SPEAKER_03 0:27

If you agree to the recording, you may have to turn your cameras back on.

SPEAKER_09 0:36

I was just wondering. I don't think I wouldn't click on that bullshit.

SPEAKER_05 0:47

Hey, good afternoon, Paul. How are you?

SPEAKER_09 0:50

I don't know why.

SPEAKER_04 0:51

I'm having a chief like day today, which means full of victories. I'm gonna hand you another one next Monday night. I wasn't gonna say that. Um we all know we're going there. Well, is uh uh Daniels isn't playing, is he? I don't know. I don't know for sure it doesn't look like it now.

SPEAKER_03 1:16

Okay. Hello everyone. Um Damien, Mark. I thought I saw Travis earlier, maybe. Um you might have to turn your cameras back on because Teams requires you to kind of come on and off if you agree to the recording. So everybody knows the drill. Uh this is the second or third, at least, call for everyone that is attending. And Matt, this is definitely not your first rodeo. So you know how this show goes. So we're gonna let you kind of talk through your journey into citywide, who you were before you knew about citywide, how you came to be a citywide franchisee. Talk to us a little bit about your operations currently. We would love to hear about your latest expansion, and then we'll just open it up for questions. So I'll let you take it away, Matt.

SPEAKER_05 2:08

Okay, cool. All right. So if I get too fast or I breeze over something, Adrian, you know me, so back me up. Um so okay, so a little bit about who I am and where I came from. Uh, just real quick, I started my career uh with FedEx. I was there for 14 years. That's that got me some really good management experience, but it was relevant to Citywide, even though I didn't mean for it to kind of go down this road. But I got a little bit of facilities experience when I was there. After I left FedEx, I went to a company called Iron Mountain. That was information management. I somehow ended up getting a lot of facility experience there, um, which was really helpful to citywide, but not exactly necessary. Um from there I went on as a business consultant. Um and I helped a uh a mom and pop produce company uh streamline their business and and get a lot more profitable uh by bettering their service profile and increasing sales in the DC market. Um and then from there I joined a uh not necessarily a startup because you guys out west probably know you all know who Gordon Food Service is, I'm guessing. Um, but they were a startup on the East Coast when I joined them in Aberdeen, Maryland. Uh and I worked there for a few years to try to help them get their transportation operations off the ground. Uh after that uh experience, I kind of decided, you know, um I'm doing this consulting gig. I I really enjoyed it, but I wanted something that was gonna last a little bit longer and really honestly something of my own, um, which is how I got connected with Citywide. Um, and I'll just tell you so I've been around since February of 2020. Um maybe, maybe not the the best time to have opened, but then again, maybe it was because to be honest with you, it just proved out the business model, in my opinion, that it is a great business model. One of the reasons that I wanted to go with Citywide is um I was looking for a business that was going to be as recession proof as something can be. And no matter what's going on in the world, places are gonna need to be cleaned, places are gonna need to be maintained, and citywide checks both of those boxes. Um, before I go any further, I do want to back up and say one thing. Uh I'm um these are my words. This is to say that just realized it sounded like an advertisement. So these are my words. This is truly how I feel. Um, I think it's been a tremendous opportunity. Um, very thankful to be in the network. I I think another thing that was very, very appealing to me um coming into citywide was um I really wanted that corporate feel. Um and that goes back to pretty much, no, really honestly, my Iron Mountain days. Um I was a general manager there uh for the Southwest US, and um I really enjoyed the camaraderie of people all across the country um and just thought it was great and it's something that I wanted to replicate. And citywide has has has been an avenue that uh has allowed me to do exactly that. I have friends all over the country now, um, and we bounce ideas off each other, and you know what's working in DC may work in Florida, may work in LA, but we're talking about things and we're sharing ideas and we're all better for it. So I I can tell you that my experience has been extremely positive. Um, given that fact that it's been so positive. Um I bought with partners the neighboring territory. Um, so I I own DC West uh by myself, and then I have partners in DC East. Um and we just officially opened our doors uh in September is when we took on employees, and then October is when we started uh booking revenue. So um it's still pretty fresh, 22 days in. Um a lot of new people running around right now, but it's uh it's a great time. It's a great time. So did I cover all the bases, Adria? Cool. Thank you. So, really, I'm I'm on the call to answer your questions. So, and and I am an open book, so feel free to ask me anything you like. There's nothing off limits. Um I'm happy to answer anything.

SPEAKER_08 6:20

Or we can make it a little bit easier.

SPEAKER_05 6:22

Um, how about we go around the call and uh uh Damien, you're the first one I see. So could you introduce yourself and tell us a little bit about yourself and what's gotten you here and maybe hit me with a question or two?

SPEAKER_01 6:34

Yeah, wonderful. Thanks, Matthew, for uh putting that story out there. It's it's uh well put together. Uh so my name is Damien. I'm based out of uh Southern California, and what I currently do right now is I have a small uh operation that I run on my own. It's a distribution business that's in the medical field, um, which was once, you know, many years ago very um lucrative. But as the times have changed, um just the market in general itself has drastically changed. You know, so that's kind of what's drawn me towards um taking my past skills and experience and applying it towards having you know business of my own, but where I don't have to do a lot of the heavy lifting in terms of like starting everything on my own. Um, you know, and Citywide has been very attractive, uh, especially because I am somewhat familiar with the with the line of business. And you know, I've been exploring it already for some time now. Uh, I think Adria can attest to that. Um and some of the questions that I have, at least today, um, kind of surround around um the the resources that you dedicate at at night um as I've come to understand, you know, the janitorial space, uh, it it it doesn't stop. It's not a nine to five, right? And so you have a lot of these these buildings and accounts that require attention by the ICs at night. And one of my questions to you that that I was curious about was how much of the resources in terms of like let's call it customer service or attention to detail uh come into play with your standard um clients that you guys obtain?

SPEAKER_05 8:14

Well, so that's that's multi-pronged in my mind. So if I get if I'm off track, I want you to steer me back on course. But for me to answer that question, what first comes to mind is you know, if you're talking about a customer experience point, that there's so many of them from the time that they step out of the building to the time your cleaning crew walks in, right? So, you know, you you have to have a cleaning crew that is well aware of the scope of work. So, you know, first and foremost, when when you when you start an account, you have to make sure that you and the customer agree on the scope of work. This, in all honesty, it might have been something that I could have done a much better job on in the beginning because I, as a rookie, I assumed an office building is an office building and they all wanted the same type of clean, but that's not the case. Not the case at all. So you want to make sure you're going in there with the right scope of work. You have the right scope of work, and then you have to, you know, vet your IC team, right? So as you're new and you're getting up to speed, it's gonna be imperative that you spend time with your ICs and their crews, not to manage them because that's not our role. But it it's to inspect what you expect and remember that you're always sitting on the same side of the table as the customer. Okay, you're not you're not there to sit on the same table as your same side of the table as your ICs, right? Um that's where a night manager would come in. Um at as you as you grow your business, you're gonna want to move to a night manager. Um, one of the things I did in my first five years was uh, you know, I started with two sales executives, and then six months in, if you gotta remember two, mine was a little bit unique because we were in the middle of COVID, but um I I hired a night manager about six months in. And that's because we grew we grew other services um at that particular time because janitorial service weren't necess wasn't necessarily an option. But the customers that we had on the janitorial service side needed more attention, right? Um, more attention than I could give. I couldn't go there every night. I didn't want to go there every other night, so it just became a matter of survival and keeping the account. So if you have a good night manager, they're going in there, they're looking at it through the customer's lens, they're inspecting, they're they're comparing the work of the ICs to the scope of work. If you have a really good night manager, they're also looking at the team's processes. Um, and they they should be able to provide a little education. Maybe I could make the team a little bit better by giving them some suggestions, not directives. Um, and if that helps them move faster, the cleaners are going to enjoy that because they're making more money per hour. The IC is gonna enjoy that because he's making more money because he's paying the cleaners less, right? The cleaners can move on to the next account, therefore they can put more on that same team. Um, so forth. The next morning, right? Well, I'm sorry I skipped one crucial part. The IC should be finaling the building if a night manager is not there, and a night manager is not gonna be at every account every night. That's an unrealistic expectation. They have to go through and do a sampling each night, okay? So the IC has to final the building, or someone on the crew has to final that building every single night. And what I mean by final, just in case, you know, um, I'm not being clear there, we've touched everything on that scope of work. We've met all obligations, and that customer doesn't have anything to complain about. Okay. Um now we go into the next morning. Uh let's assume the next day that there's an F there's an FSM visit because your FSM should have a route calendar set up, right? So your FSM is going to see your large accounts once a week, your your medium accounts two times a week. I'm sorry, once every two weeks, and your smaller accounts once a month, and your very small accounts are are never for the FSM. Okay, so let's assume he's your FSM is coming in on a on a medium to large account the following day. He before he goes and sees that contact, he's going to walk around that building. He's gonna make the inspection himself. He's gonna try to look at it through the customer's lens. Are we are we doing everything we should be doing? When was the last time we've done corner work? When were the last time were the blinds dusted? You know, things like that. He's looking for customer complaints before he's told about them. What does the back of the wall look like behind the trash can? You know, those kind of things. You you know, those things have to be taught in the beginning, but they become second nature as time goes on. Then he goes to the customer and he says, Okay, Mr. Customer, great to see you. You know, here's I've I've walked the building. Here's what I have found, and here's what I'm gonna address with my crew. Or I didn't find anything that I need to address with my crew. Is there anything that you've seen that you think I need to address with the crew? Okay. And it and then that really sums it up pretty well from a very high level. I I would tell you that I was very nuts and bolts about it. One thing that I don't think we talk a lot talk about enough, or or or we could talk about more is well, frankly, we could talk about it more. Build those relationships, build those relationships, build those relationships. If those customers like you, they're gonna keep buying from you, they're gonna keep using you. If for some reason they don't like you or you're they feel like, hey, I'm just a just a number to this guy. He's coming in, he's walking my building, he's reporting back to me and then leaving. There's there's no relationship there, you're gonna get beat on price the next time Tom with them, you know, Tom with the truck comes in and says, I want to clean your building, right? So you've got to develop those relationships. The other thing, you know, the other piece is is when you have that relationship, you can say, you can, you know, there's an understanding of, hey, my people are my people are human beings. We're gonna miss something from time to time. Have I ever not fixed something in the past? No, exactly. I'm gonna fix this this time too, right? So you have that relationship that that that's a strong word, you know, a strong uh I've used the word relationship about 50 times in the last two minutes. So um it's key. No, I it really is. It's key. You you're gonna retain accounts. I'll tell you, whenever I lose an account, my first question is, is what was our relationship with that particular customer? And and nine times out of 10, the answer I get is oh, it wasn't that strong. Right? So it's it's kind of incumbent upon us when we lose business that if we didn't have the relationship, well, then it's it's completely our fault. Did that answer your question?

SPEAKER_01 14:44

Um, yeah, yeah. Definitely give me some insight that I was looking towards. Um, effectively what I was looking for is just to get a better understanding of how much resource and and time devotion there is to the night, uh, to the night piece, right? Which it's it, in my opinion, it's it's critical. It's it's an essential part. A lot of resources would be going into that night shift uh management space. Um, and you said that you you actually invested in a night manager, you said six months into your your um operations.

SPEAKER_05 15:12

Yeah, thanks for circling me back to that because I want to talk about that for a second. So, what I did is I I yes, I did invest into a night manager, but what I did is I did kind of a hybrid role. Um so I started him, if I remember correctly, I started him at noon every day. Okay, because most of your cleaning is taking place between 5 and 9 p.m. So if I I started him at noon and expected him to work until nine. And so in that time period, he would go around and he would inspect buildings while the customers were there, make contact, build relationships, right? And then once the customers went home, he was kind of circling back and he was going and he was visiting crews and visiting visiting ICs that he knew were dropping in on their crews, right? So there he was, you know, at those particular hours, um, pushing the customer's narrative, right? I'd I talked to the customer today. This is what they want to see different, or everything's great. Thanks for doing what you do. Here's some pizza, here's some donuts, you know, that that kind of thing. But the reason why I made them hybrid was not just so that he could go visit customers, it's so that they could penetrate the accounts. And this this is extremely important. If you're not going to start with an FSM, and and I wouldn't be an advocate of doing so, by the way, um, I would start with a hybridized night manager and try to build them into your first FSM because you want them penetrating accounts. You want them asking questions of who which vendors are your most painful, you know, painful to deal with? Is that something could I could I bid on whatever they're doing for you, you know, to strengthen our relationship, to to get in there and maybe I can take one, you know, maybe you don't have to call one vendor or 20 vendors for you know 20 different services. You could call me for every single service that you're using, but I know I'm not gonna get that right away. Let me earn your trust. Which vendor is your most painful? And can I bid those services? Chances are the answer is gonna be yes, it's this vendor. Yes, you can bid, and nine times out of ten, you're gonna get it.

SPEAKER_01 17:14

So and one quick question to piggyback on what you're saying is with with that model. Um uh I haven't come across this, but um uh do you guys have like give an incentive uh struggle payment structure to your FSMs and your night managers?

SPEAKER_05 17:31

I you know, again, I did it a little bit differently than everybody else with the hybrid night manager. So I did pay my night manager 5% commission on all OS or um non-genitorial service sales. Um so that there was a 5% commission there.

SPEAKER_01 17:46

Yeah, because I I mean to me, I think that's that's critical. You know, I think uh in the industry that I've been in, it's it's just it's just critical part of the doing business. You know, you can't really incentivize someone unless they see the carrot in front of them, and and that's usually a good enough carrot, right? Um okay, cool. I'm I do have a couple other questions, but I don't want to steal everybody else's time. So I I'll just save it until other people have chimed in. I don't want to be too greedy with the time.

SPEAKER_05 18:10

Okay, all right.

SPEAKER_01 18:11

Thanks, Matthew.

SPEAKER_05 18:12

Mark, good afternoon. Oh, you're welcome. Um, Mark, you want to tell us uh tell us a little bit about yourself and maybe hit me with a question or two? Sure.

SPEAKER_00 18:20

Uh I'm Mark. I'm calling in today from sunny warm Edmonton, Alberta. So in the Canadian side of the franchise, uh I'm a prospective franchisee. I've been working with Adria for a couple of weeks now and learning more about the opportunity. Uh, we first stumbled across it. My wife and I went to a uh franchise trade show in Calgary uh maybe a month ago and were introduced to Citywide there. Uh, we've been pretty impressed with everything. We we've been looking for an opportunity to get into our own business for some time. Um, we didn't really think we liked the idea of a franchise. I think probably because most of our exposure was probably to fast food and that kind of thing. And this we found really intriguing. So we've been really enjoying uh learning more about it. Um, I don't have a lot of questions. One thing I am wondering about, though, is with your ICs, um, do you like I assume you have a number of different ICs that provide different services for you, JS in particular? Um, do they all come to you with their own different rates? Or do you kind of say uh this is what we pay and you know, so that all things are equal? Does citywide kind of give support with that and say this is what the expectation is as a franchise? We really want this, like the rates to be kind of in this area. Uh what does that look like? And I mean, really, because I'm sure you go through JSs from time to time and ICs in general, and you don't want to have fluctuation in your uh what the rates are to your clients, your existing clients, right?

SPEAKER_05 19:47

Yeah, yeah, absolutely. So um you set your rates. Uh first and foremost, you set your rates. Um now when when the ICs come to you, they they're they're playing their cards close to the vest. This is a great question, and I want to make sure I answer it and think it through properly. So they're they're playing their cards close to the vest because there are some other companies out there that claim to be like us, but they're not like us. And you know, I could I could I could go down a list of all the things that we do differently, but I think the one that really that would really make my point is we don't we don't take their money, we don't sell them accounts. Okay, we're not we don't sell them account, an account, and then turn around and take it back away from them. And then they're still on the hook for paying that. And the reason why I'm putting that out there right now is that I can't tell you how many ICs I've spoken to that are super gun shy with me because they think I'm gonna be just like that last company that took you know six thousand dollars for a two thousand dollar account and then they lost it after three months and still had to pay the whole thing off. Right? And and by the way, they lost it because they weren't given enough time to actually clean it properly, so they were losing money on it while they were in there. That that's not how we operate. So we knowing that that's kind of the experience that I run into so many times, what I'll do is I'll sit down with the ICs, or my FSM will sit down with the ICs and we'll get a feel for what it is they're looking for. And we can and we decide right then and there can we do business together. Um, just to kind of keep the conversation flowing. I typically tell an IC you should expect a gross margin of about 25% with us. So if you're willing to share what you're paying your people, I could tell you what your margin is going to be on just about any account. And I've been able to get the independent contractor's trusts pretty quick. So we've had some pretty open conversations to that. So um, do I run into people that want more money or or you know, more money than I'm willing to pay? Absolutely. Absolutely. That doesn't make them good or bad, it just makes them partners that you know are never gonna be. Um I I you know there's been a few cases where people have said, you know, hey, I really need $30 an hour. And I say, well, you know, we're we're we're at 28, and that's what it's gonna be. Um and then it's a slow start to the relationship, but once it gets up and going and we and we gain their trust, it really takes off.

SPEAKER_03 22:19

So um so I'm gonna pop in too. Um Paul might be able to share a little bit about this information. So we actually just had kind of a um tally from a loaded rate perspective across North America, obviously different in every single market because the competition is gonna be a little bit different. Um I can share with you, Mark, that I do think that from a Canada perspective, it feels like it's higher uh on the higher side of you know most of the locations um from Canada. But then of course that gets translated into, you know, a higher um bid for the overall job. But maybe, Paul, if you want to pop in and add any of your thoughts around that.

SPEAKER_04 23:02

Yeah, no, uh we uh we have some starting points for you to kind of guide you in the direction we believe your loaded rate should be. But like Matt's gonna tell you, the market's gonna determine that. Not only what your customers are gonna pay, but what your ICs are gonna bear. So um it's it's good to get that starting point, but once you get it, um, you're always validating to make sure that it's accurate.

SPEAKER_08 23:30

That's great. Thank you, everybody. You're welcome.

SPEAKER_05 23:35

Uh Chris, you want to tell us a little bit about yourself and uh maybe have a maybe have a question or two for me?

SPEAKER_06 23:45

Well, uh yeah, hi, I'm Chris Gidry. Um I'm from I'm sorry, my camera is not working right now. Uh I'm working off of my phone right now, so having some computer issues. So um I would be curious to know what your loaded rate is since that was brought up.

SPEAKER_05 24:03

Uh the rule of thumb is your loaded rate should typically, Paul, correct me if I'm wrong, but the the typically it should be twice your minimum wage. Is that right, Paul?

SPEAKER_04 24:12

Yeah, that's that is a a great rule of of thumb, but again, you're always you're always validating that.

SPEAKER_05 24:19

Yeah, and to answer your question, Chris, mine is a little lower than that. Um it's it's what the market will bear, right? So, you know, in in DC, we're we're above eighteen dollars an hour now for minimum wage. So five years ago, we could have paid cleaners $13 an hour and everybody would have been happy. Now we're we're more along the lines of 20 to 22, um, which which is you know driven driven costs up across the board. Um, but the market seems to be aware of that, and you know, we haven't seen a falloff from it. So um it's just about getting that number right. And you gotta and sometimes it's a little bit of a gut feel when you're out there doing proposals.

SPEAKER_06 25:00

Right. I was just curious because I've been on a few of these calls and just hearing what the alerted rates are across the country and across the across the territories, and it seems like it's creeping towards 30.

SPEAKER_05 25:14

Yeah, mine's 33.50. I can't remember off the top of my head, but I think it's 33.

SPEAKER_08 25:22

Thanks. Oh, you're welcome. All right, Damien, we're back to you.

SPEAKER_01 25:32

Okay, great. Yeah, and thank you for sharing that. Um you know, one of the things uh in the in the financial spectrum of this conversation, um, I was curious to find out. I know you started, I mean, dude, COVID was I to be honest with you, I don't know anybody that that came out, at least in the you know, my circle, um, that came out hurt from COVID. Um, it created a lot of opportunities. Obviously, it was you know a very dark moment for for the US. But um, you know, I can imagine that you you took off, just skyrocketed, right? And so I the question I had originally was I wanted to know kind of what your um uh your burn rate was in your first year when you started, um, you know, your your runway to become revenue uh uh positive. Uh I was curious to kind of get a sense of what that was like. You know, DC market is is what I presume to be somewhat similar to um, you know, Southern California, where it's it's it's expensive, right, on the labor side. Um but I I'm curious to kind of get an understanding of what that was like, you know, and I know it's kind of tied to the amount of business you get, and that was you know an anomaly uh couple of years. So but I am curious to find out what that was like for you.

SPEAKER_05 26:42

So it was good and bad, okay. Um first year we were we were a little profitable um because we pivoted to electrostatic disinfection, which was honestly at the time about the only thing that was selling, but it didn't matter. We could sell a lot of it. So, and that's and that's what we did. So we came out of the gate and we did really well. There's there's no question about that. Um, now that being said, it's a double-edged sword because uh probably, you know, I'm not too familiar with SoCal so much, but I you know I know LA and San Francisco pretty well. Um COVID stuck around in the DC area a lot longer than it did with a lot of the other with a lot of other areas in the country. So on one hand, that was good for me because the electrostatic disinfection revenue stuck around for a bit. But what ended up happening here was is there became some COVID fatigue. And that is that people didn't want to continue to spend the money doing these disinfections. So that started going away, but people were still not returning to work. So it it actually in the beginning, it was great, it was a boom, but as time went on, that that disinfection work started to go away. So we really pivoted to other services because people were talking about reopening, they just didn't know when that was going to happen. So then we were out there selling, hey, here's reopening plans, here's here's what you should do to your building. Is your building ready? Are your floors stripped? Are your floors waxed? You know, how you know, do you need uh initial clean to get you know get things back up to par? How's your HVAC system, power washing, window washing, all that stuff? So as that COVID business was dying, we were really running to try to get that OS business back up to par because again, we couldn't sell janitorial services at that point because there just wasn't any, there wasn't, I shouldn't say there wasn't any, but there wasn't nearly as much opportunity as there is today at that particular time. So when I say it was a double-edged sword, I saw my revenue go way up and then I saw the COVID-15 sitting in, sinking in. So that that revenue line started going down, but we were able to counteract it, which made us look flat for for about two years, two and a half years. So um, but to be quite honest with you, it's it even though it kept us flat for being a new business and inside its first three years, uh, I feel very lucky and very thankful that I was a part of the system and that that that was my experience rather than um going out of business because you know I decided to open up a pizza franchise uh a month before COVID started. That would have been a nightmare.

SPEAKER_01 29:26

No, that would. I mean, the the extra weight they would have put on because I'm sure you would have, you know, uh uh indulged in your home product. Um, but uh that makes sense. Uh I I I can see where you're coming with you know from that perspective. And that's true. There was a big element of of COVID fatigue. I I remember that um specifically. Um, you know, and and just to kind of give me a perspective then, give it now that you give me more context, what if you remember, what was your your burn rate? And by that I mean like how much uh were your operational uh monthly costs every month? You know, how long was that runway where you were kind of just shelling out until you were able to become revenue positive? Um, considering the circumstances, I know that may not apply across the board for everyone, but I'm I'm curious to get a sense of what that was like if you have that.

SPEAKER_05 30:14

Okay, yeah. Um it's it's gonna be extremely dependent on how you run your business. Okay. And and I say that because um I was cash flow positive. We were we were making money, you know, because of the COVID disinfection. So instead of putting it in my pocket, I reinvested it in my team and I decided that I'm gonna continue to run with two sales reps and I'm gonna continue to go out and I'm gonna hammer, you know, the city and the counties around this so that when there was reopening, that we would be in a position to be, hey, we were here the whole time, we're gonna be here for years to come. Let's get that relationship going. So I ran my business break even and I did it purposefully. So I didn't have a huge burn rate. Um now uh it's a different scenario nowadays, right? So I I I I would tell you that your burn rate really depends on how you decide to initially staff, right? Um and how good of a salesperson you are, because in the beginning, you're not gonna have anything to do but sell, right? So if you can get out there and you can supplement your sales team by getting sales yourself, you're gonna decrease that burn rate exponentially, right? Every time you sell, you're not paying commission. And what else would you be doing in a new business besides selling, right? So, you know, get yourself get yourself up to speed as quickly as possible by you being out there selling.

SPEAKER_01 31:45

And uh question, considering you just got um the opposite side of your territory, um, are you piggybacking your your sales executives for that territory too, or are you acquiring uh different assets for that um sales role?

SPEAKER_05 32:00

Different assets, so new new people to take over those territories.

SPEAKER_01 32:04

And what approach are you taking with them? Are you also two sales guys, or is it did you did you try something different now that you're two months in? I I understand it.

SPEAKER_08 32:12

That's a great question.

SPEAKER_05 32:14

Different it it's it's not incredibly different. So it's it's a general manager to run that side of the house, right? And two sales execs. And we've hired one of the two at this point. Um, and I think it's smart to stagger start the two. So if I had if I could do one thing differently, going back to how I did DC West, I had my two sales execs on day one. Okay, it probably would have been better for me to have hired one, got that person trained, and then hired the second one. So um that's what we're doing now in the new territory, and and I think it's gonna pay off a little bit better.

SPEAKER_08 32:52

Okay, that's helpful. Thank you for sharing that.

SPEAKER_01 32:55

Um yeah, so I I'll I'll pass it along to somebody else. Uh that way again, I don't take all the time. But thank you, Matthew, for sharing that. You're very welcome.

SPEAKER_05 33:07

Uh Jared, I saw that you just joined us. Um, would you uh would you mind telling us a little bit about yourself, how you got here, and then if you have any questions for me right out of the gate, I'd love to answer them for you.

SPEAKER_02 33:20

I'm trying. Thanks, buddy. Appreciate it. Nice to meet you. How are you?

SPEAKER_05 33:23

Nice, nice to meet you. Good, thank you.

SPEAKER_02 33:25

Good. I apologize. I'm a little late to the meeting. I'm right in the middle of some stuff at work, but I don't want to miss it. My favorite person in the world is uh Adria. So making sure that you know I I have I call her out on the phone call too. No, dude, um, I apologize for coming late. So you may have already given some of this context to people, but I'm always just kind of interested in how you got started in your journey. And uh that was the really good questions, uh, I think by Damien. Sorry, I've got my readers on. I still can't read how small that is. Um but uh yeah, just just uh really and it's getting up and going, it's just trying to figure out the model. Um, you know, I'm I I like comparing, I guess, some of the things that I'm hearing from you know one operator to another operator. I have heard in my mind, I guess it's like get the sales team up and going as quickly as possible and generate the reoccurring revenue as quickly as possible. And then you can kind of focus on your other revenues and you know, your other services, ancillary services, uh, once you kind of get up and going. Um, I don't know if you've already talked about numbers or revenue, if you could kind of talk a little bit about that. Sounds like you had a market in DC, so you have tons of experience, but then you also are starting this new market. I would, you know, where you just said about bringing up one uh sales rep, training him right or that person right, and then going on to the next person, I think makes a lot of sense. I was gonna hire two people if I were to do it. Um I'd I maybe just love to hear more about you know that that journey starting starting up and then also what you're paying your guys uh you know going forward. All right, there's no way I'm gonna remember every one of those questions, but I'm gonna try my best to bear with me. Yeah, I can I can streamline it. Like what's your revenue uh for the first year, which it sounds like you kind of talked a bit about that, but you know, hindsight and foresight, what you wish you knew, what you you know, what you um what you wish you knew now that you're on this journey, sort of thing, and where were your blind spots, liabilities, risks, you know, that sort of stuff. Sure. Uh in order to be just quickly or uh successful as quickly as possible.

SPEAKER_05 35:29

Okay. Okay. So um, you know, one one thing you said that I that I want to address because I think this is really important. Um I don't remember how you put it, but you said something along the lines of getting your contract revenue up as quickly as possible and then pivoting towards your ancillary services. I would tell you no, doing both at the same time. And and the reason why I say that is because um we go out and we do sales calls every single day. Every single day. Your sales executives are gonna be tripping over other service work, okay? So what you want them to do when you're new is pass those leads to you, okay? However, you're gonna set yourself up. If you're gonna be one of your two salespeople and then you're gonna have an FSM do the upside, then pass them to the FSM. If you're gonna play the FSM role in the beginning, then have them pass those other service opportunities to you. Because those come at a much faster rate than your than your contract revenue sales. And I'm not saying that you should put any less effort into your contract revenue. Your contract revenue is the golden goose. That's what you want, that's what you want to get after, that's all you want your sales executives chasing. Okay. But they're going to stumble over top of that OS. So when you say get your get your OS revenue up or your your JS revenue up as quickly as possible, 100% agree. But don't turn your back on the OS opportunities because that's your opportunity to build relationships with those customers, to show them that you can do what you say you're going to do, to show them that you're a trusted partner, and that's going to help you win that JS bid the next time it comes around for them too. So you've kind of got your hands in both sides of their business by the time it's all said and done, and you've already got a relationship pre-built. So, so whatever you do, don't pass on the OS opportunities. Never ever pass on those opportunities. And use that as a way to get your foot in the door so that you can build that relationship, even if you're not getting that JS, because you're only not getting the JS right now. It will come at some point.

SPEAKER_02 37:30

I heard somebody, uh somebody else and Adrian, you might remember who it was, but they talked about I have salesmen and they only focus on the JS. And then I have, I think my FSMs, they focus on the other, other uh, other income, both reoccurring in like project-based revenue. And so I'm maybe talk a little bit more about that. Is that how you would structure it in the beginning, or is that when you get to like a certain size, or do you even believe in that at all?

SPEAKER_05 37:57

It sounds like CVS.

SPEAKER_04 37:59

Is that what you think, Paul? Well, so there's two there's two trains of thought. Like um and Matt, maybe you can explain the CVS division, but I think what he's talking about is like there are some some individuals that just have their SDs try to focus on JS, thinking that yeah, thinking that the FSM will do all the OS, um, which like Matt was saying is probably a mistake. But Matt, you can explain the CVS division or how that how that plays out. Sure.

SPEAKER_05 38:32

So so to kind of clarify in case in case I wasn't really clear, your sales exec should 100% be you know concentrating on that contract revenue piece. The thing is, is you know, they should present all services, but they really should lean in on the janitorial service, right? You don't want them to try to sell the OL the O other services, OS. And the reason why you don't want them doing that is because once they sell it, now they have to manage it, then their pipeline is drying up, and then they get 5% commission on something that is a one-time hit for your business. It really didn't get anything done in the sales execs pipeline is dry. So you don't want the sales exec selling the OS, but you want them kind of mining for the opportunity that they can pass to the FSM. Now that that leads me to the CBS division. So the CBS division is think about it like um so FSMs, they go out and they visit existing JS customers, right? And they're they're building those relationships and they're they're I'm just gonna say managing the relationship between the customer and the crew for you know, however you want to phrase that, however you want to look at that. The CBS division is to keep it simple, an FSM with no JS customers. All they're doing is they've now become kind of a sales rep, but only for other services. And they're responsible for managing what they sell. So it's it's a it's a different revenue stream. Um, and they're not they're not they're not talking to the JS customers, right? So you're still gonna have SF FSMs managing your JS customers, and they're still gonna be responsible for penetrating those accounts and getting a certain amount of OS from those accounts. But your CBS guys are gonna go out and they're gonna find all their own work to otherwise non-existing customers. They're gonna bring new customers in the door who are only using you for other services. And their goal is to be a lot more stout than your than your FSMs because they're only bringing in other service work and they're not managing ICs, they're not doing IC recruiting, they're not taking customer phone calls except for the jobs that are currently in progress. So they're they're much more of a salesperson than a typical FSM would be. Is that pretty fair, Paul? Because I don't have an CBS division.

SPEAKER_02 40:57

Yeah, cool. And talk to me, just because I still have you, talk to me about like blind spots, hindsight, foresight, risk, liability, just you know, now that you're this far down the path, what would you do? Uh uh, what would you watch out for, you know, your sharks sort of thing in the water?

SPEAKER_05 41:12

Yeah, um fast talking ICs. I uh you know, they're they're they're good at everything, they've always got your back. Uh, these customers nowadays, they just don't understand. They stay away from those people. You know, um, what you want is somebody that's you want to make sure your ICs have the same heart as you, and that should be a servant attitude, the heart of a servant, right? We're here to serve our customers, we're here to take things off their plate, we're here to save them time. Okay, we sit on the same side of the table as them. So if an IC comes in and you know, they don't have that same mentality of whatever it takes to keep the customer happy, they're not your people, and they're only gonna hurt your business. So I I would tell you, um, I knew that from the beginning, but I can think of two specific examples right now where I ignored the red flags and got burnt by it.

unknown 42:08

Yeah.

SPEAKER_06 42:09

Bad y'all brought up the IC point because I was gonna ask a question about that. So you know, on a lot of these calls, I've heard that the ICs are typically the the mom and pops of the world, uh, those smaller businesses. Do you ever use ICs that are like national uh other franchises, for instance? Do you ever do that?

SPEAKER_05 42:34

No. Um I used to share an office or a building. Uh uh, I was in the same building as a competing franchise, and that was Stratus. And the owner came up to my suite one day and he said, we could work together. I could move some business your way, you can move some business my way. And I think we tried it on two accounts, and um, it didn't work out. And I would highly advise against trying to do something like that. Um, there's it's just our bread and butter is the mom and pops that are you know either a small family-owned business or a medium-sized family-owned business, but to work with like one of our um, you know, to work with a competitor like Stratus or Jam Pro Coverall, or you know, some of these lower cost providers, no, that absolutely not. ABM, Redcoats, some of the, you know, some of the bigger players, they don't need us. They're not gonna do anything for us. There's gonna be no break. There's there's no relationship there. So it's better for us to go out, find our own people, build those relationships with the ICs, help them grow, help them develop a success story, and then celebrate their successes with them. And and that's how you get loyalty, and that's how you get good customer service. You want to make sure that your that your ICs care about you as much as you care about them and your customers.

SPEAKER_06 43:58

Yeah, that makes sense. Uh Uh the reason why I was asking that question is because I had heard uh like on another when early on in my journey of looking at franchise businesses, I heard that uh them mentioning citywide. So it was kind of the opposite way. I heard them mentioning citywide. So I was like, wow, there's actually some other franchises that are going through citywide as like using citywide as their managers, so to speak. So that's why I definitely for the no, no, that's a great question.

SPEAKER_05 44:28

And and there's a few exceptions, like SurPro is one, right? Um, there's a glass company, fish fish, what uh uh fish windows window washing, yeah. Yeah, yeah. There's there's a couple of outliers out there that that don't necessarily go by that rule, but for the most part, you want to you want to get your own ICs.

SPEAKER_03 44:50

Yeah, I think there's um like Voda, I think from a national account, has talked to a couple from a carpet cleaning perspective. I mean, I think there's certainly franchise locations one-offs that the uh margins and the relationship make sense. So I mean, I think that, but from a janitorial perspective, I think is what you're saying, Matt, that that's typically not the case.

SPEAKER_05 45:11

Right. Yeah, correct. Yeah, and you'll find yourself working with some some of the bigger players that that are like a JL, right? They're they're working for the customer and then you're working for JL. That can work. Um but again, it's not it's not our bread and butter.

SPEAKER_08 45:35

Damien.

SPEAKER_01 45:36

Yeah, all right, great, thank you. Um, so uh kind of going back to the uh kind of financial world. Um what are you what are you paying your sales executive? What is their commission structure? And um I take it that the general rule of thumb is gross margin for the business for your business is about 30%. Is that correct? 35.

SPEAKER_05 45:58

I mean it's gonna be different for different franchises, but mine is roughly 35, yeah. Okay. And then for your sales ex what is the typical salary look like? Yeah, and I know you're in SoCal, so it's probably gonna be similar pay ranges. Um, well, what's your minimum wage out there? It just because I want to be able to give a perspective. Yeah, it depends, but it's roughly about 17 and a quarter. Okay, so you're not far off from us. So um I'm I'm starting my sales exec off at $60,000 a year right now. Um, that's their base salary, and then their incentive, and this is off the top of my head, so give me a little bit of leeway here. Um, up to $4,999, uh, they get 25% of that first month's invoice. From $5,000 to $7,500, they're getting 50% of that invoice. From $7,500 to $10,000, they're getting 60%. And anything above $10,000, they're getting 70% of that first month's invoice.

SPEAKER_01 47:00

And when you say that percentage, that's off of the net profit, right?

SPEAKER_05 47:03

No, it's off, it's it's off the price. It's it's literally off what we're charging the customer. So if your sales exec sells a customer ten thousand dollars a month in janitorial services, I would pay them seven thousand dollars for that sale, right? And then I would spread that sale out over six months. And and the reason why I do that, it's two-pronged. Okay. Selfishly, I'll tell you the first reason why is because it's that's how we protect cash flow, because um that's that's important. And then the second reason, and this is equally important, is because we want to make sure that if they have a bad month, that they don't just fall off a cliff, right? So they're gonna continue to they're gonna continue to sell, but everybody's gonna have a bad month sometime or another, right? So you don't you don't want their their income to go from you know this to this, especially if they have two bad months in a row. So it it helps keep their uh it helps keep their cash flow consistent as well by paying it out over six months.

SPEAKER_01 48:07

So uh just uh so I can understand better, right? Let's say that you have a contract that they land that's uh $100,000. Your business itself is making 35% margins on that that contract, right? So can you share with me how you determine the 50%, how it goes to the to the uh to the sales exec? And it's still profitable.

SPEAKER_05 48:29

Okay, so I'm gonna assume you mean $100,000 a month, right? Okay, so yeah, to make it easier, yeah. Okay, yeah, all right, let's yeah. So if you if you're at $100,000 a month, that's gonna be a 70% commission, right? So that first month of a hundred thousand dollar bill, you're gonna pay $70,000 of that to the IC. I'm sorry, to your sales exec, to your salesperson. Okay. Now you still have to cover your IC, right? So you're obviously you're still gonna pay your IC, but that's another reason why you're paying it out over six months, right? You don't want to have this outlay of I'm paying my IC, let's say 65%. So I'm paying my IC $65,000, and now I'm paying my sales exec $70,000. Okay. That's not all happening in one month. So you're paying $70,000 over six months. Um, can't do that in my head right now, and I don't have a calculator handy. Um, but you're you're gonna be covered, so you're not losing money, is is really what it comes down to. Okay, so you'll be fine once that commission is paid off. Now you're back to a gross margin of 35% when you know you were you were never losing, but it really opens up and you can really feel those new accounts once your commission is paid off.

SPEAKER_01 49:39

Oh, I see what you're saying. So you're giving him that chunk on the first month only. It's not like it's all the first month.

SPEAKER_05 49:44

That's correct. That's correct.

SPEAKER_01 49:48

All right, that makes sense to me now. Now it's coming to making sense. Okay, and then um, is there an incentive for the people that are managing the accounts or these your sales execs and your model? Are they also managing that account? Are they strictly only opening up new business?

SPEAKER_05 50:03

No, the sales execs are only opening up new business. The FSMs and the night managers are managing the account, and their incentive comes to it's two-pronged, right? So you should be doing yearly reviews and their scorecards for each of these positions. So uh you determine your bonus structure and what you want that to be for those people. Um, and then secondly, because they're in there, their um their opportunity to sell should also be seen as a positive, right? We're setting them up, we're paving the way for them to go in there and continue to build that relationship. They bought this customer's already bought from us once. That bottle's been opened, right? Yeah, they're gonna buy more from us, especially in the beginning because they're excited about the new relationship. So if you have a good FSM, he keeps them excited. And then upsell, you know, yeah, yeah, absolutely. Account penetration, upsell, and they're in and their incentive there is five percent for everything they sell. Understood. Thank you. That's super helpful.

SPEAKER_04 51:00

No, you're welcome. Hey, since that's pretty a pretty important thing, I might just piggyback a little bit on it. So a big account for us um is ten thousand dollars in monthly volume. Okay. So we measure it in monthly volume. We don't look at it like the annual price of the account. So when we talk about, hey, how much did you sell threats sell? It's monthly dollars. If you go in a building's $10,000, you sell that. What'll happen is that $10,000 building, when it starts, is going to pay them 70%. So that's $7,000. That seven thousand dollars is going to be split in six equal uh payments of $1,166 every month for six months until they get to their $7,000. In the meantime, if the customer is billed for $10,000, you're making 32% of that or 35%. So $3,500, of which you have to pay your SE $1,160 some dollars. Does that make sense? So you're yeah, it's so it'll it'll flow through. And I guess the reason I'm uh pretty adamant about it is I I do all the uh or I do the recommended SE pay plan. And so um it it it makes sense both from a SE standpoint and a owner standpoint. And I loved how Matt said um, you know, a SE might say, well, I'd like the money all up front. Well, they'll say that until that next month when they go throw up a goose egg. And if if they're getting it over six months, it's flowed out pretty evenly. Uh, as we know sales can go like this, right? And so they're getting paid a commission even, it helps even it out.

SPEAKER_01 52:53

Yeah, no, and and it's a great model to have, especially with for cash flow purposes, you know, and and especially with the the high cost labor market, uh 100%. I understand that. Now, quick question on piggybacking off of that. Um, the the IC, they're paid the 65% uh for that month up front. Is that correct? Or do they have a structure as well?

SPEAKER_05 53:16

It's it's not up front. So let's say you start a new account October 1st, you're paying the IC on November 10th.

SPEAKER_07 53:24

Okay.

unknown 53:25

Yeah.

SPEAKER_05 53:25

So one month after. Okay. Yeah. And and that that's important because it gives you a chance to build a customer. So you're gonna build a customer. All right, a new account, I don't build the customers until I've done a couple nights of good service and I followed up with the customer to make sure they're happy. Okay, but let's take typical customer, okay? Just maybe you've done business with them and you just switch the IC for this example, okay? This new IC goes into an existing account on October 1st. You've build the customer around September 22nd to September 25th. That ice that that gives the chance, that gives the invoice a chance to be paid before you actually get to IC payday. It's another cash flow manage management technique that is incredibly helpful to the business.

SPEAKER_01 54:06

So is this is the standard in this line of business, is it um like net 20 terms? Like you guys offer terms to the clients? Net 10. Net 10. Oh, that's that's sweet, man. That's that's that's gnarly. We're used to net 30 over here, sometimes net 45, just because of the industry. But uh, I'll tell you that the smaller that number is, the way better.

SPEAKER_05 54:26

All right, so I'm gonna be really honest here. So it's net 10, and if you hold your customers to it and get them used to it, you'll do very well. But if you just say net 10 and you expect them to pay you in net 10, it's gonna be more like net 30. Is that pretty accurate, Paul?

SPEAKER_04 54:39

100. You got to train your customers. Train your customers, or they're gonna pay when they want to pay.

SPEAKER_01 54:44

That's right. Yeah, you gotta hound them. Uh, that's part of the business too. I'm familiar with that part of it. So that's why it's net 30. But I mentioned net 45 because you always have those two weeks where it's like, oh, well, I was off. All right, I didn't get your email. So uh okay, super helpful. That that's really awesome, man. Thank you so much for the black and white answers. Uh, I appreciate that. No, you're welcome. Uh Jared, did you have to do that?

SPEAKER_02 55:04

I will say one thing. Oh, I was just gonna say as a follow-up to the net 10 thing, I will say the people who have net 10 and they, you know, put it on my radar because I pay a lot of AP. If people come up to me and say, you know, hey, our terms are net 10 and they follow up, they're always the first ones on my list to get paid. So that it does help. You might still get 30. I'm just letting you know, but you'll probably be the first one to get processed. But it might be, you know, 20 instead of 30, something like that. It's just it's good to keep that lease short when it comes to cash. Absolutely agree.

SPEAKER_05 55:37

Appreciate the perspective there, too. Thank you.

SPEAKER_02 55:39

Oh, no, I I like your management style, Matt. You're you're doing really good. I'll be quiet.

SPEAKER_06 55:45

Good. Hey Matt, I was gonna ask, is that net 10 a starting point only for the JS or is it for your OS also?

SPEAKER_05 55:52

Oh, yeah, great question. So it's a starting point for the JS and OS, I we tell everybody it's due when the job's done.

SPEAKER_06 55:59

Yeah. Okay. Yeah.

SPEAKER_05 56:01

Yeah. Now, does it happen like that? Not not necessarily, but it's it's it's what we tell them. It's what we uh it's it's what we go for. And and we do typically get paid faster on OS than JS.

SPEAKER_06 56:14

And you in your uh in your locations, uh, do you do a lot of OS that's recurring? Like lawn service or something like that. Uh that would be recurring, but it's not tutorial.

SPEAKER_05 56:30

I I wouldn't say we do a lot. Um I would say we do a lot of OS. Um OS for the last few months has been almost 50% of our total revenue. Um and and I would tell you that we have a lot of recurring customers, but they're using us for different services. Now, the landscaping question, you know, that the landscaping specifically is a great opportunity to sign to sign that on and get a contract, you know, with that OS. Right. Um I I frankly think in 26 that's something I'm gonna push a lot. I pushed it a little bit in 25, but if I'm being completely transparent, I was shorthanded on the op side all year long. So um we're we're going into 26 with some new blood, and I'm gonna teach them to go out there and get after that landscaping stuff. It's a great opportunity on the OS side.

SPEAKER_06 57:21

Especially in places like Houston where the grass growing. Yeah. Oh, and by the way, Andrea, you you when you said Voda, that was who I was thinking of. I got I got power dropped off of the call. Sorry about that.

SPEAKER_03 57:40

No worries. Yeah. Um, there's several franchise locations. I have conversations with vendors that are, you know, consistently asking me when I'm kind of at fan franchise industry events, if there's potential to work together. And sometimes there are relationships that make a lot of sense, especially in the OS category. Again, like Matt mentioned, there from a janitorial perspective, the other franchise systems operate in such a different way than us. Um, and there's just very rarely enough margins, or um, I think the citywide way alignment as well. So there, I think that there's a few things that create hiccups or challenges from that making a whole lot of sense. But from the other services perspective, I think that there's a lot of franchise um models that that work really well with our current location. So Mark, we're gonna let you kind of um take that last question. I think we've got a couple minutes left and we'll let you take us home.

SPEAKER_00 58:41

Thank you. Um so just getting back to how you pay uh your ICs or sorry, no, your your sales team, um, I think that's a great model because it, you know, it doesn't leave them in peaks and valleys of how they get paid. But do you find that poses a risk? So, like if you have someone that's been very successful and they're making maybe five or ten thousand dollars a month in um in their commissions, and you know, you're looking down the barrel and you you kind of owe them sixty or seventy thousand dollars. If they leave, do they take that with them? Do you pay it out the same way? Did they just walk in the door and you have to cut them a check? No, is it a one? No, yeah.

SPEAKER_05 59:21

No, I don't see it that way at all. So a couple things there. Um, there's a such thing as a bad sale, right? So let's say I go sell a $10,000 account as a sales exec, and I'm expecting my $7,000, but then my ops team gets in there and realizes it should be a $20,000 account, a $20,000 account, and I underbid it just to win it. We lose the account. The sales rep is it depends on how you run your business, but you know, theoretically, they have to pay that back. Um, I have never clawed back a commission, but I've I've never had somebody sell that awfully bad before. But if I were to lose an account during a commission period, that commission ceases immediately. So there's no risk there. The last piece that to your question was is if they leave, do you still owe that commission? The answer is no. You know, you you have to make sure that it's clearly written in your handbook. Um, I don't have it in my offer letter, um, but it needs to be it needs to be clearly written and communicated that when they leave, they're not entitled to leave with you know future commissions. That that should be a retention piece, right? If somebody has $70,000 on the books, they're probably not going to leave. And if they're right. The golden handcuffs. That's right.

SPEAKER_00 1:00:41

Yeah, yeah. So they kind of get the golden handcuffs a little bit. But do you find that that means maybe if someone wants to leave, like in their owed money, and they just kind of phone it in for a few months till they they feel they've gotten enough of their money? Like, how do you deal with that?

SPEAKER_05 1:00:54

That that's really incumbent upon us. So if you know you should be having at least a minimum of monthly one-on-ones, I do mine a little bit more often, but you know, go over the scorecards, take a look at the activities as compared to last month, last quarter, last year. And if you see a significant drop-off, call that out. And if it doesn't improve, get that person on a performance improvement plan. And if it doesn't improve, don't run the whole plan out. Right? We it's your money, you really got to run the business as as if you know you're financing it from your checking account because we are right.

SPEAKER_04 1:01:26

And Mark, we have we have metrics available that you can see daily what your person is doing. So, like if they call it in, um, you know, you you'll be able to see that very easily. Yeah, very, very easily.

SPEAKER_00 1:01:40

It's it's yeah, I assume there must be yeah, I assume there must have been something to help you kind of monitor what's going on with your sales guys and gals. Uh, because otherwise, you know, you would have, yeah, you need a line of sight on that for sure.

SPEAKER_03 1:01:56

Yeah. Well, thank you. Thank you so much, Matt, for spending your time with us this afternoon. It was incredible, as always. Lots of amazing value bombs that I think that you gave us all. And so, all the rest on the call, we as always appreciate you taking the time out to learn a little bit more. And if you want a one-on-one introduction to Matt, you just reach out to me and and I will make that introduction via email. And we'll just kind of hope to see all of you next week.

SPEAKER_05 1:02:26

Yeah, thanks, Adrian. Thanks for having me. Guys, nice to meet you. Good luck.

SPEAKER_03 1:02:29

Thanks, Matt. Thanks for watching.

SPEAKER_05 1:02:30

Thank you very much. Appreciate it. Nice job, Matt. Nice job. Thank you, Paul. Thank you. See you guys.