Why the Lights Went Off at His Plumbing Company – Brent Garrett

00:00From the end of a shovel to selling to ServiceMaster

Brent Garrett: I’d already built a plumbing and air conditioning business from the van. I was the first technician and I sold it for a really good profit. I thought I’d figured out the skilled trades, but there I sat 12 years later. I’m sitting there at 2 a.m., a million in debt, asking out loud, how did I get here?

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. There’s a stage in the trades where the business is bigger than one owner can carry, but not strong enough to run without him. Brent Garrett calls it the messy middle. Today, Brent joins Profit and Grit to talk about what happens when the growth outpaces systems.

Tyler Martin: The owner gets too far away from the numbers and the company starts creating stress instead of freedom. We get into pricing, gross profit, completed calls, recruiting, culture, and the few numbers every shop owner needs to keep close. Let’s chat with Brent now. Hey, Brent, welcome to the Profit and Grit Show.

Tyler Martin: How’s it going, man?

Brent Garrett: Hey, Tyler. I’m doing great. Thanks for having me on.

Tyler Martin: Yeah, thanks for being on. I’d love to just dive straight into just learning about you. Could you tell, for the audience and myself, could you tell a little bit about your profession, what you do, and a little bit of tidbit personally, if you want to share it.

Brent Garrett: Yeah, it’d be my pleasure. I’m not going to take you through my whole life, but I am going to tell you, as far as my skilled trade background, my dad was a plumbing and air conditioning contractor. So I started on the end of a shovel at about 12. And that was motivation for me to become a first

Brent Garrett: graduate, college graduate in my family. I’ve got a background in marketing and accounting. Broke my dad’s heart. I said, look, I want to start my own business. We never worked together. and owning a business together, we wanted to preserve Thanksgiving and Christmas dinners. So I started my first company from at the age of 26, built that through five years and

Brent Garrett: sold it to a Fortune 300 company called ServiceMaster in 1999. I’m 61 and back in. I’ve got plenty of gray hair to prove it. And from there, I went and did mergers and acquisitions for ServiceMaster. I was on an executive team where we rolled up about $500 million in plumbing,

Brent Garrett: and air conditioning companies. The first real strong PE that came through and got really good merger and acquisition experience there. Went away, became CEO of a real estate management company, did that for three years, and went right back into being a serial entrepreneur.

Brent Garrett: And I’ve done that ever since. So we currently have a residential, about 95% residential plumbing and air conditioning service business. And we’ve owned that since 05, I bought our partners out in 2015, and my wife and I have been running it ever since.

03:14The Friday the lights went out and he found a million in debt

Brent Garrett: So that’s what we do.

Tyler Martin: Wow, a lot of moving parts there. So you’ve given me so much to talk about. Where I’d love to start, a lot of times you have an awesome career, very illustrious, but you’ve had some pitfalls too. And I want to go back to a period of time.

Tyler Martin: I believe you were out on the road. You were doing coaching. You were helping people. You were traveling quite a bit. You come back to your beautiful business and you find out the lights are off. And then you also find out, I believe you’re about a million bucks behind in the hole that kind of caught you by surprise.

Tyler Martin: Could you take me back to that time? I mean, we set that story up. What was happening and take us through it.

Brent Garrett: You mean the scariest time in my life and my business and the most embarrassing too. Yeah, I was out on the road about 120 days a year. I thought, you know, I’ve got this figured out. I’ve sold one, been successful. This is no big deal. I can do this. And I come back and the

Brent Garrett: lights go out on a Friday afternoon on my day in where I caught up at the end of the week and saw how the business was going. And I’m in Texas. I thought it was a brownout. I went next door and found out, oh no, their lights, my neighbor’s lights were on. We didn’t pay the bill. And so

Brent Garrett: you want to talk about a red flag. It was a huge red flag. I went and got the lights turned back on, gave them a credit card. I seriously took a stack of paper home that night and went through all the general ledger and looked at the numbers and all that kind of stuff.

Brent Garrett: And I was near bankruptcy. And it was like, how can I be at 41 and about ready to bankrupt a

04:54The two things an owner can never delegate

Brent Garrett: business. Personally, I was okay, but God, it scared me to death. How did I let this get like this? And I think the lesson that I learned from that, that I would share with your listeners is I learned the two commandments of being an entrepreneur. Number one, you can never

Brent Garrett: delegate your culture. You set the value system. You set the rules for your business, how we’re going to treat customers and all of that kind of stuff, how we’re going to be for each other. And then the second one, most important, you can delegate the computation of the financials,

Brent Garrett: but it’s your money, it’s your financials. You can never delegate that. And I never have since then, and we’ve never had a problem. The way we got out of that hole was a real different problem. But those two things, I would just tell your listeners,

Brent Garrett: man, that was a tough lesson to learn. And a lot of good things came out of that decision. I got off the road, got rid of the coaching business, and a lot of really good family things came from that decision as well.

Tyler Martin: Really? I want to go back, though. Is part of the lesson also there that could maybe be attributed or helpful for the audience, did you kind of let your guard down, would you say? Because I think at that point, you were successful, I mean, by all means.

Tyler Martin: And maybe things had felt like they were coming easy. and so you kind of took your eye off the ball. Was that part of it?

Brent Garrett: 100%. Yeah. How did I get there? I got there because I didn’t follow the fundamentals that I knew of staging and scaling a business. I didn’t put the KPIs in place. I didn’t put the proper records in place. I would have been able to see this problem

Brent Garrett: if I had paid attention, right? Well, guess what? I ended up paying in the long run by not paying attention.

Tyler Martin: Yeah. Yeah. I want to get a little deeper too on the bookkeeper side of things or the accounting side of things. I get it loud and clear. Someone should still be doing the computation, but what do you mean? Like what level as an owner do you feel you still should be aware? Is it looking at financial

Tyler Martin: statements once a month? Is it literally going into your accounting programming? Where’s your line as far as where you feel like you still own that and have to feel in control of it?

Brent Garrett: Yeah, I would say I started at a real high level. Profit and loss statement, balance sheet, watching cash. I don’t know if I mentioned to you, my education background is accounting and marketing. I’m a plumber trapped in an accountant’s body. So it was even more embarrassing that I had gotten to that point.

Brent Garrett: But certainly looking at the key financial statements, cash flow, not as much, but I do pay attention to it. Then what I do is I go way, way down. I go all the way out to the truck. Okay, we’ve got 17 trucks on the road

Brent Garrett: right on the other side of the wall or 30 folks running a business and doing a great job for us. I know that what I call the magic moment in front of the customer, it would be just like a restaurant. How many tables are you turning each day?

Brent Garrett: Okay, if I keep an eye on what’s going on with about two or three key performance indicators and I look, I can squeeze that from both sides. I’m going to have a sales problem here. Over here on the statement side, it’s going to show me on a macro basis what’s really

Brent Garrett: going on with the business, if that makes sense.

Tyler Martin: Yeah, totally. And I want to get more into that in our number segment. But before we do, you had alluded to there’s a story to how you got out of that problem in terms of what you did. I don’t really want, if it’s a really long story, I don’t want to get too deep, but I

Tyler Martin: feel like there’s folks out in the audience that are financially challenged. I mean, I see it all

08:42How needs-based selling and good, better, best pulled him out

Tyler Martin: the time. Clients come to me. They’re financially challenged. They’re in a bad situation. I think there’s something to be learned there. I’d love to know if you can synthesize it somehow what your

Brent Garrett: plan of action was to get out of that. Hey, look, sales covers a multitude of sins. Okay. And the answer to every problem and every client that I talk to or coach, that’s the one problem that I hear most hey I need more sales and that may be multifaceted but

Brent Garrett: the first thing we did was we drove the sales and marketing side and what I learned in that culture piece is my technicians had never I was out teaching all these other companies about how to sell their business not sell in a sense but what’s going on with the tech I didn’t do it with

Brent Garrett: my own people. Okay. And so the one thing that we did, and we won’t go down in the weeds too much on this, but what I focused on was the client experience from initial door knock to closing the invoice. And I got the technicians to quit thinking about selling, build rapport, ask good

Brent Garrett: questions, be an expert and consultant by what we call needs-based selling, provide options to a really, really interesting study done years and years ago by a Harvard business study called Good, Better, Best, present options to the customer, insist that the customer have what they want,

Brent Garrett: and help them make good decisions and buy and do the work. And it was that simple. I want to say that it was a really complicated 12-step program that we created in sales. Our simple approach is ask the customer what they want, give them options.

Brent Garrett: 66% are going to choose the better option. Now we give it a different term, must, should, could. Okay, but it’s still the same thing. 66%. Technicians don’t want to be seen as salespeople. They want to be seen as problem solvers and helpers. And I help my clients now,

Brent Garrett: but that’s what got us out of the problem then. And it was what keeps us out of the problem today.

Tyler Martin: Right. Wow. Wow. Yeah, that’s good. That’s really good feedback, I think, that can help people that are struggling or in a jam to kind of think through the problem. And it does, you know, I chuckled when you started talking about this. I used to, when I would talk to my team, I’d always say, you know, sales solves all life’s problems.

Tyler Martin: I mean, nobody ever complained when they make another sale, but when you get another bill, you do.

Brent Garrett: Well, and you know what? It’s energetic. The vibe in the office is good. People are thriving. You grow your business. There’s career opportunities for everybody in the business.

Tyler Martin: Yeah, so true. Okay, so you’ve got a great book. You’ve got a book called 30 Days to a Better Business.

11:29The four stages from solopreneur to the messy middle

Tyler Martin: And in that book, you talk about the four stages. And what I find interesting, and I so agree with you, is the stage one is you’re in the truck. And a lot of times when we get out of that stage of being in the truck, we think, okay, we’re no longer, we’re now running our business where everything’s good.

Tyler Martin: But the truth is there’s still layers there that gets us stuck. So I kind of wanted to talk through that with you. I’d love to get your insight in terms of these four stages and how you’ve been able to move along the stages and what others you see.

Tyler Martin: You’ve coached so many people. What you see often is the bottleneck or the problem that prevents them.

Brent Garrett: Yes, it’s a great question. I’m going to use some numbers and truck counts.

Tyler Martin: Please.

Brent Garrett: But your business, whether you’re in painting or electrical or plumbing, the truck count and the numbers might be different, but the stages are the same. Okay. And so that first phase is you’re really good at what you do. You decide. Various of entry are very low. What we call a solopreneur. You’re starting your business.

Brent Garrett: It’s one of the most exciting times. Things are good. People like you. They refer you. You’re priced right, all that kind of stuff. And then you move into, hey, there’s only one me and how my business is growing. That is when we need to start talking

Brent Garrett: and thinking about where we need to be two steps down the road. But you start teaming, you hire people, and all of a sudden you become a manager and a leader and you didn’t really realize it. And you weren’t prepared for it. And based on your personality and what you’re

Brent Garrett: culture is for your company and what your rules are, that’s where the business starts going. And you gain some more momentum. You’re working a little longer hours. You’re not always doing the work. This is really, if I had one advice to somebody when they’re in this teaming phase,

Brent Garrett: get rid of your tools and be the lead salesperson for your company. Because once again, sales covers a multitude of sins. That’s the engine. If you can focus on that, become the key big sale person for your company, you’ll bridge this gap. But then, and let’s say that

Brent Garrett: we’re at 750,000 and we’ve got two or three trucks. And like I said, these are benchmarks. The next place that you go to is something called the messy middle. And it’s usually around a million and a half that you really start feeling it. You got five or six trucks and you are working

Brent Garrett: 60, 80 hours a week. And you’re starting to feel like all you’re doing is creating jobs for other people because you are making sometimes less profit in this messy middle than you were when you were at two or three trucks. And here’s the critical point. If you’re in the messy middle,

Brent Garrett: you could be close to bankruptcy like I was, or you could feel really stuck, or you could be compromising your work-life balance and you start to see some stress and fractures in your family and the things you care about. And you start to move into, and I’ll just

Brent Garrett: tell you about plumbing and air machine. It’s a 205, and residential service, $205 billion industry. And about a hundred billion of that is just residential service. Okay. 80% of the contractors are doing 50% of that revenue. The other 15 to 20% control the other half.

Brent Garrett: what are those two groups doing that are different? I’m happy to share those five things, but that’s where that goes. Now, if you work on the things that are those five things, you start moving through to the next phase where you start to coach some coaches.

Brent Garrett: And this is where you start to gain hope and you start to get excited because certain hats are coming off. You’re not working as hard. You’re working differently. And you’re starting to see those margins improve. And then that next piece where you own a business and you start building a legacy and building equity in your business, things get real exciting because now you own a business, not a job.

15:36The five things the top 20% of contractors actually do

Brent Garrett: And that’s really the phases of going through from owning a job, owning a business.

Tyler Martin: Yeah, I’d love to know the five things. Can we go through them? I feel like we left too much of a hook there.

Brent Garrett: Well, hey, so let’s just start and make sure that I get to five. But the first one, this is the most important. You stop doing and start hooing, okay? You look at your work day. This is a really exciting thing when I work with clients because I go,

Brent Garrett: hey, what do you hate to do the most? What do you dislike the most? Because they’ve got enough revenue, right? And really what we’re focusing on is we’re trying to get as many hats off and have them do what they love to do.

Brent Garrett: Because I ask them the question, hey, if you started the day, what could you do all day long and feel just as energized at the end of the day as you did at the beginning? And they can answer that question. Then we just start from there

Brent Garrett: and start working on getting rid of those hats. Second one is, is these 15 to 20% companies make an investment in technology. And now, gosh, we could do a whole nother segment on AI and how it’s working in our business. I’m not going to go there,

Brent Garrett: But I’m just saying you have to have a CRM and a back office software that can streamline what you’re doing because all you’re going to do at this point, if you stay on pen and paper or if you have an ineffective software, you’re just going to duplicate your problems and you’re going to feel stuck.

Brent Garrett: The next one is you must start investing 8% to 12% of your total revenue in marketing. And here’s the key. Not 8% to 12% of last year’s budget, 8% to 12% of this year’s budget. And you go, what’s a budget? Well, that’s something else that those 18, those 15 to 20% do.

Brent Garrett: The other thing is to make a serious commitment to recruiting, because if we’re going to grow and exponentially your growth starts to outgrow your, even your own, and that’s your own, what you can imagine, that’s, what’s really exciting. You go, Hey, wait a minute.

Brent Garrett: This business is starting to grow outside of me. Other people are making sales. Other people are making decisions. They’re running the business. Well, guess what? You better have a recruiting piece in place where it’s not an expense and you’re looking to go, well, I guess I got to

Brent Garrett: go hire somebody. I’ll put an ad out there. No, it becomes a part of your business every day,

Tyler Martin: just like marketing. I think that’s four. I think, yeah, I think you got four so far.

Brent Garrett: You got one more? I might’ve forgot one. And here’s the most important. On purpose, pricing. You have to be priced to win. You better become, you don’t have to become an accountant. You don’t have to be an account to be successful, but I work with my clients.

Brent Garrett: You have to own the gross profit of the business. Once you understand gross profit, and it’s not hard, you can price to win going forward. Okay. Because you know what your labor cost is. You know what your materials are. You have miscellaneous direct costs, and that’s how you set your pricing.

Brent Garrett: If you, hey, look, I’m kind of a golfer and there’s a handicap system. Well, if I’m paying Tiger Woods and I spot him four strokes, he’s going to kill me before we ever even tee off, right? Some of my clients, the lights go off when they go, wow, I didn’t realize that a 50% gross margin means that I have to take my cost and multiply it by two.

Brent Garrett: I mean, it’s something that simple, Tom. Yeah, yeah. We have folks that go, oh, if I want a 50% gross margin, I multiply it by 1.5. That’s 33%. Yeah. Oops. We’re losing on every sale. So those are the five things.

Tyler Martin: So those are great. You know, you so many things here, you got my mind going, but I do want to

19:21Pricing to a 52 to 55% gross margin and backing into overhead

Tyler Martin: talk a little bit practical from your own business. So what do you do in your own business when you’re talking about gross profit margin and getting pricing right? Are you literally like, are you taking some baked in overhead? Are you driving a certain net profit that you want?

Tyler Martin: How do you do it? I’m just curious for your own business and that you make sure you’re getting

Brent Garrett: your pricing and you’re getting the right end result you want. Yeah. Our target gross margin is somewhere between 52 and 55%. Talk about culture. I make no judgments about my fellow competition, but there is, I’m from the Midwest and I don’t mean to be graphic, but you can share

Brent Garrett: sheep three times a year. You can only skin it once. We have always taken a Midwest referral-based kind of organic growth and we share the sheep, we want reoccurring revenue. We want customers calling us back. I’m in a large metropolitan area where a lot of marketing

Brent Garrett: can be at gross margins of 60, even 70%. I’m telling you, for me, that’s against my culture. And then once I know what my baked in gross margin is, then I go to the overhead side and say, look, if I want a 10 or 15 or 20% margin, I know what my overheads have to be.

Brent Garrett: And so with my clients, we start with profit first at the X percentage and we drive and we just divide that and we say, this is the kind of revenue we have to drive. How realistic is that? Well, guess what? We know what our labor cost is.

Brent Garrett: We know what our material cost is. We’ve only got this much for overhead. If you start with profit first, you back into it. And there’s another thing. I don’t want to go down that trail too much, but Parkinson’s Law starts to work in the messy middle to the coaching phase,

Brent Garrett: where if you have two jobs for a technician allotted for eight hours, guess how long that job’s going to take?

Tyler Martin: A long time, I would think.

Brent Garrett: That’s why you go back to KPIs on the Tech Daily Snap.

Tyler Martin: Yeah, yeah. Good point. So I do want to ask you your opinion on what are you seeing, not necessarily your own business, but in terms of that net profit, Are you driving companies towards 10%, 20%, 25%? What would you generally say, hey, this is where I’d like to see you.

Tyler Martin: I’m assuming like a residential shop, a 90% plus. Is there any figure you stand on?

Brent Garrett: It’s a great question. And can I say it depends?

Tyler Martin: Okay, that’s fair.

Brent Garrett: If I’m in a strong growth phase from one stage to another, growth can be messy. So we’re trying to stay somewhere between 12% and 17% during those phases. You know, we’re investing in the future. We’re doing some things, right? We might, but we’re going to be calculated and we’re certainly going to be strategic about it.

Brent Garrett: When we get to that coaching and owning phase, now we’re starting to leverage technology and look. And I think that’s where we should be north of 15%.

Tyler Martin: Okay. That’s good.

Brent Garrett: And yeah, I mean, the average profit for the messy middle is two and a half to 7%. 11%. That’s a lawsuit. That’s a total truck. That’s, I mean, that’s lights off in your office.

22:37Using AI agents to code every call without losing the human

Tyler Martin: It’s code red. I mean, yeah, it’s code red for sure. Yeah. Yeah. I do want to pivot on one thing that you brought up because I’m curious in your own business, you brought up AI. And I don’t want to go down too much of a rabbit hole, but I’m seeing a lot in my own practice, you know,

Tyler Martin: using Claude to book payroll journal entries, to categorize transactions. I’m in a set up an AI committee meeting with one of my clients where every two weeks we’re going over with their staff on what their bottlenecks and how can we automate them. What are you doing in your own practice

Tyler Martin: aside or your own business, excuse me, your own shop, aside from just software tools? Are you doing anything within your own staff that you’re saying, hey, how can we be more efficient with AI

Brent Garrett: and various different tools in terms of our day-to-day jobs? Yeah, I’m going to tell you what we’re doing. And then I’m going to share an experience that happened just yesterday with a young gentleman in our company who leveraged that technology. So we’re in a Google

Brent Garrett: suite environment. Okay. And it seems to be the right platform for us. So we naturally gravitated toward Gemini. I don’t want to get into who’s got the best AI, whatever works for you. But the first phase for us about two years ago was, wow, this is really cool.

Brent Garrett: It can clean up my bad grammar and that kind of thing and write a better email. It can turn proposals around better. Where we are now is we have Claude. You mentioned that. We’re using AI agents right now to look at everything we do that’s on a spreadsheet to clean up and have better processes.

Brent Garrett: But the core fundamentals, they’re just clean us up and making us more efficient. However, one of the things we’re now doing is going to that next phase where we have AI agents listening and coding every phone call that we have. And it’s developing a bot that has our culture.

Brent Garrett: And I’m very cautious about making sure that if we’re going to schedule calls, and I think we might end up talking about warranty real quick, that’s a negotiated B2B model. So it’s all about price. where B2C is about value. We think that our first step would be that we leverage

Brent Garrett: bots to schedule calls, but at a certain point, we don’t want to frustrate the customer. We have to train the bot to bounce out and say, let me get you to somebody who can help you. And that’s a live person. We can’t lose that personal touch, but that is something that we’re doing right now

Tyler Martin: that we think is a game changer. Yeah, that’s exciting. I know too, like you said, it doesn’t matter the flavor of AI you use. Google and Gemini, I understand they’re actually coming, I think it’s Spark Agent they’re calling it, which sounds really fascinating because it’s

Tyler Martin: kind of like similar to what I think Claude and ChatGPT has, but it’s actually an agent that runs in the whole Google ecosystem, which if you’re in that ecosystem, I could see how powerful it

Brent Garrett: would be. It’s going to be interesting, that evolution for business. Absolutely. The one thing I would say to your listeners. Yeah. It’s not spooky. Don’t be afraid of it. I always talk in this analogy with whoever I’m working for. I say, hey, look, don’t worry about the horizon

Brent Garrett: line. Don’t worry about getting out to the ocean. We’re on a stream. Let’s just get to the next bend in the river. If that’s getting an agent in place for you, or if that’s just, hey, let’s take one step. Let’s clean up our email. Let’s do proposals a little differently. You just get to the next

Brent Garrett: been in the river. It matters for you and your environment. But here’s the thing, it’s never going to change. It’s the magic moment out in the home where somebody has to interface with the customer and perform the work. And you might argue, hey, AI might have a little bit bigger

Brent Garrett: impact on DIY and people who want to work in their homes. But there are a lot of people who don’t want to stick their head underneath the sink, do the work. No, or go in the attic in 100 degree

Tyler Martin: weather. 140 here. 140. Yeah. Yeah. No, thank you. Okay. So good stuff. Really good stuff. I appreciate you sharing that. Now I want to go into my favorite segment and that’s, I call it the number. And what I do in this segment is I like to go into some numbers that are critical to you

Tyler Martin: and in your business. And so I’d love to just open the forum, talk with you a little bit about, you’d already shared in the pre-call that you do have three numbers, but one starts with all of it. Can we get into that and share how you guys look at the critical numbers?

27:06Completed calls per day, 20% payroll, and average ticket

Brent Garrett: Yeah, sure. Yeah. And so we’ll just kind of refresh. P&L balance sheet gives me a real high level if I see sales numbers. But when we talk about the one number that I look at, it’s completed calls per day. That’s number one. Now, that’s on a report that we have that has all of our technicians’ trucks with their names.

Brent Garrett: And there’s about five or six different numbers on there. But there are three that are really important. The number one, and I have a big one at the top for the technician. And we talk about it every week in training. And we’re looking at it every day.

Brent Garrett: And that’s completed cost because that shares with me attitude and effort. If you haven’t figured out that you should take a tool bag with you to the work and not make eight trips to the truck, would you believe that one technician who’s doing better than another is probably doing something

Brent Garrett: that the other’s not okay so it can be learned right attitude and effort is something that you bring as the individual to the job if that’s in good if it’s in good shape we we look for you know three to five completed calls a day we keep our trucks in a 10 mile radius so not a lot of

Brent Garrett: drive time. It’s very strategic. We target and fence our marketing for that area. So we’ve always got a truck somewhere close by. We’re in the right now business. So the next thing we look at is total revenue or forecasted revenue for the month. We know that we don’t want our payroll to be more than

Brent Garrett: 20%. And we’re not a commission only. We don’t think that’s aligned with our culture. We pay the guys fairly. We pay them if they do better, but not at the risk of the client’s well-being. So if that one’s in place, we probably don’t look. We say, we pat them on the back. We give them a bonus

Brent Garrett: check and say, great job. Do it next month. If we find that that total revenue number is not right, then we go to the granular. We want to look at average ticket per call. And that’s not much different than any other business. If you’re running a restaurant, hey, how quickly do you

Brent Garrett: turn a table at a restaurant and what is the average ticket at the register? And I don’t, business is very simple, but it is not easy. It’s just a hundred little things you got to focus on every day. And so those, that’s the number you ask for one, it’s completed calls,

Brent Garrett: but if that’s in good place, then we look at another number.

Tyler Martin: When you, so to go into that completed calls, what’s that looking like in a practical level with a technician, if someone has a low number of completed calls, at what point are you talking with them? Or at what point are you suggesting some, is it a training or what are you doing

Tyler Martin: when you’re not quite seeing where that variable is at, where you’d like for it to be at?

Brent Garrett: Yeah. The one thing that I will tell you that I, so this is how I structure my day. Yeah. The three things I focus on are marketing, administrative coaching, and recruiting. Okay. Nobody joins our company without visiting with me about our culture and the way we do our

Brent Garrett: work and what a service call process. Hopefully we’ve looked at a resume. We’ve done a good job of screening. So if we find that something’s not right on the attitude and effort, it’s going to show up in the first 90 days. Hey, guess what? I might’ve done, our team and myself may have missed

Brent Garrett: on something. But that’s not usually the problem. It’s probably something that they’re doing out in the field. So we’ll get a team lead to go ride in the truck and find out. And here’s my very simple evaluation program. Are you a can’t or won’t? If you can’t, it’s our job to train you up. If you’re

Brent Garrett: a won’t, that starts to show itself. You trained your can’ts, you trade your won’ts.

Tyler Martin: Good stuff. That’s good. I like that. The one other one I wanted to ask you on that is you mentioned 20% labor line item. Are you looking at just the wage and if you’re paying them spiffs or commissions, is that the only thing that you look at 20% of revenue or is it also like

Tyler Martin: benefits and payroll taxes? How do you look at that number? I’m curious.

Brent Garrett: Yeah, we look at that as gross wages. That’s not fully loaded. No, probably with labor burden, we’re probably looking at probably another 12 to 15 points on top of that 20%. Now that’s just for those gross wages, not of revenue, right? Right, right, right. Got it. Okay. Makes total

Tyler Martin: sense. Okay, cool. And okay. I want to pivot. I do want to talk. It’s a good accounting question, by the way. Well done. You know, everybody does it a little different. So it’s fun. I think really what I really want to convey to the audience is there isn’t one right way to do

Tyler Martin: things. I mean, there’s different ways to be successful. And I think sometimes we hear so many people out on social media, and sorry, I’m a little soapbox there, so many people on social media that appear they’re really successful, and they’re preaching one absolute way of doing things,

Tyler Martin: and it’s just not true. I’m curious if you have thoughts on this.

Brent Garrett: Well, I work with a community of skilled trades business owners that want to scale and grow their business and not compromise their values. We, cultures are like snowflakes and I don’t want them. I want them to be who they are because guess what? When they were a solopreneur and

Brent Garrett: were growing their business, the consumer saw something they liked in them. Don’t change that. Be who you are. We want to be different in the marketing and we should find out what your est is? What are you best at? Are you fastest? Are you the best technician? Those types of things.

Brent Garrett: That defines who you are in your company. That way you attract technicians that buy into and

Tyler Martin: adopt your culture. That’s my thought. Yeah, that’s good stuff. Hey, I want to spend a few

33:10Home warranty work as a farm club for newer technicians

Tyler Martin: minutes talking about warranties. So you use, correct me if I’m wrong, hopefully my research is right. You use warranties somewhat of a tool as a recruiting tool. Could you kind of take me

Brent Garrett: through that? Yeah, I will tell you, we sure took a different tact. But I looked at home warranties a little differently. The accountant in me said, you know what? There’s a certain amount of home warranty folks that people get that with their new home, but they don’t renew. That meant that

Brent Garrett: every home I’m in, there’s a certain percentage that next year they could be a retail customer. Well, that sounds like a customer acquisition thing to me. The biggest killer for a service company is non-applied labor. And that’s a fancy word for how often is my truck in front of the

Brent Garrett: home charging for their time? Okay. And so from day one, I have been with American Home Shield. It’s been a great partnership. I have been with them for over 30 years and it has been wonderful. They were the answer to early on as a solopreneur that I always had work.

Brent Garrett: And over time, some of those customers became my retail customers. It has been a wonderful partnership. Now, I will tell you, at different points in staging the business, now that we own a business, they’re probably less than 20% of our business. And so imagine we changed our focus from it’s a sales solution to it’s a training.

Brent Garrett: Remember we said, train them up? Well, I look at it like Major League Baseball. Okay. And you see that there’s a farm club system. So now how we use that is we take not less skilled technicians, but maybe they’re newer to the business.

Brent Garrett: And we give them certain types of calls because Home Shield allows us to have some classifications of calls and skill levels so that they can get more training at one repair or one type of repair. So in essence, what we’re doing is we’re giving them more repetitions so that they can accelerate

Brent Garrett: faster and we can evaluate them at that level before we put them in the big leagues in front of one of our retail customers. Does that make sense? Yeah, completely. Yeah. It’s been a great partnership. I can’t say enough things about home warranty. And I’m going to tell you,

Brent Garrett: Every time I talk to a client or a fellow competitor, if I bring up home warranty, it’s not always a positive conversation. And the problem’s not the problem for them. The problem’s the way they’re looking at the problem. It’s a solution. Okay.

Tyler Martin: I got one more segment I want to cover. And I want to get into the culture, accountability, and mission. And when we started the show, we talked about the lights going out and, you know, million dollars of debt, potential concern about bankruptcy. One of the things that came out of this, and you cover this in the book really well, too, was just you had to fix the culture.

Tyler Martin: Yeah, you realize, hey, now it’s time to fix culture. What did that look like? Can you take me through some details of what you’ve physically done over time in terms of improving your culture, improving accountability, things along those lines?

Brent Garrett: Yeah, I would tell you that a lot of this just came throughout my life. I was a college quarterback and got the helmet back there. I’m an old alma mater. Arkansas Tech University. Got to get that shout out. Go Wonder Boys. Okay, so don’t give me a flack about our mascot. It’s different. It’s unique.

Brent Garrett: Okay, so I was being recruited by one coach in particular. I went to his football camps, made a huge impact on me and actually kept up with me. I actually didn’t go to play for him. His name was Lou Holtz. And Lou said, Brent, you know, there’s one thing we’re going to ask you.

Brent Garrett: We want you to do your best, do the right thing, treat people fairly. And he said, in relationships, we have to have trust on both sides. We’ve got to be committed to each other’s success. And we’ve got to have fair treatment. That’s stuck with me my whole life.

Brent Garrett: So if you said, is there some cornerstone piece, that’s it. As far as behavior, we look for people who are humble, hungry, smart. And we want them to show up on time, do what they say they’re going to do, follow through, say please and thank you.

Brent Garrett: I got to give a shout out to Dan Sullivan for teaching me that. And really, that’s our core behaviors. If you listen to Simon Sinek or other folks that have said this, customers don’t care as much about what you do as why you do it.

Brent Garrett: And it’s serious plumbing and air conditioning. And any of my operating businesses, our why is to make lives better. And we do that four different ways by serving each other, by focusing on progress, not perfection. I was raised by a drill sergeant. We are not a yell and scream environment.

Brent Garrett: I believe people respond to nudges and whispers, not shoves and yells. We help our team develop. We pour a lot into training. And then the fourth way that we make lives better, and I learned this from ServiceMaster, is we’re going to grow profitably

Brent Garrett: or we’re not going to grow. Because profit is not something that goes in my pocket. It’s how we live out our legacy and our why. And we reinvest in making lives better in our company. That’s our culture. It’s right there packaged. If you were joining our company

Brent Garrett: and I was having that speech with you, that is what I would sit down with you and say, look, you can make a lot of mistakes, but if you show up on time, do what you say you’re going to do, follow through. Treat people fairly.

Brent Garrett: We want you on this team and we want you here for a long time. And that’s our culture. That’s it.

Tyler Martin: When you bring someone new on, I know you mentioned everybody, you interview everyone. How often do you interview someone and maybe you’re kind of on the fence and someone else within your group goes, oh, I love them. This is the right person, blah, blah, blah.

Tyler Martin: At the end of the day, do you always go with your gut or does your team ever have a stronger impact, influence in terms of a yes or no?

Brent Garrett: Can I share a story? Please. Yeah. So about a year and a half ago, we really need a sales leader. And I knew he was right for our company, but he had been in other companies and this culture was a little foreign to him. And I could tell that he was maybe with some folks that believed in that

Brent Garrett: skin at once kind of theory. And I got to the end and I said, look, this is our culture. I don’t know this is a good fit for you. And I really don’t think you are going to thrive here because this is how we go to market.

Brent Garrett: And he was kind of stunned because it went pretty well. And I knew he could do the job, but I didn’t know if he was going to be happy here or if he could live the culture. He left. And I went, man, I sure hate to lose that guy

Brent Garrett: because he would have done so well. I get a call at 7.30 that night. And I’m going to clean this up. He goes, man, I must be an idiot. I don’t know what I was thinking. And this is just like my grandmother and what she taught me.

Brent Garrett: I want to give this a shot and I can live this culture. He’s with us today and he’s hit it out of the market and he loves it. Okay. And it’s still a struggle at times about how we go, but he buys into what’s going on.

Brent Garrett: Once you set your culture, you know what it does? It gets rid of the people that you really don’t want on the team because they can’t be successful in that culture or that environment. You’re in essence protecting your company and you’re protecting your client experience.

Brent Garrett: And you’re really doing that candidate a favor by being upfront. Because guess what? You find out 90 days later, it just didn’t work out. Well, you knew it wasn’t going to work out. You just wasted 90 days. So I hope I answered your question.

Tyler Martin: The culture almost creates a self-selection process. People self-select themselves out if they don’t fit in or it doesn’t work for them. So that’s very interesting. That’s a great story. Hey, so I want to wrap up here and I want to make sure I share your links.

Tyler Martin: First, most importantly, I want to thank you for being on. You’ve got so much wisdom. Your website, so you’ve got brentgarrett.com. Garrett is with two R’s. I’ll, of course, put this all in the show notes. Your book link is 30daysbybrentgarrett.com. I’ll share that too.

Tyler Martin: And then, of course, your business site is seriouspack.com. If people wanted to reach out, you also put your LinkedIn anywhere in particular you’d like them to go?

Brent Garrett: Yeah, it’s real simple. You just go to brentgarrett.com. There are connect buttons on every page and just say, connect with Brent. And this is what I do. Yeah, I already said that I work with skilled trades, business owners that are scaling and growing their business

Brent Garrett: without compromising their values. You know where we start? It’s just having a 30, 40 minute conversation. You just book it on, it’s going to cost you a dime. We’ll talk about your business It’s just like you’re interviewing me, I’m interviewing you. If there’s a click there and you want to work, then we’ll know that.

Brent Garrett: If not, I’m still going to give you two or three things, probably a little more in depth. I’ll answer questions that are important to you, much like our interview here. You might have heard something and said, hey, I’d like to hear more about that.

Brent Garrett: You’ll get a free e-book of 30 Days to a Better Business. That whole book is all about the lessons and thoughts in a 30-day reading period. of what I’ve learned in the business. And I want you to walk away with more value. But that’s really where it starts.

Brent Garrett: I just invite people to come and have a conversation with me. I’m doing this now to give back because this business has been so good to me and my family.

Tyler Martin: Very cool. That’s awesome. And as far as your ideal client, is there any particular size, where they’re at in their business, anything that stands out, or is it pretty much anybody in the trades you’re probably going to be able to help?

Brent Garrett: That’s a great question. If you’re a solopreneur or you’re in the teaming phase, come have a conversation with me, okay? We’ll talk about getting to that next level and I might be able to help you with that just over the phone and talking to me.

Brent Garrett: What I really work with are those folks that are near bankruptcy or feeling stuck in that messy middle. It’s very real. Some of those folks go, you know what? Forget it. I’m just going to go back to being in three trucks. Mom and I are going to work at the business.

Brent Garrett: please have a conversation with me if you’re thinking about doing that because it’s not that hard but sometimes you just need to look at it differently and I can help you through that but I typically work with a million and a half three to five truck folks that are trying to get to owning a business

Brent Garrett: and here’s what makes me different my goal is to get you to where you don’t need me okay I want to teach you how to fish not just feed you one to keep you on. And I do that through a mastermind back, it all starts with a three-day retreat.

Brent Garrett: We do things together. I share all this stuff in depth and you get a lot of what I do in my own business.

Tyler Martin: So very cool. Okay, Brent, you’re awesome. A lot of really good stuff here. I encourage folks that are in that messy middle, you’re the guy to talk to. And that’s real. That messy middle is real. I mean, there’s a, sometimes we don’t even know we’re in it,

Tyler Martin: but it’s real. I see it all the time. So good stuff. Thanks for taking your time to talk with us.

Brent Garrett: Thank you so much, Tyler, for having me on. I really appreciate it.

Tyler Martin: Brent’s story is a good reminder that experience doesn’t protect you from taking your eye off the ball. He had already built and sold a company, but when he got too far away from the culture and the financials, the business drifted into a dangerous place.

Tyler Martin: The lesson for trades owners is simple, but not easy. You can have someone help you with the books, the calls, the team, and the day-to-day work, but you cannot hand off the responsibility for your business. Know your numbers, know your cash position, know your gross profit,

Tyler Martin: know the KPIs that drive your business, and never stop paying attention to the culture your team creates every day. That’s exactly what we help owners do at Profit and Grit CFOs. If you’d like another set of eyes on your business, visit ProfitAndGrit.com or feel

Tyler Martin: free to book an intro call at CFOIntroCall.com. That’s CFOIntroCall.com. And most of all, thanks so much for listening. I hope you have a great one. I’ll catch you on the next episode.

Related Episodes

• What Numbers Drive HVAC Growth? – Lawrence Castillo
• The Weekly Numbers That Fix Cash Flow – Ellen Rohr
• How a Blind Plumber Built a 40-Truck Business – Bob Beall
• From Family HVAC Shop To Scalable Company – Ray Isaac

Tyler Martin works with owners on the numbers behind these stories: Profit & Grit CFOs.