Full transcript9 chapters · 9,070 words
00:00From welding school to an HVAC trade school in Okmulgee
Darren Yarbrough: Most heat and air shops die at $5 million and they don’t even know it. The reality is that the owner needs to get the tool belt off and get out of the way.
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. A lot of HVAC and plumbing companies don’t get stuck at 3 million, 5 million, or even 10 million because there isn’t enough demand. They get stuck because the owner is still carrying too much of the business on their
Tyler Martin: back. Welcome back to Profit and Grit. Today, I’m joined by Darren Yarborough, owner of Yarborough & Sons Heating, Air, and Plumbing. Darren has been in the trade for 40 years, starting with one truck and his wife dispatching calls and now growing the company into an $11 million a year family run shop with more
Tyler Martin: than 50 team members. In this episode, Darren talks about what kept the company stuck around the $5 million mark, why taking off the tool belt changed everything, how his son stepped into leadership roles, and why sharing the numbers with his team helps strengthen the business.
Tyler Martin: If your company still depends on you for every major decision, every problem, and every fire drill, this conversation is going to hit home. Let’s get into it. Hey, Darren, welcome to the Profit and Grit Show. How are you doing today?
Darren Yarbrough: I’m doing great. Glad to be here.
Tyler Martin: Yeah, thanks for being here. I’m so excited to have you. I’d love to start out just learning a little bit about you. Can you share with us what you do professionally?
Darren Yarbrough: Yes, yeah. I’m the owner of Yard Grow & Sons Heat and Air and Plumbing and have been for 40 years. And that’s pretty much what I do is heat and air and plumbing. So, yeah. That’s awesome. Of course, personally, I’ve been married for, gosh, since 1986.
Darren Yarbrough: So I guess 40 years this year. And my wife has been through the whole gamut with me. Got three sons. Got five grandkids. We chase grandkids around. We’ve got 105 acres that we live on. And I got the three sons, and each one of them are out there.
Darren Yarbrough: I give them land and build houses. And we tell the grandkids, when you hit a fence, turn around and come back. And so we chase grandkids.
Tyler Martin: Wow, that sounds cool. So each kid got a piece of land, huh? That’s awesome. Are you taking applications for any more kids by chance?
Darren Yarbrough: No, I think we’re there. We’re maxed out. So, yeah, everybody kind of divvied up. and are on a corner, you know, so we really don’t see each other. You know, of course, we work together and we’re a close-knit group, you know, but yeah, yeah, everybody’s got their own spot out
Darren Yarbrough: there and we got lots of deer and turkey and have a good time. I don’t shoot any of them, but I take lots of pictures. Yeah, that’s where I’m at. I like the pictures. I can’t do the shooting part. If I shot one, I’d have to clean it, you know, so yeah, yeah, so we take lots of pictures.
Tyler Martin: That’s awesome. Okay, so I want to hear about your journey here. So 40 years, super long time, want to talk a little bit, and that’s awesome because something to be said for consistency, right? Take me through kind of the origin of the company. Did you start it? Did you envision
Darren Yarbrough: yourself running it someday? Kind of take me through that. Right. And of course, I think it starts back to, you know, when I was a kid, you know, mom and dad, neither one of them finished high school. And, you know, so when they got married, you know, I had me and an older brother.
Darren Yarbrough: And when I was in high school, I was trying to figure out what I was going to do. And I was enrolled for welding school, you know, coming out of high school. And so since, like I say, mom and Dad, education wasn’t real high on their list.
Darren Yarbrough: You know, it was just hard work and dedication. And so I was enrolled to go to welding school out of high school. And that was during the 80s. And about that time, the old bust happened in Oklahoma. And every welder that I knew was out of a job.
Darren Yarbrough: And so I’m going, OK, well, what am I going to do now? And dad’s air conditioner had broke that summer. And the technician came out to work on it. And I was out there visiting with him. And, you know, I just graduated high school.
Darren Yarbrough: I’m trying to figure out what I was going to do and got to talking to him. And he made an impression on me. And, you know, said, hey, heat and air, you’ll always have a job. You’ll always have a trade. And I thought, well, that sounds pretty good.
Darren Yarbrough: You know, I said, OK, well, where’s the best place to go? And I think that this guy recommended Oklahoma State Tech, which is a technical training school in Okmulgee, Oklahoma. And it’s a three year trade school, you know, that they go to. So I signed up and off to Okmulgee I went.
Darren Yarbrough: And, you know, so Oklahoma State Tech is a branch of Oklahoma State University. And it’s just a trade school where they do air conditioning, plumbing, diesel mechanics, you know, anything you want to do. And so I signed up and spent two and a half years of my life there.
Darren Yarbrough: You know, it was two and a half years because I went one summer and come out there with an associate’s degree in air conditioning and refrigeration. And so that’s kind of where I got my background. And it started from there and worked for a company in Norman, which is a town 15 miles to the east of here.
Darren Yarbrough: And I worked for that company for three or four years. And Blanchard is a small community. I think we’re up to maybe 10 or 15,000 now. And it’s kind of a suburb of Oklahoma City in Norman. So it’s kind of right there to where you can get to either one of them in about 20 or 30 minutes.
Darren Yarbrough: Of course, in Oklahoma, we don’t have the traffic that you guys probably do. So you can get in a truck and we cover a 60-mile radius.
05:28One truck, a $20 service call, and his wife dispatching
Darren Yarbrough: Holy cow. Yeah, yeah. So from where we are. And so there wasn’t anybody doing heat and air in our town. And so I quit and we hung our shingle. And my wife dispatched me and I had a truck and away we went. So that’s kind of how we got started.
Darren Yarbrough: And I think probably if I had known that it ought to be more difficult than what it was, I don’t know that I’d have done it. Because I was 23 years old whenever I got my license. And Oklahoma license laws are pretty strict.
Darren Yarbrough: You’ve got to work for somebody for so long, and then you can go get your contractor’s license and kind of go from there. So I think ignorance was probably bliss because there was so much that I didn’t know about business when we started.
Darren Yarbrough: And that’s kind of how we got our start.
Tyler Martin: Was your vision to always be kind of a chuck in the truck, or did you envision building something big?
Darren Yarbrough: Well, you know what? I think at the time, I don’t know that I really had a plan. Okay. You know, it was just, you know, I just needed a job, and I needed a way to make a living and support the family. And away we went.
Darren Yarbrough: But, of course, when we started, you know, we started in 1988, and we got married in December of 86. You know, so we had been married for maybe a year and a half, you know, before we started the business. And, you know, and of course, in 1988, our house payment was 350 bucks a month and our pickup was paid for.
Darren Yarbrough: You know, so, I mean, I mean, you still had to work hard, you know, service call of 20 bucks, you know, so it’s all it’s all varied. But, you know, we didn’t owe nothing and our house payment was cheap. And so, you know, we just we just made the push.
Darren Yarbrough: And I don’t know that I really had a vision to to what it would turn into. And so just kind of went away from there. My first employee was my older brother and another guy that he was good friends with. They were both Oklahoma City firemen.
Darren Yarbrough: And they worked a swing shift where they’d work a day, off a day, work a day, off a day, and then they were off four.
07:13The 53-person team and adding plumbing three years ago
Darren Yarbrough: So they only worked at the fire station 10 days a month, which worked out great for a starting business because I didn’t need them all the time. So on their off days, they started working for me. So those were my first employees. And the other guy that came with my brother, he’s still with me today.
Darren Yarbrough: So he’s been here for almost 40 years. That’s crazy. And then my brother passed away. He stayed until 2015 and he passed away. Or he’d be here too. So that’s kind of where we started.
Tyler Martin: Where are we at today? What’s the market you’re serving? Give me an idea from like a technician side or whatever you’re comfortable sharing.
Darren Yarbrough: I think we’ve got about 53 people that’s on our team that works with us. And out of that, we’ve probably got 10 or 12 technicians and maintenance techs. And we’ve got six or seven plumbers. We started doing plumbing about maybe three years ago, and that has been a great fit.
Darren Yarbrough: So plumbing just went right with us and worked out super. And then I think we’ve got six install crews that just do nothing but install HVAC. Wow. And so we’ve got three CSRs, and then Bryce is our marketing manager that he joined us, which we’ll kind of get into that.
Darren Yarbrough: That’ll be a good answer for one of your questions here in a little bit. Yeah. And then we got two commercial estimators and then one or two residential estimators. And so that’s kind of the layout of how we are today.
Tyler Martin: Very cool. And I got one question as it relates to introducing that trade of plumbing. Any words of wisdom there? I know this comes up a lot. What made you decide to go into plumbing? How did you get the right expertise? Did you already have someone in-house or how did you do that in licensing?
Tyler Martin: What was the thinking in that?
Darren Yarbrough: We had kind of considered that for quite some time, you know, when it would be nice to be able to do more trades than just the HVAC. And, you know, and so we thought about bringing on electrical and we had actually brought on electrical many years ago, but it didn’t work out.
Darren Yarbrough: So we quit doing that. And then we found a plumber that was from a little town just right next to us and super great teacher, super great instructor, love teaching guys, love working with people. And he just didn’t enjoy the business part of it. You know, so he was probably, I don’t know, seven or eight years younger than me.
Darren Yarbrough: He was in his 50s. And so anyway, so he came to work for us and and loved doing the plumbing part and the bidding and estimating, but just didn’t like the people part of it. And so that was a great fit. So we brought him on board and and, you know, then he hired all the plumbers that we got and worked out pretty well.
Darren Yarbrough: And then since then, he has kind of moved off and doing a different deal. And his son had come to work for us now and he’s kind of filled that role. And so anyway, so he’s our master plumber. And, you know, so we still use his license and has worked out pretty well.
Tyler Martin: Well, you know, you brought up electrical didn’t work out.
09:49Why the electrical trade failed and plumbing stuck
Tyler Martin: I would love to spend a minute just talking about that. What made it not work?
Darren Yarbrough: We did that probably, gosh, that’s probably been 25 years ago. And we were doing quite a bit of, at that time, we were doing quite a bit of new construction houses. And so we brought him on to do that. And then we were, he was the older guy that had worked for us.
Darren Yarbrough: And I think he was kind of looking for something more where he could be kind of in a managerial role, but we didn’t have the people in place, you know, to be the managerial part of that. You know, we still need somebody to put a strap on a tool bag and go and do and teach.
Darren Yarbrough: And it just wasn’t a good fit. And so we probably did that for maybe a year or so. And so, but the plumbing has worked out super well. And we would do electrical again if we could find the right guy.
Tyler Martin: Sure. Is that really, when you think about adding trades, it’s really kind of just finding the right person to be able to introduce you to kind of carry the load to get that trade going.
Darren Yarbrough: Right. Yeah, because I think, you know, I know in Texas and just other states, you know, the license, the licensing laws are not as strict as what they are here in Oklahoma. You know, so in Oklahoma, you start out and you’re a, you’re a journeyman and you’ve got
Darren Yarbrough: to be a journeyman or I’m sorry, you got to be an apprentice, you know, so you’ve got to be an apprentice working under a journeyman for two years. And then once you’re a journeyman, then you’ve got to work for three before you can go get
Darren Yarbrough: your contractors. You know, so you’ve got guys that are, you know, gosh, you know, three, four, five years into the trade, you know, before the money kind of gets, you know, up there to where it should be. I mean, I don’t know if that’s a true statement or not, you know, because we pay pretty well,
Darren Yarbrough: you know, from the, from the beginning, you know, whereas in Oklahoma, you know, we may start out, you know, when an apprentice, you know, gosh, they’re at 18 bucks an hour and, you know, we’ve got service techs that are up into the thirties, you know, so, you know, for Oklahoma,
Tyler Martin: that’s a pretty good, pretty good wage. Yeah. Well, it comes with spiffs and that kind of stuff too.
Darren Yarbrough: Sure. Sure. On that line, you just mentioned spiffs. What do you kind of do in terms of,
Tyler Martin: in terms of incentives? Like what do you typically spiff on? Right. You know, if, if they turn over a lead, you know, to replace equipment, equipment, you know, there’s a spiff on that, you know, and then just depending on what the margins and stuff are throughout the
Tyler Martin: course of the day, you know, if they meet certain goals or whatever, their spiffs that they go into that, or we may sell a maintenance agreement, you know, there’s probably a $10 spiff or something, you know, that kind of goes on that, you know, just to kind of give a little bit of incentive to,
Tyler Martin: you know, to get those guys to remember that kind of stuff.
Darren Yarbrough: Got it. Well, so one thing before I jump to the next topic I want to talk about is just a family-owned business or a family-run business. Are there challenges in running a family business
Tyler Martin: you have faced or has it been pretty smooth sailing the whole way? Well, and I think it goes back to probably just the family dynamics, you know, and of course, I mean, you know, we’re a Christian family and Jesus followers. And, you know, and I think, you know, how you raise the
Tyler Martin: kids and how you bring them in and, you know, in our family, our family dynamic is such that there’s not a lot of egos, you know, so I can see how some families, you know, struggle because of that, you know, have power plays and such. And really, we’ve been pretty blessed that we don’t, you
Tyler Martin: You know, so for us in the family business, it’s just it’s a great fit, you know. And so, like I say, I mean, you know, we live we live in the same town. We work at the same place, you know, and you go see these people on holidays, too.
Tyler Martin: You know, so we see a lot of the kids and, you know, as they do us, you know. But now a lot of times, you know, through the course of the day, you know, when we leave the shop, you know, it’s not like we live we live with each other, you know.
Tyler Martin: So there is that separation, you know, that that works pretty well. And so for us, it’s a great it’s a great fit. And we hadn’t had too many, we don’t throw staplers at each other too much. You know, so it works out pretty well.
Darren Yarbrough: Too much is the key word.
13:12Breakfast burritos and showing the crew the department numbers
Tyler Martin: Yeah, yeah.
Darren Yarbrough: In the 40 years, what has kind of stayed the fabric of your company? Like, what has stayed the same? Like, is there something you’re most proud of?
Tyler Martin: Well, I think probably taking care of our customers and taking care of our team. You know, I mean, we screw up a lot, you know, just as much as everybody else does. But, you know, which I’ve always told the guys, you know, hey, if you screw up, fess up.
Tyler Martin: You know, I think customers are pretty willing to forgive you, you know, if you come and you say, hey, you know what, how do I screw that? You know, let’s do this different. Let me, you know, let’s refund this. I won’t charge you for that.
Tyler Martin: And here’s what we need to do. You know, so I think people are pretty, you know, pretty forgiving, you know, when you come with your hat in your hand and you’re honest with them, you know, just like our team. You know, I mean, we share numbers with our team.
Tyler Martin: And, you know, we tell them what we’re making and what we’re doing and why we’re doing it and how we’re doing it, you know, so that they know as opposed to coming up with ideals the way that we do things just because, you know, so that works out pretty well.
Tyler Martin: We do a, it started out as a profit sharing fund that we do with the guys where we share the numbers with our team once a month. We cook on breakfast, you know, and all the managers show up and we get out the, oh gosh, I want to say a hot plate or a Bunsen burner, you know, out in our sheet metal shop.
Tyler Martin: And we do breakfast burritos. We do eggs and bacon and sausage. And I think we’re doing it tomorrow, actually. And, you know, so we’ll do like a, oh gosh, we’ll do 120 eggs, eight pounds of sausage, eight pounds of bacon. And everybody will come in and we’ll share the numbers with them, you know, whether it’s good, bad or ugly.
Tyler Martin: You know, and for every month that we make more than a 6% net profit, we take 10% of that profit and we give back to the guys.
Darren Yarbrough: So when you say you share numbers, are we literally talking a full P&L or is it like a rolled up P&L?
Tyler Martin: Yeah, we kind of cherry pick. We show them what the service department did, what they grossed, what the plumbing department grossed, what the commercial install team did. We show those numbers of the gross dollars that we brought in. And then we also show them what it took to make those.
Tyler Martin: You know, so we may take, you know, our service department made, I don’t know, $500,000 or whatever, $100,000 this month. You know, then we may come and say, OK, well, we spent 30 grand, you know, to do this. And labor percentage should be less than 20 percent.
Tyler Martin: You know, so and we show them where they actually are. And we do that through each department. You know, and then we show them the big picture company wide. We made this. Our overhead is this. And we made this much money, you know.
Tyler Martin: And I think that that works out pretty well because, you know, people are going to have an ideal anyway. You know, so we might as well just show them and say, hey, here’s where we’re at. You know, and I think it’s probably better to work for a company that you know what they’re making as opposed to you don’t.
Darren Yarbrough: Right. No, that’s true. When you say 6%, do you mean 6% net operating income, net profit? What is that 6%? Yeah. Net profit. And why 6% out of curiosity? Why did you pick that number?
Tyler Martin: We robbed and duplicated that from somebody else. Like everything in the world. Yes, that’s true. That’s true. Yeah.
Darren Yarbrough: Whereas we belong to a couple of trade groups. And, you know, we’ve got some, it’s an AB call, you know, for different companies that are bigger than us around the United States, you know, that I think Tucker, one of my sons, is on a call with that, you know, every week, you know, and one of those companies did that and we just robbed that model from them and it worked out well.
Tyler Martin: Yeah, because that kind of falls under like the game of business. I don’t know about the 6% necessarily, but the whole sharing of the profits and letting the team really in on the visibility of the numbers, which is, it’s interesting to me. I’d love to know your opinion on this.
Tyler Martin: some owners will say, hey, I don’t really want to show the numbers to my team because they’re not going to really understand. And if they see I’m making X, Y, Z, they’re going to, you know, they’re going to think I’m ripping them off or I’m making a fortune. And then others say,
Tyler Martin: no, share your numbers. What’s your opinion between those two scenarios? Do you feel culture plays into this? Do you feel like, how come your team can handle seeing the numbers and obviously
Darren Yarbrough: probably doing really well? Well, I think probably just communication with those guys. because we’ve had guys think, oh my gosh, you guys are cutting a fat cat. But then whenever you break it down and you show, I mean, of course, at the end of the year, whenever we go do a job
Darren Yarbrough: or whenever we, whether it’s a service call or whether it’s an install, I mean, we’re trying to make a 15% net profit and that’s not too much to ask. And then you show those guys those numbers and your goal is to make a 15% or a 20% net profit. But by the time you screw up and you do
Darren Yarbrough: this and you do that, that 15% looks a whole lot more like eight. You know, so I mean, there’s not, you know, I mean, yeah, you’ve got to make it and you’ve got to charge it to be able to sustain business. And that’s why a lot of companies don’t.
Tyler Martin: Yeah, that’s good stuff. I’m going to, when we get to the number, I’m going to circle back to that. I already went deeper than I planned to, but when you start talking numbers, I get just kind of excited. Right. So I want to talk about, I know you guys at one point hit a ceiling of
18:09Stuck at $4.7 to $5 million from 2010 to 2017
Tyler Martin: $5 million. And a lot of times that’s just where shops end up and they’re just always a $5 million shop. What do you think, before I ask you what got you through the ceiling, I’d love to know, what do you think was making you hit the ceiling? Like what were you experienced to just,
Tyler Martin: how long did that last? And what do you think was causing that?
Darren Yarbrough: Because that was all I could do. You know, that was before the boys had joined me. And I don’t remember how many guys we had at that time. And probably we started out and we were doing more commercial work than we were residential. You know, so we had a group of commercial clients
Darren Yarbrough: that we would, that we worked for. And most of it was design build stuff, you know, where they would bring us a set of plans to a building, you know, a two or three story building, you know, that might be 5,000 square feet or 10,000 square feet. And we would design the HVAC for them, you know, which
Darren Yarbrough: we would do the duck layout and the duck design, the equipment selection. And so anyway, so after we had gotten hooked up with these guys and had worked for them for many years, you know, we were doing that and our, and our spread, we were probably maybe 70, 30 commercial, 30% residential,
Darren Yarbrough: you know? And so we had rocked along with that. And that’s kind of what we, that’s kind of what we did. And during that time, I was probably carrying a tool bag too and running service and doing that kind of stuff. And I want to say probably in gosh, 2010, we probably hit 5 million
Darren Yarbrough: and from 2010 to 2017, we stayed 4.5, 5 million, 4.7, 5 million, 4.9, 5 million. You know, and we had just stayed there. And I think that we probably stayed there just because I was so stretched thin and doing the things that I was doing, that that was just as far as we could go. We didn’t do a
Darren Yarbrough: whole lot of advertising or anything at that time. It was all just strictly word of mouth. And then it was 2018 is when all three of the boys finally joined in and come on board. You know, of course, they worked through high school, you know, in the heat and air world and
Darren Yarbrough: scrapping. And when they went to college, I said, guys, I don’t care what you do. Go find something and be productive, you know, it doesn’t make me a bit of difference. But, you know, and at that time I told them, guys, there’s got to be something easier than HVAC. You know, I mean, it’s tough.
Darren Yarbrough: It’s a grind. And so anyway, so they all go off to college, you know, and then one at a time within that same year, they all come back and said, Ed, you know what? I think I’ll come back. I think I’ll come back. I think I’ll come back. So anyway, so in 2018, they all joined and we said, okay, well,
Darren Yarbrough: if all the kids are going to join, we need to ramp up and do something different than what we’ve been doing. You know, and I think it was, oh gosh, there’s a company that will go through your zip codes and your QuickBooks and all of your accounts, you know, and then they will tell you where the
Darren Yarbrough: majority of your customers are coming from. And at that time, because we weren’t doing much advertising, you know, they said, hey, you’re getting all of your business from your repeat customers and you’re going to run out of repeat customers, you know, because once you sell an
Darren Yarbrough: air conditioner, they’re not going to need you again for, you know, another 12 to 15 years. You know, so we kind of changed at that time. And then we started doing some more advertising and stuff, you know, and then eventually we brought Bryce on.
Darren Yarbrough: He’s been here for probably the last four, five, six years. And anyway, he’s our marketing manager and does a great job of what he does. So we have started doing our Facebook campaigns, our YouTube campaigns, and does a great job. And I think through all of that, you know, we went from the 5 million, you know, the
Darren Yarbrough: Next year, we probably did seven and then, you know, eight or nine and 10. You know, I think last year we finished like at 11, three, you know, so that’s that’s kind of where we were. And this year we’re down a little bit.
Darren Yarbrough: I think we’re down, gosh, probably five or six hundred thousand dollars from where we were last year. You know, so we’re hoping we get a change in weather and and, you know, have a strong summer, you know. But it is it’s tough, you know.
Darren Yarbrough: So I think for us, probably getting over that $5 million ceiling was probably me backing off a little bit and giving a little bit more stroke to the boys that are in here. Of course, we’ve got one that’s acting as general manager now, and then Tucker’s our
Darren Yarbrough: CFO and Kobe’s our sales manager. So their roles that are in here have taken us from, gosh, a 20-person team to a 50-person team, and everybody has their independent roles that they do. And I think that that really, that’s what pushed us forward.
Tyler Martin: What would be your advice for someone stuck at $5 million?
Darren Yarbrough: Take your tool bag off.
Tyler Martin: Okay. Yeah. Yeah, that’s probably a big deal.
Darren Yarbrough: You know, and I think even today being an $11 million company, you know, if I stick my nose back in there, it clutters the, I’m the bottleneck.
Tyler Martin: Yeah. Well, now you have a leadership team too, so you got to let them lead. Yes. Yes, that is true. That’s true.
Darren Yarbrough: And so now then I still take care. We still work for those commercial accounts, you know, and they kind of just leave me in here doing whatever it is that I do, you know, so I still sell and I still go out and I still do.
22:44Flipping to 70 percent residential, dropping new construction
Darren Yarbrough: But they probably do more leadership stuff than I do. You know, I mean, I guess I have the ultimate deal that I can veto something, but they do a great job. And so I just stand back out of the way and get out of the way and quit being the dam.
Tyler Martin: What’s your residential to commercial business mix now?
Darren Yarbrough: I think this year we’re probably we’re probably more so the other way. We’re probably 70, 30 residential. Okay. And we’re trying to push that more. I think the residential side is probably more profitable than the commercial side. And so we’re really trying to push that and do that.
Darren Yarbrough: We don’t do any residential new construction. If we do 10 houses a year, that’s a lot. We probably just do those for people that we know or that have used us forever. And we might do one. But the residential new construction market is just a tight, so competitive,
Darren Yarbrough: They’ve, you know, that that’s done by all the guys that still carry in a tool bag and they’ve got a job. You know what I mean? That’s what they’re out there. So we kind of backed off of that. And everything that we do is changeouts, retrofits and changeouts on the residential side.
Darren Yarbrough: Okay.
Tyler Martin: And what about like on the membership side? Have you guys, is that something you guys focus on? Where does that play?
Darren Yarbrough: Yeah. Yeah, we do do service agreements and we do that. We probably don’t have near as many as what we would like. You know, I don’t know what the KPI on that is, but we’re always lacking on that and trying to push that.
Darren Yarbrough: and go from there. So, but we do like that where it ties the customer to you. And, you know, you’re kind of able to depend on that, you know, through your shoulder seasons. Yeah. And so I know we started that, you know, for this year.
Darren Yarbrough: Usually we’ll start that first of April, you know, to start rolling out and doing air conditioning stuff. But we kind of started a little bit earlier this year because our February, I think we had the warmest month in February on record. You know, so our heating sales
Darren Yarbrough: in February were kind of lackluster. You know, people’s not quite ready to go air conditioning. So I think that’s what got us behind a little bit this year. And so, but yeah, but we like the maintenance agreements as well. Yeah. Okay.
Tyler Martin: And then when you brought Bryce on, was that a big decision? Did you, I mean, did you know you were ready for a marketing person? Like what pulled that trigger to do that?
Darren Yarbrough: Well, I think at that time, Tucker, the student of our CFO, he was doing a lot of it. And then Bryce, he was working for the weather state, not the weather station, but oh gosh, the National Weather Service. It wasn’t fabulous. It was somewhere along those lines.
Darren Yarbrough: and, you know, and his skills with everything that he did was a great fit. And I think it was Tucker that come to us and finally said, hey, you know, this is getting bigger than what I can do. And let’s bring Bryce on.
Darren Yarbrough: And so anyway, so we did. And then Bryce is actually a nephew to me, too. So he’s related as well. So he’s the boys’ cousins. And so, you know, so you knew that background as well, you know, and his personality and his demeanor.
Darren Yarbrough: And you knew that that was going to be a great fit, you know, and so and that has worked out well, too.
Tyler Martin: Have you ever had any challenges when it comes to as you’re going through the growth and you broke through the ceiling from a cash flow standpoint?
25:32Paying cash for trucks and building the sheet metal shop
Tyler Martin: Have there ever been things you’ve had to do to be a little more closely monitoring it?
Darren Yarbrough: Oh, no, not too bad. Not too bad. We’ve always done real good. Of course, like everybody else, I mean, we’ve got a line of credit that sits out there, but we don’t ever, you know, luckily we’ve never touched it much. You know, and of course, you know, you talk about or you hear things, you know, we’re guys talking about leasing vehicles where it doesn’t, you know, where it doesn’t affect your cash flow or buying.
Darren Yarbrough: And I have always been a buy guy because I don’t want I don’t want any debt, you know. So, you know, we just we pay for things as we go. And, you know, all of our buildings are paid for. We do have a mortgage on our sheet metal shop, you know, but all of our building other buildings are paid for.
Darren Yarbrough: And all of our trucks, you know, I mean, we we get those paid for and kind of go from there.
Tyler Martin: on your trucks, you’re literally, are you buying them used or are you literally paying cash for
Darren Yarbrough: them? No, we’ve been buying new. Yeah. We’ve been buying new. Yeah, pretty much. And so, and that’s kind of the direction, you know, that we go and has worked out, has worked out
Tyler Martin: pretty well for us. Yeah. I mean, it gives you a lot more cashflow. I mean, you’re not having to service debt. And so when you’re, whatever that percentage of net profit is, is just going all to your bank account instead of to service past, you know, vehicles that you purchased five
Darren Yarbrough: years ago or three years ago or whatever. Interesting. Yeah. And I don’t know, you know, of course you hear pros and cons on that all the time, but I call it a, what makes you sleep at night kind of decision. Like if it makes you comfortable and you have the cashflow, you’ll
Darren Yarbrough: get a financial guru that’ll say it’s not the smartest move because you can get return on your investment and all that. And I do get that. But if it’s what makes you sleep at night, it gives you a lot of power because now you have all this cashflow that you’re not servicing on
Darren Yarbrough: debt. Now you are once again, if you do it the most rigid way, you probably get a better return if you finance, arguably. I get that must be the Dave Ramsey coming out of me or something, you know, where I’m going, ah. No, I get it. I paid off my home early and financially,
Darren Yarbrough: it doesn’t make a lot of sense. But peace of mind, I love the feeling. I mean, I love just
Tyler Martin: knowing I don’t have to worry about a mortgage. Right, right. Now, we actually, here in Blanchard, we’ve got a, I was talking about our buildings and stuff, we’re on Main Street Blanchard and we’ve got a 6,000 square foot building here, you know, that we kind of, we moved into, I think,
Tyler Martin: in 2006. And, you know, and everybody was here, you know, all of our install guys or, you know, everybody. And in 20, I think it’s 2015, we built another little shop just right down the road from us, which was next door. And then we outgrew it. And then so in 20, I think it’s 2019 or 2020,
Tyler Martin: we built a 200 by 75 foot sheet metal shop. We’re about five acres from the outside of town. And we built a sheet metal shop out there. And so anyway, so our installers moved out there and main stall managers out there and our sheet metal guys out there. And I’ve got two estimators out
Tyler Martin: there. And then everybody else is here at our office on Main Street. And eventually, I’d like to build another building out there and move everybody out there on the five acres before we’ve got out there. And so that’s kind of a struggle, you know, where you got half your team
Tyler Martin: over here and half the team over here, you know, which it’s a mile from here, but it’s still, you know, it’s not like you can walk over there and say, hey, what about this? What about that? Yeah. So that works out. That works out well.
Darren Yarbrough: I mean, I’ve seen it even in companies where you’ve had one on one floor and one on another, it’s in the same building. And it even has a little bit of a cultural impact because people never go upstairs or whatever. So I could see how, you know, being a mile away, it does being all in one, the same spot probably would help the company a lot.
Tyler Martin: Right. Right. And another deal we did, I think, is in 2015, we were doing so much commercial work at that time, you know, where you see a lot of spiral duct work in buildings or whatever. So anyway, we bought a spiral machine and started making our own spiral duct work.
Tyler Martin: And so from that, it grew to where we bought a gore locker machine and we would start making all of our own gore locked elbows. You know, so we’ve got a full blown sheet metal shop, you know, now that we use. And it has worked out so well that we have started selling spiral pipe back to our suppliers in Oklahoma City.
Tyler Martin: You know, so the, you know, the heat and air wholesalers that we buy parts from and buy equipment from, we sell them spiral duct. And so that has that has worked out pretty well, too. And so anyway, that’s in our other building as well.
Tyler Martin: We’ve got a full-time sheet metal guy that’s over there building ductwork. Wow, that’s crazy. That’s cool. That’s awesome.
Darren Yarbrough: Hey, I want to talk about my next segment. It’s called The Number. And we’ve already talked a little bit about numbers. So I’ll probably go a little lighter on this one. But I’m just wondering, is there a number? Is it like revenue per technician?
Darren Yarbrough: Is there any number that really sticks out at you? Is it net income percentage?
29:54Average ticket from $6,000 to $12,000 and pricing online
Darren Yarbrough: Is there one that we can really kind of focus on and talk about?
Tyler Martin: Well, you know, I think probably, you know, gosh, the one that sticks out to me, which which the kids, you know, they do a better job than I, I think probably our, our, our average ticket, you know, is one that really, that, that really kind of hits home, you know, because I
Tyler Martin: remember a hundred years ago when, when I first started, you know, you could buy a five-man system for a thousand bucks, you know, and that’s what, you know, that, that’s what the equipment cost us, you know, we may go put it in for, you know, three or $4,000, you know, and then now then,
Tyler Martin: oh good gosh, you know, you can spend, you know, five, six, seven, eight, 10 grand on the equipment, And so we’re doing jobs out there that are $20,000, $30,000 for a customer. That’s a lot of money. And I think probably why that sticks is because back in 2018 when the kids joined, I think our average ticket on sales was, gosh, it was down there $6,000, $7,000.
Tyler Martin: And I think now then we’re up there pretty close to $12,000 or $13,000. And so that’s the one that kind of sticks in my head. You know, now you grab one of the boys and bring in here and they can rattle off those numbers that we’re actually looking for.
Darren Yarbrough: What do you think has financing driven some of that? Do you guys get into financing? Has that driven some of the average ticket?
Tyler Martin: Yeah, we do. We offer financing on everything. We even do financing on service calls as well. I think it’s got to be over $1,000 or something like that or $500. I’m not sure what that magic number is, but we can get financing on repairs as well.
Darren Yarbrough: Okay. Wow. And what about from a headcount standpoint? Like how much, and I know this may fall into your team, your leadership team managing this, but how much do you focus around like headcount in terms of not being bloated or maybe not being as efficient? How much
Tyler Martin: considerations do you? Yeah. You know, and I don’t know what the, I don’t know if it’s still, you know, but gosh, you know, we try to get around, you know, 250,000 per employee, you know, it’s kind of that number that’s out there. You know, and I see some that’s quite a
Tyler Martin: higher than that, you know, and, but oh my gosh, how do you turn that? Which is, you know, our overhead, you know, it runs about 30%. Okay. So whenever we do a job, we know that, you know, gosh, whatever it is, 30%, you got to take care of overhead. Right. You kind of keep those numbers
Tyler Martin: in mind. And, you know, we work off of a gross margin and the numbers are going to change, but the margins don’t. Yeah. At the end of the day, we’ve got to charge what we charge, you know, trying to make that 15%. Right. Right. Okay. That’s good stuff.
Darren Yarbrough: Last thing I want to wrap up is just in terms of your legacy and kind of what’s next for you. Like, where do you see the business going? Is private equity in your guys’ future? Is it more just a legacy play where you’d like to continue on as you are?
Tyler Martin: Right. You know, of course, in the heat and air world, you know, gosh, PE has gone just there, you know, and run rapid through there. You know, I’ve got the three boys and they’re all, I think Will’s 35, Coley’s 33, and Tucker’s 29 or something like that.
Tyler Martin: Young guys. Yeah. Yes. Yes. And, you know, and you don’t see that too much, you know, so I think as far as as far as my legacy, you know, which we’re there now, you know, kind of less of me and more of them, you know, whereas it’s my goal to take off on Fridays, but it looks more like a half a day on Friday, you know, and their runway is long, you know, so they’ve got a long, a long ways to grow.
Tyler Martin: And if private equity can do it, why can’t we? You know, and so I don’t think, you know, right now we don’t have any desire or anything, you know, to sell to private equity. And, you know, and the boys have started a deal where they’ve made a new app called GetSuite to where it’s pricing online to where customers can go and look online and see what we charge for systems and see what we charge for repairs before we even go.
Tyler Martin: You know, so they have rolled this out and this has been a great thing. And, you know, so they’ve got, you know, they’ve sold several subscriptions to that. And I think that’s going to be a pretty neat deal that we’re going to do as well.
Darren Yarbrough: That’s a fascinating topic, though, because if you read some things online, you know, Google for a while, I don’t know if they’re still doing it. They were actually, when you go to LSA, the local service ads, they were showing like projected pricing. And there was a lot of hoopla around like, oh, my God, if we just, if everybody shows pricing, there is no differentiator.
Darren Yarbrough: and really people, you know, they need to call it. There’s a big old thread. And, you know, a lot of the owners were saying, oh, people need to call you and you need to figure out what they need. What’s your take on like sharing that pricing?
Darren Yarbrough: Is that, I mean, what are your thoughts?
Tyler Martin: Yeah, no, I think it’s a great thing, you know, because I think people are smarter today than they were, you know, gosh, five years ago, you know, and people are going to Google around and they’re going to find prices, you know, so it’s the same way sharing with our team.
Tyler Martin: I mean, so you might as well share with those customers too before you even go, you know, and it qualifies a customer as well. You know, so if they pull it up, if they look at it and they say, oh my gosh, you’re charging $10,000 for this system or whatever, you know, and they
Tyler Martin: want to pay three, you know, it saves us sending a guy out and wasting time that way. And it does for the customer as well, you know, where maybe their expectations aren’t what they, you know, aren’t realistic. I think sharing the prices on that’s a great thing. Yeah. Yeah. That’s good
Darren Yarbrough: stuff. That’s really good stuff. I’ll have to check it out. It’s called, it’s called Get Sweet.
Tyler Martin: Sorry, Tyler, I’m just hopping into the conversation. A big argument is like, oh, you know, this is going to become a race to the bottom. When in reality, I think in two to three years, everyone’s going to have their pricing available online. And a differentiator is going to become a conversation about the brand, who you know, like trucks.
Tyler Martin: So if you can say that a little bit.
Darren Yarbrough: I love that, Bryce. I love that I asked the question that got you so you couldn’t hold back. You had to share your opinion. I love it.
Tyler Martin: Yeah, he was over there. But he’s involved in that too. That’s awesome. That’s good feedback, Bryce. Thanks for giving us some thoughts around that.
Darren Yarbrough: And I do agree with you. I think information is going to become even more available, not less. Because, you know, what do you do anytime you get ready to do a home project?
Tyler Martin: Yeah.
Darren Yarbrough: I mean, you’re on Google.
Tyler Martin: Right.
Darren Yarbrough: You’re looking. Right.
Tyler Martin: Good stuff. Yeah, really good stuff.
Darren Yarbrough: They’re the same way. Hey, so this was an awesome conversation. I think I’ve covered everything. Is there anything before we wrap up? I’ll definitely share. I’ve got a couple of your websites. people wanted to reach out to you, where’s the place to do that?
Tyler Martin: Yes. Yeah. And of course, yeah, they can reach me. They can call the shop and just ask for me and I’ll be more than happy to talk to anybody or they can get me on my email, which is darren at yardbroandsons.com.
Darren Yarbrough: Okay. And then I’ll put yardbroandsons.com in the show notes.
Tyler Martin: Yes.
Darren Yarbrough: And then you also have a Facebook page. I’ll put that in the show notes.
Tyler Martin: Right. Anything else before we wrap up?
Darren Yarbrough: Yeah. And then, of course, the getsweet.ai, you know, for the other thing, go and play with that and see what they like on that too. But yeah, I think I’ve told you everything I know.
Tyler Martin: I think there’s a lot more there. I tell you, you dropped so many nuggets there. I felt like they were conversations under themselves if I would have went deeper. So getsuite.ai, that’s the website, getsuite.ai?
Darren Yarbrough: Yes.
Tyler Martin: All right. Okay, cool. Is that right, Bryce?
Darren Yarbrough: It’s G-E-T-E, and it’s like Hotel Suite. So S-U-I-T-E.
Tyler Martin: Okay, S-U-I-T-E. Okay, I’ll put that in the show notes too. Darren, thank you for being part of the show. I just can’t thank you enough. I love what you guys are doing. You got a cool family-run business.
Darren Yarbrough: It’s always fun to hear the story. We appreciate it and enjoyed it as well. Okay, take care.
Tyler Martin: Okay, here’s my big takeaway from this conversation with Darren. A lot of shop owners hit a ceiling because the business grows, but the way they lead it just doesn’t. For years, Darren’s company stayed around that $5 billion range because too much still depended on him. He was carrying the tool
Tyler Martin: bag, handling too much personally, and unintentionally became the bottleneck. What changed was leadership. His sons stepped in to real leadership roles. They became more intentional about marketing, focused harder on the numbers, expanded the residential side of the business, and built a stronger structure around the company. I also really like Darren’s approach to transparency
Tyler Martin: with the team, sharing numbers, talking through costs, and helping employees understand the difference between revenue and actual profit, which creates a completely different culture. That’s the shift a lot of owners miss. Growth eventually stops being about working harder and starts becoming about leadership,
Tyler Martin: systems, accountability, and understanding the numbers well enough to make better decisions before the problems show up. Hey, if this conversation hits home and you’re trying to figure out how to grow your business without becoming the bottleneck, go to cfointrocall.com and feel free to book a free intro call.
Tyler Martin: You can also check out my website at cfomadeeasy.com. And as always, I really appreciate you listening and I’ll catch you on the next episode.
Related Episodes
- Become Your Own Private Equity in HVAC and Plumbing – Dillon Caraway
- The Big Five Numbers Every Trades Owner Should Track – Mark Paup
- How to Become the Next GOAT in Home Services – Paul Kelly
- From Family HVAC Shop To Scalable Company – Ray Isaac
Tyler Martin works with owners on the numbers behind these stories: a fractional CFO for home service contractors.
