Full transcript10 chapters · 9,774 words
00:00How a non-technician ended up running an HVAC shop
Lawrence Castillo: I spent 25 years in the trades watching operators get stuck between $5 and $10 million, and the difference between the ones who break through and all the ones who don’t isn’t talent or market. It’s the willingness to rebuild the company from scratch every time you double in size.
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. Lawrence Castillo walked into Brody Pinnell with 34 employees, about $6 million in revenue, old trucks, weak reviews, and a lot of work to do. A few years later, that same HVAC company had grown into a $70 million operation in Los Angeles, where the weather doesn’t always create urgency for HVAC.
Tyler Martin: Today on Profit and Grit, Lawrence breaks down what actually changed. Daily numbers, recruiting, accountability, customer experience, branding, and building a company people want to work for and buy from. This is a good one. Let’s get into it with Lawrence now. Hey, Lawrence, welcome to the Profit and Grit Show.
Tyler Martin: How’s it going today?
Lawrence Castillo: I’m good, Tyler. Thanks for inviting me and looking forward to the conversation.
Tyler Martin: Yeah, I’m really excited to talk with you. I’d love to start with just learning about you. Could you tell us about what you’re doing professionally?
Lawrence Castillo: Well, I’ve been in and around heating and air conditioning for the last 25 years. And I was an accidental tourist. It wasn’t what I went to school for. It wasn’t what, you know, I didn’t go to a trade school and decide I wanted to, you know, to get into the trades.
Lawrence Castillo: It just sort of found me. And I’m grateful. The industry has been great to me. And I think we’ve been able to impact a lot of people’s lives and watch them get on a trajectory that is really proof positive that the trades are a great, a great way for folks to get to that next step in their lives.
Tyler Martin: For sure. And I mean, your history, if I have the math right, it’s like 40 years in this space. Is that correct?
Lawrence Castillo: 25, 25, 25. And maybe a little more than that. I’m dating myself here. But yeah, I think that over that time period, and I started as the general manager on day one, right? I wasn’t a technician. I wasn’t a salesperson. I wasn’t an ops manager. I was the GM in an industry that I didn’t know anything about.
Lawrence Castillo: And that just happened because a friend of mine had a small residential company. And he knew that I had had some business success. And he thought that I might be a good match to manage it. And boy, you know, and in those days, I couldn’t look on YouTube.
Lawrence Castillo: There weren’t, you know, like I had to open books. And I was fortunate enough to have some great mentors along the way. But yeah, my education was all, you know, it was a self-education, right? The school of hard knocks. Yes, exactly.
Tyler Martin: So, hey, if you looked at a P&L or a balance sheet of a $5 to $10 million shop today,
03:23What breaks when a $5M shop hires ahead of its sales
Tyler Martin: like, is there anything that would jump out to you that go, hey, the shop is ready to grow, it’s ready to scale, or growth would break it? Is there anything that kind of would jump out at you, do you think?
Lawrence Castillo: I think when you’re a, you know, a $5 to $10 million shop and your desire is to get to the next level and to scale it and to be $15 or $20 million, it has to be a very deliberate plan as to how you’re going to get there.
Lawrence Castillo: Because what you’re going to find is you’re going to, you know, if you don’t do this the right way, you’re going to be upside down in any number of places. Typically, it goes to labor, right? And, you know, people think that they can just hire and hire and hire. And if you don’t have the sales and the infrastructure to support that, then you’re going to be in trouble really quickly. So, you know, you really, if you’re going to do that, you have to have a great plan and some smart people to surround you and to advise you, people that have been through that battle.
Lawrence Castillo: But yeah, from a P&L perspective, I think that in my businesses, it really just comes down to that, you know, knowing what your overhead number is. And within that overhead number, being able to drill down and say, okay, you know, where’s my marketing spend supposed to be? You know, what is my direct labor supposed to be? All of that stuff.
Lawrence Castillo: So, yeah, but if you’re going to if you’re going to grow it, you really have to talk to people that understand it or be prepared to understand your P&L really intimately.
Tyler Martin: So, yeah. And the reason I ask that question is when you walked into Brody Panel in 2020, as I understand it, you had seven million that they had seven hundred million dollars in revenue. There were 34 employees. And since that point, I believe you’re now at 70 million-ish,
Tyler Martin: and it’s 150-plus employees. I mean, you kind of walked through this explosive growth.
05:15Walking into 34 employees, old trucks and weak reviews
Tyler Martin: What were you thinking when you walked? I mean, what was your decision-making in going to Brody? And what were you thinking when you walked into it? Did you always have this aspiration
Lawrence Castillo: for it to scale so quickly? Well, I had a little bit of a background of turning around small companies very early in my career. And I was fortunate enough to be the general manager of a company here in Los Angeles in Orange County called Service Champions.
Lawrence Castillo: And that business, I worked for Leland Smith, the owner. And I’m grateful that he allowed me and trusted me to run his business. And I walked in there for the first time and I saw things that I had never seen in the small companies that I had been running before in my career.
Lawrence Castillo: And he was an accountant by trade, but he measured the performance of every department unlike anything that I had ever seen before. And it was quite a lesson. And we were able to grow that business significantly. And that business, for all intents and purposes, was the blueprint for many people across the
Lawrence Castillo: country on what they wanted to do. we opened our doors to anybody who wanted to come in and see what we did. We gave it away to anybody, right? And if they could go and apply it somewhere, then congratulations to them. But that business is a, it now today is it’s 120 million in a single location. And of course we
Lawrence Castillo: know that, you know, they, Leland sold the business and they acquired a bunch, a bunch of others with, with that location being the platform business. But I really learned, you know, those were my battles. And, and, you know, right after that opportunity, I had the chance to, to become
Lawrence Castillo: the operating partner of this business, Brody Pinnell. And there’s no other way to put it, but I had gone from the penthouse to the outhouse, right? Went, went from a business that was just super successful, super profitable, and very organized and very structured. And I walked in
Lawrence Castillo: the doors of a business that had none of that, right? There were 34 employees and there was $6 million in revenue. And there wasn’t a whole lot going on that ever gave me the hope that, you know, we could scale so quickly, but I just implemented and I, you know,
Lawrence Castillo: it required a lot of trust. I stood in front of those 34 people, you know, in the first week. And I said, listen, I said, I’m going to ask you folks to do things that you’d never been asked to do before. And I’m going to have expectations where there might not have been expectations
Lawrence Castillo: before, but I need you to trust me. And if you can trust me, I think that we can do some special things here. And, you know, now it’s, it’s five years later and, um, you know, this business after a lot of trial and error and a lot of organization and structure and recruiting and
Lawrence Castillo: all the good stuff that, you know, that lends itself to success. I think we’ve become probably the preeminent business in Los Angeles, as far as heating and air conditioning goes. And I’m proud of what we’ve done here. And we are a much different business than we were
Lawrence Castillo: in 2020. But you can’t let off the gas, right? Because we’re always bringing new people in and and, you know, we have to teach them our way of doing things. And, you know, here in Southern California, we have to be a little better than the folks in other cities where weather’s at your back
Lawrence Castillo: and you’ve got all this built-in urgency. We’ve got to create our own. So we train them hard every day and our expectations are very high, but very proud of what we’ve done here.
Tyler Martin: So I want to go back to something, by the way, Leland’s one of the OGs. That’s so cool to hear the story there. Back to what you said, when you said you walked in, you saw things that you’d never seen before
09:04The daily field report Leland Smith ran every morning
Tyler Martin: and how I believe he was tracking departments is what you said. Can you kind of, you touched on a little bit, but can you go into a little bit more detail? Like, what did you notice that he was doing that I think could be applicable for the audience that was so different from what you had seen in the past?
Lawrence Castillo: I think, number one, I walked in and, you know, Leland, everything was about, you know, keeping everyone’s mind right. And I walked into the building in Yorba Linda for the first time and I realized this doesn’t look like an air conditioning company. There’s no, you know, in some of these smaller shops, there’s someone who sits behind a desk with a stack of warranty parts next to their desk.
Lawrence Castillo: And like that, no, no, it looked like you could have walked into the 52nd floor of a high rise building downtown. And, you know, I think that when you create that kind of atmosphere for your employees, at least your inside staff, the expectation level rises.
Lawrence Castillo: Right. And he treated it. as a business, not as a trade. And you can recruit different types of folks into a situation like that, right? Give them an incredible atmosphere. And, and, you know, I think the expectations and the accountability is a little different than, you know, a little shop where there’s a coffee
Lawrence Castillo: can for the cigarette butts, right? But walked in and immediately saw, you know, every morning we were getting numbers with, there was, there was somebody who was our analyst and he was providing a daily detailed report of what every single individual in the field was doing.
Lawrence Castillo: And I never had access to anything like that. I grew up on some software called Successware. And that software just wasn’t able… I could pull reports, but I had nothing like this. So it really allowed you to coach people based upon their day-to-day performance.
Lawrence Castillo: And instead of waiting to run a report at the end of the month, you could see what happened yesterday. Hey, this guy ran three calls yesterday and he had three zero tickets. Like, let’s bring him in. Let’s bring all the guys whose club conversion rate is under 30% in at six o’clock in the
Lawrence Castillo: morning tomorrow. Let’s inconvenience them so that they understand that they’re not meeting the expectations, right? We manage the business based upon those numbers. Those numbers were everything. And because of that, we were able to extract the kind of performance that you need when
Lawrence Castillo: they see that you are holding them accountable on a daily basis. And they’re not just jumping in the truck, driving around, you know, not converting. And they think they’re getting away with it until someone realizes, oh, this guy’s going sideways. No, day to day, we knew what was happening.
Lawrence Castillo: We could manage it and pivot because of it. So, but yeah, walking into that building, seeing that, understanding, you know, the structure, the business was so structured. It was so structured that, and we were probably a little bit too much so, but at that time,
Lawrence Castillo: You know, our first call window was eight to 10. And if you showed up at eight Oh one, uh, you were coming in to see your manager at six o’clock in the morning, the next morning. That’s, that’s what we were doing. And it was a bit much. Right. And I think back, I think back and, you know, I, I’m, I’m different now. I’m a little, little different now. I, you know, I still believe in the same principles, but I’m a little more forgiving, but you know, we’re still holding folks accountable.
Lawrence Castillo: and there’s a position agreement and there’s expectations and they need to meet them and they know it. So, but it was great times and a great education.
Tyler Martin: When you’re going through that change at 34 employees to all sudden hold people accountable on a daily basis, I mean, that really speaks to me because even in my own client base, a lot of times I’ll be talking to the owners of the business and we’ll be talking about
Tyler Martin: technician efficiency and they’re looking at it like two or three months later in terms terms of, oh yeah, this person’s supposed to do $40,000 a month. Hmm. I wonder why they’re only doing 20,000 or something like that. And you’re actually catching that inefficiency or whatever
Tyler Martin: you want to call it on a daily basis. How does the team handle that? Like, do some people drop off when you introduce this accountability and are you, were you anticipating that where you,
13:20Why the recruiter was his very first hire
Tyler Martin: Hey, it’s just part of it. We’re going to deal with it. Or how does that work exactly when you’re
Lawrence Castillo: going through that transformation? Great question. You know, you can’t expect to scale and build a business unless a high degree of accountability exists. And because you know that you have 34 employees and you want to get to 55 or 60 and then 75 and 80, you have to understand that you’re
Lawrence Castillo: going to lose people along the way. They’re not going to make it. And because of that, your recruiting effort has to be massive. Like you can’t just, you know, have, when we started this, we had nine technicians and I knew some of them weren’t going to make it. And you have to
Lawrence Castillo: make plans. Like if you lose three of those nine, all of a sudden you’re not going to be able to hit budget. You have to have people to step up and go into their places. So the recruiting part, there’s no scaling a business and no growing your operation without a huge recruiting effort that
Tyler Martin: goes along with it. Yeah. Now I know I was going to talk about this a little later, but since we’re here, I’ll talk about it now. You have a dedicated recruiter. At what point did you introduce that into the business? Do you remember roughly around where revenue or technician size was?
Lawrence Castillo: she was my first hire. Really? Yeah, she was my first hire. And that was based upon what we did at Service Champions. We had a very intentional plan, a manpower plan on how we were going to grow the business. And we had two people that were responsible for putting together large group
Lawrence Castillo: interviews and just sourcing candidates. And so when we bought Brody, I knew that, you know, 34 people wasn’t going to get us to where we wanted to get to. So the very first person I I hired was a recruiter. And that was because I knew that, you know, I was, I had my plate full.
Lawrence Castillo: I’m training and I’m putting in processes and I’m holding people accountable and I’m jumping in the truck for a ride along. And I’m doing all of this stuff, sitting in the call center, listening to what’s going on. And guess what? Recruiting is going to go to the back burner. I’m never going
Lawrence Castillo: to be able to devote the time necessary for that effort to be a success. So I had to hire somebody to make it their, you know, their 40 hour a week dedicated job. And that way I knew that I was going to be seeing enough new candidates each week that they were going to be able to, you know,
Lawrence Castillo: to source those candidates and to vet them and to have conversations with them before they even stepped in the door. So I wasn’t wasting my time. Right. But that was that my, my first hire. And to this day, the recruiting portion of this business is, I would say, it’s a pretty high
Lawrence Castillo: octane part of what we do here. We wouldn’t have been able to scale without that. And that’s a suggestion for anybody who wants to grow their business. If you’re the manager, if you’re the general manager, if you’re the owner, you’re never… You don’t have the time. And if you’re
Lawrence Castillo: spending 50% of your time on recruiting, you’re missing the rest of the business. early in my career, I went to work for the success group, one hour heating and air conditioning here in Los Angeles. And it was an airtime 500, you know, system. And Jim Abrams told all of us
Lawrence Castillo: managers that you need to be spending 25% of your time on recruiting. And it was a lesson at the time that it’s really an important part of the business, right? But as time went on, and he’s, He’s the godfather of our industry, really.
Lawrence Castillo: And I’m so grateful for his influence and his friendship and everything in my career that I was able to get out of him during our connection. But as time goes on, you realize that you don’t have 25% of your time. You need somebody so you can devote 100% of your time to the things that are the most critical to the business and have somebody else devoting their time to the recruiting portion of it.
Lawrence Castillo: So really critical. You’re not going to be able to grow from your six or seven or eight, 10 million, whatever, 3 million to that next step unless you are constantly seeing people.
Tyler Martin: Yeah. I want to go back to talking about just LA and kind of having moderate weather.
17:28Selling maintenance in LA where weather creates no urgency
Tyler Martin: I live in Northern California. So I know personally that most of the time my heater or my AC doesn’t even go on. There’s just no reason for it because we have such moderate weather. I mean, don’t have as much extremes. Whereas I have clients in Vermont, in Massachusetts, they were sitting in 26
Tyler Martin: inches of snow earlier this year. So, you know, just crazy stuff. So how do you build, especially under such a short timeline, four years, what was your process? Like, what did you do to create business and go, I think you’ve said something along the lines of,
Lawrence Castillo: you go out and find it type of thing. Well, you know, and, and this goes back to the service champions days, but to watch a single location start from scratch, you know, he didn’t buy a service base of a company that was going out of business. He just decided to put his own processes
Lawrence Castillo: in. And over the years, people always ask me, Hey, what was the secret sauce and the special magic of service champions? How did this business go? The secret sauce was that we hired people for personality. We trained them the skills. We gave them an incredible process to go into people’s
Lawrence Castillo: home and to show them customer service that they had never seen before. And when you’re going into the house of a stranger, which is an imposition as it is, right? Nobody wants a stranger in their house. But if you get people who have incredible personality and ability to communicate, once
Lawrence Castillo: they’re 10 minutes into the house, homeowner feels great about their decision, feels great about the $79 they’re spending. And if that individual can run a great tune-up, great care for the home, incredible communication, keeping the customer aware, just to run that system and to be able to
Lawrence Castillo: get through that call. By the time you’re done with that call, those folks want you to come back next year twice to take care of their system. So they’re going to sign up for a maintenance agreement. They are interested to hear about the options on the other things that you can do for
Lawrence Castillo: them to increase the quality of their air, the comfort of their home. And they’re interested in all the things you have to say just based upon being a pleasant young person who’s doing a great job. And if you’ve done a really great job, by the time you end, they want to write a great
Lawrence Castillo: five-star review for you. And they’ve probably fed you a sandwich and they want you to date their daughter, right? So lots of success stories with that over the years, but that’s the key. And I can’t put it any more simply than that. Here in Southern California, we don’t wake up to
Lawrence Castillo: a foot of snow on the ground. We don’t wake up to blazing 109 degree temperatures where air conditioners are a life support system. We don’t have any of that. The freeways here are packed because people move here because of the mild weather, right?
Lawrence Castillo: In the middle of the summer in Los Angeles, it’s largely 78 degrees. And in the middle of the city where we’re located and in the winter, it’s, you know, our cold nights are in the fifties, right? But typically it’s, you know, 60 degrees at night,
Lawrence Castillo: 59 degrees at night. So we just have to be really good at going into the house because we don’t get to walk in the house with a broken furnace. We have to walk into the house and do great maintenance show them the wear and tear, show them their options and why we think it’s time to get on
Lawrence Castillo: a maintenance agreement because it’s getting close to the time to replace or talk to them about replacement or whatever the case is. But we have to be really good here because
Tyler Martin: mother nature just doesn’t help us too much. Yeah, we’re blessed. But we also, when it comes to your industry, it’s a little bit more challenging for sure.
Lawrence Castillo: It’s true.
Tyler Martin: You know what I’ve had, I’ve seen clients in the LA space or just really anywhere in California
21:16Why he won’t add plumbing until the HVAC side is sound
Tyler Martin: to become successful is by introducing other trades as a way to offset the HV and they kind of lead with the HVAC. They kind of offset through electrical or plumbing or something like that, that has more of urgency to it and then piggyback HVAC on it. So that’s one other thing I’ve kind
Lawrence Castillo: of seen. So Brody is, Brody Pinnell is just strictly heating and air conditioning always was, you know, I have a plan to add plumbing here, but you know, when you have multiple businesses, you have to methodically decide how you’re going to, what you’re going to do with every work.
Lawrence Castillo: I have plumbing in our San Diego shop and I have plumbing in our orange County shop and, um, electrical. I don’t, I don’t have that anywhere. You know, I, we have a, well, you’re in California, but at In-N-Out Burger, when you drive through that menu, doesn’t have a chicken sandwich.
Lawrence Castillo: That menu doesn’t have curly fries. That menu doesn’t have apple pies, right? They do what they do and they do it because they’re really good at it. And so here at Brody Pimel, we’re really good at air conditioning and heating. And before we really can do plumbing here, I want to
Lawrence Castillo: make sure that we’re quite sound on the HVAC side. And if we’re going to do plumbing, we have to be really good at it. So stick to what you know and don’t try to be everything to everybody unless
Tyler Martin: you have a really good plan to do that. Yeah, that makes a lot of sense. You, in that four years or five years that you’ve gone from 7 million to 70, was there any point, because that’s a lot of growth in a short amount of time, and I’m thinking technicians, trucks, infrastructure, everything
Tyler Martin: to support it, how do you keep everything together and you, you know, keep good reviews, good service, good training? I mean, how are you doing that? Were you ever out of control at some point?
Lawrence Castillo: Sure. Like every day I look at this place and I’m like, you know, we can be better in all corners of it. But, you know, in 2020, I was doing it all myself, right? I was the general manager, the sales manager, the service manager, the install manager, the, you know, the chief marketing officer, I was everything.
Lawrence Castillo: And at some point you grow that, you know, to the point where your bandwidth just, it just contracts and you can’t devote the time necessary. So I’ve, I’ve hired, you know, a great team around me and I’m able to concentrate and sort of fly at 30,000 feet and concentrate on the bigger picture and look at the, you know, look at the stuff below me from 30,000 feet.
Lawrence Castillo: And they bring it to me if they need to. They probably think I’m a little too involved and it’s just, that’s my nature. You know, I’m, I’m too involved.
23:58Making a salesperson eat the margin on a $350K job
Lawrence Castillo: So I’ll admit that, but you know, I think I’m trying to teach lessons. I learned so much from Jim Abrams. I learned so much from Leland Smith. And I look at that education that I received and I feel like I’m obligated to do the same
Lawrence Castillo: thing for the people that work for me. I have to teach them the things that I know because sometimes I see the mistakes being made in real time and I have to catch them and I have to help them. So I may be a little too involved, but I’m okay with that because I know that at the end of the day, it’s going to help us to be a better company.
Tyler Martin: Do you have any examples of like maybe something recently that’s a lesson from someone’s mistake that you had to teach?
Lawrence Castillo: This is daily. Um, you know, I, there’s a job, um, that, well, there’s two jobs in the last 30 days here. I see the sales alerts come over and there was a job a month ago that came over. It was a $350,000 sale.
Lawrence Castillo: We’re, we’re a residential air conditioning company and $350,000. That’s not typical. Right. And when I see numbers like that, I had one the other day for $190,000. And I don’t like those kinds of jobs. I just want $35,000 in, in one day, out at the end of the day or out the next day.
Lawrence Castillo: And we’re just, we’re done and we’ve done a great job. And so I see these alerts come over. And so this 350 comes over and, you know, I contact the salesperson and it’s something that I guess we had been working on for a long time.
Lawrence Castillo: And I just had to remind them that this is not normal, that a different procedure exists for this, that lots of people have to be on that rooftop, walking that rooftop, making sure that all of this is the margins are correct. And as it turns out, the margins weren’t correct.
Lawrence Castillo: And so the choice becomes either you rebid the job or you’re going to have to take a personal sacrifice on the commission because you didn’t involve the right people and go through the right process to price this correctly. and he said, I can’t ask for any more than I’ve already asked for. And so he had to take a little
Lawrence Castillo: bit of a hit there because the company has to protect our, I just told him we won’t do the job, right? I don’t, I don’t need that job, right? We’ll do the job, but you didn’t do this correctly. And, you know, as a result, you’re going to have to, I can’t, the company’s share of,
Lawrence Castillo: of whatever profit there is in this job can’t be impacted because you didn’t do your job correctly. So that’s an example, right? And it just happened with that $190,000 job that just came in last week or whatever as well. And that one was okay. That was, he did a good job with that one. But I hate seeing those kinds of jobs come through. I just, I don’t want to try to be that company. But the reality is, is where we’re at. I’m at the foot of Beverly Hills.
Lawrence Castillo: and we serve a lot of really big houses, houses with 10 plus systems. And sometimes there’s a huge scope of work, right? We’re only replacement. We’re not new construction. We’re not remodels. We don’t do any of that. And sometimes people will just be like,
Lawrence Castillo: hey, change it all out. But anyway, they have to follow a process. I’m very structured and process driven. So, but lots of examples of, you know, why I get involved. But if I don’t, there’s probably something, you know, bad that will happen for us if I don’t.
Tyler Martin: That conversation that you had with the comfort advisor, the salesperson, where you basically said, hey, you’re going to take the hit on your commission. That sounds like a really tough conversation. Like, are you good at delivering that? Like, is that just a skill you have?
Tyler Martin: Because that’s a hard conversation to have sometimes. Like, hey, we’re not going to take the hit on the margin. you are if you want to do this job? How does that come out? And how do they react? Some people
Lawrence Castillo: might not be able to handle that sometimes. My sales team here at Brody Pennell is absolutely top-notch. It’s an embarrassment of riches. And I’m so fortunate. But I recruited all of them into this business. And so with that particular individual, the news coming from me
Lawrence Castillo: as their mentor, as their boss, as the person who took a chance on them when it went sideways elsewhere. It’s an easy conversation, but that’s the accountability piece, right? Yeah. And if you don’t have that conversation, guess what’s going to happen? The next time they’re
Lawrence Castillo: going to make the mistake again. So if you’re able to have the conversation and say, listen, you’re accountable for this error. And we have a lot of, there’s a lot that rides on a job that’s $350,000. It has to be bid perfectly. The labor has to be controlled perfectly because otherwise
Lawrence Castillo: this job’s going to come in at a gross margin that doesn’t make any sense for us. We could have done 10 $35,000 jobs instead of this one $350,000 job and gotten the right margins. I’m not going to blow it by accepting this job. You tell him that there’s a price to pay and that
Lawrence Castillo: you know, unfortunately he’s going to have to pay that price and it’s a mistake that they don’t make
Tyler Martin: again. Yeah, no, it’s a good learning lesson using your original words. The lesson comes across, I’m sure, when it hits their pocket. When you talk about recruiting, it sounds like, so if you’re recruiting a comfort advisor, are you trying to find someone that’s maybe at another
Tyler Martin: shop that’s not happy? Or are you trying to grow someone that’s, you know, a junior person that You’re going to grow into a comfort advisor. How do you approach that when you’re trying… Because you said you have a world-class staff. How have you done that?
Lawrence Castillo: When we bought the business, there were nine technicians and three salespeople. And the three salespeople that were at this business were all over 60 years old. And that’s unusual, right? I had left Service Champions where that didn’t exist, right? Everybody’s in their 30s.
Lawrence Castillo: And so, you know, I want, I knew that, you know, we were one heartbeat away from disaster, right? You lose one, you know, one guy and all of a sudden you, you know, you’ve lost a third of your sales. So it becomes, you know, okay, now you got to start to talk to people and recruit.
Lawrence Castillo: And we didn’t have the kind of place that, that we could really recruit top, top level talent to, right? The building was depressing. The trucks looked like garbage. Like everything was, nothing was the way it should be. So we started with, you know, folks that probably wouldn’t have been my, you know, the people that I would have normally recruited in. But as time goes on, and you start to develop the kind of place that people would want to be providing the kind of opportunities that a salesperson, you know, would would like running, you start to notice that the level of talent that is interested in working for you changes.
Lawrence Castillo: And then, you know, as this business started to get notoriety and, you know, there’s stuff in the newspapers and there’s stuff on podcasts and whatever, then all of a sudden I have one guy that recently left Service Champions and he called me and said, you’re the only person I want to work for.
Lawrence Castillo: And I’d never heard of him. I didn’t know him. And really grateful to get a call like that. Right. And he knew me from podcasts. and this guy is he’s fantastic right he’s four million dollars a year and this is a lesson to
31:27The six TVs of KPIs you see walking in the door
Lawrence Castillo: the folks out there that are looking to grow and scale their business if you start to write a success story good things will come to you because of it right and that’s exactly what happened there
Tyler Martin: so what’s extra cool about that is here you’re talking about accountability and people being able to deliver and you know someone’s listening to that whole thing and then they’re saying they want to work with you. It’s like, they already know what they’re coming into. And they’re like,
Tyler Martin: Hey, no problem. I can, I, that’s the environment I thrive in. So it’s like, it’s got a double impact in terms of what a group, probably a really great fit individual, as well as, you know,
Lawrence Castillo: hopefully high quality in terms of performance. It’s the best case scenario. Somebody that listens to the values that you bestow and talk about the kind of structure and the kind of place that you’ve created for people to work in. And there’s no, you know, there’s no big drape to pull back where,
Lawrence Castillo: you know, like it is what it is. You know, you walk into this place and what you see is what you get. And when you walk in, you see a wall full of TVs with everyone’s performance numbers on it. And literally when you walk right in the door of Brody Pinnell, you’re staring at it. There’s
Lawrence Castillo: six large TVs. Here’s everyone’s numbers. This is the culture. We are a, an organization that rewards people based upon outstanding performance. And that’s from five-star reviews to, you know, sales performance. Our customer service agents have a scoreboard. Everybody’s a participant. So it’s a good thing to see when you walk right in the door.
Tyler Martin: When you walk in, what numbers are you seeing? Like what are the highlighted numbers for the
Lawrence Castillo: technicians? So, you know, the television, it’s a condensed version of the actual numbers that we run every day. But I have certain KPIs that we like to keep our eyes on here. For the technicians, we like to make sure that their old call success rate is 20% or above. We make sure that their
Lawrence Castillo: club conversion service agreement conversion rate is 40% or above. We keep our zero tickets below 50%. And, you know, if you’re exceeding any of those numbers, then you’re going to be in the red. Well, you’ll be in the green sometimes for exceeding or falling below. But, you know,
Lawrence Castillo: we try to point that stuff out and make sure that they see where they stand against their brothers, right? Like it’s, it’s a group of people who are competing against themselves, but they’re also competing against the other people because I can’t in good conscience take a really great
Lawrence Castillo: call today that I know is in the hands of the right person who’s going to convert and put it in the hands of somebody who’s not going to convert it. I have installers to keep busy. We have a business and overhead to take care of. And so I have to be very deliberate about how
Lawrence Castillo: we are distributing these opportunities. So we run this business by the numbers. It is complete money ball here. And I won’t accept it any other way. And that’s probably one of the things that my managers hear from me too much, I just go back to the numbers. And Leland used to do this with me.
Lawrence Castillo: I went to lunch with Leland, I don’t know, six months ago. And within five minutes, he was asking me my numbers. It never leaves. It never leaves, right? It was just like stepping back in time. And I think that I see a lot of myself doing that now, right? It’s always,
Lawrence Castillo: I can, I can find, give me the problem and I can get to the root of it. And at some point in the process, somebody, somebody did something to screw it up. And I’ve gotten really good at the
Tyler Martin: investigative process and finding, you know, the root, the root cause. So does your management team still do kind of your style where on that scoreboard, if you have zero conversions on your memberships or zero tickets, excuse me, your ratio is too high. They’re literally talking
Tyler Martin: with that technician that the next day, is it still kind of that short of a timeline?
Lawrence Castillo: Yeah, our numbers. So we have an analyst that works for us and that is her only job. And we have reports that come out every morning, 7.30 AM. They’re mailed to all the managers for their direct reports. Very, very detailed, many, many categories. And I’m really proud. It took
Lawrence Castillo: us a long time to develop these reports. And we have data to manage everything here. There’s no guesswork. So my managers understand the tasks, right? These are your people. You’re going to probably earn a bonus based upon the performance of your people. You have to coach them up. So
Lawrence Castillo: everyone understands the task. They manage by the numbers. It’s just the way that we run the
Tyler Martin: business. So speaking of that, I want to spend a little time in my number segment that I usually bring up, are there a few numbers, and you’ve already shared a few, but more on a maybe global level of the company as a whole, are there a few numbers or key metrics that you tend to focus on
Tyler Martin: the most, whether that be on a monthly basis or on a weekly basis or even daily that really stand
Lawrence Castillo: out? I think the tale of our success or failure every day here at, you know, in any of the businesses, but, you know, let’s just take Brody Pinnell, for instance. You know, I start every day with a zoom huddle with all my managers and all the locations and they self-report their numbers
Lawrence Castillo: of all the businesses. And we look at yesterday’s statistics. There’s a spreadsheet that we share the screen and we look at yesterday’s statistics. We look at today’s statistics and we look at where we are as far as call volume, right? You’re never going to get, you’re never going to grow
Lawrence Castillo: your business unless you can hit your call count. Right. And so we made sure that we have the right amount of calls that goes back to your marketing, of course. But we take a look at the number of calls that we’re going to run. And then we take a look at the performance of the technicians and
Lawrence Castillo: the salespeople, of course. And, you know, we, the highlighted stuff that I’ve mentioned so far, if you know that yesterday your revenue was down and if it was, you know, half of what it should be, let’s find out why were the calls in the hands of the right people. Right. And if there was not
Lawrence Castillo: conversion was, you know, is that what was to blame? Are your dispatchers not managing by the numbers? Or is the problem that your folks in the field are the right people are running the calls, but they’re having a problem with their conversion? Or is it the fact that your salespeople
Lawrence Castillo: are having a hard time overcoming a certain objection right now, right? You know, it’s one of these items, right? You don’t have enough calls, or you have the calls, and they’re not going to the right people or they’re going to the right people and those people aren’t converting.
Lawrence Castillo: There’s just, you know, there’s this investigatory process that has to take place. But I think that, you know, for us, if we didn’t have this, and I think back in my career when I didn’t have it, it was a lot of guesswork, right? You’re just, you’re relying on people
Lawrence Castillo: to manage your business. Your dispatchers had the ultimate power to decide whether your business was going to succeed or fail if you don’t have the numbers to manage by. So very important thing for
Tyler Martin: us to have that to go by every day. When you were growing from the seven to 70 plus, we’ll say now, have you been able to preserve like your gross profit margin or is that something that has been there all along or have you refined that and continue to be able to improve it or where does
Lawrence Castillo: that stand as far as gross profit margin for your business? Trying to take the guesswork out of it.
Tyler Martin: Okay. Our, you know, here at Brody Pinnell, these projects come in and the install coordination department is putting each project through a gross margin calculator before we even start it. Does this job make sense for us? Right. Can we manage the labor on this?
Tyler Martin: How many days? How many people? What’s the equipment cost? What’s the materials cost? I don’t know how you run a business without doing this, right? You have to know whether these jobs make sense to do. So it starts there. It starts just knowing if it’s a good job or not. And on some of these,
Tyler Martin: it’s right on the line. And you’re like, okay, we’ve got to do this in four days. If it spills to five, our margins are going to drop below X. So holding the margins, it can’t be guesswork. You can’t get your P&L at the end of the month and say, oh, my gross margins were 46%.
Tyler Martin: percent. Well, no, there should never be a surprise, right? You need to be able to be comfortable going into the end of the month saying, I know my margins were great this month, right? We, we did everything necessary. We, you know, and, but once again, it’s just having the
Tyler Martin: right tools in place and managing your business day to day. Yeah, that’s good. That’s really good
Lawrence Castillo: advice. One, one question I’d like to wrap up on this, you know, for those shops are like in that five to $10 million range, you know, maybe some of them aren’t going to become obviously $70 million a year shops, but in terms of how they can make their next step get through,
Lawrence Castillo: because a lot of shops get stuck at that five or seven or 10, and they can’t get past it. Is there any advice you could give us based on your great career of what kind of would push them through or what they should focus on, whether that be number or something along those lines?
Tyler Martin: I think that, you know, for us, the first year was an important one. And, you know, we had those 34 people and that 6 million in revenue that we were we were starting with. And, you know, we had a 75 year old business with hardly a great online reputation.
40:57Rebuilding the brand story from 250 Google reviews to 5,000
Tyler Martin: the yelp was horrible there were hardly any there were 250 google reviews for a 75 year old company and the website was clunky and the trucks were old and they were white with no wrap and the uniforms just every no one was measuring success on on performance and i knew that like these were the
Tyler Martin: first steps i had to build a brand story we had the 75 year old company so much great lineage so I had to build a brand story online for people to want to choose us. You’ll never be able to make the phone ring to the degree that you want to,
Tyler Martin: if they don’t believe in your brand story. I hear Dan Antonelli talk about this all the time. And I heard him say one time, if you’re not going to build a brand story, they’re going to make it up in their head. They’re going to build it for you.
Tyler Martin: So I made sure to just fill our GMB with great pictures of our newly wrapped bands and our sparkling clean uniforms and our handsome technicians. And just really built a great brand story around the length of the business. Because that’s all we had.
Tyler Martin: It was an old business. I had to start somewhere. And I made sure that these folks went out and got reviews. Now we have 5,000 Google reviews now, right? And which that’s what the business should have already had being 75 years old. but the business is 81 years old now. And, and, you know, what we’ve done is we’ve,
Tyler Martin: the reviews have really helped to drive a lot of this growth people. And it’s, it might, it’s reduced my marketing spend, right? When people type in broken air conditioner, Los Angeles, and 250 reviews come up, you’re not going to be at the top. I’m the top now, right? Nobody exceeds
Tyler Martin: us. And, but with this five-star reputation, the expectation, when people call us, we have to be at our very best, we can’t deliver four-star service because it’s a letdown from what people are expecting or calling based upon. So if you can build a great brand story, if you can get
Tyler Martin: your people to go out there and get reviews, if you can make your company attractive, something that folks want to do business with, that’s a great part of the battle, right? And then it becomes training the people inside, getting them used to the structure, getting them used to being
Tyler Martin: performers. And we had a lot of people initially that weren’t performers. We had a lot of the wrong people. So we had to recruit the kind of people in that were going to go into the field and give great customer service. And we would have great results because of it. So yeah,
Tyler Martin: for those $5, $6 million shops that want to grow, you have to have the building blocks, right? It’s the blocking and tackling. And it starts with being the kind of company that people want to do business with.
Lawrence Castillo: Yeah. And all those things or any size company can do those things. I mean, branding isn’t limited to being a $100 million company. You can be a $5 million company and have really good branding. In fact, sometimes I’ll have these clients that come to me, they’ll have very actually
Lawrence Castillo: small businesses, but they’ve dialed in their branding and you think they’re a lot bigger until you kind of see their numbers, like, because just they’ve got it really nailed down.
Tyler Martin: And Tyler, that is, it is so critical. That is, you can do it today. If you’re a contractor out there listening to us right now, you can log into your Google My Business and you can see that there are 25 pictures that don’t, they don’t make anyone
Tyler Martin: want to do business with you. So guess what? Have somebody go to a call tomorrow with your best looking technician and your cleanest truck and have them take 50 pictures and then do the same thing all week long and hire somebody with a fantastic camera to get nice pictures of your truck on the street and whatever. Just start to
Tyler Martin: build your story. Start to post the reviews that you get and talk to your customers who are happy. These things will go miles with folks who have to make a decision. It’s tough. if you have $70 to spend or whatever it is on a company to come out to your house,
Tyler Martin: you want to be able to trust them. You want to feel, you want to feel safe. You want to feel like they’re going to do a good job and that they’re not crooks. You want to feel like they are a big, you know, a big shop with lots of customers and,
Tyler Martin: you know, not somebody who’s begging for business and they don’t, you know, they’re not experienced and they don’t have the training and the tools. you’re going to paint the picture that you want. One of the, one of the things that I really wanted
Tyler Martin: to do early was to have a team picture when I got the business big enough. And so I put together a picture where I had a bunch of people standing in front of our building here. And then I put all the technicians on the roof. And if anybody Googles us, it comes up and, you know, we had grown the
Tyler Martin: business to a point where there were a lot of folks standing on that roof. And that picture was enough to capture people’s attention. Like, wow, they’ve got a lot of people there. And you want to do business with somebody like that. Some folks don’t want to go to the hardware
Tyler Martin: store on the corner and buy a hammer because guess what? They’re going to pay $17 for it. And if they go to Home Depot, they’re probably going to find the same thing for $7 and know that if it breaks, they’re going to be able to bring it back in and get it replaced for free. And that,
Tyler Martin: you know, all the stuff that goes along with dealing with a big company, right? A national brand. So you want to look like a national brand.
Lawrence Castillo: Yeah. Gotcha. I getcha. Okay. So just wrapping up here in terms of if people want to, everyone, I just want to thank you. You have so such a rich history. This conversation was 10 times better. I was already excited, but 10 times better than I thought it would be.
Lawrence Castillo: So I really appreciate everything you’ve shared.
Tyler Martin: And I appreciate you. Sounds like you’ve had some great mentors that you’re just kind of paying it forward is what it sounds like.
Lawrence Castillo: All it is. I just, I love to help contractors. You know, I do these things and people reach out and I’ve never said no to anybody just because I know that I’m going to reach folks that, that need the advice and I’m willing
Lawrence Castillo: to give it all away. Right. And this is exactly the way Leland was. He kept no secrets. He let us open the doors to anybody. Contractors come in here and they can tour our facility. I’m just, you know, people helped me. So I’m in the business of helping them if they need it.
Tyler Martin: That’s one thing that blows me away by this industry. And I never get used to it really completely. Because people are just so, they share stuff so openly. And they don’t view, I guess because it’s local markets, but they don’t view competition like competition,
Tyler Martin: where they’re scared of giving their secrets. And I think that’s what makes it so special.
Lawrence Castillo: I went to a Dodger game last week with a competitor, right? And I really like his business. He has a great local business. I’m proud of him and proud of what’s going on. And we text and he asks for advice on this. And he gave me some great advice recently on something else.
Lawrence Castillo: And he competes against us. And you know what? There’s, I want him to be better. And he wants me to be better. And we’re happy to share these things. That’s the way it should be.
Tyler Martin: That’s so cool. So if people wanted to reach out to you, obviously, BrodyPannell.com is your company site. I’ll put your face, your LinkedIn, excuse me, your personal LinkedIn in my show notes. If people want to reach out to you, is LinkedIn the best place to go?
Lawrence Castillo: LinkedIn is the best place to go. And a lot of people will message me there and I’ll always return them. I’m not, it might take me, you know, a few days to get back with people, but I’m always happy to help.
Tyler Martin: Okay, Lawrence, I wish you nothing but more success. You’re an awesome guy with a great history and sure appreciate you paying it forward by being on the show.
Lawrence Castillo: Tyler, thanks for having me. really enjoy the conversation, always willing to help contractors. Thank you.
Tyler Martin: One thing that really stood out to me from this conversation is that Lawrence didn’t grow the company simply by pushing harder. A lot of times we think the next stage of growth comes from selling more, running more calls, working longer hours, or just grinding harder. But what Lawrence
Tyler Martin: described was something different. He improved the brand. He built better systems. He focused on recruiting. He made performance visible. He gave people clear expectations and accountability. In other words, he built an organization that actually could support a bigger business. That’s the lesson I see all the time with my clients. The things that get you to 5 million
Tyler Martin: often aren’t the things that’ll get you to 10 million. And the things that get you to 10 million may not be what’s gonna get you to 20 million. At some point, growth stops being about effort and it starts being about structure. That’s where the financial side matters too.
Tyler Martin: You need to know your margins, your labor costs, your overhead, your call volume, your call conversion, and whether growth you’re chasing is actually creating profit and cashflow. If you’re trying to figure out what the next stage of growth looks like for your business,
Tyler Martin: I’m here for you. I’m a fractional CFO. I help businesses in the trades. Feel free to book an intro call at cfointrocall.com or feel free to check out cfomadeeasy.com. Once again, that’s either cfointrocall.com or cfomadeeasy.com. And as always, I can’t thank you enough
Tyler Martin: for listening to this episode. and the show and supporting Profit and Grape. Take care.
Related Episodes
- The $3M to $6M Growth Trap for Home Service Businesses – Janeen Norquist
- Why the Lights Went Off at His Plumbing Company – Brent Garrett
- How a Blind Plumber Built a 40-Truck Business – Bob Beall
- The Big Five Numbers Every Trades Owner Should Track – Mark Paup
Tyler Martin works with owners on the numbers behind these stories: an accountant who works with HVAC contractors, a fractional CFO for HVAC.
