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Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
How to Future-Proof Your Home Service Business in 2025
00:37:59
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- [00:00]
A
Today we're talking future proofing.
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B
A business, when you're talking about future proofing, is to get so good at technology that you reduce your expenses to essentially a minimum viable rate.
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A
He who has the best tech wins, like, can you just grow without adding additional costs? So I think that's always the dream of technology is you can add less cost per marginal, increase dollar of revenue. So as I think about future proof, so much of it is, are we running a profitable business? Like, will technology help us run a healthier, more scalable business? Yes or no?
- [00:31]
B
You're specifically worried about this X thing happening that would shock the industry.
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A
Welcome back to Owned and Operated. I'm your host, John Wilson. Today I'm joined by my co host, Jack Carr. We run plumbing, H Vac, electric companies somewhere between Cleveland and Nashville. So welcome to the show. It should be a good time.
- [00:57]
B
What's going on? John, welcome.
- [00:59]
A
Today we're talking future proofing.
- [01:02]
B
A business which is not an easy topic in this day and age, unfortunately.
- [01:09]
A
Yeah, you'd, you'd almost think it's the opposite where there's so much technology that it's easier than ever. But I'm finding it's harder than ever because like technology shelf life is so much shorter.
- [01:23]
B
Bingo. Technology shelf life is shorter. And the ability for somebody to get the new technology that is better allows them to actually own more market share in the long run. And there's just like so many parts to. It's like, it's a technology game now, which is crazy.
- [01:42]
A
Yeah, yeah. I've said this a lot on this show. I feel like such an oldie in the industry. But yeah, grumpy, grumpy, grumpy. But this went from, this went from being this like, I, I remember like on Twitter, like five years ago, people were like, yeah, like plumbing H Vac. Like you're competing against people with fax machines in their office in 2020 and it's like, nah, dude, like today we are competing against sophisticated operators that are well funded. Like sophisticated, just not what it was five years ago. So technology is now a big deal.
- [02:17]
B
Yeah. Well, not only are they well funded now, they're well trained. Right? Like if you go to 2018, you talk to someone about PPC. Yeah, there might be somebody just PPC, but like best PPC for Home Services person that's been doing it for eight years. No, and not only that, now you have the, the, this influx of AI that. I mean, there's a bunch of companies out there. What is a great one is a good example Like I don't even know what they do. They're more expensive than I could ever imagine even paying and they're enterprise only. And so if you're one of these massive companies that's well funded, that is already has market share, that already has the people in place to know what they're doing and now can afford the best of the best AI, which I'm assuming that is they can afford them the best of the best AI. Like how can you future proof your business? It's, it's a question.
- [03:12]
A
Tight deadlines, breakdowns, last minute jobs. That is just the life in the trades. And that's why we trust we supply trades.com. they're family owned and with nearly a century in business they stock thousands of H vac plumbing and hydronics parts from brands that you are to use. They're shipped fast and even same day. If you order by 3:30 Eastern with a free pro membership, you'll get better pricing, free shipping over $99 and real experts who actually know the field. Get 20% off your first order with the code owned 20 at the link below we supply trades. Finally a supplier who actually gets it. But yeah, I agree with you. It's definitely like he who has the best tech wins. And I think it's getting harder and harder to distinguish the best tech from not the best tech. For a while like the best CRM was straightforward call center. You know, all these different things were just. Yes. More straightforward than they are today. It's definitely gray now or at least I think so.
- [04:13]
B
Yeah, I think that what it comes down to though when, when starting the conversation, what is, what hasn't changed? Right. Like there's a lot that has changed but what hasn't changed is still the need of the business and the, the simplicity of the business in whatever home service industry you're in is there's really again we talked about this on a different episode recently. It's, there's two key focuses. There's marketing and recruiting. Like I think that we have to circle back and like really focus on the way to, to future proof your business. Yeah, it's like hey, you need to make sure that you're getting into AI and that you're actually trying things and that you're being scrappy. But all that ends up revolving around is the same two things. It's like hey, how are you getting scrappy in marketing and how are you getting scrappy in recruiting? Making sure you have the best people. Do you disagree?
- [05:09]
A
I think, yeah, I probably disagree a little Bit the only thing that it's like removing friction. So I think one of the gaps that we have, this is what we look to technology for. So how much, how much of our day to day tasks can we automate? And are tasks worth automating? Like everything can probably be automated, but sometimes the cost for automation is more than just hiring somebody. So, you know, you always have to weigh those two things because I think it's easy to get caught up in automation, but how much can be automated? Because what we're trying to do is there are some things that out of, are out of our control. Like for H Vac right now it's 65 degrees in November. So yeah, we're not having the most amazing time selling stuff. And for most of the country, this was a really challenging year for H Vac. So, like well documented, right? Like all of carrier and Lenox and everyone said that they shipped like 30 to 40% less units to residential. So like, yeah, there's, there's probably some winners and some losers, but as an industry, we installed 30 to 40% less boxes this year. That's crazy. So there's some things that are just out of your control. And our macro. So what we like to have in our control is how much of our cost structure is variable, how much of our cost structure is low. And I think one of the dreams with AI is this like AI or technology arbitrage, where if, you know, if I'm Wilson and my overhead is $500,000 a month or $700,000 a month, can I go just buy another business? And because I've invested in technology, can all of their gross profit just fall straight to net because their overhead becomes completely eradicated, like they don't need it. Maybe one manager or something like that. So I think that's a lot of how we're looking at it is an adaptable cost structure.
- [07:13]
B
So when you're talking about future proofing, your answer is to get, and correct me if I'm mishearing this. Right. Wrong. But the answer to future proofing your business against changes to the market, like less, less people, you know, downshift in the market or issues with, you know, not being able to trade wars or whatever the case may be, is to get so good at technology and automation that you reduce your expenses to essentially a minimum viable rate.
- [07:46]
A
Yeah, so that's one of them. So like the way I see future proofing, you can future proof through people and you can future proof through systems. Okay, so through people is like culture. Are we training Are we adaptable? Are we nimble? Like, how, how open to change is the team and how fast to execute on that change? Are they, we can dive into that and then the next one is automation. Like, are we using. Like, one of the downsides of any growing business is the, the bigger you get, the more complicated it is. So how do you make it simpler? And one of the ways to make it simpler is flattening an org chart, investing in automation. So these tasks are just easier and ideally you outgrow your overhead. Like, can you just grow without adding additional costs? So I think that's always the dream of technology is you can add less cost per marginal increase dollar of revenue.
- [08:42]
B
This is an interesting take. I did not see your take going this way. Yeah, I mean, cool, we're here to drive to market with you. I mean, I'm just, I'm trying to wrap my head around it because I mean, for people who don't know, we don't actually like write all this out before we start digging in. Like, I thought John was going to go more of the, the path of like, hey, customer experience. Like focusing on customer experience might be.
- [09:06]
A
I mean, I think that's a part of it.
- [09:07]
B
I definitely do. But you can't automate, right? You can automate portions of the customer experience. But I think you hit the nail on the head. Like, the answer is not marketing first recruitment and how to optimize both of those verticals. It's people and systems. How do you optimize both of those? Because if you optimize your people to train better, do better act and to.
- [09:30]
A
Build those systems or to implement those systems well. But also like the first part is.
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B
Like training the team, right is going to be people, whereas your automation is going to be your systems. So I don't disagree. I just came to the conclusion in a different route.
- [09:42]
A
When the people side is it the where we are is most of, like most of our change day to day is driven by our team. So like, yeah, I might have an idea or something we want to execute on, but for the most part, like I'm not executing on very much of it anymore. So the team is like implementing this software or this AI partner or what I saw that or whatever, whatever it is. So I think training them to be able to do that is important because I, I think if the team is, you know, adaptable, then the company can be adaptable.
- [10:18]
B
Do you, do you find or do you imagine that this changes at different levels of revenue? Right. So that's something that, that you're living through. So it makes sense at, at your level. But again, some portion of our audience are smaller contractors. You're able to go in and say, hey, I'm gonna sub out. Not necessarily sub out, but like my team will do the work to automate these systems out. Whereas on a, even my size. Right. It would mostly be me. Like that task is something that falls onto me or somebody I hire to do that, which I tried and failed miserably at. So it's hard, it's a hard situation, especially if it's a catch all role.
- [11:01]
A
So I would say it's easier when you're smaller because you can directly impact it a little bit tighter. So like if I'm the analogy that we use internally is are you turning a cruise ship or a rowboat or like a jet ski? Like it's obviously easier to turn a jet ski. So if it's you and one person or you and two people driving a change into the business, it's easier.
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B
Yeah.
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A
Like it just is. Like you can just go do it. Maybe there's less people involved, maybe it's a smaller team. Maybe you own that project for whatever reason. But it's easier. But you're getting your hands dirty. We, I think it, as you grow, it gets harder because you have to get. Suddenly you have to get buy in and you have to get, you have to, you have to get things that you didn't have to get before because you would just go do it. But now you have to explain it fully. You have to explain the why, you have to explain the outcomes. You have to explain how we're going to measure success. Then you have to explain what it is like, hey, here's what we're doing and why. And why it's important to the business, why it's important to you, why it's helpful that you drive this change. And it's hard. It is hard to make change changes on a dime and that's a weakness. Like it should be easy. Right. Because some you have to be adaptable and you have to be nimble because the slower you turn and the slower you adapt, the more likely you are to get punched in the face by some, you know, black swan event.
- [12:27]
B
Yeah.
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A
So you have to be adaptable, but it's, it's hard to stay nimble.
- [12:31]
B
Yeah. So that adaptation at a smaller level is poor. A portion of the ability to change systems and people early on and that is what protects you from future change in the market.
- [12:47]
A
I think a flattened org chart. Yep. And then having a Lot of technology. Because what we found, we have some teams that we've, like, automated a lot of the work they did or, like, brought in AI or whatever. Like, Call center is a really great example. Like, two years ago, I think we had 18 call takers. And like, I'm sure someone could reference back to show notes, but it was somewhere in that. In that range. We have five right now. And most of that is driven through technology. We automated a ton of it. We brought on AI partners with Evoca. Like, we just changed a lot and we went from 13 to 5. And that team obviously got a lot easier to manage and changes were faster to happen because we didn't have to educate 18 people. So to me, that's an example of future proofing. We increased our margin and we made that department easier to scale.
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B
Yeah.
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A
And like, less friction to scale because now there's no more people really. Like, we just automate more and more.
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B
Yeah. Matzner put it really good. John Matzner, he said there's some. There's a few. I think he said there's four different types, and he probably got it from somewhere. But there's four different types of leverage. And I keep hearing you talk about two of them, which are technology leverage and people leverage. Right. It's like you're leveraging technology to be able to remove obstacles as well as. Right. Code doesn't expire, code doesn't change, code doesn't go bad. So if you're able to do the work of four or five people all simultaneously, like, why wouldn't you leverage that technology? And then the same with leveraging people is we've talked about on the here before as well. Is looking at overseas staffing for a lot of positions, because I know that that is what we both do to reduce headcount. But also. Right. I mean, I think that we get some better service. Reduce headcount. What increases margin, Increase margin.
- [14:41]
A
If. If I have to summarize, like future proofing to me.
- [14:44]
B
Yeah.
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A
Who has the margin? I. I remember as we were like, growing through the teens, so much of the focus was revenue, and we weren't running like, a profitable business yet. Like, it was kind of profitable. But, like, we're. We're putting pretty consistent, like 15 to 16 on the bottom now, which we still have a ways to go, but, like, we used to be three to five.
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B
Yeah.
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A
And because we have margin, we have. We can be nimble. And that's something that we Learned this year. We 4x EBITDA this year over last year. And we're finding that we are in general making much better decisions because we can be nimble, but we can also, like, be strategic. Like, we can look at more than just like today's cash or tomorrow's cash, and we could just make a good decision, which I don't think we used to be able to because we had less margin. So as I think about future proof and like, how nimble and how much can we invest? Like, so much of it is, are we running a profitable business?
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B
Yeah. I think the question becomes, like, what happens if the market falls out and it doesn't become a profitable business? Not that doesn't become profitable.
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A
And that's why I like the technology too.
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B
Yeah.
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A
Yes. Like, how can you take a 30 punch to the face? Like, how nimble can you be? And that's why I think so much of this is how can we automate? How can we make variable cost structure? How can we invest in people so that they can change fast when markets change?
- [16:16]
B
And so with that, I mean, I think a big portion of this. Right. That doesn't seem to be able to be focused on. I mean, it does tie in, but doesn't. It's not a direct line item for you. Is like debt. That's a great example. It's like that could be one of the main harbingers of death in case of.
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A
Yeah.
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B
You know, an issue with market or future proofing. How do you view debt from a market proofing standpoint? Right. Because debt is almost.
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A
Yeah.
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B
I mean, like market proofing.
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A
Yes.
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B
You take on debt to leverage out cash to. That's the third leverage point is like money funds.
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A
Yeah.
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B
How do you leverage funds to be able to focus on growth. But inherently, like, debt is the inverse of net. Yeah, directly. But something like that.
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A
My opinion on this has, like, obviously changed with time.
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B
Yeah.
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A
You know, during like 2, 3% interest rates. Dead all day.
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B
Yeah.
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A
Right. Like, growth was easy, interest rates were low. It just wasn't that complicated. I mean, we have some loans that adjusted to like 10% because they were on like adjustable notes. And like, that's a lot of money.
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B
Yeah.
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A
So our stance loans. Yeah, our stance now is like we're de. Levering.
- [17:39]
B
Yeah. So the, the idea now is you're at a point where delevering makes. I mean, but like, look at someone like me. Right. So we're at a point where, I mean, still tight. We are doing, you know, 10 double digits, bottom line, but there's still a decent, you know, balance sheet, amount of debt on the books because obviously we bought a business. We bought 14 trucks. Like, there's a lot there. And so we focus on it too. But like, what is the importance of somebody in my position saying, hey, I want to, you know, mitigate future downside? How much should I focus on debt or should I focus on putting money away for run rate? Like, well, how would you view that?
- [18:21]
A
You're great at fixing broken shit, so why not fix your lead flow? Well, Modernize gives contractors predictable, high intent leads without the big marketing gambler break out of the feast and famine cycle and expand into new markets with a steady stream of homeowners ready to start jobs. Now, Modernize is trusted by founders like myself because it actually delivers over $4 billion in homeowner projects. Started here in the last 12 months. Visit the link below to get started. Yeah, so we've done both. We spent most of the year focusing on building cash, and in Q3, we started like, yeah, building a strong balance sheet. And I think your point, just to like summarize it is aside from margin, you also need to have a healthy balance sheet in order to future proof, like, you need to run a healthy business. Which. Which I agree. And on one hand that sounds obvious and on the other hand, most people, including me for a lot of my career, did not run a healthy P and L and balance sheet at the same time. So, like, it's okay. It's just like, you know, time to get there, probably.
- [19:22]
B
So thanks for the advice, John. Yeah, well, I feel like weak balance.
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A
I feel like people could be like, yeah, I feel like people could be like, well, that's so obvious. And it's like, yes, it's obvious. My guess is most of the listeners are unhealthy and like, there's parts of us that are unhealthy. Like, yeah, we probably have like, our debt is healthy according to banks, but like, is it healthy according to me? I'd love to have 2 million less debt.
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B
Yeah, no, I love to have no debt. Like, that's the obvious answer. But I guess what I'm trying to get at though is right, there's an inverse relationship between growth and debt. Right. So I could take out, for example, if a bank would lend it to me $3 million tomorrow or $5 million tomorrow and dump all of that into growth and probably, if I'm a half good operator, get significant growth.
- [20:15]
A
Yeah.
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B
That being said, probably not healthy from a balance sheet perspective is like, hey, now you have a giant payoff. And even if you get that growth, the. The risk of a downturn, which Is what we're talking about here or changes in AI that, that makes certain things obsolete, like whatever the case may be. Like, how do you view that? Like, is there, is there a balance? Or do you view that as, hey, like, that's the risk you have to take? I guess the answer that I'm trying to push through from you is not, you know, obviously no debt is better. But where, where's the, the healthy standard that you view for yourself and your business and from your risk profile, because obviously too there's a risk factor. Like, how much risk are you willing to, to eat? It sounds like less today than it was in 2021.
- [21:03]
A
Yeah, I was having this conversation with a couple people yesterday, but. And the question was, are you, are you currently risk on or risk off? Like, is your mindset risk on or risk off? And like, it's kind of a spectrum of like, yeah, I'll take a little bit here, a little bit there. But yeah, right now I'm definitely leaning risk off. Whereas, you know, a lot of our career we were pretty risk on. So like, risk on is like, yeah, let's go lever up and buy some stuff. And today that's, I'm less concerned and we're much more concerned about like healthy balance sheet, healthy P L, good culture. Like, are we driving the things that we want and are we driving like 20 EBITDA?
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B
Is that a. Based on like your growth and your size and like where you're at as a company, or is that based on macro trends?
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A
I would say size and where the company's at? Like, at a certain point it's just too much money. Like, it's, it's just too much. Like you cross into the 20 millions and you've got PGs and you've got debt.
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B
And like, that makes sense.
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A
And the, the expectations from vendors or banks ratchet up, which they rightfully should. Like, we have credit lines with some vendors that are like a million, some dollars. Like, they should have expectations of like, am I running a healthy business? So a couple years ago, we started being required to submit quarterlies to our vendors, like Ferguson. Like, we have to give them financials. We have a big credit line with them. So we, you know, really as the expectations ratcheted up from the external stakeholders, we started focusing a lot more on, hey, are we running like a healthy, scalable future proof business? Are we running a profitable business here? But we got sort of pushed into that, which I think was good. Like, it was a good pressure, but we got pushed into that from external vendors. And in banks, just like, hey, you either didn't submit your quarterlies because we weren't running an organized accounting department, or you did. And, like, here's where you're weak. What's your plan? So, yeah, it was good, healthy pressure.
- [23:14]
B
So risk off because of size, which I understand. Like, I remember the moment that we crossed. Like, hey, I can't fund this anymore. If it were to go south for my own, you know, savings and what I could potentially.
- [23:26]
A
That was my dad's. That was always my dad's. He's like, I never want to get so big that I can't save it personally.
- [23:33]
B
Yeah. And that was.
- [23:34]
A
And, like, we're definitely, well be anxiety.
- [23:36]
B
That was. I remember. Like, I remember the day and where I was at, where I realized looking at the book, like, if this goes south, I can't go get a job and, like, cover the debt and, like, save my house. Like, it's gone. Gone.
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A
Boy. Yeah.
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B
That's interesting, though. Like, I actually really am taking a lot of this conversation because I didn't expect it to go here, but. So it sounds like that we've kind of gone through a few areas here. But to. To recap, just so I can align my mind, it was. There's. There's people and systems, which when. If you're reducing risk, you need to focus on getting your people and your systems correct. By being small, it's easier sometimes to write those people and systems and then build the systems correctly. Build the people programs correctly. As you continue to move people programs might look like, hey, how do we do these specific jobs? How do we build the right leaders into the right places? And then the systems look like deleting as much overhead as possible in case of issues, leveraging technology, focusing on.
- [24:36]
A
Yeah.
- [24:37]
B
How to flatten the org chart, and then on the back end, trying to reduce debt, determining whether you're a risk on or risk off company. Because I don't think there's a right answer in a hypothetical here, but knowing what you are and then how to eventually stake and turn it the opposite way or turn it off for good. Like, hey. And that's why I think some of the big businesses, they don't grow as fast. Right. They move from a risk on to a risk off perspective, a lot of their decisions are slower growth. You're no longer shooting for 6,000% growth. You're going for 30 or 40. So that makes sense. Is there anything else I'm missing here that you think is a soapbox that you should get up on?
- [25:15]
A
No, I Think, I mean, I, I, for us, it, it's sort of like the North Star is a healthy and profitable business. Like you need to have a healthy and profit, which again sounds obvious and any decision, anything else that you could use to future proof your business is really just. Is this helping us towards our North Star? Like will technology help us run a healthier, more scalable business? Yes or no? Will our marketing help us do that? Will you know, whatever this thing is that we're looking at, will it help us drive down cost or increase revenue or strengthen our balance sheet?
- [25:53]
B
Which I mean again the obvious one which comes to immediately to mind for me because it's so new, is knowing numbers. Like knowing your numbers and having those stats and data is a headache and it is a nightmare. But that if you want to talk about future proofing your business, you can't even get to your step of like, hey, run a profitable and great business because you don't know, know if you're running a profitable and great business. You don't even have the numbers.
- [26:17]
A
I mean there were, there were years we had no idea.
- [26:19]
B
Yeah, yeah. I mean it's taken us a year since we started this and solely because of this podcast that we focused on getting our gross margin. Because I'm trying to think of like, hey, well what happens if X, Y or Z happens? Well, you know, you, even if you were to just like randomly fire half your staff and like cut all these truck expenses and let them get repoed, like all the, the intricacies and like the actual nuance of it doesn't actually matter because you don't know what you would do it too because you don't have your break even numbers, you don't have your financials. So like if there's a first step, to me it sounds like get your numbers right.
- [26:52]
A
Yeah, I mean it's hard to know where you're going if you don't know where you're at.
- [26:56]
B
Yeah, I mean that, that makes total sense for me. Is there anything that you foresee on the horizon? Just again, wild shot in the dark, like, what are you worried about? We have a buddy, mutual friend and the only thing like that he worries about in the H Vac industry and the reason he got out of the H Vac industry is because he was worried about the Uberization of the trades. I don't worry about it as much now that I've been in the trades for a long time and realize like the difficulty that it would take. It would be a trillion dollar business, much like Uber or Lyft or whatever. But this decentralization of talent, like that was his. Do you have one that's like that where you're specifically worried about this X thing happening or, or this Y thing happening that would shock the industry?
- [27:48]
A
Yeah, at one point it was the Amazon effect. I'm sure that some version of AI will, will do this. So if, if we think back to like the North Star of like, hey, let's can we drive a profitable business? What AI should ultimately do is it should disrupt your cost structure. So if I run a 50% gross margin business, then I have 50% of potential costs and potential profits. With the, some of the technology that's starting to come out now, the large portions of that are going to shrink. So it's pretty common to see like 50% margin, 40% overhead, 10% net profit. We're usually like 49, 50 gross profit and like 33 to 35%, sometimes 36 or 7 in a week month overhead. So the way we're looking at this is can this investment push us to 25 overhead and can we have 25% sustainable EBITDA or can it push us to 20 overhead? And like how far can we go? If we need less people, we need less square footage. If we need less square footage, we need less utilities. And it's sort of this like it can really ripple pretty far. And then if technology runs most of your day to day, how do you find ways to add incremental gross margin? So I think what I'm saying is less about the Amazon or I, I think like he who has the text is going to win and like you've got ARS and you have Apex and you have all these guys with 10,000 texts. And I think the bigger concern is that they radically change their cost structures and they gain another 10 points of EBITDA and they invest 5 points of those EBITDA into taking market share over the U.S. i think that's a much more likely problem.
- [29:46]
B
Yeah. If you could see me right now, I'm shaking my head. Yes, yes, yes. Because that, I mean I think that's where the big worry is, is big.
- [29:53]
A
That's like the next 12 months. Like with a lot of the technology out there now, like I said it.
- [29:59]
B
From the beginning, it's going to crush the middle guy. Like we've, we've talked about this for like two years is the middle guy is getting crushed because the truck in the truck can still slaying a unit for 500.
- [30:08]
A
But the crazy or they can be subcontracted by the big ones. Yeah.
- [30:11]
B
Or they can be subcontracted. But most likely if they're out on their own, it's just them, like they can install something for $400, zero overhead because it's their cell phone and it's their truck that they use for life and there's no overhead. Right. So your cost is the infrastructure. And it just happens like it is the same cost as a multi, like a multinational conglomerate can get because they can push their purchasing power so low. And what's historically helped everyone else out is that with that historic or with that low purchasing power, it also comes with a naturally, somewhat decently high margin or. Yeah, yeah. Expense. Right. I have to have more people, I have to have a bigger shop. I have to have this and this and this to be able to manage Everybody. But if AI comes in and smashes 95% of that. Yeah, it pushes them down to the same price as the chuck in the truck, but Instead of making $500 in the unit, they're making 50% margins on the unit. They can do more of them and everybody in the middle who is 2, 3, $4,000 higher. You know, as much as people love like, hey, we love the family owned company, nobody loves the family owned company for $4,000 more. Like, it's just, you know, it is what it is. Small businesses get pushed out. I mean, look at Walmart, like what they did. So.
- [31:34]
A
Yeah, so I think that's the bigger, like, challenge. And I think what's shocking to me is we're closer than we probably think. So Evoke has got this thing called, I think it's called Onyx and it literally automates your front office now. So you can call in. It handles everything from the inbound call, does outbound to inbound sms, to booking the call, to dispatching covers, that whole thing now. And I mean, you know, you add that to a giant or a small company, you add that to any company, I guess I don't know how much it is, but like, that disrupts the cost structure and maybe you save like eight points.
- [32:20]
B
This is, this is the. I guess that's the point of the episode. So as a small company, how do you fight Onyx, the big company who just, right, cut eight points. Like, what's the move? Go to Excel spreadsheets and automate as much as you can.
- [32:33]
A
Like, I. Yeah, I guess, I mean, I would, I would try to find ways to invest in technology yourself. Yeah, I mean, the problem is it depends on who they are. Like, they're either going to add that straight to EBITDA and do nothing else or they're going to market more. So like, who's the operator that you're competing against? But yeah, if they're marketing more like, that is going to be a tough gig. I think you're. It's the same thing as always. If you're competing against somebody bigger, you have to be doing things they aren't doing. So if they're all on Google, probably don't do Google.
- [33:02]
B
You got to bob and weave. Bob where?
- [33:03]
A
You got to bob and weave.
- [33:04]
B
Weave where they're not. If it means, hey, your entire team. What, I mean, what comes to mind for me is like you get these new automated platforms that are doing all the marketing and are coming up with the, like, it's crazy now they're coming up with the images and the copy and they're just auto posting it and getting leads and it works or it doesn't. It can cycle through hundreds of these. But like, you know what they can't do is they can't knock on your door. So I know door knocking is some, you know, it can be a gray area for some. But my point is, is, you know, bob, were and weave where they can't. Yeah, but interesting. I mean, I don't, I don't know if there's an answer for this hypothetical. So.
- [33:42]
A
Yeah, well, I think if, if we're back to the North Star of like, are we healthy, are we profitable, are we nimble? Then like, you can compete better than like, if you're running a 3% shop. Yeah, like, you don't really have time to figure out how to bob and weave.
- [33:58]
B
Yeah. I mean, like you said though, within 12 months to go from like, hey, I'm a 6, 8, 10 shop to like, I need to be this person. Just cut all their expenses, you know, 30, 20, some crazy number. Like we were already competing with. Like, for example, I'll, I'll talk about. I don't think we have to beep this one out.
- [34:17]
A
Cool Ray.
- [34:18]
B
Cool Ray sells stuff at Dirt Cheap. They are an absolutely cheap competitor.
- [34:25]
A
Really? I don't think I knew that. Are they Wrench and.
- [34:28]
B
Yeah. Wrench Group in our market. And they. It's because I've seen their purchasing power and it's ridiculous. Like, they, they run a massive organization. They get amazing carrier prices with amazing carrier rebates. But the point is, is like they're already on par, like with the max purchasing power we can get versus them. Like, if they were to say, hey, we're going to an AI system that cuts 20 margin and we're could, we're passing that on to you. Shitty infomercial like we would get destroyed. There's no way that we could drop another 20 on the top line. I guess, I guess you're right. No, the answer would be, well, Jack, you need to figure out how to drop 20%.
- [35:05]
A
I mean that, that really is that is it. Because if companies my size are figuring out like, hey, I can go from 35% overhead to 29, which, that's our target. That's six points. That's a lot of freaking money.
- [35:19]
B
It's. But the crazy part though is a lot of money for you guys, it's like six points. In a smaller industry, like a two million dollar company, it's not that much. So like that's you changing.
- [35:29]
A
Yeah.
- [35:29]
B
Voips, that's you changing from service times. Like, hey, I can't afford service time right now because I'm just getting beat up by AA to jobber or whoever. Like that's the answer unfortunately is like, hey, I need to cut 6% or 7% to be able to match so that this works. And then it's the hope that, you know, they misallocate all that money to investors rather than pay their people more. Recruit better.
- [35:56]
A
Yeah.
- [35:57]
B
So awesome. I mean I think that this is.
- [35:59]
A
That'S how to future proof the business.
- [36:01]
B
This is how you future proof a business. And I think that the other part.
- [36:03]
A
Run a healthy nimble business.
- [36:05]
B
The big. I think the answer to this actually is right in front of us. John. The answer to this is you need to get in front of some other operators and freaking talk about it. Like, yeah, this exercise right here has been kind of. I mean it's made a difference for me in just this sitting. So I mean that's probably.
- [36:22]
A
Yeah. I mean you talk to half the stuff that we've talked about I've gotten from other people. Like I found out that other companies were fully automating. Like I've talked to companies in the last couple months that are several hundred million dollar organizations that have two call takers. Yeah, that's crazy. And this is something that we didn't even know was possible like a year or two ago. And it's not just one, it's like kind of a lot. So we're talking, we're just talking to more and more people and it's like, well, what are you going to do with the $3 million that you just gained? Like that's the real math that these companies are looking at and it's, it's. Yeah. Okay, well, we're, I mean, a lot of it's going to be ebitda. Maybe it's new locations, maybe it's whatever, but it, it's giving bigger companies more ammunition for sure.
- [37:13]
B
It's the, you know, first to growth as well. Right. It's that you put it back into growth, into different locations. Winner take all. So.
- [37:21]
A
Yep. Are you still running your business on pen and paper or a clunky software? Field Pulse is the top rated field service management platform that saves you five to 10 hours a week. It syncs with QuickBooks and it puts scheduling, invoicing, and more all in one place. FieldPulse users grow 78% a year on average. Book your demo today using the link in the Description and get 15% off an annual plan. Field Pulse, a field service management software for those who need more.
- [37:49]
B
Awesome. Well, this is an awesome episode.
- [37:50]
A
Thanks everyone for tuning in. Make sure you give us five stars wherever it is that you listen.
- [37:53]
B
Five stars, people.
- [37:55]
A
Five stars. Five. We need them desperately. It's for our egos we're fighting.
- [37:59]
B
AI.