now. So my, like one of my downfalls, right. Is if the truck is empty and there's calls to run, I'll go run the calls because I can and I want the money, I want the revenue. That being said, is that the best, is that the best use of my time? Definitely not. But yeah, you can't do that or you can't run apart if the, the they need a part. You can't meet the vendor who stops by from the local distribution warehouse. It has to be a zoom call. So there's an extra step there. So like I understand. But once you're able to get all those down, I think that there's a huge opportunity in these kind of little sub tertiary market purchases. Maybe even not tertiary, maybe even secondary market purchases. And just because if you're able to manage them effectively from afar, you have no geographical bounds on where you can buy. And so there's so much more opportunity. Right. Like there's 300,000 H vac businesses in the United States. There's two that probably go for sale in like a five year period in Omaha or whatever. So like by having to buy in a certain geolocation makes it kind of difficult. Yeah, but that, that's awesome. Have you thought about going into plumbing or a different vertical or just H Vac?

[Thomas]

Yeah, I go back and forth. I mean I feel like I hear people talk about how sexy plumbing Is so part of me is like, oh, maybe it'd be fun to get into. Not such a volatile industry as. As H Vac, but I don't know anything about plumbing. Not that I knew anything about H Vac. I recently found out that the evaporator coil is near the furnace. You know, really riveting stuff that I probably should have known before entering into this. But, like, I. I don't even know how to spell plumbing. So, like, I don't know what the problems are, what the risks are, but I don't know. I just feel like that'd be an easy one. And in the location we're at, almost, unfortunately, and fortunately, we're, like, close enough to Omaha where we still get a lot of competition from the bigger companies. But far enough away that that town or the county, a lot of people prefer local. And there's not what I would call like a really residential service plumber or electrical. There. There are electrical companies, but. And plumbing companies, but they seem to be more new construction or commercial. So I thought if I could add one of those, that would maybe be wise. But then again, I'm like, well, we've figured out H Vac a little, so maybe I should just keep pushing that button and focus on that before trying to give myself more headaches.

[Jack Wisitions]

Definitely. I mean, we. We bought at. When we hit 3 million, we bought our plumbing or started plumbing, and it was too small. Rich. Rich Jordan used to say 3 million was the number. 5 million was the number. He. He's. He was right. It's probably five.

[Thomas]

Not before switching a vertical or adding one.

[Jack Wisitions]

Adding a vertical, because, A, you don't have your first vertical down very well.

[Thomas]

Yep.

[Jack Wisitions]

And then, B, there's a bunch of, like, it's running two companies as much as it's one company. It's like, hey, I have two marketing spends. I have two gross profits to now worry about. I have two. Like, all this stuff. And so it just makes it super difficult to. To allocate proper resources and.

[Thomas]

And.

[Jack Wisitions]

And time and management, managers and labor and everything to it. So it's a. It's a pain, but it's definitely worth it once it gets up and running, because plumbing is a. Is a beautiful beast once it. Once it's running, like, it's just going. And it's hard because, like, I. I feel a little bit of the same stuff that you feel out being so far away, even being local. It's like, I can't. I can't go help them with plumbing. Like, I can give you a Part. But I'm not gonna be able to jump in a truck and run this call, this call, or this call.

[Thomas]

You can run the H VAC calls, but you can't run the plumbing.

[Jack Wisitions]

Exactly.

[Thomas]

Nice.

[Jack Wisitions]

So. So we've had to build systems and hire really good managers. And so I feel a little bit of that.

[Thomas]

That push through because it kind of forces you to maybe make the harder or the better decision earlier. Because you can't solve problems.

[Jack Wisitions]

Exactly.

[Thomas]

Yeah.

[Jack Wisitions]

You build the system better from the beginning because you can't do anything else. So all you do is build the system system. And if you don't, then you lose the call, you lose the revenue, and then out of luck. But this brings me to an awesome next segment, which we don't really do segments on this, but I'm gonna. We're gonna do a segment called Hot or not. Probably also trademarked. So some. It's called something else. Don't sue us. Hot or Not. I'm gonna turn the camera.

[Thomas]

Let's see.

[Jack Wisitions]

So to preface this. Is that backwards for you?

[Thomas]

Nope. I see it.

[Jack Wisitions]

Perfect.

[Thomas]

That's good.

[Jack Wisitions]

This, this business is a business we passed up on. We had the opportunity to buy it here in Nashville. We passed up on it. And I want to know if you would buy it or not. And then we'll. I'll give you the outcome of what happened. So it is a 2.1 h vac only company.

[Thomas]

Top line, 2.1.

[Jack Wisitions]

Top line, 2.1.5% nets though. So it does. Terrible. Absolutely destroyed. On top of it gets worse. No infrastructure. So it's doing 5% nets without a CRM system. So they're not paying for service, tie in or housecall pro. They're using phones and paper. So you have to buy that. Right. Right out the gate. No voip, no phone system. They're using a landline. It's probably actually cheap. Cheaper to go voip from. From a landline. But still they don't have that, etc. Etc. It was just really bare bones. The owner's 67 years old. The purchase price not bad. 105 000, which is about 1x net. I think it's almost exactly 1x net.

[Thomas]

Sign me up. I'm in.

[Jack Wisitions]

But you also have to pay the owner salary until he's 70.

[Thomas]

He.

[Jack Wisitions]

He wants to work until he's 70. You have to pay his salary, which is 60,000 a year, plus about $12,000 a year in benefits, which is kind of.

[Thomas]

I think I'm still in.

[Jack Wisitions]

That's kind of a Good deal though because like on, on the good side, the bad side is he's been in the business for his entire life and top line's only 2.1. So if he's going to get salary and stay on, it's like, what, what.

[Thomas]

Are, what are you, what are you actually doing?

[Jack Wisitions]

Are you, are you a good owner or are you just kind of screwing around and not making good choices and causing issues?

[Thomas]

Is it residential though? I guess I got some follow up questions as I become more educated.

[Jack Wisitions]

There we go. That's a good question. So I mean, this is a good process to go through for listeners who are thinking about buying an H VAC company. It's like the first question is like, what is it? Is it residential service? Is it new construction residential, Is it commercial, Is it industrial? And the answer, it's about 75% residential, 25% commercial. With most of the commercial work being. Most of the commercial work being property management companies.

[Thomas]

Interesting. Hate those. Yeah.

[Jack Wisitions]

So why do you, why don't you like this, Thomas?

[Thomas]

I don't know that I don't like it. I don't like property management companies because they will shop around for R22 Freon in Florida and ship it up and not want to pay for the replacement. So they're always fighting you on price. So like to truly do flat rate, it is harder with property management companies. So. But I'd still 70% split. I mean this is similar to what I would have bought, just way smaller. So like paper phone, nobody answering the phone. If my dad answered, great. If he didn't answer, we lost all these customers and I had to go find CRM vip. I don't know if I would have. I probably would have done it just because I like pain, but I don't know. Only 105 grand for 2.1 a top. I feel like I could make that more efficient and have some fun with that.

[Jack Wisitions]

Yeah, I mean the downside, right, is it's messy. So what you're going to run into when you look at a business like this is what gets me is this 5% without infrastructure. So that means that they're probably priced too low. Their sales people aren't doing what they're supposed to to generate revenue properly. They're doing a lot of repair, a lot of repair, a lot of maintenance and they're still priced too low.

[Thomas]

How's the Google reviews? How's their profile?

[Jack Wisitions]

Good question. 37. Here, I'll write that down. 37. 37 reviews after 40 years in business, no out of 4.4.

[Thomas]

Don't love it, don't hate it.

[Jack Wisitions]

Well, 37 reviews at a 4.4 is not unrecoverable. Right. You can push that up. They have the calls. What, what they, I think this is a great example of though is like you never pushed for the five star review. So all you get is the one star review. Because people like to come in angry for some reason. If you don't ask for fives, you're only going to get the 1 stars of the people who are unhappy. So this is not bad for, you know.

[Thomas]

Yeah, yeah. Unrecoverable.

[Jack Wisitions]

Like that's, that's 10 bad reviews. 10, 10 bad reviews over 10 years. So not unrecoverable. They're still doing a lot of top line. So you know, they have the jobs, but that's recoverable purchase price, not bad. Owner salary maybe because that pushes it up to over four years to be about 300,000, which is about a 3x. So 3x on a messy business, I would generally say no. But it is tax free, right, or interest free? Excuse me? It's interest free loan, right. For three years because you're paying a salary and you might get labor out of them.

[Thomas]

Yep.

[Jack Wisitions]

Any more questions? What more. What are some good questions you should be asking here?

[Thomas]

I would want to talk to the techs and know like, hey, if we came in, I don't even know if you can do this, but like, hey, if we came in, I'd want to pay you more and teach you how to do this. Right. But understand like what the risk of, you know, does everybody have all the bad habits that the owner has and doesn't want to change or are they willing to change and like, hey, we want to make some switches.

[Jack Wisitions]

Yeah, that's a huge concern for me as well is like what I found is when you buy ones like this, that the people that are in this business are kind of happy being in this sort of business and have been there for seven to 10 years because no one's pushed them. No one's pushed them to generate sales. Nobody's pushing, push them to have to have good conversations with owners. Or on the other hand, they're slimy. They're slimy and they're sleazy because they can get away with it. And the owner's not being like, hey, you can't. What you, what are you selling them? Like that doesn't make sense. They just, they're good. There's no accountability and there's no accountability. The last question. Oh, go for It.

[Thomas]

Nope. Go ahead.

[Jack Wisitions]

The last question that you should be asking, which is the one that I did and the reason we actually didn't buy this, unfortunately the last and the best question was after 44 years, how many names and phone numbers and emails do you have from your current client base?

[Thomas]

Great point.

[Jack Wisitions]

27,000. We were in love. This was it. I was going to buy the business 100% until we get to due diligence. And those 27,000 names had no attached phone numbers or emails to them because that's probably one of the most valuable things is being able to. Right. Call your customer base back, get a hold of them, talk to them and work through like hey, let's get out and service you with the new company.

[Thomas]

So especially on the tuck in killer.

[Jack Wisitions]

Yeah, I mean the phone number technically still works but it's extremely passive. You have to wait for them to call in. You can't call out to your customer base, even the last two years of your customer base to say, hey, ownership's change, it's going to be a new name. Be ready. Nope, you have to run it as their name because if you changed it, they're going to answer the phone to rapid response instead of their name.

[Thomas]

They're going to be confused.

[Jack Wisitions]

So bb, do you buy it? Price is right. Lot of mess.

[Thomas]

I probably still would because I'm sick like that. I'm a masochist.

[Jack Wisitions]

I wish I had a green pen for everybody not listening. This is getting a giant check mark. So there's no right or wrong answer here. It's just exactly how much you want to. How much pain you want to be in. But the outcome to this is I had a buddy who bought it here in town. In six months, he was able to turn this around in six months. What do you think it the turnaround. I shouldn't have told you that but I'm going to. What do you think the revenue was after six months?

[Thomas]

The TTM feel like it was trending towards four or five.

[Jack Wisitions]

Close. After six months he was a little bit above 3 million and he got the nets up to I think it was 13, 12 or 13. So I mean not amazing net but that's a. Still a turnaround and he did it by. He raised prices because the owner hadn't raised prices since 2008 since Obama was in office. So 14, 15 years of written no price raises on Right. We've had seven in the last two years alone in H Vac. Like that's going to kill you right there. So that killed his margin Dropped it. He was able to sell send mailers instead of phone number calls and emails.

[Thomas]

Which worked at least. Okay.

[Jack Wisitions]

So I was able to convert the customer over.

[Thomas]

You could door knock that too, if you really.

[Jack Wisitions]

I mean, if you really wanted. Yeah.

[Thomas]

Or.

[Jack Wisitions]

Yeah, a bunch of things. Implemented CRM House Call Pro. He used.

[Thomas]

Yeah, baby.

[Jack Wisitions]

He put it in place, put someone to answer the phones. Actually invoice customers followed up on arap, but 3 million in the first six months, huge win. I'm sad I didn't buy it, but I think that I'd give this one too. I think you're right. You're right on this one. It was probably a good buy, but the mess got to me because these are messy businesses, right. At the end of the day, I like the mess.

[Thomas]

I don't want to be competing for. I can't pay pe, so like, give me all the. Give me all the mess. That's to me, clean up. Like. I don't know. This may be a different discussion.

[Jack Wisitions]

I don't think you're wrong, though. Like, I try to view it like the really easy way to, to draw a parallel in my mind for it is real estate, right. If I go and buy a regular house and then like, kind of wait for it to appreciate and do well and maybe just upkeep it, the house might over the next year be worth $50,000 more. But if I buy a fixer, I tear out the carpet, do the paint. You know, you get the, the analogy here metaphor here, right? You could draw, you could put in a hundred, $200,000 in equity into that home. Like that, like, that's six months. And so I think that was the case here. The only downside is, like, it can go really bad.

[Thomas]

Yes.

[Jack Wisitions]

You can get, quote, unquote, the structural damage and not have the time or energy to fix it. So that's what I was worried about.

[Thomas]

Here on that one, was if I'm out a hundred grand, I gotta sell a rental property. That sucks. But, like, it's not sinking me.

[Jack Wisitions]

Yeah.

[Thomas]

You know, like, I think about it, I would. I don't wanna lose 100 grand. Like, if I did, it's. I'm not completely unrecoverable and I probably learned some valuable lessons.

[Jack Wisitions]

Exactly. And then I think what I talked to the gentleman after the fact, the, the. The person, not the, the owner, but the buyer after the fact, that buyer said that in material and parts alone, in inventory, which was included in the sale, and the trucks, the trucks really weren't worth anything because they had like five or six really old beaters worth maybe, you know, 10, 15, 000 total. But in material which I found interesting in. In old fashioned flex and pipe and just like random bits and pieces, there was about another 80k in inventory alone which so he, I mean he pretty much recovered quite a bit of it right out the gate. Obviously you have to sell that, but he made it a huge focus early on to like use what's in the shop.

[Thomas]

That's cool.

[Jack Wisitions]

So huge win. Thanks for playing. I think it was hot. It was hot.

[Thomas]

It was.

[Jack Wisitions]

But like once again the key, the keys here I think are. Know what questions to ask so you can actually dive under the hood and understand like what is the business. Because if it was a $2.1 million new construction business run. Get out of there. Not even 100K. Maybe I'm wrong. Comment?

[Thomas]

Yeah, I might have got lucky because I did. If there's possible to do less than zero due diligence, I did that. And like I hear people like being like, yeah, I kind of learned about the trade and like these different things. I did none of that. I was like, oh, the net looks okay. That at least pays my loan if we don't grow at all. And then I got, you know, 50 grand coming in, like so dumb. Don't do that because. Yeah, it's so hard though.

[Jack Wisitions]

It's your dad. Like, how do you. Due diligence your dad.

[Thomas]

Well, I like. I mean our company's call, it was a N G which stood for awful nice guys. Like that was always his calling card is like, I'm just an awful nice guy. Like there's probably not too many skeletons. And his wife, my stepmom was very particular on the books. So like they bought the old beaters. Like they made sure there wasn't any lost dollars or things like that. They didn't necessarily grow a ton, but like that made me feel a little bit more at peace that like she was reeling that in and you know. But yeah.

[Jack Wisitions]

And so does it feel like a. Because a big, A big transition point for me was there was a point where I rounded about a million or 1.5 million. Where I. I had times where I felt like it was an actual business versus me just running calls or being a Chuck in the truck. Have you had that realization yet or do you feel like it is a real business in. In a sense, like it, it has its feet, it has its foundation set.

[Thomas]

I think I'm close to saying that like we somewhat, you know, this was our first year actually. Even trying to weather the slow season storm. And, like, we did that. Okay. And, like, so it does feel like a real business. But I'm not, like, even to the point of acquisition. Why? Maybe a little more hesitant to jump in. Even though I love chaos. And I'm like, I don't know that I fully cracked the formula. Not that you ever can, but, like, I want maybe a full year of feeling like I'm doing things mostly right, of, like, dynamic pricing, actually holding techs accountable, holding sales guys accountable. My next project, which I was going to mention on that deal, is 5% net. But the pro, the guy probably hasn't gone to war with his suppliers yet, which I'm currently doing. Not fun, but I now have data. And I'm like, really? I'm getting beat by these big companies because they're getting full Systems for, like, $2,000 less than I'm paying. Like, it's time for war, baby. So, like, different things like that you can do to clean up. To clean up debt. So, like, I haven't done all of those things yet. So, like, maybe at the end of this year, if we hit 2 or we flirt with 2, I'd probably be even happy at 11 7. I might be able to say it feels real. It maybe feels real because I don't run any calls. And, like, I just pretend I'm the office guy. If anyone has to talk to me. Like, I'm like, I don't know anything, ma'. Am. I'm just the office guy. Like, let me get you to the service manager, you know, like, so that part, sometimes it feels real or sometimes it makes it feel not real at all. Like, I don't know.

[Jack Wisitions]

Awesome. Well, I appreciate you coming on today. It's a great story. It, you know, in the nicest way possible. Thomas, it does feel like you've done a lot against the grain or. Or not to book and you've turned out okay, so. Or at least for now, okay.

[Thomas]

I think I did everything wrong. And that's why I tell people, like, I'm kind of still paying for my sins. For the first two years of being passive, I've had, like, nine months of being active and, quote, trying to do things right. And that's starting to work. And now I'm like, almost where I've cleaned up all of the problems I've created, and now it's like, okay, if I can do that, I clean up that mess. Let's find some other messes.

[Jack Wisitions]

Cool stuff, man. I mean, that really is a great story. I've been fascinated with it since you told me it initially and the drive behind it and moving in the right direction now. And it's been fun with you texting me and watching it actually, you know, the playbook work. So I do appreciate you coming on today. I think that your story is fun. I think it's exciting and Absolutely.

[Thomas]

I, I always have questions I was ready to debate you on no ad spend being good or bad. I'm ready for that at any time. You're probably right. But I'll die on my way up that hill. You know, anything. I'm ready.

[Jack Wisitions]

Yeah, I mean it's, that's the cool thing. I think at the end of the day there's very few things. There's definitely things that are right and wrong ways to do things and no odds for might be a wrong way. But, but, but, but I mean most of it's recoverable in a way, shape or form. If every business ran the same then we'd all be doing exactly the same, you know, playbook and top line and bottom line and everything.

[Thomas]

That's another topic for another day is like I get so many calls from post acquisition. There's more like big PE and they're like I feel like I'm getting ran into the ground with like the PE playbook. So a part of me is trying to have an early stage thesis thesis of like how do I create this hybrid where it is a profitable business but it's a place that techs do want to come and stay. Not just come for a year and oh, I made money but now I hate it because I'm getting ground to the bone. So I'm interested. I'm. I'm playing around with that in my head.

[Jack Wisitions]

Fun. Well, we'll definitely have you back here soon. Especially once you buy a nice business like this one or a plumbing or an electrical or like just some weird roofing business because you decided to decide you like chaos that much and you're going to go off the wall and buy a fencing contractor or something.

[Thomas]

You should just buy financial advisor practices. Those are actually way, way more profitable. Easier to run maybe.

[Jack Wisitions]

And maybe in your lane, like who knows Going for punishment.

[Thomas]

Man, I appreciate it.

[Jack Wisitions]

Maybe, maybe we'll switch. I'll. I'm going to go buy a financial advisor prac firm and then like then I'll be both as well.

[Thomas]

Well.

[Jack Wisitions]

And it'll be fun.

[Thomas]

Study.

[Jack Wisitions]

Well if you like what you heard today, comment like subscribe. You know the deal. Sweet. Peace.