SPEAKER_08 0:02

Uh you're gonna be infamous in citywide history here. Um it's a weird thing that keeps happening whenever we do this. It is um muting everyone and turning everybody's cameras off automatically, and I'm not sure why. So if you guys want to go back in and manually turn on all your cameras, I I do not know, Adam.

SPEAKER_02 0:26

I think that it's a disclaimer. So it's like a permission thing. Yeah, you have to be like permission to record your face and stuff, yeah.

SPEAKER_08 0:35

I see. Okay.

SPEAKER_02 0:36

Yeah, if everyone can turn their cameras back on and then there'll be obviously a moment for uh and that must be a new thing because I don't think that it had previously.

SPEAKER_08 0:45

Am I right? That it's not it didn't do that.

SPEAKER_02 0:48

It feels newer, yeah. Yeah, I feel like a few weeks ago didn't do this and just started doing it.

SPEAKER_08 0:53

Okay, we're gonna kick it off. We've got the one and the only Mr. Jim Hughes hosting the Z Call this afternoon. We're excited to have him on. He's gonna tell us a little bit about his citywide journey, who he was before he was the infamous citywide Jim Hughes, and a little bit about his business. Is everybody else? Can you hear me?

SPEAKER_03 1:21

Yeah, I can hear.

SPEAKER_08 1:24

And we're gonna let Jim tell us his story and then let you guys open it up for questions, and everyone can um hop in. You can either come off mute and ask a question, you can raise your hand and I'll call on you. Um, and if everybody doesn't engage, then what happens is Adria starts picking on people. So I always say, make sure that you're asking your questions. Um, so we'll we'll let we'll let Jim take it away.

SPEAKER_05 1:49

I just want to make sure um that we don't have any technical issues with some of the people on. Do you want to just kind of make is everybody cool? Like, all right. What's up? I think there's Mark, there's a Jason. Hey Mark.

SPEAKER_08 2:04

Hi Natalie, Ryan.

SPEAKER_05 2:07

I don't there's a D and B. Hi, sorry, technical difficulties. No worries, I just want to make sure.

SPEAKER_03 2:15

Oh yeah, cool. Well, I don't want to distract you in any way.

SPEAKER_05 2:20

Yeah, no worries. Yep. Um, cool. I just wanted to make sure that uh everybody was was set. Okay, um, I want this to be I I have to I have to jump at like 5-2. Uh I have an appointment at four central. So um just in in all fairness, I don't I'll make my uh opening comments very very short, and I want to you know save as much time to answer any um any questions that I that you may have. Uh this is this is a great way to listen to others, you know, because I I remember we didn't have these when I when I started in um I did all of my due diligence in June in um from June of 2013 through I want to say December of that same year, 13. Uh I signed a contract in March and uh and I didn't open till June. So uh because I had a job and um I didn't get this chance, so we didn't have this technology, and I think that's pretty awesome. So I I really I think it's really cool um to leverage other people's thinking. Um, that's how I've grown all of my businesses is really getting input from others because you can't think of everything, and so I think this call is a great way to um get your questions answered, but also hear maybe some really good insights from others. Um so just keep an open mind as we go through the call. So again, I've been doing this since 2014 June. We opened the doors with zero contract revenue and zero buildings, which was terrifying. Um, and um I got physically ill handing over my check to Mr. Odo. Physically ill. So I I I I had done very well in the banking system. So I was my wife and I were in the banking system together for 25 years in Chicago. So I grew up in Chicago, I've born on the South Side. Um, don't hold that against me. Um, I I loved banking, I was very good at it. Um, I came into this business with no debt, so I have a bunch of I have three or four houses, and they were all paid off before I started. So I came in with a different luxury than some people do. Um, so think about that as I'm going through my story. But uh, I made this transition. My wife said I was jumping out of a perfectly good airplane because I was doing consulting for the banking industry, and she's like, What the hell are you doing? And I tell you this because in order for you to be successful in this business, you need to be fully committed, not half-assed, not like, oh no, I'm you know, I'm gonna try this thing and hopefully it works. Nope, you will fail miserably. Um, you have to I had to train myself and discipline myself to make myself feel like I had to do this or I was gonna fail, or everything was going to fail. Like I really put that much pressure on myself. And um, I also have the mentality of long-term thinking. So I'm not a cryptocurrency guy, as one person described me. They're like, you're more of like an I 401k plan, you're not cryptocurrency guy. I'm like, Yeah, I I do everything with long-term mindset. I'm somewhat conservative, but um I I have a my strategic background in the banking system. I grew multiple networks, so branch networks. I was responsible for branch networks. Um, and I opened branches, uh, probably 125 branches, new branches I've opened, and I had to place them in different parts of Chicago. And so I'm very strategic about my my approach to this business and somewhat somewhat anal and disciplined. Uh, I don't chase shiny objects, I'm focused on one thing, one thing, net gain. In order to get good net gain, which is the difference between your gross sales and your retention of business, so your lost sales, is you have to have a high retention level. Otherwise, you're inefficient. So you can't outrun it. You can't outrun your sales and feel good about it. You have to be super efficient. So we have a net gain as a target. Every one of my leadership team members has a goal and they get paid out based on net gain. We're probably the only, we're the only group in the entire system that has a net gain goal for the leadership team. Now, let net gain again is your gross sales minus your lost business. It gets harder and harder as your portfolio gets bigger and bigger. Our portfolio at the end of this year, now keep in mind we're the fastest city to$1 million in contract revenue, janitory contract. We've we beat everybody, so we did it in 113 months. We did that through retention level of 90%, and we did it by putting on contract revenue on a monthly basis. So it's it's essentially if do is it does anybody know what a systematic investment plan is? A SIP. Does anybody know? Um no? No. Okay. So does anybody invest into a mutual fund on a regular basis, like a monthly or quarterly? Okay, that is a SIP. It's a systematic investment plan. What it means is you commit, let's call it a thousand dollars a month. You commit a thousand dollars a month, no matter if the market's high, low, whatever. It's dollar cost averaging your investment, and it makes you, if you do that over a long period of time, you're bulletproof. Like, because you're buying in the dips and you're not buying as many shares when it's when the stock's overpriced, right? So you're buying, it's an awesome way to invest, but it's a long-term investment strategy. So I think of this the same way. You can have a negative, like a negative SIP is if you have credit card debt, really bad idea. Uh, because credit card debt will mount on you quickly in the same way that you can um grow net gain in a positive fashion. So it if you're doing, let's call it 5,000 a month in net gain, as you guys are starting out, you'll probably do 2,000 a month in net gain, and that's a good number. We do 18,000 a month in net gain. That's our goal. 18,000 a month. We grow about 200 to 250,000 a year just contract revenue, and our target is 90 retention. The reason I bring up retention is a lot of you are thinking about the sales side as being really difficult. I was terrified of it because I'm like, I've never sold janitorial. What the hell am I doing? Like, how am I gonna pull this off? I'm gonna tell you that is the easiest part of this business. Sales in this, if I could sell, if you got half a sales process, you can do it. Um the hardest part was the other two constraints. And I'll get to constraints in a second. The other two constraints are I'm sorry, the importance of the um the um net gain piece is that as you're growing this and you're making and it's more difficult, the the more you have to pay attention to the operational side to retain it. Otherwise, you're just running a hill of sand. It's it's actually a waste of your money. And at this point in your career, or like when you start, you don't you can't afford to waste money because the other constraint, there's four constraints when you start. One is cash flow, two is is people like team members, three is contractors, and four is clients. If you think about that and think about this business in that way, you have to solve for cash flow in discipline. So you have to solve for it in being able to bring on business that pays you on time, you're responsible for making sure that they understand that up front and that you collect for with them on time. Cash flow in your early years will crush you if you don't have that cash flow. It will crush you, or you know, unless you have, I'd say, a$300,000 line of credit, which I'll get to in a second. But the the the other constraint is that I think is more difficult than just the client piece is the contractors. It's the number one problem I have in Chicago is finding contractors, period. Because the contractors you want aren't the contractors that you know are huge, you want the ones that really care about their buildings, and they don't have a sign out front of their house that says, Hi, I'm a contractor, and in my garage I have all my equipment. You you don't identify those people, they don't drive around with signs on their trucks, they don't have they're in descript, right? So you you have a it's a really difficult time uncovering them because trust is a big deal with them, and they don't trust um they don't trust uh companies very very much because Jana Pro and Janiking have destroyed the trust level in this business. They have manipulated and and really disrespected contractors and taken advantage of them because of their you know lack of um of language skills or you know understanding what they're trying to get through because of language. My number one goal is to make sure I protect my contractors. They they I have the I have contractors been with me for nine years. Why? I pay them every tenth of the month. Ever since we've opened, we've never missed a paycheck for them, pay period. And two, we pay them fairly. Three, we treat them with respect. I fired clients because they've disrespected my vend my contractors. It's rude, it's it it it's against our values as a company, as citywide. Um, I I look at that as professionalism. Like you, you, you can't you can't take advantage of my contractors. I will get I will get rid of you as a client, right? So, but they've been disrespected and they've just been disrespected by Janet Pro and Janking. So they're jaded, and it's really difficult to build a relationship with them. Just now we're starting to get referrals. It's 11 years later. I've I did the math on this the other day for because our 10-year anniversary was last June, and I wanted to put some numbers out there that would really hurt people's head once a month since last January, so January 24. We pay out a million dollars a month in my business, a million dollars a month to contractors. You would think we would get referrals, but no, first of all, they're afraid to refer us because they to another contractor because they think we're gonna give them the businesses that they deserve, right? So there's that obstacle, their own, their own, you know, head trash. But two, it's the trust thing. It's really difficult to for them to find a uh a company that that treats them with respect and pays them well. So I think when you think about the constraints, the first two that I would say are things that you need to focus on are number one is cash flow. Number two is your your how are you gonna find how are you gonna find contractors? Number three is operations, because operations, whether people tell you sales is the answer or not, operations is what's gonna cost you the most money and is the thing that's gonna keep your company rolling in the in the black. Sales, not that tough. It's your last, it's the fourth one. So just trying to save you some time. Currently, we grew um the first four years of my business was extraordinarily difficult. I'm not gonna pull any punches. I know that Adam and Adria want to sell franchises, but Adria Adria has given me the the go-ahead and the green light to say, give them the hard stuff, like let them know, right, Adria? Like give them the hard stuff. So I had no debt, as you recall, zero. I didn't pay myself for four freaking years. I was writing checks every single month for three years. It was painful. Finally, I started seeing the black in three years, and it wasn't much. In fact, it wasn't a lot at all. My CPA finally said, dude, you gotta pay yourself, like you gotta do something here. Um, so I did. I'm gonna tell you, I almost handed the keys in in 2018. I was like this close to like being done because I'm a pretty gritty person, but this business was kicking my butt. And then all of a sudden, I got the right person in an operations. All the training that I had done around my sales team, because I believe the retention starts with sales. If you're not selling good buildings, if you're not selling to clients who understand our value, you're gonna have natural retention at a higher rate, and your operations can't do anything. So our whole business is built on don't screw your buddy. If you're a salesperson, put it on the books, knowing that you're going to be proud to hand this to a salesperson in the sales ops handoff, and they'll be happy to take it and treat your client correctly. So much so that we have a process that is not in Citywide's manuals. We do a face-to-face visit, not with the FSM, but with the salesperson who sold the account and the director of operations. Those two people leave the FSM out, the account manager, and they visit our clients 30 days after the account starts. Why? Because I want my salesperson to be in the face of that person they sold the contract to to say, How are we doing? Is this what I promised you? Because that means a lot to me. That's my reputation. And then they go, we go back out again. If we didn't get a five out of five in our first meeting, we go out again in 60 days and make sure that everything is solved at that level. And then we go out again at 90 days. So if we get a five out of five, we still go back in 90 days because 90 days is when people start to get lazy. Contractors get lazy, FSMs might get lazy. I can't have that. So we protect ourselves by having that process put in place. That's how much I believe in the operations and sales connection. So if you harbor that and do that at the front side of this, you won't have any issues down the road with silos or fiefdoms where ops are ops and sales are sales. You'll have a cohesive group that really is focused on you know taking care of the client. Okay. Now, all of you, I'm assuming you all have jobs and you're all in some process, right? Do not quit your job. I'm as a former banker. Um, I get a lot of these franchisees that quit and they open up their franchise and then they call me and they go, Hey man, I know you're in banking. Is there any way you can do anything to get me a loan? I'm like, uh, you quit your job, you knucklehead. Like, no one's gonna give you money if you don't have a job. I see Mark's laughing his butt off. Are you a banker, Mark? Okay, cool. Uh, where are you from?

SPEAKER_04 17:33

I like banking talk. New York. Okay. I was an investment banker and an investor for the last 20 years.

SPEAKER_05 17:39

I'm a little bit like you. Uh yeah. Um, I didn't have your pedigree though. I I I was in retail banking. We were kind of the stepchild of the banking system. More operational experience, Jim. More operational experience.

SPEAKER_04 17:53

There you go.

SPEAKER_05 17:54

Nicely done. Yeah. Well, you know what? Let's talk about that in a minute. But um, going back to getting your getting your cash flow, make sure, I don't care how you do it, make sure you secure a line of credit for the cash flow. Um, you know, and I again this is this is Chicago. This is not, I have friends in all over the system. Like I have really good friends in North Carolina, Oklahoma, Vegas, um, Phoenix. And all of us came in here thinking, oh man, we're gonna we're gonna put 350, 400 grand into this. If you're gonna build this thing for long-term growth, you need to start investing early and make good decisions because if you don't have enough capital, you'll ultimately make really bad decisions and short-term decisions just so you can pay your mortgage. And I really don't want you to do that. I'm trying to help you guys like do the right thing for yourself and your family and your team, and and have money, more money than you need. Um, and and and the worst part that I've seen from some of these franchisees is that you know, they put a sh they put a ton of work into this thing in the first three years, they start to see some return, and they're like, Yeah, this is mine. Well, okay, great. Like, if you want a$400,000 a year job, great. I didn't, I already had that. I wanted I wanted to build something big, and I wanted it to be really powerful. And I'm into like if I can get a repeatable process and do that process over and over and use discipline to keep that process going. If you've ever read Jim read Jim Collins, that's the flywheel. Like, I'm a huge Jim Collins fan. So flywheel, it works here. That's exactly what you should think about when you're thinking about this business. What do I need to do to get the flywheel going? Because after four or five years, the flywheel's humming, and then at that critical point, you're gonna have to make a decision. Do I want to reinvest? So I put, and I'm being transparent with you, I put six hundred and fifty thousand dollars into this thing to get through my first four years. We started making money, I started getting paid. I hired more people that because the only thing, and Adrian knows this, the only thing I'm really good at is knowing what I'm not good at. So I had a whole bunch of hats I was wearing, and I'm like, I suck at operations. So I hired a badass operations guy, cost me more money than I ever thought I was gonna pay out, and um he he lifted my business. So I then I had my sales guy, my VP of sales is my first sales associate that used to put make surveys for me. He used to set all my surveys, he's been with me since day one, and um I've promoted him four times through through over the the 11 years. I'm really proud of him. He's 39, really great guy. But he knows what we wanted out of sales because I trained him from the beginning. So try to think about from um you know, from a um a human capital standpoint. Is there anybody that you know that's not a friend or family member? Don't don't hire those people, don't get sucked into that. That's a bad idea. Anybody I know in the system that or around me or kids of friends of family that would fit into these roles that you can trust and you can train and help grow and develop. It's really rewarding if you can do that. Um, but but going back to the the capital piece, make sure you secure that in advance because after my first four years, I invested another eight hundred thousand dollars of internal capital in 2021 because we were growing at such a rate. I needed I needed to replace my one DOO and make him a VP of operations with two more DOOs because I don't believe in anybody having more than eight people that they are responsible for. So six to eight from my I have a deep management skill. So as Mark mentioned, I have operational knowledge. Well, I was middle management for so long that I learned how to hire, fire. Like, I can hire and fire tomorrow. Like, I'm really good at it. But there's a lot of people that come from corporate that have enough juice to open one of these things, but they forgot what it's like to hire people. They forgot what it's like to have a conversation about accountability. They they need to roll up their sleeves. I was cleaning toilet. Dude, I was on a private plane the year before I was I was started citywide. The next year the IC doesn't show up to the to the dealership, the infinity dealership, which is my second client, and I still have him. And I was cleaning toilets, and I'm thinking to myself, what the hell went wrong? I'm on a private jet a year ago, and now my ego has been stuffed into a toilet seat and I'm cleaning toilets. I'm like, good God, it was just so much pain at that time. But you know what? I cleaned the toilets at 10 o'clock and did a proposal at eight o'clock. Like, you just you need to be able to sell yourself on the fact that you have to be able to do these things and you have to wear 10 to 12 hats to do to get this thing off the ground. And I was fortunate enough to know people in the market. If you live in a market that you didn't grow up in, I've been in Chicago my whole life, and you're trying to recruit people, it's going to be difficult. So you're going to have to figure out how are you going to recruit? Don't hire a recruiter. Hire recruiters are terrible because they don't know who you need on your team. They they can fill a seat, but you're going to go through a lot of people. If you can find people that you know in your market, it's going to be very helpful for you. So those are the constraints. Um, I hope that helps you kind of frame it up. Um, I hope you understand where the difficulties were, and I hope you understand um that this is not something that you go into. Um, it's not a subway. So if you want a subway, go do subway. This is you gotta be a full happy to get in here and be a full grown businessman, businesswoman, entrepreneur to get this thing started. Um, and if I'm scaring you, I'm happy. So with that, um I want to take questions.

SPEAKER_08 24:21

Because you yeah, you can't do a 25-minute citywide Jim Hughes history and do all this and all the scary stuff and then not talk about the end of the story. You failed to give the numbers and the beginning and the middle and the end. You gotta give the the end of the story, or we're all just gonna be sitting here like, well, what happened?

SPEAKER_05 24:43

Well, what was the end? So in our first four years, first four years, we got to we had about eight or nine people after the fourth year on the team, and we had about we were doing about 32 three point three point two million in in uh contract or I'm sorry in total revenue for the year. 3.2 four years. Then you know, I started adding some people, key people that I could start to afford at that particular time. And we we grew, I think we got to 10 million. I'm trying to think. I think we got yeah, we got to 10 million in year. What is this 11? Year nine. So so 10 million in, I'm sorry, year seven. I apologize. Seven years to get to 10 million. It it took us three more years to get to 20 million. And you and you like if you want to know how that happened, remember that$800,000 number that I told you about? That was hiring all capable people at leadership level because I made the decision, this is not going to be something small, this is gonna be something big, and I need to reinvest into this. So a lot of my franchisees where they fail is this they start making, you know, let's call it 500 grand a year. And and then that's a don't get me wrong, I'm not that's a good number, but um the potential of this is much greater than that, and you need to be able to suck it up and not live. Um, some people a lot of people I know, it's just I'm old school, like I'll be 59 in August. So I'm kind of older, my mentality is older. I don't spend the money I make. I I we've my wife and I have never lived beyond our means. I'm super conservative. I do investments at a monthly rate, a lot, you know, a lot different than a thousand a month now, thank god. But I still do those investments and I don't spend my money. So, what I do, I bought a building. Why? Because it was a great investment. If I'm gonna pay twelve thousand dollars a month to somebody, I might as well pay myself. And if I'm gonna want this business to get bigger and I want to keep my reputation in the market, I needed to reinvest in people. So don't look at this as I can't wait to get to seven years and I'll be making a million dollars a year. No, tell yourself 500,000 is enough. Pay taxes on it, and then put money aside to grow this thing. And if if you guys sign up to be a franchisee, call me when you're after you get through your first six to eight months. I'd happy to talk to anybody about the mindset you need to have so you don't get stupid and start buying boats and cars and stupid shit that nobody cares about. And um, you are compromising your ability to grow this thing. Now, after year seven to year 10, we were the fastest growing city to 19.5 million dollars in all of citywide history. Why? Because we have discipline, we have processes, and we pay attention to retention, not just retention to clients, retention to people. My average retent um tenured person in my business. Now keep in mind that's with all the new people, we're up to 39 people now. We have 425 buildings. We started with zero. We have 39 people on the team. I have three vice presidents, operations, finance and administration, and um sales. The VP of sales has been with me since day one. Most of the people on my team have been with me for six years or longer that are in a leadership position. I pay them well. Um, we've built an amazing culture together. It's not just Jim Hughes's business, it's theirs. And um, I've spent a lot of time being intentional about that. So, yeah, we're 24 million, but I I I'm very proud of it. Well, we'll be 24 million this year. So the last three years, we've grown three point 3.2, 3.5, and 3.3 million last year. It's a lot of work, and it gets really crazy when you start seeing these numbers accelerate at this pace. And we're gonna do 4 million this year, but I'm ready for four million. I'm I have the capacity, I have the people, I've trained them. We're the only city in citywide that has a training coordinator on our staff. That gives you an intent, uh, some idea of our level of commitment. Some other people would see that as another 100 grand that they could save. I also do annual trips, which costs 100 grand a year. So we just got back from Mexico. My top performers, I pay for them and their and their guest to go to Mexico for five days, or we went to Dominican the year before that. I brought this in from the banking mark. Remember when we used to have the boondoggles all over the world? Yeah, it was awesome. So the lady was doing this.

SPEAKER_04 29:43

That was a long time ago.

SPEAKER_05 29:46

I know. Um, my wife had my wife was um she was the head of US Trust in Chicago. So um we had her trips and mine from the bank, and like every April we go all over the place. So I took that thought process of how motivating that was. And you know who the you know the biggest um cheerleader I have on my team are the spouses of the people who won the trip the year before. They're they're calling me like, what does Danny need to do to get on that trip again this year? So it's like a hundred grand that it's hard for people to understand the power of it, but it's it's it's really cool from a cultural standpoint. Everybody looks forward to the trip, so much so that this year we've added two more trips to it only for values. So we pick a values winner every single month, like who exceeded expectations around our core values? They get their name, um, if they get their name um picked by leadership, um, they get a golden ticket, just like Willy Wonka. And in November, we spin the wheel with their name on it. And the number of times they get entered in there is the number of chances they get to win this trip. And so we've done it with one winner for the last three years. This is the first year we're adding two trips. So I put my money where my mouth is on retention of people, it's really important to me. And the retention of people, retention of clients will get you um where you want to be. So, again, that's the story. It's super cool to hear the end of it, but the beginning, you know, is really hard. So, questions?

SPEAKER_01 31:22

So, Adrian said, pop off mute, put your hand up, whatever you want. Jay, I see you off mute. Do you want to jump in?

SPEAKER_03 31:28

Uh yeah, uh Jim, thank you for the time. I appreciate it. Um I'm in here in New York with Mark. Um, one of the things you said in the beginning about the constraints, uh, which is a big concern for Mark and I, is what process have you developed to properly vet your uh ICs?

SPEAKER_05 31:47

Great question. So um a wonderful resource that the uh franchise has is the IC playbook. And then when they come in, um let me can I ask you a question real quick? Sure. Yep. Have you like have you done any hiring of contractors or vendors or um how how much is your experience in personnel hiring?

SPEAKER_03 32:10

Uh I do that quite often in my job now and when I own my previous businesses, yes, yeah, quite a bit. Awesome. Okay, great.

SPEAKER_05 32:18

So, you know, I I didn't want to, I didn't I want to make sure I was level set and um a lot of the things you can do. So, one, they have to have these are my these are my three things that I did. I don't even have a conversation with them until they get these three things. You have to have buildings, they're already cleaning buildings because we cannot, especially in the state of Illinois, New Jersey, California, they're they're the worst for the ABC. You got to keep the employee, employer separate, right? Because Jersey and California have ABC Plus, so you you can't do this, but they have to have buildings. We cannot be a hundred percent of their of their income, right? So, one I asked them what buildings, how are they cleaning, what's their approach? You learn a lot, you know, and I know when you hear you look people in the face and they are telling you you can tell if they're bullshitting you or not. That's what I was trying to guess. If you if you've interviewed people, you know that, right? That's a gut. So I use my gut a lot when I'm doing that, and I'm asking questions that they know I know that they can't BS me, right? Right. I it's just those are the ways I do it. Then um, so the second thing is they gotta have they have to have a business license and they have to have insurance, insurance, and those are the three non-negotiables. Uh, after that, then we further have conversations about their experience, how many people are on their team, what's their process. I'll even ask them, okay, here's I'll give you a daycare first example. Give me your process on a typical daycare because they're all built the same way. 75% of buildings are the same. You're gonna, you know, if you're a smart cleaner, you have a process in which you're gonna approach the building, and I want to hear what their mindset is on that. Does that make sense? Yep. Okay, did I answer your question? Yeah, absolutely. Thank you. Okay, good.

SPEAKER_01 34:09

David, I saw your hand up.

SPEAKER_06 34:11

David Morray. You're just on mute, David. Hello, can you hear me now? Yes, sir.

SPEAKER_09 34:23

Oh, hey. Hi hi Jim. Thanks for for sharing. Um I'm interested in learning about the profit margin through this journey. I know you were like a 3.2 to 10 to 20 M. And what's the profit margin structure there? How did that evolve as your business grew as well?

SPEAKER_05 34:44

I love you, David. That's it. That is, I was waiting for somebody. I'm like, someone's gonna ask. So that is, I have a I have a screenshot. I don't have it here. I wish I could provide it for two of you. But what I did was I showed the growth, the people, the annual year-over-year growth, and then the um the EBITA uh that was commensurate to that particular growth, right? So it's it's very um expensive in the first part, the first four years, because you have all the things you're trying to overrun without really any revenue, right? So um, you know, the first two years was negative because it's the way I started. I started, let me give you that. I started with an essay who is two essays, two people making phone calls. Um, I had an uh myself was selling, and I had a person that worked for me in the banking system that was my counting operations, first FSM, blah, blah, blah, blah, blah. Right, she can do a lot of stuff. So um, I had a I had a heavy payroll, and um, I wanted to bring on the right business. And so we didn't have a lot of growth in from an EBITDA standpoint. I will say I also in my worst nightmare because worst enemy as it relates to EBITDA, because I also invested a lot in a lot of tools for my people to be successful long term. Because again, I'm I'm a long-term guy, I'm not doing short term. So I have a website that is a secure website that is a searchable tool, that we have all the policies and procedures from citywide loaded in there for us, and that I it's it's it's secured, and um, every FSM, any person on my team can search. Like, you want to search um um the office like manual. See, see, they they can put pull up anything. Um, it's a searchable database for everything. Like, hey, do I want to know what the um complaint policy is? You type in complaint policy and it pump comes up. Citywide doesn't have that on their back end, but I invested that that cost me like two or three grand a year to support that, and so I have a lot of pieces in here that are for long-term growth, so keep that in mind. So my EBITDA has been really, it was two, three, four percent for the longest time uh because I kept reinvesting into the business. Does that make sense, David? Yep, yeah. So if you had a more short-term thought process and you wanted to skinny this thing down and you didn't care about growing at the rate I wanted to grow, and you didn't want the flywheel to go the way I wanted to, you can run this business a completely different way. So there's a lot of different ways to approach it. I'm really just telling you my approach. So you it but but with that approach, it comes a lower EBITDA.

unknown 37:39

Right?

SPEAKER_05 37:39

So if you the long-term approach for me costs me more money up front. Does that make sense? Yeah, okay. And then now it's starting to be good. So I've assumed all the expenses, I've moved three times, I'm in my final building. Like I have a 12,500 square foot building that I have tenants in, which I'm gonna kick out when I need to to support the growth of my company. So I was thinking ahead of how I'm going to grow this thing out, but that is you know, that expense is gonna stabilize for me for the next four or five years, right? So now I'm putting up um I think we're running at about 9.97 right now from an EBITDA standpoint, if that helps you. Yeah, so about 10.

SPEAKER_06 38:23

Thank you. Yeah, yeah. Okay. Who else? Yes, sir.

SPEAKER_00 38:35

I'm sorry, I got a Lewis. Hi, hi Jim. I'm Lewis from New Jersey. Thank you for uh you know speaking today. Um, so you went from 3.2 million and then you jumped up incorrectly. What was that difference? Well, you know, you had the same salespeople, did you hire more salespeople? You know, how'd you grow so quickly in that short period of time?

SPEAKER_05 38:54

Yeah. Um uh well, we were retaining business at a better clip, right? So your my retention became um, we got more disciplined with the new um DOO that I hired in 2019. So this is up to 2018, and then 2019 we started getting traction. We grew about, I think we grew 1.8 million um because we had some discipline. We had myself and Troy, so Troy and I were both selling. Um still, I was still selling, and uh that was a hat I really liked to wear. So I offloaded operations. I was still doing some of the finance stuff because I could, and um, it was you know small PL, so it's not that tough. But um really what I will tell you is when we really started to grow, so what you really want to think about is when we got to um you know, we were like 13, was it uh we were at 10 million, so we went from to 10 million in 2017. No, 20. Sorry, let me think about this. 23 22, 21. So the last three years was 23, 22, 21. So from 18 to like 21, right? We we got to it took us uh to 2020 to get to 10 million. So 2020 was 10 million, I misspoke. Took us it took us so from 2014 to 2020, which is six years, seven, yeah, it was our seventh year. It was right, seven years in, we were at 10 million, and then three more years, right? We got to um we got to year 10 at 19 million. So we grew 10 million in the last three years. That was the 800 grand I I I I purchased more salespeople in 2020. Um, so now we have three sales, we have three sales executives, two SAs, and um we also had the essays, we had three SAs at one point in time. We promote everybody from SA to S E. We don't hire SEs. Everybody who's ever been, so here's the crazy stat 1.5 million in contract revenue this year. Everybody who's ever sold a contract at Citywide of Illinois is still employed as Citywide of Illinois. Me, Troy, Jackie, Elijah, and Katie, all of us are still here. We've sold every single piece of business that is inside of our PL. So I don't lose people, I've not turned over any salespeople in the last five years because I have took my time with Troy. The SAs have to set appointments, and hey, um, one thing you need to know, you know, the numbers that you get from, and it's not, and again, I'm not slamming citywide franchise. I'm saying the numbers that they give you, you have to vet out to make sure they fit into what you want to sell. So let me give you an example. We have 3.2 million population in my territory, 3.2 million, it's a lot, right? We had 16,000 buildings, half of those we don't sell to, so it's really 8,000 buildings. And the way I figured that out is I spent probably uh six months going through our database and vetting out, which is not so I categorize them. We're never gonna sell to a bank because that's not a five-day-a-week client. I can't get a contractor to do two hours uh a night in there. No contractor is gonna work for you unless they can get two hours five days a week. So don't even sell it, right? And they're the biggest headaches. Like three-day-a-week clients are a nightmare. You probably have to do them at the beginning, and they're a great, great way to learn, but they're really difficult. So, you the faster you can get to call it a$2,000 account and above, the better your life will be and all your people, right? So, um, I'm sorry, I lost my train of thought. We were talking, what was I talking about?

SPEAKER_00 42:54

I I just want to follow up. Now, do you wish you would have invested that those$800,000 sooner and you would have grown quicker? No, I couldn't.

SPEAKER_05 43:02

I I didn't have them like I'm not taking out at that point. I'm like, I already dumped$650 out of my cash into this. As fast as the this comp as the business grows, I was just taking profits and pushing it back in. So I compromised what I was taking home, right? I didn't, I didn't, I didn't bring it back, right? I didn't pay taxes on it and then reinvest it. It was sitting there and we we I said, well, we have this amount of of capital that we will produce this year. Here's our schedule. So I'm very disciplined about hiring. I can do a budget. My budgets are really good, and so I put in my budget by person all the way through all the expenses that will be in there when we're going to hire them on the books, and then I go work 90 days to 90 to 120 days backwards to say, here's When I need to start looking for that person, assuming that they'll start on this 90-day period and get them going, especially the FSMs, because it takes a long time to train them. You don't want to throw them into the fire. My FSMs don't get accounts for 90 days after they store. For they can be they'll be working for us for 90 days. They won't get a client for 90 days. Other cities throw them right in day day two. Like I don't do that. Oh, it was the salespeople. So think about your salespeople. Those essays are valuable because they can vet out the buildings you shouldn't be calling on. And they can bring in instead of you buying lists, they could bring you what's happening and like they drive around the market and they can tell you what's being opened, what is um new in the market, and they can add that into the database for more phone calls to set appointments. Because you're going to need to do a hundred and twenty activities, 100 to 120 is what I found to be kind of that sweet spot every for every um survey you get, and every survey you get, um, so so out of every four, you'll close one 25% hit rate. Right? So there's a lot of work. So we need 30 surveys a month to get to our number because we work the numbers backwards. You got to know what your close rate is, and you got to know what your average account base is. Our average is$4,000. We sell, other citywides are like$1,800. Um, one of the other things, and Luis, did I answer your question? I'm sorry. Yes, you salespeople.

SPEAKER_00 45:34

Okay, yes, you did. Thank you.

SPEAKER_05 45:35

One of the other things I wanted to tell you that I would have done differently if I would have like so. I was hoping somebody would ask this, but uh so I'll answer it because I got I don't have a lot of time. If I was to do this all over again, my market was so big, like it was it's an enormous territory. I just said, you know, set me an appointment anywhere. I'll go bad idea, Jimmy. Uh, we were everywhere, and my people in Chicago, especially in Chicago, good lord. I mean, in New York, New Jersey, you're gonna have the same issue, right? You got you can't afford to have your people sitting in the car, right? So, what I would have done differently, guys, is pick a zip code do you want to own? Like you look at that. Is it Target Rich with buildings? So look at the list that Adria hands you. Go in there and do your freaking homework. Don't just assume it's gonna be a win. Look into the zip code before you send your people in. Do the math, look at it, go on Google Earth, look at the buildings. You know, are they still open? Are they closed? What's the deal? Then go after that market. Like you have like you, you have not that's the only thing in your entire world. That one zip code is your only territory. The reason I say that is because when you do that, you become really efficient. And when you hire your first FSM and night manager, they have a limited territory that they're driving to, saves you on mileage, it's it allows you to focus, it keeps your ICs efficient, they're not all over hell. They don't hear the excuse of, oh, I couldn't make it to the building. No, they're right there. So if I would have done this better, I would have said, I'm gonna own this business one zip code at a time, sometimes two. Like, I get it, but uh that would be the biggest piece of advice I could give you outside of you know, making sure you have funds to start this thing and that you're focused on your constraints. Go ahead. Who else is up?

SPEAKER_03 47:28

Mark, I know you had something you want to jump me. Go ahead.

SPEAKER_02 47:31

Jay, J.

SPEAKER_03 47:32

I think you were asking the same thing. Yeah, go ahead, Jay. We're probably talking about the same thing. The other thing, um, just back like kind of to the IC thing, what do you look for? What is your target sales executive? Um, I don't hire sales executives. Uh the the um I know you you you promote from within, right? But so if you if you had to start over again and you needed to hire a a good salesperson, what are the the qualities that you look for? Have you not hired them? You just you you just started with you and you did it.

SPEAKER_05 48:05

Okay, I'll tell you what not to do. Um, because we did hire a couple and they were disasters. How's that? Do not hire a retread. I don't need another 58-year-old Jim Hughes to come in and do sales. Um, and and the reason that is not that I'm a bad guy or that I don't know how to sell, is that I need to get past all your bad behaviors that you have brought with you for the last 25-30 years of sales that you think you're a real good salesperson. Citywide has a it's a really easy process. I'm telling you, it's the easiest sales process because Jeff is I'll say Jeff Photo is really good at sales, really good. Like he doesn't even know how good he is, he's just got this gift, and he built this thing to make it super easy for everybody else to come behind. All you need to know, brother, know your metrics. How many appointments how many contacts? Um I'm sorry, how many emails, phone calls do I need to make? So it we call it in citywide, we call it the multi-touch experience, right? Door knocks, phone calls, emails, emails, sometimes texts. What is that number I need to do? Do that number, meet your sales, and you can bring on a an I'd say a somewhat experienced salesperson. Look at the PI. Do you have PIs? Do you know? Have you ever heard of the predictive index? Yeah, okay. I I grew okay, cool. So when I was in banking, I was asked to start up a small business network in Chicago, Wisconsin, Indiana. My boss came to me and said, You got to hire 40 business bankers. I hired 40 business bankers and three regionals in to fill this role. Half of them quit, or I fired them. And I said, I can't keep doing this, I'm putting too much time in the training. I brought in predictive index 2005. I had zero turnover for two for two years afterwards, two, not three, two, two years afterwards, zero turnover. Why? Because I took my best, my best um um business bankers and I put them on this test and I said, Don't hire outside of the ranges that these six are. Well, Citywide's done that for you. They've created their own predictive index ranges, don't hire outside the ranges. So that's my biggest thing is one, are they a values fit? You know who you are. You know, if Mark, if you and Mark are going to business, you guys just need to sit down and go, Who are we? What do we want out of our team? How do we want our values? Hire for values first, ask them questions around their values, then you're gonna have to you. You can you can take um, I would say a three to four year experienced salesperson and show them what we do and follow the training that Citywide has out there, the playbook for sales, and it's just a numbers game, dude. It's like don't overthink this. I'm not that good at sales, and I was able to be successful. And you're going to have a 25% close rate no matter what. Follow the program. If you guys put the coin down for this thing, take advantage of the resources and don't be like some of these other franchisees that fail. A lot of these franchisees fail. These new ones, they fail because they don't follow the model. No other reason is they think they're smarter. Oh, they come in, they got you know, they went to Wharton or they're you know, they went to Booth, they're super smart. Like that doesn't help you in this business. And being in corporate and running 500 employees doesn't help you either. What helps you is being able to roll your sleeves up and get shit done. And if you're not able to commit to that for at least three years, don't do this. But I get a feeling like you I just listening to you talk, Jay, you'll be able to smoke out somebody who's gonna be able to be a good salesperson. Just follow the PI and don't hire outside the PI.

SPEAKER_03 51:58

Got it. Thank you very much.

SPEAKER_04 52:00

Yes, sir. Hey, Jim, I know you're tight on time. Uh so big territory, zip code by zip code. How many zip codes, you know, many years later do you have, right? Given the size? So 3.2, that's a big market. How do you think about it now? You cover everybody, or you still like certain areas you want to have that concentration, that zip code by zip code market share? Okay, that's a great question.

SPEAKER_05 52:22

So um we're we've been very deliberate about covering the entire market since we started. And so um once I got enough personnel to say, like Troy and I divided up the city into two, and then we added Jackie, then we added Elijah. Now we've quadrant, we have a quadrant of what the sales executive own, right? They own their quadrants, and we do territorial reviews with them uh twice a year, and they have to tell us how they're gonna own their market, what a strategic plan they're gonna have to win in that market. Most of the time it involves our operations team. Why? Because we have 425 buildings, so like it's easier, Mark, for me to talk to you about this today because we have a we have cont we have deep presence. Yeah, yeah, you're big. So it's easier now. So it's it's I forget, like I know it's like uh I still want to remember how the baby was born, but sometimes I don't. You don't want you now. I get it, I get it, I get it. That's helpful, thank you. Yeah, all right, guys.

SPEAKER_07 53:28

I'm gonna let if sorry, go ahead.

SPEAKER_05 53:29

If you guys have any, let me let me just close with this. If if individually your question wasn't answered, because I I apologize, I have to go. If your question question wasn't answered, or you want to do a deeper dive on a particular topic, I'm happy to take a phone call from you. Um my my phone number, I'll give it to you right now, is 630-470-0555. That's my cell phone. I might not be able to get back to you right away, but if you're pretty clear on what you're looking for, I can in advance, I could I could give you um, you know, I could think about your your situation and we can have a decent conversation, uh, even a Teams call. Um, obviously after I check with Adria. But um if you want to connect with me at a later time, I'm I'm happy to take your calls.

SPEAKER_08 54:17

Jim, I'm so grateful for your time. Thank you um for giving everybody the real deal. We we know we can count on you. Um thanks everyone else that showed up to um learn from Jim. Like I said, we're grateful. Um he's giving you guys some uh free reign to reach out to him to ask any more questions. And if you need me to, I can always introduce you via email. Uh have a great rest of your Wednesday, all. Take care, Jim.

SPEAKER_06 54:45

Be good. Thanks, Jim.