SPEAKER_11 0:39

TJ is going to start by giving us a little bit of introduction to him and his background. And then you guys feel free to jump right in with all of your questions. I gave him a little bit of rundown of you guys are kind of all over the place between New Jersey to California. And so we'll have some people that um I know you guys have all actually been on tolls before. So you know the drill too. And um, TJ, all that being said, go ahead and kick it off.

SPEAKER_06 1:09

Sure. Um well I've been with Citywide now for five years. Uh three, we finished three last year. So we're moving into the fourth year in Las Vegas as the franchisee here. I started out as a director of operations for who is now my business partner in Las Vegas and North Carolina. I did operations, then sales there uh before moving out this way. And prior to Citywide, I was about 20 years with the same retail company, starting at the bottom and working my way up to the C-suite there. Um, so I was accustomed to doing many of the things that we do at Citywide, but in a different format and framework, uh, negotiating leases, working with vendors to get stores built, um, stores cleaned, et cetera. So it's a bit of my uh my history and uh kind of how I got here. Um, we I also did B2B sales in the in the previous company, so I brought that experience over. Um we were a consulting firm in the retail space, so I had to go out and find nice prospects and persuade them to let us open and run stores for them. So that translated kind of naturally into what we do here at citywide.

SPEAKER_10 2:30

Thanks TJ. Camille, I see your your mic went off. Did you want to jump right in?

SPEAKER_11 2:37

Okay, all right. Well, you guys feel free to um if you want to take yourself off mute, you can jump in. Otherwise, put your hand up. Let me know how you want to be called on, um, or just feel free to jump right in.

SPEAKER_01 2:53

Hey DJ, this is Sonil. Um, I am here in New Jersey and um, you know, we are working towards our territory here. Um help us understand, you know, if you can walk us through, you know, the initial it seems you're operating three, you know, for three years and you know, going into four. How was that initial journey for next you know, uh year where you know you're really getting that framework ready for your organization to operate? Um, if you can just illustrate, right, how you know it seems you had some experience, you know, with the franchise in a different territory, but coming into this, right? Apart from figuring out, you know, right from the location, you know, office to your staff, and you know, what are the key roles that you onboarded and you know how did that process happen? Um, you know, you know, any insight would be really helpful. Sure.

SPEAKER_06 3:47

Um, I well, you know, if I I'll I I could tell you what I did and then I could tell you my advice, which might align even though I didn't know my advice existed back then, but uh, because I might have disagreed with my current perspective on what I think I'm good at and what I think I like doing versus the way that I actually behave in my day-to-day life. But uh my advice would be figure out what you are good at and what you can spend 10 hours a day doing. And then there's two when you open up, we're pretty simple. We're gonna be a very flat organization for a little while. So there's sales and then there's ops. And those are the primary two roles in the organization. And as the owner, we are also the CFO, and you know, we're all the other things, but the primary job that we have to fill in the beginning is to produce revenue, manage revenue, grow the business, and keep customers on the books. So are you able to do the operations role or does sales fit better into um into your personality? Um, operations, we're uh not us. This industry is a complaint-based industry. So if you decide you're going to be the operations person, you have to prepare yourself and ensure that you have the emotional fortitude to take five to six comments about dirty toilets and toilet paper that was half empty and the crew didn't fill it up, or that you were supposed to paint a wall and they painted it dark brown and they actually just wanted a light brown, and they know they told you dark brown, but they didn't mean that, they meant light brown. So you've got to be able to quickly move through that problem solve it, move on to the next thing. You have to be able to be very religious to a route. Citywide's business model falls apart if the person who is not doing who is doing operations cannot be so structured that the customer knows on Mondays TJ comes comes at 10. I know that if someone misses something on Thursday, I'm gonna write a note. He'll be here on Monday, I'm gonna see him. That level of routine and consistency is not built into my DNA. I will do it, but I will suffer through it. Uh, you know, I'll do whatever I have to do, but I won't enjoy it. I happen to have identified someone for our first FSM that routine was just part of who he was. He'd funny enough, he'd been at Starbucks for a long time, and part of their training was just very much about the routine on how to make the coffee drinks. And amazingly, that translated really well to running the route, visiting the customers, giving great customer service, handling 20 or 30 comments about toilets every day, and turning most of those remarks into sales to produce OS, which allowed me to sit into a sales seat, which um I might have, if you had asked me five years ago, said that I've always done operations, that's what I'm good at doing. I'm good at making plans. Um, but the the reality is that uh if I'm really honest with myself, that um the way that our sales works, that's what I enjoy doing. And so I would say to do a little soul searching about putting yourself in that seat, really make sure you understand what both of those require. One requires knocking doors every day, going up to strangers, making your way through gatekeepers, getting the contact information for the person you try to sell to. The other is servicing the accounts and uh dealing with complaints and selling other services. So um I don't think one role is better worse than another. I I know owners who have been in both seats and have grown and been very successful. I think it's about your own personality and uh what your preferences are. So that would be where I would start. Um, because in the beginning, your primary focus is on growing your revenue and getting money into the bank as fast as you can.

SPEAKER_09 8:00

So I figured. Uh I'm I'm a Las Vegas local like you.

SPEAKER_05 8:17

So I I guess I'd like to ask you about the early days. Maybe you can uh help us visualize it better. Um, what was the team looking like? Uh what was your main kind of primary uh target and uh in terms of you know both sales cost and how long maybe did it take you to get to uh breakeven in the sense that you're paying yourself a salary as well as able to cover up uh all of the business costs?

SPEAKER_06 8:43

Yes. So um we are somewhat unique. So there we achieved breakeven to the point where we were all collecting salaries inside our first 12 months. That is a little bit unusual. Um, but if you pro forma this out, here's how you do that. Um your contract sales are gonna be slow growing, right? Um, they feel that way, anyways, because your average account size, I don't care which city you go to, 25 to 3,500 is the average size of an account. And you in the beginning, you're gonna maybe start one or two a month, then you know, maybe you'll grow up to where you get to where you're you're starting 12,000 a month, and that feels great. Um, but really to get to a point where it feels healthy to both take a salary and have a positive EVIT up, you've got to get the contract revenue to be above like 100 or 150,000. It's a lot of 300 or $3,500 contracts to get there. Uh, so if you're in the sales seat, you need to have a dynamic range of clients that you're going after. You got the medium-sized targets, 25 to 3,500. Little babies are gonna come to you, you know, eight, eight hundred dollar accounts. You know, they are um they are always more troubled than they're worth, but we take them because we need dollars from the bank. So you take what you can get, but you need to have your high your sights set on some buildings that you might call it a whale. We call them top 100 accounts here. They're buildings where I'm pretty sure they're gonna have a reasonable amount of janitorial, maybe 5,000 a month, but they might also have day porters. Um, the decision maker that is in charge has a lot of hats to wear. So if you think like a manufacturing plant or a car dealership, the gym or the service manager, that's who calls the plumber, that's who orders the paper towel, that's who decides if the parking lot needs to be rescribed. Like he doesn't want to do that. It's a great client for us. So you want to have some of those. So you know, I won't say all car dealerships are great, some of them are terrible. Uh, a lot of them are very healthy, $12,000 a month janitorial that might also give you parking lot sweeping. They might also give you pressure washing and window cleaning. They will almost always give you their supplies, which is the easiest margin ad that you can get because you just submit an order and your supplier brings paper towel. Um so they're great. So you want to have a mix of those targets you're going after that you know are going to deliver if you're on the sale side. But the fastest way to become profitable is with other services. So um as you go into your market and you look at the ramp you have, be really aggressive to get three different contractors who can provide our like top five services. You don't want one window guy to stranglehold you on projects and pricing. So um, you know, now we probably have 10 of each service category, 10 sweepers and 10 parking lot stripers, and you know, 10, 10, 10, 10, 10. And we probably have 200 or so janitorial contractors, and you need that because you want to make them compete against each other for your business. And the fastest way to get profitable is to go out and sell a bunch of projects you can build in the month. So um we ran on average for the past three years anywhere from 85 to 100 percent of the janitorial revenue. We also sold that much in other service projects. In the beginning, the other services were more than the janitorial. You know, first couple of months, my janitorial might have been 40,000, but we were selling 65 or 70,000 in other projects with an equal to or better than margin than we had on janitorial. So that's the fastest way to get profitable. We did get there inside of the first year. Um, my whole ownership group, we own five markets. Uh, we own Reno, northern Nevada, and a couple in the East Coast. Our strategy from a hiring perspective is to always be forward-thinking. So we pro forma out what route volume each account manager is going to manage. We think about total business, you know, um uh uh what's the word I'm looking for? Um managed, we'll say we don't want them to have more than like $200,000 that they're in charge of because it's overwhelming. So if we have a high-selling account manager and they're managing 150,000, we're gonna plan three or four months down the road that we're gonna hire the next person. When you do that early on, it could be turning a positive EBITDA back down to either flat or negative on the performance. It doesn't always work out that way because sometimes you hire people and they end up being rock stars. But we were very forward-thinking in the way that we hired heavy. I started with myself, another salesperson, and within the first month, we hired our first FSM, who is now our director of operations. So he's been with us since the second month that we were open. The same first salesperson is still here with us as well. Um, the third salesperson is still here with us as well. Um, so inside the first 12 months, we hired uh the FSM, uh, a second salesperson. And in the fourth quarter of that year, we hired the second FSM. So we opened in October of 2022. So most of those hirings took place in 23. Um, so we were basically like a flat EBITDA for the year of 2023, maybe $1,500 in the positive, but most of that was reinvested into staffing. Um, and then we were profitable 24, 25, um, and we'll be profitable again this year.

SPEAKER_08 14:40

So TJ, that's awesome. Just a quick question on your how quickly how quickly do you try to expand into the OS services after you've closed the JS? And would you would you position any OS if you don't necessarily get the JS service up front?

SPEAKER_06 14:56

Oh, absolutely. Yeah, there's all always opportunity. Now, if it's me, always opportunity hunting. We try, and I say try because people do what people will. Uh, we try to keep our sales team focused on janitorial because everything that is not janitorial, well, not everything, most things that are not janitorial require us to touch base with an independent contractor for pricing. I don't want them busy doing that. That just slows them down. It slows down that machine that keeps the janitorial growing. And that is a slower growth line than your OS. It's a 30, 60, or 90-day decision-making cycle. Uh, it takes like seven interactions before you get an appointment. And then by the time you get that appointment, you have to really stay on top of your prospect, or else if someone else comes in, even if you did a great job proposing and they happen to show up the day the current crew missed a trash can, you just lost your deal, and the person that went there that day is the one who got it. So um it's very competitive, very competitive in Las Vegas. Everywhere that I've worked, it has been though. So you don't want any distractions from the sales team. You want them super focused. Um, the way we handle it in Vegas, every market has a different method. If they uncover a really good opportunity for other service work, they craft an email, send it to the point of contact and the FSM for that area, loop them in, summarize the need, they track it through our Outlook Connects to our CRM, they track it back to the account. So we have tracking in our system, make the introduction, and then step aside. Um, and we do a commission split for them. So for turning in the lead, so they both get paid for it. So they don't they don't really care as long as that's the case. Um, sometimes salespeople feel compelled to try to um own the delivery of the other service in an attempt to leverage the good outcome towards a janitorial contract. Zero percent of the time has that been a good formula for me. So uh I would encourage you to avoid that.

SPEAKER_11 17:06

Right, so that's kind of what we were talking about last week too, when it relates to like everybody is a salesperson. Your salespeople are salespeople, but your operations people are selling too.

SPEAKER_10 17:17

Matthew, go ahead and jump in.

SPEAKER_09 17:23

Uh hey Gigi.

SPEAKER_02 17:25

Uh just kind of curious uh as to your sales approach to the uh independent contractors. Um obviously you know you can't go out and bid a uh a potential client without having any backing to it. So how do you get three people on board to want to do business with you?

SPEAKER_06 17:41

Well, listen. Oh, yes, I can. Are you kidding me? No, of course, no, of course you can. You know how many things I sold and I walked away and thought, how in the hell am I gonna get that? But I but I always get it done. Uh so you you cannot, we are how do I say this? Okay, so we have there are organizations that are in our space that operate very differently than the way we do. And they do not always have a good reputation with the independent business owners that perform services. It's different every market, but you've got coverall, ABM subcontracts, you've got Jan Pro, you've got Janiking, you got all these people that are in our space, and they make their money off the independent contractor. So they sell the account to them, they try to take it back once they paid it off, then they try to resell it, you know, not to bash anybody, but if you go into a conversation and you don't make a very clear distinction upon about who you are as a facility management company versus who Jan Pro is and who Janiking is. So we enter the conversation like this most of the time. Do you do you do any work for any property managers? And they say, you know, whatever they say. Most of them say yes, right? Okay, we're gonna work very similar to that. Property managers have a whole bucket of things they're responsible for. All we're responsible for are the facility services we're hired to manage. We don't do any of it in-house. We always use service providers. We call it our vendor network. We're like, you gotta be in my vendor network. I've got to have signed documents, copies of your certificates of insurance, and a couple other things. Once you're in the system, you're good to go, we'll send you work orders or uh opportunities for contracts. Uh, the way I handle it in Las Vegas, every job that we get, if we're asked to do a strip and wax, you know, it's we'll just use that as an example. We'll email through our email marketing platform every independent contractor who has checked the box that says they can do strip and wax, give them the details and ask them for an estimate. Uh, if I sell a janitorial contract, we'll email all 200 of the janitorial independent contractors, and we will say, here's the building, here's how big it is, this is the number of bathrooms, because that's an important metric. Um, and a little bit about the floor mix. We'll say frequency and the monthly payment. We ask them to review the details, let us know how they would staff it, supervise it, and what chemicals and equipment they think they would bring. We'll review that plan. We pick three people and we go walk them through so they compete. We're always making them compete against each other and we make sure they know it. So, um, in the beginning, like right now we're in northern Nevada, right? I don't have a lot of street credibility yet. Um, and nor did I in Vegas. And people told me up there and they've said it to me here, I will never work for you guys. We don't need you. I'll get my own contracts. Well, now I got 500 buildings in Las Vegas. Now who needs to? And they're all signed up with me now. So it uh they just don't at first. But the the biggest thing is differentiate yourself, start off by talking about how property managers work. We're facility managers, we're in a very similar space. We are not Jan Pro, we are not Janet King, we're not gonna charge you $50,000 to buy a $5,000 contract and so forth. Um, so yeah, that's well, I also think it's important to keep it simple. In the beginning, I oversold who I was, and I found that is less effective than if I just assume they want to be part of my network. You're like, hey, hey, listen, you know, I got some buildings, I need a street sweeper. I was on Google, it looks like you do street sweeping. I just got some paperwork for you. Would you be interested? No, no harm, no foul if not. Um, that gets me better results than when I send them some marketing crafted flyer that's got all the you know, we pay on the 10th every month. That just doesn't work as well for me. If I'm very nonchalant and assumptive, they just fill out the paperwork and I got a new street sweeper.

SPEAKER_02 21:56

So yeah, take it from there. Yeah, what what what's the sale? Cycle like um you know from meeting with the potential client to putting it in front of the potential contractor to actually you know making that connection full.

SPEAKER_06 22:15

The large majority are gonna be from the day that you drop off the proposal, if you follow the seven steps of the sale from citywide, your proposal drop is meant to be a signature, right? Like I'm coming with papers that you are gonna sign, and you already told me on the phone you're gonna sign them. So that's why I'm here, right? So if you do all that right, which none of us execute perfectly every time because we can't control the other side, uh, but then it's 30 days from then. That's most accounts go and they give a 30-day notice. Um, there are many contracts from our competitors, like there's a company called Anago. I don't know if I'm pronouncing that right. No one's ever told me how to say it correctly. Um, they have a 60-day uh out, but they also like to fight with the clients. So, you know, if it says 60, anticipate like a 90-day. Um, Janakin is in our space known to be the most difficult to get rid of. They're like a uh disease. So um that one will take a while. We help coach the customer on how to go through their whole cure period, and you'll learn to do that. But most of your your um cycles run 30 days. Um, but it may not be 30 days from when you measured the building. Uh, it may be you know two months because sometimes you measure the building and then they go off on holiday, and it takes a while to get the proposal in front of them. Um, but we train people here and we say it's gonna be a 36 year, a 90 day. If you're working on a whale, a top 100 account, you should anticipate a very long dance. It's gonna be six months to a year. That is true for most accounts that are over $10,000.

SPEAKER_02 23:59

So I'll I'll I'll go back into the QL somebody else chat.

SPEAKER_10 24:08

Matthew, go ahead. You you've got the mic.

SPEAKER_02 24:10

All right. Um quoting process. Uh, you know, do you guys have uh some sort of an app that you actually go through um with you know, like uh a toilet takes four minutes, uh four fixtures per bathroom. I mean, how do you guys actually measure and quote?

SPEAKER_06 24:30

Yeah, well, we are a franchise, which means that we get a little bit of flexibility on how we want to do that. But there is a spreadsheet. I actually created the original spreadsheet that was then it's a nice word, modified. And then uh and I'm an Excel uh very good at Excel. I studied it for a long time. I used to work in finance some in my last company. So I've got my own opinions about the company released one, but for the purposes of today, I'll say it's great. Um, and yes, the the generally accepted method of pricing janitorial is square footage, floor type, number of fixtures. Um, you can get more nuanced, you know. In Reno, we have this area that Tesla is located in. We have to pay cleaners $25 an hour. And everybody in that area knows it. So the, you know, everywhere else I might sell janitorial at an effective rate of $30. And in that corridor, if I don't sell it for $40, I can't, I can't service it. No one will do it. So um, you can get a little bit nuanced in the way you do it, do things, and we do that somewhat by area of town. Vegas, it's the strip. You have to pay more on the strip, uh, and then by industry. So I assume a medical building has to be cleaned more slowly than a law office, for example. But uh, but generally it's square footage, number of fixtures in the bathroom, and then the floor types is how it works. And um, there's a an organization called the ISSA, and they release these beautiful books or minus uh that tells you how long things should take. So our spreadsheet is based on that ideology. So okay.

SPEAKER_02 26:14

Uh and as far as specialization, is it is it beneficial to actually specialize in one area or another, you know, the healthcare, um, you know, which which may be somewhat of a niche business to get like those larger hospital, like real big hospital contracts. So I guess the question is how do you actually make that leap to getting like an airport or like a huge hospital system?

SPEAKER_06 26:37

Right. I I think I've seen um markets across the country that you'll and some of it is strategic. I know Phoenix, they have I think three industries and they don't let the salespeople hunt for anything outside those three because they already have so much credibility inside of their city. So their active prospecting is towards that. It might be five, I can't remember what he told me. Um, then in San Diego, he has like all the biomed stuff, man. He's just got all of it. Um, here I find that we have just such a mix um of buildings. Vegas is uh a little bit unusual that a lot of our buildings are less than 10,000 square squet. Um, the uh a citywide building is 10,000 to about 200,000 square feet. Smaller than that, and the pricing we become a little bit too expensive because of our management structure. Bigger than that, and we would need an army of ICs to staff it. And so we struggle a little bit with that. So um we we our buildings here tend to be very small, or they'll look really big, but the office is really tiny. So it's most places that has have distribution are that way. Um, so I don't think we have some so much specialized. We do have a lot of class A office buildings here. Um, but I would say that what's more important to me, like we do a lot of kitchens, which is unusual in citywide. They don't like a lot of people don't like doing kitchens. Um, we tier class the building categories, and I think kitchen is the lowest tier because people don't, it's dirty work, man. It's I've had to clean a couple myself, and it's it's foul and it's heavy, hard labor. Um, but I have two different contractors and all they do is kitchens. So they're specialized, they teach me what I need to say to go sell it, and then I go sell the business and they do the work. So that would be my opinion on the specialization. Though I think you can have salespeople who, you know, I I know if I get a bank or a medical building, which person I'm gonna send, um, versus if I get, you know, a manufacturing plant that wants us to come out, um, who's gonna fit in better uh it with the people that they're working with? So I think you can think about it a little bit that way. But um, I I don't think uh you want to oversight low in the beginning. You kind of want to have a a broad reach.

SPEAKER_02 29:04

Yeah, no, make it makes 100% sense. Um so it's it's really getting to network with uh with all these uh independent contractors, knowing who you can leverage or you know, go to, and then at the same time, you know, go out and start selling who you have a connection with.

SPEAKER_06 29:22

Yeah, and and we never stop. I'm still the one who recruits all of our independent contractors. And I I'll go on Facebook Marketplace and type in cleaner, and there'll be 15 posts will pop up. I'll send an instant message to all of them and just ask them questions, see if they're interested. Um, I find their Instagram accounts. I like the social media better than all the other things that we get told to do because they usually post pictures of their work, and I can judge if those are commercial buildings and if they look clean. Uh, and I can judge if they're just doing houses. Um, you can take a residential cleaner and you can teach them how to clean commercial, but it is not easy. It will be a painful process for both of you. And uh there will be a lot of fighting about what the hourly wage should be and how long things should take. So, particularly in the build in the beginning, you really want to focus on uh companies who have commercial experience primarily. And even if I see house under a website, I'm like, uh, how many commercial buildings do you clean versus homes? Uh, because it's it might as well be two different, complete different industries, they're not at all related. So got it, got it.

SPEAKER_02 30:39

Hey, thanks. This is really helpful. Appreciate it.

SPEAKER_05 30:43

Uh TJ, I want to talk uh talk about maybe um uh competition a little bit more. So you've already touched upon it. I know the market is is very competitive and you mentioned that, but maybe help me understand how are you differentiating yourself and where do you find um I guess the customers uh most the message that resonates most with customers?

SPEAKER_06 31:06

Well, first of all, I don't want anyone bidding against me. So I try to negotiate my way into being the sole bidder. And if I fail in that because of some company policy, which is usually the only time I fail, uh then I make sure that I am the final bidder. I do not want to bid first, I want to bid last. And then I want to get some feedback on how I compare to all the other people who bid on this project to make sure that I'm in the ballpark. Um and then past that, uh, you know, I have found a powerful thing to ask people is hey, you know, with your current cleaner, let's just say they forgot to mop the bathroom floor. Who do you call? And the answer is usually some name. Like, all right, is that who is supposed to mop the bathroom floor? Is usually yes. Like, I want you to imagine that experience and what it's like when you have to call the cleaner who is responsible for mopping the bathroom floor and tell them they didn't, you're gonna most times be met with excuses, rebuttals, attitude 90% of the time. I know because that's what we do for a living, uh, is tell the people that we're supposed to mop they didn't do it. So the differentiator with citywide is going to be that our job and the people you interact with is to sit on the same side of the table as you. We're never gonna argue. If you call and say the bathroom floor wasn't mopped, the person you call is not going to say, Yes, it was, I mopped it. They're gonna say, Thank you so much for letting me know, I'll handle that for you. And then it will be handled and it won't happen again. That's the difference with citywide. Anyone else that you go with, the person that you're gonna talk to is gonna be one of the people responsible for cleaning. So when you give cleaning feedback, they're going to take it personally. And that's gonna be the difference in the way you experience service with us. So um, but as I said, I I prefer not to bid against people. So um during the prospecting phase, you know, most of the people that you uncover because you're actively prospecting, they're not in the midst of an RFP. We don't we're not gonna win. Like if we if I say I'm gonna win one in three bids, that is not RFPs. I'd not I might win one in 20 RFPs. When I have to bid against everybody else, not gonna be the lowest price. I don't want to be the lowest price. There's a reason you got rid of all those low price people. So if you're just trying to compare price tags, you know, I'm not gonna be the cheapest. It's much better whenever I find someone who has not yet emotionally experienced the pain that is existing in their building with their janitorial. And I help them to realize that it's painful. And together we decide that we're gonna change their crew to citywide. Those people aren't gonna go get other bids so long as you manage the relationship and that process well. So that would be my advice is to try to put your energy there. You know, you when you get into the city, you'll probably sign up for all these emails that the government releases for RFPs. Like, eh, don't do them. Just ignore them. Ignore them until you're so big that you've got someone that can just go fill out all that stupid paperwork because it's not worth it. In the beginning, it's going to be low margin, lots of expectation. They're gonna require you to buy a bunch of equipment. You're much better at go find a law office, some easy, smaller, you know, medium-sized buildings to sell to, that you can persuade them that they should change services versus someone who's out, you know, bottom of the funnel. So, you know, people that are already out actively looking because they're gonna compare quotes.

SPEAKER_09 34:55

So um, that's where you'll get the most wins.

SPEAKER_11 35:03

Earlier when you were answering Basar Bashar's question, you mentioned how some of your sales executives from I think you said the first one and maybe the third one are still with you today. Um that's something that I feel like is kind of rare from a first sales executive ever. Can you walk us through uh where that person came from, how you found success with them, how you were able to retain them, anything pointers-wise there of retaining those strong sales executives?

SPEAKER_06 35:31

I think that support's important, um uh maintaining a good culture. In the beginning, you work so many hours, you can get very short fused because no matter what, in the beginning, that guess who is the night manager? Guess it doesn't matter if you're the salesperson, you are the night manager. So when you start a new account, you have to go, then you're back up because you got an appointment to go measure a building or whatever you might have to do. So at the beginning, in the beginning, the the days are long, so your your temper and your fuse can get like a little short. I'm known for already having like a slightly short view. So I had to deliberately manage that for sure because culture is important. Um, when I say support, um, if I get a lead, I make sure that they're split evenly. I don't just go take, I know some sales managers and some franchise users are like, oh, this is a bottom of the funnel. This is a person already wants a quote. Like, I'm just gonna go do it. I don't want to pay someone commission for this. And I don't feel that way. I'll pass that on and then I'll go help them close a lot of the times. I do, especially in the beginning, maybe a hundred percent of the proposal deliveries. I was present for them well into our second and third year. I came to the proposal delivery to help close. Um, and that helped train them how to ask for the sale in the right way and to use some of the psychology they teach us at citywide to get the prospect thinking so forward into our relationship that there's just no question that we're getting started. Um, so I was I believe strongly in that. Um, both of the people who started with us have migrated around in the company to different roles. One is now our business operations manager, our first sales executive. And the other is she currently is she we call her a BDS, um, but really that's not what she does. It's just her title. She does do the BDS role, which is appointment setting, but she helps us with training. She puts together sales drops. So in the exchange for a business card, you know, it's usually best practice. I give you something, you give me your business card. So um, we'll put together little sales drops, cookies with little cute tags on them. She's very good at those. So she does that. Um, she helps us with training, um, various other things inside the sales department. So part of it is, you know, I spoke earlier about finding out what you're good at. Also, if you want to keep people on your team, you have to figure out what they are good at and what they like to do. Um, you know, they may fit well into the role today, but what does five years and ten years out look like for them? So um I think that's a big part of it as well. And not yelling at them whenever I want to.

SPEAKER_10 38:19

Thank you.

SPEAKER_09 38:21

You got it.

SPEAKER_10 38:26

You guys have any other questions while we've got TJ?

SPEAKER_05 38:31

TJ, are you willing to share with us uh your growth trajectory? How um how have you done over the past three years? I know you were coming off of COVID when you started. Have you seen like a slowdown? Are you continuing to grow at a similar pace? Maybe help us with that.

SPEAKER_06 38:48

I experienced the beautiful COVID experience from citywide in North Carolina. We were well past the glory days by the time Vegas got going. So I think we have one time ever done a disinfecting spray, and it was just at a daycare. Uh now back in North Carolina, that was great business, man. It was awesome. Um, so we didn't have that here. In the first year, we did 2 million, and we so uh citywide measures our performance on a revenue per capita. So how many dollars per capita did you grow from one year to the other? And my territory, the way the zip code map is drawn based on the last consent uh uh census is uh two million. So I have to grow by two million every year to be in you know a platinum market, is what we call it. And I intend to always be a platinum market. So every year we've grown by two million. So two million, four million. Last year we did 6.25 million, and this year we'll do nine. So um that's been our growth um trajectory uh so far. Um it's been highly weighted towards other services, which are things that don't typically repeat. Uh, another kind of unique thing in Vegas, we do have a very large number of landscaping contracts. Um we have about $80,000 a month or so in recurring landscaping. Um, that's been great for us. Um it is we've never once had a landscaping contract be canceled. So we have many that we started in early 2022 that are still there. Um, all of them fit within our contract where we give them a three to five percent increase every year or so. Uh they've been great, they've been sticky, expanding margins over the years. Um, I would put them right up with our janitorial. We treat them like janitorial, we inspect them, meet with the client, talk through solutions, provide extra services.

SPEAKER_07 40:48

Um, so that's been large for us as well.

SPEAKER_11 40:55

You know, I would point out too is TJ mentioned how he has a good source of uh revenue from supplies, um, and then also his price increases and being able to follow that model in that perspective, those are things that I would say are are bringing in that additional income stream for a fairly if you relate it to the amount of work that having to be done for it. And um, you know, the the like being able to add that on just creates that immediate profitability profitability from that from that perspective. And we don't see, I would say, every single person in the system doing that. So when you look at TJ's revenue and that growth and being able to see that, I think you said three to five percent increase. Take note of that.

SPEAKER_06 41:43

Yeah, I think we do we do think there's two different you know, schools of thought around increases. Some people do it on the anniversary date. Um, once you get past 300 buildings, that is a nightmare to manage. Um, so we do them in January, and my contract to the customer says that every January we're gonna send you a price increase if is so long as the service started in the final six months of the year. So you're gonna pick up the six months on the other side, right? Because you got the new price for the whole year of the next year. Uh, and if you your service started uh before that, then you wouldn't give, or later than that, we wouldn't give you one. So um, so it's if you are January through June that your contract started in the next January, we're gonna give you a price increase. So the the last half of the year we don't. Um, and we just do them all in January. So I think we picked up like 8,000 in revenue in January for price increases this year. So this is nice.

SPEAKER_11 42:44

That's awesome.

SPEAKER_05 42:45

Do you do it across the board or uh is janitorial treated differently from other services?

SPEAKER_06 42:50

Across the board, whether it's a a contract for pressure washing, a contract for um consumable supplies that are flat rate landscaping. Um we we tried doing a sliding scale, that became too complicated. So we just said above a thousand, we'll do three percent, below a thousand, we did five percent. And that's what we did.

SPEAKER_02 43:14

And and real quick, how do you compensate your uh your sales folks?

SPEAKER_06 43:19

So they are paid on a tiered system of commission, and it's based on the month that the sale begins. So the first day cleaned. So if something gets cleaned on January 31st, we count it as part of their commissionable sales for January and it's tiered. So there's we we use three tiers. Some people got like 10 tiers out there. Um it starts out at 25%, then 50%, and then 60%. So if they start $10,000 in the month, it's a $6,000 commission. We spread it over six months or six installment payments. So if they sell 10,000 in January, we're going to pay them $1,000 February through whatever six months is July. Um and it stacks. So then February, they sell another 10,000. Now they're getting 2,000 stacks up. Uh we do also pay them for project leads in a similar way, uh, but we pay them 5% of the gross margin, and we also pay that out over six months. So their stuff just stacks and stacks and stacks. So they get nice trails. Yes. And it becomes, you know, somewhat predictable every it isn't like you get big jumps in your pay if you just get paid out the next month. So their their 12 months feels a little bit more spread.

SPEAKER_02 44:47

And I I guess what's your uh what's your like sort of net spread uh between uh customer contract versus independent contractor contract?

SPEAKER_06 44:58

Um so there's if we say who are actively working, it's probably somewhere between um every independent contractor. We don't let them get more than five contracts if we can help it. We try to keep them to two or three, but we do have some that have more than that. So actively working, I think last time I looked, there were 70 working, and there's maybe 300 that are on recurring contract work, so it's about the ratio, whatever that works out to. We have um many more contractors than that. So we have many janitorial that don't have any accounts currently, um, and fighting ferociously always to get the next one. But I'm constantly keeping that bowl full of new people. Sometimes we do have to cancel contracts. Um, we have a handful of times over the couple of year, a couple of years with contractors. They say something crazy to a customer or to me, um, or they just can't meet our expectations. They just can't clean. I mean, so I don't know. Easier way to put it, they just can't clean. Sure.

SPEAKER_02 46:08

So yeah.

SPEAKER_07 46:10

Um we do also go ahead, sorry.

SPEAKER_02 46:14

15, 20, be like, you know, like net spread.

SPEAKER_06 46:18

If we say he's asking about the margin. Oh, the margin. I'm sorry, I thought you were asking me how many contractors to uh to contracts. Ah, no, our 35% across the board. Some are much better than that because we do not generally pass the price increase on to the contractor. That is just an expanding margin. We always start with a baseline of 35. Sometimes we negotiate down to 32. Um, there's probably one or two I have out there that is 25 or 28 percent. Sometimes it's because one of us messed up the pricing and we had to fix it by a margin sacrifice. Um, but uh my finished margin uh last month was 37 percent. So um so it's a mix of some things low, some price increases, and so forth.

SPEAKER_02 47:09

And and last last question, I promise. Um so you said you don't let uh you don't let contractors get more than two to three. Yes.

SPEAKER_06 47:20

Well, we try uh you you always want to be in the position of control. And as soon as they have too many buildings, well, it's it happened to me. I've been stupid not listening to all the other owners who told me not to do it. And there was this guy, and I thought he was just the greatest cleaner, and no matter what, I threw it in, he'd just figure it out. I thought, oh, this guy's great. I solved so many problems for me. And then one night he um moved back to Florida. He just like, I can't remember if he texted what he did. Anyways, he had 10 buildings. It was a Sunday, one of them was a school that was supposed to be cleaned that day, and that day my director of operations and I had to change out crews in 10 buildings, including a school that was supposed to be clean that same day. It was painful, it was not fun. We did it, we did not miss any cleans, um, and I learned my lesson not to do that again. So um if there and I in the when I was very new in the market, she didn't have enough, you know, hold to to try to um arm wrestle me. But I had a girl once who she's one of the contracts we canceled who um I don't remember what happened, but she set sent me an email that basically said, if you do not do X, whatever she wanted, then I'm going to not clean tomorrow. And so that's how they tried to leverage, you know, the fact that she had like four buildings. And I said, Oh yeah, oh yeah, I'm okay.

SPEAKER_02 48:52

You got it. I I totally with you. Yeah, yeah. So that's the reason. That's the reason.

SPEAKER_06 48:56

I now listen. I've I've got probably two who have more than I'm comfortable with. And sometimes that happens not because you get a new contract and you award it to them, but because they become someone that you I feel like I'm talking about the person who left me from Miami. Now I'm giving myself nightmares, but someone that problem solves for you really well. And this one person in particular will have two, three different contractors, they cannot cling to the customer satisfaction. Finally, they're like, oh Luigi, help me. And he'll go in there and all my problems go away. Not a single complaint again. Uh, and he probably has seven or eight contracts right now, and most of them are fairly large. So if he decided to move back to Florida, I would be hurting.

SPEAKER_09 49:45

But yeah. Appreciate it. Thank you. Going once.

SPEAKER_10 50:00

Going twice.

SPEAKER_04 50:05

I I I feel like two weeks in a row on the last one to ask the question. TJ, thank you so much for sharing all this really awesome information. So did you say that your first year your revenue was close to one million or just over one million? No, we were 2.25. Okay. And if you answered this earlier, I apologize. But what what was the key factors in really just getting to that number right off the bat? I mean, was it your your previous experience in North Carolina, or is it just kind of knowing the system, or what was it just a combination of a bunch of different things?

SPEAKER_06 50:38

I would say a combination. Um, I I spoke about it earlier, but I just reinforce it that um identify the big buildings, yeah, know what they are, and go after them like a dog with a bone. Um, we would not have gotten there if I had I, you know, we take care of the Sands Corporation. It's like 40 grand a month. We take care of the news stations here, they're all $30,000. I closed those because I hounded them like an insane person. And if we didn't get them in that first year, we would not have hit that number because that's a significant amount of recurring revenue. Uh, and then the other side of that is whoever is doing operations, they have they cannot just be an operator, they cannot just be a people pleaser, they must also be a very good salesperson, they have to be constantly trying to add service. Um, we do commission our ops people. Um, we also tier their commission, and it's tiered based on margin. So uh, and on annual sales. So I got Excel again, I got complicated formula that says um your base margin rate is five percent. Then when you hit an annual gross sales amount, it goes to six and eight, and then ten percent. And then there's an uh an accelerator on it based on the margin. So 35 is good, that's the 5%, and then it just goes up fractionally if they go above that. So um, you know, we don't want them to price things stupid, uh, but but if it's a small job, if it's a $400 job, most of the time we can get a 50% margin on that. And they will by default pay 35% because that's what the paper says. So um we commission them that way. And uh my experience has been that they've been very aggressive about getting those commissions. So um, and you know, in the beginning, our OS um revenue was greater than our JS revenue, and that highly contributed to the success, which just wouldn't have been even close without that.

SPEAKER_07 52:46

Awesome. Thank you.

SPEAKER_00 52:48

I have one quick question for you, TJ. Okay, so we talk a lot about network wing, we talk a lot about how great our franchisees are. We're about two weeks away from convention. What's convention like when you go?

SPEAKER_06 53:02

Well, it I would say it's like a big party, but we do really do some work things there. No, it's it's great, honestly. Um, I was just talking to my uh my business performance coach, which I think they have a new title, but I'm never letting go of that one um earlier. And uh I tend to be very guilty of being a know-it-all, which my team reminds me of very frequently, I will add. Uh, and then I'll go to convention and I'll start talking to people, and I'm like, oh man, that's so much better and more efficient. Like, I've been wasting so much time doing it this other way, or I never thought about selling that service. Um, and we all exchange ideas like that, you know. We also have a lot of security revenue. Um, it's unarmed guard service, and it's basically a Walmart greeter that sits out of a couple of buildings to make sure people don't break in. Uh, and that that was a hot topic last year at convention because people are like, what do you do? Security, and uh now I can see we can see each other's um sales and Power BI. And I see a couple of them went and sold some contracts. So I think that's great. But uh we learn from each other. Um it's good to get together. There's a a lot of uh fun that happens, the gallas are great, the events are great. Um, it's also nice to sometimes meet the support center staff that either you don't know or who usually are just like a name on an email that sometimes you want to murder. And then when you meet them, you're like, oh God, I actually like you. All right, I'll be nicer to you in emails now from now on. Even though my program doesn't always work, I'll be nicer to you now that there's a face to go with that name. So uh so yeah, I think it's a good experience.

SPEAKER_00 54:47

Love that. Excited to see you. Thank you, TJ.

SPEAKER_02 54:50

Yeah, excited to see you. And what one last one for a job site cleanup, yeah, how many independent contractors do you typically need to do that?

SPEAKER_06 55:01

Uh job site like post-construction or yeah, post-construction. It's uh depends on the square feet. Um, but you know, the calculator I use for post-construction, I always assume that there's some person that has to be there running a floor machine. If it's a big building, I always assume there's another person there that has to use a wet vac. And then you need at least one other general cleaner. So three is probably the minimum. When you get into a really big building, like we just did one at Nellis Air Force Base here. We had 10 cleaners there. Two of them were like what we would consider like floor technicians, and the rest were like general cleaners. So um, scopes aren't always the same either. A lot of the time post-construction will require a scissor lift. So you gotta someone have someone who knows how to use a scissor lift and is certified to use a scissor lift, and you have to rent the scissor lift most of the time. So so it really varies by job. Probably 90% of our post-construction cleans. I mentioned not a lot of big you'd think there are a lot of big buildings in Vegas, but most of our office buildings are about 7,000 square foot. That's about the average size of our account. And uh one person, maybe two, can do a post-construction clean in there.

SPEAKER_09 56:14

So thank you. Sure.

SPEAKER_10 56:20

All right, y'all.

SPEAKER_11 56:21

Well, thank you guys so much for coming with all of your questions and TJ. Thanks for giving us your hour to to answer all of them. Really uh appreciate the time and hope you all have a great rest of your day.

SPEAKER_07 56:33

Thank you so much.