The Home Service Expert Podcast
00:57:58 · Tommy Mello, Becca Erdmann, Kyle Erdmann
[00:57:58] S0: Communication is key. [00:57:59] S1: I I know. So that's what I started doing. That's the one of the first people I've hired and trained and she's still with us. She does an amazing job. So, it's twice a week, every week. Even if there's no update, she'll still send an update saying, there's no update, but just we're still thinking about you. I know we have your money. We're still thinking about you. I don't want you Just [00:58:15] S0: so you know, waiting for the manufacturer. Yeah. Yeah. She means it. Okay. I was [00:58:19] S2: just saying that our operations... Our director of operations is bonused on getting jobs ready to produce under a ninety day timetable. So, you know, the the key... The adage has always been, you know, incentivize the behavior you want. Yeah. So we want jobs to turn within ninety days. So his bonus plan is based on getting jobs ready to produce under ninety days. That keeps love that. That keeps on a tight timetable. What... [00:58:40] S0: So when you started, you were negative 4%. So you guys were losing money and you guys are, what, around 10 now or something? [00:58:47] S1: Last year we hit 10, yeah. [00:58:48] S2: Yep. Should be... Yeah. Green fielding's expensive, but, we'll still be good this year.
00:58:48 · Kyle Erdmann, Tommy Mello
[00:58:48] S2: Yep. Should be... Yeah. Green fielding's expensive, but, we'll still be good this year. [00:58:52] S0: Well, Greenfielding... You know, what's cool about Greenfielding is... And this is a general rule of thumb with private equity is you could add back the first year. It's not necessarily an add back, but people understand if you get Greenfield, it'll organically grow that. So we go guns blazing when we greenfield, like instead of tiptoeing in and going, we're gonna go soft launch, we tried that and now we just go guns blazing, but... [00:59:12] S2: Dude, I listened to yours and Vince's podcast that you did about greenfielding about three months after he opened, and I wish that it came out three months earlier. Yeah. Would have saved me a headache. [00:59:21] S0: Yeah. Yeah. That that was a good one. Well, let me ask you guys this. For somebody listening that's kind of stuck at five to 10,000,000 wants to double, what are the first things they need to have in place to get that done?
00:59:21 · Tommy Mello, Becca Erdmann
[00:59:21] S0: Yeah. Yeah. That that was a good one. Well, let me ask you guys this. For somebody listening that's kind of stuck at five to 10,000,000 wants to double, what are the first things they need to have in place to get that done? [00:59:31] S1: They need to read who not how and get out of their own way because I think people who are operating around 5,000,000 typically are in their own way. They want to be involved in every single decision. They're scared to hire people. They're scared to fail. Scared Scared fail. Scared of everything. So, that's the bottleneck, and that's what stops anybody from growing. I think the other thing is, for us and for a lot of companies, when you have too many products, it's really difficult to scale. You can't have a salesperson be expert on a 100 different things that you offer. No. And then, you can't have your production team be an expert on installing it or the project manager who's managing it. It's impossible. So, I'd say reducing products, I mean, that's what we did. We went from, I don't know, 50 down to basically three. [01:00:17] S0: They gotta be run as a separate company within the company if you're gonna have a different product and then other person has to show up there. Yeah. Like even going into garage flooring, so many guys try to do this or they go to front doors or they go, we're gonna do commercial and residential. We're gonna do new construction. Those are free. And then they start wholesaling out of their... I'm like, those are four different companies. [01:00:35] S1: Yep.
01:00:35 · Becca Erdmann, Tommy Mello
[01:00:35] S1: Yep. [01:00:36] S0: And they're small. They're $5,000,000. And they're like, we take whatever we can get. And I know what that feels like to take what you could get because you gotta you gotta put food on the table. Yep. Yep. And it's like you take on things that you probably shouldn't have. [01:00:47] S1: Yep. You're like...... Money. [01:00:48] S0: Oh my gosh. And then it just... It's like... It's it's a nightmare. [01:00:52] S1: There's no system. There's no process. It's something you've never done but kinda done similar but haven't done exactly. You can of course, anybody could figure anything out. And just because we can do something doesn't mean you should. Also doesn't mean you're going to make any money. [01:01:04] S0: You know, it's so important. I've only... Probably the last three years, I've talked so much about profit. As the company grows, everybody's excited, it's fun to come into work. Yeah. When you're not making profit, it's like you're doing, you're making bad decisions. [01:01:19] S1: What's the And
01:01:19 · Becca Erdmann, Tommy Mello, Kyle Erdmann
[01:01:19] S1: What's the And [01:01:20] S0: what's the point of starting a business? And there's a lot of people out there, but I have to say that a lot of people, they don't know the difference between paying yourself a salary and a good company, you should pay yourself a couple $100 a year. And then the profit's what comes after what you pay yourself. Now there's also draws, but your CPA should be saying pay yourself a healthy salary and pay FICA and Medicare and all the other stuff we pay. And then the profit should be what's left over. Yep. And in small businesses they say, yeah, I paid myself $300 last year. I'm like, what did the business make? And they're like, what do you mean? I just told you $300. I'm like, no, That's not [01:01:56] S1: out of This is salary for your job. [01:01:58] S0: Yeah. Yeah. And it's like, you only taking a draw? Yeah. Isn't that how businesses rent? [01:02:03] S2: No. No. Audit, you're gonna be
01:02:03 · Kyle Erdmann, Tommy Mello, Becca Erdmann
[01:02:03] S2: No. No. Audit, you're gonna be [01:02:05] S0: Yeah. No. It's not a good thing. But most of these companies don't get audited. When they do, the IRS's job is not to shut you down. It's just to get enough payments to get what they could out of you to keep you still going. And they're not... I'm sure one day the IRS started auditing and they're like, we're gonna have to shut you down. And then they realize, we're not gonna get this money back from this person. So they're just gonna get you enough that they could come pull a little bit out at a time. I love these conversations. Is there a moment in your guys' relationship where you guys thought, this might break us? Just being around all day or working together or you just stay in your own lanes. It sounds like you guys communicate that that's for sure. [01:02:42] S2: So so two things. One, we stay in our own lanes really well. So I'm visionary of the business. She's the integrator. We... We've we've read Rocket Fuel. She's read Traction. We know how that that dynamic is supposed to work. Once I Integrator. Yeah. Once mostly I learned how to stay in my own lane and stop being the the tornado of the company that blew everything up and tell everyone my ideas [01:03:06] S1: Uh-huh.