← Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
The REAL Cost of Running a Trades Business in 2025 — What Most Owners Don’t Understand
00:49:27
Loading summary
Transcript197 lines
- [00:00]
A
My headline of the year is don't skip out on recruiting. Otherwise you'll feel a lot of pain. While the industry had issues with marketing and leads, we had the opposite. We had to shut down all of our marketing because we could not fulfill capacity.
- [00:14]
B
Our mindset is lean and lethal. And because we had this plan, like, we believed in it. They were still hard decisions, but they were easy to make.
- [00:22]
A
Good leadership really moves the boat.
- [00:25]
B
Like, this has been tough in, like, September, October. I think I was just stressed and, like, how do I show up every day for my team? So, like, this was a. A hard year for H Vac. I can't control that. What I can control. Welcome, welcome, welcome. Welcome back to Owned and Operated. I'm your host, John Wilson. Here's my super handsome host, Jack Carr.
- [00:52]
A
What's going on? No mustache. New year, new me.
- [00:56]
B
New year, new you. Yeah, it's December 19, 2025. We're. Yeah. Nearing the end. Snow started falling. I've skied four times so far this year. It's felt great, pretty much. I mean, you did move to Nashville. Like, this is not a me problem.
- [01:14]
A
That is a. That is a big fault of mine.
- [01:16]
B
Yeah. I think. I think we're doing a roundup of 2025. What do we like? What do we think? What do we hate? What would we do different?
- [01:22]
A
Oh, my goodness. So where do we start?
- [01:26]
B
Well, if you had to brief Someone on my 2025 before they entered 2025, what would you tell them?
- [01:32]
A
Before 2025, we were in turnaround mode. We had a plumbing department that wasn't working.
- [01:39]
B
Oh, I remember that.
- [01:40]
A
Yeah, we had a plumbing department that wasn't working. It was losing money month over month, every month for consecutive months. After we bought a large business plumbing division, we had to shut down a new construction vertical of that plumbing department, which was $1.1 million in top line revenue. Lots of change. 2026 was a good year. We had good growth. We hit our goal, or we're on track to hit our goal. We still have a few days left, but overall, I think the theme for me on 2026 or 2025, it was recruiting, recruiting, recruiting, recruiting. While the industry had issues with marketing and leads, we had the opposite. We had more leads than we knew what to do with. We had to shut down all of our marketing because we could not fulfill capacity. So again, we hired a recruiter, and then we hired a new recruiter, and now we're on our third recruiter to make sure that it's going to work. Just as we need it to work. And going into the end of the year, it is still recruiting. So good news is we've gotten our lead cycle down. It's just recruiting.
- [02:48]
B
Yeah. My 2025, if I had to brief somebody on what would happen in 2025, what would I say? Variable overhead, probably. I think most especially in H Vac, like, in plumbing. Plumbing. Everyone I know in plumbing, like, still sort of moved and grooved and all that stuff, but anybody in H Vac, like, tough year. Like, I remember the headlines of the summer that didn't happen for California. It was like 60 degrees in July. Like, you know, shoulder season was tough. The switching refrigerants was tough. Going from 410 to R32 or 454, they didn't have refrigerant for like three months there. I. I think in general, like, if you were an H vac, it would have been have variable overhead and try to be nimble because it. It just was hard. Like, this was a hard year for H vac.
- [03:40]
A
Yeah, I think that's fair. That's where most of our growth. I mean, we had decent growth in H vac. I think it was like 30%. It was modest. But our big growth came from plumbing, which this month actually might surpass our H vac on total revenue, which is wild.
- [03:57]
B
That's beautiful. Isn't that beautiful?
- [03:59]
A
Yeah. So I. I don't disagree with anything you said there. I think that the industry definitely had some troubles this year. It was, like I said, we heard from a lot of different contractors across the country. Leads has been rough. And then we were lucky enough to not have to really have that. That refrigerant change issue. I know a lot of people did, but we didn't.
- [04:19]
B
I mean, there was leads, there was refrigerant problems. There was, how do you install equipment without refrigerant? There was tariff price increases, and then there was moderate weather pretty much everywhere. And then, like, once it started to get good, the government shut down for 45 days and then all the things that came with that. So even if people. Even if demand was there, which demand has been there for a while for us, but we're seeing more customer financing declines than ever.
- [04:48]
A
So that true?
- [04:50]
B
I don't know. It is interesting. I think my biggest headline of the year, and I'm curious what yours is, but my biggest headline of the year is if. If people aren't watching Home Pros. Home Pros. Our friend Alec over there just runs a really good, like, industry news newsletter. And I. I Like it a lot. And it's like, it's like industry news. It's timely, it's interesting. And there was one, like two days ago we were working on budget budgeting and we were like trying to figure out like H Vac for next year. Because H Vac for this year we like, it was hard to figure out. And like I go to home pros news, I think, and the headline was, and this is my headline for the year, October H vac shipments crater 49% year over year. And it was, it was just like, yeah, that's, that's, that's my headline for the year.
- [05:40]
A
Yeah, I mean, and I get it. Like, I get it. If you look at the market from the hole, I mean, three, four years ago we were selling 15, 17 sear equipment at the price now of base model equipment. So yeah, it completely understand. I think my headline, I think I already said it, is don't skip out on recruiting, otherwise you'll feel a lot of pain even at a smaller size. Like you should be recruiting all the time. And the fact that we weren't or we had issues getting a recruiter in place this year and learning that and strengthening that muscle was. Was our big downfall for potential this year. It's no secret that my office here in Nashville is almost completely empty. So how do I support my team as well as have great growth metrics? Well, the answer is international contractors with quick staffers. So Quick staffers is a premier staffing agency which will place top tier talent in your business. Built by the trades for the trades. So if you need a csr, they'll be placing a CSR that is highly trained in your business that knows service titan and can book calls effectively. Day 1 Call 1. Affordable, reliable and trained in all of the industry best practices. Quick staffers can help you cut that overhead, boost conversions and scale your business fast. So don't waste another lead. Visit quickstaffers.com and transform your business today.
- [07:10]
B
All right, sweet. We have like a couple segments here. I think this will be kind of fun. So the first one biggest wins 2025. Let's start off with some dubs. What decision paid off the most?
- [07:24]
A
New plumbing manager.
- [07:25]
B
Yeah, yeah, yeah.
- [07:27]
A
You know we are plumbing might surpass our H Vac. It has absolutely blown up. Plumbing has been the star of the show in 2025 for us. And I mean we have more water heaters sitting down in the scrap pile than H vac units. And it was cold last week.
- [07:44]
B
All right, so let's go.
- [07:45]
A
Yeah, let's go is what I'm talking about. And so he's the one, bro, you're.
- [07:50]
B
A plumbing company now.
- [07:51]
A
I tip my hat off to him. Yeah, yeah, we know it says rapid respons plumbing first. So, you know, I, I seriously considered going through our GMBs and changing our primary contractor status on some of our GMBs to plumbing because of how well plumbing is doing.
- [08:06]
B
I think, you know, I don't know.
- [08:09]
A
I don't know. But that's been the biggest decision is our biggest paying decision is we took a chance on somebody, he took a chance on us as well. And he's been an absolute all star. So it's just a reiteration of a lot of times good leadership really moves the boat.
- [08:27]
B
What decision paid off the most? I think we made a decision in the very beginning of the year or late last year, and it was to be transparent down to net. And I think that that decision paid off the most. So if you're new to the show, we do a monthly net profit financial session once a month with our frontline and senior leaders. And, and we've been doing this for like basically a year now. I think it started in January was our first one. And that decision ended up being incredible because we were able to really talk about exactly what was going on in the business at any given point and they knew the score with that.
- [09:09]
A
John, there was a. When we mentioned this in the Facebook group, there was a bunch of people that were asking for more information like, how do we do this and what do we do and why do we do all this information? Like, is there another book I could read on it? And I didn't answer anybody because the answer is I just opened up my P and L to the team. Like we did the same thing this year. And I just said, hey, this is how much I make. Which was, I think, you know, shocking for them. This is our meals and entertainment that we spend. And they saw, oh, Jack's not pulling money out of the business. This is. And, and they also understood, like, where all the money goes and how tight it can be at the end of the month. So we talked about, you know, gave us opportunities to talk about refunds and callbacks and how much not turning in warranty parts actually can hurt the company. And so that's been a huge win for us this year as well. We, we are in our third month of doing that. We started in September and it's been really good.
- [10:04]
B
Yeah. My advice to people is one, just like that, just start and then two, talk about what Happens after net or after EBITDA or after whatever it is that you're showing or talking about. I think that was probably the big one. But yeah, we like, it's the second Wednesday of every month and we just, here's the P and L, here's my notes on what happened for the month and by department, here's what we did. But like when we first started, it was like, here's the P and L. Like, it wasn't that deep. We've gotten better every single month with here's more data, here's better versions of the data, here's like something you can make decisions from. But just starting, I would just talk openly.
- [10:43]
A
Yeah, I mean, honestly, it was crazy to see the eyes, like everybody's eyes just went wide as like, oh my gosh. No one's ever shown us this before because I think there's a misconception, right? Is I sell to you. I sold a H Vac unit for 10K. I know you can buy that thing for four. You guys made $6,000. It's like, no, we didn't make $6,000.
- [11:02]
B
Yeah.
- [11:03]
A
All that goes into overhead and keeping the lights and paying office staff and doing this and that and the other thing. And so at the end of the day, they get an actual view under the hood. And I think it really drives the bus.
- [11:14]
B
What system or habit did you do you have that compounded? Like, what do you think? Like, really just built on itself.
- [11:21]
A
Oh, daily huddle, dude. We went from daily huddle being like a basic, hey, this is how we're doing. Trying to figure it out to like now we have this seven person daily huddle that really hits. It's 15 minutes long, so it stays really short. But it really opens up the day on what we need to do and how we need to do it and where the Mrs. Are. And that's aligned the entire team. So that that's the hard. We've like doubled and tripled down on getting that right. And it's been really good, I think.
- [11:48]
B
For probably leadership development. That's been one of our big superpowers. It's like compounded. And that paired with like the transparency thing from earlier. Like, we have two leadership cohorts. We launch one every six months and our first one's about to finish up their like, cohort. And we've graduated three managers from that first cohort. And they're like, they understand. So us deciding to do it and then sticking with up the habit. The system, like developing that has turned into a superpower. For our business, but it's taken a whole year.
- [12:23]
A
I could imagine. I mean, I. I sat through Brandon doing that couple months ago.
- [12:27]
B
It's really good.
- [12:28]
A
Super valuable.
- [12:28]
B
It's like. Yeah, it's really good. It's. It's become a very important part of our future.
- [12:34]
A
By the way, I love the difference in our answers because yours are like this. You could tell, like, the difference in the size of the business based on your answers, because yours are like, your leadership cohorts and training to get the next round of leaders in. Mine are like, you got to get the basic systems down this year, but that.
- [12:51]
B
Well, I think they're. I think they're both good because, like, valuable. We'll talk about what. We'll talk about our misses. But, like, my misses were, like, kind of basic. Like, I miss the basics. Yeah, it wasn't great on it.
- [13:06]
A
It was actually me saying, like, I really like the kind of the juxtaposition of the two.
- [13:10]
B
Let's do some. Let's do some Ls. I mean, what was your biggest L? Like, just like, what. What was the.
- [13:15]
A
What was the biggest L again? Our biggest L goes back to my headline of the year is we lost our two of our top H Vac guys, which, I mean, in a company that's five H Vac service technicians drops our. Essentially our service staff in half in June right at the beginning of summer. And the value that we think we lost from them is about a million dollars in top line over the next three months because we didn't have recruiting down yet. The second big L is I don't think we were pricing effectively. We were pricing to keep things moving, but we were not pricing as high and aggressively as we should have been. We had a close rate, probably in the middle of summer, of about 80%, which. Which is great because you're like, oh, I just make 80. But realistically, the issue was we weren't.
- [14:04]
B
Priced high enough this year. Our big L, I think we had two big Ls. So I shared this with the team. We did a. We did. This was like. It's kind of funny, you know, that meme of, like, men used to, like, go to war. Men used to, like, build things. Yeah, yeah, yeah. So I felt. I, like, really, like, felt that this week because I, like. We finished putting together, like, like, our budget and our. Like, our. It's our Eida Bridge. Like, how do we go from three and a half to. We want to hit seven million, eight million of EBITDA next year? So, like, it took a Lot of work, like, and, you know, I was exhausted. And. And then on. On Thursday, we spent like, five hours with the senior leadership team and we. We dove into this and the. The meme was like, I felt exhausted, but, like, I hadn't, like, I didn't do anything right. Like, I, like, filled out a spreadsheet, like, moved my way through Excel, whereas, like, most of our team is, like, doing actual work and doing, like, really.
- [15:02]
A
Important things like sucking water heaters and you're.
- [15:04]
B
Yeah, yeah. And I'm just like, it was hard work. I did learn a lot, but it was. It was sort of like men used to go to war. And I'm like, here I am working on a budget. Like, it's just very boring. So the biggest Ls for us, we put. We put costs before revenue this year. So when we budgeted for the year, we had big growth plans and we did not hit budget. So budget was 30 million. And I think we're going to achieve like, 27. And. But last year we were like 22 or something. 23. So, like, still grew. We just didn't hit budget.
- [15:37]
A
Yeah.
- [15:39]
B
So which on the surface isn't bad. Like, okay, that happened. But the, the pain point that we had is, like, because we were driving this budget in, we made decisions on costs and investments that were too fixed and not variable enough. And that's. That was. My headline is like, be variable. And then it. It. It just. Okay, hey, H Vac was weird. Shipments are cratered. 49 in October. I can't control that, and I can't control the government shutdown, and I can't control, like, finance declines being higher. What I can control is, like, how nimbly we can respond and react and iterate. And so, like, my big L was budgeting and, like, beginning to implement a cost structure that was hard to unpeel the later on in the year it went.
- [16:33]
A
So with that same thought in mind, where did you ignore the early signals? Because, right. There's early signals in each of those processes where you should have started getting out, but it was so hard to get out that you probably stayed in it, you know, a month or two too long.
- [16:47]
B
Totally. So. So we started. I. We started seeing that there was a problem in June and almost all of it in H Vac. So just, like, running through our year really quick. Plumbing grew 16%, electrical grew 23, drains grew 21, restoration grew 50. And H vac was flat, which is beating the market. I mean, if the market's down 49% and I was flat, Hell yeah. Like, I mean flat, like 0.7% year over year, like flat. Right. But we probably upped our prices and we probably like moved less pieces of equipment. But as a for dollars we were flat. So we started noticing an issue in June and because we had this plan, you know, sort of like, hey, this was the plan, this was the strategy. Like we believed in it.
- [17:43]
A
Yeah.
- [17:44]
B
And I don't know that I want. I remember in our monthly financial meetings being like, hey, we missed budget, we set these plans. I'm not going to react yet. Like that's in my financial notes that I told my whole team like, hey, we're not going to react yet. We want to see what next month looks like. Next month came around. Hey, results were slightly better. I'm still very cautious. So if you look back at my notes from May, June, like we started identifying the fact that there was an issue in August. It was like, hey, three months in a row. We are not where we thought we would be. We need to start acting right now.
- [18:20]
A
Not to mention like those are the biggest three months too. So to miss like the, the majority of, of most people's year is hard and it's hard to cut. Right. If you miss one month, like ah, it's really hard to cut June.
- [18:33]
B
Right. I mean we strategic, we put a lot of thought into these investments and and so I don't know that we held on too long because like hey, we saw it happening, we like responded, we reported on it. It's not like it caught us by surprise. We're like, hey, we're actively watching this situation. Maybe we could have responded sooner but I mean a 90 day response time on an investment that we expected to have a 12 month payback feels like, you know, I still really don't know. I still really don't know what the. But ultimately we ended up trimming up quite a bit, I think.
- [19:07]
A
I mean ours is much simpler. No, no, no surprise there. But ours was. We held on, we held on too long to personnel. So shortly after, towards the end of this year, we picked up Isaac's model hire fast, fire fast. Because it's very hard to tell how good a person will be at the job until they're actually on the job. Right. Some of the best interviewers or interviewees are people who do a lot of interviewing because they're good at interviewing, not good at their job. And so we learned that the hard way. Unfortunately, we held on to people a little bit longer than we should have when they were quite obviously showing poor performance and so that was our biggest thing that we held onto for too long. Going into next year, we have been much quicker at. On and off. On and off.
- [20:01]
B
Big surprises. What was harder than expected?
- [20:05]
A
H Vac this year was harder than expected. I mean, this is. It's like we're beating the dead horse here, but really, like, historically, H Vac has been easy for us, but this year, we've just had a slew of. Of. Of issues, and a lot of them are around the new units. Hey. Different types of warranty things that crop up. If you start doing this, this specific 15.2 seer, then you have surge protection issues. Like, we had H vac installation issues, which historically has not been something that our company has had to deal with. So that has been fun. Big surprise.
- [20:41]
B
So it. As a whole, we had a good year. Right. So, like, I'm just giving the top line. Like, we. We grew 15 or 14 or whatever. Gross margin grew. In 2024, we were at 42. In 2025, we're at 49. Like, that's a insane jump.
- [20:59]
A
Yeah.
- [21:00]
B
And EBITDA grew from a million to three and a half. So, like, we did work.
- [21:06]
A
Yeah.
- [21:07]
B
So, like, when you look at that, it was good. Right. So the year was good. But what was harder than expected was managing, like, the mental load and sort of pulling myself out of the. Hey. The last six months have been really hard. Like, this has been tough and, like, discouraging and pairing that. And, like, how do I show up every day? Like, how am I showing up for my team? So in, like, September, October. I think I was just stressed. Right? Like, we were. We were. Summer was weird. We're trying to figure out, like, okay, how do we respond to, like, shipments being down like crazy? Like, what are we supposed to do here? Are we the only ones feeling this and just feeling a little, like, alienated? And what was really. What was really hard was I. I don't feel like. I know I didn't. I didn't show up in, like, the way that my team needed. And it was hard to balance my mental health during, like, a challenging moment. Like, now I feel good. It's sort of like I recognized it, like, 60 days in, and I'm like, oh, I'm being an. Like, I'm, like. I'm like, I'm bringing a cloud with me wherever I'm going. And, like, that's not helping anything or anybody.
- [22:14]
A
As the director of vibes, you cannot be doing that, John.
- [22:17]
B
Yeah, I know. For sure.
- [22:18]
A
Yeah.
- [22:18]
B
And so I think that was harder than I expected because I, I've usually, I'm usually able to, just historically able to show up in like the right mindset to be what the team needs. And like there was a 60 day period today or this year where that was hard to do.
- [22:36]
A
Yeah. Which dovetails into like, that's actually some, some along the lines to the thing that I found surprisingly easiest this year. So on the other end of the spectrum, surprisingly easiest for me this year was. And it's. There's a caveat here. It's okay. Surprisingly easy was my team's willingness to have change management in their. How their, their leadership managed them. So it was very difficult for me to get the paperwork and to start the process of like, hey, how do I go from managing frontline to managing managers? Which is where I think a big part, part of this year was for me was going from frontline to managers. And in managing managers, they were big jump. They were craving though. They were craving structure and they were craving information and they were craving the ability for me to manage them. Like how. Like a very good way of management and to have some kind of structure there. And so once I put that in place, that was very easy from a change management standpoint to say like, oh yeah, let me show up to this meeting. Let me fill out my rocks, let me go over my weekly updates. Like they were pumped. And so I really like that it just needed to do it and get over the hump of like, hey, I don't know what I'm doing and figure it out. So that's been good. What was your easiest?
- [24:00]
B
I would say the easiest was making decisions. Like. Like making decisions because. Yes. So I've never had this much data in my career.
- [24:16]
A
Yeah.
- [24:17]
B
So when we're going through a hard time, I've never had this level of clarity. I have all of the clarity in the world now.
- [24:23]
A
All of that.
- [24:24]
B
And on top of all of the clarity, I also have a team, a full leadership team of like 22 people that see the P and L every month and understand exactly what's going on. This was the easiest. Like they were still hard decisions, but they were easy to make because we all know the score, our leaders can see it. And we weren't fighting against ourselves to like explain the context. Everyone understood the context. We've been looking at like us missing.
- [24:53]
A
Budget in July and I'm assuming they're all incentivized in the same direction as well. So like they're all on top of that. It was easy to make those decisions and they're all incentivized to do the thing that you were hoping that they do.
- [25:05]
B
Yeah.
- [25:05]
A
I mean, you remember three years ago for you, probably three, four years ago. Like, the half of the battle is getting the. Why.
- [25:11]
B
It's getting the team on board.
- [25:12]
A
It's getting the Y down.
- [25:13]
B
Yes.
- [25:14]
A
Figuring out where the issue is and then getting the team on board to make the change that's necessary to, to, to, you know, get back.
- [25:21]
B
That only gets harder with more and more people because there's these, like, new layers of communication that you now have to go through. So everyone knowing the score and like being transparent about, like, here's the levers that we have available to us. Like, okay, do we. Do we shut this contract? Do we stop doing branded marketing for H vac if we're fighting against, like, big headwind?
- [25:40]
A
Oh, yeah.
- [25:41]
B
Yes. No. Right. So like, we did, but that would. And it became a light switch instead of a 30 day. Like, let's. Well, let's talk about it. It's like. No, we've. We've talked about it once a month. Everyone knows. So I think that that was like, easier than expected.
- [25:57]
A
That's cool. No, that makes sense too. Like, that's logically the thing that I would imagine for you would make sense.
- [26:03]
B
What ended up not mattering at all this year that you thought would be important that just wasn't. I have a funny one.
- [26:09]
A
You go first. I don't know. I don't know.
- [26:12]
B
I think like, AI search, like, ended up. Yeah, like, I don't know. So I remember doing like. I'm not saying it won't eventually. I, I know it's an important part of what we're doing, but it, it just was funny because I remember in budget of 2020, like going into budget for this year, we were like, oh, man. I think Google, I, I think leads are going to be really challenging because, you know, like here, you know, these five different factors and AI and all this stuff and man, it just didn't matter at all.
- [26:42]
A
Yeah, that's true.
- [26:43]
B
Just didn't matter at freaking bit. I think eventually maybe it matters, but it, it didn't matter in 2025.
- [26:52]
A
I think for me it was acquisitions, which is a hard thing to say out loud.
- [26:57]
B
Acquisition of Jack position. We.
- [27:00]
A
We tried. We put in five, Lois. This year.
- [27:04]
B
You did, you talked to so many.
- [27:05]
A
People this year and we had not gotten one. The Nashville market is too hot. I'm just not buying a sub, you know, sub business for 6x.
- [27:14]
B
Well, some of the one. Yeah. Some of the ones you were looking at were crazy. Like hey, we've got like 80% new construction.
- [27:20]
A
80% new construction. And yeah, like we sub everything.
- [27:26]
B
We're going to need a two times revenue for that.
- [27:28]
A
Like yeah. And I'm just saying no, just hard nose across the board. Like laughed out of the room nos. I mean I know like there's some offers that I should get laughed at but there's like a lot that were. This is what you were asking it. You don't deserve this. But like someone came in 10%, 20% over and I'm going what are you doing? Hopefully that means though that in the next couple years those are going to have to retrade because there's no way you can run on the debt that those businesses are have picked up. But we shall see. So didn't end up.
- [28:00]
B
That's funny. So didn't Acquisition didn't end up mattering at all.
- [28:03]
A
Acquisition didn't end up mattering this year though I will say last year's acquisitions did we. We still get weird like hey Jeff and I was like we bought Jeff's business three years ago and people are still reaching out. I love that. It's my favorite thing.
- [28:14]
B
Yeah, that is cool. Your team's doing the work. Big reputation. Make sure that Google knows it. Some of the key areas they help are if you have multiple gbps, they can post on every single one of them every day. They can send reviews by your closest GBP to wherever the job was completed. And they have built in SEO heat maps that show exactly where you rank on the map pack in real time. There's no more manual updates, no more missed opportunities, just results. Get started free at BigReputation AI and unlock 15 free SEO scans today. What would. What would you have started earlier like this. What are we doing differently as our next couple? So what would you have started earlier than you did or moved faster on?
- [28:56]
A
Oh gosh. Finance financials data. Financial data. Just like for the reasons that you said was surprisingly easy to make decisions this year we are trying to.
- [29:05]
B
I've never had this much data in.
- [29:06]
A
My life to that point where we have data, we just don't have it going in well, we don't have it tracked as well as we want, blah blah blah blah. So this year like we've gotten our POS structures down. We stopped employees buying things. Like we're trying to just figure out the financial side of the business more so that we can track and make good decisions. And I wish we would have done that sooner because it would have been easier to onboard people with this process already in place. And it's not that hard. Just lots of busy work, lots of busy work to get it going.
- [29:36]
B
I think emphasizing plumbing, something that was really funny this year. Like I've said this, but like we went into 2025, like plumbing has been our largest division forever. Right. H Vac has been growing like crazy. So like the last two or three years, H vac is like 50%. 50%, 50%. So this year we were like 2025. We're like, okay, H vac is going to be 50%. Like we're going to do it. Here's how we're going to get there. And we. And here's all the investments we're going to make to get there. We made all those investments. What was funny was again, we did beat market. So if the whole industry's down 40% and I'm up.07, like, okay, I guess I won. But I would have as we were like investing hundreds of thousands of dollars over the course of a year into this one department and it was like not going anywhere. Plumbing was growing 25% like with basically no energy at all.
- [30:35]
A
Yeah.
- [30:35]
B
So I just like would have emphasized it earlier. Yeah. Like we probably could have hit 50. Right. Like plumbing, we're still clocking every single day. Easy wins and it's our biggest department. But H Vac has been like the lion's share of our executive attention for almost three years because it went from a million dollars to like 10 million this year. Like it's just been.
- [30:57]
A
Yep.
- [30:57]
B
Sort of exploding for us.
- [30:59]
A
Yeah. It's been the hot blonde.
- [31:01]
B
Yeah.
- [31:02]
A
And you've just been, you've been ignoring wifey over there in the corner.
- [31:07]
B
I know.
- [31:09]
A
John Tisk.
- [31:10]
B
Tisk. I should know better. What would you have stopped immediately?
- [31:13]
A
Plumbing, New construction work. That one's easy for me.
- [31:15]
B
How long did you do it?
- [31:16]
A
We did it.
- [31:17]
B
I mean it wasn't that long.
- [31:18]
A
Well, we, we start. I, I don't know if this is even 2025. It might have been 2020, end of 2024 that we did this. So I don't, I don't know. What would you have stopped immediately? I'm just gonna say that because that's an easy answer for me and I actually don't have another one. So that's what I'm gonna say.
- [31:35]
B
We over resourced, so I would have stopped that immediately. So this is back to like one of our core philosophies for 2025 and, and for the past few years is we have an idea. We invest resources. Revenue comes later. And we don't think about roi. What I would have stopped immediately was that, yeah, I would have, hey, here's this thing. We're feeling constrained in plumbing. We're feeling constrained in whatever. We need to add this. Resource manager, coordinator, dispatcher, whatever. And like, hopefully revenue follows it. But like, in some cases it didn't. I would have just like stopped. I would have stopped putting cash out the door before revenue was coming in from that project.
- [32:23]
A
I would have stopped buying vans, high top trans vans, box trucks. I would have stopped all of that. And mavericks only.
- [32:32]
B
I think I bought 17 this year.
- [32:34]
A
We are like in the only company now. I love myself some mavericks, man. I love when I look out in the parking lot and it's all mavericks lined up with their little, little boxes on the back and their, their ladders on the top. My favorite. So that's what I would have done. I think that there's a world where you can run a. You still need a truck at some point to pull like a trailer. But outside of that, I wouldn't have bought two vans that we bought. Saved us.
- [33:04]
B
That's funny.
- [33:05]
A
Saved us 120k or something.
- [33:08]
B
So what would you have protected more? Time, health, focused. Relationship.
- [33:13]
A
Oh, gosh. Time, health, focus and relationships.
- [33:18]
B
Cash, probably.
- [33:20]
A
Cash. Yeah.
- [33:22]
B
Okay. Okay. I guess we can't pick that one.
- [33:24]
A
Yeah, that one's easy. Like, that's the number one. I mean, I probably would have focus protected. I mean, focus is a good one. Focus is a really good. Our relationships with our vendors is good. Relationships internally and the company is good. Health is fine. Time is okay. It's focus. Right. You focus on the wrong thing for too long and then something else drifts. I mean, that, that was the story of our plumbing H vac kind of pendulum is we focus on plumbing to try and get plumbing back to functioning and being profitable. And then H vac slips. So then we go run over to H vac, try to get that focused, and then plumbing slips. It's like this back and forth pendulum because we didn't have the right leaders in place. So I would have focused on protecting focus.
- [34:05]
B
This year. I probably did the best I've ever done on time or at least in a few years. So that felt pretty good. Probably health. I think this is the, this is the least I've exercised in a year.
- [34:15]
A
That's a good one. Yeah.
- [34:17]
B
I didn't do a good job. I know. Not enough. Not enough getting yoked or running or skiing, frankly, definitely not enough.
- [34:25]
A
That's, that's what I need to protect is my ski time. Just need some more vacations out to the slopes.
- [34:30]
B
And any final thoughts on 25 before we hit, like what's up next?
- [34:33]
A
2025 wasn't bad. Like I said, we grew too. We missed goal a little bit. But overall happy, healthy business. I'm ready for 2026 though. I'm so excited.
- [34:44]
B
I am. Yeah, I am ready. 2026.
- [34:48]
A
My one rule.
- [34:49]
B
What's on the brain?
- [34:50]
A
My one rule for 2026 ABR always be recruiting. I don't care if we have every position full and there's people sitting at home with no jobs. That is the last thing I'm going to stop is the hardest. That that's what kicked our ass in 2025 was not recruiting enough.
- [35:10]
B
Yeah.
- [35:10]
A
And being reactive rather than proactive. So this year reactive or proactive, always be recruiting coffees for recruiters and closers. So that, that's my big. That's our big theme. We have the leads, we have the systems. We just need the people in. So.
- [35:31]
B
Okay, okay, okay. We declared this our one rule. I didn't think of it as a rule. Our mindset for next year is lean and lethal. Something, something that we ran into this year was as we were like over the last $10 million of revenue. This was a good thing. And it ended up being a weakness which I think is kind of funny. But for the last like two years we had to become a process driven business and we had to silo roles and create specialists and do all of those different things. And towards the end of this year, as we're trying to move fast and like, hey, hey, what do we do when things aren't going to plan? Well, you have to respond, you have to iterate. And in many, in many ways we were not able to at the pace that we would have liked because we siloed into specialists and became like this process driven business. So our big focus for next year is lean and lethal where process can't get in the way. Like red. We can't red tape ourselves if something is like very straightforward. So I'll give some examples that we've run into. We have a process on how to onboard a technician into a vehicle. We had a vehicle that like needed a battery from autozone. No one just took the charge and got that battery. There's a process because of that. It took two weeks. And I think, I think that honestly in that case the technician might have quit.
- [37:01]
A
Yeah.
- [37:02]
B
Because we were so slow to go to autozone and get a freaking battery. There's a few of those cases where we just tripped all over ourselves trying to follow these processes that at the end of the day, like they don't. Like, yes, they matter in the, you know, if it's real and it progresses. But like we're still a small business, like we should be able to react. So lean and lethal 2026.
- [37:26]
A
Lean and lethal.
- [37:28]
B
Yep, that's the tagline. I'm getting hats.
- [37:30]
A
What do you leave lnl? What are you leaving behind?
- [37:33]
B
Like the way I'm interpreting this is like I, I'm leaving behind like a version of me that didn't know how to do this. So maybe the way that I grew, which I think is better, like the big way that I grew this year was understanding ROI off the P L. Like what's a higher OI project, what's a low ROI project? And what should we be focusing on? Should we be putting cost ahead of revenue and how to set plans, not goals? Which sounds kind of cheesy, but if, if I look at this year, our budget was kind of a vibe. Like it was like, I think we can, like here's the data. Like, like there was some thought put to it. It's not like I just like threw fricking darts. But what we did this year was like, hey, we want to go from three and a half to seven of ebitda. And that's not like a vibe we. And you've seen the document, it's this like 15 frickin page document where it's like here is exactly the steps that we will be going, that we will be performing to do this. And like we expect step one to give us 300,000 of EBITDA, we accept two to give us 900, we accept three to give us 50. And half of that list has already been implemented and we have actually achieved exactly that amount of EBITDA over 2025. So yeah, I think like those two things are the same thing in my mind where it was less vibe and like a vibe would be like, let's grow. So like let's invest in all these places. Not really like being thoughtful about, hey, what's the actual return to what matters to our, to our company?
- [39:11]
A
Yeah, I think we are leaving behind financial ambiguity. Like that's our goal is we need to know where we're at at all times, when we're winning on the day, on the week. And we've done a really good job starting that in the last quarter. And I think going into 2026 that is part of the culture is knowing when we're winning, when we're losing, how much we're winning, how much we're losing and being able to make decisions quickly off that because historically it's been very slow. So we, a great example is I was looking at our Daily Huddle, which we're doing daily and I said, hey, this is like we're in the red for, on the weekly, for the Daily Huddle in this category. Let's go look at what's going on. And so immediately down in the Daily Huddle it shows our gross margin by department labor versus material. And we're seeing, hey, the revenue generated is not justifying the, the, the labor, the revenue generator is not justifying the labor. Let's look into it. We open it up and sure enough we have technicians in H Vac that are passing over 20 year old units, not offering. And we talk to that technician and the answer is, you'll get a kick out of this. He doesn't work here any longer because of this. But his answer was that R22 systems are better, they last longer and they're better than the new systems. So I don't offer them new systems. And I said, you are a service tech, sir, this is not your choice. That's the customer's choice, whether they would like to get a new system under warranty again or take that risk. That all being said, wasn't a good fit for the company, unfortunately. But we were able to find that really quickly like that. It was within a week we could see that this issue had sprung up. We got to the bottom of the issue and we're able to move forward with a solution and again, always be recruiting, having someone ready to go to fill that spot.
- [41:07]
B
So yeah, 2026 next year we are, we want to drive three and a half to 4 million of additional EBITDA. And so for Q1, our big. We're, we're acquiring again. We've talked about that on the show. Like we're probably going to do like between three and four acquisitions next year, which is. Feels like a lot. It feels like a lot. I'm already tired. I'm like, I'm an old man. I'm ready for a nap. We have our first one closing in 10 days. So our focus for Q1 is close integrate. Close integrate. And how can we do that while remaining lean and lethal?
- [41:51]
A
Yep. I think ours is for Q1, no loss months, I think.
- [41:57]
B
Oh yeah, like that's, that helped us a lot last April.
- [42:00]
A
Yep.
- [42:01]
B
We have Literally not had a lost month since we declared that on this show in April of 24. I haven't lost money, which is amazing.
- [42:09]
A
Yeah, that's amazing.
- [42:10]
B
Yeah. Like if you look at my 10 year career, the longest I went was like three months without like a net loss month.
- [42:17]
A
Well, like our January last year was negative 54. I think there was some back and forth from December to January. That was the plumbing issues and everything. But that all beside, like once you declare that as well, like you can see it in ours as well that the folk, once the focus started, like we really didn't have lost months. We had maybe some swings, maybe like a month with negative a thousand. But yeah, compare that to like years prior where it was we only won three months, we only won four months. And that was, I mean that was us afloat. So the Q1 is the hardest in my opinion to keep those at no loss months. Yeah, I think we'll be able to do it. And the goal is this year, no loss year. So no loss for Q1 across the board.
- [43:02]
B
When we were growing, like we still are, I guess when I say that I imagine us like maturing. When we were maturing, we did not obviously have the same philosophy. And I, I'm, I'm sure I said this on this podcast and I know that I said this on Twitter. So like, feel free to check me. Boo. Like, I know that I used to think that switching to like a profit minded, a profit first business was like a light switch. I used to think it was just like, oh yeah, you just do it. You just do it one day. And on one hand that is kind of what happened like last April. Right. Like that is sort of what happened. But it took us like we're almost 20 months in, 19 months in or something. And it has taken a lot. It was nowhere near a light switch. Like it was a light switch to go from like break even to 5, 6%. But now this is my first like double digit EBITDA year in my whole career.
- [44:03]
A
Yeah.
- [44:04]
B
And that took a lot of work. And we're at like 13, 14% and I think 15 after rebates. So that was, I think my thing on rebates that ends up being gigantic. Yeah, but, but like we, our target was 17 and we did not hit that. Now granted we were a lot closer, but now we want to set our target for 20. Like how do we hit 20? And the cool part about that, that took like two years.
- [44:28]
A
We didn't mention this though, throughout any of our these questions is one of the big focuses this year for both of us. And I think the reason that all of this culminates in the right direction is a huge focus on gross margin. Like, yeah, we spent like, six episodes in, like, April, May, June, July.
- [44:45]
B
Yes.
- [44:45]
A
Just, like, talking about gross margin. And people just like, shut up. We don't want to hear about gross margin anymore. But that has been huge. Like, that is.
- [44:53]
B
Yeah. I mean, we went from 42 and 24 to 49. Yeah. And. And, like, we're going from 49. Our budget's 52 next year, and that's a difference of millions of dollars.
- [45:03]
A
Yeah.
- [45:03]
B
Like, if our overhead doesn't. So our overhead this year was $100,000 more than last year. So, like, we did pretty good for growing by 4 million or whatever, organic. So that feels like really healthy. And, like, we did a good job. Our goal next year is, like, drop overhead while still raising revenues. That'll be the tricky one. But so much of it came from gross. Just improving gross margin because our OPEX expense didn't adjust at all.
- [45:32]
A
Well, that's what I mean. Like, you guys, you focused your entire company in that. We talked about, you know, sharing your financials with your team, but that started with, hey, we're sharing gross margin. We talked about gross margin. We started. Everybody started actually incentivizing their employees on gross margin. So, like, I think a big thing that I don't want to skip over here at the very, very end, if you're still listening, is how important gross margin was to all of these items. Like, yeah, across the board. That is the only way that it. Our business did as well as it did is because we started to focus on it and we started making decisions based off gross margin.
- [46:06]
B
Are you thinking about turning up your marketing in the new year? Now is the time. Our friends at service scalers are making it easy. When you sign up before December 31st, they'll cover up to $5,000 in free ad spend to help you launch strong. That includes Google, ppc, local service ads, even Facebook ads, all managed by their team. If your home service company is ready to scale, this is the offer for you. Service scalers handles everything. They handle setup, management, and strategy so you can stay focused on running the jobs. Don't wait. Head to serve scalers.com and tell them owned and operated sent you to get started. Here's my fun nugget for that. And I got this from my friend Rich Jordan. Yeah. So in instead of so, like, thinking about gross profit, the approach that we're taking to budgeting next year, which I think is kind of fun, and I like it is instead of budgeting off of revenue, we're going to budget off of gross profit. So the way to think about that is field labor and field materials no longer becomes, like, a part of the p. L. Like, it obviously does, like, as we're looking at performance, but the way that we really think about revenue is gross profit. Is our revenue to spend on OPEX or gain an ebitda. So what percentage of our gross profit dollars are we willing to invest into opex? And that's the way that. Which we've never really approached it that way. And I think if I would have in the past, I probably would have been a lot more conservative because all the numbers that people tell you, like, hey, your office wages should be 10. Well, that's a revenue. And if your gross mar. If your gross margin is 30% and you're spending 10% on office wages, like, you're.
- [47:48]
A
Yeah.
- [47:49]
B
Whereas if your gross margins 60% and you're spending 10% on office wages, like, pop off.
- [47:54]
A
Yeah, you could go do your thing. Not 10% on advertising. You could spend 20% on advertising. If you're 165% gross margin. So.
- [48:02]
B
And there's people that are spending 15% on advertising, it's like, well, how are you doing that? Well, they're plumbing only, and their gross margin 65% versus, like, if you're an H vac at 42%, you can't do that. So I think that gave us a ton of clarity as we think about next year where, hey, it's actually more like 15 salaries of our. Of our gross profit. And we just think about gross profit. Like, our. Our real revenue now is gross profit.
- [48:28]
A
Interesting. I love it. Yeah.
- [48:31]
B
Yeah. I'm a big fan.
- [48:32]
A
That's gonna keep me up tonight trying to figure that out.
- [48:34]
B
Like, thinking back, well, it forces, like, real clarity. Because revenue.
- [48:39]
A
Yeah, because revenue really likes the actual money you have to spend. It makes sense.
- [48:43]
B
Yeah.
- [48:43]
A
Like, yeah, a lot of it's all percentage.
- [48:45]
B
And then, you know, we do the math and we're like, oh, like, hey, our opex was 70% of gross profit. Or for us, it was 77.
- [48:54]
A
Yeah.
- [48:54]
B
So 77% of gross profit. Why couldn't it be 60?
- [48:59]
A
Yeah.
- [48:59]
B
Like, how do we get there? Well, do we raise. We can raise gross profit. We can drop opex, but, like, how do we increase that delta? Because that's our ebitda.
- [49:07]
A
But I definitely wanted to bring that up because I think that that's a big portion of this year.
- [49:10]
B
Big portion.
- [49:11]
A
We talked about that a lot.
- [49:13]
B
Well, thanks, everybody. If you're still listening, we actually just broke into top 200 on Apple podcast, which is really cool. So thank you. Make sure to give us a review. We need it. We're desperate. And make sure you hit like and subscribe.
- [49:27]
A
Appreciate it, guys.