#202 - When The Lights Went Out

[00:00:00] Our culture throughout the company, I believe in natural law, which means you do good things, good things tend to happen. You choose things like get there, the shortcut way or skin at once kind of mentality. You could be very successful, but it may not line up with your culture. And I would argue that those who choose those have a hard time having repeat customers. If you're a large metropolitan area, it can work, but it's a choice.

[00:00:29] So when we talk about sales, sales is something that happens in the entire client experience. And so we actually don't even use the word sales. We go with a needs-based or option-based selling model.

[00:00:43] So first thing we're going to do is we want to be seen as and considered as the expert and the consultant. So we're going to build rapport. We're going to ask really good questions, understand what those questions are, clarify them, and then provide solutions through...

[00:01:03] We call it must, should, could, it's really a good, better, best option. It's a Harvard Business Study that says 66% if presented to the customer's options, they'll tend to pick the better option, which is 66% of the time.

[00:01:18] And then we help people buy because people love to buy things they hate to be sold. So we put that in context of the entire client experience. And it starts with how we park our truck out in front of the house. And it goes all the way through to the end where we make sure that the customer got what they actually said they wanted.

[00:01:46] If you are an irrigation professional, old or new, who designs, installs, or maintains high-end residential, commercial, or municipal properties, and you want to use technology to improve your business, to get a leg up on your competition, even if you're an old school irrigator from the days of hydraulic systems, this show is for you. Welcome back to the Sprinklin Nerd Show. Today, I'm joined by Brent Garrett, the owner of Sirius.

[00:02:15] Plumbing and Air Conditioning, the founder of The Skilled Trades Coach, and author of 30 Days to a Better Business. I asked Brent to join me today because he knows what it feels like to build a business around service trucks and technicians and customers and payroll and callback and parts and all of that stuff because he's lived all of it. Brent has built and sold and rebuilt companies and learned some of the hardest lessons a business owner can learn.

[00:02:44] And now, he's sharing them with the next generation of tradespeople. In his book, Brent talks about the day the lights literally went out in his office. I think a lot of contractors can relate to some version of it. Maybe it's not that the lights literally went out for you. Maybe your payroll got tight. Maybe the schedule was full, but there really wasn't any profit left at the end of the day.

[00:03:13] So today, we're going to talk about what it really takes to build a better trades business. Brent, welcome to the Sprinklin Nerd Show. Thanks, Andy. It's great to be with you. I'm excited about our time together. I really am. So I'm starting off with a new question for all guests, Brent. And that question today is, what have you been nerding out on lately? Yeah, it's a great question.

[00:03:38] I will tell you, probably for the last year and a half, I've been really trying to get my arms around and understand AI and how it impacts our business and how can it improve process. Because at the end of the day, I am always trying to refine our processes.

[00:03:58] Usually, a better process means a better client experience or it means reduced overhead or maybe even a better experience for your team. And we're finding that in all of the AI questions. And so that's where I'm doing the deep dive right now. So is there one, can you think of one specific AI tool, task, something that improved your efficiency or something that you found really valuable?

[00:04:27] Oh, man. You know, the tough part of that question is just one. Yeah, exactly. That's why I asked it. Yeah, well, so at this point in time, one would be that we're using Claude with all of our spreadsheets and organizing and looking for ways to streamline that. I've got an accounting and marketing background and love spreadsheets.

[00:04:53] And it's been a lot of answers to way before AI came on. And so if it's one thing right now, it's that. But I would like to take it back a year and a half and just say it's been a progression. And I would just say to your listeners out there, hey, don't let it spook you. Find something that you can get comfortable with and just, you know, one step at a time. You know, a million mile journey starts with the first step.

[00:05:24] Good quote. Yeah. So let's start with the first step here. And I'm just going to go right in because I'm probably going to name the episode this because it's a hook. But it also, I think, can relate to a lot of contracting companies. When you say in your book, the lights literally went out. I would love for you to share that story and what it meant to you and why, you know, it became a part of your book.

[00:05:54] Yeah, I've been an entrepreneur, you know, since my first job when I went to work for New York Life because it was straight commission. And the pure definition is that you basically get paid for the value you create in the marketplace. And so I've been a small business owner all the way back to age of 26 when I started my first company. I'm 61 now.

[00:06:21] And I love the way you framed that at the beginning of the podcast is that it's a metaphor for many different things that happen for a small business owner. But your question, I actually experienced the lights going out in my business. We didn't pay the electric bill. I'm taking a lot of ownership in that, but that was actually the accounting department that needed to do that. But ultimately, I'm responsible.

[00:06:50] To explain what happened was I was about 35, 6, maybe something like that. Maybe a little older than that. No, I'm sorry. I was 41. Gosh, time flies. I was 41. And I was coaching and keynote speaking and training my industry on kitchen table sales, working with teams, that kind of thing, Tuesday through Thursday.

[00:07:18] And I also had a plumbing and air conditioning business that I had started. I had sold one that I started younger. That's why I got the years mixed up. But I walked in on a Friday and I took my eyes off of some stuff, real neglect, things that I should not have done. And the lights went off in the business. And I found that we were about a million dollars in debt.

[00:07:44] And I learned a couple really, really important lessons from that that I never, ever neglect. I call them my commandments, the two commandments from that. But it was a real soul-searching time for me, both personally and as an entrepreneur.

[00:08:01] And probably the best thing that ever happened to me, because ever since then, I can look and go, wow, did I really get some structured foundation on what was important to me from a family standpoint, from a spiritual standpoint? And I had to go save the business. I thought we might have been bankrupt on that one. And we pulled it out with sales, like just about anything. Most companies, you can trace every problem back to revenue.

[00:08:30] And that's how we climbed out of that hole. And so I appreciate that you said that it was your responsibility because you are the owner. But at the same time, it was somebody else's responsibility on your team to pay that electric bill. How might a business owner know how to, as you call it, mind your own business? So not be a micromanager and get in everybody else's way. But how do they know what they should be doing and what they should delegate?

[00:08:56] Yeah, that business was the first time that I hired a team and said, go make it happen, right? And the mistake there was, I think Stephen Covey, it's a book I read, Seven Habits of Highly Effective People, said, if you're going to have a garden, there better be a gardener. If you're going to coach somebody, you can't just hire them and say, here's the job description, go make it happen. There are some things you have to do.

[00:09:24] You have to set expectations. You have to train them to make sure that they know how to do the job. You have to evaluate them against those individuals, against the expectations, and then hold them accountable for results. If you really want me to diagnose why I ended up where I was, I didn't do any of those four things. But the lessons I learned from it is you can delegate something, but you're still responsible for the results.

[00:09:52] And so the two lessons I learned was you can never delegate the responsibility for your financials, and you can never delegate the rules for your business, or better said, the culture of your business. How are you going to market? What are the rules?

[00:10:09] How do you communicate to your leaders, or if you're coaching the coaches, which is a lot of fun and a great phase to be in, what rules have you established so you can scale and grow the business so that it looks like when you own a business what it looked like when you first started it? Because you have a belief system. Every owner has a belief system about how they go to market.

[00:10:35] There's a unique way that makes their business successful. And if they can't communicate that and communicate what the culture is, which I clearly did in that case, you'll lose your business. Would that be like saying there's alignment around culture so that everyone is kind of rowing in the same direction, for lack of a better expression?

[00:11:00] I want to say to listeners, you and I have never talked about alignment, but it's a word that I use a lot, and it's 100%. It's all about getting everybody to line up. You don't go to McDonald's, ask for a quarter pounder, and you're not happy when you get a Whopper. That's not alignment. You get the same one every time. Yeah, exactly. McDonald's is a filling station. Take your kids there and fill them up.

[00:11:29] It's not a great burger, but it's a very consistent, predictable, know-what-you-get burger, for sure. Mm-hmm, mm-hmm. So now, for everybody who's offended by them, not thinking it's a good burger, that's just my opinion. Hey, everybody has their own lens on what a good burger is. So there's 1,000 different burgers that can all be the best burger. There you go. For 1,000 different reasons. McDonald's, because it's consistent, you're going to get the same one every time. So maybe that's what makes it the best burger. Yeah.

[00:11:59] So let's talk about sales kind of as that survival. And you say that the lights nearly went out, and then you were saying a moment ago that sales is an avenue that can fix most problems in a business. How should business owners think of that? And when I say that, it reminds me that a lot of times the business owners don't know how to sell, can't sell, feel uncomfortable selling, or undervalue what they're selling.

[00:12:26] And say, well, my customers can't really afford that, so I'm going to charge a little bit less. And that may not be truthful. Well, in sales, your approach as an owner to sales is a culture item also. What are your rules? There are a number of different ways to get there. I'm from the Midwest. We say you can share sheep three times a year. You can only skin it once, right? We want repeat recurring customers or reoccurring revenue.

[00:12:53] So hard sell, heavy closing is not our philosophy. So if that's it for me to answer your question, we may not line up. Our culture throughout the company, I believe in natural law, which means you do good things, good things tend to happen. You choose things like get there the shortcut way or skin it once kind of mentality. You could be very successful, but it may not line up with your culture.

[00:13:22] And I would argue that those who choose those have a hard time having repeat customers. If you're a large metropolitan area, it can work. But it's a choice. So when we talk about sales, sales is something that happens in the entire client experience. And so we actually don't even use the word sales. We go with a needs-based or option-based selling model.

[00:13:50] So first thing we're going to do is we want to be seen as and considered as the expert and the consultant. So we're going to build rapport. We're going to ask really good questions, understand what those questions are, clarify them, and then provide solutions through. We call it must, should, could. It's really a good, better, best option.

[00:14:13] It's a Harvard business study that says 66%, if presented to the customer's options, they'll tend to pick the better option, which is 66% of the time. And then we help people buy because people love to buy things they hate to be sold. So we put that in context of the entire client experience. And it starts with how we park our truck out in front of the house.

[00:14:42] And it goes all the way through to the end where we make sure that the customer got what they actually said they wanted. We call it needs-based selling. And that was the first culture piece that I had to bring back into that business to scale it. Because we want, great companies have a repeatable client experience. And so we wrap that whole sales piece.

[00:15:09] And I'm sure in irrigation, you know, we have to develop a relationship with the customer. We have to understand what their problem is. And we're just, what we're doing is we're getting the, we're obtaining the right to do the work. If we don't do that correctly, if that front end's not right, then we never get the job. I want to ask you about, you said a moment ago, the customer will typically choose the better option.

[00:15:39] What does the better option mean? So I had a client once that asked me, and they really struggled with that. Hey, look, I really have a hard time asking somebody for more money. And I said, well, don't. Don't ask them for more money. They're calling you out there to solve a problem. And that problem is a basic need. If I've, and I'll use, you know, irrigation.

[00:16:05] If I've got a head that's not working properly, and that's why I'm out there, there's an issue, or they lost, they lost, they've got a leaky pipe or whatever. I'm out there to fix that problem. But I might ask you the question, Andy, is there anything else about your irrigation system that you'd like for me to check while I'm doing that? It's included in the service fee. And I'll do an operational check. You've already paid for it, right?

[00:16:32] So when I come back and present, hey, I can replace this. I found out where the leak is. Here's a picture of it. I can show you where it is. Should take me about 30 minutes. We must do this to get you back up and running. Now, while I was looking at it, I noticed that your controller wasn't programmed quite right. I want to make sure that that's it. But would you ever care about running that from your phone so that if you did have a problem, you could shut it off remotely?

[00:17:02] When you're on vacation. Well, yeah, I'd really like that. That's one of the things you should consider. I could do that today or you could put it in your budget later. People will choose things to make their life better. And they'll choose things to keep themselves safer, healthier, or cleaner in their home. But here's the key.

[00:17:28] If I offer a should option, I can tell you what it does, which is technical. I'll stay with the theme. It's a little nerdy, right? It only makes sense to me when you tell me what it does for me. Here's what it is. And what that means for you is you could save money on your water bill because you're not having to do X. And I'm making some things up here in terms of like I'm a real irrigation guy and I'm not.

[00:17:57] But features are what it does, benefits what it does for me. People will move to should options when they can see that the value exceeds the price. I love that. I love when the value exceeds the price. That's in just a great position to be in because then there's really no reason they should say no when because that's like a deal.

[00:18:27] Like I'm getting more for my money. Of course. Can I share something with your listeners? There's three things, including you, okay? Anybody that have to be in place before someone will buy. Number one is value has to exceed price. And it doesn't have to be this much more in value. It's just got to be more. I've got to see the value. The second is likability. They have to want you for their problems.

[00:18:55] You say, well, gosh, how could anybody not like me? Well, get inside their bubble, get into that close space. There are a hundred things you could do on a service call that could cause somebody not to like you. And you may not even know that, but they have to want you. And then the third thing is it has to be affordable. Affordable is different than price is too high. If the price is too high, then what do we have the problem with?

[00:19:24] They don't see the value. Affordability might be different types of payment options. And so those three things have to be in place before anybody, including all of us, will buy. And I think I said earlier, we love to buy things we hate to be sold. So of those three things, is there a order of priority? And the reason I ask the question is because it could be the best deal in the world, but if they don't like you, they don't like the deal.

[00:19:54] So which comes first? Oh, without a doubt, likability. Okay. I mean, without a doubt. We spend, in fact, I coach the coaches in my business, two of our, you know, the accounting side and ops and office. But I don't, right on the other side of that wall is 30 really hard working team members. But the one thing I haven't let go of is recruiting and training.

[00:20:22] And it doesn't take much time, but it's so important with your teams. We were just talking about, you know, the five or six key things you do before you ever walk through the door. Yeah, I was actually wanting to get there because you use this phrase in your book, early is on time. And now that you've been talking about this likability piece, what does early on time mean to your business? And is that part of the likability equation? Without a doubt.

[00:20:51] Four things have to be in place before somebody will refer you. The first thing is you've got to show up on time. The second thing is you have to do what you say you're going to do. And the third thing is you have to follow through. And the fourth thing is you have to say please and thank you. Yeah. And I kind of laugh about it in our business. I say, look, you can screw up in our company a lot, but if you can't read a watch and can't be a nice person,

[00:21:19] you're probably not going to stay on the team very long. So we have a phrase here that 15 minutes early is on time. Right? Now, that's really, really tough. Really, really tough. When we're making commitments to customers and we have three, four, five calls a day. Not impossible, though. And we teach that. But so if we're a little bit behind, we're going to call the customer.

[00:21:49] And first of all, we're going to apologize. That's just saying please and thank you and being nice, right? Go ahead and acknowledge you're late. I'm sorry I was taking care of this customer. They had some problems we didn't expect. We got their water back on. Thank you for being so understanding. Can you tell me a little bit about your problem while I'm driving there? Earbuds, be careful, be safe. But try to do something that compensates for maybe a missed promise. Mm-hmm. And that's a good opportunity

[00:22:19] to have communication with the customer. And the more communication a business has, the better the opportunity to build that relationship. And I guess I say that thinking it has to be good communication, but that's not necessarily true. Could be some bad communication that actually helps show the human side of someone. But if you're able to then communicate with the customer more openly

[00:22:46] and you can understand their problem better, you might be in a position to understand what they really need, not just what they thought they need. And so that's the key to asking good questions. Right? And so we talked about building rapport. That builds likability. The next is you're an expert. You're not a salesperson. You want to make less sales? Start acting like a salesperson.

[00:23:15] Be an expert in your field. Could you imagine, Andy, you have a problem with your ankle and you go to the doctor. They don't take your blood pressure. They admit you into a room. The doctor comes in and he says, hey, look, I've got your heart transplant lined up for tomorrow. That's the way we approach some service calls. Don't you want to check my vitals? Don't you want to check what the static pressure on the system is? What is the first thing the doctor says?

[00:23:45] He probably knows part of the problem from the vitals, right? But he said, hey, tell me when that happens. Tell me what you're experiencing. What's it feel like? Right? That's what we are. We're experts. Can you tell me a little? I'm here to fix this problem. Can you tell me a little bit more about that? One of the things I do with our technicians in our trainings is to say, hey guys, wow. And can you tell me a little bit more about that? So they talk to their,

[00:24:14] and one of the exercises or homework I give them is say, look, are you married? Do you have a significant other? If you don't, can you remember back when? Here's what I want you to do. And then if you don't have a significant other, I want you to call your mom. And say, ask them how their day was. And the guys roll their eyes. And they say, oh my gosh, I'm not in for that. I said, no, you got to do the homework. Okay? And when they're done telling you about their day,

[00:24:44] I want you at some point to go, wow, then what happened? And when they get done talking there, then I want you, can you tell me a little bit about what happened after that? Right? Now, they'll come back and go, I'm never doing that again because it was an hour conversation. I said, why do you think it was an hour conversation? Did you act interested? Oh yeah, that's what was part of the homework, right?

[00:25:11] So when you ask a customer or a client, tell me a little bit about your problem, how do you listen to them? And they go, well, I listen with my ears. I said, you know what? Listen with your pen. Write down what they said. And then make sure that you got it right. And is there anything else that you might want to tell me about that that you think might be helpful? This is likability. We're entering into a relationship

[00:25:41] and you're going to learn more about the problem and you're going to understand what's either causing them pain, discomfort, or costing them time. That's how we move into the should and the could. And you're building that relationship. And at the same time, you aren't going to go down a false rabbit hole of solving a problem that's not the problem because you've just picked up much more intel to help you identify what could be causing whatever their issue might be. And in sprinkler systems,

[00:26:11] there's a lot of various problems that... And when I see this, and I have experienced this specifically when I was working on controls, people would start taking apart a splice when it has nothing to do with what the problem actually is. Can I tell you a story about Bill? He owned a company and I'm thinking of Bill. It's not really his first name, but I want to protect Bill because he might know that I'm talking about him. He was so resistant to this

[00:26:40] needs-based selling, being an expert, that kind of thing. And I have Mastermind Group and we talk every week and he came back and he said, okay, I did it for a week. He said, I get it. And I said, what do you get? He said, the money is just being spent with me in the process of getting into a better relationship with my customer. I said, exactly. I said, exactly. I said, I said,

[00:27:11] you're the expert. You know what they need. Hey, Bill, do this. Listen to what the customer says. Write it down. Say it back and insist that they have what they want and do it through an option-based proposal and just say, you know what, Andy? Which one works for you and your family? And then insist that they have it. I said, what do you say we train everybody

[00:27:40] in your company to do this that's out there talking to customers? They're going to make more money. They're going to have more success. And oh, by the way, Bill, do you think your technicians want to be seen as salespeople? Oh, he shared an expertise. No, that's why they're technicians. But he said, oh, heck no. I said, I said, guess what? They're going to enjoy hearing you say they don't have to be salespeople. They can be experts

[00:28:09] and do what they do well and just follow a process and they'll never be a salesperson ever again. And Bill today owns like a six, seven million dollar business, scales the business, big believer in training. That's when it's really fun when you see the lights go off and you see it actually take place in their business because sales, and as I said in my book, it covers a multitude of sends. So you just mentioned the good, better,

[00:28:39] best, the three options. And in your book, you've got this phrase, you become your own competition. What does that mean? Yeah. And by the way, we use the word must, should, could, but it is the Harvard business study, good, better, best. Okay. And those folks are pretty smart. I know they're taking a few hits right now, but they're still pretty smart. And it was an old, old study. Why do we say it eliminates competition? Because

[00:29:08] if I only give you the must solution to fix your problem, or I come to you with what is, in my opinion, that I recommend to you the best solution, then I either create a, I create a binary decision for the customer. It's either yes, no. And we know what happens if you ask a question with a yes, no. 51% of the time, you choose no. Right. And so, by a must, should, could,

[00:29:38] you give me options, you give me choices. The relationship's totally different. Well, why, why do I have to call somebody else? I've got the three options. You get to the point now, what if I get an objection about price? Well, if you say price is too high, what is my real issue? They don't see the value. They don't see the value. I didn't cover something, right? Mm-hmm. The truth of the matter is, sometimes,

[00:30:08] what they can't tell you is, I don't have confidence in you, or I don't care for you. Right. That's a tough one to hear. But guess what? Guess what? Not everybody matches up with everybody out in the marketplace. Sometimes we just have to be okay with no. Yep. Yeah, and move on to the next call. Is there anything that might tie into that with choosing the right customer

[00:30:37] for your business? Great question. Now we're talking about marketing, right? What is it worth doing? Because, you know, I love to fish. There are a lot of things I like to do, but I love to fish. Certain types of fish you have to fish for in a different way, right? Different depths of water, different types of things that you offer. If for some reason you see a real trend in certain types of business

[00:31:06] that you're not closing, well, then you need to look at your competitive product, right? But, certain customers will tend to value different things. The one thing we don't talk a lot about in the Harvard Business Study is that if 66% are choosing the better option, then on one side of the scale, people are only interested in price. that,

[00:31:36] and you can split that in half, right? And it's somewhere a little over 15% on both sides. Some people want the best, only the best, and that is the only thing they want. Some are price. If some are price-driven, well, then, then, basically, we have a different conversation with the customer. But does that mean, let's say a company doesn't want customers who are price-driven, I don't even know if that's a fair statement, but should they

[00:32:06] fit a price to meet that need or say, you know, this person's probably really not my type of client anyway? And I think that's, I think, I think that is a decision for the business owner to make about their culture. And, and yes, plus, they may not value, they may not value the level of service that you're bringing to them that, that derives that price

[00:32:35] even at the must solution, right? Right. So, I would turn back, you know, we could, we could spend a whole segment on answering customer objections, right? We haven't talked about that, but we're getting an objection. You know, I could say, you know, Andy, when I talk to customers, I've heard them say the same thing, is it, is there something that we could do or make an adjustment to this or is it just the price? And so,

[00:33:05] well, it's the price. Well, let me call the office, let me see what I can do. What we do is our value and our service is brought because we got out here same day with your problem. Are you saying that if we could work this call in next week in between, maybe when we don't have a full schedule, that there's a price that you'd be okay with? I don't know if you want to go there or not. I wouldn't because I'm not interested in a price-only customer. And let me tell you,

[00:33:36] we're going down, I'm going to take it one step. What I'm finding is SEO is great, pay-per-click's great, but what I've also seen is those folks that only make those choices off of digital media, if that's how they work, well, then price, they might be a price customer. Okay? And what I've also found out in the marketplace is when you get that person and they don't get exactly

[00:34:05] what they want, they will extort you on social media and threaten you with a bad review when you really weren't worthy of it. Do you really want that customer in your big company boat that you want to take through the rest of your business life? I would argue no. Right. Yeah, and I do have a couple questions that were given to me by a couple contractors that I'll ask you.

[00:34:35] Maybe I should just ask, since you mentioned marketing and Google PPC, how does that land with your business? Are you incorporating it at the moment? Yeah, we're bigger now. We play in the pay-per-click game, but we use LSAs. We spend money helping our existing customers or those who are aware of us from our other, what I call TOMA, top of mind awareness marketing, to easily find us. Oh, you know,

[00:35:04] what was the name of that company? It was Sirius, something like that, and they find us. I'm not getting into $300 per click game. No way. No way. Um, and, and so, no, we don't play the pay-per-click game. Um, so does that mean, if I could, uh, stop you for a second, does that mean if it was pay-per-click, you would want them to be at least using your name in the search so they already know who you are? so you're filtering out all of the general searches?

[00:35:34] Yes, or there are certain types of jobs or key, uh, words and phrases that we're looking for that are the, um, larger jobs or the most sought-after jobs in plumbing and air conditioning. It might be slab leak or, a water heater replacement or, um, a drain line replacement or a drain repair. In HVAC, it would be, um, uh, equipment replacement. I'm looking for a, a proposal or a quote on that.

[00:36:04] I'm thinking about changing my, so we might pay a little bit more for those types of targeted leads, but we probably stay away from just a service call. Um, but I, I will tell you, we have grown our business over the last three to four years at double-digit growth, and, um, our, our industry average is anywhere between eight and 12% for a, a moderately growth company. Those in the

[00:36:33] pay-per-click game are spending anywhere from, I'm sorry, eight to 12% of total revenue. of sales. Okay. Yes, yes. The average growth company in the pay-per-click game is spending 25 to 30%. Don't kid yourself. They have to recapture that on sales, um, and increase price, right? Um, and so on an average we have spent over the history of our company and we're, we're five plus million dollar company. Um,

[00:37:03] we have grown from word of mouth and organic growth and our, our spend has been between four and six percent over our history. Um, and for the longest time we were at two to four percent and we are about ready to move into that eight to 12%. We're, we have a growth plan to grow to 10 percent on your total sales and marketing, um, for a growth company. Something's not right.

[00:37:34] Knowing what you know about the, uh, gross margin of a service business. Yeah. My value prop is a coach to the, to the, the companies that I coach is that if I can't save you that money on marketing, plus all the other stuff we do for you, you ought to fire me. Yeah. I mean, I mean, we are going down a rabbit hole and I'm sorry you can stop me at any moment, but I just want you to know, one of the things that I'm becoming more outspoken

[00:38:03] about in our industry is, um, I won't call it extortion, but certainly taking advantage of skilled trades contractors who may not be real skilled in marketing and sales. I'm sorry, marketing, uh, cost and marketing companies. They are being taken advantage of by marketing companies. Um, things that, um, there are a hundred things you can do that don't cost you a dime that marketing companies are charging you on a

[00:38:33] monthly basis to do. And it's just insane. Um, uh, it doesn't have to be that way. Um, but here again, your marketing is not one or two silver bullets. It's a hundred things you have to do in unison and you're building a brand that you, it's exactly like investing in the market. You, you, you dollar cost average. You, you, you invest every month over time in a certain brand, a message,

[00:39:03] how you go to market the way you, we were just talking about the client experience. It's all that wrapped together with the uniforms and the color and the logo and your website all working together. And you can get that done for six to 12% of total sales. If you're spending, if you're spending over 15, 20%, call Andy or call me. I mean, I just, you know, please, please, please. I just, it's almost

[00:39:32] become a cause for me because every dollar that you're spending that you shouldn't is overhead dollars that go right in your pocket. Would you think it's possible at all? I better calm down. No, I mean, I think there's two sides to it because, number one, a contractor might not be charging enough for their current service. I don't know this to be true, but I'm just saying there's two ways to take 10% cost of sale and make it

[00:40:02] 5%. Either, you know, increase your price or decrease your expenses to make it more profitable. So, if they did all the things correct, their trucks are beautiful, their uniforms are matching, their likability is the best out there, do you think they should be able to increase their price by some amount because they

[00:40:31] act like the best, they look like the best, they behave like the best, so therefore they must be the best, and so therefore they're worth more? Yeah, I started in this business at the age of 12, my dad was a plumber, I am a plumber trapped in an accountant's body, and you were kind enough to read my book, the first three weeks are about sales, leadership, and training, the fourth one's about accounting, it's about gross margin and understanding the gross profit gain because you have to understand that and it's

[00:41:01] for everybody out there, you don't have to be an accountant, you just have to have a calculator, understand math, and a couple easy, easy, formulas, but you can't price correctly if you don't know what kind of margin you want at the gross profit level and just real quick, sales, less labor, direct labor, and less materials going to the job as your gross profit. You can do that and if you can't, I can teach it really quick, but what I'm saying is if you have all

[00:41:31] those things you're talking about, but you aren't priced correctly or don't know how to price that, you're losing it on every sale and your customers will pay you what you're worth. And so if anybody reads the book, please, if you make it through the first three weeks, go read the accounting section because it's written for somebody who's not an accountant. You have to understand what

[00:42:00] gross profit you're trying to achieve on every job to be able to properly price your work. And it is around us every day, contractors, you know, probably close to the top of the biggest complaint is that everybody around me, you know, doesn't charge enough. Everybody's prices are so low, so I have to bring my price down and well, first of all, you don't have to do anything. And if that competitor is so low, they might not be making any money.

[00:42:30] So if you want to make money, you need to figure out what making money looks like for your business. And that also means they might not be around forever. And there's so many other, it's like, let that business focus on that business. You focus on what you want to do with your business. I would say in most of the companies that I work with, if they're not, if it's a fair and honest charge, okay, fair and honest markup,

[00:43:00] we can't get into the numbers, but you come in a clean lettered truck and it looks like the website and a uniform technician with a name badge on and a hat and a logo that matches, you wear shoe covers, you're respectful. What we were talking about that first half, the customer values that more than we think. Usually when we have an issue with price in the technician mind or the owner mind is that we

[00:43:30] understand what builds that. You don't value what you do for your customer as much as your value from the customer's perspective is. Yep, I can see that. I think a lot of, I don't want to stereotype, but I have seen that if a contractor doesn't value themselves and their work and what their value is, how is the customer supposed to value their work? 100%. 100%. And it is

[00:43:59] so much fun to watch business owners who have really hit a brick wall for quite a while or what I call the messy middle of being in a group where they feel stuck, they might be having cash problems, that kind of thing. Once they shift from who not do and start changing the way that they communicate with their customers,

[00:44:28] the lights go off and then they start scaling their business and man, hold on. I've seen it too many times, they go, man, I didn't realize. I thought the answer was I needed to work harder and what I really needed to do was shift the way I was looking at things. And one of the things I say to our folks that I work with, the problem is usually not the problem, the problem is the way we're looking at the problem. That lens, yeah. Can we talk for, well, as long as you

[00:44:58] might want to share, the differences, and this might be a vanity thing between revenue and profit, and I say that because a lot of times when let's just take a business networking event, someone's going to say, hey Brent, what's your revenue this year? And another person will say, hey Brent, how many employees do you have this year? And oftentimes it's kind of like, who cares? Like what, I mean, revenue matters, but the question should really be, hey, how profitable are you this

[00:45:28] year? And why? What's working? What's not working? But I feel like contractors oftentimes get caught up in revenue, revenue, revenue, revenue. Yeah. Can I illustrate the point through an example? Sure. Okay. So, and I'll just use our industry, but the numbers I'm sure in any industry kind of match up. But we have this 80-20 rule in residential plumbing and air conditioning

[00:45:58] service businesses. On an annual basis, it's about $125 billion industry in our country. and 80% of the contractors are a million and a half or less. 15-20% are a million and a half or more. Of that whole group, that $125 billion, the 15-20% control over

[00:46:27] 50% of that total revenue. That group tends to have an average net operating income of somewhere between $300,000 and $600,000 a year. The 80% of a million or less is somewhere between $100,000 to $120,000. And I think you could agree real quickly, one group owns a job, the other one owns a business.

[00:46:56] And there are very clear things that one group is doing that the other is not. A. And there sums up the net operating income. Now, the nice thing about AI is you could just plug in the numbers and it would tell you everything I just covered. And it would also tell you why this group versus that group are doing what they're doing and what they have to do to get there. And so I'm happy

[00:47:26] to talk about those top five things. And let's say here's another question in the same scenario. Let's say a company's doing, I'm going to make up a number, $3 million. Should they continue to say, I'm going to grow, grow, grow? Or is it okay to say, hey, I like where we're at right now with this $3 million. Maybe we just stay here at $3 million and maybe we focus on just operating and being the best we can be and focusing on our employee retention and having happy employees having great lives

[00:47:56] and good relationships? Or should they always be, no, I got to get to $5 million, $6 million, $10 million, $20 million? Wow. That question has like three prongs to it. I'm going to answer it on its face. I think you said, hey, it matters about what percentage are you dropping to the bottom line. is probably declining just based on everything's getting more

[00:48:26] expensive every year, right? So just in theory, you'd have to grow to make the same amount of money you made last year. Okay? And that's a decision where you say, I totally get it because my wife and I, when our kids were growing up, they're 26, 29 now. We had a lifestyle business. We were running the business and actually holding the growth back because there were certain lifestyle things. We made some decisions about what we wanted to do. Remember talking about it changed my life when we almost went bankrupt?

[00:48:56] I had some life decisions to make. I couldn't be out on the road and have a business here unless it's possible but it wasn't structured properly. But the other thing was that lifestyle wasn't supporting my life goals. And so we did stay within a certain revenue area but the answer was never based off of how much I was having to work. It was what is the net income of the

[00:49:26] business and is that normal or is that where it should be in relation to the industry? Right? And so the question is I think three million if three million means that you're working 80 hours a week and you're making half the profit you were back when you were smaller and your marriage might be compromised and your lifestyle might be compromised you're going to have to make some decisions

[00:49:56] about you're going to either need to grow to cover that level of overhead or you're going to have to adjust the business to a net income level. There you go. And I hope that made sense in answering the question but what you cannot do if you're stuck or having cash problems you're in a whirlpool right? And I will tell you that

[00:50:25] working harder is not the answer. You may have to go back to something you were more comfortable with but you won't be able to sustain this because what happens in the whirlpool you go down eventually right? And that's usually when people come to me. People don't come to me when their businesses are just clicking along doing great. A couple but usually there's some big problem we're having to solve

[00:50:55] and a lot of it doesn't have to do with the business at all. I have to change something because I'm stuck, I'm running out of cash, I'm close to bankruptcy, I can't sustain this, I've got a health issue. I mean, those are the kinds of problems that come and the business is trying to tell you you need to make change. Let's see, can I ask you a couple questions that came in from a contractor?

[00:51:24] I mentioned that we were going to be talking and you had a couple questions. Some of them we've covered because they were talking about Google marketing and percent ROAS and those sorts of things. You did mention AI at the beginning. Are you using any AI calling center or calling services? Great question. We are just starting to look at that and when I say that, we've been looking at it for six months. We're in some negotiations with our current software provider and

[00:51:54] I don't think it's an if but when. One of the things I've learned over time and a big, big, big proponent and fan of leveraging technology but there's two kinds of technology. There's leading edge and there's bleeding edge. Bleeding edge tends to charge you a rate where you're investing in their research and development.

[00:52:23] Leading edge it starts to be stable enough and has enough critical mass and what I mean by that is enough customers to settle out and sustain a price that is fair with the amount of value it's providing. Right now, and I'm really trying to give you the answer for your listener that's asking, right now I think we're somewhere in between and I'm just not ready to pull the trigger yet because

[00:52:53] there are two things going on. I'm not sure that I want to use a software propriety with a software provider that includes it in their package. I'm not sure that I want to be beholding to that because what I'm seeing in AI I use the right Zapier

[00:53:20] and I'm not so sure that a bolt-on or this product over here is going to be able to integrate I'm going to use technology word with an open AI and I'm better staying here rather than letting the software give me eight services inside their software because once I'm in there it's harder for me to leave and make a decision. So what happens to their price? Does that make sense?

[00:53:50] Yeah, if they've got you by a lot of different reasons you're not going to leave their price could end up going up because they know that the stickiness you're not leaving. And if you're if your contractor is asking the question wants more information on that go to my website they can visit with me for 30-40 minutes I'll tell them exactly where I am on that. I just don't know that I can give you this answer to that question but here's what I don't like bleeding edge technology and I'll tell you why especially in our industry

[00:54:20] it doesn't require it. If we stay in leading edge and maybe even a year behind leading edge we're probably five years 80% of our competition. So why pay that premium for you know I remember my dad if I tell you a story first time when I started my first business at 26 and it was in the 90s and my dad and I didn't work together but I had bought a PC a personal computer and it did a lot of things for us

[00:54:50] and but he came in he goes he goes man Brent that's great and I know that computer I don't know anything about it but who's gonna fix the leak. Don't forget your business your business is at the magic moment with the client out in the field that magic moment when you're with in front of the customer if your technology is not making it better faster cheaper for you and your business don't do it. Really what it was I was saying dad look this isn't this really cool we got a computer and he was trying to say yeah but how

[00:55:19] is that gonna make you any more money what problem are you solving and who's gonna fix the leak who's gonna do the work. I understand he was trying to make a point but there's no reason to invest in bleeding edge you're gonna pay a premium for it and and to use your own words and your own theory if likability matters and maybe is the number one of those three you with phone specifically or any customer interaction you

[00:55:48] risk likability and so if somebody calling in is part of giving them a great experience then you want to give them the great experience and make sure that if you're going to use AI that it is doing it better than you could. We're on this topic so the reason we're looking at Zapier is because once you're with a company do you really want to talk on the phone? They're doing this they're texting about

[00:56:18] 60% of our clients we're booking with a text they come online they come on on on our website they have a service request this is a repeat customer they would much rather text and confirm so do we really want to spend a bunch of time and energy right now and and premium dollars on handling a bot's phone call when 60% of our clients are doing it through texting? Yep we use text right on our on sprinklersupplystore.com you know instead

[00:56:48] of live chat it starts a live text because we've all been there where you start live chat and then your phone rings you walk away and you go oh man I just lost my live chat but if it's on your phone and you're texting with the company you're you're right there what a great conversation yeah you could spend two hours talking about just that component right there it's just there's a lot can I make one last point on on that there's no

[00:57:17] doubt within the next I think in the next two years if you are a midline to larger company and you aren't booking a call through some form of AI technology with the customer in less than a minute you're probably behind the competition we still have time to look at that and there are a lot of people coming into the game I just don't think it's quite time to pull the trigger on if you find the right solution go for it and if you can justify the cost and it's enhancing the client experience

[00:57:47] go for it I just haven't found it yet there's the answer to your yeah I've got one question that has to do with that and it's about hardware technology are you familiar with this new thermostat company called Nuve yes and I would like to it it's interesting to me for a number of reasons but I just like to hear what you think about it well I will tell you that if we're just talking about controls and thermostats Honeywell

[00:58:18] Honeywell I think has like 80% of the residential controls market okay you know we saw a nest thermostat come to to the game and they certainly have their place but and it's kind of like watching what what you see with a big Microsoft or an Apple or whatever there comes upcoming technology somebody either buys it or or they get absorbed somehow

[00:58:48] I think the controls game still is they're trying to handle this 100% of whole home technology and we've seen a lot of progress made in that and of course in my limited understanding we're talking about Zwire or some type of roll up in that here again leading technology Honeywell is totally caught up

[00:59:18] with nest already and they still maintain the percentage of market share so whenever something new comes on and I see I'm I'm all about learning what's going on and what's similar and what's different but I would just sound like I'm old-fashioned and that's not the case I mean I love technology the best business book I ever read was read to me somewhere between three and five

[00:59:47] called A Tortoise in the Hair Slow and Steady Wins the Race right? Keep plodding along look at it ask the right questions I just wouldn't be the first to act on it right right yep and I think you know it's similar in the irrigation market there's a couple major manufacturers that control a lot of the market and just hearing from some contractors that they really want more capability specifically as it relates to actually client communication not necessarily

[01:00:17] the control of the device but it's just almost like using the device as a customer communication portal where maybe let's say on the controller it could just be like yeah schedule service tech right there on the unit and I think I think about the irrigation industry and HVAC industry and even computers and technology it all started with open and closed circuits that's all we're doing is opening and turning the valve on and off it's a binary

[01:00:47] process is it on or off right and so technology is giving us better interfaces ways to have a better client experience we can operate it on our phone we've got wifi those kinds of things but we're still talking about open and closed circuits and you know my dad's question was right who's going to fix the leak and that's a good one I hope everybody remembers the bleeding edge versus leading edge yep

[01:01:17] definitely and as we close this circuit do you have any last words of wisdom that you want to share with the audience no I just enjoyed the conversation and you know I work with I work with a community of skilled trades business owners that want to grow and scale their business but not compromise their values we tend to focus on doing

[01:01:47] the right thing we think win-win you do not have to compromise your values to be successful in this business and you should be able to make a fair an honest profit and really provide for your family and your team and if you'd like to get into a conversation about that you can find me at the skilled trades coach dot com have a conversation with me that's what I do I'm 61 I got a 20 year plan I'm going to spend the rest

[01:02:17] of my life helping small business owners fix and solve some of these problems we're talking about and you'll get a free copy of the book if you have that conversation awesome and can you say the website one more time I'll put it in the show notes but one more time it's the skilled trades coach dot com okay yeah very good for all of you out there I would definitely reach out to Brent he's got a

[01:02:57] Andy thank you so much for having me on you run a great podcast I appreciate it thank you have a great day