Talk to your insurance agent before big projects

In this episode, Steve Sherwood interviews Pat Grignone from California Pool Association to explore how pool service professionals can optimize their business operations, partnerships, and insurance strategies to grow profitably and sustainably.

Keywords

pool service, business growth, partnerships, insurance, pool renovation, subcontracting, liability, pool industry

Key Topics

• Business capacity and scaling in the pool industry
• Partnering with subcontractors and specialists
• Managing insurance and liability for large projects
• Streamlining operations for profitability
• Best practices for pool renovation and startup

Guest Name

Pat Grignone

Sound Bites

• "Control the entire renovation and startup process"
• "Talk to your insurance agent before big projects"
• "Check in with your insurer when business changes"

Chapters

00:00
Introduction and Guest Introduction

00:15
Steve's Personal Pool Industry Story

01:09
Challenges of Scaling a Pool Service Business

02:01
Balancing Service, Repairs, and Billing

02:54
Strategies for Managing Growth and Capacity

04:02
Partnering with Subcontractors and Vendors

08:31
Pricing and Profitability in Renovations

09:23
Managing Renovation and Startup Processes

10:45
Controlling Quality and Long-term Service

11:37
Partnerships with Leak Detection and Plaster Companies

12:35
The Cost of Equipment and Building a Large Company

13:45
Controlling the Entire Pool Renovation Process

14:25
Advice for Companies Outsourcing Jobs

15:16
Financial and Insurance Considerations for Large Jobs

16:11
Tax and Insurance Implications of High-Value Jobs

18:01
Monitoring Revenue and Insurance Changes

18:55
Closing Remarks and Contact Information

Transcript

SPEAKER_03 0:53

Hey everyone, happy Thursday coming at you from your host, Steve Sherwood. And as always, our guest, Pat Grignon, Vice President over at California Pool Association. So, Pat, thanks so much for coming on. We always love you having you here. And uh we really appreciate the sponsorship and all the the knowledge that you're dropping on the show.

SPEAKER_04 1:09

Awesome. Pleasure to be here, Steve. Thanks for having me.

SPEAKER_03 1:11

Thanks, buddy. So I wanted to shout out one of my buddies today. I grew up in New Jersey, right? And I lived in this small town. It was like a square mile. So like everybody kind of knew everybody. And a lot of my friends, you know, stayed there in New Jersey. A lot of my friends, you know, spread out throughout the country. And my friend Brian Bongard, he actually moved to Arizona. So he, you know, went out there and he was doing like pump stuff before he was like a pump mechanic before he moved out there from Jersey. So he bought a pool route. And uh, you know, he's pretty successful in that aspect where like uh, you know, he's making really good margins and it's it's really awesome as far as like the the money goes, but he's running into the the age-old adage that we have in the pool industry is you know, at what point do you do you break, right? And I mean that in a sense, and I'm not saying that he's broken by any means. I'm just saying that like once you get up to the point where you're doing 50 or 60 pools by yourself, it really becomes a struggle if you're trying to be the person who services your pool and does the repairs, right? Then you're also um subbing out different work, right? So you have like these installations and these motor swaps and different things like that. So you're doing all the service, all the repairs, and then um you're also doing the billing too, right? So I remember when I was doing like uh, I was doing like 70, 80 pools myself, and I was also trying to like do the billing and stuff, and like that's when like I really started to kind of fall apart because like I was just all of a sudden I was like three, four months behind on billing, you know, and people were like, hey, like can you get this, can you get this bill out to me? And I'd be like, Yeah, yeah, yeah, yeah. And then like something something else would happen. And like my weekends were not mine. So like my week my Saturdays, I worked on I did six, I did six to twelve pools on Saturday, and then Sunday was supposed to be my day off, but because there was so much shit going on, I would always have to work on Sundays to to catch up, just to make sure. And I left myself one day. I would leave myself, you know, Mondays to do to do those installations if I could, but the installations would be, you know, wind up taking five, six hours, and then I wouldn't get it done on Monday. I'd have to push some of my pools on Tuesday. So we were just chatting. He he reached out and he you know, he told me that he loves the show and he listens all the time. You know, with the insurance interlude, he's really learning a lot of stuff. But you know, I want to know for myself, for the listeners out there, Pat, you work with a million different guys. You know, you work with the single polers, you work with the guys that have, you know, a hundred employees and they're they're using heavy equipment. You know, you're working with the guys that do leak detection, you're working with the guys that do renovations, you're working with the guys that do, you know, super high-end, you know, commercial construction, where they're holding insurance that, you know, would just basically make all of us, you know, basically shit ourselves. So I want to know, like as somebody that's reached that point, and I've been at that point before, where you have those fit between 50 to 80 pools, you know, what's the best source of going out and making your life easier and making more money and making better use of your time? And I always say, like, I say this to my service manager, Carlos, all the time. He's out there doing pools. He does pools too, like on his own, because he's 1099. And then he does pools for me too. And I actually want to fire him from doing the pools. Like, I don't, it doesn't actually do me or him any good for him to go and sweat his ass off and do 10 pools a day. I would rather him just do installations and just do troubleshooting because I got four light jobs that I'm hoping sitting on. I've got a heater job that I'm sitting on. I got a lot of work. I got like weeks worth of work that like we can only do one, we can only catch up one or two days a week because he's so busy. So, what are some of the people that you can partner with and ways that again you could just make use better use of your time?

SPEAKER_04 4:55

Yeah, really common, really common problem, like you said. I think in business in general, but certainly in the pool business where you know you kind of got to make a decision on, you know, I'm at capacity, so what does that look like? So, you know, I've had I've had a lot of my clients in that same kind of limbo area there, you know, plenty of them, they'll go find someone inexperienced, but you know, reliable and hungry, and you know, they teach them how to just do the the pool service, right? They're not doing anything with the equipment, they're just doing they're just doing uh filters and and netting the pool and then calling calling him in for anything that's that's more sophisticated or needs uh you know needs a different touch. Um, but uh, you know, so that's an option. I mean, you gotta take a look at some things like workers' compensation insurance if you're gonna make them a W-2. Um, but there's lots of folks that that take that route, they'll bring in one and maybe another one, and they just focus on like the equipment repairs and installation and and driving more new accounts into the business. And I've seen a lot of folks expand um solidly with that. You know, the other one, yes, you can find companies to partner with and to kind of refer workout, you know, or bring in as subs, right? I mean, like you you bring in, you bring in your guys, they're subs, they're 1099, they do their own stuff, but they do stuff for you. And, you know, there's a lot of people who who may not be at capacity out there that would be happy to jump on board and come do your overflow work, and you can kind of pick and choose what you want to do.

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SPEAKER_02 8:35

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SPEAKER_03 9:25

That's a great that's a great idea, and I do that. It's just you have to be super careful with how you do that because I've gotten myself into situations at the beginning where you farm out these jobs to these people, but you don't really get anything in return. Yeah. Or maybe they kick you back a hundred bucks or you know, five hundred bucks or you know, whatever. But like maybe they did a renovation for fucking fifteen thousand dollars or twenty thousand dollars. Like uh a hundred dollars out of fifteen thousand dollars is you know not a good not a great percentage. So, you know, for me, what I've always done is I it took me a long time to find my plaster guy, and a lot of people don't want to deal with it. They're like, hey, I don't want to do that, but what I do with the renovations is, you know, obviously my plaster is an additionally insured on my insurance, I'm also on their insurance, so if anything goes crazy, we both are covered. But more so is that I act like the foreman of the job. And I'm the one who goes out to the client and sells the job, and then my plasterer, they send Sherwood Pool Consulting Group a bill, I send my client a bill. So my client doesn't ever deal directly with my plasterer. My plasterer doesn't deal with anybody but me. But that's a lot of responsibility for you know for our company to take on, in a sense that, but we are the ones that are renovating the pool with through a sub. We directly are the ones that are starting up the pool, and then we are the ones that are servicing the pool. So that means a lot in that aspect because I am actually standing on my work. Where most companies that renovate your pool, there's one company that renovates the pool, there's another company that, you know, starts up the pool, and there's a third company that uh that now is taking care of the pool. And then they call you back six months later and they're like, hey, there's a problem, you know, and you come back and the cyanuric acid is through the roof, the TDS is through the roof, the calcium's through the roof. So now you you can't warranty any of this this product, you know. But if you're the person that that does that every step, so and those are you know, those are decently lucrative jobs where you when you work with a company because if you're the one that's that's putting it out, like you can make whatever percentage you want. You're not beholden to someone else giving you X amount of dollars for this job. And I do the same thing with my leak detection, like we don't do leak detection anymore, but like I have a guy that does great leak detection, and uh, you know, he goes all throughout the LA area and he does it way quicker than I would do it. And he charges, you know, way less than I would have charged anyway in the first place. So I can still pay him what he needs to be paid. I can still make a little bit of money. Um, so those are two of the things that I've I I've I've made really good partnerships with uh, you know, with like my plasterers and my my leak detection companies because I'm the one who's actually doing that. It's just I tell them, hey, because people always ask, they're always like, Are you the one that's doing it? And I'm like, if any company tells you that they're doing all of this shit, they're lying to you. And if not, then they're California pools. They're a company that's doing Disneyland, or you know, they're a company that has 250 employees, and like, yes, they do have they do have six divisions, but like you can count on you know, on your fingers and toes the amount of companies in California that are fully licensed and insured to do all that shit. Yeah, right. Right? Like a lot, yeah. It takes you, you know, it takes you 25 years to build a company like that. That's how that type of company doesn't happen overnight. Like uh, they're buying, they're buying, um, you know, they're buying uh like rigs that are like 500,000. You know, I mean, you know how much it is to most of the guys that plaster pools, they don't even own the trucks. Rent the truck for the day because the truck is a half a million dollar, it's a six hundred thousand dollar truck. Yeah, who's buying a truck for six hundred K?

SPEAKER_04 13:09

Right. Yeah, you think about you know, it's not having all the different trades that go into, you know, like renovations and and building of pools. Like, how are you gonna keep your how are you gonna keep your servicing guy, you know, busy enough to warrant full-time payroll? So yeah, it's you've got to be really big to be able to be like vertically integrated like that.

SPEAKER_03 13:28

And then you gotta take over the pool. And again, because of the the way that the licensing and stuff goes and the liability, a lot of these guys don't wanna take responsibility and they don't wanna they don't wanna start the pool up, but then it comes back to you know, whose fault is it three, four, five months later when there's a problem and there's modeling and there's you know, everybody, yeah, everybody points the finger to, oh, it was your startup guy or it was this guy. And that's why I always tell all my clients like if you are going to renovate the pool, I'm like, no matter who you use, I'm like, make sure that the same company does the renovation, starts up the pool for you, and and services the pool for you. And I don't know many companies out there that do all three. And that's why when I go to a lot of these jobs, I tell them, I'm like, no matter who you work with, make sure that they're doing that. Yeah. And I'm telling you, like, I'm one of the only companies that I know of. I'm sure there's other companies out there that do it, but I'm one of the only companies that that wants wants to take on that responsibility because I know that if you do it the right way, you know, more time there's there's anomalies that happen, but if you do it the right way more more times than not, you know, there's not going to be any long-term issues if you if you do it properly. Yeah.

SPEAKER_04 14:39

Yeah, it's a compelling argument, right? I mean, if I was on the fence with uh selecting the company to remodel, remodel a pool, you know, like that that makes a ton of sense. And and yeah, I agree. You know, be the point person on it. You that way you're not giving up, you know, a level of control into all these, like in this example, those three different phases. You want to be able to control it, control the messaging to the to the customer, and it's a smart way of doing things. Yeah. And you can you know, bring in, bring in subcontractors to do to do the work that you need help with the lifting and you know, make a little bit of money doing it. Nothing wrong with that. The way to go.

SPEAKER_03 15:11

Okay, so now is I've got in my parting, you know, in my parting notes here. Uh, is there anything that like someone like me needs to do? Um, because on some of these jobs, like I'm start uh you start to make like a decent amount of of money, you know? So like other than like uh having proper licensing and and all that stuff, right? Like, is there anything else that like a company like me that that farms out some of these jobs like needs to think about or worry about in in that sense, other than having people as additionally insured? Like, at what point do you say, like, okay, like if I'm making over, you know, five hundred dollars for a job, or if I'm making twelve hundred dollars, like all of a sudden not now, maybe you know, you get a renovation that's two hundred thousand dollars, you know, like and you're making uh a lot of money. Yeah, you know what I mean? Like uh there's there's companies out there where they only build ten pools a year. You know what I mean? Like it like uh when you get into building pools, like these things cost sometimes, you know, they start at like what like sixty to eighty thousand dollars somewhere around there. And then I mean I've seen pools that are three million dollar pools. I've seen like uh Jeff Hampi pools where he's done did one by one tiles on the whole thing and it was uh it was over a million dollars.

SPEAKER_04 16:24

Yep.

SPEAKER_03 16:25

You know, so like at what point would you would you have to say like uh and not me as the person subbing out the job, I guess, just like at what point, like when you start making fifty thousand dollars, you start making eighty thousand dollars, you start making like does it matter the profits that you make on a job? Like, is that have does that have any bearing on on any kind of like and not ta this isn't a tax show, so we're not the tax guy. Like obviously there's tax implications and any money that you have coming in from that, like you gotta you gotta disclose and like you know, you're gonna pay tax on that and stuff. But like, is there anything else that like we you wouldn't think of, like, oh, you need to do this or you need to do that because you're making X amount of of money doing doing this?

SPEAKER_04 17:04

Yeah, I think ultimately you should have a good open line with your insurance agent and just like just be thinking about that. So it does the amount of revenue or payroll or subcontractor spend or cost, the larger that is, you know, the larger your insurance premiums are on most standard policies. Um, you know, ours is based on like a headcount, you know, per per employee or per sub and and sub some sub cost, but traditional policies are all gonna use your gross revenues, your payroll, and or your uh subcontractor spend yearly to determine um you know how much money you're gonna end up paying for that policy. If you're all of a sudden you land a$200,000 job, I think that just you know, whenever you have a change in your business, pick up the phone, talk to your insurance agent, say, hey, you know, I'm I'm bringing this in. What does this do to pricing, my policies, anything like that? And really, is there anything else that you'd recommend, you know, that I carry doing a job this big? And you might might discuss it on having an umbrella, might discuss some different things. But really, you know, you you'd want to get ahead of like, you know, getting surprised by a huge increase at the end of the year when they audit a policy on a look back, and it's like, whoa, you said you had you know 250,000 in revenue was what we projected this on, and now it's 600,000.

SPEAKER_03 18:21

Oh, it's quadruple that.

SPEAKER_04 18:22

Yeah. So you know, guess what? You owe X amount and it's a big fat bill. I mean, look, you it it makes sense, you make more money, you have more money to pay the bill and whatnot.

SPEAKER_03 18:30

But it gets weird because a lot of these jobs are uh, you know, it's not like you went from having 25 clients to having 550 clients, where it's like, okay, we grew 300%, and we're gonna stay at this growth. Like, if I get a renovation job that's$250,000, and let's say you make whatever$80,000 on this job, that's like a one-time job.

SPEAKER_04 18:54

Yep. Yeah.

SPEAKER_03 18:55

Like you're not gonna make that$80,000 for that job again next year. So it's like uh it's kind of like a one-off thing, you know what I mean? And you do five of those and you make a bunch of extra money. Looks like your company grew 400% for the year, but like the next year it's uh like right back down. So I think that the lesson here is just, you know, check in with your insurance company, you know, at least at least yearly, especially if you're having a really good year and you, you know, you're you're actually getting more revenue than than you had thought because there are things that you have to change in your disclosures. And uh, you know, there's also like if you're working with a bunch of these companies, like uh now your scope of work and your liability is just oh it's just opening you up to a lot more liability. So you just want to make sure that you have all those bases covered. So, Pat, thanks for the great segment today. Um and Brian, thanks for the question. I appreciate you reaching out and I appreciate you listening to the show. And uh yeah, so if you guys ever have any questions, just reach out to us at talkingpools at gmail.com. We'll we'll talk about your stuff on the show. And uh, if you guys want to talk about insurance or if you need insurance and uh or if you made more money than you thought you did this year, why don't you check in with your insureds agent? Um, if you talk with Pool California Pool Association and you mentioned the Talking Pools podcast, they will actually give you a one month off on your general liability, which is super awesome. And uh, you know, if you just need to reach out to them and talk to them um just about different things with whatever you have with insurance, they're there for all your insurance needs. So once again, Pat, appreciate you being here. And guys, thanks for listening. We will talk at you next week. Thanks for having me, Steve.

unknown 20:19

Thanks.