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 $2.2 Million Lesson Every Home Service Owner Should Hear - Chris Lee
Most owners think growth is the prize. Chris Lee says growth without discipline is what bankrupts you.
Chris went from six locations in his first year to bankruptcy and $2.2 million in debt. Ten years later, he built Solgen, a solar and roofing company, and sold it for $233 million in just five years. In this episode, he shares how ego nearly cost him everything, why designing a five-year roadmap before hiring is critical, and how charging premium prices actually created loyalty instead of pushback.
We get into the hard lessons from running on bank balance accounting, the turning point when he learned to live debt-free, and how his PEAS framework—physical health, economic strength, associations, and spirituality—transformed culture and kept his team engaged. Chris also explains why owners in the trades must stop copying the shop down the street, how to hit real margins instead of scraping by at 35 percent, and why future-proofing your business means leading with numbers, not appearances.
What You Will Learn in This Episode:
• Why scaling too fast without discipline can bury you in debt
• How ego destroys businesses faster than bad math
• The five-year roadmap strategy that sets up sustainable growth
• Why premium pricing creates stronger margins and more loyal customers
• The hidden danger of running a business by bank balance instead of real numbers
• How living debt-free shaped Solgen’s path to a nine-figure exit
• The PEAS framework and why investing in people beyond paychecks builds loyalty
• Why most trades shops run too thin at 35–40 percent margins and how to aim for 55–60
• The shift from working in the business to designing one that runs without you
• Chris’s lesson: design first, then scale, or the grind will break you
More From Profit & Grit
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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
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We scaled fast six locations first year. Then it all collapsed bankruptcy $2.2 million in debt. The lesson ego will bankrupt you faster than bad math.
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 Martin.
Speaker 3:Today's guest went from bankruptcy and $2.2 million in debt to a nine figure exit in five years. Chrisley built Solgen. It's a solar and a roofing company with a simple idea design the business first, then scale with discipline. We get into why ego is more dangerous than bad math, how premium pricing can actually serve the customer and his PASAS framework. That stands for physical health, economic strength, associations and spirituality. That turned a workforce into a loyal, winning culture.
Speaker 3:If you're running a home service or trade business and keep asking why the grind isn't turning into profit, this one will hit home. Hey, chris, welcome to the Profit and Grit Show. How are you doing today? Doing great. Thanks for having me. Hey, man, I'm so happy to have you here. Not too many times I get a nine-figure exit guys, so this is awesome, it's great to be here. So, hey, this is where I want to start. So I want to go back to when you started your first business. As I understand it, it was at 24. Can you kind of take me through the story? Just the short story. What got you started at that early age?
Speaker 1:Yeah, you know, I uh, uh. Growing up I wanted to be a doctor and then I quickly realized I was really good at sales, and I always say that sales is the gateway drug to entrepreneurship. And so, 24, I figured, you know, I know everything to generate good business, why not own it? And so, at the age of 24, in 2008, I launched my first business and, you know, had a good pipe dream that was ready to go and live.
Speaker 3:I got to say one thing. You mentioned about sales being the gateway to business. A lot of people say, hey, I don't know sales, I'm not a good salesperson. What do you usually say to that?
Speaker 1:Well, one sales can be learned, or you can hire it. So it doesn't matter whether you're good at it or not Somebody is. And so, as an entrepreneur, as a business owner, your job is to figure out all the puzzle pieces and put them together.
Speaker 3:Love it, so you're okay. Then, if it's an entrepreneur like they say, hey, that's just not my gig You're probably going to come back with, well, that's okay, hire someone that can do that. Function for you. That, hire someone that can do that function for you. That's right, got it? Okay, cool, I want to go back. So you sold Solgen if my data is accurate, $233 million. It was in five years. You did it, but prior to that, you actually had a bankruptcy, and I want to go back to that period of the bankruptcy. What are some red flags that you saw that maybe you missed, or maybe you did see them and you ignored them. Were there some things that popped up before you got into Solgen?
Speaker 1:I mean, there was a lot of red flags in my first business One, I was just completely self-deceived from the standpoint of I didn't look at everything macroeconomically that was going on. I mean, I launched this thing at the end of 2008. Literally, the stock market had been crashing that year and I was just had the blinders on and was full bore like ready to go. So one was was that too? I mean, there was a lot of things that I just didn't know. I didn't ask for help from a lot of people that had great experience, just to try to figure out everything on my own scale. Too fast, too quick, without really any good handle on the numbers or really what I was doing. I was suffering from your typical small entrepreneur mindset bank account accounting If there was money in the bank, then you could spend it, that type of thing, and so, yeah, I just made a lot of mistakes.
Speaker 3:So, on that note of like your typical business owner, entrepreneur, that's kind of doing bank account accounting, how do you recommend if someone is kind of at the smaller level, what should they be doing to set up structure, maybe for growing? Is there anything that stands out now that you've month?
Speaker 1:Yeah, absolutely One is you shouldn't build a business to compete right. Competition is like the number one downfall for most business owners, and the reason I say that is most guys look at what other people are doing and they try to mimic it. It's the worst thing that you could do. You know most business owners don't know what they're doing, and so trying to mimic them from the outside looking in is just a terrible idea. So one make decisions based off of your numbers, not somebody else's. So for me, I'm a big believer in being one of the highest priced in the marketplace, and so, with that is understanding.
Speaker 1:There's some basic terminologies that you have to understand as a business owner in order to scale. One is your unit economics, which means like what is my average cost for an average product that I sell? What is my core offer that I bring in the marketplace, and what does that look like from a revenue standpoint for me. Two is what is the gross profit from a unit economic standpoint on that particular product, so how much cost of goods, what is the direct labor cost? What do I get after I go and deliver that product, to run to pay the rest of my bills, right? And so I'm a big believer that you should be operating at a 60% gross margin. And you know, most guys operate 25, 30, 35, 40% gross margin, and that is the reason for most failures they don't have enough money to be able to operate their business. And so once you understand what your gross margin is, is understanding now that I get.
Speaker 1:So, say, I have a $20,000 product and I have a 60% gross margin. That means my unit economics tell me I have $12,000 in what's called attribution margin. It's attributed towards to pay everything below the line that's a fixed cost. And so, understanding, how many of those $12,000 gross margin deals do I need to break even? And break even is measured against your fixed costs, so that's your salary, partner's salary, building costs, anything you have to pay for, regardless of whether you have zero sales or a hundred sales.
Speaker 1:And so, and then understanding so, how many units? So if, if I get $12,000 from every deal to go and use towards fixed costs and my fixed cost is $48,000 a month, that means I need to sell four deals to break even every single month and then every deal above that, I net $12,000 a deal. And so and a lot of people think that like, net profit is going to be about the same. No, it's. It's all about like, how much am I crushing my, my break even, and so, like, if you can understand those numbers and get outside of the bank account right, like the bank account should not determine whether or not you do something, it should be. Am I running a profitable business? Not, because there's a lot of things that you probably don't understand from a cashflow standpoint how much deposits you're sitting on those types of things, and so just understanding that those things alone right there, that'll help you in the scalability of your business.
Speaker 3:Hey Chris, how often do you see companies actually hitting that 60% gross profit margin? Because typically it's what I'll see. You know, if I can get a client above 50 plus percent, I'm usually feeling pretty good. I mean, obviously more North is better. What's been your experience at that 60% number?
Speaker 1:I mean rarely are people coming in at 60% when they start working with me, but I've been able to get most companies to that and some even above that, depending on what their cost of goods structure is.
Speaker 3:In terms of levers. Are you seeing, are you pushing for more revenue on that typically, or are you finding spots in their cogs that they can reduce it to get that number, to get the gross profit up, or a little bit of both?
Speaker 1:I mean, the old adage is it's way easier to earn more than to save more right, so it's typically charging more God is the way that you're gonna increase that lever, but it's a big misnomer that you can just charge more right. Like I'm an advocate of charge more and improve your offer right, and so what we call offer stacking and creating something that completely distinguishes you from the rest of the marketplace Got it?
Speaker 3:Okay, I want to. I could talk with you about this all day, but I got to go to the next question I want to. You mentioned about ego as being one of the reasons that your company, you, you drove your company to the ground because of ego. What did that actually look like on a day-to-day basis? Like when you say, like you know, ego really play a role in kind of driving the company ground? What day-to-day did that look like?
Speaker 1:Yeah, I mean real easy. You know, I, growing up, I grew up in a, my dad was a school teacher, my mom was a stay-at-home mom and, like, I didn't need a lot of like material things to be able to live, and that's never really been me. And so, like example, I went to go buy a new car and one of my regional managers was like dude, you got to buy this car Cause, like you know, that's a CEO car. It was like a Mercedes CLS 500. And, like I didn't need a Mercedes CLS 500, nor did, nor had I earned a Mercedes CLS 500.
Speaker 1:Right, like, and so, you know, I changed, even like, just my standards of like who I was, to play into this ego of like, oh, what would? What would a CEO do? Or what would a successful person? Right, I think, a lot of times, as business owners, we're trying to be successful before we actually are, or we're trying to prove to the world that we have been successful, right and so, and which leads me to, like, one of my, my favorite things, I tell guys, is just like, quit robbing the business of growth capital to prove to people that don't like you that you are successful. So they, you know, and that was, that was me. You know, uh driving, uh driving the car.
Speaker 3:Nice office space just looking good to to other people was was high on my priority list during that time. Yeah, hard not to fall into that, but it's cool that you kind of sat back and realized it.
Speaker 1:Yeah, and because of that, when we launched Solgen, we operated out of my garage for the first two and a half years and first $75 million of revenue.
Speaker 3:So that's crazy. And that brings up my next question as we go into the next segment what made you decide to go into Solgen as opposed to, like you know, a lot of times you get hit with a bankruptcy, you get hit with going through a failure. You just kind of go well, I'll go grab a W-2 and move on Like what made you decide to try again as opposed to walking away.
Speaker 1:So Solgen wasn't like my immediate rebound from bankruptcy. So I was bankrupt in January 2011 and immediately got into this. So I was in the home security, home automation space and immediately launched another business in that same space, because I knew a lot of the mistakes that I had made and everything like that. But after running that business for a year, year and a half, quickly realized man, there is a lot that I need to learn. I just don't know how to scale properly, scale properly. So I like I micromanaged that business. You know was making enough for me to live off of and my business partner at the time to live off of. But we did not know how to like properly, scale. And during that time, I was trying all different types of things, starting different businesses, just kind of banging my head against the wall of like man, I don't know what the freak I'm doing. And so eventually, what I did actually went back to work for somebody else with the intentionality to study exactly how these guys were growing, and I actually spent four and a half years, between 2012 and 2016, working for three different companies, particularly just with the intention to study the CEOs, seeing how they were building their culture, seeing how they were building their strategy, and so I called my paid education and that's when I really learned how to grow and build and then simultaneously started investing in my own personal education with masterminds and coaches and different things like that, and so that's really where things started to turn.
Speaker 1:It wasn't just like, hey, I learned from my bankruptcy and go, I learned a lot from that, but it was really getting in the room with mentors that had gone and grown. Like one of my greatest mentors that I had the opportunity to work for, uh, he had two different billion multi-billion dollar IPOs and so, just being a part of that, like during the, the four and a half years, I worked at two different businesses, I experienced IPOs and just saw massive growth. I was a vice president of one of the businesses and I was over growth and and uh, and so, yeah, it was going through that. Sometimes it's great, Like it's okay to admit like, hey, I don't know what the freak I'm doing, I need to learn, I need help and you know, sometimes that route is going and working for somebody else for a time as an entrepreneur, and that was a.
Speaker 1:That was a really big, like you know, damage, you know. Kick me in the junk of the ego to say like hey look, I'm no longer the man I've got to. I got to answer to somebody else for a short time.
Speaker 3:Yeah, big time, you know. I also wonder, though, getting around that one mentor of yours that had, you know, $2 billion IPOs, did that kind of open your mind to like what's possible, like cause, I imagine being around that.
Speaker 1:Yeah, that must have been huge. And I and I would say not only that, but the many other guys you know I, I'm a big believer paying to be in a room of people that are doing way bigger things than you are, because that most entrepreneurs struggle just with like what their capacity could potentially be Right. And for me the biggest thing is like getting in a room seeing a guy who looks not very smart that's doing big things and realizing, holy crap, if that guy can do it, I sure as heck can do it, you know.
Speaker 3:Chris, not all of us can look like you man I don't know about that.
Speaker 1:I'm not. I'm not saying. I'm just saying like, oh my gosh, like, like. I mean I'm. I'm in some rooms where they're just like dude, how in the world is that guy doing this? You know like I think that is the secret to life is get around dumb people that are being successful.
Speaker 3:No, I get it. Hey, you mentioned you know, like you said, hey, I'm going to go on a paid education and I want to learn how to scale. Do you recall, like, what were like one or two things as you were learning how to scale by working for others, that just jumped out as, oh my gosh, I didn't do this, or oh, I didn't think about this.
Speaker 1:Yeah, one would be transparency, like the way that Todd ran his organization with transparency. One, there was no like special pay scales or anything like that. Like if you made a certain amount of money, everybody knew exactly what you made and the justification of why you made it. Like that was huge for me. He was very open about his profitability. There's this experience where the uh, you know, the Oh8 crash, where they were not going to be able to. So in this line of work they have what's called a back end, like commission structure. There's like one big chunk paid once a year and there wasn't going to be enough money to be able to pay for it. And he actually went to. So he had a 3000 sales rep organization and he went to those and he said, look, we're in a position where we're not going to be able to pay this. He said we have two choices. One, we can like attempt to pay it and then close our doors. Or two, you guys have all I'll have the opportunity to invest in the business and make it happen. And like that, right, there was like such a lesson on transparency of like getting the buy-in of your people and like the rally cry of like like people aren't stupid, right, people know when things aren't good and and if you can like enlist them in the struggle and list them in into that and like get, be transparent with like the good, the bad, the ugly, you're going to get crazy buy-in.
Speaker 1:And you know there was a lot of people that were made multimillionaires. One of my best friends worked for that. He. He made as an employee $35 million through some of these programs. So that was like huge. Just the transparency aspect and then the, the pricing, and the pricing and pay is structure. So he, they were always the most expensive and paid some of the least in the marketplace, yet the peep least was from a commission percentage standpoint, but that those salespeople actually made more because they were selling more because of the culture that was created, the, the different competitive atmosphere, the buy-in. You know there there was so many. So like just the level of culture and transparency that, uh, that was created by Todd was something that I that I always tried to emulate in my business.
Speaker 3:Wow, and one thing I love hearing about that too is the guy that made $35 million. A lot of times you'll have businesses scared to someone to make that much and they don't really kind of see the big picture of. Well, if he's making $35 million, that's gotta mean the company's making a ton of money on top of that.
Speaker 1:Right, yeah, and that's the thing is like. If you're afraid to let your people know that you're making a lot of money, you got the wrong people.
Speaker 3:Yeah, yeah, that's a good point. That's strong. Hey, I wanna talk about your frame, solgen's business model and just your frameworks in general. I've heard you talk about the eight pillars of growth. Can you talk to me about one or two of the pillars that you felt had a big impact on Solgen?
Speaker 1:Yeah, so one would be design. So the design pillar, which is like actually building out your business before you go and execute Most guys are just running by the seat of their pants, reactionary. They were good at being a technician so they just naturally fell into running their own business and they expand when absolutely necessary. So the day I started Solgen, everything was designed from a five-year aspect, Like, hey, this is what we're going to go and grow. And so I do something where we call it the next level plan, which is a five-year roadmap to like exactly what you're building over the next five years. So you start with the end in mind and you build it backwards from a total organization standpoint what it's going to take from a revenue generated, everything like that so that when you go and you start hiring because most guys like, for example, say you have budgeted 10% to your sales of your product If people don't start with a five-year roadmap of what their total sales organization is going to look like, they're going to start by just compensating their sales reps 10% today, and then, when they go to grow and they need levels of management and training and everything else, there's not going to have anything left in the budget to be able to go and grow with. And so what happens is they start hiring these other people and their bottom line from a percentage standpoint just shrinks. So instead of being a, my target's always a 25% net. Instead of being a 25% net, they're going to be, you know, five, 10%, whatever it is. Because they didn't build this company from a forward thinking, five year roadmap design aspect and so designing everything from the ground up, like when I operated out of my uh, out of my garage, our five-year roadmap was we were going to have 500 employees doing a hundred million dollars a year, and we had it exactly built out of what that looks like. So when we bring somebody in, we're like, hey, look, this is where we're building to in the next five years, this is where you're coming in at. These are the opportunities to be able to scale up and grow within the business If you so want to or desire to, and you take the bull by the horns and you develop as a leader and everything else.
Speaker 1:So one. And you take the bull by the horns and you develop as a leader and everything else. This is so one. It presents opportunity when you have a proper design, and that that is the backbone to a vision, and so one of the key things in recruiting and developing a business is the vision of the leader, and the vision of the leader is only as clear as the design that is created. And so getting just really honed in on what that exactly looks like, which ties into you know. So that's, that's one of our pillars, and then the other, the other pillar that I always love focusing on, is so I mean, all eight are fantastic, but the offer right, Like, what is my core offer? How much am I charging? What am I paying my people? Top to bottom, how does this all pencil out? And that really ties into the design very well, from a standpoint of starting with your priorities, correct.
Speaker 1:So one of my most controversial takes that people when they first hear they're like, wait what I say, you know, stakes that people when they first hear they're like wait what I say, you know, most businesses are ran customer first, employee second, business third.
Speaker 1:And I invert that so where it's actually company first, employee team second and customer third. And the reason is the only way that you can properly take care of your customers if you're highly uberly profitable, because when you're profitable you can afford to. You're going to stay in business, you're going to afford to be able to take care of your team really well and pay them in the proper way, and everything else which, in turn, allows your team to be able to take care of your customers. Because, you know, when I failed in my first business, I put the customer first, so I charged the least, and then I said, oh, employees, we need to pay them more. So I paid, you know, and then margin was only here, and so, ultimately, there was nothing left over for the business. So that, what did that ended up doing? When the customer called in, Nobody answered, right, Like there was nobody to be able to service their account or anything else. And so, like you, if you want to screw your customer, put them first, yeah, that's, that's great.
Speaker 3:That makes a lot of sense when you know you talk about the company scaled so fast. I think he went to like 1100 employees in five years. How do you keep culture together when you're growing that fast?
Speaker 1:I mean very much by by design. You know you've got to. One is you've got to have a lot of leaders that buy into the mission and the vision and the direction of the business, right and like. And two, like that has got to be the foundation of what you hire, right. So like, your core values. So if we go soul gen, we had six core values synergy, outside the box, uh, thinking, love of family, generosity, excellence and no excuses. Those are my core values and every single person is being measured on those, initially when they come in the door to be able to get in the door, and then later that they're being analyzed that on a quarterly basis, are you living the core values? Are you the right person to be in the room? And so you know somebody could be the top producing sales rep but a cancer to our culture and we're going to get rid of them. And so like keeping people aligned there and there's you know that's a very loaded question Like, how do you keep? Like I could go on and on and on of like how we recognize through emails and awards and create a competitive atmosphere. And and uh, always dealt with the hard conversations and focused on the five dysfunctions of a team of like, always building trust through leadership, development programs and and creating so like.
Speaker 1:One of the one of the things that I would say that separates me more than most is like I understand that compensation is taking care of the whole human physically, economically, with their associations and their spirituality. So P's or ASEP, right, like those are, when you invest in those four things in someone, they will bleed for you. And because most guys are coming in thinking that they're competing on pay or whatnot, that's the same mentality of competing for a customer on price. You'll never, you're never going to win that game. And so you know Walmart and everyone else, but they're selling butt cracks and whatever.
Speaker 1:So for me it's like how do I help somebody get better physical shape, get their diet dialed in, help them lose weight, help them, like, really start taking care of the thing that God gave them? How do I teach them to be smart with their paycheck? How do I teach them how to invest? How do I get them into their first real estate property? How do I do, right, so we do financial Fridays which anybody could come in and I would teach, like, how to invest in the stock market or different things like that. You know more than just hey, go and negotiate a higher pay. No, be smarter with what you're earning right now. How do I be a better father, a better mother, a better sister, a better contributor to society? How do I participate in company, give back incentives, in which we're going and we're buying meals for families and actively participating in service projects? How do I help people become better believers in a higher power? You know and for me it's Christianity, for others it could be something different, but, like I do all the things that most people would probably get sued for from an HR standpoint. But the thing that's a reality is you only get sued if your culture sucks.
Speaker 3:Right, definitely, definitely. Risk is higher if your culture sucks. For sure, yeah, that's a good point. So just kind of shifting gears here. I know you talked about the ASEP framework, which I believe aligns with spirituality and physical health. What exactly is that? Can you talk about that a little bit?
Speaker 1:Yeah, so I actually flipped it. It's P-E-A-S. It's the same thing, I just, but it's the same four letters. It's Physical, economic, association of Spirituality. And so when we again, when we focus on those things and like, help people live a fulfilling life that's across the whole board people will bleed for you. They will like, they will come to you in those moments that are actually critical.
Speaker 1:I actually had multiple employees come to you in those moments that are actually critical. You know, I, I actually had multiple employees come to me in very critical situations. I had one that you know he was ready to kill himself and um and uh, you know he called me and and I still remember I was in the Arizona airport and pick up his call. He's like, dude, he's like you're the only one I knew I could go to. And this is at a point where I had 600 employees and this guy was just a normal employee that I'd shown love and reached out to. But for me, that's it, that's that's like the epitome of entrepreneurship, is like when, uh, when you hit that level, when they're there for more than just a paycheck.
Speaker 3:Wow, that's pretty heavy story and you actually interacted with them or helped them. Yeah, yeah, man.
Speaker 1:Talked to him, talked to him off it. So, uh, he, uh, yeah, got him out of the, got him out of the situation. Spent 20, 30 minutes with him on the phone and yeah, he's still with us today, so praise.
Speaker 3:God, what a cool story. That's awesome. One thing I wanted before we wrap up this section so you had the bankruptcy, then you went other places to learn. You mentioned being working out of your garage. I think you set up to 75 million as Solgen. I heard you correctly. Was there a part of you that was kind of still think or thinking small because of the bankruptcy as you went into Solgen and did you have to shake that off Like I mean, cause I imagine you had that experience.
Speaker 1:Yeah, you know it's. It's interesting is so, you know, we went from 16 million first year to 32, 34, 89, then 233 million, right, and so, like, the growth was like fantastic. The crazy thing is we did that all without debt, like the and, and so, and, frankly, we did it without debt because of my bankruptcy, because of my fear of of doing those things, and and, frankly, I think debt is a fantastic vehicle, but it requires confidence and that, where my confidence had been shaken, we did not access debt and, frankly, had we accessed debt sooner, we would have been able to scale even faster than than what we did, which is just wild to think about.
Speaker 3:That is crazy. So you were completely cash, completely profitable, no debt on your balance sheet. That's a pretty crazy story in five years. Yeah, that's wild. What, what, what, what, what is Solgen do exactly? Who were you serving?
Speaker 1:We did a solar, a solar home installations, so residential installations and also a roofing.
Speaker 3:Wow, yeah so what a great business. And then, at what point do you go? When's the right time to exit? Basically, cause I for you five years, that's a pretty short timeframe for a business. What? What made you decide to go? Yeah, this is time, you know we.
Speaker 1:We had always built it Like design is like knowing what outcome that you want, and our five-year roadmap was always to sell to private equity and and so like. From day one, I was building everything with the intentionality to be able to do that and so it was just going, you know, sticking to the plan and and and, uh, you know. But again, this wasn't my first rodeo. Prior to that, like I, I couldn't say that I built with the same level of intentionality, but I knew, going into this one, that from everything I learned, I'm like all right, I am coming, and I am like everything was on purpose from day one forward.
Speaker 3:Was it a five-year plan to exit or did it just happen to work out that way? Oh, it was a five-year plan to exit. That's crazy. Wow, really cool. That's amazing. I can only imagine the multiple and the EBITDA on that baby yeah it was great.
Speaker 1:We always operated at anywhere from 23 to 25% net margin, so Wow, that's good. That's a good net margin you can run the numbers.
Speaker 3:Yeah, that's good. That's a good net margin. You can run the numbers. Yeah, my benchmark is generally around 20. I mean, obviously, if you get north of 20, but I like that, that line of 20. So the fact that you guys were above that and, honestly, roofings, roofing and solar I know it changes depending on the economic climate, but that's a tough world. That can be a very tough world.
Speaker 1:You know the the standard uh solar installer operates at a 6% net margin. Yeah, it's crazy, that's crazy, and so you know I'm a big believer again being in the highest price in the marketplace and having distinguishing features that aren't just your traditional. You know, you go wham bam. Thank you, man.
Speaker 3:What's an example of, to you like, in that space of distinguishing features.
Speaker 1:Well, one is so most people try to sell with price right. I sell with better skilled salespeople, and so one is having a trained sales force is absolutely imperative and investing a ton in that force to be able to go and be distinguishing. The second thing is offering like. So one of the examples I always give to my community is like look, if you're operating 10% net margin on a $100 product, your average product is $100 and you're averaging 10% net margin, at the end of the day, if you go and you charge $105 and you don't change your offer whatsoever, you only added 5% to the to the customer and 50% to your net margin, right. And so like just understanding that a dollar to you is worth a whole lot more than a dollar to the customer. That is like key step Number one understand that. Step number two is if that is the case, then how can I take a little bit of that and give it to the customer and make it a distinguished experience? So if I go for, if I'm at a hundred bucks and I go to one 10, so I increased the customer's product by 10% and my bottom line right now is now a hundred percent increased, right. What if I took two of those dollars, two of those additional $10, and I added it to the experience. Somehow, like I, I created, uh, some sort of like handwritten note structure or you know what, did something that that made this like wow, the memorable from an experiential standpoint. Now I increased my profit margin by 80% by only, uh, by improving the customer experience and only charging the customer 10% more. And so, like, that's the mentality that I go in, and so I'm always looking for ways that I can improve the experience. What kind of package, what kind of gift, what kind of little extra can I do? What? How can I improve the brand? What is a little product that only has, like maybe a 10% cogs that I can just throw in for free as a little add-on? So, like, we would do things to like help improve the efficiency of their HVAC system, maybe give them, like a package of LED light bulbs. We'd come in, we'd seal their HVAC system up, do different type of things to all these things that we could just include, but then charge $20,000 more than the rest of the marketplace. And so so that's like step number one improve the, improve the customer experience. Be like a, a, just a completely luxury Louis Vuitton type offer and then train the heck out of your sales force. So, like, when a customer so like.
Speaker 1:I'll give you an example of one thing that I train my salespeople. When a customer says, hey, why are you $10,000 more than Joe Blow Solar Company on the street, we will ask them a question like this. We'll say hey, mr Customer, why is it important to you that we're profitable? Right, and I guarantee that customer has never been asked that question ever in their life, okay, and then they'll be like, oh well, I don't know. Well, I guess if you're profitable, you're going to be able to like, take care of me, like, yeah, you know, and so like. That's an example of like, training your sales force at a completely different level than just like, hey, high pressure, you know those types of things, and so those are a few examples of those types of things. So those are a few examples of prices.
Speaker 3:That brings back memories. You know I used to manage a sales team and I'll never forget I wanted my team to end up with a $25 an hour net margin. And they used to always come back with these deals and they were like 22 or 23. And they'd say to me, hey, a couple bucks, no big deal, why are you complaining? And I'd say, dude, those $3, $2 are nothing to our client. But you know they were literally a hundred thousand dollars because we were doing so many deals. So I revised their incentive plan, so it made sense for them equitable sense for them to get to that 25. After I did that, I never, I think we had like maybe out of 20 deals a month, 30 deals a month. We had maybe like one every six months. That was under 25 bucks and it's just and part of it was training, but part of it was the right compensation too.
Speaker 1:Yeah, no, that's, uh, that's great. The the other. That brings me to one of my other sales principles is we don't negotiate like our prices are price and so we, instead of dropping price, my salespeople have to just learn how to sell it better. And so, you know, I think that's where a lot of business owners just screw up is they're like hey, you know you can give 10% discount or this. Like no, heck, no, why would I put that in the hands of a salesperson?
Speaker 3:Yeah, I mean it incents them basically to go. First thing they're saying out of their mouth was I can give you a 10% discount without even getting into any sales process. Okay, that's good stuff. I got just a couple more things I want to talk with you. I do want to talk about next level pros. So what are you doing now and who are you helping?
Speaker 1:Yeah, so now I work in the blue collar space. We run a community. We have a few hundred members in the community and where we coach one-on-one, we host two-day workshops. I have a 23,000 square foot headquarters training facility where people come in, fly in from all over the world. I got people out of the UK and Australia and really everywhere that come in and we do real in-depth training on these eight pillars for growth, on the operating system that we call God Mode, and so really helping these guys design and build their businesses from a very strategic standpoint.
Speaker 1:And so the reason I do that I tried retirement for six weeks and it was the worst six weeks, most depressing six weeks of my life and I realized like, hey, what brings me the most happiness and joy?
Speaker 1:And ultimately it's like it's developing people. And if I happiness and joy and ultimately it's like it's developing people and if I and I honestly believe that I can change the world faster through influence entrepreneurs than I can building my own business, because this allows me to literally impact hundreds, if not thousands, of different businesses who in turn have hundreds, if not thousands, of employees all at the same time, which really really is what the thing that pushes and motivates me and gets me out of bed in the morning. And so, uh, yeah, we've been doing this, uh, doing this, for a couple of years. It started off as a podcast, and then I doing one-off experiential things and workshops and eventually I'm like, man, let's build a freaking community and build this thing. And so, yeah, we focus on the trades in home services. We also have a little bit of a medical division, but outside of that, man, it's what drives and inspires me every day.
Speaker 3:So this is geared towards this podcast for blue collar community. Is there any particular? Is just any home service or is there any particular kinds that are a better fit Any certain sizes?
Speaker 1:I mean, our target market is anyone between a million to 20 million bucks, right, and we do have people that are above that. I have companies in our community that are doing a hundred million a year. But that one to 20 million is usually where most of the issues that we're solving for are right in that revenue range. And so but this is all different services anything from the trades HVAC, plumbing, electrical, to roofing and windows and landscaping and, you know, window washing all of it is very applicable.
Speaker 3:What's the common theme that you see, because it sounds like you talk to a lot of entrepreneurs and business owners. What do you say is the most common thing they bring to you as far as the problem they're hitting?
Speaker 1:I mean, most guys are wearing too many hats and they're stuck working in the business rather than on the business. And so that's one of the first things that we typically identify the key man syndrome, right, like if they got hit by a bus tomorrow, what would happen in their business? And so and I mean, there's companies that are doing 15, 20 million that are suffering from this Right, and so I know even higher than that. And so it's like, how do we remove you as the key man and help design the business? Because ultimately, as entrepreneurs, we get paid for design, not for the work ethic that we have, because there is hard work going on side your business. That pays a whole lot less right, like guys swinging a hammer on a roof or whatnot, they're gonna make 20 bucks an hour. Like, hard work is not what pays, design is what pays. And so we help guys design something that is going to be able to operate with or without them.
Speaker 3:Yeah, that's awesome, hey. So I wanna just talk a little bit about your legacy. So you've got five kids, you got 23 acres, you got a playbook. What's your legacy, man? Like, where do you see yourself going?
Speaker 1:Yeah, I mean, for me it's. I want to leave my fingerprint on the world through entrepreneurs. I honestly believe the fastest way to change the world is through entrepreneurs Because, like more than government, more than sports or influencer or anything else right Like, as entrepreneurs, we have the ability like we entice people in with a paycheck but then we have the ability to totally transform their lives and ultimately, that is what I'm trying to teach my kids. What I'm trying to portray is like I want to be known as the guy that changed the world through entrepreneurs in more than a financial aspect and did it in the right way, where man people became closer to God, had better families, were better contributors to society, made a ton of profit but did incredible good with that profit.
Speaker 3:Nice, wow, okay, I wanna finish with this last one. What should entrepreneurs be doing to future-proof their shop Like what stands out for you?
Speaker 1:Yeah, so I mean, we all know AI is changing the game, right, and we're in the 1990s of the internet, right, like the late 90s. Everybody knows that AI exists, knows that the internet exists, right, everybody knows that you can use email and like a little bit of search, and eBay is just coming out and chat rooms, right, like everybody knows that those things. But it's just like, but how, how, how do I actually change my business through this little internet thing? And that's where we're at with AI. And so one is you can't just replace Google with Chad GBT. That's not AI. Okay, that that is a form of AI, but like the lowest form of AI.
Speaker 1:So where we position ourselves in the marketplace is like blue collar guys know they need AI, there are AI tools that exist in the marketplace, but nobody is actually helping in the integration and bridging of it.
Speaker 1:And so that's where we come in, is we help operate as like a chief artificial intelligence officer of your business and help you identify the ways that you need to go and start implementing and what tools are the proper ones to be able to go and apply.
Speaker 1:Because ultimately, I mean 10 years from now, the world's going to look a whole lot different. We're going to have, you know, you're going to have an autonomous barber shop that's going to be cutting your hair on the way to work. You're going to have like all kinds of things going on. Blue collar is kind of like the last frontier of like the last thing that's going to be replaced by the robots, and so we have to position ourselves to create efficiencies across everything else besides that direct labor aspect that's installing the toilet, that's checking the you know that will be one of the last things to do but, like from a customer service and lead qualification and follow-up system and the way that your CRM integrates with your lead sources and everything else, it's vastly imperative that we start adopting AI, because somebody else is and they're going to be taken over quick.
Speaker 3:What are you seeing right now in terms of and I know this practically changes overnight like how do you feel about, like AI CSRs in terms of and I know this practically changes overnight, like how do you feel about like AI CSRs in terms of, like, answering the phone, big fan? Are you a big fan? Big fan? What would you say? Are the like, the biggest things a home service business should be looking at in terms of AI help?
Speaker 1:Yeah, so AI voice absolutely is a route that you need to go is a route that you need to go. We've got a couple of different partners in that space that we've vetted out that do really well with the blue collar space that you know the way that you got to be looking at it is sure you can have an all-star CSR that's going to be able to outperform an AI voice, but does your standard training get everybody else to that level? And the reality is no. So an AI voice is going to be able to outperform your standard training. They may not be able to outperform your best person, but ultimately, what the world of AI is going to look like is you're going to have like one person managing multiple AI agents that's constantly training them and developing them and getting them to their level of performance. So, yeah, we see in that a lot.
Speaker 1:You know there's the follow-up systems that are taking place. The chat bots are huge, the way that we're doing analysis and strategy and financial deep dives and reporting and replacing bookkeeping and everything else Like. There's a lot of that. You know I'm a big fan of like. Uh, so I, I record everything that I say or do throughout every 16 hours a day and I'm like training a large language model that automatically sends emails on my behalf, reports to my assistant on decisions that are made throughout the day, creates SOPs and uh to-do lists and everything else. Like man, there are so many cool ways that AI has changed.
Speaker 3:What are you using to record all day? It's not Limitless, is it?
Speaker 1:No, so I use. It's called Plot Note.
Speaker 3:I'm wearing it right here, oh Plot Note okay, okay.
Speaker 1:Wearing it here on my wrist. You run that all day long I wear it 60 hours a day.
Speaker 3:Wow, okay, I Okay, I didn't know it ran that long on battery. That's cool. I use this one. It's called Limitless and it's kind of interesting. It, like you said, it literally follows you wherever you take it and then at the end of the or the next day it summarizes like your to-dos or anything you've said, in terms of actions, it's kind of cool.
Speaker 1:Yeah, no, it's a, it's a. It's a crazy world we live in right now.
Speaker 3:Okay, hey man, that was awesome. A lot of really good stuff. I think my big takeaways I had they're probably like 50 of them, but definitely the ego part, I think, stood out to me, cause I know I've had bouts of that and I hear that a lot, so that's a big one. I think the fact that you worked out of your garage up to 75 million is pretty crazy. That stands out. Your links go next level proscom is where folks should go If they want some help and figure out your eight figure method or eight step method, excuse me. And then you're on LinkedIn under Chris Lee. Of course. Your Instagram is under Chris Lee. Qb, I believe is the handle name. If people want to reach out to you, are those the best places or is there anywhere else?
Speaker 1:Yeah, instagram, dm me. As long as you don't sound like a bot, I'm going to be responding, so Is there anywhere else? Yeah, instagram, dm me as long as you don't sound like a bot, I'm gonna be responding.
Speaker 3:So, okay, man. Hey, thank you so much. Can't thank you enough for your time and it's great that you're doing good for people. Appreciate it All right.
Speaker 3:So here's my quick take before we wrap up. A lot of owners try to win by copying the shop down the street and they end up copying the wrong things. Chris made two points I want you to keep. First, watch your gross profit margin. If you're running jobs at, say, 35 or 40%, you're setting yourself up to struggle. Get that over the 50% mark by adjusting your pricing, tightening labor efficiency or cleaning up material costs.
Speaker 3:Small shifts here can make a huge difference in your bottom line. Second, don't run your business by what's in the bank today. Track break-even sales each month and use a simple cash flow forecast so you know if you're building profit or just treading water. Now, this is the kind of work that I do with owners every day helping them rework pricing models, maximize labor efficiency and improve margins so their business finally funds growth instead of draining them. If you want to help dialing in your numbers, please book an intro call at cfointrocallcom or cfomadeeasycom. I'd love to chat with you. No pressure, just an easy conversation. Last but not least, thanks so much for listening to the show and being here every week. I sure appreciate it, and I hope you have a great one.
