SPEAKER_05 0:22

Oh, nice to see all of y'all are here, you guys. Feel free to um pop on your cameras and your mic so that we can see you and and see who's here. And thanks for joining us today. Um, I've seen a couple of y'all before on these calls, and a couple of them only have some new faces. So um, welcome to our Z call today. We've got Tyler Olson joining us. Um, he is our franchisee in Minneapolis, and he is going to kick the call off with giving him a little bit of background on himself and his location, where he came from, how he got started in citywide, um, all things Tyler and All Things, Minnesota. So after he's finished, um, please feel free to jump in with your questions that you have for the call today. I really want to make sure that um the purpose of these calls is for you to get everything answered during your discovery process. And so we want to make the most out of this hour and um make sure you're getting everything that you need to continue on. So nothing's compliments. Feel free to jump in with whatever questions you have. All of that being said, Tyler, go ahead and give us your background.

SPEAKER_02 1:39

Cool. Um, so I have a little bit of an interesting background uh as far as how I ended up where I am with citywide. Um I started with the company in Minnesota about 13 and a half years ago. Uh, and I started as a sales executive just as an employee up here. Um, and we were in year four, maybe as a franchisee, four or five, I think, uh, when I started uh as a franchise, I didn't own it at that point. Um, and over a handful of years, worked my way up through the system um and then got the opportunity when our old owner decided that uh he had moved his family back to Kansas City and it just was time for him to move on to something else. Um, I was able to buy into the citywide as a franchisee. So um I've been doing that for the last roughly three and a half to four years. I think March coming up here will be four years uh as an as a franchisee. Um as far as Minnesota goes, we originally opened in 2006. Um and uh so we've been around for 19-ish years roughly. Um grown steadily every year since we opened, uh and especially every year since I've been here, at least. Um, and very much enjoy what I do and the team we work with, and everybody that I get to help and employ, and brand contractors, and all that stuff. So um don't know what else you guys want to know about Minnesota. It's cold right now, it's really cold, but otherwise, uh ask away.

SPEAKER_07 3:19

It's cold here in Miami today.

SPEAKER_02 3:21

It was 24 this morning. Well, it was 74 here. I warmed up the truck before I brought the kids to school, I'll tell you that.

SPEAKER_05 3:32

Tyler, I'm gonna oh Scott, you go ahead, kick us off.

SPEAKER_07 3:35

Okay, great. So what I'm looking for is some help in sales hiring, like in the um evaluation, like OMG versus PI. Like, do you have a sway either way? Being a sales background?

SPEAKER_02 3:51

The answer is yes. I use both, I guess. Um, they're both tools. That's I mean, there's a little more tactical question um than maybe the rest of the group wants to hear about. Uh and if you want me and you could connect to if you want to really dive into it. But I use both. Um I use them both as tools as part of the interview process. So we look at PI COG and OMG for any salesperson coming on. Um if they align in all of them, great. If they don't align in one of them, we more heavily weight the ride along in the interview and generally how we feel about them. Um but like I said, they they're all tools. I've had people that we've overlooked both OMG and PI andor PI on that have worked out great, and we've had people who align on both of them and they don't work out, so nothing's foolproof, but in general, as long as they're the more aligned people have been more long-lasting.

SPEAKER_05 4:48

So and just for everybody else on the call, those are acronyms because we use a whole lot of acronyms here, but PI stands for predictive index, you're fine. Um, we do this a lot. And um, those are two sales tools that we use to evaluate both from a franchisee perspective and then also from a sales executive perspective. Sometimes the uh what you'll hear is the FSMs are account managers as well. So those are just two um insight tools that we use. Tyler, I'm gonna add on while I have my my hand up, I guess. Um obviously coming from a sales executive role, like Scott mentioned, you know, you've you've got some experience both on the sales executive side and now the owner side and knowing what to hire. Is there any industries that you found that have been successful in strong salespeople for you? Um and then on top of that, can you speak to metrics? I know that's a question that we talk about several times in these calls is what kind of metrics are you expecting out of your sales executives when you first bring them on?

SPEAKER_02 6:03

Okay. Um as far as industries, um it hasn't necessarily been a specific industry that we've had success with, um, but we've had the most success when people were selling B2B some sort of recurring revenue model. You know, so they weren't doing one-time sales, they were doing stuff where they were actively having to go out and prospect um and sell somebody something that they were having to invest in as a recurring service versus um just selling uh an item or tangible thing to either a customer or a business. Um, so Verizon uh corporate sales, so not Verizon like customer storefront place, but where they're actually selling into businesses full phone and uh technology systems for their communication. That one was a good one. We've had enterprise, which is hasn't really isn't really recurring, but they they've been pretty good. Um and then we've had some uh others that were just technology uh or service-based B2B type reoccurring sales.

SPEAKER_05 7:16

Awesome. Thank you.

SPEAKER_02 7:17

And then metrics-wise, um if you're talking about overall, like what end-of-year results we look for, uh, that is very much in flux right now because we're changing our entire sales model. Um, we've grown to the fact to the point where we are re kind of reinventing the wheel on the sales thing. Um, but for the first 18, 19 years, what we look for was a sales executive that could on average find um six to eight thousand dollars in recurring revenue every month. Um, so we would look for somewhere between $72 and $100,000 roughly in uh annual sales is what we would shoot for a sales executive to be able to produce on a given year. Um, and when I say $72,000 to $100,000 in recurring revenue, if somebody sells $100,000, it's it's really $1.2 million in annual revenue. We just evaluate it on monthly contract size. Um, and then breaking it down into the, you know, into the month, we we have metrics surrounding how many uh decision maker conversations they have, how many phone calls they're making, how many times are they stopping in uh to a business and doing either cold call or field visit, whatever you want to call it, um, where they're trying to start a conversation with somebody in person. Um, we have metrics surrounding all of those based on their actively activity level to get to that a $72,000 to $100,000 in recurring revenue contracts.

SPEAKER_05 8:45

Awesome. Thank you. That's really helpful. Go ahead, Scott.

SPEAKER_07 8:49

So sort of on, you know, the same sales question. Like, how are you pulling your candidates towards you? Meaning, are you going to LinkedIn or you're using outside service, like a recruiting service?

SPEAKER_02 9:00

We use a recruiting service right now. Um, we're you currently using Envision Q. Uh, we are potentially pulling that in-house with one HR coming up here in in the next year, but yeah, we're using recruiters to go find it and whatnot. We uh we've had we had success early on with just posting in manually, like either myself at one point had even had like a recruiter light format, but we just got to the point where nobody internally had the bandwidth to handle that, so we outsourced it.

SPEAKER_07 9:31

Okay, thank you.

SPEAKER_02 9:32

So if you if you have somebody who has the bandwidth to do it, you can certainly do it yourself, but um we've had better results using somebody else.

SPEAKER_06 9:40

Going outside. Okay, excellent, thank you. Karen, go ahead.

SPEAKER_08 9:47

Um, um, have you used any of the AI SDR tools uh which are out there at this point of time?

SPEAKER_02 9:56

Uh yes, uh we are currently using one. Um it is moderately productive. I mean, you're paying we're paying less than we paid uh an individual to come in and do it, and there's a lot less management to go for it. Um, but I'd say the results are also in a line with you're paying less, you're gonna get less. Um but uh it's it's generating a lot of um brand recognition and making some of our what we would say is a cold call more warm because they're getting these email chains from us or email campaigns from us. Um and the productivity of it as far as actual like meetings and appointments that come out of it kind of come in waves. It's like some months it's like this is the greatest thing ever. Some months it's like, is it working today? So it's not a foolproof method, but we are currently engaging in one right now, and we've been doing it for 18 months, roughly.

SPEAKER_06 10:55

Okay. Thank you so much. Can I ask a follow-up question?

SPEAKER_00 11:03

Yeah, go for it.

SPEAKER_08 11:04

So from all the from all the channels uh through which you are getting actually the meetings, which are the ones which are most effective?

SPEAKER_02 11:13

All the channels that we're getting the meetings out of, like in as far as who's setting them and where are they coming from?

SPEAKER_08 11:18

And no, so for example, uh, like one is the uh sales cut salespeople reaching out, some are might be inbound, some are you're going to events, those channels. So based on that, yep.

SPEAKER_02 11:30

Uh the best results have come from either uh we've had in-house call people reaching out actively, or the salespeople themselves out prospecting. Those are really have been our best two channels because usually that comes from a little bit of a relationship build just from the cold call to having a conversation about what they need, maybe they weren't ready yet, a few more back and forth, and then a final, and eventually we're getting in there. So they tend to be uh a little better lead and a little more qualified lead, I guess, because the sales executives have had the ability to ask the questions they need to make sure it's where they want to be going, versus you know, with the AI or you know, inbound leads, some of that stuff. Um, it's easier to get out on a not qualified appointment if you can't have the proper exchange with somebody. Um, not to say that the uh we haven't sold good things out of those, but um, they just tend to be not necessarily the most fruitful or the largest uh ones out there.

SPEAKER_06 12:42

I saw your mic come off mute if you wanted to ask a question. I have a question. This is John or HJ Bay.

SPEAKER_04 12:54

Um so I'm in California. Uh I I'm in currently uh B2B sales in terms of like corporate banking. So I do a lot of sales. I sell money basically to business owners, uh, basically business owners who don't need money, right? So like a paper lending. But anyways, um you said you're year over year you've kind of grown every year, right? Um can you share with like those numbers and in terms of revenues, like what's kind of the breakdown of like the the channel of uh like janitorial versus like plumbing or electrical, like what's kind of the percentages, I guess, uh that you can share.

SPEAKER_02 13:44

Yeah, so the percentages are super easy. Um, and it it varies a little bit franchise to franchise, just depending on how you focus. For us in Minnesota, right now uh we are roughly every month is you know, give or take a couple percentage, we're roughly 70% recurring janitorial contracts. Um contract revenue is obviously like the the best thing to value a company on, and it's the way that the company grows the best because it's uh you know predictive recurring revenue. Um, and then the other 30-ish percent comes from everything else, and that varies widely for us at least, depending on time of year, um and just general, like whatever we happen to stumble upon, you know. Like this month, if you look at it, we would have a vastly skewed at the end of at the end of November, we'll have a vastly skewed one in re in our construction bucket because we're doing a huge big remodel project. So a lot of our dollars are gonna come from that. Um as winter comes here, as it's getting cold, start getting snow, we'll have a buck our bucket of snow removal goes up, right? So, like that changes, and and people tend to do less of the standard floor care stuff with us throughout the years, and and uh so it's it's seasonal, um, but yeah, overall 30 is everything else, 70 is recurring contract, mostly janitorial.

SPEAKER_04 15:05

Yeah, which seems like the most consistent because I was on a Z call last week, and uh it seems like everyone's kind of leading with the janitorial services. Is that what they sound like? Okay.

SPEAKER_02 15:16

We're not necessarily always leading with it. Um that's why I said earlier um we're kind of reconstructing our sales division. We got to a point where we had just contract revenue outside salespeople who were supposed to be asking uh, you know, two questions of like, can we do anything else for you besides janitorial? But just by nature of that's how they get paid, they tend to lean into the janitorial. Um, we had started a second division that was going after all everything else. Um and we got to a point now where we we're actually going to change it all and shrink everybody's sales territories, and everybody can sell everything. Um, so they're getting paid on both aspects now. Um, so we're focusing on both. And the idea behind that is that we can if even if a company is not ready for janitorial, because being that it's a recurring contract, oftentimes it's a big budget bucket for them, um, you know, as far as dollars go. Um and janitorial tends to be the thing that nobody wants to talk to you about until they're in a lot of pain and then they want to talk to you about it. Um, we try to get our foot in the door with all those other. So let me come in and help you with your windows or a parking lot quote or whatever else we can do to get our foot in the door, show you how we function that we're professional, so that when that contract revenue opportunity comes along, they might not even go out to bid for it. They might just give it to us because they know us and how we function. Um, so the idea is not necessarily leading with it, but it's just the primary revenue source and it's it compounds on itself versus having to be resold every month, is the other reason why it's such a big percentage.

SPEAKER_04 16:51

Got it. So, like uh just going back to your construction piece, like you said, you're having a pretty deep big month because of the construction piece um component. Is that like I guess I'm trying to understand the process. If is your client, do they call you and be like, hey Tyler, I've got this big construction project coming in, you know, December. Once you guys have bid on it, do they actually outbid it as well? And you know, how does that process work?

SPEAKER_02 17:19

So it this one in particular came from a customer where we are doing the janitorial. So one of our account managers is in there every week, anyways, and kind of doing additional work for them when plumbing comes up and any of these other things come up, floor care windows, you know, the non-janitorial stuff. Um, and she has been very good at all that stuff. So when it came time for them to look at doing this remodel, um, because it's not a new ground construction, it's a complete gut and remodel of a section of their uh office building. Um, they came to her and like, is this something you can do? And she says, Yep. And then she actually managed it the right way, which was do you need to get multiple quotes? And instead of bidding citywide against other people, she represented as well and was like, I can get you three quotes that you need and come back to you with three options. And what she did there is basically, no matter what, citywide's getting the business, but I'm providing you with three different options from these three contractors. Um, and that's how we won the business. So if if your account managers can frame that right and just be like, let me be that resource, and I'm truly a facility manager for you. I'm not the one bidding this, I'm getting three vendors' bids for you. Um, we can kind of make sure we're getting we get it, but somebody gets it. You know what I mean?

SPEAKER_04 18:35

Yeah, yeah, it's yeah, it's within your lines, okay, connections. Sure.

SPEAKER_02 18:40

But it's all about the account once you once you're in there for janitorial, it's about your account managers visiting the buildings and having an open dialogue of like what's next, what can I help you with, what vendors are giving you headaches, what's coming up on your project list, you know, basically just having to stay front of mind and remind them that I do all this other stuff besides make sure your building's clean, so that when those things come up, they come to us.

SPEAKER_04 19:04

Okay. So, so sorry to ask so many questions, but um, what about um in terms of like this construction project? Like you said, the account manager actually had like three people to come and bid it. Um, did you actually already have those relationships? And or and typically the other question is how many of those contractor relationships do you have, like for like plumbers, electricians, construction contract, general contractors? Typically, how many do you have in your arsenal?

SPEAKER_02 19:36

In that particular instance, we had two of the three people, and then we went out and found somebody to give us a third quote. Um, we try our goal is basically to have two of every type of contractor for the different services per account manager, uh, other than some of our bigger ones. Like we have one large plumbing HVAC and electrical company that works with us that can that has the bandwidth to help all of our territories. Um, but we try to have at least two of every vendor that can help any of our account managers. So some of our partner vendors are smaller and they might only be able to support one or two of our FSMs volume-wise on something. So we we kind of assign them to a specific account manager or two. Um, but then the bigger vendors that can do more, we assign them to more FSMs. Um the goal is for every FSM to have, you know, two strip and wax people, two window people, two construction people, two, you know, HVAC plumbing electron people that they can reach out to in any given instance. So that number goes up every year, is the is the answer.

SPEAKER_04 20:38

But that's the goal. Yeah, it's a good problem, I guess.

SPEAKER_02 20:44

It's a constant recruiting contractors is a constant. You will never not do it. So, because every time you get a couple of good ones, you're also gonna lose a couple that either fell off or you found out weren't good.

SPEAKER_01 20:55

And so it's it's almost like a sales process, but you're just recruiting contractors.

SPEAKER_05 21:03

Great questions, John. Go ahead, Scott.

SPEAKER_07 21:07

Okay, thank you. Um the question I have is like in my past history, we've grown a lot through national account business. How have you done that? And what can we do to help push that along working with national accounts? NBD?

SPEAKER_02 21:28

Uh as far as like any top-down ones, you can't really do a lot to push it along, other than if you find relationships, pass them along to them. You know, if you find somebody who's a bigger account and you can get them connected with NBD, it can grow. Um that's where like Reyes came from. We had we sold all the Reuses up here, and then we connected the main person with NBD a long time ago, and then eventually it became a preferred vendor for them. Um, if you've seen that since you're working here, but so they're a they're a big customer. Um we have a good amount of NBD, and I would say it's about 50 50 stuff we had prior to it being an NBD relationship, and 50% of it came directly from NBD through either top-down RFPs or um preferred vendor stuff where we've worked in collaboration with them to pick it up. Um majority of our business is not NBD, but that's because we had been in business for like 13 years before NBD existed. So we had a lot of business prior to them as well. Okay. Thank you. For for a new kind from what I know about newer Z, however, uh it's a huge tool to be able to jumpstart your business, from what I've heard from people who've started in the last three to five years, um, which is allowing people to reach profitability and certain dollar markers much quicker than we did in 2006.

SPEAKER_01 23:00

So lean on it heavily if you can.

SPEAKER_07 23:03

Okay, thank you.

SPEAKER_05 23:06

Jose, Andrew, and Cyrus, I know y'all joined after I gave our introduction. So we are at the point of the call where you guys can feel free to jump in with your questions. You can come off mute, you can raise your hand, whatever, flat us down, so we know that you are wanting to ask something of Tyler. Tyler's our franchisee in Minnesota. Taryn, I see your hand up, so go ahead. And then Andrew, you can jump in right after.

SPEAKER_08 23:34

Um, all this information is extremely helpful. Uh, can you touch upon a little bit about the profit margins and the churn and specifically the top reasons you have seen for regrettable churn that you could have avoided over the period of time?

SPEAKER_02 23:50

Uh client churn, you mean? Yeah. Okay. Um, so those are kind of two different directions. Uh, as far as profitability goes, I can give you kind of an answer. Um profitability is great uh if you're managing it correctly and staffing to the right levels and growing at the right uh amount. Um from what I know of uh us and our experience and other people in performance groups that I'm a part of, um, you know, you you tend to have a profit margin that closely matches your number of years you've been in business up until about 10%. Um for at that 10-year mark, you should be at between 8 and 12% profitability, most of what I've seen. And then it grows pretty readily from there. Uh if you're continuing to be able to run lean, um, and then it kind of goes up and down as you have to overstaff and then you know, gain accounts, and then overstaff and then gain accounts. Um, but it's uh a very steadily profitable thing to be invested in. Um if you have more specific questions, I could jump into more of that with you. Um as far as uh customers go, we are very stringent about uh size and area, or like you know, area within reason of where we're located, um, and industry that we will work with in Minnesota. Um, we find that some industries just tend to have really high vendor turnover, um, like restaurants, bowling alleys, movie theaters, like that sort of type of industry that tends to have its own internal churn, tends to have a lot a high churn for its vendors as well. Somebody else comes in, you know, every six months there's a new manager and they want to bring somebody else in. Like there's there's things that we won't do um business with, or we have to very, very much bet it and make sure it's the right decision if we are gonna go into it. Um, so we focus on the things that we know we're good at and that we know have reasonable vendor turnover, which is like you know, industrial, medical, office buildings, property managed facilities, schools, those sorts of things, they tend to have a much lower vendor turn. Um, and then obviously it's a lot of just managing it correctly. Like you could have the best types of buildings and the best scenarios in the best industries that, and if you just don't manage them right, you're gonna have churn. If you manage them right, you should have a much lower churn on it.

SPEAKER_08 26:22

Thank you. On average, Tyler, um what has been the length uh of a like what is the life of a customer on an average?

SPEAKER_02 26:32

Uh we are about seven and a half year average customer life in Minnesota. Um that being said, we've got vendors that predate me and I've been here 13 and a half years. We've got vendors that last a year because it was the wrong scenario, but on average we're about seven and a half years.

SPEAKER_06 27:03

Andrew, I originally saw your mic come off.

SPEAKER_05 27:05

Did you have a question and want to jump in?

SPEAKER_03 27:09

Uh you know, I'm I'm early stages here. You know, we've only had our our our initial conversation. You know, I have a ton of questions because I've uh I've got kind of the high-level overview right now, and you know, there's a lot of gaps, right? In terms, you know, one of them was around the financials. Uh, I know Tarun just asked some of that. I'm just trying to get a sense of, you know, you mentioned eight to twelve percent profitability. Uh, and roughly how long did that take you to get to to that stage, right? Like, are you kind of in the red for the first number of years? What point you start?

SPEAKER_02 27:42

So I think we were slower than what people are doing now. And any of those of you who are more on the franchise and know more about it could feel free to chime in, Paul, or anybody else. But I think it took us about two years to get truly profitable, maybe two and a half in Minnesota. Um, and there have been a few franchisees recently that using that NBD that we were just talking about, that national business development team and getting business from them more readily right out of the gates. I think I've seen it as low as a year uh to go into the black um for some new people. Um, but I would say I think on average it's somewhere between 18 months and two years before you're steadily profitable, is what I've heard.

SPEAKER_03 28:26

Okay. And in I'm just curious, you know, this national business development team, like what percentage of business would that kind of generate for a lot of businesses? Is it a good chunk of it, or is it really, you know, cold calling and starting from scratch yourselves?

SPEAKER_02 28:44

It's it's both. You for sure can't just rely on NBD to start you off if you're not doing your own stuff. Um, however, you have the opportunity to walk into a lot of preferred vendor situations where you still have to reach out to them, but we are already set up as a preferred vendor as a whole, citywide is. Um, and then there are plenty of top-down scenarios where maybe we don't have a franchisee in that market yet, so nobody's getting those buildings, but they can definitely jumpstart your business depending on where you are and what you're opening. Um, but it's not something you can just rely a hundred percent on NBD and then eventually get back to selling stuff. You have to do both right out of the gates. Um but it's you know, like I said, we didn't have an NBD when we started in 2006. I wasn't even around when we started. Um but so it took us a little longer and a lot more feet to the ground than what I've seen newer franchisees run into now.

SPEAKER_06 29:46

Thank you. If you have any other, you you mentioned financials questions.

SPEAKER_02 29:55

If you have any others, throw them off.

SPEAKER_03 29:58

It it's really you know, and again, I don't want to kind of I don't know. Uh I'm I've had one quick meeting here, but you know, I obviously want to understand what does citywide bring to the table, right, in terms of for your franchise fees, what do I get? Uh that's still not clear to me from the PowerPoint I saw is just the value, right? And and and I I don't want to go down a path if people are already well aware of that. And I'm the new guy coming on just at a single meeting, right?

SPEAKER_02 30:28

I can tell you from somebody who pays those fees, uh, benefits of it. Um a lot of benefits come from it from you know, national marketing stuff. So they're getting our name, logo, stuff out there that way. A lot of support, especially in your first 10 years coming from the franchise or regarding like business coaching um and just structure and strategy as to how you should be staffing and how you should be setting up and um a lot of hands-on coaching through that stuff. Uh, all your IT and all that stuff is set up through the franchise company, which is a huge loadoff when you don't have to worry about what you should be using, what systems, who's managing it, you know, when something's down, who's handling it, all that stuff. Um, you know, and then just the overall support of the system itself is worth a chunk of those dollars because uh I guess I don't know the full official count right now. Are we at 104? 110.

SPEAKER_06 31:27

Yeah, 110.

SPEAKER_02 31:28

So there's 110 other franchisees around the country in the US and Canada that are also in that same wheelhouse with you. That are it's a good support system between coordinated uh performance groups and just people you become acquainted with and are running through the same issues and same strategies to you know help make sure everybody succeeds. Um, so I don't know if that helps or not, but you know it does. I think it's much more efficient way to get started in an industry uh with that support system than it is if you were to try to go do something individually and have to fix all those issues plus run a business.

SPEAKER_06 32:16

John, go ahead.

SPEAKER_04 32:21

Yeah, uh so my question to uh my follow-up question to that is um does the franchise or the citywide help you with like structuring like commission plans for like account managers or facility management guys? Because I'm sure they get commissions, right? So, you know, someone being new to a a business being a business owner, would you would they help with that?

SPEAKER_02 32:41

They all they have basically for any of like the standard positions, so like an account manager, sales executive, uh any of that stuff, they have structured business like templated uh comp plans that you kind of have to adjust a little bit depending on where you are in the country. Uh, cost of living is different in Minnesota than Boston, than California. So like base wages might change a little bit to get to where you need to attract people. Um, but the overall structure of it is pretty well laid out.

SPEAKER_04 33:13

And uh what what building sizes are you kind of focusing on in Minnesota? Because I mean in California, we have a an abundant amount of like buildings, right? I mean, like it's it's like almost like the capital of like small business world here.

unknown 33:27

Yeah.

SPEAKER_04 33:27

But I'm sure it's a lot more competitive too. So what are you guys focusing on?

SPEAKER_02 33:31

It depends on the industry. If you were to just generalize it, 25 to 300,000 square foot facilities is kind of the range uh for us. Um when I say industry, like you know, a 25,000 square foot office building might be the same amount of hours to clean. Uh, and so therefore the same dollars as a 5,000 square foot medical facility because it's more detailed cleaning, uh, that sort of thing. Um, but that range is about average. Um, we would easily go bigger than that and do go bigger than that. We have a handful of buildings that are bigger than that 300,000. Um, but they're a lot, uh, there's a lot less opportunity in Minnesota, at least, with that, because we have a heavy union presence with our janitorial and we're non-union. Um, so there's a lot of large buildings that we just won't ever get our foot in the door because of union requirements. Um, but right in that range, anywhere in that range is easy, and that 50 to about 150,000 is like the most the perfect sweet spot for us because it's big enough that it's worth managing, but not so big that it is like you know, crazy hard to manage.

SPEAKER_06 34:48

Can I ask a question?

SPEAKER_05 34:49

Cyrus, oh go ahead. Um Cyrus, actually, you jump in first and then Scott, you can go right after me.

SPEAKER_06 34:56

Okay. Oh, hey, uh, can you guys hear me?

SPEAKER_00 35:02

Yep, now again, now again. Hey Tyler, uh, thanks for making the time today. Um, so just uh following up on the hiring of sales executives, you know, I'm trying to really understand what separates you know top performing franchises early on. And I know that you know obviously hiring top talent is uh really critical. So my question is around you know, are there any specific traits, backgrounds um uh you see that works uh best for Sales XX in this business? And then just uh you know to add on to that, you know, how do you vet for hunger and grit versus you know just a polished resume?

SPEAKER_02 35:44

Well, I'll caveat this with I think salespeople are the hardest people to hire because if they're even reasonably good at sales, they tend to interview well. So I think it's the hardest position to hire for, in my opinion. Um, but one of the biggest things we lean on is what uh is called the predictive index. It's one of the assessments that Citywide supports that gets you can send out to um any of your people before their interview to see if you even want to talk to them uh as they apply. Uh, but basically it gives you a trait outline, you know, it's kind of like a disc assessment or any of those other personality assessments that you see, but we use a uh predictive index. Um, and so I look for specific ranges on there, just like you should, of you know, how does their personality mesh with what the traits that are that are needed for sales executive to be successful in citywide? Um, so that's one thing we use. We also use uh an assessment called the OMG, which is a little more targeted for just sales executives that tell kind of gives you an idea of is this person gonna go sell or not? It's a longer, more in-depth assessment. Um, it'll also give you an idea of how serious that candidate is about applying for your job because it's about a 40-minute assessment versus the PI takes about 10-15 minutes. Um, so you got about an hour's worth of assessments before they even uh come into you know interview with you. Um and then as far as the other things that we look for uh basically contract revenue um sales scenarios. So uh people who have previously done business to business sales, selling recurring revenue um have been the most successful SEs for us across the board. So not people who are knocking doors and selling something door-to-door to people, um, and not something where they are um you know selling direct to consumers and not something where people are walking in the door and coming to them, something where they've had to go out and find it and they're selling business to business, have been the most successful uh people.

SPEAKER_01 37:53

Um, not necessarily from the industry or anything.

SPEAKER_05 37:58

Hey Cyrus, I'm when I take you off mute, it we are getting echoes, so I have you on mute, but go ahead and and follow up with that because I see that your hand's still up.

SPEAKER_00 38:12

Yes, sorry about that. Um, so yeah, just uh just a follow-up on that. Um, so are there any like two or three red flags uh you look for when when interviewing? Um and then just um based on uh first year performance, um, what does a good first year performance look like? Uh a number of you know clients or revenue?

SPEAKER_02 38:38

Um well first full year performance is a little unique because you have to account for a pipeline and uh build up and the fact that we have a 90-day-ish closing timeline from opportunity creation to closing it out. Um but I would say a first 12 months of successful SE should sell 50-ish, 50 to 60,000 in contract revenue on a ramp up. So by the end of that first, by the end of their first six months, they should be pretty close to where you'd like them to be ongoing. But that first three months it might be almost zero. Um, and then three through six, they're starting to ramp up more because they've got the pipeline that should be closing down and going. Um, and then, like I said, by the end of the first year, somewhere in that 50 to 60 range is a good first-year sales executive. Um, I have a brand new one right now. I'll tell you that. Uh his first 30 days, he set up an appointment or two, but that's about it because he's just learning who we are, what we do, started doing some prospecting, took a while to build that up. Uh, about the 40-day mark, he started setting some more appointments, and now we're approaching the 60-day mark, and he just closed his third account today. So it takes a little bit of time to get going, but then once they get rolling, they can start closing some stuff down.

SPEAKER_00 39:57

So when you say 50, you're talking more number of accounts, right?

SPEAKER_02 40:01

No, I'm talking about $12,000 in revenue. Oh, so a $50,000 um in new sales is it basically equates to $600,000 a year in contract revenue.

SPEAKER_06 40:16

Got it. Thank you. You open the door about union.

SPEAKER_07 40:27

Um we have the opportunity to earn a very nice account tomorrow, 11 o'clock. They want to go with us, but they have a current union um janitorial service, and they're scared. What can I give them, support them to make them feel comfortable? They want to give us the business, but they're scared, they're scared of the union.

SPEAKER_02 40:49

They just have to understand uh that they might get some flack and potentially some, you know, a little bit of harassment from the union company, but it goes away at a red fairly quick pace. They try to put up a big front at first to make you double think your change, um, but then they dwindle off quite quickly. Depends on the size of the account, too, and where it's located. Um the nice thing about where you are is Florida tends to be a much more right-to-work state, and they have a lot less, they have a lot less pressure down there versus Minnesota's so heavily unionized in every aspect and worker first versus employer first, uh, that it's uh it's a little more challenging. They have a lot more pull-up here. But we've taken business from union contractors more than once. And it, you know, everyone they'll they'll cause a headache at first and then it goes away. You know, once you're in there, once you're in there and established, they back off, usually.

SPEAKER_06 41:55

Okay, thank you. John, go ahead.

SPEAKER_04 42:04

Hey Tyler, you just mentioned that uh your sales exec or sales account executive closed three accounts. Can you share like what kind of companies those were, what kind of property types? Just kind of curious on like a beginner sales guy closing three accounts. What kind of accounts are those?

SPEAKER_02 42:22

One is a larger uh insurance brokerage that has a it's about a 35,000 square foot office for their insurance brokerage. Um, and the other two were uh basically car dealerships but and mechanic bays for uh semi trucks. So they sold sold and leased new semis to two companies. Um so we're cleaning their showroom and corporate offices uh at both locations.

SPEAKER_04 42:58

And um are these um was he kind of leading with like janitorial services, I guess?

SPEAKER_02 43:05

Uh you said cleaning, so I'm assuming it's a lot of it's janitorial first and so oddly enough, uh I you know I mentioned we had two kind of silos of salespeople right now, and we're gonna merge them. Uh, our other silo, who's focused on not janitorial, found the semi-trucks, and basically they were like, actually, we have this floor thing, but also can you clean buildings? And so he actually referred our sales guy in there to get the the job um for for the well for the first one, and then based off the first one, and uh they signed us up for the first one. We went through the whole thing and they were like, by the way, we have a second location, it's a different decision maker called Dennis, and he went and called him, and now we're in that building too. So, or we uh officially signed paperwork and we'll be in that building in the next week or two. Um, as far as the insurance brokerage company, that one it was more of a standard they went in cold called um insurance or uh janitorial was the thing that the customer decided to lead with and so that's where we started with it was janitorial first and then hopefully we'll get more from it later andrew you want to jump back in yeah i have another question for you um anyone who's dealt with contractors in the past before knows it can be challenging to say the least does statewide help with you know legal agreements contracts negotiating that gotchas around some of the things you should be considering when you're getting into agreements with contractors well so we have a generic contractor agreement i'm assuming that we got it originally from franchise um and then we had to adjust it somewhat for Minnesota law because every state has slightly different laws um but so there's a general template for contractor relationships um so we we don't generally sign the contractor's agreements they sign ours um on some bigger project stuff like construction we may also sign off on their proposal saying that we you know this is what we sold to our customer and we agree to your stuff but the terms and conditions are ours as far as how does the relationship go, when do they get paid who's liable for what all that stuff feed structures yada yada yada and it's oh sorry is there specialty legal folks with that are available through citywide to to help with those you know who specialize in this type of thing or is it kind of up to each of the franchisees to find their own legal and get that that experience I think it's a little bit of both correct me if I'm wrong Xavier Paul it's a little bit of both like we have a we have a local attorney here on retainer in Minnesota but we also get some support through the legal team at the franchise or but they're not like I don't send them a contract and go can I sign this you know it's it's a lot of working with both you'll you'll want to find a good local attorney because they're also going to be more of the expert in what's going on wherever you're located um or wherever you're looking to buy a franchise.

SPEAKER_06 46:24

Okay thanks.

SPEAKER_05 46:30

Tyler I'm gonna jump back in as well um you know I think one of the things that's really attractive about our business model is the net terms um how how those are structured typically depending on the client I know we're aiming for that net 10. And I was wondering if you could just open up a little bit about that and share your experience with that from other people to understand how you get paid um or when you bill how you get paid and then when you pay your independent contractors so that um everyone on the call can understand the cash flow element.

SPEAKER_02 47:04

Yep so we shoot for like like Savannah just said we shoot for net 10 on all of our standard agreements with people. We get that 80% of the time and then the other 20% either they have corporate standard payment terms. NBD sometimes has some outside of that payment terms uh so we'll extend all the way up to 60 day payment terms if we have to but we try not to uh we also charge a uh additional percentage if people want to extend past 30 days so we will go from 10 to 30 days no problem after 30 days we start adding percentage to the revenue um because as Van just indicated we obviously have to pay our contractors and I don't want to continue to float months and months and months of contractor pay uh from a cash flow standpoint before I get paid from the customer and then get myself in a bad spot if they decide not to pay or whatever else can happen with people. So generally we invoice on the 25th of the month prior to the month of service. So uh for example on October 25th we build for November the invoices are dated November 1st with 10 day payment terms. So by the time we are halfway through the month uh of November we have been paid by a large percentage of our customers for November already even though we're still providing services so that cash flow has come in by the end of the month where we are uh 80 to 90 percent of our pay has come in for whatever November is if we do like I said we do have some extended payment terms that go 45 or 60. But that allows us that on the 10th of the following month so in for November in December on on or around the 10th of the month we have a contractor payday um and that is when all of our contractors get paid. So we've collected our income for November all through November have it in the bank so that on the 10th of December we can pay the contractors and start that cycle over again um and by the time we've actually paid the contractors and they're cashing their checks we've we'll have probably collected a good portion of December's uh payments as well so um that's the general cash in cash out of it and then obviously our our people are getting paid every two weeks so that's a consistent more consistent cash flow but a large percentage the largest percentage of dollars in dollars out is um contractor pay awesome thank you so much y'all we have just a couple minutes left and if you guys have any lingering questions on your mind feel free to jump in otherwise oh go ahead Tyler were you gonna say something I was just gonna say just for those who are thinking about it it it if you're looking at this comparing it to anything else um you know it's not the flashiest industry to be in but it's a very very very not recession proof but recession and economic uh resistant industry because regardless of what's going on there are still things that need to be fixed there's still things that need to be cleaned there's still all these things I mean COVID shut the world down and we still grew by a million dollars that year because we had enough essential business that instead of the to cover the people who were shutting down enough of our essential business wanted to increase their cleaning because they had to have their people present that we actually balanced out and grew that year. So as far as an investment a place to put your money in to do something with it's a very dependable industry to be in because it's very consistent.

SPEAKER_05 50:32

So food for thought as you're considering it's Tyler hey this is John last question um for someone like me who's kind of considering this as a as a as a business what does your payroll look like in year one like is it obviously you and the facility sales manager I'm assuming like what does that year one look like for so many jump in there um yeah so it your payroll will initially be we're you know we're shooting for next year now two sales executives um we do build out your staffing guidelines with you over the course of 10 years and that staffing guidelines helps you navigate uh what monthly contract revenue should you hire that next individual. So I would assume by the end of year one you're probably looking at an additional two to three more individuals between us and role account manager role. You could also be looking at a potential part-time night manager who's going to be managing those independent contractors in the evening it's it's more so about as you're taking in that monthly contract revenue, you're looking at ways to take those hats off of your head. Those initial three roles are the ones you're probably going to fill in the first year. Sometimes we see people put somebody put in an office admin as well in year one, but again it's going to depend on your monthly contract revenue.

SPEAKER_02 52:07

And how much you want to do and how much you want to do yes I would say for sure you want to get the salespeople up and running first and then start hiring account managers as you need them to cover the bandwidth of visiting your customers Tyler I'm not sure if we touched on this or not I don't recall it but how much business do you put on your um account managers on a monthly basis? Loaded question uh our average right now is $186,000 in route revenue. We shoot for $180 to $220 is about the range we need to be in but caveat to that is it all depends on what kind of business you're selling because they have a certain frequency that they need to visit our customers and that's really what trumps it. So you can have a $2000 route that's made up of 40 buildings and somebody could easily manage that and you could have $150,000 route that's made up of 90 buildings and that's much harder to manage because you're a lot of a lot of smaller customers. So uh it has to be evaluated on both revenue and size of customer.

SPEAKER_05 53:12

So that's good to know. Thank you. Yeah perfect all right jam well I think that was a great call Tyler thank you so much and thank you guys all for coming prepared with questions what a good use of our time if you guys have any follow up please feel free to reach out to Adria or myself and we can make sure that everything is um super clear to you if there's anything lingering. So Tyler thank you again so much for your time and I really appreciate you doing this for us.

SPEAKER_02 53:42

No problem.

SPEAKER_05 53:42

Nice to see y'all have a good day everybody thank you.