B (2:48)

Yeah, so we think about the core financial metrics like gross revenue, RMR, EBITDA. We over the last 12 months have gotten really focused on our average monthly service revenue, which is shocking. As we started to track it more intensely. We've improved average architecture, those sorts of things. Those are very like financial. We're also thinking about things across our team. Revenue per team member, RPE revenue per employee or per technician, especially in this industry. Things like that, Those are, that's kind of like the starting point. That's some of the what I call like obvious things that you should have a goal around and be tracking.

A (3:36)

Yeah, I think that a lot of folks set EBITDA and revenue numbers, but I don't think they set some of the other tactical ones. Like for us, average service revenue is a really big one for us. And it's funny, once we started tracking it really tightly and we set a goal that we then trickled down to our service manager and our service techs, that number went up weirdly. But then we also look at how do we hit that goal. So we're looking at average number of service appointments per tech per day. We're looking at utilization rate, we're looking at return trips. So the point being is like, we may have a departmental goal that then has additional goals and KPIs that are set below that. And I think that it's important to understand that like if you're going to improve in your business, you've got to have a scorecard. I think that this is one really like tough thing, especially for medium sized security businesses, or I should say small businesses kind of jumping to that medium size, which is it's not fun to invest in things that don't drive growth. Well, immediate growth. So like, oh, I'm hiring a salesperson, but like hiring A fractional CFO investing in some technology that is going to give you more visibility into your numbers is a super important investment. We talk a lot about technology. Ideally you're investing in some type of technology that is going to be able to expose these metrics that you're trying to track. And so one thing that we're really spending a lot of time on is kind of our financial goals and then making sure we set up the dashboarding within our technology to support those goals so that we have a monthly look at these. And it's kind of funny, we have not done a great job in previous years of we look at our financials every month and we review them together. But we've not done a great job of setting a really tight budget and then holding that budget. Stephen, wouldn't you say, like we haven't really spent a lot of time going every month say okay well we spent you know, $15,000 in technology this month and it was supposed to be 12. We haven't really done that in years past. We've looked at things more just from like a bottom line and I. And this year that's going to be a big initiative for us.

B (5:44)

That's right, yeah. Basically budget, actual to budgeted and basically recasting that on a monthly quarterly type basis. And a lot of that's just us growing and maturing and so we don't necessarily, it's like the, you know, the artist is kind of ashamed of their work from the past three, five years, whatever, and is proud of what they're doing now. It's like, well, similar in business, right? Like in ways, businesses, art. And so we knew some of the things that we needed to do. We just didn't necessarily have the bandwidth or the prioritization of it. And so that's one of the things that as we've started to continue to grow and grow up in this business, in this industry is we, we have to do. And that's actually one thing I'll say is like truisms that aren't necessarily specific to the security industry. Some of this is just pure like SMB growth and management that is applicable to lots and lots and lots of industries. We will touch obviously on some things that are really specific to our business and our industry as well. But a lot of these are just like age old business truisms, things that you've got to be tracking and, and you like, you have to know your numbers and like you alluded to oftentimes you can't actually really know your numbers and all of that detail in near or actual real time if you haven't invested in technology and infrastructure to be able to see it, get access to it.

A (7:13)

Yeah, 100%. I want to touch on something that we've, we've talked about in the past, but I think is sort of a, it's kind of a funny thing. It's a topic that's not been, that does, is not really talked a lot about in the SMB world. In particular in security, which is this idea that a lot of security companies get stuck at the $3 million revenue mark and they have a really hard time getting to that $5 million and then ultimately 10, 10 plus million. That's, it's really hard for a lot of security companies. Like if you look like if we look at the majority of businesses that we've seen sell, they've been lower than 10 million. Actually most of them have been lower than 7 million of total revenue that, that we have looked at and some of that's just our buy box, but we're also looking at like everything that's out on the market just to kind of get a sense of what's going on. And I think this is more philosophical so I'm just going to zoom out for a second. One reason that that is is because it is hard to build a business. And a lot of these operators have owned these businesses for a lot of years. And so what happens is they get comfortable making X number of dollars. You know, they make $150,000 salary and then they make another 200k in distribution. So they're at 350 year at all in and they're like, man, I don't ever want to make less than that. And so what that means is they're not really allocating a lot of money to growth initiatives. And so it's like, hey, if you're not going to allocate more resources, you're and you're not going to reinvest in your business, your business is likely going to stay pretty flat even if you're a world class operator. I mean like, even for us, I feel like we're really good at growth. We're having to spend money. Stephen and I make decisions every day about hey, that could go into our pocket now or that could go into our pocket in five years from now or whatever. So I think that one thing that's really important and I want to call this out because I think this is important, you have to get tight on what you need to make and then you've got to set your budget from there. So if you say I've got to make 350k and you're, I'm going to take 150k in salary, and then that means I need to make another 200k in distributions and you want to invest a certain number of dollars, let's just say you want to invest another 400k into your business. That means that you need another 400k of cash. So you would have to add that 200 plus 400, which means you're making 600 of net income. What you then have to do is you have to say, okay, if I'm making that amount of net income, how much did I average last year in gross profit and net income margins? And you need to run that from the bottom all the way up your P and L to really determine what you're going to be. And then on a monthly basis, you've got to say, okay, well, in order for me to get paid and reinvest in my business, I need to be making X and spending X. And if. And you've got to really look at that and like, if you don't have that set up, you're going to have a tough time growing. I remember in the early days we would always say, and even some last year, man, can we spend this money, Stephen? Can we invest in this employee? I don't know.

B (9:58)

Is this the right time?

A (9:59)

And some of that was because, yeah, it was the right time. Some of that is because I didn't know what our goal was. So I would say, hey, if your goal is, let's just say in this example is 600k and you're on track to do 750, then you've got some money to work with to reinvest. So the answer to that binary question of can I invest? The answer is yes. If your goal is 600 and you're tracking for 500, then the goal. The answer is no. And the answer is, I need to cut additional out of my business. And I think that it's important to understand that, like, don't settle for 500. If your goal is 600 net income, go do what you have to go do to get to 500. Also, conversely, your goal is 600, then I would say it's, you don't really need to be focused on trying to hit 750 that year. Like, you should seriously just go reinvest that cash in your business throughout the year. Because what a lot of owners have told me as well, yeah, I knew I was going to go Over. But then what I do is I do a sweep at the end, I grab some cash out at the end of the year and then I also go take those dollars and reinvest them at the start of the next year. Well then you just miss, missed an entire year of compounded growth on your investment. So I would say be tracking this on a monthly, if not quarterly or quarterly basis at the very least so that you can make a, you can make an investment. Like if you could hire a salesperson in March, that person is going to drive a lot more value for you from March until December than hiring somebody in December and waiting to ramp them and do all the things. Right. So I just think that's an important concept to really be, to think about a lot, especially for owners that have owned their businesses for a lot of years is like, figure out what your EBITDA number is and then hit it. Like do what you have to do to hit that number. And, and that may mean you've got to make a decision about your own net income or your own personal income and how that relates to net income. Or that may mean, you know, going and investing in different areas.

B (11:52)

Yeah. And you have to have discipline and kind of like pre decided criteria for what you're going to do in both scenarios. If you're like over or under.

A (12:03)

Yeah.

B (12:04)

So if you're under what's kind of your predetermined playbook for where you're probably going to go cut, Is it your own personal income? Is it, hey, we're going to lean out our, you know, technique from a technician perspective. We're a little heavy. Is it, we're going to pull back on marketing spend or a mix of those things, whatever. Also, if you realize you're one or two quarters through the year, you're having, oh, best year ever. Like we're going to be, we're going to blow away like our kind of net income projection. Well, what, what are you going to do with that? In the fun answer, the easy answer might be, well, I'm just going to make a lot more money this year. And that's neat. But that is a very narrow short term view. Maybe that's part of the equation, but you need to have like some sort of rules in place for how you might start to utilize additional free cash flow. And if you don't have a plan, you're going to do weird stuff. You're going to like sponsor a local bowling team. Like, yeah, you know, bro, those big.

A (13:08)

Roi, big ROI in the local bowling team. Yeah.

B (13:11)

No you're going to strike out punny, baseball, bowling, I don't know. Yeah, you have to know your numbers, but you have to know what you're going to do from a, like net income surplus or deficit as you go throughout the year. And so that's another thing early on in the year. To have a plan around I think is important.

A (13:32)

Yeah, I think that's a great, I think that's a great concept which is like, what is your plan out some various scenarios of how your financials could look mid year. And you've got to determine now as you're planning, what are you going, what decisions are you going to make? And if you really want bonus points, find an accountability partner in your network or in your, you know, whether that's your personal network or in your professional and say, hey, I want to, I want to make sure. Like, I think that that's another really big concept here. That's, that's one huge advantage that Stephen and I have, which is that as business partners, we hold each other accountable to what are the ultimate goals of the business. And so we always think about how, how do we make decisions that align with that. So sometimes I'll tell Steven I want to do something and he'll say, I don't know if that's consistent with what we had talked about or what you had talked about or set goals for yourself. You know, we had an employee that frankly wasn't great for culture and wasn't super talented, but they were just good enough. And Steven, you know, one thing that we have around here is talent wins. So we like to find the very, very, very best people. And I was letting this boy kind of hang around and he was like, hey man, this is inconsistent. You're letting this person hang around. Yes, there's going to be some short term pain from letting them go, but we. Talent wins. And so I think that that's one thing that a lot of solo operators or operators and their wives, they don't have that structure set up where they can say, hey man, hold me accountable or hey miss, hold me accountable to what I'm trying to do. These are my goals, this is my decision making framework. And I think that's really important. And I think this kind of jumps into our theme of talent wins. Stephen, talk a little bit about this because we've had a transformation on this over the last three, three and a half years. Talk to us about talent wins and why we kind of got there.

B (15:15)

If you are going to try to grow and scale, there's two Issues with trying to do that cheaply or what? I'll say maybe affordably in key areas. From a talent and cost of talent perspective, the quality of work and your reputation and the pain of managing like B and C and D players, like all of that is a huge drain and slows you down. The other issue is that your A players having to deal with and, and, and overcompensate for your team members that are subpar, you're gonna burn them out, you're gonna frustrate them and they're inherently not going to have as high morale as they could. And so you have to count the cost. Like, is it worth it to cut corners and save 20k here or there on someone's comp or in a roll? And like, you know, I really think I want to go with the, the young scrappy guy. It's like, well, yeah, why are you telling yourself that? Maybe it's a good idea.

A (16:23)

Yeah, right.

B (16:24)

Maybe you're just trying to save a buck in a super key role when you're trying to scale and that's a huge mistake and you're not thinking about the long term. So talent wins because if you'll pay for talent and budget for it, you're going to do better work. You're going to have a better reputation in the market. You're, generally speaking, your employee morale and your team vibe, which is a technical term, is going to be healthier. And so as you were trying to grow and scale, you need all those things to be true. Like you need to be out in the market, you need to have a good reputation in the market. You, this is, it's hard work. So like in the midst of doing hard work together, you generally kind of need the, the attitude and the demeanor and the morale to be healthy if you're going to be able to accomplish significant growth. So count the cost of, you know, justifying, you know. And also what we see when we go look at potential acquisitions is people keep people around because they become friends with them.

A (17:36)

That's right.

B (17:36)

And in the most loving way possible, your employees are not your friends. Nope. We've actually hired a couple people who were friends and we had to have a very specific conversation to say in the bounds of this engagement together, like you are an employee and we're going to treat you as such. We're not going to treat you any differently. And I think, I think we've actually really held the line on that. I think you especially within a couple, context of a couple of relationships, but you know, it's dangerous takes a lot of maturity, a lot of good communication. But if you just keep people around because they've been there and because you're afraid to fire them because they're going to tell somebody at church, you know, that you, that you're not a nice guy or whatever, you know, the local context is, that's bad. That's immature thinking like that. That's. You're not going to grow with that type of decision making.

A (18:35)

Yeah. Two things I want to add to that. First one is when we were early, we've talked about this in the past, but when we were early on with our masters, we are so process technology driven that we were naively thinking that we could hire people that were C or B players and throw a very detailed process SOP at them and that that would solve any deficiencies. My thinking gatedly was like, hey, they don't really have to use their IQ because they just need to follow this sop. And that didn't work. That didn't work at all. So what I would say is you are the sum of your business. And that's I guess why there's like a whole industry of books out there on like how to hire great people and be a great leader and develop people. I guess because that means that's the sum of your parts is like you can't be great without great people. And so we are learning that and trying to improve on that a lot. And in fact, um, we like Steven said, when we're doing M and A deals, we look, we always try to look at employees that we can kind of take from those businesses. And here's why I'm gonna come back to the M and A thing. One thing that I've learned and I'm gonna. Steven, I'm gonna put a post this about LinkedIn. Every business I've ever been a part of where operators say or owners and they're scaling their business, like, yeah, I've got this super detailed process. Like this lead comes in and it's, it falls to this person and then this system handles it and this person, they fall and like there's a super tight process. I don't even have to look at it. Every successful business I've seen that's been sub 100 million has 1, 2 or 3 like gap filler key people ride or die. Employees that the business kind of sits on the backs of that are like ownership mentality. Gap filler does what it takes. When that lead comes in, it doesn't exactly fit. They know what to do and who to hand it to. And I think that that's a hidden truth in a lot of these businesses that say, oh, I've automated my whole business. I use international talent like I use technology and AI. It's like, no, you have somebody on your staff. It could be an international employee. It could be a full time, you know, local employee, domestic. That is the gap filler for you. Everybody does. And that gap filler is your A person. They are your varsity starting quarterback person you need on that team. And so we've realized that and we have realized the lift that we have gotten from hiring really great people. And obviously you've got to do some budgeting. You can't. We talk all the time here about things you should invest in. You can't do it all. Yeah. You can only do what's within your budget. And so you have to make meaningful decisions around that. And that might mean getting more from less. That might mean figuring out how to let go of a few underperforming employees and pay another employee more. That might mean giving somebody your A player an impromptu race and getting rid of some other folks and putting more work on that A player. Sometimes you have to do that and like those are decisions that have to be made. Going back to the M and A thing, Steven and I just Quick update, Alarm Masters. We closed a deal last week and we're about to close another deal hopefully in the next 30 days. And we're going to be bringing on two technicians. And one thing that we always are looking at is what is the quality of the talent in that business. And so we're really excited about exploring that and trying to figure out how that works. We're also, y' all are going to hear more. We'll give you more updates as we go. We're about to close our first or, sorry, our second platform, another business outside of Houston. And so we're going to have to kind of relearn employees and how they do things and evaluating talent. We're really starting from scratch in that business. Not from scratch, but rolling our playbook out from scratch, I should say. So we'll have more updates on that as we go. But that kind of speaks to the talent win thing is like we're not going to make the same mistake before we're going to go in. We're going to evaluate the talent, we're going to keep the A players. And that's nothing to do with like cost cutting. It's truly just like find the A players, double down on them, hire more A players.

B (22:30)

Yes, and amen.

A (22:31)

I think I want to transition here as we're kind of doing planning. I want to transition to like there, there are some key themes that everybody really needs to be aware of if they want to get, if they want to keep up. And I think that the best type of planning happens, Steven, when you are looking at a five year goal and then you back that up to a two year goal and you back it up to a year goal and then quarterly and monthly and then weekly and then daily. I think that's the best way to do goal setting. And I think that there are some trends that are happening in our space, but just in general in the service space that if you're not keeping an eye on and incorporating those into your planning, you're going to get left behind and you don't want to make the mistake that we have seen where we had a business that was crushing it. They did not invest in the themes and the new trends that were coming out. An example is they didn't go after cloud based technology. Fast forward 10 years, they're selling their business is now cut in half of what it was worth. And that's because they didn't pay attention and now they're selling their business for 50% of the value of what it was and they should have sold it either 10 years prior or invested in the trends.

B (23:48)

They didn't pay attention or they just didn't want to. They were stubborn and they wanted to just do what they were comfortable with.

A (23:55)

And so I think there's some key themes. I think one thing, if you haven't listened to our episode with Leo Dess, he talks a lot about some themes to be looking at and I would highly advise you as an operator to go to go listen to that. It was a great episode and that was a lot about being kind of a systems technology integrator versus a security company and the sort of total addressable market that that opens for you. So good. So go listen, I'm not going to spend any more time on that. One thing that everybody's talking about is AI. That's a key trend that if you do not have a strategy, you're going to get left behind. And here's, here's what I mean by that. And we don't have to spend a ton of time on this. We can kind of each give it a couple sentences. But like my, my broader point on AI is AI should enable you to have better, more impactful personal interactions with your customers, not less. So for us, we're using AI to automate a whole bunch of work that's back office so that our employees can have great interactions with our customers. Like we don't use. Let me just give an example. We don't use AI for voice. We do human beings that are all employees of our business because that interaction and touchpoint with the customer is so valuable to us. And I think that it really does drive value. So what we did is we took off a whole bunch of workload off of our CSRs by outsourcing it to AI so that they could focus a lot of their time on being excellent at customer interaction. And so Stephen, do you have any other thoughts on that as it pertains to the AI stuff?

B (25:26)

If you are skeptical of AI and hesitant to try to learn how it might help your business, I, I would like you to have a conversation with yourself. There are ways it is represented that are not real or kind of overblown. There's a lot of marketing, there's a lot of marketing out in, in the world related to AI that's half truths and exaggerating. But if you are so set in your ways and you're kind of refusing to at least explore utilizing, I'll just say emerging technology, better technology to help your business, then that's foolish. You need to go ahead and start to go down that path and learn and understand how it might be applicable to your business. So for us, specifically, the two ways that we're currently thinking about it, one is better customer experience. Two is improving gross margins. Like we expect over the course of time to very directly positively impact our gross margins because we are implementing better technology. I'll just say that we don't even have to use the, the two letter, you know, curse word that everyone's using. So that's, that's kind of our take on it. But I just think if you are hesitant and kind of standoffish, saying, you know, I'll, I'll check in in 2028 and see if that ended up being real or not. That's a mistake.

A (26:55)

You brought up a really important point. I want to bring this up because I just talked to a friend about this, another local operator, small business, similar size as mine. And he said, hey, one of my goals for this year is to implement AI. And I said, that's great. And he said, can you tell me how you're doing that and what I should start with? And I said, I'm not going to start there. I'm going to ask you what technology you're using and what international talent are you leveraging? And he wasn't using either. He had some very custom homegrown built piece of tech that was very old, not flexible, not giving a lot of automation, not giving a lot of integration to other platforms. Like he didn't have a VoIP system integrated and I have his email integrated and have his bookkeeping was very siloed and he wasn't using any international talent. I said dude, you, you're you, you don't have your help, your foundation built, you can't build on add ons a second floor when your foundation isn't there. And I think that's a huge thing that people are missing. Listen, if you are not using solid technology and you don't have international talent that you're leveraging to help with some of the back office stuff, you are going to light money on fire trying to use AI. And I don't mean sure, get a subscription to ChatGPT and let that write emails for. I mean there's some basic stuff you can do that's like, that's not going to really move the needle. It may save you a little bit of time. It's not going to move the needle. But like don't go build a quote agent. We are just now building an AI quote agent because for the last two years we've had an international employee that we layered on top of incredible technology that moves really fast to make it even quicker. And the AI is just automating and speeding that up even more. And the only reason we were able to build the quote agent was because we knew what we needed from doing it within an international employee and in the technology stack that we had. And the technology stack we had has the quoting agent stuff built on. So it wasn't like some massive lift from a development perspective. It was more of like a process lift. So I just really want to highlight that because I think that if you are, if you are trying to throw more of yourself, Mr. Operator at your business in the new year to try to grow, that strategy is not going to work. You are not going to get more out of you this year.

B (29:04)

That's right.

A (29:05)

You can get incrementally better. But you have to figure out how to duplicate yourself through technology and people. And there's three places you can do that. You can either do that with technology, you can do that with international talent or you can do that with domestic talent. And our strategy has always been hire amazing. But a small number of domestic employees hire amazing, really great international talent that follow our process and Then layer on technology that makes everybody efficient and allows me to track what they're doing. And then I think if you've got that foundation built, then you can build on the sexy AI stuff.

B (29:40)

No, it's perfect. I just. I hope people listen because we've. We've gone through pain and kind of arrived at doing that, and it's working and we're continuing to double down on it. And so, you know, we're practitioners and we can, you know, say, hey, like, if you will kind of follow this approach, we think it'll work out well for you. So.

A (30:00)

Yeah, and I just. From a humility check moment, like, Stephen and I are really great at some things. Good at marketing, sales, modeling, strategy stuff, modeling feet modeling for Stephen in particular. But what we're. What we're. I wouldn't give ourselves, like, I would say we're B players is, like, operationally, like, technique, technically speaking, like, wiring up the. Dude, I had a. I had a guy call me out up here in the industry, and he was like, hey, can you subcontract this door? It's. He was a friend in another market. He's like, can you do this door for me? And I was like, sure, it's a one door. And I was like, I honestly, you shouldn't be talking to me because I talk to my ops manager, but sure. And he was like, yeah, it's an electrified handset. And I was like, what is that? And he was like, okay, I don't think I want to use you. He was like, you don't know what that is. And I was like, that's a. That's a fair yellow flag. So I asked my ops manager. He was like, dude, you need to stop having those conversations. We do electrified handsets all the time. Like, you need to cut it out because you're making people think that we don't know what we're doing. And I'm like, ah, okay, got it. So I'm just saying that. To say that, like, we're not great at everything, and I hope we don't portray that. We are really good at building process and strategy. And I think that, like, we have done some things in our lives that have helped us get to that point. And if you're going to listen to anything that we talk about, don't listen to what type of camera we use and listen to sales and marketing growth stuff, because we've done it and we've got some reps in there and we've screwed stuff up along the way.

B (31:38)

I think to add on to that. We've made some really focused bets, and several of them have panned out, but some haven't. And then we've had the humility to be like, okay, we can't keep forcing this. This isn't working. We got to stop it. So I agree, though. Like, we're not perfect. We're not the greatest company of all time. We've learned some things that are working out pretty well, and we're just trying to share this.

A (32:05)

One other thing I want to kind of talk about, that's sort of a key theme here is, um, I think that in general, and I think a lot of people are kind of. I don't know if this is new. I think a lot of people have kind of figured this out already. I think that gone are the days where your value is how many different systems you can work on and install.

B (32:31)

Yes.

A (32:32)

And more of the value is can you be the very best at one or two per scope of work? And that was something that we doubled down on early and has paid a. Paid dividends for us operationally. From a sales perspective, from a quoting perspective, I have friends that'll call me and they'll say, hey, can you, you know, install genetech or something? I'm like, no, I can't.

B (32:53)

Like, I can't.

A (32:54)

I don't know how to do that. Our team doesn't know how to do that. And so I think that, you know, I think that you've got to get really tight on being the expert at one or two systems. And yeah, there are some systems that can do some things that other systems can't. If you are trying to be a everything to everybody guy, you're going to be nothing to a few people. And, like, I think we need to figure out how to be everything to a few people. It's like, hey, I can do these five scopes of work as long as it fits within these parameters. And if you want some super sexy something else, I cannot help you with that. And I'm not really going to spend a bunch of time trying to solution that with you. Like, we had a. We had a customer. That's okay. I really want you all to install a gate. There's like a pole arm that going into our parking lot. I'm like, no, I can't do that. I can, like, go find a sub and, like, I don't want to deal. Like, I want to work with y'. All. I'm like, okay, well, we'll sub it out. But, like, we don't do that. And we're not going to get involved. And they're like, well, we already use this technology at other locations and like y' all could service it at all those locations. I was like, no, we don't do it. It's not, not, not part of our core competency. So that's sort of my last, my last key theme. Steve, do you have anything else kind of going into New Year? What other key themes that you see that are on the horizon that folks should be aware of?

B (34:09)

Let's kind of the last piece today we're going to cover is department KPIs. And some of these. I know that you and I could both go on for a long, long time. So let's stick to like top two or three. You in particular, especially me. Yeah, I just, I mumble. It's a whole thing. As my wife. Top two or three KPIs, we're going to touch on sales, marketing, finance ops and a special shout out for M and A. So top two or three and so we'll go kind of rapid fire a little bit. You hit sales.

A (34:42)

I have a listener reach out to me literally today. And they said, hey, I'm doing planning. Can you help me understand, like, what are you all doing? Revenue per rep. What KPIs are you setting? And he started with actually saying, hey, how many activities? The question was, it was a two sentence. How many meetings do you do? Do you ask your reps to do per week? And I said, well, I'll share with you what that number is. It's between 12 and 15. But that's going to be highly individualized for you and what your goals are. And so the way that I think about this is what is my revenue? What is my install revenue goal? What is my install revenue goal per rep? What is that? Reps close rate. That means they had to generate X amount of pipeline. What's the average deal size? How many activities does it take to generate that deal that flows down to. They need to do X number of meetings. Like, so I think that you need to stop thinking about, hey, I think it like, yeah, I think if I'm going to do a million dollars, then, you know, everyone else is doing 10 meetings a week. That should be. It's like, well, maybe, maybe your rep needs to be doing 20 or maybe you need to find another rep that's going to. Because you're never going to get there. Your numbers have to, they have to go up. Like, they have to match. So you've got to kind of trickle it down. So for us, we're looking at number of what we call coffee drops, which is just essentially a prospecting appointment for existing customers. We're looking at the number of deals that have demos on them. And this is a lot has to do with more like sales process adherence. So we look at close rate and then in order to how do we influence close rate, we're looking at face to face meetings per deal cycle. We're looking at average deal size, we're looking at lead source, we're looking at loss reason. We're looking at.

B (36:24)

I literally said two or three metrics and you have thrown out like 17.

A (36:29)

I know, I know, I can't help it.

B (36:32)

I'm so sorry everyone.

A (36:33)

All right, give us your two to three. In marketing, okay? You got to stick to two or three.

B (36:38)

Cost, cost to acquire a new customer. Cac like you have to know like what you're spending to get a new customer. That's more like new logo and that's heavily predicated on where you're spending, what channels you're doing like paid ads. Are you doing, you know, referrals and sponsorships. Are you not spending any money at all? And yeah, you know, like there's again it, it depends on what you're doing, how you're functioning and what you're even able to track. But you should have some sort of idea, especially on the new logo side, what you're spending per new customer or like creation costs essentially people from like an RMR perspective. We'll talk about creation cost. Two is, I know that in an age of AI, people think that like SEO is dead. And that's not true. I can get on my soapbox, but like organic traffic, ideally like organic traffic growth month over month on your website, looking at like calls from your website, form fills, you know, website visitors, things like that.

A (37:50)

And then those sound like more than one KPI. I'm just saying. Listen, I'll just keep it.

B (37:57)

I walked right into that.

A (37:58)

Okay, I told you listener. All right, I told you this guy.

B (38:03)

I didn't even, I didn't even realize that I was.

A (38:04)

Editor, editor. Edit it out.

B (38:08)

I didn't even realize what I was doing there. And then if you are especially residentially focused, like more people are focused on social, from a residential perspective, then you're looking at, you know, comments and likes and like daily engagements and follower counts and things like that, views across, you know, DMs, click throughs on, you know, even going back to paid ads. I click the rates and things like that obviously. So again it depends who you are, the strategies you're deploying, kind of what you would want to track. But those are seven or eight, you know that you might consider.

A (38:45)

Seven or 18. Yeah, that's great. We're going to finance so we're going to stick to two or three. Huh. Okay, that's tough. Let's not do the obvious ones. What do I think are the most important now? I've got to really think about it because I can't just start rattling off my favorite ones. I think that the one that I am going to talk most about is going to be gross profit margin is one that I was like, there's only one.

B (39:10)

If you can only pick one, that's it.

A (39:12)

Yeah, I'm going gross profit margin but this is, this counts by revenue type for me. So I'm going to go by you know, service projects in rmr. So that's going to be, that's going to be the one that I'm really focusing on.

B (39:23)

On really good. If I.

A (39:24)

What's your one?

B (39:25)

Yeah, so that's what I would have said. So number one. Yes.

A (39:29)

Suck it. That's. I don't care. I keep it.

B (39:31)

Number two. So we obviously are big advocates. Even if you are more kind of construction oriented, more install focused, we still are really big advocates for trying to drive rmr. So I will say my number two would be net RMR change month over month. So we want to be obviously going up and to the right and we want to look at like net RMR contracted RMR monthly, quarterly, annually would be kind of a non obvious, you know, not like gross revenue would be like a top one.

A (40:03)

I'm going to add one more. Since we did two, we get three. And because this is a big one for us which is just receivables and all of the metrics that go along with receivables like total account balance I think is fine. But I would look at your over 60 days. You can impact what's at 90 days. At 60 days it's really hard to impact what's going on in 90 days. So we have not mastered this. So just full disclosure. Like we are constantly figuring out better strategies around how to collect, how to do it, how to set us up for success on the front end.

B (40:36)

You could say we're masters of alarms, but maybe we're not masters of collections.

A (40:44)

Yeah, I think that's great. Collections Masters is not our name for a reason.

B (40:48)

Maybe, maybe that's a future business.

A (40:51)

Agree. We'll see. Yeah, you heard it here first.

B (40:53)

Here's our Affiliate collections, Masters llc.

A (40:56)

Yeah, right, perfect.

B (40:58)

Okay.

A (40:59)

Okay. Operations. I'm going to just, I'm just going to do two, three, two here. One would be technician. They're both, they're two actually really Technician. One is technician utilization rate. That has to do with how much billable time are they basically taking.

B (41:18)

Right.

A (41:18)

So they got an eight hour a day. You're paying them eight hours. Generally how many hours are billable? That's a complex thing to track if you don't have a really tight system. So. And it's also really hard to improve a technician utilization rate if you have a process in place and your technician is not hitting high utilization. It's usually a technician's fault. If you don't have a process in place, you don't have expectation, it's your fault. And then the second one is just revenue by technician. Total number of techs. You know, how much revenue do you have, how much revenue you make a protect. It's just a good way to kind of benchmark yourself in the industry to figure out how are you performing. That's just like our, that's an easy way to kind of look at utilization. So those are my two for operations. You have any for operations or I.

B (42:04)

Was just going to say if you've have dedicated service and install teams on the tech side, you could split it out. You know, those revenues within those teams. If it's a little more blended, you could blend it. Yeah, yeah. Last one is M and A. Especially if you are really focused on inorganic being a large driver of your growth. Like so if you acquisitions is a big part of your, you know, revenue story and where you're headed and then you've got to have shots on goal. So that just goes almost like in sales. Right. So how many people are you reaching out to? How many meetings were set based on that? Out of all the meetings that you establish, how many actually happened, you know, and after that like did you get to an LOI and you know, just kind of tracking those. But ultimately if you're reaching out to like one or two random people every three months, if it's kind of half hearted, then you're going to have kind of half halfway results that you know, probably don't meet your goals. So I would say align your M and A KPIs to your M and A expectations, you know, similar to what we've been talking about in other departments. And so if you're thinking, hey, I'm trying to close three deals this year with a total purchase price of X, well You're probably going to have to do a significant, I would say for every deal that you hope to close in a given year, you probably are needing to actively meet with 10 to 15 owners who are interested in selling. You verified they have interest in selling. Probably one out of 10 to 15 may convert to a closed deal for you. Yeah, again, who are in market, they're interested. It's not like three years from now. We're thinking about it. So yeah, those are, Those are some.

A (43:59)

KPIs for my last one for M and A actually is on the other side, which is after you close. We are always looking at revenue by type, by legacy company. So we closed on a business last year, we closed off a bunch of business last year. And what I'm looking at is how much revenue did each of those, the customers that came from those acquisitions, how much revenue did they generate and by type, and the closest that you can get to their previous year sales number, the better. And you would think that that would be insanely easy. It is not. Okay, let me just tell you, if you bought a company and they're doing 2 million last year and you acquire them and your expectation is you're going to do an incremental 2 million, good luck. Because it's not easy. It is hard. A lot of that comes down to attrition. But that's a big metric for us to evaluate a lot of different things. But that's one thing that we're looking at. So real quick, before we close, let's talk about homework. We'll each give one. My homework is sales related and that is go figure out these numbers, average deal size and your close rate and then build out the KPIs as a result of that. Okay, email me at info at Entry and Exit co and I can help you with that. Hit me up on LinkedIn. That's my homework, Stephen.

B (45:22)

My homework is if you don't have a lot of this data readily available to help inform your decision making, it's time to bite the bullet as a part of your 2026 budget to invest in technology so that you can know your numbers.

A (45:41)

Couldn't agree more. Hey listen, listener, would you please go like and subscribe our videos and subscribe. That helps us a lot and especially when you engage in our videos. We do this because we enjoy it and we like to help people and I like to engage with people and I geek out when people reach out to me and I spend at least two or three times a week meeting with folks that are listening. That have questions and I just enjoy it. And actually a lot of times it is a two way street. They're asking me questions, I'm asking them questions. So this has actually been a huge net benefit for us. I would love if you would please subscribe to our channel and also go hit up our newsletter. We put a lot of thought and content behind these newsletters and we try to pull stuff from other industries. We also try. There's a lot of folks that like, like to get the clips and stuff from YouTube, but they're really more readers and the newsletter is great for that. So if you would please do that, that would bless us. And yeah, we hope you have a fantastic new year. Thanks for listening.