Full transcript10 chapters · 9,429 words
00:00A $10 million shop that was barely breaking even
Jason Noel: I walked into a company doing 10 million in revenue, and they were barely breaking even. The number on the sign looked great, but nobody inside was winning. That’s the trap most service owners don’t even know they’re in.
Tyler Martin: 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.
Tyler Martin: Here’s your host, the Blue Collar CFO, Tyler Martin. Hey, hey, welcome back to the show. If that opening line hit a little close to home, buckle in because today’s conversation is going to challenge the way you think about revenue, profit, and what it really takes
Tyler Martin: to run a healthy trades business. My guest is Jason Noel, a coach with CEO Warrior and a 26-year operator who spent his career turning struggling home service shops into profitable ones, including a 90% profitability jump at ARS in Indianapolis. In this episode, Jason is going to break down why revenue is a vanity metric, how to dispatch
Tyler Martin: for profit, why he tracks gross margin by truck, the right time to hire a GM, and the limiting beliefs that quietly cap most trade businesses. And last but not least, the simple consistency habits that separate the owners who scale from the ones who just spend.
Tyler Martin: So grab a notebook. There’s a lot of meat on this bone. Let’s get into it. Hey, Jason, welcome to the Profit and Grit Show. How are you doing today?
Jason Noel: I’m good, Tyler. Thanks for having me.
Tyler Martin: Yeah, thanks for being here. I’m really excited to have an opportunity to talk with you. I know
01:55His dad was a plumber and he became a manager instead
Tyler Martin: a lot about CEO where I’ve researched them. I’ve ran into them in circles. So I’d love to just start. If you could just share a little bit about yourself, what you’re doing these days
Jason Noel: professionally, and then maybe something about yourself personally. Yeah, sure. So been in the trades industry, Jason Knoll, I live in Indiana, have my whole life. Ironically, been around the trades my whole life. My dad was actually a plumber. I saw what a toll it took on his body.
Jason Noel: He made a very nice career out of it, but was beat up pretty bad, as most of you plumbers and trades people know. Had no interest in being a plumber because I always say, like, that work was too hard for me. So, like, I didn’t want – I wasn’t smart enough to be a plumber.
Jason Noel: So, I ironically got into the industry in year 2000 as a manager, right? So, I couldn’t be a plumber, or I didn’t want to be a plumber, so I became a manager. So I was hired in 2000 by a local company here in Indianapolis throughout from 2000 to 2022,
Jason Noel: I believe it was. Worked with three different companies as general managers and operations managers to help turn some of those businesses around and been with CEO Warrior for four years. It was four years here in January. And we help business owners do exactly what I’ve done for the last 22 years prior to me coming here.
Jason Noel: So just helping them grow their businesses, become profitable, and a lot of them trying to get out of a truck. And yeah, that’s my quick 26-year history in the trades. Personally, my passion is my boat. My passion’s my family. However, my best place to be is on my boat on the weekends
Jason Noel: at our lake in Southern Indiana. So we have an RV down there. We stay down there. We go down there for the boat. That’s my time to get away from all the noise and all the busyness for a couple of days. And that’s where I love to spend my time with my family.
Tyler Martin: That sounds like fun. That sounds awesome. Hey, so just getting kind of going through your journey here, I’d love to learn.
03:50Running plumbing, electrical and HVAC to own the home
Tyler Martin: So of those 26 years, I know you spent about 14 years under American Residential Services, or I think you may have had two stints, but this one particularly was 14 years. I want to talk about you had three different trades under that one roof.
Tyler Martin: I kind of want to go through, like, take me through, like, what did running three trades under one roof, what did that kind of teach you that is a lot more than just if you hear about it? Like, what were your takeaways in actually experiencing it?
Jason Noel: Yeah, so my apologies, Tyler. I may have misspoke, but my first 14 years were with Clockwork Home Services.
Tyler Martin: Okay.
Jason Noel: It was the Ben Franklin one hour Mr. Sparky franchises. And then we became a company owned location, which was purchased by Clockwork, which then in turn was purchased by Direct Energy. So that was the whole ARS comes later. Got it. So that was my first 14 years through. I started with a local company, went through franchisee, went through buyouts, went through acquisitions, went through.
Jason Noel: And that was the 14 year journey to small location to very large location through buyouts, acquisitions and just and just growth. So I believe your question was, what was it like working in a three multi trade? I think it was absolutely fantastic. And here’s why, because we could share, we could share leads, we could share marketing, we could share what our goal there was, was to own the home, right? So we could go in and take care of plumbing, electrical and HVAC, which doesn’t leave a whole lot left to do right in the home. So we get on the home. So we had club memberships that had all three, you know, involved all three trades.
Jason Noel: So it was just, it was great to be able to cross market, cross generate leads from other departments and just being able to own the home was the biggest thing there.
Tyler Martin: Got it. So you’re working with a client. At what point do you say to that client, hey, it’s time you introduced electrical or it’s time you introduced plumbing in addition to your HVAC. How do you know when that’s right? And what’s your thought process around how do you
Tyler Martin: introduce that into the business so that it doesn’t become a distraction or a money suck?
06:00Go deeper before you go wider when adding a trade
Jason Noel: So how do you introduce it into the business, not to the plumbing?
Tyler Martin: Well, yeah. I mean, when do you bring that trade into the business and go, okay, I’m ready to take on the employees. I’m ready to take on the risk related to growing this trade, that type of thing.
Jason Noel: Yeah, great question. So we work with that a lot now here at CEO Warrior because a lot of business owners view it as that’s another revenue stream, an easy revenue stream, right? We know being in the trade, you laugh because, you know, that one’s easy.
Jason Noel: So like we really focus on whatever they’re doing, whatever their primary trade is that we get really dialed in and we make sure we go deeper before we go wider, before we expand out. So you nailed it when you said it’s a huge distraction and it’s really making sure everything’s
Jason Noel: in place. So someone, whether it be the owner or an operations manager, a management team can take on that extra trade and grow it without it pulling away from the primary trade. So it’s just it’s just really diving into financials processes, right? Making sure everything’s clean. It’s never
Jason Noel: going to be perfect as we know, but making sure everything’s clean before we really, we dive into that distraction because it can really hurt the primary trade.
Tyler Martin: Got it. If you were going to roll out another trade or you were going to have a client, do one of your clients do this? Do you have any methodology that you would say to do it? Like, do you try to hire within? I guess it might be hard. You may not have an electrician,
Tyler Martin: But how do you do that where you’re able to cross into a new trade and do it?
Jason Noel: I’ll give you a real-world example. So I had a client. They were having a challenging time on the HVAC side there in California. Weather’s kind of moderate. So their work was just inconsistent and just challenging. So they really doubled down on electrical. And that has been a real entryway for them to drive business during slow periods.
Jason Noel: They have a steady business now. and the HVAC has kind of piggybacked on that. So they kind of changed their whole focus. So
Tyler Martin: when do you know that’s right versus it’s more risky? And you answered it partly is just make sure you’re dialed into your main trade as it is. But how do you know and how do you introduce, like, do you go out and just try to find an electrician or do you have any thoughts around
Jason Noel: that? Yeah. So I don’t know that you ever truly know, right? But to the best of our ability to make sure everything’s running fairly smoothly before we expand, I would say probably, and again, It’s going to be kind of business by business related, which, you know, we work when we work with our clients.
Jason Noel: No, no one process is ever the same. So for me, it’d be it’d be legalities, right? Licensing. You got to have the to go from HVAC to electrical. And in most states, I don’t know about California, but I know in Indiana, you have to have an electrical license.
Jason Noel: So you need a journeyman licensee, you know, to be able to build that off of. And then it’d be the right person to be able to take that. And this is the hard part, finding the person that has the license and the person that can take it on and run that department.
Jason Noel: So that would be where I would kind of go towards first. But I think the main thing would be just to make sure you’re getting licensed and licensed appropriately in that state and then just building the right team to run that to run that other other division.
Tyler Martin: Yeah. And one of your earlier statements, you said about owning the home.
09:15Why one club membership beats three separate ones
Tyler Martin: Yeah. What were you guys consciously doing when you were doing these multi-trades to make sure that you own the home? Like, were technicians, you know, technician comes in for HVAC, where they go on, hey, I noticed your outlet doesn’t look like it’s set up properly.
Tyler Martin: I mean, what was the owning the home look like from a practical standpoint?
Jason Noel: Man, I think the biggest thing is club memberships. Okay. And we could have a whole call just talking about club memberships, but it was part of the process of every single service expert that went in. We call them service experts. Every single technician that went into the home would talk about the club membership, which included all three.
Jason Noel: Right. So that that was the lead into owning the home. If they had a club membership and we were able to do the services for all three, like that was it. Right. So I am a huge, huge, huge proponent of club memberships. Again, we could have a whole nother conversation around that because we could talk for hours on that.
Jason Noel: But the answer to your question is club memberships, getting them involved in club memberships. And some people, you know, like a plumber goes in, they may not have an electrician, but they may have an HVAC company. Right. You can still get the club membership because we made it inexpensive and enough just to be able to provide the service, you know, and in hope someday we would become their HVAC company as well.
Jason Noel: But, yeah, just just club memberships is my is my easy answer.
Tyler Martin: Okay. And just on a side note on the club memberships, did you guys, when you had the three trades, was it you buy one club membership with all three trades or did you have the option to go, hey, I just want HVAC?
Jason Noel: So my personality and my skill set is to overcomplicate things. Yeah, me too. So I’ve done all of those things, Tyler. What I found was one. Okay. When I circled all the way back around, we ended up having one that covered everything because it was so confusing.
Jason Noel: you know, I have a plumbing membership, I don’t have this, you know, you know, you get it. So like, but the easy answer is, is I would do one. Okay. And then, you know, monthly payment or annual or optional. I don’t think there’s a, I don’t think there’s a wrong answer. I think it
Jason Noel: really depends on the business depends on what the client wants to do. I mean, I’m a big fan of monthly reoccurring revenue. Yeah. But again, if somebody wants to pay the whole lump sum up front, So be it, right? I mean, we just want to be their business of choice.
Jason Noel: Yeah.
Tyler Martin: Okay, good stuff. I think that’s really good on the multi-trades, what I kind of want to talk about. I want to do also get into, I believe, and hopefully I’ve already botched up my research once, so hopefully I don’t strike out by the end of the show here.
Jason Noel: I don’t know that that was your fault. That may have been mine.
Tyler Martin: No, no, no. I’m sure it’s me. Let’s move on. Yeah.
11:50The 90% profit jump and pausing TV he couldn’t staff
Tyler Martin: So this next one is about 90% profitability jump. So I believe this was at ARS Indianapolis. Yeah. Kind of just wanted to talk about a little bit what was involved in doing that, maybe how that relates to most shops that you see a lot of times that are probably having the same type of challenges. Can you walk me through that?
Jason Noel: Yeah, I’m a big numbers guy. I’m a big P&L guy. It’s making sure you know your numbers and you own your numbers. Because if you don’t, you don’t really know what action steps to take. So that was what I did the first six months I was there is I just did some serious analysis on.
Jason Noel: It was really mostly in gross margin challenges, cost of goods. So and then by department. So I really dove into that. What it came down to, Tyler, is mostly processes and just understanding what to do. So, you know, I mentioned cost of goods, but a perfect example is the first year I was there.
Jason Noel: This isn’t a cost of goods. this an overhead item, but we were short on staff. We couldn’t run all the calls we had, but we were spending hundreds and hundreds of thousands of dollars in marketing for TV, right? Which we couldn’t run the leads we had. So I just put that on pause because we couldn’t
Jason Noel: do it anyway. Sure. So that saved us, that saved us a lot of money to the bottom line just by doing that. Right. So then we would focus on cost of goods by department, right? So gross margins, making sure we’re job costing everything, especially the larger ticket items. HVAC
Jason Noel: install turned into job costing every single job, right? We wanted to figure out where some of our challenges were. Like, again, I can talk about this for several hours of the processes and procedures that were put into place, but it was just, it was just, I’m going to make it sound
Jason Noel: simple, but it was just that. I had a lot of sleepless nights over that first, you know, few months trying to implement these things. We lost people, right? We lost people that didn’t want to get on board. And again, I’ve lost a lot of sleep over that, but it ended up paying off,
Jason Noel: you know, and turning things around. So it was just a, I think the thing for folks now is understanding what your numbers are, understanding the actions to take from those and man, just staying consistent. Cause it, cause I’m a big, I’m a big, I talk about consistency a lot because it,
Jason Noel: it gets hard, right? It gets hard to stay consistent. So just understanding the action items, sticking with it. It’s going to suck for lack of a better term. And you just got to stay consistent with it. Right. And we, we preach that every single day today, stay consistent with the
Jason Noel: process. It’s going to turn around and you know, it’s not going to be easy. Yeah. What is there
Tyler Martin: some reoccurring theme or something when you see a trade donors come to you? Is it pricing? Is it overspending on marketing? Is it all of the above? Like what, what do you, what do you typically see when they do come to you as we’re talking about improving profitability.
Jason Noel: Yeah. Again, like I mentioned earlier, it’s kind of customizable by business. Yeah. Most of the time, what I see is, ironically, this is going to, you’ll probably find this funny, but like, ironically, most of our folks that come in don’t spend enough on marketing
Jason Noel: and then wonder why the phones don’t ring. But the challenge, the most of the challenges is in their cost of goods. It’s in their gross margin. It’s not necessarily in their overhead. So it does become several things, right? It becomes pricing. It becomes inefficiency in the field.
Jason Noel: It could be a dispatching issue, right? There’s just, we’re discounting too much. You know, we’re not charging for the, for all the material we’re using. Like I can go on and on and on. Right. But it’s like, that’s where the job costing comes from.
Jason Noel: So when they, when you come on board to CEO warrior during the onboarding, the very first thing you do is you dive in and you get your financials cleaned up, which a little plug here. I didn’t ask you if I do this, but I’m gonna do it anyway.
Jason Noel: We’ve added accounting services to CEO Warrior now. Nice. Bookkeeping services, because we ran into a challenge of most of our clients coming in didn’t have P&Ls or didn’t have clean P&Ls, and now we can do them for them. So that’s been a huge thing for me, being one of the financial people here,
Jason Noel: is just being able to review financials on a monthly basis like you should, right? So it’s really just, man, I keep saying it, but it’s just knowing your numbers and understand what to do with them.
Tyler Martin: Yeah, that’s good stuff. You know, on this whole topic of a general manager in terms of a shop that says somewhere between $3 to $15 million, at what point does an owner know to say, hey, this is time to bring in a GM?
16:08When a $5 million shop is ready for a GM
Tyler Martin: And then how do they find the right person? Because, you know, I’m hearing you and you’re like a numbers guy. You can look at a P&L. And I look within my client base that have GMs. And, you know, I hear a lot of comments about the GMs.
Tyler Martin: And a lot of sometimes they’re very good and sometimes they’re like, well, he doesn’t really do GM stuff. We just kind of just have him look at the staff or whatever. So how do you know, like, when do you bring in a GM?
Tyler Martin: When do you think it’s the right time? What are the signs? And then what’s that profile if it were you trying to hire a GM that you would be looking for?
Jason Noel: So that is a really, really great question. We see that as well. We’re at people being GMs and they don’t really do GM stuff. I mean, we see that every day, too. So I don’t know that there is a specific profile and I’m going to give you a good example.
Jason Noel: So one of my counterparts that works here, Kevin, he was a general manager, same ran same types of business as I did him and both successful. Him and I are completely different personalities. Right. So I think for me, what I think somebody in that role is understanding what your skill
Jason Noel: sets and passions are and the surrounding i think a good a good general manager surrounds themselves with really good people right so so i’ll use me for example i’m not a sales trainer um i don’t like to train sales i don’t like to do role play like i you know i just don’t like this type of
Jason Noel: thing i’m a numbers guy right so what did i do i surrounded myself with people that were really good at doing that right so and that’s like i didn’t get where i i haven’t got i didn’t get here by myself right so i had to surround myself with really great people and i think that’s where
Jason Noel: not only general managers, but owners miss the mark today is thinking they have to be great at everything and you don’t, right? You just have to know what you’re really good at, stay really good at it, hire somebody really good at the stuff you’re not great at, and then hold them accountable
Jason Noel: to those things. So I don’t know that there’s a true personality trait. Okay. When would you say
Tyler Martin: introduced, like, is there a certain threshold of profitability? Is there certain revenue size? Like, when would you say, hey, it’s time for you to think about a GM?
Jason Noel: So all of the above, I think when somebody, when one of my clients comes to us and says, I want to hire a general manager, the first thing I’m going to say is, well, let me see your budget. Did you budget for it?
Jason Noel: Let me see your P&L. Let me make sure we can afford it. What’s this person going to do? Are they going to help you generate revenue? Right. What are their expectations? Right. I’m going to create a bonus structure out for that person to make sure they’re paying
Jason Noel: for themselves and, you know, in so many words. but I think that number is probably, if you held me to a number, I’d say probably 5 million and above. You’re probably ready for either a general manager, a director of operations, something kind of in that role between the owner and everybody else. Because the way I would like
Jason Noel: to build it out as owner, then I’d want to build out like field leads, right? So people are still out managing people, but they’re still generating revenue. And then that person, one of those people could potentially grow into somebody that runs those departments. So it would be a built-out
Jason Noel: process, but it would be, you know, I’d say probably 5 million or above. You probably need somebody in that mid-level management tier. At that 5 million level, you’re introducing,
Tyler Martin: let’s say, a GM role or some management, mid-management level role. Is that someone that is a technician that has strong technician experience? Is that maybe someone that understands the industry, but maybe they’re not a technician? Like, what would be your general, like, hey,
Jason Noel: this is my profile that I’d be comfortable with. So man, that’s another tough one because it’s not always a good technicians don’t always make good leaders and managers, right? And that’s okay. So again, I’m not going to say there’s a specific profile. I think it’s the right
Jason Noel: person regardless of where they came from. Like I said, I had an inventory control background is what I had before I started in this industry. So did that help me here? Sure. Did it help me with plumbing, electrical HVC? Absolutely not. I don’t know how to do any of that stuff. I’m not
Jason Noel: smart enough. So like it’s, it’s understanding. And again, certain technicians, and this applies to owners too, right? So like they’re hands-on and really, really good at it, but don’t always know how to run a business. So a technician and I, and don’t get me wrong. I had technicians that
Jason Noel: worked for me back in the day that own their own businesses now. So it doesn’t mean it can’t happen. It’s just got to be the right person. Um, and you got to set the right expectations and they have to be developed. They have to be developed to see if they can even do that role. I get it.
Tyler Martin: I mean, it’s hard. There’s a lot of different profiles that are probably a good fit. And so it’s just what fits for your business. I think one thing, my big takeaway from you was your self-awareness around what your strengths were and what your weaknesses were. So in your case,
Tyler Martin: hey, I’m not really a sales guy or I’m not really interested in that, but I’m great at numbers. And I think the owner that’s considering person for this role has to, if they were interviewing you says, hey, this guy is going to have my operational side dialed in. How do I help him
Tyler Martin: make up for maybe the sales side? What are we going to do in that area to continue to grow and cover that area? So that’s good, really good feedback.
Jason Noel: Yeah. And I think the flip side of that too, Tyler, is like, if an owner comes to me now and says, I want to hire a general manager, like where we’re going to start is going to be like, okay, list out everything you do and then tell me what you don’t want to do anymore.
Jason Noel: Right. That’s where we’re going to start.
Tyler Martin: Yep. That makes a lot of sense. Now we got to find the person that will do those things. If it’s an entrepreneur type, big picture type owner, they need an operator like me. Yeah. It just depends on the situation. Right. And I think we always fall into this like, oh, get out of the business. You’re going to work on the business. I’ll work in the business. And I think we pass the we pass the whole discussion about, well, that works in phases. Like you don’t just all of a sudden you’re out of the business. Like you’re still going to be doing some things in the business, maybe even forever. I don’t know. It depends.
Tyler Martin: about how big you get and how much your structure or management. But I think there’s like this picture on the internet that you’ll just get out of the business.
Jason Noel: Yeah, no, and I mean, you’re right. That’s not reality, right? And I mean, most business owners don’t necessarily want out completely. Right. So we have technicians that come in that, you know, they’re business owners now. They don’t, you know, we’re always talking about getting out of a truck.
Jason Noel: Well, some of them don’t necessarily want to be completely out of a truck. They just don’t want to get into crawl spaces anymore. or hot addicts anymore, right? So now they’re doing out what they want to do. They’re out in the field training
Jason Noel: and you can still do that, right? It’s what you want to do and what’s the best thing for your business. And then we fill in the gaps of people that can do the other things.
Tyler Martin: Yeah, that’s a great way to say it. I like that. Hey, one other thing I want to talk about was related to how much do you look at when you’re working with clients, utilization of technicians
22:52Labor to sales percent and gross margin by truck
Tyler Martin: and then their actual efficiency. Like, do you break that down into numbers in terms of it all the way down to like even a target billable rate where they should be at? I’m curious just like what your process is for that.
Jason Noel: Absolutely is the answer. So I’m a big labor to sales ratio person. Okay. I love the billable efficiency idea. I think billable efficiency is super, super, super hard to track. Okay. So I leaned more towards, you know, cause I mean, a normal service department’s billable efficiency is somewhere
Jason Noel: in the 30% range, which if you, you know, a guy works 10 hours a day and he’s billing for three, like that makes most people want to throw up. Right. So that’s why we train on giving options, right. Take care of the customer while you’re there, stay there all day. Every time you’re
Jason Noel: in the truck, like you’re losing money. But I spent most of my, most of my targets and goals are set off of labor percentages. Okay. You know, they’re what they got paid divided by what they generated. So that helps me give a better, a quicker, like a quick snapshot. Like I’d love to
Jason Noel: track billable efficiency. I just think it’s so difficult. Yeah, I gotcha. Now, when you say,
Tyler Martin: are you doing the standard kind of range, 17 to 20% is what you’re kind of looking at. Yeah. How do you deviate from that? Like when is 17 more ideal than, I mean, is there some diagnostic or something you’re looking at where like, if I had someone come to me recently and they’re 27%
Tyler Martin: because they have an incentive plan. And when it’s fully loaded, it’s 27%. What’s your thoughts when you hear that? Like you’re like, man, you’re going to lose money or it could make sense. Like where do you land on that?
Jason Noel: Next step I would take is just to dive into their total gross margin. Okay. Right. Because so if you include burden rates and all of those things and commissions, yeah, you’re going to. So my target was 18%. Okay. I did 22% with commissions. Okay.
Jason Noel: So, and that was without tracking any kind of burden. So add another, whatever, three or 4% of that. So I’m not too far off from what you’re saying. Got it. But so that’s why I went from labor percent down to, I dropped it to gross margin because
Jason Noel: the higher your average ticket, the lower your labor percent is going to be, but it’s going to drive your material equipment percent higher, right? And then vice versa. So if I had a guy that was running a good labor percent, he may not be a good, he may not have a good gross margin
Jason Noel: because he’s doing higher average ticket stuff, but he’s not charging the right price for the the higher equipment. Right. Right. So that’s why I ended up bringing it down by gross margin by technician or by truck to the point of there was an expense of a helper that got, got charged to
Jason Noel: that. Right. There was a finance charge that got charged to that, like down all the way down as far as you could go, because I wanted to see if that truck was truly profitable. Wow. Right. Not just, not just on labor, but on all cost of goods associated. So when you can get down to that level,
Jason Noel: you can really start to see where some of your challenges are, right? And it doesn’t mean, and then that’s, that’s coaching opportunities at that point, right? Because they may not even understand what the problem is until we, until we talk to them, explain it and show up, show it to them.
Tyler Martin: Wow. So you’re all almost running like a mini PL, P&L, by the loss for each truck. Wow. How do you even get that data? Are you just taking, obviously payroll data, pretty straightforward, but I mean, are you taking some allocations on some of those expenses, maybe like workers comp or I don’t know?
Tyler Martin: So because even workers’ comp, you could drive back if you want to do the exact amount. Do you do allocations for some things?
Jason Noel: So unlike workers’ comp and benefits and 401k and things like that, I just took a generalized percentage, and it was the same for everybody. But I could track material based on purchase orders, right? Purchase orders by job attached to that person. I could run that on.
Jason Noel: I mean, I ran that on a weekly basis, and then I could chew it up every month. So I could run material. I could run a quick permit. I could run subcontractors. I could run financing fees. I could run every single thing except what you’re talking about, which is the burden rate.
Jason Noel: So I would just use just a flat percentage as a burden.
Tyler Martin: That’s interesting. And what was your target typically you’re looking for in terms of a gross profit margin by truck that you’d go, hey, this is good or, hey, this is a red flag?
Jason Noel: So their target was 60%. And they were paid a bonus on anything over the 60%. Now, what I ended up doing was not worrying so much about the 60%, but worried more about the gross margin dollars. Okay. Right. So if I set a revenue target and I set it at 60, you know, if I set a revenue target
Jason Noel: of 40% or 40,000 at a 60% gross margin, right, whatever those dollars were, I think it’s like 24,000 or something. So at 24,000 gross margin dollars, they got bonus anything above the 24,000 of gross margin dollars. Percentages don’t pay the bills, right? The dollars do.
Tyler Martin: That used to be my exact line.
Jason Noel: It took, like when I said to overcomplicate things, right, it took me a little bit to circle around to get to that. But I’m a firm believer of that now is like, we can talk about percentages, their targets, their goals. We want to shoot, build our prices at that.
Jason Noel: But at the end of the day, the dollars is all that matters.
Tyler Martin: Right, right. Yeah, you’re tugging at my heart. I used to have a staff and I used to be in the engineering services field. And people would come to me and say, oh, I’m making 60% on the dollar. and I’d look at it and it’d be like $2 an hour they’re making.
Tyler Martin: And we were making like 25 or 30 an hour. And I’d be like, guys, percentage I don’t care about. Dollars pay the bills. Like that’s all I care about. More dollars, I know I’m good. I’m not going to go out of business with dollars.
Tyler Martin: I am going to go out by percentages.
Jason Noel: 100%. Yeah, that’s good. That’s just funny. If you’re doing a bunch of small repairs, right? I mean, you’re going to probably get a 70% gross margin where if you’re doing larger ticketed items, you’re going at 50%. But yeah, I’ll take 50% of 5,000
Jason Noel: over 70% of 500, right?
Tyler Martin: Right, right. And the logistics of 500 and the risk and the follow-up and the recalls. Yeah, that’s where most of your liability and customer complaints come from. Yeah. Are there smaller repairs? Yeah, yeah. No, that’s all good stuff. Really good stuff. So, hey, the other thing I wanted to talk about
28:50Look for inefficiencies before you cut a single expense
Tyler Martin: is just, and it kind of falls under this, is I know you’re really big on, we were kind of chatting about this, is how much revenue can be a lie. Like we hear, hey, I’m a $10 million company and I’ve seen it firsthand.
Tyler Martin: I get to see their books and it sounds like you do too. And you’ll see they’re making 1%, 2% net profit. And it’s like, wow, you’re working really hard to bring almost nothing home. What are your thoughts around that? And what do you usually see as problems that are causing that?
Jason Noel: Yeah. I know when you and Eric are talking earlier, I’m a little passionate about this. So revenue, right, all over the internet, right, is flashy revenue. I’m 10 million, I’m 20 million. like who cares? Like, it doesn’t matter. Like, and we’ve seen multiple, multiple companies that
Jason Noel: can do, you know, do a million dollar a month and lose money. Like, how is that even possible? Right? Like what are, what are we doing to make that even, to even make that like, like you said, I mean, you mentioned it. I say this all the time. You just said it like we wait, work, work way too
Jason Noel: freaking hard to not make any money. Like, I don’t care if I, if we did a million dollars in revenue and I lost money, like, I don’t like, we work too hard for that. Like there’s no point in that. So I feel like it’s kind of turning now, but profit used to be kind of a bad word in our industry.
Jason Noel: I think it’s shifting a little bit now, at least from the business owners and, you know, some of the, some of the trainers out, coaches out there that, you know, talk to revenue, but firm believer of, I don’t care what your revenue is. Let me see your profitability. So
Jason Noel: again, that comes back to processes, procedures, making sure you’re getting the right gross margins, making sure your overhead percentage makes sense, right? To generates to the bottom line, then we can focus on growth, right? Then we can focus on growing the top line
Jason Noel: because now we have everything in place that we can sustain some of those growth challenges, right? Because as you grow from two to five to seven to 10, like the problems just get bigger, right? So we want to make sure we have that structure in place
Jason Noel: so we can continue to be profitable. Otherwise, especially your labor and materials, it’ll get away from you so fast, you don’t even know what happened, right? And those are your two largest expenses in your business. So, yes, just really making sure you’re structured for that. And yes, I’m a big profit over revenue kind of person. I don’t care what your revenue is.
Tyler Martin: Right. That’s a good point. So do you, you know, a lot of times the first inclination, let’s use that $10 million company not making very much to the bottom line, the perception might be, hey, cut expenses. Is that where your mind goes or your mind goes like, well, I know there’s probably some operational inefficiencies or whatever.
Tyler Martin: Kind of take me through that, like how you’re thinking when you see that.
Jason Noel: My first thought is never cut expenses. My first thought is give me your P&L and let’s dive into it. Right. And I always tell people it could be generate more revenue, cut expenses or both. Right. So like it and you’re you are you nailed it.
Jason Noel: there’s more than likely inefficiencies in the business that you can fix pricing wise, right? Just dispatch wise, making sure the right person’s going to the right call, cutting down, having, I mean, a big one is inventory on your vehicles, right? Not going to the supply house all the time.
Jason Noel: Like that’s a, that’s a big one, especially in a large company like that. People are going to supply house all the time. That’s doing nothing but costing us money. So like, I would almost guarantee there’s inefficiencies that we can fix prior to cutting expenses. So, you know, it may
Tyler Martin: be both, but I’m going to look at inefficiencies first, 100%. How do you, Jason, get down as a coach? How do you get down to this level of detail to see these problems? Because, you know, in an hour meeting with a client, sometimes it’s hard to get that type of level of detail. Is it just
Tyler Martin: walking to having them walking through the whole process? Do you ever go out to their sites and kind of observe? Like what, how do you figure out some of these operational things can really
Jason Noel: sometimes be buried? Yeah, no, that’s a really great question and good segue too. So, So the process, so we meet with our clients more than once a week, typically, um, minimum twice a month. I would always start with send me your P and L, right.
Jason Noel: And then we would, and I would, I would do a deep dive in it outside of the meeting before I went into the meeting with them. I would go over things I was looking at, ask them questions. They’d leave with things they got to go find out from their accountant, whatever, like
Jason Noel: where did these expenses, right? All these things. And it would be a process of going through those things. it’s usually, you know, it’s usually a couple of month process of getting really everything dialed into where we can really read the, read the right information.
Jason Noel: Sure. To your point, yes, we do go to people’s businesses and that’s something we do here at CEO Warrior as well. And that is completely eyeopening and that’s life changing. So like we’ve, we’ve done, we actually have one coming up here in April where we’re going
Jason Noel: to a client in Dallas. So we discover a lot of things, right? So, and it’s, it’s interesting too, that people, their, their employees will tell us things that maybe they won’t tell their owners. Right. So that helps us get it. Cause we, I mean, we dive deep, we dive into talking to every single person and we dive into, we go to their meetings.
Jason Noel: We go to, you know, we go to their financial reviews. We go, I mean, we do everything. So even some training along the way, if, you know, if that, if that’s what they want while we’re there, but yeah, just being onsite and just sitting back and watching, man, we can learn so much as, as folks.
Jason Noel: that’s been in these businesses every single day. And you want to learn something about your business, go save with your dispatcher. Like you’ll learn everything. That’s the cog that makes the wheel, the cog in the wheel.
Tyler Martin: Yeah, yeah. I had a guy, Cody Martinez, on my podcast and Cowboys in San Antonio. And, you know, they went from, I think 4 million to 10 million. They’re at 20 million now. But what he did is he did what he calls call-by-call management on his dispatch.
Tyler Martin: And he actually got involved in who got assigned which jobs. And he really, for lack of better words, micromanaged it. But I mean that in a positive sense. And it had just a dramatic change in his business. So it sounds like to the point of what you’re bringing up,
Tyler Martin: you could be pretty surprised if you listen to some of those calls.
Jason Noel: Oh, yeah. Yeah, and what the definition of call-by-call management is out in the industry now is, I mean, you mentioned micromanagement. It’s a little bit of micromanagement to me. I’m, I’m bigger on dispatching for profit, which is what we teach, right? Right. Guy to right call, making sure they debrief after the call, making sure they did everything
Jason Noel: they were supposed to do, but not really communicating with them while they’re at the call. Right. Which is call by call. That’s kind of what it is. You’re, you’re on a Slack channel talking to the guy while he’s there. So I, I kind of like a hybrid version, right?
Jason Noel: So I was talking to a client yesterday and he was asking me about call by call. and then he told me what he was doing and he wasn’t really doing call by call. He was doing more of, this is what you do on every single call
Jason Noel: and then I’ve got people that are gonna oversee it and make sure you did those things, right? So it’s holding people accountable to what they should be doing.
Tyler Martin: Yeah, that’s good feedback.
35:36Nobody can do it as well as I do, and other beliefs
Tyler Martin: Hey, last topic I wanna cover is just our limiting beliefs. I had a lady on my podcast, her husband, Joey, and Alyssa. Alyssa was on my podcast and at one point they were kind of stuck, I think around two, three, 4 million and they were just like,
Tyler Martin: hey, we wanna get to 5 million and that’s gonna be great. And then they got some coaches and got some people behind them that helped them to think bigger. And now they’re at 10 million thinking that they want to be a hundred million someday.
Tyler Martin: And there, you should just see her light up when she was explaining to me about how their whole mindset changed of just maybe getting to 5 million to now it’s a hundred million. So what are your thoughts around these limiting beliefs? What do you typically see when an owner comes to you, a trades owner comes to you and how
Tyler Martin: do they overcome that?
Jason Noel: so again i want to come back to consistency okay so when they come back to us a lot of these folks have limiting beliefs and we’ve had several clients just like what you’re talking about and we just got to work we got to work through those things and prove prove it to them right so
Jason Noel: like and i i don’t like to say it this way but like it almost comes down to hey try this and let’s see what happens and then when it happens now they start to believe a little more they have limiting beliefs, but they got to be, they got to be open to feedback. They got to be coachable.
Jason Noel: They got to be trainable, right? That’s where they need to change their mindset. And once they’ve done that, then as long as they’re ready to put the work in, we can get, we can get past that limiting
Tyler Martin: mindset for sure. So you do see it a lot. It sounds like where, you know, folks come to you and maybe they’re just limiting beliefs. What, I mean, I love actually your concept of just try it. Like, I think that’s healthy. Like, you know, if we always act like we always have the perfect
Tyler Martin: answer. I think we’re doing a disservice to the client. So I love that you’re just like, hey, try it and see it for yourself. And that, you know, a lot of times the things we say, we believe more than what’s that saying? Like, if I say it, I believe it. If you say it,
Tyler Martin: maybe I’m questioning it. So you’re just kind of getting them to see their own results and their belief of it. But what is the most common one? Like, is it around revenue growth and getting bigger? I know revenue isn’t necessarily what we’re looking at, but is it around being able
Tyler Martin: to be a bigger shop? Is it getting themselves out of the business? Like, do you see any, any pattern of limiting beliefs where you go? Yeah, I see this all the time.
Jason Noel: Yeah. I think the biggest limiting belief that we see, um, which leads to all the other things you’re talking about is having them, them not having to do everything, right? Because they’re the best at everything. So the owner does it, the owner’s in the business right now doing every
Jason Noel: single thing and nobody can do it as good as them, right? That’s, and they’re not wrong. Nobody’s going to do it as the way they did it or the way they’re going to do it. However, people can be taught and trained to do it, to move you on, to do other things.
Jason Noel: Right. So we were talking about, you know, earlier about working in the business and on the business and things like that. And some owners don’t necessarily want to get out of the field per se. Right. So they can go out and train people, right?
Jason Noel: You don’t have to get out of the field. The idea is to do what you want to do and surround yourself with people that do the other things. Right. So I think the biggest limiting belief really is that I can’t, I can’t want to one, one is I can’t
Jason Noel: hire enough people because everybody’s doesn’t want to work. I cleaned that up a little bit. And the second thing is, the second thing is, is nobody can do it as well as I do.
Tyler Martin: Yeah, that’s a good one. Those, those are strong. That’s the most common one. Both of those really are the most common is, is the, they’re, they can’t find anyone good. I mean, I’ve heard that a million times, which is in every industry, I think people feel this way. And it’s 99% of the
Tyler Martin: time, totally untrue. It’s just a mindset. And then I do, that’s a good one. Nobody can do it as well as, and I love how you articulate that sometimes we’ll throw a percentage on like, oh, well, they can do it 80% as good as you. I like how you worded it. It was like to get you to move
Tyler Martin: forward. Like they can do a good enough to get you to move forward. So, and that’s the most
Jason Noel: important part of it. Yeah. Yeah. And we talk about this a lot is like, they’re never going to be you. So quit thinking they’re going to be you. That’s your limiting belief.
Tyler Martin: Yeah. Yeah. That’s awesome. Okay. Hey, Jason, I want to wrap up here before I do. Share with me a little bit about CEO Warrior. Who’s the ideal client that you’re looking for that you think you can help? And where can people, your website is ceowarrior.com. Where can people reach out to if
Tyler Martin: they want to just learn a little bit more about you and your business?
Jason Noel: Yeah, perfect. Ideal client, anybody in the trades that needs help running their business. You know, this business was developed from owners that realized they couldn’t run a business. They learned how to run the business. They wanted to teach other people, right? So our ideal client is kind of twofold.
Jason Noel: One is I was a really good technician. I’m still a really good technician. I don’t know how to run my business. I don’t know how to train my people. I don’t know how to do all those things. The other thing is maybe a larger company that needs to build some processes and create
Jason Noel: some efficiencies like we talked about earlier. So we don’t have a revenue ideal client. We don’t have any of that. We just need somebody that’s an implementer in the business, right? And it could be the owner. It really doesn’t matter. Yeah, you named the website.
Jason Noel: If anybody wanted to reach out to me directly, it’s Jason at CEOWarrior.com. I’d be happy to speak to anyone. We have an event coming up in May, and I am apologizing because I don’t have the dates in front of me. However, they are on the website you spoke about earlier, and it’s just around recruiting
Jason Noel: and retention. So something we talked about earlier, and a lot of people say I can’t find people, but they miss the fact that they can’t keep people. Right. So we want to talk about retention and culture as much as recruiting, because it might be a retention problem, not a recruiting problem.
Jason Noel: So that’s a little bit about us. Yeah. Reach out if you want to chat.
Tyler Martin: That’s good stuff. Also put your LinkedIn link in the show notes. I’ll try to, when I publish this, I think this will publish in around late April. I’ll put the link for people to be able to sign up to the recruiting and retention, which retention is the golden key, right? It’s one thing to get them in the door. It’s another thing to be able to keep the great people for a long term. That’s great. Okay. Hey, Jason, thanks so much. I really appreciate your time. I think you dropped a lot of wisdom today. I’m confident people got a lot out of this, so I appreciate it.
Jason Noel: Thank you. Yeah, I have the last. Thanks for having me.
Tyler Martin: Thanks, man. Take care.
Jason Noel: All right. Appreciate it.
Tyler Martin: So here’s my take on what Jason laid out today. Revenue is loud, but profit is what actually pays the bills, funds your growth, and lets you sleep at night. I see this almost every single week with home service owners I work with. They’re chasing the next million in top line while their gross margins quietly slip.
Tyler Martin: Their inventory bleeds out the back of the truck and their labor to sales ratio drifts a few points in the wrong direction. None of those things are dramatic on their own, but stacked together, they’re the difference between a $10 million shop that prints money and a $10 million shop that barely breaks
Tyler Martin: even. The fix is exactly what Jason kept circling back to. know your numbers, own your numbers, and get the visibility down to the truck, the call, and the technician so you can act before the small leaks turn into floods. That’s the work I do as a
Tyler Martin: fractional CFO with my clients. Clean P&Ls, real job costing, a 13-week cash flow forecast they can actually use, and a monthly review rhythm that turns financial reports into business decisions. If you’re working too hard for too little, that’s usually a numbers problem long before
Tyler Martin: it’s a sales problem. If anything in today’s episode resonated, head on over to cfomadeeasy.com to learn more about how I work with trades owners, or feel free to book a free intro call at cfointrocall.com. That’s cfointrocall.com. and let’s talk through what’s going on in your business
Tyler Martin: and how I might possibly be able to help. But most of all, thank you so much for listening. I’ll catch you on the next episode.
Related Episodes
- Marketing Mistakes Costing Trades Businesses Thousands – Adam Rich
- The Weekly Numbers That Fix Cash Flow – Ellen Rohr
- Thinking Too Small Is Costing You Millions – Alyssa Rogers
- Drowning in Chaos at $2M? Here’s the Fix to Get to $10M – Jason Payne
Tyler Martin works with owners on the numbers behind these stories: Profit & Grit CFOs. For where your business sits right now, read the $3M to $15M scaling breakdown.
