The Home Service Expert Podcast: Q&A With Tommy - Moving Beyond Revenue Goals for Lasting Success

Host: Tommy Mello, Founder of a $200 Million Home Service Company, Forbes & Inc. Contributor

Introduction

In this episode of The Home Service Expert Podcast, host Tommy Mello delves deep into the intricacies of building a sustainable and profitable home service business. Moving beyond mere revenue targets, Tommy emphasizes the importance of focusing on bottom-line profits, cultivating a strong company culture, and implementing effective scaling strategies. Through a series of listener questions and his own insights, Tommy provides a comprehensive guide for home service entrepreneurs aiming for lasting success.

Key Themes and Discussions

1. Revenue vs. Profit

• Tommy's Awakening: Tommy shares a pivotal realization that shifted his business focus from obsessing over revenue to prioritizing profit.

  • Quote: “Revenue is for vanity. It’s purely vanity. Profit is for sanity.” (00:00)

• Practical Implications: He explains that while large revenue numbers are appealing, they don’t necessarily reflect the company’s health. Instead, profit margins ensure sustainability and the ability to invest back into the business.

2. Personal Development and Leadership

• Investing in Oneself: Tommy underscores the significance of personal development, advocating for substantial investment in coaching and continuous learning.

  • Quote: “I spend how I want people to spend with me. I didn’t get a discount, I didn’t ask him for a deal. I spent a lot of money on coaches and I’m only getting started.” (21:30)

• Leadership Philosophy: Emphasizing accountability, Tommy urges business owners to take full responsibility for their company’s outcomes, fostering a culture of excellence and continuous improvement.

3. Building and Scaling Systems

• Standard Operating Procedures (SOPs): The creation of detailed SOPs is highlighted as crucial for scaling operations efficiently.

  • Quote: “You need to build SOPs if you’re going to scale this business.” (14:50)

• Hiring Specialists: Tommy advocates for hiring experts in various domains (e.g., sales, marketing) to enhance specific aspects of the business, rather than overextending capabilities.

4. Marketing and Customer Acquisition

• Relationship Building: For businesses like garage door services, Tommy recommends aggressively networking within industry meetings and community boards to generate leads.

  • Quote: “You need to go meet the people. You need to build a stream, whether that’s property managers, realtors.” (12:10)

• Online Reviews and Testimonials: Leveraging platforms like Google, Yelp, and Nextdoor for accumulating positive reviews is essential for establishing credibility and attracting more customers.

5. Performance Pay and Incentive Programs

• Aligning with Federal Laws: When implementing performance-based pay, it’s crucial to consult with payroll lawyers to ensure compliance with labor laws.

  • Quote: “You need to hire a lawyer that understands HR and understands payroll.” (24:35)

• Equity Incentives: Introducing equity incentive programs can motivate top performers by offering them a stake in the company’s success without granting decision-making rights.

  • Quote: “It’s called an equity incentive program. They basically have the Pinnacle club.” (26:50)

6. Operational Efficiency and Productivity

• Maximizing Technician Efficiency: Assigning follow-up responsibilities to specialized teams rather than technicians ensures that sales experts focus solely on selling, enhancing overall productivity.

  • Quote: “I want specialists in every piece of my company that they master the art of follow up.” (23:15)

• Maintaining a Clean and Organized Workspace: Regularly assessing and maintaining the workplace environment reflects the company’s standards and can influence employee performance positively.

  • Quote: “Look at the bathrooms. They look clean. It really made me feel like I was embarrassed.” (37:45)

Listener Q&A Highlights

1. Starting a Small Garage Door Service

Question by John: “What’s the most important thing I can do to get phone calls?”

Tommy’s Response:

• Networking: Attend local BNI meetings and build relationships with property managers and realtors.
• Reviews: Offer discounted tune-ups to garner positive reviews on various platforms.
• SOPs: Develop standard operating procedures to streamline operations and facilitate scaling.
  • Quote: “You need to go out there and do cheap tune ups, nine bucks apiece and get reviews.” (12:10)

2. Aligning Performance Pay with Federal Laws

Question by Rich Prater: “How do you ensure that performance pay aligns with federal labor laws?”

Tommy’s Response:

• Legal Consultation: Engage payroll lawyers to design compliant performance pay structures.
• Investment in Expertise: Spending on legal and tax professionals ensures adherence to regulations and prevents costly mistakes.
  • Quote: “You spend a lot of money with our lawyers because it’s a big deal.” (24:35)

3. Scheduling Time for Selling Technicians

Question by Anthony Moore: “How do you schedule time for selling technicians to do a follow-up?”

Tommy’s Response:

• Dedicated Teams: Utilize separate teams for follow-ups to ensure sales technicians remain focused on their primary role.
• Specialization: Assigning follow-up tasks to specialists enhances efficiency and conversion rates.
  • Quote: “I want specialists in every piece of my company that they master the art of follow up.” (23:15)

4. Private Equity Concerns with Mixed Services

Question by Jake: “Does it look bad to private equity to come mixed in commercial and residential services?”

Tommy’s Response:

• Focus on Core Services: Emphasize scaling primary services over diversifying into too many niches.
• Market Share: Concentrate on capturing a larger market share within core areas to enhance valuation.
  • Quote: “Why do you do 10% commercial? Why haven’t you got big and why is your residential so small?” (17:20)

5. Performance Pay KPIs for Retail Employees

Question by Tokens: “Recommendations for performance, pay KPIs for retail employees?”

Tommy’s Response:

• Identify Key Metrics: Select three key performance indicators that strengthen the company, such as reducing turnover or increasing sales.
• Attract A-Players: Implement performance-based pay structures to attract top talent who can significantly contribute to the company’s success.
  • Quote: “Find three things that make the company stronger, faster, better.” (29:10)

Insights and Strategies for Lasting Success

1. Prioritize Profit Over Revenue: Focus on margins and profitability to ensure long-term sustainability rather than getting distracted by high revenue figures.

2. Invest in Personal and Team Development: Continuous learning and coaching are vital for personal growth and fostering a high-performing team.

3. Implement Efficient Systems: Develop and adhere to SOPs to streamline operations, reduce errors, and facilitate scalability.

4. Specialize and Delegate: Entrust specialized roles to experts within the company to enhance efficiency and maintain high standards across all functions.

5. Cultivate a Strong Company Culture: Encourage accountability, celebrate successes, and maintain a clean and organized workplace to foster a positive and productive environment.

6. Strategic Marketing and Relationship Building: Engage in targeted networking and actively seek positive customer reviews to build credibility and attract more business.

7. Comprehensive Performance Incentives: Design performance pay structures that are legally compliant and motivate employees to excel, thereby driving overall company success.

Conclusion

Tommy Mello’s insights on this episode provide a robust framework for home service entrepreneurs aiming to transcend basic revenue goals and achieve enduring success. By emphasizing profit, investing in personal and team development, implementing efficient systems, and fostering a strong company culture, business owners can build resilient and scalable operations. The listener Q&A further reinforces these principles, offering practical solutions to common challenges faced in the home service industry.

For entrepreneurs seeking to elevate their businesses, Tommy’s blend of strategic advice and personal accountability serves as a valuable roadmap towards achieving lasting profitability and market dominance.

Notable Quotes

• “Revenue is for vanity. It’s purely vanity. Profit is for sanity.” – Tommy Mello (00:00)
• “I spend how I want people to spend with me. I didn’t get a discount, I didn’t ask him for a deal. I spent a lot of money on coaches and I’m only getting started.” – Tommy Mello (21:30)
• “You need to go out there and do cheap tune ups, nine bucks apiece and get reviews.” – Tommy Mello (12:10)
• “Find three things that make the company stronger, faster, better.” – Tommy Mello (29:10)

Further Resources

• Book Recommendation: Elevate by Tommy Mello – Dive deeper into building and developing a high-performing team.
• Upcoming Event: Freedom Event – Learn from home service legends about protecting your business’s bottom line and future.

Thank you for tuning into The Home Service Expert Podcast. Stay committed to excellence and continue striving for lasting success in your home service ventures.