May 13, 2024 • 41 mins
Service Success Academy welcomes Jim Klauck to episode #98 of Pipeline to Profitability. Jim is the founder and president of Check A Pro – a Home Services referral organization. Since 2003, Jim Klauck has been assisting home service professionals build their businesses through Direct Response Radio. Jim likes to say, he is in the business of “Helping Winners Win More!” From Air Conditioning companies to Window Replacement, Jim has worked with hundreds of home service companies over the past 20 years.
The Radio Pitchman moniker, used by Jim, describes what he does best – pitch! Jim is known nationwide as “The Radio Pitchman” and uses his unique formula to craft copy which makes the phone ring for his clients.
Jim works with premier home service companies such as A1 Garage Door Service in Phoenix, Arizona and Abacus Plumbing, Air Conditioning and Electrical in Houston, Texas, where he has produced unique programming to get the phone ring for premier home service companies. Koala Insulation commissioned Jim in 2020 to bring countrywide attention to this national brand in cities such as: Atlanta, Boulder, Cleveland, Dallas, Houston, Nashville, Orlando, and Panama City.
If you’re a home service, plumbing, or drain business owner or manager and you want to learn how to generate more revenue from your existing plumbing and drain calls without complicated or pushy sales tactics? If so, head to swipemydrainbusiness.com to learn more.
Jim Klauck: jim@theradiopitchman.com
www.jimklauck.com
Get Jim’s FREE Audio Book about Podcasting - https://www.theradiopitchman.com
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Welcome to another engrossing episode of 'Pipeline to Profitability.' Featuring a thought-provoking conversation with Jim Klauck from Check A Pro Podcasts, this episode covers a spectrum of business strategies, from utilizing artificial intelligence (AI) to adopting best practices, which are transforming the home service industry.
We explore the changing landscape impacted by technological advancements, acknowledging the foresight of industry veterans like Al Levi. Al's journey from a plumbing business in the 1980s to leading coaching and best practice groups in Australia serves as an inspiring tale of adaptability and vision.
The episode shines the spotlight on the benefits of AI, recounting Billy Stevens' success story with his AI-based software, BillyGo. We unfold how the software redefines business operations, revolutionizing customer experiences while enhancing profitability.
A look at the trending influence of private equity on well-run service companies is also on the agenda. While this is palpably growing in the US, it's still nascent in Australia. We caution on the potential pitfalls, highlighting the importance of strategic planning to maximize business valuation.
The episode concludes with a comprehensive discussion on the essence of a well-structured business system and its decisive role in running a successful business. Across the globe, leaders are recognizing the need for robust training programs, sustainable management practices, and a deep understanding of business metrics.
Join us on this insightful journey and gather valuable takeaways from both success and failure stories to build a thriving, profitable business in a technology-rich world.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
So, welcome to the Pipeline to Profitability podcast, the podcast for home service professionals.
And today, I think it's number three, maybe four, I welcome Jim Klauck from Check A
Pro Podcasts. And yeah, we've got a lot to talk about today.
(00:21):
So, I'm probably, we'll start off letting you tell our listeners a little bit about what you do, Jim.
Well, sure. And I can't wait to get into what you do because we're going to
do a little expose on you on your own podcast today.
They call me the radio pitchman. I've been doing radio for a long time.
(00:41):
And what I do now is I take my radio experience and I help home service professionals
gain exposure online through video casting where we take a video and we put
it on podcast platforms.
And I specialize in home service professionals doing that.
Love it. I have to say, what you're doing, I wouldn't say it is different because
(01:07):
not that many contractors are doing it.
I was very grateful for you to invite me along two weeks back now to an event
you hosted at your local country club, golf club,
where I got to spend time with the one and only Michael Gerber, Michael E.
Gerber, which was an absolute pleasure. And I also got to meet some of the companies
(01:31):
that you're working with and from the garage door space and from the HVAC and the plumbing.
Very impressive. And I'm proud to know you and I'm really honored to be part of your podcast.
And thanks again for joining me, Jim.
Thank you. I enjoy having you in the Checker Pro family. It is kind of like a family.
(01:54):
When we had lunch with Michael E. Gerber a few weeks ago, you know, it was nice.
Michael was at the head of the table. I was at the other head.
And I'm like, this is a nice family because I have clients, members,
and friends, and associates.
And, you know, I thought it was a great event, too. It was great to have you all there.
(02:16):
And notice how I hogged the seat right next to Michael.
That's the advantage of arriving early, right? early as on time and on time as late.
I think I got the second best seat in the house.
Absolutely. So now I want to ask you questions on your podcast,
Pipeline to Profitability. May I ask you some questions?
(02:38):
Absolutely. Absolutely. Because what you do is fundamentally important. Yes.
For the trades, because you train and coach, you help, you have all this experience
going back decades and you bring it to America as well as internationally.
(02:58):
Australia is where you're from. Can you talk a little bit before I get into
the question, talk a little bit about your background, where you came from,
because you have this accent that doesn't sound like you're from the continent that we're on right now.
Al, tell us a little bit about who you are, where you came from,
and then I want to get into some questions that are really going to help the viewer today.
(03:20):
Sure. So yes, I am from Australia, Sydney, which is a five and a half million population.
So Sydney is quite big when you look at all the other cities in Australia.
I think we've got a total population of 27 million versus 330 million,
(03:41):
the US, and I am based in Houston, Texas, as are you.
So my background, I got into plumbing, geez, back in the 80s,
and I didn't really get into, and that was like working in construction builders.
(04:01):
And I didn't really get into the service industry, home service industry, until into the 2000s.
And when I did, I then started to, well, I realized that.
The industry didn't have the coaching and it didn't have the best practice groups in Australia.
(04:24):
So that's when I used this thing called the internet back then. It was quite early.
And I started to communicate with best practice groups. I think Frank Blau was
one of the first people I reached out to.
The founder of Nexstar, James Leichter, Mr.
HVAC, Aptura reached out to him.
(04:46):
And I realized that the world is such a big place when you can communicate from
Australia, a tiny little island which has got the same land mass of the United States, so far away.
And I used the internet to communicate and start to learn.
And that's basically my humble beginnings. And then I realized that Australia
(05:13):
needed flat rate pricing.
It needed best practice.
It needed trainers. And that's probably the shortened version of how I got stuck
into the service industry, not only as a contractor, but as a coach.
And we grew our company to be, it was one of the largest in Australia.
(05:37):
It was plumbing, electrical, heating, cooling.
And, you know, we got that to a pretty big company, 100 staff,
while we were actually running a best practice organization partnered with Service
Roundtable, Service Nation.
Yeah. Great self-intro. Thank you very much for that background.
(06:01):
A lot of people do know who you are.
Well-respected in the home service space.
When I mention your name, they're like, I know that guy.
He's from down under. Yeah, that's the guy.
So it's actually nice to be different, especially in North America,
coming from Australia, because you do stand out. Do you find that helps you?
(06:23):
Look, yes and no, because, I mean...
The thing is, I don't think there's anything wrong with the way I talk.
I find that you Americans talk quite oddly, strange, however you want to say
it. But we'll put that to one side.
That could be a later communication subject.
But you guys have been dealing with the likes of Paul Hogan and the Hugh Jackmans
(06:49):
and the Nicole Kidmans and the Keith.
So you've been dealing with us Australians for quite a few years now.
And, uh, yeah, I, I believe that I've spent a lot of time in the U S,
um, uh, and, and for the last few years I've been living here,
but, um, our cultures and values are nearly identical except you guys talk funny. That's about it.
(07:12):
Well, sure. We took the British English long time ago and twisted it somehow.
So, um, you know, we speak American, right? I mean, let's be fair.
It has some English roots and it's American.
And there's no question.
(07:35):
There's a huge difference. Okay. So I have some questions for you.
A lot of people want to know what's going on out there in home service.
Where is the industry heading in the next three to five years?
Yeah, look, that's a good question. and that's one that I've been asking now.
(07:55):
Probably in the last year, I've seen a change which is more than I've seen in
the last 20 years as far as the use of technology, best practice groups, coaching.
And I think that,
COVID and what it actually did for the industry and it did for the world has changed things.
(08:19):
There's some parts about it I do like, and I love the fact that we can be anywhere
in the world and we can jump on a Zoom call and we can chat.
We can interact with anyone.
I love that side of it. Um, and, uh, but where I'm seeing the industry change is, is by,
(08:41):
um, just the way we run our companies
using technology and using the right technology to, to drive it forward.
I mean, we both follow, um, and I'm going to touch on some of the,
the gurus out there and some of the best practice groups,
some are actually growing a lot faster than others,
(09:01):
but you know we both have a common friend um
being tommy mellow and i'm watching what tommy's doing to the industry he's
in the home services industry by garage doors he's also got his fingers in you
know in in some other businesses ventures as well and i'm watching what's happening with
(09:22):
coaching, communication.
And look, I feel that the companies that get on board,
and it's not just about the changing technology and, you know,
the scary world we're venturing into,
(09:45):
it's also about how we're using that technology and the likes of CIRA software,
which I've got to know Billy Stevens quite well, and just the way that software
is actually changing the way we run our businesses.
(10:05):
So, I believe, and I think it was probably a few weeks ago,
Billy Stevens put a post up about the amount of change that's coming in the next few years,
and I think that's really going to be accelerated faster than anyone knows just
(10:28):
by the use of technology and how we use it in our businesses.
So, but those that get on board, um, not just with the way we coach,
but the way we run our businesses with that technology are going to have a, uh, a clear advantage.
(10:49):
There's a lot more to it than that, and I'll probably explain a little bit better as we go.
But, yeah, there's a lot of change coming.
I'd be interested how you see this, Jim. Well, I was going to ask you,
what do you think is going to happen to the home service organizations that
(11:13):
don't fully adopt the technology?
We hear AI all the time, and we hear people say, if you're not using AI today, you're already behind.
There are a lot of home service companies that have a long heritage,
in other words, three generations deep.
(11:33):
Some of them are a little more advanced than grandpa was, but still they're
kind of living back in the 1980s, maybe 1990s.
Even if they lived in 2010, it's totally different.
What's going to happen to a lot of them? Are they going to go out of business?
Are they going to get absorbed before they're worthless? What's going to happen?
(11:56):
Um, there's two things, uh, Jim, they're either going to adapt or they're going to die.
And I'm guessing a lot of them, if you know, I'm, uh, I'm a bit older generation,
you know, I was born in the 60s, both were.
And yeah, I realized a long time ago that we need to change.
(12:17):
And sometimes we wait too long to change. I have to say that when it come to using the internet,
Google ads and all that, I was
probably one, I was way ahead of most of my friends over here in the US.
I got, yeah, I think my first website was around 2000, 2001.
We were doing Google AdWords not long after, and I still noticed.
(12:42):
And the only reason I went in that direction was because I just couldn't justify
the cost of the yellow pages, and I stopped yellow pages over 20 years ago.
AI is a big part of this. And I look, my belief is that AI is not going to replace
plumbers, electricians, HVAC technicians,
(13:03):
but AI, if used right, what I believe is those that use AI will replace those
that don't, if that makes sense.
So uh for example you've got and
ai has been in and i can say this
you know had a had a really good podcast with billy stevens
last week and he uses ai within his software better than anyone i've ever seen
(13:28):
and and i might if we've got time i might touch on that but yeah so if you've
got a team member that knows how to use ai and they're using it well they're
going to replace those that are not.
Well, actually, why don't you touch upon what you were going to mention about
Billy Stevens, how he's using AI so well in the software. What is that secret sauce?
(13:54):
Okay, I can tell you what I know.
Now, let's just think about your average service call, whether it's plumbing,
electrical, garage, door, heating, cooling.
Billing um billy worked
out when he first developed the software that
there's let's say 28 touch points
(14:16):
you know the customer calls in um someone rings to confirm the call the technician
community and so he believes that on average there's 28 touch points on your
average service call um some are less some are more i know jobs where there
would have been hundreds of touch points on the bigger jobs.
So if there's 28 touch points and you've got software that can reduce that to
(14:41):
two to three touch points, that's eliminating staff, physical staff in the business via technology.
Now, this is the indicator that will shock a lot of people listening is.
Your average company has, let's say, one office staff for every million in revenue.
(15:05):
Now, if you're a million in revenue and you've got four office staff, you're overstaffed.
So if you're a $4 million company, you should have four staff.
And maybe that's not an exact way to work this out.
But with Billy's company, see, when Billy developed software,
(15:28):
CIRA software, he started BillyGo, and he used it to test the software.
He runs most companies are usually between 800,000 to a million per office staff.
He runs closer to 4 million per team member.
So a business that I think he's on track to do 20 million this year,
(15:49):
and I think he's got four staff in the office.
Business tell me any any business um
that's doing 20 million that's only got four staff um
it's hard to it's hard to find a better example and his business is probably
the most profitable service company in the industry in my view i could be right
(16:13):
it might be someone more profitable Sure.
And I know he has very profitable businesses.
We've talked about it on my podcast, Contractor Stories, when he and I were on there.
And so it makes sense. Labor is generally the number one cost,
(16:33):
the biggest cost in any organization.
And if you can leverage...
AI, and you can have systems that don't have a beating heart,
meaning a human, do this 24-7 without getting sick, without breaking down on
the way to work, without complaining,
(16:53):
without going through a divorce, without being on drugs, without going to jail,
seriously, then it's a dependable, less expensive operation to run.
And in many cases, I believe the homeowner, the customer is getting better service
to an extent than a human who is having a bad day.
(17:15):
And they're on the phone saying, yeah, how can I help you?
Because they just had a bad day already, right? And the homeowner doesn't need to hear that.
So there's no question. If you can cut back on that human,
which we don't want to really say that, but in reality,
if you can put your human resources toward the technician side and some other
(17:38):
driving the business forward side and have some of these mundane tasks done
by AI, you're better off.
Absolutely. The other thing, too, is one thing I've learned from getting to
know Billy Stevens is he removes resistance in working with his company.
So he has one-hour appointment times and zero dispatch fee, which goes against
(18:02):
the industry norm, but it's fucking working.
And, yeah, I admire him for what he's doing. He's built a software product using
AI that does replace office staff
that would add, you still need to have a certain number of technicians.
So he's removed that path of resistance in dealing with people.
(18:26):
And the way the software works is just like using Uber. I mean,
how convenient is it to just jump on an app, book a ride, and then off you go?
So that's part of the change that's coming.
The other area, and I wanted to not spend too much time on this,
(18:50):
but it's bigger in the US than it is in Australia.
It's actually next to non-existent, is private equity is buying up well-run
service companies big time.
So in the US, probably 60% of the companies that I know that I've been working
with for years have already been bought up.
Primarily HVAC, heating and cooling businesses, but they're chasing plumbing businesses.
(19:16):
And the businesses that I work with that really focus on improving drain revenue
will increase their resale price and the value of their business. So.
And this is going to lead into where I see the coaching and education space change.
But Australia is behind, okay?
(19:38):
Maybe we're ahead in certain areas like technology when it comes to cleaning
drains, because we've sort of modeled Europe.
Maybe we're a little bit ahead with using Google websites, that sort of stuff. But the U.S.
Is ahead in the majority, technology, software, private equity,
(19:58):
and the amounts that these companies are paying for well-run companies.
Holy shit. It's absolutely mind-boggling to me.
Some of these multiples, I'm like, come on, is that for real?
Yes. Um, and then you see the big boat and the Lamborghini and they're like, I think so.
(20:22):
Yeah. Right. We see it all the time and I've never seen anything like it before.
Um, over the past three years, maybe five years, it just seems like,
Hey, if you have a nice little profitable HVAC business or plumbing business,
a good home service business,
might want to consider getting some private equity involved.
(20:46):
And they're like, well, I don't know if I can get much money for this.
You never know. You might want to ask.
The downside to that, and there's always, whenever there's great upside,
as there is with private equity, there's downsides.
There's a lot of vultures out there, Jim. and I'm not here to name and shame,
but there's vultures out there preying on companies that are not running that
(21:10):
well and basically taking over these companies and paying pennies compared to
what these businesses are worth.
But I see the doors are opening for new best practice groups that are going
to not prey on these companies like vultures,
but help these these companies to grow in a
(21:31):
partnership that's going to help them see the full potential
of their business so there is a change coming
and and whether um the only one
that's listening to this podcast that's part of
a best practice group trust me when i say this
it is changing it's changing from the
uh done with you model and
(21:53):
best practice i look i what i've
learned is every best practice from good to
bad is there to help the contractor some help
more than others so i've got absolutely nothing
bad to say about anyone in the industry that's helping contractors to succeed
but there is some people out there doing the wrong thing so um yeah so it's
(22:17):
shifting from the here's the information this is what you need to do and a lot
of the the bigger best practice groups.
Which I have mentioned, are doing a done with you model.
But what if not every contractor has got the ability to implement?
What if we were to give you a done for you model where we actually put someone
(22:42):
in your business to shape the tree?
What if that That was the revolution that's coming, and I'm part of that now.
It is happening, and I'll be getting involved with an amazing organization that's
going to bring that best practice to Australia, and that's the change.
(23:06):
If I was to look at the companies that I've worked with over the years,
some really good companies that have grabbed the ball, have said,
right, you need to do this, and five Five minutes later, they've fucking done
it and they've implemented and they've got the results, but not everyone is wired that way.
It comes back to leadership.
(23:26):
How strong is the leader? Has he got the right people actually doing the implementation?
So there's a lot of things that come to play, but if you were to provide a best
practice that was to put someone physically in that business,
that's the game changer for the industry.
Hasn't that always kind of been there? Isn't that like a turnaround guy?
(23:48):
Is that what you're talking about? Someone coming? No, it's,
it's look, it probably has that.
I've never actually had that offered to me.
And I've been part of some of the best, best, the, the, the greatest best practice
groups out there, um, where they actually put in a general manager into the business, um,
or an MD and managing director to actually direct traffic, um,
(24:12):
on daily process and accountability.
Um, but, um, it probably has been out there, but it's, it's now,
I believe it's going to become the norm because I don't want to see.
And anyone I see out there that is struggling to grow their business,
they've got the same information.
I give, you know, I've worked with hundreds of companies and I'll give the same
(24:35):
advice and information to each one of those companies.
Some actually get the results, some don't.
It's not the information, Jim. It's the implementation.
And that's the biggest difference I see, what's coming at the moment to the industry. Okay.
It's like what Michael Gerber says. It's really the system. I mean,
(24:58):
look at McDonald's. Okay.
He brings that example up all the time, Alan. McDonald's.
Look who is running a McDonald's restaurant day to day. Yeah.
Someone who's not highly educated. Some of them back when I was a kid, they were run by kids.
Today, it's not quite the same thing, but they were literally run by teenagers, maybe college kids.
(25:20):
Right. They were managing it and they were flipping the burgers,
but they couldn't mess up because there were systems.
And so people who try to not use systems or go around the system fail and you
need to just follow that system, which you're great at. So question for you.
Why do companies who invest in training and coaching start off so well,
(25:43):
but often ultimately fail? What happens?
It's taken me, another good question, Jim, it's taken me a lot of years to realize this.
And I just want to, I want to quickly go back to the system.
And it was, it was absolutely an honor to spend time with Michael E. Gerber.
But the system is only as good as the management that leads it. So here's an example.
(26:10):
And I want everyone that's listening to think about, you know,
you've given, you've got systems in place and you've got your staff out there
in the field interacting with customers.
And I want you to think about this. If your 18-year-old son or daughter was
to go to work at McDonald's, they're given great training.
(26:34):
I know there'd be great leadership in place.
And they're told that, right, you're on
the front desk or you're dealing with the
customers through the drive-through you must offer
fries with the order and you must
always up they look i'm not really into that
(26:54):
i don't think i will do that how long are they going to last there then they're
not going to tolerate that it's like this is the freaking system you either
do it or you don't have a job here and i and i and that's where coming to your
question about trainers
and it does it all comes back to accountability and leadership so for years i was.
(27:19):
With service professionals
australia we started to bring the likes of tech daddy charlie greer kenny chapman
uh great trainers mark madison matt michelle um i've had some of the best trainers
on the planet we've brought them to australia we've we've we've put on we've
(27:39):
done done training within our company.
Um, we've done public events. Then I, then I brought Joe Cunningham as well.
And, uh, um, and, um, you know, we've, we've taught technicians how to,
sales is a process and anyone can be taught a process how to sell,
but some sell better than others because of their communication skill.
(28:01):
And I believe that, um, anyone that's, uh, tuned in and has got.
One technician sells, you know, he might sell $10,000 a day,
but another technician struggles to sell $1,000 a day or whatever your KPIs are.
They've both been given the same training. They've both got the same process.
(28:23):
So whenever we brought a trainer, and like I said, I've had some of the best from the U.S.
Come to Australia. I've spent a ton of money over the years.
I don't want to go into the millions that we've invested in training for the
industry, not just for my company.
The results always increase. Everyone, I sent everyone to the same course.
(28:46):
It could be a one-day, a two-day.
Charlie did four-day courses, which were amazing because he actually would teach
you, give you the scripts.
You would have to learn the scripts. You'd have to record the scripts so you
knew what to say if the customer said that's too expensive.
So nearly every one of my
technicians that's gone to the training has come
(29:09):
back on fire and has gone out there
and absolutely killed it so you know let's say
our company was was doing 100 000 a month sales would shoot up to 150 a month
and i'm going holy shit this this training is great and then i would project
that forward for the next 12 months but then two months down the track, sales are 120,
(29:33):
and then three months down the track, they're back to 100, or they might even drop below.
I'm going, why is this? I mean, the guys are trained.
Surely they should be able to keep it up.
Basically, it was Joe Cunningham that opened my eyes up to this when I first
brought him to Australia.
2013, and he had a process called call-by-call management.
(29:58):
Now, we didn't call it that. We called it the perfect service call.
We modified it for drains because that was our focus. That's where we made the most amount of money.
And what I realized was the system is good, but it needs to be followed.
How do we ensure the techs are actually following it out in the field?
(30:18):
And he said, well, we need to, we need to put a manager in place that manages the process.
And then it sort of, I realized that it was the accountability for each technician
doing the exact process is where we were falling down.
And that's where, you know, we've now come up with training for Australia,
(30:41):
the industry in Australia.
We call it virtual call management because we've taken, I've taken what I've learned from Joe.
I still believe he's one of the best trainers in the industry.
He's HVAC, he does train plumbing.
And we've taken what he's taught us.
I've worked with other great coaches that use a process called virtual ride-alongs.
(31:04):
And there's products out there that you can actually manage
everything that's said to
the customer and that that entire process and we've
we've we've come up with our own train which is it's
for plumbers but more so for drain cleaners where
the money is right and it's just it's a process that requires someone to hold
(31:26):
the technician accountable for every step you can't Don't miss a step on this
because the system is that tight that it basically forces everyone to follow the process.
And that's why results didn't stick because the accountability wasn't there.
It's all changing now with virtual call management.
(31:50):
Yeah. No, thanks for explaining all of that and bringing that to the forefront.
Profitability, big thing. We don't want to be unprofitable. If we're in business,
we're supposed to make a profit, right, Alan? Absolutely.
And not all companies do.
What are the best ways or the fastest ways to, and we may have touched upon
(32:13):
this a bit before, but, you know,
what truly is the best way to improve profitability the fastest? Okay.
Too many contractors out there don't know their numbers. So they really need
to, if you don't know how to read your P&L, if you first, you've got to have a P&L.
If you don't know how to read your P&L, you're going to struggle to improve.
(32:36):
And you know i can i can tell you
if you were a contractor and i was coaching you i can just
say jim just raise your prices but it's there's more
to it than that that is not the solution
raising prices um you know
when i first start working with a company the very
first thing i want them to do is to generate more revenue
(32:56):
so they can at least pay my coaching fees but
you've got to know your numbers so basic accounting
numbers is important you've got
to know how to manage by the margin the gross margin
and then you can control you you can price yourself
you might be charging too much i mean
that's it unless i can actually see what
(33:19):
someone's charging and refer it back to the pnl and
know how i can affect that you might be
overcharging and you might be burning your customers and they're
just not using you because you're so you don't know unless
you've got the numbers um so look
the fastest way to improve profitability is to know your numbers um uh get some
(33:41):
coaching on in that space i don't actually coach contractors in that area i
always i recommend everyone to a lovely lady by the name of ruth king she has
some some great resources on basic
business accounting foundations.
You've got to know your numbers. You've got to make sure you're charging right,
(34:02):
but you've got to be efficient.
Efficiencies in the business have more to do with profitability than anything
else, as long as you're priced right.
And I'll give an example. You've priced a job.
Let's say you've got a billable hourly rate, and everyone uses flat rate.
Most companies do anyway.
And you've got a billable rate. Let's call that $400 an hour.
(34:25):
So the component of a job is I am going to allow 10 hours for that job. That's $4,000, right?
And I'm going to allow $1,000 worth of parts and I'm going to mark it up 50% margin.
So I'm going to double it. That's the easiest way to get a 50% margin.
But what if, and that job might be priced right if...
(34:49):
It only takes 10 hours to do the job. What if it takes 20 hours,
30 hours, 40 hours, 50 hours, 100 hours?
It's possible. I've let it happen in my company. So you've got to manage your
efficiencies. You've got to know your numbers.
And pricing a job, is there's a science to it.
(35:10):
It's not just, we'll throw a number out there that is based on what everyone
else is charging and hope that we get it and we'll try to make money.
That's not how it works. The best way to improve profitability is by knowing
your numbers, knowing your efficiencies, accurate pricing, bear pricing.
I want you to be pricing. You have to decide how much profit you want to make.
(35:36):
If McDonald's stores on average make, I think, a 22% net profit,
why can't a plumber, a contractor, a lot more difficult business to operate?
That's just some basics on on how to improve profitability it's um it's there's
a little bit in it but it's not completely,
(35:57):
it's it's certainly achievable for anyone that i work with because i'll get
them to understand their numbers and then let's start digging into your efficiencies a little bit.
There are so many great technicians that own a business they're not necessarily
good business I talk about this with Michael Gerber all the time from the E-Myth.
(36:24):
Working on and working in your business, working in your business certainly
is, hey, look, I turn wrenches and I'm really good.
I'm a great tradesman. I mean, I can I'm the best guy in in the city.
But are you the best business owner? And is that important to you?
So if you're self-employed, maybe it's not a big deal because those P&L numbers
(36:46):
are a lot easier when it's just you, when it's not a real business.
But some of these great wrench turners, right?
These great technicians want to have a great company.
They want to be 3, 5, 10, 15, 20, $50 million in revenue one day,
but you've got to be profitable or you will go out of business.
(37:09):
And so it is so important to know your numbers and.
And I guess as that leader of the company, if you're really the best technician
in town, but not necessarily the best business owner, you're going to have to
step aside and have someone help you, right? Absolutely.
Look, the industry needs coaches. And that's one of the things that I learned
(37:33):
early on, because the best businesses on the planet. And, you know, in the U.S.
There's companies, I know of a company that I interacted with a few months back
that is probably approaching the $2 billion a year mark in revenue.
So there's some big companies there. I will next guarantee that the CEO is being
(37:57):
coached by someone. Okay?
So it doesn't matter where you're at, what size, you need a coach.
And some companies need multiple coaches.
Maybe you need someone to help you with your finance.
Maybe you need someone to help you with your pricing. I mean,
I do that for anyone that knows their numbers.
(38:17):
Maybe if you want to grow your drain division, you need someone that's actually
built a $20 million plus drain business to help you.
So, yeah, there's so many good resources out there.
And back to where we started, the internet has just opened up and made it easy for everyone.
And that's why I've actually, there's nothing good about COVID.
(38:40):
I mean, the fact that they locked us down for the time that for nearly two years
in Australia, there's nothing good that come out of it in that respect,
but there's a lot of good that's come out of the technology changes.
And I frigging love it. I love where the industry is heading.
I love that I'm part of helping contractors and you never know one day I might
(39:03):
start up another business.
Might be in the US, might be in Australia. Who knows?
Oh, knowing you, probably. Hey, before we wrap it up, what have we missed today?
You got me there, Jim. What have we missed today?
What have we missed? We've talked a lot about how to be profitable,
(39:26):
coaching, training, the importance, the changes in the industry.
And it's not just this industry. It's all industries, really.
So no matter who's watching this, it doesn't matter what industry you're in.
If you're not on top of technology, you're going to be left behind. mind.
I saw something recently about the real estate market and how that's changing
and how the real estate commissions aren't going to be the same.
(39:50):
There's just so much information out there for people and so many ways for people
to do transactions without humans anymore.
And if we haven't missed anything, then this has been awesome.
It's been very complete and I I appreciate it.
Yeah, thank you, Jim. I appreciate you turning the podcast on me because,
(40:12):
look, I'll be honest with you.
I don't do as many podcasts as I should, and we've done some together.
I've got a very good message for everyone out there,
whether they're a small company near a big company and
my message is really through the hardships
(40:34):
that i've endured it's not like we don't
grow from good times we grow when um we get hit in the face yeah as mike tyson
said it's not until you get punched in the face that you realize you know and
look i've got a lot of i've got a lot of good stuff that's happened but i've
had a lot of bad stuff and that's where the lesson is.
(40:57):
There's no mistakes in life. There's only lessons. And yeah,
I want to thank you for interviewing me on my podcast.
And I want to thank all of our listeners of Pipeline to Profitability.
I hope you've got some massive value from today's podcast.
So, welcome to the Pipeline to Profitability podcast, the podcast for home service professionals.
And today, I think it's number three, maybe four, I welcome Jim Klauck from Check A
Pro Podcasts. And yeah, we've got a lot to talk about today.
(00:21):
So, I'm probably, we'll start off letting you tell our listeners a little bit about what you do, Jim.
Well, sure. And I can't wait to get into what you do because we're going to
do a little expose on you on your own podcast today.
They call me the radio pitchman. I've been doing radio for a long time.
(00:41):
And what I do now is I take my radio experience and I help home service professionals
gain exposure online through video casting where we take a video and we put
it on podcast platforms.
And I specialize in home service professionals doing that.
Love it. I have to say, what you're doing, I wouldn't say it is different because
(01:07):
not that many contractors are doing it.
I was very grateful for you to invite me along two weeks back now to an event
you hosted at your local country club, golf club,
where I got to spend time with the one and only Michael Gerber, Michael E.
Gerber, which was an absolute pleasure. And I also got to meet some of the companies
(01:31):
that you're working with and from the garage door space and from the HVAC and the plumbing.
Very impressive. And I'm proud to know you and I'm really honored to be part of your podcast.
And thanks again for joining me, Jim.
Thank you. I enjoy having you in the Checker Pro family. It is kind of like a family.
(01:54):
When we had lunch with Michael E. Gerber a few weeks ago, you know, it was nice.
Michael was at the head of the table. I was at the other head.
And I'm like, this is a nice family because I have clients, members,
and friends, and associates.
And, you know, I thought it was a great event, too. It was great to have you all there.
(02:16):
And notice how I hogged the seat right next to Michael.
That's the advantage of arriving early, right? early as on time and on time as late.
I think I got the second best seat in the house.
Absolutely. So now I want to ask you questions on your podcast,
Pipeline to Profitability. May I ask you some questions?
(02:38):
Absolutely. Absolutely. Because what you do is fundamentally important. Yes.
For the trades, because you train and coach, you help, you have all this experience
going back decades and you bring it to America as well as internationally.
(02:58):
Australia is where you're from. Can you talk a little bit before I get into
the question, talk a little bit about your background, where you came from,
because you have this accent that doesn't sound like you're from the continent that we're on right now.
Al, tell us a little bit about who you are, where you came from,
and then I want to get into some questions that are really going to help the viewer today.
(03:20):
Sure. So yes, I am from Australia, Sydney, which is a five and a half million population.
So Sydney is quite big when you look at all the other cities in Australia.
I think we've got a total population of 27 million versus 330 million,
(03:41):
the US, and I am based in Houston, Texas, as are you.
So my background, I got into plumbing, geez, back in the 80s,
and I didn't really get into, and that was like working in construction builders.
(04:01):
And I didn't really get into the service industry, home service industry, until into the 2000s.
And when I did, I then started to, well, I realized that.
The industry didn't have the coaching and it didn't have the best practice groups in Australia.
(04:24):
So that's when I used this thing called the internet back then. It was quite early.
And I started to communicate with best practice groups. I think Frank Blau was
one of the first people I reached out to.
The founder of Nexstar, James Leichter, Mr.
HVAC, Aptura reached out to him.
(04:46):
And I realized that the world is such a big place when you can communicate from
Australia, a tiny little island which has got the same land mass of the United States, so far away.
And I used the internet to communicate and start to learn.
And that's basically my humble beginnings. And then I realized that Australia
(05:13):
needed flat rate pricing.
It needed best practice.
It needed trainers. And that's probably the shortened version of how I got stuck
into the service industry, not only as a contractor, but as a coach.
And we grew our company to be, it was one of the largest in Australia.
(05:37):
It was plumbing, electrical, heating, cooling.
And, you know, we got that to a pretty big company, 100 staff,
while we were actually running a best practice organization partnered with Service
Roundtable, Service Nation.
Yeah. Great self-intro. Thank you very much for that background.
(06:01):
A lot of people do know who you are.
Well-respected in the home service space.
When I mention your name, they're like, I know that guy.
He's from down under. Yeah, that's the guy.
So it's actually nice to be different, especially in North America,
coming from Australia, because you do stand out. Do you find that helps you?
(06:23):
Look, yes and no, because, I mean...
The thing is, I don't think there's anything wrong with the way I talk.
I find that you Americans talk quite oddly, strange, however you want to say
it. But we'll put that to one side.
That could be a later communication subject.
But you guys have been dealing with the likes of Paul Hogan and the Hugh Jackmans
(06:49):
and the Nicole Kidmans and the Keith.
So you've been dealing with us Australians for quite a few years now.
And, uh, yeah, I, I believe that I've spent a lot of time in the U S,
um, uh, and, and for the last few years I've been living here,
but, um, our cultures and values are nearly identical except you guys talk funny. That's about it.
(07:12):
Well, sure. We took the British English long time ago and twisted it somehow.
So, um, you know, we speak American, right? I mean, let's be fair.
It has some English roots and it's American.
And there's no question.
(07:35):
There's a huge difference. Okay. So I have some questions for you.
A lot of people want to know what's going on out there in home service.
Where is the industry heading in the next three to five years?
Yeah, look, that's a good question. and that's one that I've been asking now.
(07:55):
Probably in the last year, I've seen a change which is more than I've seen in
the last 20 years as far as the use of technology, best practice groups, coaching.
And I think that,
COVID and what it actually did for the industry and it did for the world has changed things.
(08:19):
There's some parts about it I do like, and I love the fact that we can be anywhere
in the world and we can jump on a Zoom call and we can chat.
We can interact with anyone.
I love that side of it. Um, and, uh, but where I'm seeing the industry change is, is by,
(08:41):
um, just the way we run our companies
using technology and using the right technology to, to drive it forward.
I mean, we both follow, um, and I'm going to touch on some of the,
the gurus out there and some of the best practice groups,
some are actually growing a lot faster than others,
(09:01):
but you know we both have a common friend um
being tommy mellow and i'm watching what tommy's doing to the industry he's
in the home services industry by garage doors he's also got his fingers in you
know in in some other businesses ventures as well and i'm watching what's happening with
(09:22):
coaching, communication.
And look, I feel that the companies that get on board,
and it's not just about the changing technology and, you know,
the scary world we're venturing into,
(09:45):
it's also about how we're using that technology and the likes of CIRA software,
which I've got to know Billy Stevens quite well, and just the way that software
is actually changing the way we run our businesses.
(10:05):
So, I believe, and I think it was probably a few weeks ago,
Billy Stevens put a post up about the amount of change that's coming in the next few years,
and I think that's really going to be accelerated faster than anyone knows just
(10:28):
by the use of technology and how we use it in our businesses.
So, but those that get on board, um, not just with the way we coach,
but the way we run our businesses with that technology are going to have a, uh, a clear advantage.
(10:49):
There's a lot more to it than that, and I'll probably explain a little bit better as we go.
But, yeah, there's a lot of change coming.
I'd be interested how you see this, Jim. Well, I was going to ask you,
what do you think is going to happen to the home service organizations that
(11:13):
don't fully adopt the technology?
We hear AI all the time, and we hear people say, if you're not using AI today, you're already behind.
There are a lot of home service companies that have a long heritage,
in other words, three generations deep.
(11:33):
Some of them are a little more advanced than grandpa was, but still they're
kind of living back in the 1980s, maybe 1990s.
Even if they lived in 2010, it's totally different.
What's going to happen to a lot of them? Are they going to go out of business?
Are they going to get absorbed before they're worthless? What's going to happen?
(11:56):
Um, there's two things, uh, Jim, they're either going to adapt or they're going to die.
And I'm guessing a lot of them, if you know, I'm, uh, I'm a bit older generation,
you know, I was born in the 60s, both were.
And yeah, I realized a long time ago that we need to change.
(12:17):
And sometimes we wait too long to change. I have to say that when it come to using the internet,
Google ads and all that, I was
probably one, I was way ahead of most of my friends over here in the US.
I got, yeah, I think my first website was around 2000, 2001.
We were doing Google AdWords not long after, and I still noticed.
(12:42):
And the only reason I went in that direction was because I just couldn't justify
the cost of the yellow pages, and I stopped yellow pages over 20 years ago.
AI is a big part of this. And I look, my belief is that AI is not going to replace
plumbers, electricians, HVAC technicians,
(13:03):
but AI, if used right, what I believe is those that use AI will replace those
that don't, if that makes sense.
So uh for example you've got and
ai has been in and i can say this
you know had a had a really good podcast with billy stevens
last week and he uses ai within his software better than anyone i've ever seen
(13:28):
and and i might if we've got time i might touch on that but yeah so if you've
got a team member that knows how to use ai and they're using it well they're
going to replace those that are not.
Well, actually, why don't you touch upon what you were going to mention about
Billy Stevens, how he's using AI so well in the software. What is that secret sauce?
(13:54):
Okay, I can tell you what I know.
Now, let's just think about your average service call, whether it's plumbing,
electrical, garage, door, heating, cooling.
Billing um billy worked
out when he first developed the software that
there's let's say 28 touch points
(14:16):
you know the customer calls in um someone rings to confirm the call the technician
community and so he believes that on average there's 28 touch points on your
average service call um some are less some are more i know jobs where there
would have been hundreds of touch points on the bigger jobs.
So if there's 28 touch points and you've got software that can reduce that to
(14:41):
two to three touch points, that's eliminating staff, physical staff in the business via technology.
Now, this is the indicator that will shock a lot of people listening is.
Your average company has, let's say, one office staff for every million in revenue.
(15:05):
Now, if you're a million in revenue and you've got four office staff, you're overstaffed.
So if you're a $4 million company, you should have four staff.
And maybe that's not an exact way to work this out.
But with Billy's company, see, when Billy developed software,
(15:28):
CIRA software, he started BillyGo, and he used it to test the software.
He runs most companies are usually between 800,000 to a million per office staff.
He runs closer to 4 million per team member.
So a business that I think he's on track to do 20 million this year,
(15:49):
and I think he's got four staff in the office.
Business tell me any any business um
that's doing 20 million that's only got four staff um
it's hard to it's hard to find a better example and his business is probably
the most profitable service company in the industry in my view i could be right
(16:13):
it might be someone more profitable Sure.
And I know he has very profitable businesses.
We've talked about it on my podcast, Contractor Stories, when he and I were on there.
And so it makes sense. Labor is generally the number one cost,
(16:33):
the biggest cost in any organization.
And if you can leverage...
AI, and you can have systems that don't have a beating heart,
meaning a human, do this 24-7 without getting sick, without breaking down on
the way to work, without complaining,
(16:53):
without going through a divorce, without being on drugs, without going to jail,
seriously, then it's a dependable, less expensive operation to run.
And in many cases, I believe the homeowner, the customer is getting better service
to an extent than a human who is having a bad day.
(17:15):
And they're on the phone saying, yeah, how can I help you?
Because they just had a bad day already, right? And the homeowner doesn't need to hear that.
So there's no question. If you can cut back on that human,
which we don't want to really say that, but in reality,
if you can put your human resources toward the technician side and some other
(17:38):
driving the business forward side and have some of these mundane tasks done
by AI, you're better off.
Absolutely. The other thing, too, is one thing I've learned from getting to
know Billy Stevens is he removes resistance in working with his company.
So he has one-hour appointment times and zero dispatch fee, which goes against
(18:02):
the industry norm, but it's fucking working.
And, yeah, I admire him for what he's doing. He's built a software product using
AI that does replace office staff
that would add, you still need to have a certain number of technicians.
So he's removed that path of resistance in dealing with people.
(18:26):
And the way the software works is just like using Uber. I mean,
how convenient is it to just jump on an app, book a ride, and then off you go?
So that's part of the change that's coming.
The other area, and I wanted to not spend too much time on this,
(18:50):
but it's bigger in the US than it is in Australia.
It's actually next to non-existent, is private equity is buying up well-run
service companies big time.
So in the US, probably 60% of the companies that I know that I've been working
with for years have already been bought up.
Primarily HVAC, heating and cooling businesses, but they're chasing plumbing businesses.
(19:16):
And the businesses that I work with that really focus on improving drain revenue
will increase their resale price and the value of their business. So.
And this is going to lead into where I see the coaching and education space change.
But Australia is behind, okay?
(19:38):
Maybe we're ahead in certain areas like technology when it comes to cleaning
drains, because we've sort of modeled Europe.
Maybe we're a little bit ahead with using Google websites, that sort of stuff. But the U.S.
Is ahead in the majority, technology, software, private equity,
(19:58):
and the amounts that these companies are paying for well-run companies.
Holy shit. It's absolutely mind-boggling to me.
Some of these multiples, I'm like, come on, is that for real?
Yes. Um, and then you see the big boat and the Lamborghini and they're like, I think so.
(20:22):
Yeah. Right. We see it all the time and I've never seen anything like it before.
Um, over the past three years, maybe five years, it just seems like,
Hey, if you have a nice little profitable HVAC business or plumbing business,
a good home service business,
might want to consider getting some private equity involved.
(20:46):
And they're like, well, I don't know if I can get much money for this.
You never know. You might want to ask.
The downside to that, and there's always, whenever there's great upside,
as there is with private equity, there's downsides.
There's a lot of vultures out there, Jim. and I'm not here to name and shame,
but there's vultures out there preying on companies that are not running that
(21:10):
well and basically taking over these companies and paying pennies compared to
what these businesses are worth.
But I see the doors are opening for new best practice groups that are going
to not prey on these companies like vultures,
but help these these companies to grow in a
(21:31):
partnership that's going to help them see the full potential
of their business so there is a change coming
and and whether um the only one
that's listening to this podcast that's part of
a best practice group trust me when i say this
it is changing it's changing from the
uh done with you model and
(21:53):
best practice i look i what i've
learned is every best practice from good to
bad is there to help the contractor some help
more than others so i've got absolutely nothing
bad to say about anyone in the industry that's helping contractors to succeed
but there is some people out there doing the wrong thing so um yeah so it's
(22:17):
shifting from the here's the information this is what you need to do and a lot
of the the bigger best practice groups.
Which I have mentioned, are doing a done with you model.
But what if not every contractor has got the ability to implement?
What if we were to give you a done for you model where we actually put someone
(22:42):
in your business to shape the tree?
What if that That was the revolution that's coming, and I'm part of that now.
It is happening, and I'll be getting involved with an amazing organization that's
going to bring that best practice to Australia, and that's the change.
(23:06):
If I was to look at the companies that I've worked with over the years,
some really good companies that have grabbed the ball, have said,
right, you need to do this, and five Five minutes later, they've fucking done
it and they've implemented and they've got the results, but not everyone is wired that way.
It comes back to leadership.
(23:26):
How strong is the leader? Has he got the right people actually doing the implementation?
So there's a lot of things that come to play, but if you were to provide a best
practice that was to put someone physically in that business,
that's the game changer for the industry.
Hasn't that always kind of been there? Isn't that like a turnaround guy?
(23:48):
Is that what you're talking about? Someone coming? No, it's,
it's look, it probably has that.
I've never actually had that offered to me.
And I've been part of some of the best, best, the, the, the greatest best practice
groups out there, um, where they actually put in a general manager into the business, um,
or an MD and managing director to actually direct traffic, um,
(24:12):
on daily process and accountability.
Um, but, um, it probably has been out there, but it's, it's now,
I believe it's going to become the norm because I don't want to see.
And anyone I see out there that is struggling to grow their business,
they've got the same information.
I give, you know, I've worked with hundreds of companies and I'll give the same
(24:35):
advice and information to each one of those companies.
Some actually get the results, some don't.
It's not the information, Jim. It's the implementation.
And that's the biggest difference I see, what's coming at the moment to the industry. Okay.
It's like what Michael Gerber says. It's really the system. I mean,
(24:58):
look at McDonald's. Okay.
He brings that example up all the time, Alan. McDonald's.
Look who is running a McDonald's restaurant day to day. Yeah.
Someone who's not highly educated. Some of them back when I was a kid, they were run by kids.
Today, it's not quite the same thing, but they were literally run by teenagers, maybe college kids.
(25:20):
Right. They were managing it and they were flipping the burgers,
but they couldn't mess up because there were systems.
And so people who try to not use systems or go around the system fail and you
need to just follow that system, which you're great at. So question for you.
Why do companies who invest in training and coaching start off so well,
(25:43):
but often ultimately fail? What happens?
It's taken me, another good question, Jim, it's taken me a lot of years to realize this.
And I just want to, I want to quickly go back to the system.
And it was, it was absolutely an honor to spend time with Michael E. Gerber.
But the system is only as good as the management that leads it. So here's an example.
(26:10):
And I want everyone that's listening to think about, you know,
you've given, you've got systems in place and you've got your staff out there
in the field interacting with customers.
And I want you to think about this. If your 18-year-old son or daughter was
to go to work at McDonald's, they're given great training.
(26:34):
I know there'd be great leadership in place.
And they're told that, right, you're on
the front desk or you're dealing with the
customers through the drive-through you must offer
fries with the order and you must
always up they look i'm not really into that
(26:54):
i don't think i will do that how long are they going to last there then they're
not going to tolerate that it's like this is the freaking system you either
do it or you don't have a job here and i and i and that's where coming to your
question about trainers
and it does it all comes back to accountability and leadership so for years i was.
(27:19):
With service professionals
australia we started to bring the likes of tech daddy charlie greer kenny chapman
uh great trainers mark madison matt michelle um i've had some of the best trainers
on the planet we've brought them to australia we've we've we've put on we've
(27:39):
done done training within our company.
Um, we've done public events. Then I, then I brought Joe Cunningham as well.
And, uh, um, and, um, you know, we've, we've taught technicians how to,
sales is a process and anyone can be taught a process how to sell,
but some sell better than others because of their communication skill.
(28:01):
And I believe that, um, anyone that's, uh, tuned in and has got.
One technician sells, you know, he might sell $10,000 a day,
but another technician struggles to sell $1,000 a day or whatever your KPIs are.
They've both been given the same training. They've both got the same process.
(28:23):
So whenever we brought a trainer, and like I said, I've had some of the best from the U.S.
Come to Australia. I've spent a ton of money over the years.
I don't want to go into the millions that we've invested in training for the
industry, not just for my company.
The results always increase. Everyone, I sent everyone to the same course.
(28:46):
It could be a one-day, a two-day.
Charlie did four-day courses, which were amazing because he actually would teach
you, give you the scripts.
You would have to learn the scripts. You'd have to record the scripts so you
knew what to say if the customer said that's too expensive.
So nearly every one of my
technicians that's gone to the training has come
(29:09):
back on fire and has gone out there
and absolutely killed it so you know let's say
our company was was doing 100 000 a month sales would shoot up to 150 a month
and i'm going holy shit this this training is great and then i would project
that forward for the next 12 months but then two months down the track, sales are 120,
(29:33):
and then three months down the track, they're back to 100, or they might even drop below.
I'm going, why is this? I mean, the guys are trained.
Surely they should be able to keep it up.
Basically, it was Joe Cunningham that opened my eyes up to this when I first
brought him to Australia.
2013, and he had a process called call-by-call management.
(29:58):
Now, we didn't call it that. We called it the perfect service call.
We modified it for drains because that was our focus. That's where we made the most amount of money.
And what I realized was the system is good, but it needs to be followed.
How do we ensure the techs are actually following it out in the field?
(30:18):
And he said, well, we need to, we need to put a manager in place that manages the process.
And then it sort of, I realized that it was the accountability for each technician
doing the exact process is where we were falling down.
And that's where, you know, we've now come up with training for Australia,
(30:41):
the industry in Australia.
We call it virtual call management because we've taken, I've taken what I've learned from Joe.
I still believe he's one of the best trainers in the industry.
He's HVAC, he does train plumbing.
And we've taken what he's taught us.
I've worked with other great coaches that use a process called virtual ride-alongs.
(31:04):
And there's products out there that you can actually manage
everything that's said to
the customer and that that entire process and we've
we've we've come up with our own train which is it's
for plumbers but more so for drain cleaners where
the money is right and it's just it's a process that requires someone to hold
(31:26):
the technician accountable for every step you can't Don't miss a step on this
because the system is that tight that it basically forces everyone to follow the process.
And that's why results didn't stick because the accountability wasn't there.
It's all changing now with virtual call management.
(31:50):
Yeah. No, thanks for explaining all of that and bringing that to the forefront.
Profitability, big thing. We don't want to be unprofitable. If we're in business,
we're supposed to make a profit, right, Alan? Absolutely.
And not all companies do.
What are the best ways or the fastest ways to, and we may have touched upon
(32:13):
this a bit before, but, you know,
what truly is the best way to improve profitability the fastest? Okay.
Too many contractors out there don't know their numbers. So they really need
to, if you don't know how to read your P&L, if you first, you've got to have a P&L.
If you don't know how to read your P&L, you're going to struggle to improve.
(32:36):
And you know i can i can tell you
if you were a contractor and i was coaching you i can just
say jim just raise your prices but it's there's more
to it than that that is not the solution
raising prices um you know
when i first start working with a company the very
first thing i want them to do is to generate more revenue
(32:56):
so they can at least pay my coaching fees but
you've got to know your numbers so basic accounting
numbers is important you've got
to know how to manage by the margin the gross margin
and then you can control you you can price yourself
you might be charging too much i mean
that's it unless i can actually see what
(33:19):
someone's charging and refer it back to the pnl and
know how i can affect that you might be
overcharging and you might be burning your customers and they're
just not using you because you're so you don't know unless
you've got the numbers um so look
the fastest way to improve profitability is to know your numbers um uh get some
(33:41):
coaching on in that space i don't actually coach contractors in that area i
always i recommend everyone to a lovely lady by the name of ruth king she has
some some great resources on basic
business accounting foundations.
You've got to know your numbers. You've got to make sure you're charging right,
(34:02):
but you've got to be efficient.
Efficiencies in the business have more to do with profitability than anything
else, as long as you're priced right.
And I'll give an example. You've priced a job.
Let's say you've got a billable hourly rate, and everyone uses flat rate.
Most companies do anyway.
And you've got a billable rate. Let's call that $400 an hour.
(34:25):
So the component of a job is I am going to allow 10 hours for that job. That's $4,000, right?
And I'm going to allow $1,000 worth of parts and I'm going to mark it up 50% margin.
So I'm going to double it. That's the easiest way to get a 50% margin.
But what if, and that job might be priced right if...
(34:49):
It only takes 10 hours to do the job. What if it takes 20 hours,
30 hours, 40 hours, 50 hours, 100 hours?
It's possible. I've let it happen in my company. So you've got to manage your
efficiencies. You've got to know your numbers.
And pricing a job, is there's a science to it.
(35:10):
It's not just, we'll throw a number out there that is based on what everyone
else is charging and hope that we get it and we'll try to make money.
That's not how it works. The best way to improve profitability is by knowing
your numbers, knowing your efficiencies, accurate pricing, bear pricing.
I want you to be pricing. You have to decide how much profit you want to make.
(35:36):
If McDonald's stores on average make, I think, a 22% net profit,
why can't a plumber, a contractor, a lot more difficult business to operate?
That's just some basics on on how to improve profitability it's um it's there's
a little bit in it but it's not completely,
(35:57):
it's it's certainly achievable for anyone that i work with because i'll get
them to understand their numbers and then let's start digging into your efficiencies a little bit.
There are so many great technicians that own a business they're not necessarily
good business I talk about this with Michael Gerber all the time from the E-Myth.
(36:24):
Working on and working in your business, working in your business certainly
is, hey, look, I turn wrenches and I'm really good.
I'm a great tradesman. I mean, I can I'm the best guy in in the city.
But are you the best business owner? And is that important to you?
So if you're self-employed, maybe it's not a big deal because those P&L numbers
(36:46):
are a lot easier when it's just you, when it's not a real business.
But some of these great wrench turners, right?
These great technicians want to have a great company.
They want to be 3, 5, 10, 15, 20, $50 million in revenue one day,
but you've got to be profitable or you will go out of business.
(37:09):
And so it is so important to know your numbers and.
And I guess as that leader of the company, if you're really the best technician
in town, but not necessarily the best business owner, you're going to have to
step aside and have someone help you, right? Absolutely.
Look, the industry needs coaches. And that's one of the things that I learned
(37:33):
early on, because the best businesses on the planet. And, you know, in the U.S.
There's companies, I know of a company that I interacted with a few months back
that is probably approaching the $2 billion a year mark in revenue.
So there's some big companies there. I will next guarantee that the CEO is being
(37:57):
coached by someone. Okay?
So it doesn't matter where you're at, what size, you need a coach.
And some companies need multiple coaches.
Maybe you need someone to help you with your finance.
Maybe you need someone to help you with your pricing. I mean,
I do that for anyone that knows their numbers.
(38:17):
Maybe if you want to grow your drain division, you need someone that's actually
built a $20 million plus drain business to help you.
So, yeah, there's so many good resources out there.
And back to where we started, the internet has just opened up and made it easy for everyone.
And that's why I've actually, there's nothing good about COVID.
(38:40):
I mean, the fact that they locked us down for the time that for nearly two years
in Australia, there's nothing good that come out of it in that respect,
but there's a lot of good that's come out of the technology changes.
And I frigging love it. I love where the industry is heading.
I love that I'm part of helping contractors and you never know one day I might
(39:03):
start up another business.
Might be in the US, might be in Australia. Who knows?
Oh, knowing you, probably. Hey, before we wrap it up, what have we missed today?
You got me there, Jim. What have we missed today?
What have we missed? We've talked a lot about how to be profitable,
(39:26):
coaching, training, the importance, the changes in the industry.
And it's not just this industry. It's all industries, really.
So no matter who's watching this, it doesn't matter what industry you're in.
If you're not on top of technology, you're going to be left behind. mind.
I saw something recently about the real estate market and how that's changing
and how the real estate commissions aren't going to be the same.
(39:50):
There's just so much information out there for people and so many ways for people
to do transactions without humans anymore.
And if we haven't missed anything, then this has been awesome.
It's been very complete and I I appreciate it.
Yeah, thank you, Jim. I appreciate you turning the podcast on me because,
(40:12):
look, I'll be honest with you.
I don't do as many podcasts as I should, and we've done some together.
I've got a very good message for everyone out there,
whether they're a small company near a big company and
my message is really through the hardships
(40:34):
that i've endured it's not like we don't
grow from good times we grow when um we get hit in the face yeah as mike tyson
said it's not until you get punched in the face that you realize you know and
look i've got a lot of i've got a lot of good stuff that's happened but i've
had a lot of bad stuff and that's where the lesson is.
(40:57):
There's no mistakes in life. There's only lessons. And yeah,
I want to thank you for interviewing me on my podcast.
And I want to thank all of our listeners of Pipeline to Profitability.
I hope you've got some massive value from today's podcast.
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