Profit & Grit with Tyler
Profit and Grit is the no-BS weekly podcast for home service business owners and blue collar entrepreneurs. Each episode features real strategies from successful contractors and industry experts in HVAC, plumbing, electrical, roofing, and other trades. Hosted by Tyler Martin, a fractional CFO for home service businesses and the trades, Profit & Grit dives into growth, cash flow, hiring, pricing, and leadership. If you own or want to grow a business in the trades, this home service podcast will help you build a stronger, more profitable company.
Profit & Grit with Tyler
The HVAC Crisis That Built a $5 Million Business - Jack Carr
Most trades business buyers expect a rough start. Jack Carr got a full-on fire drill.
He bought an HVAC company across the country, packed up his life, and drove 32 hours, only to find out his entire team had quit. No techs, no support, no HVAC experience. Just a dispatcher, a wrench, and the middle of summer in Tennessee.
In this episode of Profit & Grit, Jack shares how he went from scrambling to keep the phones answered and units running, to building a $5M business with a clear plan to hit $20M by 2030. He breaks down the real math behind paying techs more, how offshoring back-office work helps him fund better talent, and why most first-time buyers badly underestimate the businesses they acquire.
You’ll hear how Jack taught himself HVAC at 4 AM with YouTube videos, why he fired the seller after two weeks, and the pillars that let him compete with $100M giants in his market.
What You Will Learn in This Episode:
• What really happened when Jack’s whole HVAC team quit before day one
• Why most home service acquisitions go wrong in the first 12 months
• How Jack uses overseas labor to pay field techs $5–$15/hour more
• The one hire that helped him double revenue and gain breathing room
• Why offshoring admin roles isn’t about cutting cost—it’s about upgrading talent
• How Jack models growth down to call volume, conversion rates, and fleet size
• What first-time buyers get wrong about “opportunity” and “low-hanging fruit”
• Why “just add marketing” is one of the most dangerous growth plans out there
More From Profit & Grit
Book your complimentary Financial Insight Session with Tyler Martin, fractional CFO for home services and the trades, here:
http://cfointrocall.com
Learn more at http://cfomadeeasy.com
Follow the show for weekly interviews with HVAC, plumbing, and home service owners and experts who share what it really takes to grow, scale, and profit in the trades.
If you listen to any of the following shows, we’re sure you’ll love ours too!
To The Point Home Services Podcast, Toolbox for the Trades, Masters of Home Service, Home Service Business Coach With David Moerman, BlueCollar.CEO, The Home Service Expert Podcast, Next Level Pros, Blue Collar Business Podcast, Home Service Millionaire with Mike Andes, The Contractor Fight with Tom Reber and Blue Collar Success Group
🎙️ Profit & Grit by Tyler Martin
Real stories. Real strategy. Real results for service-based business owners.
🔗 Website: ProfitAndGrit.com
📍 LinkedIn: linkedin.com/in/thinktyler
📸 Instagram & TikTok: @profitandgrit
Tyler Martin, a fractional CFO for home services and the trades
📅 Want to grow your business with smarter financial strategy?
Book a free intro meeting
Day one, every single technician quit. I left with a dispatcher, a wrench and zero HVAC experience.
Speaker 2:Welcome to Profit and Grit with Tyler, where blue-collar owners and insiders spill the real story behind their hustle, building businesses that thrive through sweat and smarts. We'll dig into their journeys, from scaling chaos to growing the bottom line, with lessons and grit that pay off big. Here's your host, the blue collar CFO Tyler.
Speaker 3:Martin, hey, hey, welcome back to Profit and Grit. This is Tyler Martin, your host. Today I got a great guest. His name is Jack Carr. He bought an HVAC company thinking he'd ease in, learn the ropes and grow from there. Instead, his whole team quit, and this is before day one Now. He had no experience, no techs. Middle of summer, he rolled up his sleeves, learned HVAC from scratch and went all in Fast forward. He's now running a $5 million shop, scaling through smart acquisitions and on track to hit $20 million by 2030. We get into what that first year really looked like, how he uses offshore talent to pay his techs more and why so many trades buyers get burned, and the exact moves he's making to keep growing without killing margin.
Speaker 3:If you're thinking about buying a trades business or you're trying to scale one without losing your mind or your money, this episode is a must listen. Let's get into it with Jack. Hey, jack, welcome to the Profiting Grit Podcast Show. How are you doing Good? And yourself, tyler? I'm doing great man, thanks for being on the show. I always love to start learning a little bit about you. Can you tell us a little bit about yourself and then maybe, if you would, even a little personal note about yourself.
Speaker 1:Yeah, I mean me. I'm a ex winery operations manager. That was where I got cut my teeth as I started off in facilities maintenance and operations, ended up moving my way up the ladder running multiple wineries. Always had a bug though for entrepreneurship and so started a few businesses. I won't kill the dead horse here, beat the dead horse, but essentially essentially a mobile maintenance business, and then a Bitcoin mining server farm, which I exited late 2010s at a really good times and then took a few years off to raise my family, which I have a five-year-old son and two twin year old daughters, which has been amazing.
Speaker 1:It was a lot, and I got to take off right at the point where I had three kids under two years old, so my wife probably really appreciated that, yeah, and then I got a wild hair to buy an HVAC business, mostly because HVAC was one of the things when I was working in the winery that we just couldn't do in-house. We did all of our plumbing, we did all of our high level carpentry some beautiful pieces we did our own concrete, we did our own wastewater treatment, but we couldn't do our own HVAC. And I would send guys out to HVAC classes and they'd come back and they'd be like Jack, I don't know, and I'm like I just spent three weeks and a ton of money sending you to this and you still can't get it. This has to be some level of moat and that is a technical moat that only a select few group of people can do. So I went and bought an HVAC company, moved from Boise, idaho, out to Nashville in 2022. And we have just been growing the business ever since.
Speaker 3:Yeah. So let me just kind of set this up here. So one I mean it sounds like you've owned multiple businesses. Where did this whole entrepreneurial spirit come from? Is this something from your family? Is this just something you've always decided to?
Speaker 1:tackle. Yeah, Tyler, I just I don't like being told what to do, and so that that's where it came from. So when, when I was working W2, I did really well in jobs where the managers would stay out of my way and I would work with, like the GMs or the director team, it ended up being like they would just let me go and say, Jack, just here's your really high level goals, go hit them. And even from really early on, I would do that. And anytime that somebody would try and micromanage me, it just doesn't work for me. And so what that led to is me saying I'm just not going to work in an environment where anyone can micromanage me anymore, and I pivoted to entrepreneurship and running businesses.
Speaker 3:Okay, so autonomy is important to you. It sounds like Just doing your own thing is you'll get it done.
Speaker 1:just stay out of my way to you it sounds like just doing your own thing is you'll get it done. Just stay out of my way. Yeah, and ironically right, that's the opposite. I had to learn the hard way that in some businesses like HVAC that's the opposite of what you get from customers, right? But let's just say I'm not the customer face of my business.
Speaker 3:Plus, when you own the business, it always feels a little bit different, that's true. Then if you're not the owner and you're getting that type of treatment, so let's talk about that HVAC. So you didn't start as an HVAC guy when you bought the HVAC business. Is that correct? Like you didn't have experience doing HVAC, or did you Correct?
Speaker 1:So my I mean I was able to sell the SBA on, like this idea that I fix electrical troubleshooting at the wineries, troubleshooting at the wineries. We did a lot of that. We have a very handy background. We had $172 million in wine under refrigeration at any point in time, but A that was all commercial wine, almost industrial kind of cooling equipment like large glycol chillers and cooling towers, and then I went and bought a residential HVAC service company, which is absolutely completely different. So the answer long way around is no. I had almost no experience in actually what HVAC residential service was.
Speaker 3:And Jack, can you tell me what happened on day one after you acquired the business?
Speaker 1:Yeah. So I have a real fun story. There is I'm driving from Boise on my big old U-Haul, the biggest size U-Haul, with the biggest size trailer behind the U-Haul, pulling my truck and everything, and it's a 32-hour drive. I did it straight, no sleeping, which is not the smartest move, but I did it. And then midway through that Sunday I got a call from the owner or the ex-owner.
Speaker 1:So the seller and he says, hey, I have some bad news for you. And I go hey, what's going on? He said you're going to come in tomorrow and nobody's going to be here. And I said, what do you mean? And he goes, yeah, everybody kind of just quit. And I went wait, whoa, whoa, whoa, whoa. What's going on? He's like, yeah, everybody has quit and it's just going to be me and you tomorrow. I mean, given that everybody was a two-man HVAC service team. But for me going into this with no experience, I mean that was huge. Right, I have no more technicians in the middle of summer in Tennessee and it's just me. And so I had to really quickly learn HVAC, and not only learn HVAC as a business, but also learn how to become an HVAC technician, which usually takes quite a few years of training, but I was able to pick it up pretty quick.
Speaker 3:I'm assuming the owner stood by you during that transition.
Speaker 1:No, no, wow. So the owner viewed himself as more of a comfort advisor or a salesman. He actually hadn't been in a technician spot in years, and years and years. He's only estimating and selling. So that generated a very large problem for me, because that's not what I needed at the time. So we had a month and a half long transitionary contract and I let him out of that after two weeks because I didn't need any help selling. I just needed help with the technician portion, and so he was actually just getting in the way. So I let him go really early on and I just said, hey, there's two options Either I figure it out and we save the business, or we flop before a whole month is up. And so we just went ahead and figured it out, do you?
Speaker 3:know why the two technicians quit. What was the story behind that?
Speaker 1:Yeah. So the story behind why? A lot of speculation here, so I can't prove any of these ideas. But the old owner and you'll see a trend here the seller decided to tell the warehouse their distribution warehouse that he was selling before he told the technicians. So then when the technicians went in to buy parts, they heard that the business was sold and that the new owner was starting. And there's a lot of uneasy feelings around that. Right, absolutely. Is our pay going to change? What's going to happen? This doesn't make sense. Blah, blah, blah, blah, blah. And it was sprung on them not by me and not by the old owner, which didn't buy me any time. It bought the technicians weeks of time to like figure out where who they were going to go work with behind the old owner's back and then right before at the maximum pain point, a comfort advisor.
Speaker 3:How come you didn't feel like I guess I put myself in this position. I'm like man, I know nothing about HVAC. I really now have no staff. I'm in a jam here. I just bought a business. How come you didn't need, you didn't feel you needed his help in terms of the comfort advising standpoint, the selling part.
Speaker 1:Yeah, because I think that, based on a really on the model of HVAC residential service that works the best, is its maintenance. Good maintenance rolls into good service, which then rolls into new units. So if you don't have the first two sections done well, then it's very, very difficult to do the last section. You can't really show up at customers' houses on a two-year-old unit and offer them new units. It just it doesn't make sense because there's going to be more service and more maintenance than there is sales. And so when he tried to help me and would take me and show me here's how I do a maintenance, and I went this is, this is not how you do a maintenance. I'm not even an HVAC and I know that. And so that I understood that really quickly and I said, hey, I'll figure out the sales portion later, but I need to service this customer base and keep them happy with service and maintenance. And so I was able to sell a few units.
Speaker 1:I was able to do a lot of service and pick that up quickly. A lot of primarily three to 4am I'd wake up every day and watch YouTube videos. I'm more than happy to say that I am a YouTube university grad and it would be like top 10 things that went wrong in HVAC. But the nice part was that I learned that really quickly through like, hey, here's what you see, and this is what it causes. It's a very causal effect. And then I was lucky enough to surround myself with some really good subcontractors who, in cases where there were situations where we couldn't I couldn't figure it out, I would send the data to them and be like, hey, I really need your help, can you help me? And then, on the background, when I did sell a unit, I would utilize them to do the installation for me so very beneficial.
Speaker 3:Jack, was your strategy then? Kind of I don't want to say self-preservation, but you're like, hey, I've got this base of clientele, I'm going to just make sure they're really covered well, and I can do that on my own and I'll worry about building new clients and business, kind of once I get my feet grounded. Was that kind of your strategy once this all happened? Yeah, it was minimize losses.
Speaker 1:That was where I went into is like how do I keep the business afloat? The nice part about having a small loan and a small debt service and no team and no infrastructure, like the one good thing about not having a buying a good business and buying a really bad business, which now I know. But the good thing was like there's really low overhead, so all I needed to do was pay myself and pay the debt service. Phones were already ringing that he didn't really have marketing set up, so I was able to jump into this. My trucks were paid off and so the overhead to keep the business afloat and the break even was very, very low. So my goal was keep customers happy until I can hire somebody who knows what they're doing from a technician side and then I can take a breath. And that's exactly what happened.
Speaker 3:Awesome If you had a do-over, knowing now that it was a bad business. Is this a business you'd still buy and say, hey, I learned a lot from it? Or would you have selected, taken more time and maybe selected a different business? Oh, that's such a hard question. I know that's such a hard question. Let me add a little color to that too. You know, I interviewed John Wilson and John cut his teeth by basically acquiring for lack of better words bad businesses. And what he told me I said well, dude, now that you've made it, I'm assuming you're like selecting from the cream of the crop. He said to me no, I'm a turnaround expert now, and so really, that's what he acquired out of that. I'm happy if that's what it takes and it makes sense. That's his thinking, which was honestly opposite of what I expected him to say.
Speaker 1:Yeah. So I get this question in different ways. Sometimes it's like would you buy or build Is a lot of times a phrasing I get on here. Yeah, and I will say that, even though that it shook down the way it did the business and the way that everything happened allowed me to understand my business in a way that I would never have understood it if I bought a larger business to start right, a business that did 2 million in EBITDA and I'm just the owner who you know floats around, has never touched a tool in his life.
Speaker 1:I actually understand my business from a CSR perspective, from a technician perspective, from a comfort advisor position, because I've been all those and much like John has as well. And then with that, I think that there's a muscle somewhere that you build it and it's not a physical muscle but it's a enduring pain muscle and it's a figuring out problems muscle and it's a dealing with situations that aren't ideal muscle that business owners need, especially coming from a W2 world, that you need to build early on. It's just like, hey, stuff is going to happen in your business, there's going to be fires, and the whole experience has put me in a position now where I run a very successful business multiple businesses and put me in an industry that I've really enjoyed, and so, to answer your question, I can't even say I would have liked it to be easier. I just it is what it is.
Speaker 3:Yeah, I hear you, I get it. You rolled with the punches basically and and now you're in a great spot. Yeah, I hear you Kind of switching gears. I want to talk about kind of a turning point. When did you realize like hey, I'm actually building a real business now, like I've overcome the hump and I'm on my way?
Speaker 1:So my first feeling of that was about a year and some change in. So, because a lot of the beginning was just really hustle and like how do I get my first technicians in? And then, oh, this technician doesn't know what he's doing and you know the the normal, uh, really early stage business owner. But I remember feeling that, uh, we rented a small shared work office in in like a yeah, like a shared business park, because I wanted somewhere to bring technicians that wasn't like a home garage or, um, something like that. So I thought, hey, shared office at least makes me have some level of ethos.
Speaker 1:And we hired who's still with us today, my comfort advisor, and she's on track to sell over 2 million this year, 2.5 million in units. She is an amazing person who's helped this business grow and I couldn't have done it without her. And so I remember, like, shortly after I hired her, I was like, ooh, we got two technicians, we got a comfort advisor, who's who's working, and like we're pricing correctly now and she's generating sales without me having. I was like this feels like a good first step. And now that's where, like, I attribute my good, my, my turning point where it became like a good first step and that's where, like I attribute my good, my turning point, where it became like a really hard hustle of just me to like now me having a partner who I could work with, who's also focused on sales, and, yeah, that's probably the moment.
Speaker 3:That's awesome, just as a little tangent. On the comfort advisor you know that's one of the challenges I see a lot of times in HVAC, where it's just a sticking point. It's a stopping point, like people have a hard time finding the right comfort advisor, the right team. Any words of wisdom there and what made it work for you?
Speaker 1:good comfort advisor with such a small company. But I think what I leaned into and what I continued to lean into, and what our business has always leaned into from the early stages, is this vision, this goal, this dream that we put forward and we're very open about like, hey, we want to do a fast, fast growing business with you know, we still we want to hit 20 million by 2030. Like, we have this, this dream, we have this goal, goal and we're pushing forward. And so I think that there's certain individuals who see this building opportunity and they see somebody who is, you know, competent, trying to push it and trying to run with this vision, and a lot of people cling on to that. So there's not much you can offer very competent individuals early on in terms of pay or package or whatever. But one of the things that you can do is you can really be passionate about your project and that shows through.
Speaker 3:Yeah, what I was thinking when you said that is the one thing you can offer them, is you, as the owner or the founder, the belief in you. Because that's I know, I kind of was there in my career People believe in you. They see your energy, they see your passion and that's really what they're signing up for.
Speaker 1:Yeah, exactly, they are signing up for the ability to build something with somebody that they think is going to go far and who they like, and it's been a very mutually beneficial relationship since then.
Speaker 3:Yeah, you talked about potentially becoming a $20 million a year business in 2030 and just kind of going down this path of kind of making it as a business. How much have you laid out that plan? Like, you know, I don't want to you disclosed off the recording your size. Now I don't want to disclose that unless you're comfortable, but how like are you like, hey, I want to be at 12 million this year, this, this, and I know how many trucks I'll need and how many technicians I'll need. Like, how granular is that, if at all?
Speaker 1:Yeah, we've we've run that extremely granular, really. We've run that down to the T of how many calls like cause. It's all connected, right, right. So we know how many calls we need at what percentage of close rate, which then turns into how many service calls are running and how our percent of close rate on maintenance contracts and how many of those we need to sell as units and our average unit sale price and how many people can run that at what velocity, based on the percentage of our revenue that's generated in which months.
Speaker 1:So, like we've, we've ran this entire model, uh, multiple times and so far we've grown over a hundred percent year over year, which wasn't difficult in the beginning because it was a seven $800,000 business. So seven to 1.5 is nothing crazy. First year, 1.5 to three was a big step, and then three to five-ish, a little over five this year, and so we will not hit the 100% mark this year, but we'll still be in like the 60 to 80%. So we're really excited about that and what we are planning on is the continuation of that. Hey, we want to be 50 plus percent and if we stick to that 50 plus percent of growth year over year for the next five years, we'll easily be at that 20% mark or 20 million mark.
Speaker 3:Yeah, it gets pretty hard to be a hundred percent when you're like a 10 million year company, unless there's like some crazy dynamics going on, exactly.
Speaker 1:And our market? Once again, everybody says this, our market is particularly difficult, more so than other markets, is my belief. Easier than other markets, but harder than a lot of markets. You know, we just have a lot of hundred million dollar companies that we have to compete up against, who have amazing purchasing power and huge scale and big coffers. So it doesn't make it difficult as we get bigger to actually they start targeting us right. It's no longer a you know, we're a small guy that flies under the radar. They're like oh, we're going to start bidding their name now on PPC and we're going to start, you know, actually viewing them as competition. So we've started to see some of that with some of the medium-sized guys and eventually we'll have to fight off the bigger teams here in the near future. You start to become a target.
Speaker 3:But as long as you're smaller, you probably can service better and provide a lot better service. Generally is what usually happens.
Speaker 1:Yeah, we try. I mean, there's some definite pillars of our business that we lean on that, we believe, keeps us innovative as well as agile, to be able to kind of go around the big guys and what they have to do. View it like as a speedboat versus a cruise ship. We can move faster and turn better.
Speaker 3:Yeah, Before we move on to the next thing I want to talk with you about, are you open to sharing those pillars, the pillars of? You said we have certain pillars that you kind of go by. Are you open to sharing them?
Speaker 1:Yeah, so I mean, one of the huge pillars that we really push on is the ability to pay our employees better than they would get paid elsewhere. So we can't offer a lot of things, but what we can do is we work really hard and this is super granular. So excuse, excuse me here, but like we're able to focus on over offshoring certain individual positions in the office or that expense dollar, and we can reallocate it, and so what we do is reallocate a lot of that money back into technician positions, and so what we see is that we are able to take technicians who are really really good, top tier technicians, and then we're able to take them away from their companies, because as a small company, we have recruiters who are overseas you wouldn't know it, but we have them and then we're able to offshore other positions, like HR, generalist or ARAP or all these kinds of auxiliary roles, and we're able to save a huge amount of money on that, and then pay the technicians five, 10, $15 more an hour, and what you find is, wow, like you pay someone $7 an hour more. They're more likely to transition businesses, and so that's one of the big pillars that we lean on to do it, and that's another pillar kind of hidden inside, is by offshoring a lot of that labor we are able to generate more positions at the same rate.
Speaker 1:So we can hire out of Latin America, for example, at you know three times their you know monthly wages there, or what it would be their average monthly wages. We can pay them three times as much of that. They're living really really well and comfortably and so they care a ton and they're coming out of their country with like biomedical engineering degrees, coming out of their country with like biomedical engineering degrees, looking for these roles and they're picking up, you know, systems project roles and HR roles. They're coming with HR master's degrees, they speak amazing English, they're wonderful people and long story short is we can have those HR generalists, we can have ARAP, we can have call center managers. We can have all these positions we wouldn't normally be able to have. But because we've gotten really good at being scrappy and finding the right individuals overseas, we're able to create win-win situations for the business, for our team and then for those overseas individuals.
Speaker 3:So it sounds like you're in terms of the positions you're using. It sounds like maybe like accounting, back office recruiting, did you say?
Speaker 1:HR Positions in HR. Yeah, so like we keep our HR person local, so we have one local HR individual who manages the team and then she gets assistance from two HR generalists who work on different projects, either recruiting or payroll, or in-house stuff like that.
Speaker 3:What about like CSR type roles? I imagine those are. Our entire CSR team is overseas.
Speaker 1:Yes, we have five individuals in inbound CSR overseas. We have one inside salesperson that's overseas. We have one outbounder who's overseas, our install coordinator who works with our comfort advisor he's overseas. And so, like we can have these positions that we normally would cost us, you know, an absolute arm and a leg. But we can reduce that labor overhead by going overseas, and we've learned to do it really, really well.
Speaker 3:Oh, that's very cool. I wanted to shift gears here and talk about, like, good advice and bad advice, and I didn't talk about this too much, so let me set it up. You've now gotten into the whole acquisition world where and in fact, your podcast Jackquisitions which I love, by the way early, early stage of your podcast just starting out, I think you're like 13 published episodes and it's already a great podcast. Talk to me a little bit about first, talk about just how you got into this acquisition space, and then I want to. I've got a couple of questions related to that. Yeah, so it was a mix.
Speaker 1:There's a mix of reasons why. The first and probably the most important reason is when I bought my business, it was a terrible deal, as you can probably guess from the early side of this podcast. If you've listened to the whole thing, you'd see why it was a bad deal. Like I paid way too much. I due diligences, you know I didn't put in provisions I should have put in, and it was a mess, and so that's a big portion of it.
Speaker 1:The second portion is like going through the acquisition process is a very confusing process for someone who's never gone through it. When do I do LOI? When do I do this? How do I do this? Who's my team? And all of this I mean luckily for me, because the business I purchased was so small, which is terrible, but because it was so small it actually mitigated a lot of my life risk, right. So my payment is something where, if I really wanted to go out and get a job, I probably could have gotten a job and covered that payment and my lifestyle. So point being is that there was a lot of things that I did wrong that I want to help people not do wrong.
Speaker 1:That's the first part, and then the second part is there's a lot of bad information out there, with other gurus and people who are pushing this, and I mean I was on the other day and some guy was like it takes 90 days to buy a business, 30 days to find the business and 60 days to close. I'm going, yeah, there is no way you're finding a good business, especially local to you, in 30 days, like especially if you don't know anything about business buying, and so there's just a lot of bad information out there. If you listen to the podcast, it might not make you happy, because I'm really real about what the situation is. You're personally guaranteeing your financial livelihood on this. If you own a house, you're putting that up on the market or under a guarantee, but we get really granular and it's a lot of fun to be able to do that.
Speaker 1:I bought four businesses now in the last three years, so you know I'm in the space. I really enjoy acquisition, business acquisition, and so that's a lot of the reason why we started this. We saw the huge need, mixed with some issues with what's currently out there, mixed with. I have a personal passion for helping people get this right, because the difference between one or two items will make your life significantly easier. Post-close.
Speaker 3:Yeah, one of the things I see so much. Jack prospects will reach out to me. I'll have a meeting with them and I tell you this is 80% of the time it's true. Let's say they bought a business with $800K EBITDA or cashflow or whatever you want to call it, and they now have owned the business for a year and it's down to $300K or $200K and they barely can service the debt.
Speaker 3:On the SBA loan, I had one come to me about a couple of years back. They were worried about not being able to make the covenants because they had a credit line and they were kind of upside down in terms of debt and they were probably gonna get their credit line pulled because their covenants didn't work. And I just get this a lot and it actually makes me really sad because I feel like you know, if they had a little more help on the front end someone like you, maybe someone like me and just kind of running through the scenarios. And another thing I see a lot is they want to make changes right away, which I think is a little bit dangerous because they don't even really understand the business yet.
Speaker 3:Like I had one come to me he wanted to add he added a service department and on the surface it sounded good. But he added several staff. He didn't know how to run the service department. It ate up a bunch of his profit and cashflow and he was just like he was in a bind. He was like dude, I feel like I'm going to go out of business and so it's sad. So I'm curious like what's your thoughts around that?
Speaker 1:as you hear that, so my thoughts around that are exactly what you're saying is I see it all the time is a lot of people are making really bad choices on the businesses that they're buying with debt. So that's the first big red flag. It's like somebody comes to me says, hey, jack, I got this great hvac business that I'm buying. I've heard hvac is an amazing business to buy. I don't haven't listened to you yet, but I just heard your story and you know I'm excited. Said, well, how much of that's new construction. Because what a lot of people don't understand is there's these subsects inside the trades of like, yes, it's HVAC but it's industrial, or yes, it's HVAC but it's commercial, or yes, it's commercial multifamily, or it's commercial new construction, and so there's all these little sub areas. They hear that HVAC is great, which it is, but they don't understand kind of the nuance of the business itself. And so what it ends up generating is somebody who goes in and buys a new construction business realizes, oh, in a small downturn, now I can't afford this debt. And then, like you said, they try to start up a service line because, oh, now they understand. But the problem is that when you start that service line they don't understand that, hey, service people and installers are not the same. They don't understand the sales process and the sales cycle, and so a lot of that, to get off my soapbox is driving it back to like, hey, let's talk about buying a business and what you need to be looking for and fully understanding home service business, acquisitions and what that looks like on the whole. Let's look at their marketing. Let's look at you know what is their gross margin? Who's their customer, their service, is it B2B, b2c, is a B2B B2C? And then, lastly, what?
Speaker 1:The biggest one that I find to answer your question in a long roundabout way, tyler, is what is your specialty as the buyer? So, are you a CFO coming into a business or are you like me and you have operational experience understanding? Hey, I can do electrical troubleshooting. So when I started, when everybody quit, I realized that half of an HVAC unit issues are all electrical troubleshooting. A capacitor is a capacitor, contactor is a contactor. You know you have to check incoming voltage and that'll solve 50% of your problems. Now I just need to learn refrigeration theory.
Speaker 1:But that's me, and so buying a small business for me, where that specific thing happened, wasn't a deal killer, whereas if somebody who had a, you know, a marketing background, bought that same business. They would have never been able to to do that. And vice versa. Like if I bought a giant business, I don't know if I would have been able to understand the CFO role or the finance role or the marketing role or all these different differential roles kind of on the bigger businesses as quickly as I needed to actually keep that business running steady state. So that's where, you see, the drop is because people don't understand their skill set needs to fit exactly into the business and the size that they're buying.
Speaker 3:Yeah, and this leads into my next question what do you think is, like, the biggest myth when it comes to acquisitions? Is there something commonly out there that's just a myth. It's just not true.
Speaker 1:Yeah, it's exactly that and I've talked about that quite a bit. It's that there is a specific size business that you need to buy. So a lot of times what we see is like people are cosplaying private equity, like they see the private equity model and they go private equity is only buying $1 million EBITDA business isn't up. So I must need to do that. But the answer is maybe Like, if your skill set is private equity and you understand management, leadership, those kind of items and you have that money to do it, yeah, that's probably where you should go. You should not buy a very small business under 3 million where the owner goes into the field regularly, Like you're not going to be able to do anything there. And then vice versa, the same thing. Like if you understand, you know operations, you should focus on a business that needs operations and not go buy something bigger that already has some because your, your skill set is not going to do as much value while you're still learning the industry and the business itself.
Speaker 3:That's where you see, like the people who make decisions because they think that they need to make decisions, and it's like no, you don't, you need to just operate steady state Right, I think there's also kind of a myth and feel free to correct me if you see it differently where I think people buy a business and they go oh well, I'll just hire an operator, or I'll just hire a GM or whatever, and you know, I don't really need to know the details. Or you know, there's someone that works there that has a license, I don't really need it, or whatever the case is, I think that's kind of a little bit of a myth too. How do you feel about that?
Speaker 1:100% a myth. Yeah, there's very, very rare instances where putting in an operator at any point in your business, even as a successful business owner, generates a better business. And that's just because, hey, nobody's going to care about your debt and your PG and your business like you will, Because if they get fired they can go get another job really pretty fairly easily, especially in the trades right now. But if they do that, that means that they've sunk your business into a giant hole that now you need to crawl out of. So that's a huge myth. That's a big one that I preach a lot. The only other myths that I see generally are.
Speaker 1:One of my favorites is there's no marketing. It's a huge opportunity which, yes, technically big opportunity to add marketing to your business, but you're undervaluing the amount of time and energy and capital it takes to actually get a marketing system and program running. It takes I was talking to Sweetwater Plumbing out in North Carolina and he estimated that he spent $230,000 on trying to get his marketing so that it actually ROI'd, and that's I mean I'd say probably I'm in the hundreds of thousands of dollars in marketing spend to find channels that work properly, and so it's not just like this lever you pull and then marketing come, you put up a website and all of a sudden your business skyrockets. It's like hey, there's about a thousand steps you could take and a lot of them are missteps. So, making sure that you buy something with the systems in place already that are already working and already have showing fruit, that's a much better business than not, Right, right.
Speaker 3:Good stuff Another big one.
Speaker 1:Yeah, that's a huge one. Well, I think I'm not saying I know I'm going to keep going on this soapbox, but like I think that also applies to everything. Right, and that applies to hey, their trucks are all you know, they don't have a maintenance program for their fleet vehicles. We just need to do that, they'll have less downtime and boom, it's easy. Well, none of it is easy. So every system that you think is an opportunity, probably technically is an opportunity, but not without a huge cost expenditure to get there. So that's like I want that to extrapolate to every portion of the small business that you're buying is understanding that anything that you think is a low hanging fruit probably not. So don't go changing things because you're going to have a huge expenditure and then, like you said, tyler, they're going to then see a huge dip in revenue and or net just because they thought that something was an opportunity and they could tackle it and it was a much bigger fish.
Speaker 3:Yeah, that's one of my biggest challenges is I get people come to me and I don't want to be the negative finance guy, but I want to keep it practical. And you know people, when they're buying something, they're really excited, they're the marketing one is the classic one, it's all. I just need a little bit of marketing budget and you know I can grow this by 25% and I wish it were that easy, like you know, I wish you know it's just like you and me both. It's a fuss. You can just turn it on and and, oh my gosh, all this water comes out. It just it never works out Like we. You know I always just try to coach people, like you know. You know it sounds good, everything you're saying is right, but it never works out like we think it does. And if you don't have contingency building, there's a high probability you're going to get caught off guard. Yeah, yeah, that's a brilliant way to put it.
Speaker 3:Yeah, okay, I want to talk about and I think this is appropriate with what we were just talking about. You know, a lot of times, business owners the first thing they want is hey, I want to grow fast, and what's my first step? Like, how do I grow fast. So when I say something like to you, what comes to mind in terms of what are some steps you should take and it doesn't necessarily have to be around fast growth, but that's what I hear often what do you think are steps that? Is it CSR related, or what do you think they should be doing as first steps?
Speaker 1:So if you wanted to grow fast. There's really two keys that I look at, and the first one is no matter what type of business you're running, it's to hire a sales individual. Like I said, my turning point was a CA and I think that's because when you have somebody focused directly on generating revenue and high amounts of revenue, then that's their goal, is they're going to generate high amounts of revenue, especially if they're on commission structure. So they have two options. A is that they don't work out, which we had somebody like that. He ran for two months, didn't work out, got rid of him because he was a terrible CA, and then we hired Elena, who's now our CA, and she's amazing. She was able to drive huge amounts of revenue really quickly. But when you have a sales dedicated person, you're going to see your dedicated sales stream increase just because there's somebody solely focused on that. So that's the first high growth metric is like I don't know if it's a comfort advisor or a salesperson in plumbing or a B2B person who's gonna go and knock doors at plumbing companies to find some kind of business, but having a dedicated salesperson focused solely on generating sales is sounds silly, but that's one of the huge ways. It's a huge one. The second one is, as we spoke about earlier, is acquisitions. So we've done four in the last three years. Acquisitions are a great but extremely, extremely risky and dirty way for quick growth. So we've gotten very good at it.
Speaker 1:But it can be very difficult and can be chaotic, right, because you are slamming together systems, you're slamming together teams and people and at the end of the day, if you're able to do it well or you get lucky enough and you're adding, you know, a million, 2 million, 3 million, 5 million to your top line, and we always say, hey, you know the easy way we do the breaking $5 million workshop, the easiest way and the way we do the breaking $5 million workshop.
Speaker 1:The easiest way and the fastest way to get to $5 million in revenue is to buy it. Like, if you can go out tomorrow and buy a $5 million business, you avoid all the headaches of the one to $5 million and now you have a $5 million shop. So that's going to be one of the quickest ways to growth. It is not easy, it is not necessarily fun and it can cause lots of chaos in your business and it can actually hurt your business more than it helps it if you don't do it correctly. But if you're able to do it correctly, I mean easily, the fastest way.
Speaker 3:Yeah, the other thing that I love about acquisitions is it's so common for us to get stuck at a certain level, whether that be 3 million, 5 million, 7 million, it just happens. I mean, I'll never forget we were stuck at 15 million and it was so frustrating because you take a step forward and then you take two steps back and there's like, oh, we're back at 15 million again and acquisitions are one way to your point. Like you just get to 5 million, like it catapults you and you acquire talent. If, let's say, you don't have that comfort advisor and you're looking at an acquisition of someone that does have a really stable, long-term person, that could be a way to infuse talent in addition to sales 100%.
Speaker 1:Yeah, I mean, you hit the nail on the head. We call them step changes. There's a step change at three. There's a step change at five. There's a step change at three. There's a step change at five. There's a step change between 10 and 20, depending on your business and it's just like you have to reinvest so much into your business to grow past a certain point, whether that be managers, upper upper level service managers, c-suite team, whatever the case may be, to get there. There's so much investment that it is very difficult at certain points to blast through those step changes, and one of the easy and quick ways to do it is to just buy your way through.
Speaker 3:Yeah, that's good stuff. Hey, and just wrapping up here, I've got one last thing I want to go over with you. What is your looking ahead? Look like Like, where do you want to be? I mean, you mentioned the 20 million. That's what are we? It's really not that far out actually. It's really not that far out actually 2030. Four years, yeah, that's not a crazy amount of time. So that's kind of your real big looking ahead. Is there anything else you're working on or you're thinking about?
Speaker 1:I mean, we are always working on that and we have been doing an amazing job this year, so I'm super proud of my team. This is the first year where we are not hindered by leads, so we have an abundance of leads, too much work. We are hindered by talent, and so we are taking those changes in our business to hire recruiters and make sure that next year we don't have talent issues and then we will have lead issues again because we'll have too many people. So we'll go back and forth, but at least in the upward direction. And so that be all being said is, yeah, 20 million by 2030. That's the goal. We're on track. I think we have a valid path to get there.
Speaker 1:We have some acquisitions in our pipeline that we are always working on trying to close, to buy our way quicker to there. And then, you know, on the side, we just continuing to network and meet people and run acquisitions and help people with acquisitions as a passion project, continue working with owned and operated to help people operate. We have a workshop in two weeks, so that's always fun. We get to go up and talk to business owners and that's a great time. And then quick staffers we talked about staffing a lot. I run a staffing agency on the side because I was able to take all my SOPs and scripts and we talked about John. I could take a lot of John's SOPs and scripts and I get to steal them, rebuild them for quick staffers and then create some really nice frameworks for people and help people out with exactly what I'm doing and what he's doing, which is overseas talent.
Speaker 3:That's really cool. You had mentioned kind of a little bit in terms of like your growth plan and potentially acquiring. To get to that, Do you have any intensive like intentions of adding like an apprentice program? A lot of times people I'll talk off here, especially when they start getting into that $20 million range they'll create an in-house type of technician training plan where they'll just hire, you know, apprentices and grow them right up.
Speaker 1:Yeah, we have a pseudo version of that. Okay, so, like we do generally, we hire one green hand at a time and then we train them for about a year. So we have two of our graduates that run in our service department right now. It's one of the best ways that we find to get really high skilled technicians. So it's one of the best ways that we find to get really high skilled technicians, but we don't run it anywhere near some of the big companies that have like full 60 day, you know, apprentice courses. We just we understand that that's a great way to bring on great talent, and so we look for a very specific thing when we are going through that process and when we find it, we'll bring them on if we have an opening.
Speaker 3:Yeah, that's awesome, that's cool. Okay, so I just want to wrap up here. A lot of really good stuff you just shared, I think, a lot of takeaways for me. I would say one was just your whole story of like having your staff quit and starting from ground zero. It sounded like you kept your composure and it was pretty cool how you were able to translate your electrical background to really be able to service 50% of the type of things you were going to run across anyway, which I think is a great contingency plan, even though you didn't necessarily plan for that. So there was just a lot of gold nuggets. I loved your practicalness in terms of acquiring and myths. A lot of good stuff In terms of links if people wanted to reach out to you. You've got the HVAC Jack. Is your Twitter handle Owned and operated? We mentioned John Wilson's podcast. You got it. Are you still co-hosting on that? I haven't listened to a recent one.
Speaker 1:Yeah. So I mean I still jump in from time to time. Less direct co-hosting on a weekly basis and more, you know, like a monthly basis, got it so? So Jackquisitions takes up most of my time, which is jackquisitionscom, yeah jackquisitionscom, and then Jackson L Carr with two R's.
Speaker 3:Jackson L Carr is your LinkedIn. If anybody wants to reach out, I'll put these in the show notes at Profit and Grit. Awesome podcast, awesome wisdom. I can't thank you enough for being on here.
Speaker 1:Yeah, of course. Thanks, tyler, I really appreciate it. It's been fun. Thanks, jack.
Speaker 3:Huge shout out to Jack and a thanks for sharing the kind of lessons that you can only learn the hard way. From losing his whole team before day one to building a multi-million dollar shop with smart hiring and sharper decision making. This was literally a masterclass in staying in the fight. So if your business is growing but the numbers don't make sense or maybe the cash isn't showing up the way it should, that's exactly what I do. I help trade business owners get their arms around the financial side so they can scale without stress, so they can scale confidently, so they can scale without thinking like, hey, am I doing the right things?
Speaker 3:If that sounds like where you're at, please grab a free intro session with me at cfomadeeasycom. Once again, that's cfomadeeasycom. No pressure in intro meeting. We just have a cool chat to people talking about what's working, what needs fixing, and just see where that takes us. Talking about what's working, what needs fixing, and just see where that takes us. As always. Thanks so much for listening and I'm excited about the future episodes here. I've got so many killer guests lined up. I just can't wait for you to hear them. I'll catch you next week, take care, thank you.
