Full transcript10 chapters · 11,571 words
00:00Under a house at 12 for $200 cash from his brother-in-law
Keith Flores: I started in a crawl space at 12. Everything I know about running a profitable business, I learned under our house, not in the classroom.
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. Today we have Keith Flores. He’s also known as the HVAC god. He started in the trades at just 12 years old, crawling under houses to make money on side jobs. He went on to work as an installer, built and sold companies, advised private equity groups,
Tyler Martin: and grew one HVAC business from zero to 4.5 million in one year. But as Keith learned, fast growth can hide a lot of expensive mistakes, especially when you understand sales and branding, but you don’t understand the numbers behind the business. Over time, his focus has shifted to profitability, keeping customers, developing good technicians,
Tyler Martin: and building a company that doesn’t have to depend on the weather to stay busy. In this episode, we talk about some of the mistakes Keith made along the way, what he learned from them, and how he thinks about building an HVAC company today.
Tyler Martin: Let’s talk with Keith now.
01:33Why he became the HVAC God and the license plate dare
Tyler Martin: Hey, Keith, welcome to the Profit and Grit Show. How’s it going today, man?
Keith Flores: Good. How are you?
Tyler Martin: Good, good. I’ve been following you for a while over at HVAC God. Anybody with a name like that, it kind of sits in your memory. So I feel like I’m blessed to kind of use a pun to have you here. How’s it going?
Keith Flores: Good. Really good. I’m happy to be here. And, you know, I got to tell you a quick little note about that. A lot of people always go, man, who do you think you are? Blah, blah, blah. You know, it actually started off as a chill.
Keith Flores: I was probably 19, 20 years old, walking across the parking lot. You know, Ken Starr, who used to own Home Comfort USA, we kind of cut our teeth in the trades together. And he had got Jesus on the back of his service van.
Keith Flores: I said, if you’re Jesus, I’m God. A few months later, he got on the license plate, and it stuck with me ever since. And I’ve had it ever since. Copyrighted and trademarked it. You know, did the whole kid doodle.
Tyler Martin: It’s awesome, man. Every time I see it, I got to be honest, I chuckle a little bit in a positive way. Not in a…
Keith Flores: Yeah, so people can get offended by it. Like, people get offended by it, and I just…
Tyler Martin: I know. People take stuff so seriously. There’s Jason the Roofer, and I can’t remember the tagline, but it has the word sexy in it. and uh he was on my podcast and he said you know there’s there are people that have come up to him
Tyler Martin: and are offended by him using the word sexy in his uh tagline so it’s like people are going to get offended about everything and doesn’t bother me whatsoever back in the day i used to get i
Keith Flores: truthfully you know in my 20s and early 30s and i was pretty cocky and arrogant you know full of it and but i i literally i take what the greatest thought about is i just think it’s fun Most people know the story, so it is brilliant.
Tyler Martin: Very cool. Hey, so I do want to hear your story, and that’s a great, great point to go into. So you were crawling in spaces of homes at 12 years old. I think you were making like $200, and it kind of bit you.
Tyler Martin: Can we kind of start there and just maybe a few minutes overcap? Because you’ve kind of done everything, man. I think all trades, selling business, growing businesses. So I’d love to just hear your story straight from you. could kind of start there and what what where your legacy has gone from that yeah so you know
Keith Flores: my brother-in-law he’s the one that really got into the industry you know um he worked for my family business like my dad and uncle had a company and you know for years he he ran you know most of their field operations and every now and then he’d get a side job and so one day he hit
Keith Flores: me up and i was like like i said like he just said it i was 12 years old and said hey i got this uh sad job you want to go make a little bit of cash and i was like i didn’t know anything so i went
Keith Flores: over to his house he threw me underneath this house and tells me just take off all the ductwork and then we’re done with that come and get me and then i’ll show you how to put it back together it was like i remember the exact house i know the guy’s name even to this day the house and i remember
Keith Flores: coming underneath jim’s house and i’m taking all the ductwork off and then coming and grabbing matt back it was all right this is what you do and you duct tape it because back then everything was duct tape we just duct tape it all back and then we were done by the end of the day and
Keith Flores: you know it’s funny because i remember my brother-in-law who i still this day look up to he was sitting down there with the the whole owner and they’re smoking a joint together you know and i’m laughing because i’m underneath the house i don’t really know what it is but i’m
Keith Flores: like they’re just having a good time and um here i’m underneath the house working my butt off hi uh we come back to his house uh let me come ride your mic over tomorrow and i’ll pay you and So I rubbed my bicep over.
Keith Flores: He goes into his freezer, opens up the freezer, pulls out a stack of cash, and gives me $200. And after that, I was like, hey, what’s the next time can we do this? And that was it. I literally was booked after that. I had to stay in school, but any weekend I could get, I’d go going, hey,
Keith Flores: he taught me how to do gutters. He taught me how to do, you name it. He taught me how to do it before I could even actually be really working. He taught me how to do flash. Back in the day, H-Pack guys did all the flashing or anything to top out the roof.
Keith Flores: The gutter worked downspouts. We had to custom make everything. And he taught me all that, you know, taught me to take the light out, how to use square rounds and all that type of stuff. So it was very educational, to say the least, because he was a very rough and tonal guy.
Keith Flores: So I learned pretty quickly. If I didn’t, I’d get the crap smacked out of me. So he’s the one that, you know, really introduced me to the trades. And I fell in love with it after that. My family, they probably didn’t agree with it too much, but I really loved it.
Keith Flores: Yeah.
Tyler Martin: So fast forward a little bit, and if I’m skipping too much ahead, feel free to fill in some blanks. You went from $0 to $4.5 million when you built, I believe it was your first company, but correct me, in one year, which is pretty crazy growth.
Tyler Martin: Tell us that story. And once again, if you need to fill in some blanks to get there, feel free to do so.
Keith Flores: Oh, well, I will fill in a little blank. Yeah. So I left the family business with my brother-in-law.
06:37Quitting to start his own shop before the license came through
Keith Flores: You know, I was really young. I got a job offer from a guy named Lou. He said, look, I’ll give you 20 grand cash. You know, not cash. I’ll rent you a $20,000 sign-on bonus. I’ll pay you over $200,000 a year to be an installer.
Keith Flores: And I come back and I tell my family, they’re like, you’re an idiot. It’s snake oil. There’s no way. They can’t afford that type stuff. back then you weren’t making you know you were tapping out like 70 000 a year um being the best
Keith Flores: at that and now is new construction we did new construction a lot of new construction a lot of commercial work and bad type stuff so i went to work for a little bought my first house really young because i took that deposit or that uh bonus sign on bonus bought a house put me down
Keith Flores: and from then on i just started making tons of money and i was like wow this is amazing so i it from an installer and then i found out you know i’m peaceful i had to split some of my money with my helper so i told her i don’t want to help her i just need a you know parts to be dropped off
Keith Flores: every now and then and blah blah blah because i was very greedy i was young i couldn’t believe how much i was making and then from there like one day i remember them not having a job for me and they told me you know you can go home i go no i don’t want to go home but what can i do and they
Keith Flores: send me on a service call. I go out on a service call. I sell the first call I’d run. I remember the address because it was 666. Perfect for each guy I got, right? Yeah. And I literally go into the house and I sell my new system.
Keith Flores: I call, we do the, you know, we used to call it the higher authority close. Everybody calls something else now. And on the direct connects, we’re talking back and forth. I’m like, I’m sitting here with John and he’s a great customer, blah, blah, blah.
Keith Flores: They need a new system, blah, blah. He’s telling me, you know, the price is $10,000. The guy’s sitting there looking, I’m looking at him and I go, he can do better at that shit. Watch. And we sell the job. Next thing I know, I call Lou back and I say, hey, Lou, I need the equipment delivered.
Keith Flores: So I figured out how to double that so I could sell it and install it. That went on for a while. And then Lou said it was too hard for us. They needed me to be selling all the time. And so I’m trying to get to where I was at.
Keith Flores: What happened was they kept them bumping me up and bumping me to sales positions and then give me titles. I didn’t want the titles. I wanted to learn business. So one day I just quit. I was done and went into business for myself.
Keith Flores: I went out and bought, let’s see, eight trucks, I believe, not knowing that it took a long time to get your CSFB, your contractor’s license. I was young and dumb. I buy a building, buy a lease of building. I hire my techs. I wrap all the vans.
Keith Flores: I got computers, everything. Everything’s dialed in. We’re already sending our marketing pieces. We’re getting clients locked in. Because I knew one day I was taking my test. And I thought, once you pass it, they just give you your license. Wow. So I go in and ace the test.
Keith Flores: I walk up. There’s my license. They go, oh, I’ll be announced in six days. It’s California. I mean, it’s California. So I’m like, crap. What did I just do? I had a full staff. I have an accountant. I have a dispatcher and like a front desk girl and 10 techs, including installers, and an office and everything else.
Keith Flores: I scrammed a little bit, took a second out of my house because I didn’t know how long I was going to be.
10:08Zero to $4.5M with no idea what a P&L was
Keith Flores: We had to call all our customers and tell them, hey, hang tight. We had billboards on up. We had like, I went all in. It was very interesting time frame. Probably about six weeks in, I finally get it. And we hit the ground running.
Keith Flores: I just went after it. I didn’t know what I was doing, honestly. I just knew I needed a brand, brand, brand, and that’s it. That’s all I needed to know, branding. And so from my clothes to my cars, my personal cars, everything I had, I had logos.
Keith Flores: Everybody wore shirts. I threw shirts out at everybody and hats and you name it. We were sponsoring Little League teams. I just chewed up so much money. But the reason why is because I didn’t know what a P&L was. I had no clue what a P&L was.
Tyler Martin: But yeah, you still grew to $4.5 million in the first year, right? Yes. Okay, so you had no idea what a P&L is. You’re making sales, probably spending it like crazy.
Keith Flores: For four years, I went crazy. I went hog wild. We crammed it. This is now, we’re talking 2006, right before the crash. And a big consolidator came through, started asking me a lot of questions. And how did they do it? well, Blondley wanted to add to their customer base.
Keith Flores: And I thought at the time, I was, ooh, that’s a lot of money, let’s do it. And come to find out, well, it wasn’t afterwards. And I realized then, you know, I needed to learn a lot more. And that company I ended up going to work for
Keith Flores: for quite a few years and running their biggest location and had a good time, great time doing it. Learned a lot, learned what a P&O was very quickly. And enjoyed that ride for quite a while. segment out I ended up leaving that company and
Keith Flores: built myself a great name of a revenue driver as being a revenue driver and sales process very procedural started consulting and coaching and that whole I hate guru and not coaching even but some guys could afford me some guys couldn’t the guys that couldn’t
Keith Flores: I started making deals look give me 50% of whatever I grow you above give me a two year two year time frame to buy me off, whatever the fair market value is at that time. And that worked out quite a few times very well for me.
Keith Flores: The last time, tanked horribly. It was just with the wrong guy.
Tyler Martin: Yeah, Keith, I was going to ask you, what made that? I want to keep calling you HVAC God, by the way, so I have to fight myself not to do that. Keith, because I think there’s a good learning lesson in that. You obviously had some successes doing that model.
Tyler Martin: What made that one not work? or when it didn’t work,
12:47The $15M partner deal he walked away from over the paperwork
Tyler Martin: what did you see made it not work? What made it not work
Keith Flores: was the owner. Yeah. It was an old tech and he took it to his dad’s company, which was dad’s company in light since which was only some years old. It started a little garage shop, basically. Okay. At a telemarketing room. Oh, the telemarketing room
Keith Flores: was insane. It was doing more, like, the telemarketing was, he had more telemarketers than he had techs. Okay. All working out of a garage. So when I met them, we said, look, you’re doing $600 a year. Let’s blow this thing up. Can you afford me?
Keith Flores: So I just said, look, 50-50. And we went hog wild for two years. We’ll call it $15, $16 million. Wow. Good EBITDA. We were using one of the trade secrets, which everybody should know. It should be the trade secret. is if you have any inventory or anything like that,
Keith Flores: you want to go to another distributor and work out some sort of deal, they’ll throw money at you. They’ll throw money at you to squint you over because if they understand your vision and where you’re going, they’ll give you a ton of cash right in front.
Keith Flores: You don’t have nothing. And so that’s how we initially got started that company. We literally rebranded the entire company. That’s a big one. And then just went in a different direction than everybody else. What we did was we went social media route, hired some influencers.
Keith Flores: We went and hired guys and we bought cars for guys to drive around and pass out. You know, the little red middle cars? Like that. We went crazy with it. Where we made Simon’s was we got an offer from a big PE backed group.
Keith Flores: I brought that offer in and I was like, hey, this is a serious number. Let’s do this. And he wanted to keep going. he thought we can go bigger bigger bigger I didn’t want it that’s not what my plan was I had a different plan
Keith Flores: and we started having lots of arguments over it and he’s I won’t say he’s not the most straight guy ever so our paperwork was very chopped up I should say and I walked into my house one morning or one night and And I told my wife, you know, man, this guy’s being a pain in the ass.
Keith Flores: Blah, blah, blah. We’re going on and on. She goes, why are you there? I’m like, because we got this huge offer. Let’s do this. And she goes, you’re not happy. Like, just go. Just walk away. I’m like, what? I can’t do that. There’s families and all this.
Keith Flores: And she’s like, would they care about you? Would they stick around for you if you were that miserable? I doubt it. And so I walked in the next morning, grabbed some of my personal items that I had. I had a lot there, but I left most of it and never looked back.
Keith Flores: About nine months later, they were out of the business. The guy never paid attention to what I was doing. Never. So the lesson that we learned there is make sure your cake works very good. Don’t trust anybody. This business is our friendships. and that’s one of my big learning experiences for myself.
Keith Flores: I’m more than old enough to know better. My wife kept on me over it. And I just, you know, we could have probably been down the lawsuit path for quite a while and student each other. It wasn’t worth it to me at the time.
Tyler Martin: So Keith, I have a question for you because you’ve seen so many companies. You know, when I look at, let’s use HVAC as an example, you know, I got a client in Vermont that’s a resort town, second custom homes, The personality of how they buy, when they buy is a lot different than a client in Los
Tyler Martin: Angeles that has moderate weather. And it doesn’t really have a, there’s very few times throughout the year that there’s an extreme need for their services.
16:45Weather enhanced, not weather driven, and the five-mile radius
Tyler Martin: They kind of have to, it’s more if it breaks down and then they call someone, but there’s not extreme needs like other areas, maybe like Vermont. How do you, when you’re talking with these companies, because everyone kind of has their own personality based on the location they’re in and the demand and how many competitors they have.
Tyler Martin: Do you change how you go in there in terms of giving them advice? Or is your feeling, what I do will work anywhere? When I first started going on the
Keith Flores: retro side, everybody told them, Texas, you do this, and Vermont, you do this, and all this other stuff. But over the years, we’re weather-enhanced, not weather-driven, right? You’ve got to brand yourself properly and you got to have faces for the company out there every day. Okay.
Keith Flores: Doing the branding for you, being brand ambassadors, whatever you want to call it. But like here in Newport Beach, beautiful out. Today, it’s going to be 75. Yesterday, it was 75. The day before, it was 75. It’s always 75. Right. My crews are always busy.
Keith Flores: We’ve been here now going on almost six years. I’ve never laid a guy off. Always have had work. We cover a five-mile radius of our office, so we don’t go far. And that’s because what we have put and built for infrastructure has been 100% referral-driven.
Keith Flores: We go off referrals. I just changed out my entire fleet. this is the second time i mean we always have brand new beautiful trucks very clean logos very simple i don’t you know crazy like you know cartoon guys with you know train rude rain
Keith Flores: all these other i just have our logo well we like heating and air conditioning or general class specializing in heating and air conditioning that’s it and a phone number i don’t put instagram tags on there i don’t put all this other stuff and that’s where people a lot of people go wrong so
Keith Flores: So staying one with the community you’re working in is a huge, huge opportunity. Most people, like my other companies, I used to drive hours. We were talking about two and a half hours to get to a job. And I’m like, what am I doing?
Keith Flores: Like, that’s terrible. That’s terrible business. Wearing terror. Guys hate it. People are miserable. Nobody wants to work for a company like that. You got too much windshield time. You’re not seeing your family. Like, the list goes on and on. if you communicate to your community properly.
Keith Flores: And what I mean by that is like you go to the school and you don’t have to donate money or anything. You don’t have to do, which I’ve done terribly sometimes, but you don’t have to do it. It’s a coloring book. That’s cool.
Keith Flores: Go and get up into all the local preschools. I’m not marketing. I’m branding. Talks about the company. It has like a story in there. you know it cost me say 1500 bucks you go and put it at every preschool every big local restaurant
Keith Flores: everybody will use you i walk into restaurants now people go i know you from somewhere just that happened a couple nights ago we had a bunch of big big guys in and they go i know you from somewhere and then the guy goes walking out and it’s holding this he goes that’s you
Keith Flores: so like i look at the weather not be the problem like it last year i heard oh we didn’t have a summer we didn’t have a summer oh you’re looking at these way way you’re giving so if you’re going and holding a company meeting you got 200 tags 50 tags 10 tags two tags and you’re like man we need
Keith Flores: summer man we need a heat wave we need something to have you’re putting it in there you’re giving them the excuse why the consumers aren’t doing business. So that’s where I really, I disagree with everybody. We’re weather enhanced. Yes, definitely. But there’s, you know,
Keith Flores: if you’re straight up with your customers and show them, you know, the proper way we always do four options with every one of our clients. I don’t care if it’s a brand new system or whatever it is, we give them four options. One option is to do absolutely nothing.
Keith Flores: Choose another client or another customer company. Sorry. And then three, you know, injured coiled, watch, you need a salt annex on your outdoor unit, whatever it is. Then we give them sponsors. That’s it. And we don’t, we lay it there. We don’t, no heart pressure.
Keith Flores: You know, we’re not drilling off of conditions. You know, we don’t pay our guys commission. We pay them totally different. And so that’s, I really feel like that’s what sets me apart from most.
21:20Why he pays hourly instead of commission
Keith Flores: I do do a little bit of training here and there and helping guys. A lot of people will reach out to me and DM me. Hey, I’m having this problem doing this. I’ll try this or whatever. And I’m an open book for at least 30 to 45 minutes.
Keith Flores: And then after that, hey, you got to come to the office and we got to put some money down on this. Yeah, the meter should start at that point. Yeah, yeah. But the younger guys I try to help, like any young guys, I’m always trying to help because I want more blue-collar guys.
Keith Flores: I like the younger generation. My entire staff is under 30 years old.
Tyler Martin: You made a comment about in terms of compensation, you’re not necessarily commission based. Is it performance related that you tie a lot? No, it’s just a, it’s just a base. Is that basically it?
Keith Flores: It’s the wait and we pay hourly. Wow. Okay. And then, uh, you’ll never have to ask for a raise from me. Ah, you know, I’ve been, I used to like dread those conversations as a technician or I used to dread it as a business owner.
Keith Flores: Now I’ll walk into a meeting, you know, and be like, hey, you’re getting bumped up two blocks. You’re getting bumped up $2. Thanks for all your hard work. I appreciate it. And walk out. And there’s, you know, 15 other guys and they’re going, well, what about me?
Keith Flores: Now they all understand that it’s because reviews. It’s because homeowners call in and tell our office staff, hey, this guy’s great. Or it’s from me stopping by a job and seeing, you know, they’re going the extra mile. it’s you know the office staff
Keith Flores: telling me how great this guy is communicating with them with the office or hey I called him and it was after hours he said no problem I’m there the little things go a long way with me the commission is great I loved it when I was doing it I really
Keith Flores: did and you get a ton more revenue and the community we’re in how do I say this properly we’re a very high net worth community right the clients they feel that pressure, they push away really good. And so what we do is just a little bit different.
Keith Flores: They’re all referral driven. I mean, we have jobs. We just sold them last night for $103 million. That’s a big HVAC job, right? Yeah. And how am I going to pay attention to that? Because the guy called in knowing HVAC God owns HG Home Services.
Keith Flores: I like him. I met him at one of the restaurants. He’s a great guy. Blah, blah, blah, blah. they’re lay downs most of our clients are lay downs like i get text messages from planes all the time hey you guys out here he’s telling me i need you know a new air conditioner what are your
Keith Flores: thoughts well if he’s telling you then you should probably do it okay just to have him go ahead and do it that’s kind of like the difference so i couldn’t really at first we were starting to do you know commission-based and piece work and all that stuff and with you know kind of a mixture
Keith Flores: and um it just wasn’t it wasn’t making sense for me it wasn’t making sense for my customers mainly um they could they could feel it you know because you know how it is i remember i’d be at the end of the month myself personally and i had a goal you know i’m selling 400 000 and it’d be like three
Keith Flores: days away and i’m 100 000 short man i’m gonna put i would just put that tribe in on every client and they start feeling it you know yeah i don’t know i know everybody’s gonna probably yell at me and throw everything at me you know for saying that but it’s the truth you know first and foremost
Keith Flores: i’m a technician i don’t dress like a tech anymore but that’s just something different i i definitely feel like you can do business very well without having to put those big spiffs or big commissions and my guys they get paid really good they do get you know bonuses here and there
Keith Flores: depending on what they’re doing or how they got done. Also, a lot of our clients are high net worth individuals, like 90% of them. They have other homes in other states. They have homes in Palm Springs, which is two and a half hours away,
Keith Flores: or they have a building in LA, the Rodeo Drive or something like that. And they only want us to do it. So we’ll tell them, well, we can do it, but we’re going to charge you extra. And so those type of deals, we’ll pay the tax differently too on those.
Keith Flores: because what i preach is drive time i hate the windshield yeah and you only serve as a five mile radius so i’m assuming you have very little windshield time relatively speaking windshield time yeah unless right now we’re looking at a job um it’s actually coachella
Keith Flores: valley which is two and a half hours away and so i’m like you know it’s a client of ours here we’ve done multiple homes for him so he’s like we only want you guys so i’m trying to figure out like what the logistics are going to be um we’re trying to figure out like do i hire a couple guys
Keith Flores: that live out there that i know buying a couple trucks because this is a probably a seven month job buy a couple trucks post them up out there put a little shop on the premises and leave it And then send one of my guys from here once a week to just check on.
Tyler Martin: Keith, you started out this conversation not being like really hardcore into profit and loss statements when you first started out. Now that you’re later in your career and as you’re talking about this particular deal, how much are you spending time in the numbers of, hey, if I get two trucks, I got to do seven months.
Tyler Martin: I have to hire two guys from out there. Where do the numbers play into it for you now?
Keith Flores: So I look at every job, not as much as I show into detail afterwards, because I know there is jobs that have tanked on us. But we typically run around 20 to 24% in EBITDA. Okay. Wow. We got great negotiations with, you know, since I’ve been around for so long, you know, most of the manufacturers I can do pretty good deals with.
Keith Flores: I know what the big boys get, so I know how much wiggle room they really have. But, you know, the factor, the fudge factor, you know, we always put in there, especially for a job that far away. It’s just a big number job.
Keith Flores: So we’re trying to like, and it’s basically cleaning up after another company. So the other company walked after this job and then this guy bought the location and took it all over. So, you know, we’re definitely not the cheapest by any means. You know, I was just with Leland Smith the past two days and, you know, Leland drove me home over and over and over.
Keith Flores: You know, there was a big group of us. We had Alan Crick there. We had Ian Jacoby there. We had some great, you know, Steve Moores was there, all these big boys from the industry. And we were talking about some of these things.
Keith Flores: And one thing that, you know, drove home for me was Leland started off his company by himself. and then next thing you know, he was catching houses on fire, so he’s like, I’m not a good tech, so let me hire two guys. So he hired two guys
Keith Flores: and once they got out of the field and he was answering phones, doing everything, you know, get booking calls, this and that. And he was like, I was the most expensive back then when there was only four of us. And I’ve always said,
Keith Flores: if you give them good service, they’ll keep coming back. To this day, service champions is proud. I know they are the highest price company around, but they have, I think, $50,000, $55,000 maintenance clients in their customer base that pay them a monthly fee of $19 a month.
Keith Flores: I mean, that right there just tells you, you know, these clients are sticking around for them. Yeah, yeah. That’s huge.
Tyler Martin: Going back to just kind of the numbers on it, are you a flat fee shop? Like, do everything you do under a flat fee? I think you said you have four options you present. And one is not necessarily your firm or your shop.
Keith Flores: We have a flat rate book, right? We do strictly, you know, we have, you know, our service book. And then we also have basically five levels of systems. But then, you know, since we are in a very different area than most, we got to run the numbers first before we actually pitch the job.
Keith Flores: And the reason why is because we do a lot of space pack. I don’t know how familiar you are with space pack, but it’s high static pressure systems, two inch ducting. The ducting is only two inches. So we do a lot of that and it’s very expensive.
Keith Flores: So we got to price those out very differently. The great thing about those is, you know, you don’t have to drop ceiling lids and all that other stuff. Anyways, most of our outside here have more than three systems. So we also take into consideration that too.
30:05Getting paid up front on 30,000 square foot new construction
Keith Flores: Like, sorry, cops are flying by. We also take into consideration, you know, like, we’ve got a job. We’re finishing up right now. They have 14 systems, you know. So every job is a little bit different. You know, these are smart individuals. So we don’t go in there going, all right, this is ours.
Keith Flores: So we go in there and show them and show them what we do differently. So I’m like, Leland told me the other day. He goes, you guys do new construction? I go, yeah. you know these 30 000 square foot homes you know i don’t need tracks but we do you know i think
Keith Flores: our biggest one so far was like 45 000 square feet we do big homes like that but we bid them 100 like retrofit and what i mean by that is like say they’re a two-year job three-year job we buy all our equipment up front and we either put it on job site or we put it in a storage unit
Keith Flores: for those people and they have to pay for the source fees. But to top it off, those people pay for that equipment out front. That’s how I’m ready to hold the number. And we also put a markup on it. So we’re getting paid out front
Keith Flores: and then we have, as soon as we step foot on job, we get paid a certain amount. As soon as we’re done with the rough-in, we get paid a certain amount. And then on startup, there’s like usually about 10% left. And most contractors,
Keith Flores: general contractors, don’t even want to do business with us. And I just want to do business with us. But the homeowners that have already done business with us come back and go, no, no, no, no, you’re using them. I’m good with paying the $70,000 up front.
Keith Flores: I’m good with paying the $100,000, $200,000, whatever it is. There’s no way. So what I’ve learned in new construction on these big commercials, there’s no way to build one of these big mega mansions without change orders. Because over time, fuel prices go up, equipment prices go up, labor goes up.
Keith Flores: everything goes up. But the way we bid it is work while higher, but you’re not going to get a change order unless you move a wall or you add on to something. And that’s what, that’s our guarantee to the builders. You’re not going to see a change or it lets somebody come up,
Keith Flores: customer and done something that we did not do, but that’s why people keep on coming back to us. Yeah. Wow.
Tyler Martin: That’s interesting because usually when you think new construction, it’s the exact opposite. Like you’re not getting paid forever. You’ve got, you know, You’re having to front all this cost, and it’s just a big slippery slope.
Keith Flores: It is, and we structure it very well. And we’re right in front with them, and people don’t want to do it. We’re not chasing those jobs. We get those jobs because people have seen us and used us and so forth. So that’s like one of our biggest clients now.
Keith Flores: He literally bought – he’s the only guy that ever bought 15 lots in this place called Newport Coast Pelican Hill Resort. only individual I would buy 15 lots and build 15 spec homes on it he’s on his last three right now he’s a very wealthy individual
Keith Flores: had a hundred hotels sold them all and now he’s doing this thing and he’ll only use us he doesn’t care about the price he cares about like the guys showing up to the jobs in marked vehicles you know in uniform not smoking not cooking on the job
Keith Flores: not like all these things that you think of new construction guys showing up on tank tops and smoking and cussing. They got music playing in the background.
33:32Firing a tech over tattoos and smoking, then hiring him back
Keith Flores: We do not allow any of that type stuff. So they love homeowners and contractors as well, love seeing that portion of it. It’s so funny you bring this up though. I was talking to someone a
Tyler Martin: couple of weeks ago that has a shop and we were talking about how to improve their business because they were having a tough time. And one of the comments came up about them working on a large residential home. And they said, you know, we can get the job, but we don’t keep it.
Tyler Martin: And they don’t come back because, and I kept probing like, why, why, why, why? And finally, it came out like a lot of their technicians don’t present well. They come, you know, with baggy pants, ripped up or wrinkled shirts. They don’t have necessarily trained bedside behavior where
Tyler Martin: they sound professional. And it just, I think for anyone out in the audience, I think people forget about this. They don’t dot their I’s and cross their T’s on this type of stuff that you’re talking about. And it makes a world of difference because if someone’s coming into your home and
Tyler Martin: their impression doesn’t look good, I mean, it has a big impact on your business. You can’t always quantify where, but it does. It’s absolute. I feel like if you’re coming in,
Keith Flores: and I hate saying this, but tatted up and smoking and you smell like cigarettes, like when I go and train and teach guys, I’m like, you need to quit smoking. Like, because it’s that client you’re going to walk into that. You have the opportunity to do a big deal with that is quit smoking for six
Keith Flores: months. You walk in smelling like smoke. He automatically smelled it. And he’s like, Oh, that’s it. It will drive that guy nuts. I’ve done this going too long. I know what people are looking for. They’re looking for clean cut guys that can speak.
Keith Flores: Well, they want uniforms. They want, you should be able to open up your van and go, come on inside. This is Nordstrom’s. This is Neiman’s. I mean, like your van, you shouldn’t have stuff on your wet dashboards. You should, it should be beautiful.
Keith Flores: And that’s really what I preach to every company. I help my own guys. Like there’s been times I’ve walked by one of my trucks of just the other day, walked by one of the trucks and it, we get coast, you know, the fog in the morning and they were out one of these big projects and it
Keith Flores: got dusty. and so it looked like it was like, like it rained and bunt. And I’m like, guys, we’re already out of the bus, don’t worry about it. We’re going right after this, the meeting, you’re driving over and watching the truck. So that’s, and it’s
Keith Flores: huge, man. You can’t put a value on it, but if you go to my social media, you’ll see him, he did this little video for me, but during the meeting, he goes, look, I always made sure my guys were crisp i didn’t allow beard no hair past your dog or like all this other stuff and then i kind of
Keith Flores: joked with him because he weren’t he had the beard now he’s like well i’m not i’m not doing thing or you know and thinking cultures do change i let guys have some facial hair as long as it’s cleaned up right good whatever but you know if you have a tattoo you better be wearing gloves all the
Keith Flores: time and if you have something on your neck or anything like that anything that’s visible if you can’t hide in with a colored shirt then you’re wearing a band-aid that’s i mean i am really
Tyler Martin: stressed out how from a practical standpoint if you have a great technician but they don’t present well or maybe they don’t always look clean cut or maybe they don’t speak as well as you’d like are you pretty hardcore like like that are you gonna they’re not gonna be a fit for your
Tyler Martin: shop or they won’t be a fit okay okay and here’s the here’s the reason why if they okay two things
Keith Flores: i’ll give them the opportunity to clean up okay and we’ll go through that process and listen and pay attention but if i keep on hearing you falling back to your slang or if i hear you know seeing you pulling up to the shop with your your hg shirt underbuttoned wherever you’re wearing a uniform
Keith Flores: me or representing me. I don’t care if you’re at the gas station. I don’t care where you’re at. You’re sure to be tucked in. I’m going to know about it. And so that’s where we’re really strict about. So I have a hard time with that because
Keith Flores: the guy that I told you about our business, like I walked away from, he was a technician. I fired him the first day I saw him. And the reason why is he came in and big guy and lovable big teddy bear, but he had a past and he had a lot
Keith Flores: tattoos. He covered them up pretty well, but he had two and he used to wear a hat really low. But he had two big devil awards right here. And I say, hey, what is that? And it looked like pen marks because he was trying to have them
Keith Flores: removed. And I said, what? What is that from? And then he told me the story. I said, dude, let’s go. Every morning at 5 a.m., he was sitting out in front of my shop waiting for me every morning. Want to know how to talk better,
Keith Flores: want to know the process, clean himself up, got himself all new teeth, like literally. I ended up bringing him back on board. And he ended up selling, you know, on average back then, about four and a half to five million a year. I mean, he was one of the best sales guys in the country.
Keith Flores: He started beating everybody. And me and him became really good friends after like a long time, but he would pay attention to everything I would tell him. And so if the guy’s willing to change, yes, let’s work on it. But if you’re coming here and you’re going to be, you know, as soon as you walk out that door, I’m talking to your shirt.
Keith Flores: I’m going to know about it. You’re gone. That’s it. So he was very trainable as opposed to taking the attitude like, F you, I’m going to do what I want to do. So we’ve had those guys. Yeah.
Tyler Martin: And that’s my next question. Like, how often do you, how hard is it to find someone with the right mentality that is willing to stay in the lane of what you want the business to be? Is that like one out of every hundred?
Tyler Martin: Or do you take the standpoint of hire for character and then train them into technical where you need them to be?
Keith Flores: I tend to be a mixture. Okay. We bring in a lot of young guys. I’m really going to always look for young guys. Okay. Not because they’re cheek or anything like that, just because they’re more trainable. I don’t like the train schools. Train schools are terrible.
Keith Flores: And I wish somebody, me and a couple of owners years ago, thought about building one in Oklahoma, about that we build a couple houses inside and then we could hey you need operations manager here you go you need a service sales manager whatever the trade schools teach them book stuff
Keith Flores: right so gotta get rid of that so i we each do all the job training you get paid you don’t have to have this debt or anything like that so i speak at a lot of high schools i go and speak at colleges
Keith Flores: junior colleges and i try and get those guys to come in and see that there’s a bigger opportunity here than what you’re doing over there. It’s a great question to figure out. It’s hard to keep guys with all the P’s. Yeah, man. I’ll tell you that
Keith Flores: right now. P’s are dominant in our industries right now.
Tyler Martin: We all know it. I do a lot of M&A. I love having the P’s in our space as an outsider, but as a small business owner inside the space, it’s tough because
Keith Flores: they, you know, right before summer, like we’re right now, they start just throwing money around, telling them, you know, everything’s at your fingertips. You’re going to make so much money, blah, blah, blah. And then come fall, they’re all laid off. And that’s why I try and explain to them,
Keith Flores: guys, they’re ramping up for summer. That’s all they’re doing. That’s all they’re doing. And when we get guys to leave, once you leave, like, sorry, you’re not coming back. You know, it is what it is. But these days, everybody wants instant gratification. And I can’t start a guy
Keith Flores: that knows nothing at $30, you know. You know, it makes no sense. Now, those guys can start at whatever hourly rate they want, floss commission, because they have the funding behind them, and they need manpower. Now, are they teaching them right? No. Are they teaching them anything rubber?
Keith Flores: No, they teach them how to sell. All those guys are just teaching them how to sell, right? But one thing I know is P is good for our industry. Two-fold. A lot of millionaires are coming out of the HVAC, in trades right now.
Keith Flores: But also, a lot of the PE guys are starting to learn that they don’t, just because they have a Harvard degree, they don’t know anything about the blue-collar trades. They need to start bringing in guys that they can pay, that they know what they’re doing.
Keith Flores: So, I have a lovely relationship with it. There’s a lot out there.
Tyler Martin: Hey, Keith, if you had to start over, because in researching about your, you know, you’ve talked about having experienced nothing beats experience. If you had to start over, what, what would you tell people in today’s climate, like things they should be doing or be focused on in terms of,
Tyler Martin: if you had to start over, what would you do? It sounds like branding obviously would be almost number one for you.
Keith Flores: Branding would be number one. Get out there, brain the heck out of yourself and do a lot of handshaking, baby kiss and that type stuff. But two, definitely be willing to always change get you don’t need to have these you know crms that are
Keith Flores: you know four thousand dollars a month or anything like that there’s a million crms now you know service tight is probably not the best one out there but very expensive so younger guys they they need to look at you know does it make enough sense for me to be on this setting
Keith Flores: with five guys, you know, not saying that, you know, RMI, they’re not justified asking for what they’re asking for. Cause I, I love Scrapcite and I was one of the, I think probably 15th or 16th person on it, but there is a lot of CRMs out there. Getting that kind of structured up and
Keith Flores: set up is very important, crucial. And then knowing what you’re doing. And what I mean by knowing what you’re doing, not just your PNLs, cause you can always hire for that. yeah for sure but i hate when i like i always tell every tech that comes to me is like i want
Keith Flores: you to open up your own business someday i don’t want you to work for me forever so i’m going to teach you how to be a business owner what i mean by that is like you’re going to learn what pnl is you’re going to learn like what it costs and why that ten dollar part we’re charging 385 for them
44:08Home Guardian and the $1,000 cost of keeping a client
Keith Flores: So that’s very, and I think the other thing I would definitely be willing to bet everything in the world, the technology is changing so fast out there. You have to be a part of the technology space. Not trying to lead into what I also did, but the technology that is out there right now is garbage.
Keith Flores: We need to retain our clients better because that’s a big thing. It costs us $1,000 to keep a client retained, right? And you might not see anything out of that client for three or four years. So every year you’re spending $1,100, $1,200 to keep that client in-house.
Keith Flores: And it’s terrible. There’s technology out there now that can keep that client. And it’s not some thermostat or it’s not some gadget device. It’s very fragmented, the retention of this industry. So what I’ve learned over the past few years is really focusing on keeping my clients to my clients.
Keith Flores: And one of the big things is like you always tell them, oh, put a sticker here and get the thermostat that has your logo on it and put this over your touch base with your clients. Say hello. That type of stuff is always good.
Keith Flores: Your social media is big. I always hear about Google reviews and all this other stuff. I don’t care. I don’t pay for any Google. I don’t pay for PPC. I pay the cheapest I can for Yelp. I think it’s $300 to keep people off my page.
Keith Flores: That’s pretty much all I paid. the reason why is like and people are on there they’re already looking for another company so why who cares and i can’t keep up with pe i’m not going to spend that what they’re spending on that stuff so you know i i have a new another company that i started about five years ago
Keith Flores: that is a hardware and software company that literally is a retention of for all every trade out there from roofing to you know plumbing electrical hvac and all that type stuff so So I’m not pushing that on anybody, but I’m just saying there is technology out there that is agnostic, you know, Switzerland.
Tyler Martin: But Keith, I do want to spend a few minutes because we’re coming up to the end of the hour. I, as usual, have gone off path from where I intended to go. But I do want to give you a little time here to just talk about what you do.
Tyler Martin: So I know you have HVAC God. That’s mainly coaching, HVACGod.com. That’s mainly coaching. Is that correct in group? I believe you do like some group events and type things.
Keith Flores: Yeah, group events. And then, you know, I was doing a lot of, I did a lot of M&A for a few PD groups. That has really like taken a side step for me only because I focused in on Home Guardian. Home Guardian is my baby.
Keith Flores: It’s like I spend probably 90% of my time with that project now. Okay.
Tyler Martin: And talk about Home Guardian a little bit. I’d love to learn more about it.
Keith Flores: so home guardian is a full full-blown retention hub for contract it was built for contract 100 okay what i did was that you know years ago i had a client call in and say hey i’m buying this 32 000 system how do i know it’s a 20 series system it says it on the yellow tag no no how
Keith Flores: do i know though he was an engineer of course so i literally start going down this little path with him and he’s like no i want to know every day what my miles per gallon number well you know on the yellow sticker when you buy a fridge it says this and he goes no like when you
Keith Flores: go to the car dealership tells you this and then when you go to the gas pump then you can calculate how do i know well sir and i hate to tell you this but you don’t you can pay us a lot of money
Keith Flores: every six months we’ll come out figure it out for you no no no I’m still buying it but they kind of bummed me out about it because I’ve never really thought about that and so I’m away home kind of doodling as I’m sitting in traffic
Keith Flores: I thought about it and I was like I’m going to create a button on the wall that basically shows my house pretty that was it that’s all I wanted spent probably half a million dollars about nine years ago saying it went nowhere it was too expensive I was too early chips were so expensive all these things nothing would work
Keith Flores: then I sat on board of another startup company I met an engineer and start telling him and he’s like yeah he’s getting an air conditioning he comes back to me a few weeks later and goes did you know that’s a 90 billion dollar industry I go ah if you’re close and then we start talking and
Keith Flores: came up with a number and we decided all right let’s do this so it went from knowing real-time sear rating to sorry every time i said that my sear rating goes off real time er real time water quality humidity you name it static pressure like everything you can think of inside your home
Keith Flores: we monitor real time but the homeowner gets to see it at the same time so both like the contractor is getting alerts the homeowner is getting alerts before there’s problems so we could tell you your utility bill if you want to keep your utility bill at five hundred
Keith Flores: dollars a month by the 20th you’re at 450 it’ll start telling you hey stupid turn off your pool pumps you don’t need to run that often or your air conditioner raise it up it’ll start telling you this type of stuff and then it starts telling you when things are over amane it tells you like
Keith Flores: i said real-time water quality it’ll tell you before you have these big slab leaks or before you have a roof leak it’ll start because normally when you have a roof leak when do you know there’s The whole one’s ceiling. And it’s not always like a lot of there’s companies out there that put, you know, a little device in a drain pan and tells them, sends alerts and nap and the contractor runs it out there.
Keith Flores: It’s not always the drain pan. It’s not always the air conditioner. So that’s where we are different. We’re taking every one of our nodes, these little guys right here, every one of our nodes is its own smart device. and it can go from,
Keith Flores: be state connected about 900 feet away through concrete, whatever. You can connect up to the 4,000 nodes to one head unit. You’ll never do that unless you’re in a parking lot, whatever. But those nodes, each one is sending out information, real information, not going up to the cloud
Keith Flores: and then formulating, oh, in this area, it should be this. No, it’s taking outdoor, indoor temperatures, noticing a community spike, noticing a spike in startups, whatever it is. we’re giving that to the client and the contractor at the same time so like i just put in a couple
Keith Flores: new air conditioners in my home and all of a sudden the guys turned on and i’m looking at my app and i go guys this is the top of my system and i’m getting like it was like we’ll call it nine er i’m like hold on and we look the back end because as a customer i can see the back end
Keith Flores: and it’s telling me how much duct linkage i have how much static pressure i have all this stuff so I’m sitting there going, all right, let’s connect this, let’s fix this, let’s fix this. And we got to raise back up to where it’s supposed to be.
Keith Flores: That’s real-time information. That’s been agnostic because we can hook up to a 50-year-old system or a brand new system. We can hook up to variable speeds. We can hook up to high static. We don’t care. And this took a lot of time, five years in the making.
Keith Flores: We have some great people that are involved now. Leland Smith, one of them, you know. And we built it for technicians. So it only takes two hours to install the entire package. Oh, wow. So very simple to install. And we’re only going directly to contractors.
Keith Flores: Contractors is the only way to buy this because whoever installs it, all alerts will go to that contractor and their backend device. Now the homeowner gets, once something goes off, you get an email, the contractor gets an email. You get a text message, contractor gets a text message.
Keith Flores: You get an alert on your app, contractor is getting an alert on his app. So it’s staying connected. And so the homeowner might go, well, I don’t need you guys to come out for a filter. Because if we’re taking, we’re not, it’s not a timer.
Keith Flores: We’re taking static pressure. So they just hit the little button on there and we can drop ship a filter to their house. Or, hey, we need somebody out here ASAP. You know, we noticed that there’s high humidity levels in our eye. Okay, we’ll send somebody out and take a look.
Keith Flores: It’s a true retention of, there’s no going around what we’re doing. And for the cost, so $2,000. Like Leland was like, I didn’t give it to every new install, period. Period. I’ll take my $19 a month maintenance cost and add the $9 app fee to it.
Keith Flores: Call it good. Because part of the app fee, $3 goes back to the contractor. So forever until they get off the app. We’ve spent a lot of time, a lot of engineering. It’s being built here in the U.S. you know uh you know red white and blue american pride we took a different approach to this thing
Keith Flores: i didn’t announce until about a year and a half ago started showing it off a lot i brought in peter agone who’s the founder of curate he does all my financial planning we had hon from pudin we had more cats who’s the cfo of um burlington took him to an ipo we like i brought all these
Keith Flores: outside guys they didn’t to you know get their ideas and so forth and then i started bringing in guys from within the industry. It’s exciting times. We’re getting ready to launch. By the end of this year, we’ll have a full-blown stack of 1,500 out of the field.
Keith Flores: And then next year, there’s the real, like, let’s go hollow out of it. We have a manufacturer that does all the manufacturing for Apple and Dell here in the U.S. that is willing to do all our manufacturing here in the U.S. that she can scale by next year to do $200,000 if we want to $300,000.
Keith Flores: It’s just that simple work. Okay.
Tyler Martin: So you got HVAC God kind of has a little bit taken a backseat. Most of your energy is going into hghomeguardian.com, hharryglennhomeguardian.com. I’ll put that in the show notes. And then, of course, your business page, if someone happens to be in your area,
Tyler Martin: is hghomeservicesco.com. So those are your main websites. And then most people, guys, if people want to interact with Keith, most people do it on Instagram and that’s HVACGod. Did I get that all right?
Keith Flores: That’s all congrats, yes. Awesome, awesome. That’s the easiest way to meet all of the people. People be in me all the time. Sometimes they go into the filtered section so I won’t see it for a couple of days, but I always check that to know.
Tyler Martin: Awesome. Okay, man. Hey, Keith, you’re awesome. I’m wishing you a lot of success with Home Guardian because I feel like hearing you talk about it and looking at the website, there’s a need for something like that that’s got that communication. I love that you’re giving the communication back to the homeowner.
Tyler Martin: I think that’s a big part of it is that they get a chance to see rather than I’ve seen some of these other systems and it goes just to the contractor. And I’m not a fan of that personally.
Keith Flores: Well, real quick story. I know we need that.
Tyler Martin: Yeah, please.
Keith Flores: so on two different instances we had that we had them currently in for home home services the homeowners called us saying hey i need my air conditioner replaced and we’re like well i mean told you you know when we’re out there they have four air conditioners uh they only wanted to do
Keith Flores: three of them well when we put the three in they noticed you know what the efficiencies are on those you know it was like 14 er’s and their other ones like running at four and they’re like no we to replace this. And on another one, we told people, yeah, I mean, you know, put a halo system
Keith Flores: in or, you know, some sort of water filtration system in. And they started getting their alerts how dangerous their water was. And so they called us up and said, hey, we need a new water filtration system. We’re like, yeah, we know. We’re getting the alerts too. But it’s amazing to be able to
Keith Flores: have the homeowners calling you and telling you. So it’s selling the product for you too.
Tyler Martin: Right. It’s empowering, I think, is the way I see it, is they get to see their own and make their own decisions, which goes back to almost the way we started this, is people want to be able to trust you. They want to be able to feel like that credibility and authority by seeing their own data and then coming to you because they’ve done their own research.
Tyler Martin: I think it creates a certain element of trust and credibility when interacting with you.
Keith Flores: Full transparency. Your car tells you absolutely everything. Your front head limits out. You’re almost out of gas. You know, all these different things, taillights out, flat tire, whatever, tells you everything. And then the dealership’s telling you, they’re sending you emails and text messages.
Keith Flores: When it’s time for service, your house tells you absolutely nothing. Not anymore.
Tyler Martin: Yeah. Well, hey, man, thanks for taking your time to come on the show. I was really excited for this conversation and it lived up to it to exactly what I expected. You’re a world of knowledge and you should just share it openly. So I appreciate it.
Keith Flores: I appreciate you having me on.
Tyler Martin: Okay. Take care, man.
Keith Flores: Thanks, sir.
Tyler Martin: So Keith’s story is just a great reminder that experience changes what you pay attention to as an owner. Early on, he knew how to sell, build a brand, and generate revenue, but he did not fully understand the P&L or what growth was actually costing him.
Tyler Martin: Today, he’s much more intentional about margins, customer attention, service area, employee standards, contracts, and how each job is structured financially. He also made a strong point that trust is built before the technician ever asks for the job. It shows up in the truck, the uniform, the communication, the follow-through,
Tyler Martin: and the way the company stays connected to the customer. For trades owners, the lesson is simple. Growth only matters when the numbers, systems, and reputation underneath it are strong enough to support it. This is the kind of work that we do at Profit and Grit CFOs.
Tyler Martin: If you’d like to set up an intro meeting and I’d love to chat with you, go to ProfitandGrit.com or feel free to book an intro call at CFOintrocall.com. As always, I so appreciate you listening and I’ll catch you on the next episode.
Related Episodes
- How a Blind Plumber Built a 40-Truck Business – Bob Beall
- What Numbers Drive HVAC Growth? – Lawrence Castillo
- Become Your Own Private Equity in HVAC and Plumbing – Dillon Caraway
- How to Grow Without Experienced Technicians – Austin Blanchard
Tyler Martin works with owners on the numbers behind these stories: an accountant who works with HVAC contractors, a fractional CFO for HVAC. For where your business sits right now, read the $3M to $15M scaling breakdown.
