Full transcript10 chapters · 10,616 words
00:00Marrying a plumber and taking over the books after a death
Ellen Rohr: Tyler, right now we are in the golden age of the trades that since COVID, private equity investors and the entire world is looking to service and home contracting businesses in a whole new way.
Tyler Martin: Welcome to Profit and Grit with Tyler, where blue collar owners and insiders spill the real story behind their hustle, building businesses that thrive through sweat and smarts. We’ll dig into their journeys from scaling chaos to growing the bottom line with lessons and grit that pay off big.
Tyler Martin: Here’s your host, the blue collar CFO, Tyler Martin. A lot of trade businesses are very busy. The trucks are moving. The phones are ringing. The team is working hard. But the owner is still wondering where the heck the money went. That’s exactly where Ellen Rohr’s story starts.
Tyler Martin: She stepped into her husband’s plumbing business thinking he would turn the wrenches, she would count the money, and they would get rich. What actually happened was stress, debt, tough conversations, and eventually a completely different understanding of pricing, cash flow, and what it really costs to run a shop.
Tyler Martin: In this episode, Ellen breaks down the financial lessons that changed everything. why charging more than it costs is not optional, how to use a simple weekly financial check, and why knowing your numbers gives you more options as an owner. Let’s get into it with Ellen now.
Tyler Martin: Hey guys, so I got a special guest today. I’ve got Ellen Rohr. She’s like the goat of finance, you name it. I think a lot of things. So connector, literally probably travels everywhere. Every time I watch your LinkedIn, you’re in a different country, Australia.
Tyler Martin: I think you just, you may already still be there, but I know you were just there. I went to Morocco. Just got back from Morocco. Morocco. Okay, Morocco. Service Titan Ambassador. Great, great software and author of at least four books and maybe a co-author of another,
Tyler Martin: which we won’t even mention that one. So anyway, Ellen, thank you for being on the show. I’m honored to have you. I don’t even know. I’m kind of a little bit in fanboy mode. So we’ll start with that. How are you doing today?
Tyler Martin: And if you could share a little bit about yourself, I’d love it.
Ellen Rohr: Oh, me too for you. I’m like, Tyler, oh, he’s into money. He’s a money guy. I was so excited to be here. So yay, we get to talk about money and some of our mutual friends and business success. So I’m psyched to be here.
Tyler Martin: Yeah, great. Well, hey, let’s start. You know, one thing for maybe the folks that haven’t heard the story, because you’ve got such a wonderful story in terms of how you got to be really the go-to person when it comes to simplifying finance, simplifying accounting for the home service trades business
Tyler Martin: area. So how did you get there? Let’s start with when you were a restaurant manager and you were probably still trying to figure out what you ultimately wanted to do.
Ellen Rohr: Well, I graduated from University of San Diego, top of my class, business degree, and I knew what I didn’t want to do is get a real job. So then I became a ski bum. So like, listen, I’ve had 50 jobs, at least lots of them in the restaurant industry, because, you know, there’s food, there’s friends, a lot of money for a short amount of time, and then you can go play.
Ellen Rohr: And I did a lot of that. I am that fence testing, troublemaking employee to this day. And I think maybe your listener to your listener, you can relate that when you’re an entrepreneur, it’s kind of you’re kind of unhirable. I say that as a full time employee of service right now.
Ellen Rohr: But just say it like there’s just a part of you that is going to press or test or whatever. So I really, to this day, have the mentality of that troublemaking employee. I relate a lot to team members. I’m always thinking when an owner is saying something, I’m thinking, if I worked for you,
Ellen Rohr: that wouldn’t land very well. Or I would love that, you know, those kinds of perspectives. But any event, I marry a plumber. I married this guy. He said his name is Hot Rod. So I like, all right, this guy. He was a stunt car driver and a plumber. And I thought those were selling
Ellen Rohr: features. So when I grew up, we didn’t have anyone handy at my house. Like my dad wasn’t handy. We called people. And I really never gave these services a thought like you flush the toilet, miracle happens, turn on the light completely, uh, uh, not in my psyche at all. And then I married
Ellen Rohr: this guy and I’m hanging out with his friends, the electricians, the roofers, the painters, the HVAC guys. And they’re like the coolest guys in the world. And what I love about my husband is what I love about trades people. Like they are no nonsense. It’s either plum or it’s not,
Ellen Rohr: it leaks or it doesn’t. And I just was super attracted to that. I don’t have any of that sensibility or skill set. So I’ve been from the get go, a grand champion of tradespeople. I think that’s really what’s been a thread in my career. And what happened is Hot Rod had a little business
Ellen Rohr: going. And I was at this point now a restaurant manager. You do it long enough and they throw you the keys and there I am. But I had some experience with profit and loss and financials. I worked for a really sophisticated restaurant group. And so Hot Rod’s partner dies. At age 33,
Ellen Rohr: his best friend, since they were eight years old, worked himself into a stress-induced health crisis and punched out one weekend. And we’re like, I thought he was like a hypochondriac. Like, I’m like going, oh man, that’s awful. And it was. And, you know, after the first like trauma of it
Ellen Rohr: starts to subside, I say to Hot Rod, well, so what do you want to do? And Hot Rod says, I’m going to go get a job. I really don’t like the business part. I’m a technician and he is. In his field, which is hydronic plumbing, that subset that makes floors warm and,
Ellen Rohr: you know, gathers warm water from the sun and boilers. I mean, he’s a world-renowned guru.
Tyler Martin: Wow.
Ellen Rohr: But he’s a technician and that’s what he wanted to do. And this is when I, no, no, no, no, don’t you, I’ll quit my real job. I’ll come work for you. You turn wrenches. I’ll count money. We’ll get rich. And that did not happen, Tyler. It was terrible. Absolutely terrible. And we still
Ellen Rohr: deal. I mean, I’m still married 42 years later, but we still deal with those scars of how I would say we don’t have enough money. And he would hear I’m not working hard enough. I’m not good enough. and it was really stressful. So like, I haven’t forgotten those days either.
Ellen Rohr: And my favorite line these days is, business is easy. I like made easy. Business is easy. Being broke is hard. That’s the hard part is being broke.
Tyler Martin: Yeah, it is true. When you say, I think there’s so many people right now that can relate to the scars from running a business and money being short. When you say there’s still scars there, do you mean like kind of that mentality of,
Tyler Martin: you’re not sure if you have enough or what does that scars that still sit there?
Ellen Rohr: The scar, I think, comes from like, if we talk about something sensitive, our walls go up because like at that time, I mean, probably with more therapy, we could have worked through more of this. But like what we did, which was a good thing,
07:14The Frank Blau letter that told her to shut the business down
Ellen Rohr: is that, okay, so this is how it happened. So we’re not making any money. And then back in the day, we didn’t have podcasts or blogs or Google or Claude or anything. We read trade magazines and they’re still relevant. Like rich people write down how they did stuff or talk to you
Ellen Rohr: about it now on podcasts, but there’s no mystery out there. People like to share. And I read a column in plumbing and mechanical magazine a million years ago called how much should a contractor charge? And you know, I can still picture it like opening the page and that’s
Ellen Rohr: the headline. And I, you know, I read it and it says this, Tyler, this is like good advice in the article. Frank says, you’ve got to charge more than it costs. And I wrote him a letter and said, dear Mr. Blau, please help me. I hate my husband. We’re broke. Our guys are terrible. We hate our
Ellen Rohr: customers, you know, blah, blah, blah. And then I spend the rest of these two pages telling him why everything he said in that column wouldn’t work. And I went to college. There’s something called the going rate or what the market can bear. And you don’t know. Now, keep in mind,
Ellen Rohr: we are operating in Park City, Utah, where the richest people in the world have their fifth home. But my mindset was, nobody’s going to pay if I raise my prices. Like, so I, you know, I tease people and now I come off as kind of a know-it-all.
Ellen Rohr: But listen, I was a hard nut to crack as far as this went. So Frank ends up calling me up and telling me right out of the gate that I have my head so far up my, that I’ll never see the light of day.
Ellen Rohr: And I’m like, who is this? And then he tells me, I’m the guy who wrote the letter to. And listen, just shut the business down. He’s like, he hits me with a brick and I hang up on him. This is the start of our.
Tyler Martin: And this is Frank, Frank Blount. He’s an OG, right? I mean, he’s essentially an OG. I think he’s 97, 98 years old. And yeah, you’re like, who is the, it’s just funny. You’re like, who is this? And you’re hanging up.
Ellen Rohr: And he’s rich and I’m broke.
Tyler Martin: Yeah.
Ellen Rohr: Like, so, you know, we’re just like, we’re knuckleheads. So, so the next day crying, I call him back and just say, I don’t know what I’m doing. Please help me. And back in the day, we had that greasy spooled up fax paper. Yeah. You’re touching your hands, it turned black.
Ellen Rohr: And I went to my office and it’s just like the Torah is like spooling off of this fax machine, just reams of paper. and it’s his financial reports. And he taught me how to read. This makes me cry every time I say, he taught me how to read a balance sheet
Ellen Rohr: and a profit and loss with his money. Like just here’s how it works. And then he points out things like, I paid more in taxes than y’all made last year. Like then both of you made last year. You know, so he’s a tough nut.
Ellen Rohr: He calls it taking the medicine. And they say, you know, some people need a feather. Some people need a brick. I apparently needed a brick. But it was like, once I started to figure this out and I fought it. It wasn’t diagnosed like this back in the day, but I’m very distractible. I
Ellen Rohr: don’t see columns and numbers very clearly. I, you know, I definitely have some sight issues. I didn’t want to learn how to read spreadsheets or financial reports or, you know, add things both ways. But what happened is once the light came on, it was like I was born again. Like,
Ellen Rohr: how do I not know this? I went to college. I didn’t, how, you know, all this, it was like, oh, so you charge more than a cost. You make a profit. Equity goes up. Assets go up. You can build a fortune. It just changed everything for me. So we raised our prices. And I got to tell
Ellen Rohr: you, I went kicking and screaming. I said, I’ll try it. It’s not going to work. But I figured I’ll
10:53Going from $30 to $150 an hour and getting out of debt
Ellen Rohr: go get a job. Hotrun and I hating each other, hating everything. I had nothing to lose. But I thought, okay, if it’s going to work, we have to quintuple our prices. Back in the day, this is late 1990, we went from $30 an hour to $150. And I thought, that’ll put a fork in it. Nobody will
Ellen Rohr: ever call us. We went at flat rate. We were one of a few companies in Utah even playing with this idea. Frank Blau and George Brazil, I think we were the only flat rate contractors in the world at this point. I mean, this is back in the day. And all that happened is we started to make more
Ellen Rohr: money. And I’m like, well, now what? We get out of debt. We start stockpiling money. Like this happened really fast. We stopped doing work for people who didn’t pay us. We stopped doing big construction jobs that just, we couldn’t get our arms around. We started doing more service and
Ellen Rohr: retrofit. And like, it just like everything changed for us. So at this point I turned to Hot Rod and I say, money buys options, baby. What do you want? I knew it was his company. and I wanted to, like, now I wanted to really explore what we could do.
Ellen Rohr: And he says to me, I really want to work all by myself. None of what you’re doing is appealing to me. And I bring that up because, dear listener, do what you want to do. Like, if you want to work all by yourself, Hot Rod went off.
Ellen Rohr: We sold our company to our guys. By the way, Tyler, 30 plus years later, those Hot Rod and Yachts trucks still run in Park City, Utah. How cool is that?
Tyler Martin: That is really cool.
Ellen Rohr: Sold the company to our employees. Makes me super proud. But this is where like Hot Rod and I decided we had different goals. So we were going to go our own way, but we stayed married probably because of this. And that’s when I wrote the other two books about business planning, because those business
Ellen Rohr: planning questions are, what do you want? Why do you want it? How much is good enough for you? What are the kind of things you like to do? And those are business planning questions. So keep track of the money. then dream and take action.
Ellen Rohr: That’s really the total package.
Tyler Martin: Right. Okay. Well, I want to just dig into a couple of things. So when Frank tells you, hey, quit, shut your business on.
13:03Your business is a vehicle, not your identity
Tyler Martin: Now that’s like basically saying, hey, give your baby up for adoption type of thing. Like, I mean, it’s that type of thing. Like, was he serious? Were you in a period where you’re like, yeah, I really should just shut down this business. How did you receive that message and how serious was it?
Ellen Rohr: I was okay with it. I think just because I wasn’t the plumber, it wasn’t me. I have always had a fairly healthy distinction between the vehicle that is your business and me. Okay. Like this is, I think where a lot of people get into trouble that they would think that for
Ellen Rohr: some reason, if they shut down that business, they would become less as a human being. Right. When my friend Howard Partridge says it like this, your business exists as a vehicle to drive you in the direction of your dreams, but you can sell the vehicle, you can fix it. You can add
Ellen Rohr: a second one. You know, it’s just a tool. And that has been very helpful to me. I have not identified. I mean, why? Now I have a drain cleaning company. Didn’t dawn on me, like it doesn’t dawn on me that I’m like, without that identity, I wouldn’t be worth something. But I’ve seen it. Your question
Ellen Rohr: is coming from a place of truth that a lot of people do. And so my encouragement is to remind yourself, it’s a business. You can fix it. Most of the time you can fix it, especially in the trades. Yeah. Especially in the trades. So you could fix it or you could sell it. You could get
Ellen Rohr: a partner. You could add another business. Like when you start to look at it like that, it becomes a little less emotional and a lot more, your vision expands on it. Is that?
Tyler Martin: Yeah, totally. Your business becomes your identity if you let it. Like if you don’t think of it like a vehicle, it becomes you. It becomes who you are as a person. So it is interesting. That’s why I asked you that because I’m sure you’ve been on this side when you have, like Frank was to you,
Tyler Martin: you have people that are struggling and that’s a tough conversation when you’ve got it. And they’re not even thinking that at all. They’re going to keep putting money in. They’re going to go down
14:59Why raising prices feels like a self-esteem problem
Tyler Martin: with the ship if they have to, which brings my second part of this question. When it comes to raising prices, why is that so difficult for people? Because it sounded like it was challenging
Ellen Rohr: for you to hear that. Why do we have such a problem with that? I think in my case, there’s different reasons for different folks. My case as an educated person, listen, being smart is not always an advantage. As an educated college graduate, I thought I knew better. There were
Ellen Rohr: rules of marketing, like what the market will bear and the going rate. What are you doing here? You can’t be 10 times the market. I didn’t understand the Starbucks factor, the Rolex factor, the premium priced model factor at that time. So that was part of it. But I think for most folks, especially if
Ellen Rohr: you are a technician working your way up somewhere in high school, you were told, I got this from Matt Smith, a really great trainer in our industry, somewhere in high school, you were told you’re going to wear a patch with your name on it, or you’re going to wear a tie. And the guys with
Ellen Rohr: the ties are going to make a lot of money and have the prestige and the respect. They’re going to go to college and you’re going to wear a patch with your name on it. And I think these self-esteem issues started now. Tyler, right now we are in the golden age of the trades that since COVID,
Ellen Rohr: private equity, investors, the entire world is looking to service and home contracting businesses in a whole new way. Like these are the jobs to have. I’m getting goosebumps talking about. These are the jobs to have. These are the industries to invest in. And I think it’s an
Ellen Rohr: exciting time, but we still carry a lot of those scars. When you hear someone say, I’m just a plumber. I’m just an electrician. You know, then that’s kind of that indicator that it’s not the math that’s so hard. In my case, it was that I thought I knew better. In some cases,
Ellen Rohr: it’s self-esteem issues. In a lot of cases, I think it’s self-esteem issues. It’s not the math that’s hard. Charge more than it costs. Figure out the balance sheet and profit and loss. If I can do it, anybody can do it. It’s the emotional stuff that’s tied to it. Your dad’s
Ellen Rohr: saying, you’ll, you know, you’ll never make anything. You’re not going to college. You might
Tyler Martin: will learn in the trade. All of that stuff kind of lays into that. Yeah, that makes a lot of sense because it’s kind of a reoccurring theme. I’m sure it’s something you’ve experienced and then I’m sure people you’ve interacted with the same thing is when it comes to pricing, people are very
Tyler Martin: scared to raise their prices. I mean, even if the numbers tell you otherwise, I’m thinking of a client in particular, they showed me a P&L for five years and their GP’s gone up every year and their sales have stayed flat and, or I’m sorry, their cost of goods sold has gone up every year.
Tyler Martin: Their GP’s gone down every year and their sales, they’ve kept the same pricing all five years. And it’s like, that just doesn’t really work that way. Like it’s just, it’s not a good model. It’s not, it’s not serving you using your business, not serving you using your, your
Tyler Martin: terminology.
Ellen Rohr: Let me tell you this story. Do you know a guy named Dan Hallahan?
Tyler Martin: No, I don’t.
Ellen Rohr: Oh, he’s wonderful. He’s wonderful. He wrote for plumbing and mechanical, PHC, a bunch of magazines, still writes heating traininghelp.com. And this is where like my husband, Hot Rod, pursued another path. He had a couple of businesses all by himself. He’s now a training guru for a big manufacturer,
Ellen Rohr: living the life he wants. Like you can do whatever you want, get clear on what you want. It’s so fun. But anyway, Dan told the story once and I’m going to steal the story, but I want it.
18:15The copper elbow story and who eats when you discount
Ellen Rohr: I want you to, to hear how it landed with me. He picked up a copper elbow and he was, the, the topic was training. He was teaching about training and he said, anything can be interesting. Any topic can be interesting. Like, look at this copper elbow. So there’s no boring
Ellen Rohr: topics, just boring people. Like this copper elbow, let’s break this down. Where did it come from? Maybe a mine in Chile somewhere. And a miner with a lamp goes to, and he’s a really good storyteller. He’s going, you know, and then he puts it in the bucket and rattles it down the
Ellen Rohr: mountain and dumps it in a truck. And the truck goes to the port. Now it’s loaded in containers and it sails across to where? To Europe. Maybe there’s a manufacturing plant over there. And he talked about a company called Wurzbo. Wurzbo is now part of Upanor. Wurzbo has been, it was
Ellen Rohr: purchased, but it has been in existence for over 500 years and they used to manufacture swords and now they make copper components. So all this story, and he talks about all these individual people who are involved in the process. We get the copper separated from the dirt and then there’s
Ellen Rohr: engineering and infrared and packaging and all the steps of making that copper elbow, which is, it has a fail rate of like 0.0000001. It’s that good, right? That’s amazing. And then it’s packaged and barcoded and it’s forklift. And the kid on the forklift has a
Ellen Rohr: ponytail and he’s thinking about his girlfriend. He goes through this whole story and he mentions all these people along the way as a way to illustrate how interesting anything can be. But what I’m hearing as this goes, is this copper elbow ends up at our contractor’s job site,
Ellen Rohr: packaged, ready to go, and it’s going to work. And he could have ordered it five minutes ago, and he’s going to get one. And then he goes into the house, and he talks to Mrs. Fernwicky, and he gives her a bid. And Mrs. Fernwicky tells him that, I spent way too much money on the Italian
Ellen Rohr: marble that I’ve got on the floors and on the countertops and this and that. If you could just take, you know, $500 off or 10% off your bid or whatever, she’s negotiating with him. And when the contractor acquiesces, he takes a hit for every family in that distribution chain.
Ellen Rohr: He goes back and he squeezes his manufacturer, right? Or supplier, and then the manufacturer, and everybody down the line, you are representing the entire chain of command, the entire chain of distribution. You’re the one in charge right now to make sure all those
Ellen Rohr: families eat. And that’s what hit me when he told that article. And I think those are the kind of stories you want to tell your team members of how important it is that we maintain high prices so we can provide health benefits and nice trucks. We have trucks at Zoom Drain that are box trucks
Ellen Rohr: for the primary reasons so that a person can walk in without bending over. It’s a civilized truck. Like, just like, what can we do to make it nice to work here costs money? So the difference between a low-priced contractor and a high-priced contractor is what they spend on the people.
Ellen Rohr: What they do to make things nice for the people who work there so that they can provide a premium experience for the customers. And that is marketing. That is sales. That is learning operations and efficiency. That’s using a great CRM like Service Titan to automate an AI, the housekeeping situation at your company.
Ellen Rohr: So you’re free and clear to be human. So that’s what’s required. And see, I can see that because I’m not stuck in the mindset of, let me fix it. If I picked up a screwdriver, Tyler, I would get hurt. Someone would get hurt.
Ellen Rohr: Well, I would. That’s better than an equivalent to I would break it. Whatever I’m trying to fix. If I pick up the screwdriver, it’s going to end up broken.
Tyler Martin: How did you, I mean, just to kind of deviate a little bit, how did you get into the trades?
22:08Tyler’s near-miss as an electrician and 200 ride-alongs
Tyler Martin: Like, what was your path as a bean counter? How’d you make it here?
Ellen Rohr: What a cool question. So I used to have a CPA firm and a lot of my clients, well, a couple different things. One is a lot of my clientele when I used to have my CPA firm were in trades of some sort. And I just loved, they’re always fun conversations.
Ellen Rohr: They were like the type of people I wanted to go out and have a bear with. That’s what I would always say. These are people I want to have a bear with. And so, and sometimes I did. But the other part that comes from, and I don’t share this too often, I actually took an electrical maintenance class in high school for two years.
Ellen Rohr: And my whole plan was to become an electrician. And I’ll never forget, I went out as an intern or an apprentice with a guy named Rocky. Rocky would drink beer. He owned his own business. He would drink in his truck as we were going out to job sites.
Ellen Rohr: And it was fun. It was actually a really cool experience. But as I started climbing under houses and I started having to bend one inch pipe or one and a half inch pipe, I don’t remember how big it was. I started to think about, man, I don’t think, I’m a small guy, I’m 5’2″, 5’3″.
Ellen Rohr: I don’t think I can do this for 25 years. Like my body is not going to be able to do it. And truthfully, Ellen, my family comes from more of a blue collar, hard worker, six days a week, 50 hours a week type mentality.
Ellen Rohr: so I’m not thinking like, hey, maybe someday I can own a business in the trades. I’m thinking like, I just can’t do this job. I’m thinking like a worker. And so I never did it. I went in a different direction. I ended up going to college,
Ellen Rohr: first person in my family getting a college degree. Love numbers, was always kind of like a baseball guy with statistics. And so I went down that path to give you the long story. But there was always a part of me that was truthfully,
Ellen Rohr: I’m kind of like a wannabe. Like there’s, even though I’m not a very handy guy, I’ve always kind of been a little bit, I don’t want to say I’ve gone obviously in a good path and I’ve had a lot of really, I’m blessed because I have a lot of good experiences, but there’s a part of me that
Ellen Rohr: feels like, man, I, I, that maybe should have been my, I feel like I could have went down that
Tyler Martin: path and I’m in some ways regret I did it. Well, and you know, I think like maybe you can relate to this too. Well, I can’t do that. I’m so impressed by it. Oh yeah. Huge. Yeah. Huge.
Ellen Rohr: Yeah. Yeah. I’m impressed by it. So like being a champion of the trades, I’ve been on a lot of ride-alongs, over 200. It’s not a lot compared to how old I am. Like, I always wish I do more. Get out in the field, talk to the guys. What do you love about what you do? What do you hate?
Ellen Rohr: What do you wish was different? You know, like ask good questions and get some feedback from people who are dealing with our customer all day. Right. And that makes me love them. It makes me love them. And even Rocky, there’s so many cool nicknames. Hot Rod. I went on a ride
Ellen Rohr: along with the guy named Bam Bam. Bam Bam and I went on a call together and he was amazing. And you learn about, you know, what’s important to them. And so that is what gives me fodder is that these are great jobs. If we do a good job as business people, we can make really great
Ellen Rohr: lives for the technicians. And there’s a lot of ill-treated technicians as a result of poor
Tyler Martin: business practices. For sure. And I think that’s your point. The other thing that is so cool is the trades is getting so much more visibility in the last, I don’t know, 10 or 15 years that I think companies now are thinking more, a lot more about how to treat people right,
Tyler Martin: how to treat their staff right. I’m sure if we rolled back 10, 15 years ago, there was a lot more of people not being treated as well in this field. And so a lot of really cool things. I agree with you. It’s something to be really proud of
Tyler Martin: is to be in this industry. And back to my original point, the people are just so cool. Like they’re just, the part that blows my mind the most is how people are willing to share. Like I was talking to a lady named Ashley Stroud yesterday
Tyler Martin: and she was just literally at the end of the podcast. She’s like, hey, if anybody wants to reach out to me, here’s my email. I’d be happy to collaborate or share what I do know. I probably would, I’ll take more than I give,
Tyler Martin: but I’m open to talking. And I thought it was just really cool. And it’s just endless, like people that you interact with like that, that will share numbers, the way they do things, how problems are happening. It’s just mind boggling, actually.
Ellen Rohr: So good. Now, I paid a lot for my education, but I’ve also been so generously, people have so generously shared. Shop visits are a really important thing, and a way I’ve gotten smarter is to, what, are you doing something cool? I just said this to a guy in Portland yesterday, and I’m like, I would love to see you do that.
Ellen Rohr: Can I come to Portland? I’ll get two or three shops that I could go and visit and just see what they’re doing. How do you get through the day? Even with all this automation, with all this data, with all this information, what’s obsessing me right now is what does the service manager do minute by minute to make sure that we win the day?
Ellen Rohr: And it isn’t that complicated. Like even as much as we’ve got attention to every invoice, every call, every tech, it’s the coach on the field. He’s on the field. He’s not in the locker room. He’s right there. He’s letting them play. And then they come in and there’s like a touch point.
Ellen Rohr: Are you okay? Do I need to bench you? Do you need some direction? Do you want to go to the left instead of the right? Like there’s this, I love sports and apparently you do too, but there’s a lot of analogies there.
Tyler Martin: Ellen, let me ask you one thing, because I think it’s important. So my audience generally is going to be business owners, probably with like a three to $15 million shop. So not super large, not super small either. Where do service managers fit in there for them?
27:32Building field supervisors before you crown a service manager
Tyler Martin: Like what would you tell in someone that’s a $6 million shop? Should they have a service manager? When should they be introducing that role? What are your thoughts around that?
Ellen Rohr: This has been like, it’s fun that you brought that up because just this week, it’s really been a hot topic in many of my conversations. There is a guy named Cameron Harreld and he wrote a book called Second in Command. And he was a second in command to Brian Scudamore’s 1-8-Hot-100-GOT-JUNK when they went from
Ellen Rohr: 10 million to 100 million. He’s a terrific speaker, has a great podcast and his messaging, you know how you know something but then somebody puts words to it and you’re like, yeah, what he said. That’s kind of how I felt about Cameron. So what he says is that at every great company,
Ellen Rohr: there’s going to be two people at the top. There’s going to be the cheese, the CEO, and in EOS or traction, they call this the visionary. Usually it’s the visionary. And then there’s going to be an integrator. So someone who’s going to get that.
Ellen Rohr: Where are we going and how do we get it done? So when he talked about it, what he said is that really blew my mind. He says, if you’re the cheese and you’re looking for a second in command, the job description for that person is everything you hate and are bad at.
Ellen Rohr: So it won’t be the same for everyone. Okay, like if I’m really into numbers and I’m going to be in the office head down, then I need someone who’s going to be sales and marketing, you know, obsessed. Or I’m going to be operation.
Ellen Rohr: So it doesn’t have to be the same position description, but they have to be complementary skill sets. And so what a service manager ends up doing, how to get one, like, listen, you might have to make a few mistakes, and I’ll share some personal experiences with that.
Ellen Rohr: But what you might look for, and this is the Al Levy method, is to start developing leadership skills at every position in the org chart. So the way Al Levy recommends it in his tremendous book, Seven Power Contractor, is that you’re going to, suppose you get 10 techs.
Ellen Rohr: We’re going to break that up into two teams and create a field supervisor for each of the teams. Okay. And you, as the CEO for now, say you’re a three or five million dollar company, you’re still the service manager. CEO is still you.
Ellen Rohr: But you break your team up to team leads. And these field supervisors, this is so good. These field supervisors have to go through a course. Alice created a field supervisor course. you earn the stripes to become a field supervisor, you might not make it.
Ellen Rohr: And if you don’t do well in that position, our promise is you can go back to the track. Because a lot of people are hesitant to become managers because they think they’re going to fail and they probably will. And a lot of times we crown someone manager and now they’ve got a week’s
Ellen Rohr: worth of time and they usually become a glorified dispatcher. I’m sure you’ve seen this a hundred done. Okay. So what the intention of this is, it doesn’t always work, but it works pretty well as an overall model for growing leaders at your company is now you’ve got say five technicians
Ellen Rohr: who report to you instead of calling the, who report to the field supervisor, instead of calling you all day. So now you’ve got a little bit of shield, which is helpful. So you can get some stuff done, but these guys are going to be answering technical questions and taking a little
Ellen Rohr: bit of the load off. They’re going to have five days worth of goal, like every other service technician, but they’re going to have one day in the office, or they’re going to have one day’s worth of time to work on a project, to do a ride along, to run the safety meeting, to run the sales
Ellen Rohr: meetings. So you’re giving them junior management duties, but not a whole week to try and fill. Because up until this point, those service tags, we’ve been micromanaging every minute. Wait in your truck. We’ll give you a dispatch. You go to the next job.
Ellen Rohr: Don’t even think about the job after that. We’ve trained them to be, you know, have a week of emptiness that we’re going to fill for them. And now we’re asking a service manager to just make all our dreams come true. So this idea, that’s why I love Al, is just that meat and potatoes of idea of like, how
Ellen Rohr: do we develop managers? we give them like a small portion of management projects to do and we coach them into leadership. Now you do this, maybe you have three field supervisors and as your team grows, they compete then for the service manager position. And what does the service manager do all day?
Ellen Rohr: Invoice by invoice, paying attention to make sure everyone else has got the obstacles out of the way for them to do their job. And really the best service managers are watching, walking around, talking, texting, reporting in, they can get buried in data, especially if you have a really
Ellen Rohr: great CRM. Enough data, one KPI, two KPIs per position to understand if someone’s winning or losing and how do we fix that before the day is out, when the day, when the week, when the month. And that’s what great service managers do. Now I’m describing it in a way that sounds really simple
Ellen Rohr: and it can be, and you might bump and, you know, hit your head as you go. One of the things I’ve noticed over and over again is that the owner gets burnt out. So they hire someone or elevate someone, crown them service manager. And now they have a shield, which is helping, but now we create
Ellen Rohr: a crazy person out of that service manager. It’s the same guy, completely overloaded, completely stressed, 30 people reporting to him. So that’s where we fail. And then the owner, because they’re just, I’m not even blaming, they’re just overwhelmed, bows out. And this guy with no
Ellen Rohr: ownership, with no reason to believe is in charge of the money in the company, and it can be a disaster. Or he quits, and you’re right back in the middle. So it’s just this endless cycle
Tyler Martin: that leads to burnout. Yeah. Yeah. So just to like paraphrase this for me.
Ellen Rohr: Let’s get back to it more. I can feel the energy like, damn, that’s me.
Tyler Martin: No, I mean, it’s good though. This is good discussion.
Ellen Rohr: It’s not you, but like a dear listener.
Tyler Martin: Yeah, yeah, no, I know that’s what they’re feeling. But I mean, just in terms of just to paraphrase it, what would you, because one thing you said to me that kind of stuck out is you said, hey, you’re going to make some mistakes along the way.
Tyler Martin: Like it’s not going to just instantly come together. And what is, and when you say that, are you meaning like maybe hiring the wrong people or what do you mean in terms of like, what would the mistakes happen in that process, do you think?
Ellen Rohr: Well, Brene Brown, do you know Brene Brown, Daring Greatly? Oh, yeah, yeah, yeah.
Tyler Martin: So Brene Brown says that anytime you attempt to dare greatly, to do something like, you know, own your own business or move out into uncharted waters, you’re not just going to fail. You’re going to full on fly swat fail over and over and over again.
Tyler Martin: Like that is the path you raise your hand for. Now, what I’ve noticed is the very, the most successful contractors by their own yardstick, the ones that seem happy, having fun, reaching their goals, doing cool things with their family, the ones who are successful, grateful, those guys fail and recover super fast, super fast.
Tyler Martin: Tommy Mello is a good example of it. Tom Howard, Lance Bachman, these guys are failing all the time, but they take it. It’s a joke. It’s a story. Can you believe I did that? And then they’re over it. There isn’t this like, if only I had done this, you know, and this self-deprecation and then loathing.
Tyler Martin: You know, if you could provide yourself some grace and others grace, others are going to disappoint you, going to miscommunicate, going to like everybody’s going to fail. and that recovery, like the willingness to be able to get back in there, learn the lesson,
Tyler Martin: take the hit, make, you know, some like kind of gracious moment about it and press on is really going to help. Like you might hire a bookkeeper who rips you off. Well, next time you should be paying more attention or you could be mowing the fact that you got ripped off by this bookkeeper
Tyler Martin: for the next 30 years.
Ellen Rohr: Right. Like, so it’s really that personal commitment to self-development, self-awareness, growth as a human being. Allie Brown, another business guru said that the best personal development course you could ever take is a business of your own. It’ll make something of you. You know, like all of the, all of those,
Ellen Rohr: you know, all those milestones in the journey are going to make something of you. and for if you want to do it and you don’t have to do it like at some point it is an honorable thing to say this isn’t working i’ll go do something else you can sell the vehicle or
Ellen Rohr: get another one or fix it or abandon it you know there’s things you can do but the journey is
Tyler Martin: always part of the story even if there’s a few bumps in the road for sure okay we got time for one more segment i want i know we’ve been moving way too slow this is all my fault i i kind of a I’m enjoying you. Thank you.
Tyler Martin: A little bit starstruck here.
36:36The Tuesday financial quick check and its five numbers
Tyler Martin: Okay. I want to cover the Mark Pop, I believe is how you say his last name. I want to spend a little time on this. So, yeah, Pop. So I was blessed. He came on my podcast. He shared his story. He’s gotten about 30 million plus.
Tyler Martin: But in that conversation, he had said to me that you and Al Levy were so instrumental in his success. In fact, so much so that he said, hey, I wouldn’t be where I’m at today if it wasn’t for you guys. And one of the things that he brought up, yeah, it’s really cool.
Tyler Martin: One of the things that he brought up is he said, hey, every Tuesday, I use Ellen’s report. It shows me a little quick snapshot of items that help me run my business. So I thought, could we spend a little time talking about what is it?
Tyler Martin: I was covering so many topics, I didn’t get into the details of it. So I’d love to hear straight from you what that is and what every business owner should be looking at at Tuesday at five o’clock.
Ellen Rohr: All right. So I’ll tell you the journey of this. So when Haran and I were trying to figure things out, I would go into his office and I would just like get these financial reports and I’d go all over his desk and I’d start pointing at numbers.
Ellen Rohr: This, I don’t know what this is, but it’s better. This, this is good. This is terrible. You know, I’d just be like, and interrupting him, like, you know, he’s doing something and I’m just randomly showing him this information as a light bulb goes on for me.
Ellen Rohr: And then we would fight. Like, so he said to me, if you put what you’re pointing at on one piece of paper, I’ll look at that. And then I got some advice. Why don’t you have a meeting every week at the same time and leave each other alone about it until the meeting?
Ellen Rohr: Now, if we’re bouncing a check, we can’t wait for the meeting. Like there are some things that may come up. But most of the time in accounting, it can wait till Tuesday. Right. So like these are the things. So I put together once upon a time, I called it a monthly summary of critical numbers.
Ellen Rohr: But here’s what happened that changed everything. By the time the month happened, the score, it’s too late. The game’s over. Now we’re in game four or game five or whatever. But it’s after the fact, we look at the score and we go, oh, we should have done this.
Ellen Rohr: So what happened is we started doing it every week. And I started doing it with my clients. And when I worked at Benjamin Franklin, and now we do it at Zoom Drain. Not everybody does it and they should. This is like just this one thing
Ellen Rohr: will change everything for you, which is that you run a balance sheet and a profit and loss weekly. Now it’s not closed, but you’re kind of soft auditing the financials once a week. And it’s so much easier to find and fix an error.
Tyler Martin: Yeah, it’s right there.
Ellen Rohr: You know how this is. If it happened two years ago, it’s a deal. You might even have to submit a different tax return. It happened Tuesday. You just adjust. You can fix it. And so you run the balance sheet and the profit and loss, and then you create what I now know
Ellen Rohr: is called a dashboard report. Like in the corporate world, dashboard reports are everything. Give me one page. That’s all I’m going to look at. One slide. I don’t want to deck. I just want to know the few numbers that make all the difference.
Ellen Rohr: And the way the overall construct of my FQC is, it’s a truncated profit and loss on the top and it has month to date information for sales, cost of good sold, broken out, gross profit, gross margin. That’s one of the five numbers, right? And then profit. That’s another one of
Ellen Rohr: the five numbers. There’s sales, gross margin, gross profit, dollars and percentage. There’s profit. Woohoo. Those are three. So, and then I compare that to where my budget is and what’s a budget, a made up goal, a made up thing. And you tell your team that we made this up.
Ellen Rohr: We did a million last year. Let’s do a million five this year. But we got a game as we’re going to measure where we are month to date compared to one month’s worth of budget. We can do a year to date compared to where we should be by the end of the year. The year to date is interesting
Ellen Rohr: because any kind of leapfrog we might have with expenses and sales on a monthly basis smooths out.
Tyler Martin: You’re getting this, right?
Ellen Rohr: Yeah, it’s awesome.
Tyler Martin: Yeah, and so what it is, is the global scorecard. It’s not why things happen, it’s what happened that will cause a conversation to help us dig into how do we fix the month. So even with those three KPIs compared to budget, what if we have three days left of the month
Tyler Martin: and we are $1,000 from the hitting budget or $2,000 from our best month ever? Would you and your team look at that and think, we can do it. How could we do it? We could run a contest. Good idea. We could call customers who said no, and maybe they’ll say yes.
Tyler Martin: Yes, let’s try it. So now we’ve got the score. It’s the buzzer beater. It’s a chance to pull off the month. Can we hit our sales goal? Pay attention to that gross margin, gross profit number, because we need that to pay all our bills. And then will we have a profit?
Tyler Martin: And that kind of week by week check-in causes you and your team to make decisions that’ll impact the score while the month is on. That’s the beauty.
Ellen Rohr: Yeah, that’s huge.
Tyler Martin: Yeah, and then down at the bottom, I’ve got a couple more KPIs. Five, you could have seven, but don’t have 50. So the other things I track is cash flow. Do we have enough cash? So from the balance sheet, I’ll put our cash, our accounts receivable, and I’ll measure it against our current liability.
Tyler Martin: So it’s kind of an acid test or a quick, what do they call it, quick ratio. I’ll measure how much I have in cash or close to cash compared to what I have in bills to pay. Isn’t that a good number to have?
Tyler Martin: Why are they so high? I don’t know. Let’s look in. Then somebody’s on the job. Like they have to go, what’s happening? Do we have stuff that’s old? How do we collect it? Why are we giving them credit in the first place? Should we offer financing?
Tyler Martin: that’s the stuff that comes from these meetings so the other stats i would look at would be our cash position or a cash flow ratio and then this number i really love total gross wages for the company as a percentage of sales i love this number it’s a defensive number because even a
Tyler Martin: tight company like mark pops probably just gross wages are right around 30 35 percent of total sales and it’s a variable number.
Ellen Rohr: Is that the general, sorry, Ellen, is that 35% is kind of what you’re looking for or is there a range?
Tyler Martin: Yeah, but like this isn’t gospel kids. Like your numbers will supersede mine. It’s a training wheel number. But if I see a company in there, the 30, 35% range, I’m thinking, all right, but then I’ll also ask, and this is important. Am I measuring labor the same way someone else is?
Tyler Martin: Is there payroll taxes in there? Are there benefits in there? Or is it just the gross wages? So just even as you hear percentages, you go to Pantheon, I get this much gross margin. I don’t even talk like that because I don’t know what they’re putting in those different
Tyler Martin: buckets on the, so I don’t even ask. Like I’d have to sit and look and ask those questions, you know, elbow to elbow or on a Zoom call or something to get that straight away. But you get the basic idea here, right? How good is this?
Ellen Rohr: Yeah, no, it’s great. It’s awesome. In fact, you still have on your website, that’s the financial quick check that we just talked about. I think you still have on your website, if you go to Ellen Roar, R-O-H-R slash FQC, I think you have either a document or something on there that you can download.
Tyler Martin: I hope so.
Ellen Rohr: Yeah.
Tyler Martin: I tested it last night. Let me make sure it’s still…
Ellen Rohr: Yeah, you still have it. I’m checking it right now. Yeah, it’s still there.
Tyler Martin: Okay, good.
Ellen Rohr: So yeah, Ellen Roar, R-O-H-R, E-L-L-E-N, R-O-H-R.com forward slash FQC. and I give that away. Right on the splash page of my website, I give away a copy of Where Did the Money Go? which makes sense of a balance sheet, a profit and a lot.
Ellen Rohr: I wrote that book 20 something years ago, crazy. But it never changes. This is the beauty of accounting. Still completely valid since the 1400s if it hasn’t changed. So these basics, just like nobody knows this stuff. I know this is a big part of your life too, Tyler,
Ellen Rohr: but nobody was born with an understanding of a balance sheet or a profit loss. Everybody learns it. And I recommend, I mean, if there’s an action item from this podcast, sit yourself down with somebody who knows better or at least get the book and get started and then sit
Ellen Rohr: with your accountant. And if your accountant doesn’t want to sit with you, find an accountant who will, right? And go line by line and just demystify what you’re looking at. Have Tyler give you a hand, call him up, see what his services will do for you.
Tyler Martin: And yeah, you know, it’s your money. is I don’t think it’s optional to say, oh, I let someone else handle the money if you’re the owner. You got to pay attention. I had a guy, Brent Garrett, on my podcast two weeks ago. And he was coaching.
Tyler Martin: He was going all around the country coaching, but he also had a plumbing business. And he came back to his plumbing business one day and he’s a million dollars in debt. Bills aren’t being paid. And it just got out of hand. He basically handed his financials over to someone
Tyler Martin: and just assumed it would all get taken care of and went off and did his coaching. and almost went bankrupt. He got out of it. I mean, he was able to get around the curve, but there’s, you know, sometimes I think as owners,
Tyler Martin: because we don’t understand the numbers, we kind of put our head in the sand. And sadly, a lot of people in my profession and your profession, they make it sound a lot more complicated than it needs to be. Like it’s some secret sauce that we’re doing.
Tyler Martin: And that scares the owners even more that they believe it’s so hard to understand. And so the thing I really love about you and your books is your whole concept is about just making it approachable and understandable. And I think if all of us did that, and maybe with AI, it’s a little easier nowadays,
Tyler Martin: it would be less intimidating for ownership and for people trying to run a business is my belief.
Ellen Rohr: Well, and it is possible, but not everyone will do it. And like we were saying before we started to, I throw seeds on stony ground all the time. There’s nothing about the financials, like you said, that is mysterious. It’s just that you don’t know it.
Ellen Rohr: It’s all knowable. And it’s not an infinite course of study. Like you can learn 90% of what is out there to be known and run your company on that forever. And you know what? Mark Popp is a really good example of that. Not every one of my clients has been as successful as Mark.
Ellen Rohr: But listen, Mark came so far. This kid, when Al found him, he had his head on his desk, you know, burned out, crispy critter. doing a lot of, we call it cheap white and chrome, new construction, you know, for peanuts. And he had a lot of guys working for him and he completely overhauled his company,
Ellen Rohr: turned it into a service company, you know, over, over, you know, worked over all the operations, team members and everything. He did a lot of brave things. Not the average bear may not be willing to do it. And so I’m so proud of him. And I’m so proud of, again, just, you know,
Ellen Rohr: making a go of a small business, the odds are not in your favor still. Like, and you’re saying even your listeners, three to 5 million, 15 million in sales, the average plumbing company is three or fewer trucks. 80% of all plumbing companies are three or fewer trucks. And of them, most of
Ellen Rohr: them are one man bands. Nothing wrong with that, but the opportunity to grow for anyone is there in every market and not everybody’s going to make it, but it might as well be you.
Tyler Martin: Yeah, I love it. Okay. Hey, got to wrap up. We mentioned your website, Ellen Rohr, R-O-H-R. I’ll, of course, put it in the show notes. Service Titan, we can’t not mention that.
48:24Clean up your books before you migrate to ServiceTitan
Tyler Martin: Love Service Titan. What a great CRM. I probably have 15 clients on it. It’s definitely got its complexity to it. There’s no doubt about that. But if you get the right people around you to help you support it, man, the data. In fact, a client recently moved to it from another product.
Tyler Martin: I’m not going to mention. That’s irrelevant. But moved to it. and he was literally touching his estimate invoice process probably 15 times, I’m not kidding, from multiple people from beginning to end. We were talking the other day and he’s like, man, I’ve got it down.
Tyler Martin: Like we’re now, we’re just doing one step process and it’s so much better. And so if you get the, but it’s important, you gotta get the right people on you because sometimes service site can bring, sometimes people like they have the wrong perception of it
Tyler Martin: because they just don’t have the right people supporting them to get it where they need it to be to help their business.
Ellen Rohr: Hey, one other thing on that too, and you can help it. If you’ve made a mess of your accounting system and now you’re going to add Service Titan to it, you’re going to have 10 times the mess. So get your book straightened up
Ellen Rohr: and Tyler can help you with this. That’ll make all the difference.
Tyler Martin: This is a great story, Ellen, just because I think it’s important for anybody considering any system change. We actually spent six months prior to signing on with you guys with Service Titan because we wanted to make sure operationally we could handle it. We had the right people.
Tyler Martin: We were thinking about, we did our best. I mean, not everything did we see with a crystal ball because we did miss a couple of things and it was a little rocky for a couple of weeks. But once everything settled, we’re great now.
Tyler Martin: But my point is we really thought through. We didn’t just all of a sudden make a change. And I think that’s part of having a successful migration too.
Ellen Rohr: Here, here, for sure. To have me back, I think you’re terrific. Love, love, love.
Tyler Martin: Thank you so much. Thanks for your time. Have a good one.
Ellen Rohr: Okay, I really appreciate your time.
Tyler Martin: Thanks, Tyler. Bye-bye.
Ellen Rohr: Take care. One thing I kept coming back to during this conversation with Ellen is that businesses that survive and grow are not necessarily the busiest. They’re the ones that know their numbers. We hear that a lot, know their numbers. Not because they’re accountants,
Ellen Rohr: but because they understand what the numbers are telling them. They know what jobs are profitable, where cash is going, when they need to raise prices, and they make decisions before small problems become big ones. That’s really what this podcast is about. It’s helping home service business owners build better businesses by making better decisions.
Ellen Rohr: And those decisions almost always start with understanding your financials. If that’s an area you’d like to get better at, I’d love to help. head over to ProfitAndGrit.com. Click on the cashflow scorecard section and you can take a very simple test to see where you get ranked.
Ellen Rohr: It’s really cool. It’s simple. Or if you’d rather talk about your specific situation, you could book a complimentary intro meeting with me. We’ll spend some time talking about your business, where you’re at today, where you’re trying to go and whether working together makes sense.
Ellen Rohr: Most importantly, thanks so much for listening and I’ll catch you on the next episode.
Related Episodes
- The Habits That Separate Profitable Shops From Busy Ones — Jason Noel
- Why the Lights Went Off at His Plumbing Company – Brent Garrett
- Nobody Talks About This in Home Services – Ashley Stroud
- How to Fix Your Messy Data Before It Kills Your Margins – Bernie Ollila
Tyler Martin works with owners on the numbers behind these stories: Profit & Grit CFOs.
