Unlocking Financial Success in Business with Ellen Rohr
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If your financials are a mess, a buyer will discount your company and not tell you. Like as soon as I see that the financials are a mess, there's no way that company should get top dollar for that business. Welcome to the Home Service Expert, where each week Tommy chats with world-class entrepreneurs and experts in various fields like marketing, sales, hiring, and leadership to find out what's really behind their success in business.

Now, your host, the home service millionaire, Tommy Mello.

Before we get started, I wanted to share two important things with you. First, I want you to implement what you learned today. To do that, you'll have to take a lot of notes, but I also want you to fully concentrate on the interview. So I asked the team to take notes for you. Just text NOTES to 888-526-1299. That's 888-526-1299. And you'll receive a link to download the notes from today's episode.

Also, if you haven't got your copy of my newest book, Elevate, please go check it out. I'll share with you how I attracted and developed a winning team that helped me build a $200 million company in

and 22 states. Just go to elevateandwin.com forward slash podcast to get your copy. Now let's go back into the interview. All right, guys, welcome back to the Home Service Expert. Today is an awesome day because I have a wonderful lady. She comes on the podcast quite a bit. She's a big mentor of mine. She came into A1 and helped me out a ton with her sister, Gail. I got the amazing Ellen Rohr on the Home Service Expert podcast today.

Hey, I love you so much, Tommy. I love being here. And you know, you feel like my son. I have a son and I know what it feels like. And you're another one. You're a bonus. You're a bonus boy to me. So thanks so much. I mean, we go way back. I'll leave. He's the one who said, you got to meet my boy, Tommy. And I'm like, okay. And then I meet you and I'm like, nope, no, not having it. I

I think you were more that way against Adam in the beginning. You know, it was just like I kind of had it up to here with dragging people through the process. I think it was, you know how you always project what you're dealing with? And when I met you, I just thought, I can't take someone who I have to convince or drag through or whatever.

And you weren't like that at all. So Al made me go back in there and we took off like a rocket and Adam was great and you were great. It was, you know, really, I think me just dealing with the fact that it gets very frustrating. You might relate to this too. When you share...

tips. Someone asks your opinion and you share tips and strategies and tactics, or you've done something and then you just get resistance. And you're like, well, then why am I here? Like, what's the point of all this? So I think that's where I was at that point. And I've been there many times in my life. And I try to just keep going in because, you know, Tommy, once upon a time when my mentor, Frank Blau, tried to, he called it, make me take the medicine.

I resisted too. I resisted too. Like, well, that won't work. My guys won't buy it. My customers won't do it. I can't raise my, I did all those things myself. So over the years, I hope I've mellowed a little bit, but sometimes I get a little frustrated. It is frustrating because accounting and finances is very hard to learn. You know, it comes second nature to you because you've been in the dog fight, but you know, Al came up to me several times in our relationship and said, listen,

I may not be able to work with you because I don't want you studying anybody else's stuff. Not till you get your manuals done. Not till we dial in your org chart and your depth chart. He's like, you know, I love that you're a learner, but there's information overload too. And he goes, let's get these things dialed in and then I'll be open to hearing other ideas. So Al, who says, who has a cojones to say that? Oh, he doesn't care. He, he, he will just tell me like it is. That's what we know. So,

- He's so great. And he's been, you know, not just such a great mentor to us, but our best friend. And he's disgustingly right. Al, I know you'll be listening. You're always right. So I didn't come to it naturally though. Like I am kind of dyslexic. I have a lot of energy. I'm easily distracted, things you can relate to, right? - Yeah, all of us. - And back in the day,

We didn't diagnose us. I was just considered kind of a low attention span. Let's say that. But that really like I wasn't geared up to look at numbers. I still don't see things quite right. Columns blow my mind. Spreadsheets are hard. I use a ruler or color code stuff. I mean, it still doesn't come easy to me. But what I found is if I can learn it,

Literally anybody could. When the compelling why is there, which in my case was I was so tired of being broke. I didn't want to do this anymore. I just had to fix it or I would go out in flames. Like I was okay going out of business, but I finally just said, okay,

Frank was the guy at the time. I'll learn how to read a balance sheet, profit and loss. Thanks for your help. I'll stick with it. Had a couple of great accountants. I don't know how I lucked out with that. Gail was a huge help to me. And once the light bulb started going on for me, I was like,

I was like born again. How does not everybody know this? This is my life's work now. That's the impact it had on me because the balance sheet and the profit loss, it's hard until you realize there's a technology to it. It's based on an equation. It's not a limitless course of study. It is something you can figure out. And if you're a plumber and you know drains and vents, that's an equation.

For every action, there's a reaction. These are equations. And that's all we're dealing with here. And that it really like my whole world opened up and I've been on this journey ever since trying to communicate in ways that people can get it, learn it. And we're still doing that right now. Yeah, no, it's a struggle because we go through this firefight of you got to get the right brand. You got to renegotiate with your vendors. I want to, you know, I was with Ken Goodrich recently and back in the day he was having a conversation with

Jim, who you worked with. Abrams. Jim Abrams. Yeah. And it's interesting. I want to hear your thoughts on this because Ken said there's one thing. And he said, by the way, there were times in my life where he rubbed me the wrong way. So regardless of the person that just this notion, he said, Tommy, the things that he told me were be the highest price and pay the most.

that's something that stuck with me. Be the highest price and pay the most to get the talent to keep the talent. What are your thoughts? Because this is where it comes in. Your whole, if I could shorten your lecture, it's raise your prices, raise your quality. Charge more to make a profit. I mean, where did the money go? All these things kind of talk about the same thing. So what are your thoughts?

Just to give props to Jim Abrams, he's a tough guy. There are moments, right? But what I learned about all my mentors is that take what you need and leave the rest, like an AA meeting. Pull it through your filter.

to Al's point, you can listen to multiple voices, but at some point you have to pull it through your own filter and discard that which does not align. Right. And, but Jim Abrams taught me so many things that of all the mentors I have, probably the voice in my head the most is Al of course, and Jim, because Jim was so meat and potatoes. One thing he also told me, those are things are both right. You have to be the highest price and you have to pay your people better than anybody else. I want to get into that a little bit more.

because there's more to that than just paying them the most a whole lot more, but we can, we can come back to that. But another thing that Jim Abrams taught me, and this is so good, so deceptively good couple things. One is make money with the sales you have today.

make money with the sales you have today. So that means if you have a goal to do 20,000 this month or 120,000, whatever, that's your budget, that's your goal. And you only have 60,000 this month.

Don't spend more than $59,999. Don't lose money in a month. And this is such a cool concept. If you're paying attention week by week, which is my standard for the balance sheet and the profit and loss, pretty darn good. Every week, it's not impossible. In fact, it's easier to do it this way. But you run the balance sheet and the profit and loss, you look at them weekly and you're narrowing in on it like the third week.

don't lose money. So if you, and there's a little leapfrog there, right? Like some of the payroll may be from the previous month. There's a little bit of leapfrog, but if every month, whatever you book for sales and whatever you book for expenses, if it's a positive number, you don't lose money for the year. You're okay. Like just get there. So if the three main KPIs, and this is all Jim Abrams are sales profits, EBITDA and cash.

First thing you got to do is sell, sell, sell, sell, sell, sell, sell, sell, sell. Even if it's messy, even if you're going to just eat it, but just get the enough heft up there.

that now you can work on profit. You got to get enough in sales to cover basic costs, and then you can work on profit. And then you take those sales in cash and you pay attention to cash. So sales profits in cash, because if you operated a loss for too long, you have to go into debt. There's no other mathematical outcome.

If you operated a loss to the point where you run out of cash, that's your only option. Business is really easy when you think of it like this. And this is why Jim Abrams is so brilliant. It's just he focuses on the things that really matter, sales, profits, and cash. And let's get those straightened out. And you won't know where you are unless you understand the balance sheet and the profit loss. This is what changed my life. Yeah, you know, I'm fortunate that I...

I'm in a demand driven business that is not super seasonal. It's not super seasonal. So I see specifically HVAC, which is a great industry. There's a few months where they'll go at a negative, but it doesn't need to be that way. You know what business we want to talk about this too. Like if you were to buy a business, I'm all about making things easy. I tell you what I wouldn't buy. I never say never.

but what I'm not looking for is an HVAC business. And you know why? They're so good. Those guys are so good anymore. Like to be able to outspend, outthink, you talk about it in your blogs. These guys are so good, so big.

And this is why I love drains at Zoom Drain. The drain empire, gosh, we can take them. We can literally take anybody in any market. I feel like I better move faster because somebody else is going to figure that out. And power washing. I love what Jared Williams is doing. These kind of micro niches, there is a place to just kill it. Landscapers. My landscaper is good, but I am...

I told them, I'm going to help you become great because you got the right stuff here, but you're good and you're crushing it. If you get great, you're there's the sky's the limit for you because the bar is so low in that industry overall. Does this make sense? Yeah. Let's start here. So we'll start with me and you are both going to invest in an industry. I would say my first lesson would be

I'm going to look at the market cap of the business and I'm going to say discretionary versus non-discretionary income, which power washing is discretionary, just like epoxy floors. So I'd want to be something where when it breaks, you have to get it done. You got a broken pipe, whatever that drains, you know, whatever it is, your garage door is busted.

I would make sure that I can make it through a really nasty recession. And that's by being non-discretionary income. How would you, and that's just one thing, but I want to go back and forth here. Yeah. Well, I love that. I love that too. So there'd be a couple of things we'd check off our list, right? One is, are there guys killing it in the market already? Do I want to go up against those guys? Or could I do so in a different way? Like you could go against Walmart, but you would have to go to,

a Trader Joe's model. Like you can't go be Walmart. You'd have to be something that people don't like about Walmart and find that. So there may be a way to go into those markets like that. But I like what you say about non-discretionary. I mean, our close rate for drains, shouldn't it be 95%? Who's gonna turn the drain cleaner away?

Like what are we doing that would make someone turn you away if you showed up and there's a clogged drain in your house? That's like, to me, drains are so wonderful because of the ultimate need not want service. You got to get that done.

So that would be one of the tips. And the other would be, you know, just like the big guys, if you're buying a company, learned a lot at when I was working with Benjamin Franklin and at Zoom Drain and with all the clients I've worked with over the years, including you, I've been either involved in or tangentially aware of a lot of acquisitions, either companies selling, right, or buying. And that is a really great way to grow your business. So

So I would also look at, I'd look at their financials. But here's the thing, Tommy, if I were buying a company and the financials are a mess, I wouldn't fix their financials before I bought them.

I would think that's a way I can add value to this company. Is that making sense? So like anybody who's buying a company is looking like, how do I get back what I paid? Where's my ROI for buying this company? And one way is to understand the financials well enough to think, could I fix this company's financials and scorekeeping and then take it another quantum leap forward?

So I would look at the financials and I'd be able to tell if they were good or bad, but I would not necessarily fix them before I bought the company. So the tip here, dear listener, is if your financials are a mess, a buyer will discount your company and not tell you.

Like as soon as I see that the financials are a mess, there's no way that company should get top dollar for that business. It's like, you see where I'm going? That's why we do audited financials now. I mean, if you're,

We're involved with private equity, as you know, but you have to get audited financials. Yeah, but that's a different game than what I'm talking about now. No, no, no, you're right, you're right. But I'm saying that, you know, I talk to a lot of people and they're like, look, at least reviewed financials. Like, you should have that because if you ever need to get money, like if you could put a buck in and take a buck 25 out, you should put as many dollars in that as possible. So I always say, get the money when you don't need it. Get on accrual accounting, not cash, eventually. Mm-hmm.

And get audited financials because you cannot get a loan from the bank with poor financials. It doesn't work like that. So that's advice to the person who's trying to sell his company? That would be advice for anybody that – look, if you wanted to raise capital to buy companies, you would need great financials. Now, look –

I want to just get back to picking the company here. There's home improvement and then there's home service. Home improvement, I'm amazed. Kitchen remodelers, pool companies, these people could go windows. They don't have any leads. They go out and get it like they're door knocking. They're going to events. They're doing outbound calls. And I'm trying to learn that piece of the business because I think garage doors fall into both home service and home improvement, depending on if you're selling a new door or not.

But I'd be curious to see. So you do a deal, obviously. The upside of any person going to do a deal, including private equity, is there's more room to grow. We've got to grow this thing. We've got to find more profit. We've got to expand. We've got to do greenfield, organic, buy and build. So what would be the size you – and I know this is relative, but let's just pretend it's $10 million, 10%. So there's a million to profit. You'd probably want to buy in at a better multiple. And what would be your first few moves? Yeah.

Well, I think when you go to 10 million, though, let's talk about it in that gradient, because there's a spectrum of buying companies. And one end of the spectrum is you grab their phone number and their website. They go out of business. They're old. They die. Stuff happens, and that is a tuck in. And then the next notch on this spectrum, point on the spectrum might be,

a young person who started their own company. It sucks. They didn't know what they were getting into. And now that person wants to work for you, brings their calls in, you give them 5% of sales, 10% of sales, plus a great job. And you move on. Like, so it goes all the way over to like the 10 million over is over here. There you have to have audited financials. We're talking about EBITDA for a minute. Let's just consider a company with no EBITDA.

Like these are the ones that everybody's looking at that $10 million guy, but there's a lot of opportunity for the one, two, $3 million guy. Maybe a few of them, you identify the market area and the niche, and then you can get a few of them. This is what Al Levy taught me a lot about these napkin deals where this person doesn't have any

equity partners coming and knocking on their door, but they're going to exit their company. Al calls them the D's. They're going to die. They're in debt up to their eyeballs. They're getting divorced. They're sick, diseased. Those things change everything. And there's so much opportunity for that. I'm interested in that. Now I would invest with other partners who know what they're doing on more equity, you know, on the 10 million or bigger companies for sure.

But if you were to grow a company from Greenfield, I would be looking at those. In addition to marketing and branding and Dan Antonelli and everything else you need to do, I'd be looking at those tuck-ins right out of the gate. For talent, people who want, you can't buy people, that's slavery. But for talent, someone who might want to come work with you, as well as the ringing phone, the active website, the Facebook pages that are delivering, those kinds of things, there's so much opportunity right there.

Yeah, I agree. Those probably have crappy books. Now, I just I know I'm bouncing around. So help me stay on track, which is an interesting thing for me to say. The two of us trying to stay on track here. There you go. No, it's good. Look, ultimately, I want to work through these things. We got a still a lot to talk about, but I want to point something out to you. Darius Libers and I were at dinner about a year ago.

And, you know, he's a really good manager. I mean, he's a smart leader. And he goes, Tommy, if I buy a business under $5 million of EBITDA, I have to remove the owner because they are literally the sticking point. He's like, they think their way is better. So once you start getting to a certain threshold, they're very good operators. They've seen 2009. They've seen COVID. They keep them. But I've noticed, like in Cortex and private equity, they're like,

A small deal takes almost as much time as a big deal. It just depends on how much money you want working. You can make massive improvements on these small companies by moving a few things. But then again, I guess you got to ask yourself, how much is your time worth? Because let's say you take a $2 million company. Don't get me wrong. You get it to 4 million. You get it to 20%. Now you got $800,000. Maybe you get a 7X. It's real money. It's a $5 million. It's a great return. Yeah.

But, you know, like Apex, KKR, Blackstone, they won't buy small deals because they got to put their money to work. Yeah.

But you're in rarefied air now. Most of your listeners are not there. And so like the way to get there is this path. And you also then keep your teeth on deals that aren't as risky, aren't as scary, don't involve so many lawyers or deal. Like there's where I'm going with this is kind of the, this end of the spectrum. There's opportunity all along it, but your personal interest right now, I might suggest is like,

this world that's opened up to you the last few years. It's crazy. And you're thinking it's crazy to get bigger and bigger and bigger. You're looking right now. And you said, look, I might be getting involved with some stuff. And you said landscaping, you love drains. Obviously you're, you're involved with zoom drains, but what, what are the ones out there that you, that excite you? People ask me this question all the time. I'm just curious what yours are.

I think any home service business where you knock on a door, I'll tell you, there's a big movement right now for home improvement versus home service. I'm still very cautious about home improvement. I like base hits and doubles. I don't like home run jobs.

So unless you're a big company buying a new construction company or especially now with like what material prices are doing and zoom drain other than the trucks and the jetter, which will probably see price increases. It's a labor only job. It's a skilled labor job. It's a lot less volatile than a job with garage doors or something that depends on metal. So those are some thoughts. It also though, and you've talked about this before,

If you don't have materials, you eliminate that variable. Materials allow you to leverage the labor hour. So for the same labor hours, you can sell big tickets in the same amount of time, which is pretty sexy, but it's a little more volatile.

But overall, I like base hits and doubles and not, you know, I think that unless you're big, unless you're really good at financials, operations, at marketing, moving into

new construction or big install work, I've seen so much heartbreak there. Now, Service Titan is a big proponent of expanding into the commercial and construction arena. And the primary reason is that there's companies who are doing it and doing it well, and Service Titan wants to service them. I wouldn't take it as an overall endorsement that you too should become a new construction contractor. Do you see the difference there?

Yeah, I know. And I do. And it's funny because I wrote down on my sheet big tickets because I'd look and say non-discretionary and big tickets. I got to run 23,000 jobs a month. And I'm proud that we're able to do this. And my team's amazing. But, you know, if I was running a fraction of that and roofing in solar and solar is too subsidized, but in HVAC, plumbing, electrical, there's a lot of things, you know, right now with this race to AI thing.

I heard this stat come out that they need 500,000 electricians and a ton of commercial HVAC to build the grid, this AI grid. And I just think there's a lot of opportunities, man. I love the world right now. I love the game that we're playing. And, uh,

Yeah. I mean, it sounds like, so would you do a lot of deals now that you're thinking about going in on some stuff? Are you looking for a couple to really focus on? Are you going to say, look, I'm just going to basically consult them and come in and try to get 20 to 30%? Where do you see the best opportunity?

for me, and this might be, you know, this might spark some interest for other folks. I like working with the team. So I'm going to look for folks who are doing deals and then I can be the Lieutenant, not the general. This is something I've learned about myself over the years. You're a general, I'm a Lieutenant. Like that. I like, if there's no leader in a situation, like if we're on a lifeboat or something, if no one's stepping up, I'll step up.

I can't be without a leader, but I really prefer to be in a situation where there's a team and there's someone whose vision I love. And I like to align myself with that person. Now that's because I've become self-aware over many, many years. I'm an older person. So one of the things to consider as you do this is, do you want to be the CEO? Do you want to be the king or the queen? I have been, and I've had

tremendous successes in my life but I'm also like yeah and let somebody else do that where the heavy heavy uh heavy is the head who wears the crown I like to support and facilitate and work with other people so that's something that I'm looking for are great partners I'll never be the CEO of another company I like what Warren Buffett says I I'm still enjoying this path that I'm on but uh

I started to realize Richard Branson, he doesn't, he's not the CEO of any of his companies. He just hires the best and lets them build a team, you know? And I think that's super powerful. I know. And there's, and there's people who have that itch to scratch, let them scratch it. Yeah. Like, I don't really, I don't feel that itch.

You know, like it is. It's a lot of work, a lot of stress. Well, it is. And there's there's adventures to be had. I like supporting people. I like mentoring. I like doing what I do. And the piece of it that I can help with is this financial literacy piece. I'll do that. Love it. Well, I wanted to talk about your work in on the signature financials. And, you know, obviously we work together for a long time and I know the known financial position, the money in the bank.

I'm not doing it the same way we did, although I get a whole report daily and weekly. I know what's in the account. I took what you gave and I modified it to our business a little bit, but it's still the basic things. Like I know my month by the second of the next month, which is crazy, but we've got FP&A people. We've got a big finance department. It's not big, but it's bigger than it was when you were here. We were really...

not set up for the size business we were. Well, you upgraded too. Like, I mean, and it doesn't make people worth less just because, you know, they got you to where you are, but then you need someone who knows more. You know, you've just been willing to upgrade your team as you go. Hey guys, hope you're enjoying today's episode. Quick reminder, you only have a few days left to grab your Freedom 2025 early bird ticket before the $5,246 in bonuses and 20% VIP discount go away.

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Now back to the episode. Top grading. We got a meeting next week in Milwaukee. And, you know, they called it the Keeper's Test at Netflix. And the question I have for you, Ellen, is, you know, this is basically if you were a manager, is who would you be willing to bet the future of your family's life on? And if...

You're not. Then why are they still here? I mean, trust me, there are people that don't sell a ton, but they show up every day. They want to learn. They're eager. They come with a smile. I'll never give up on those people. And then there's top performers that are cancer. So the Keeper's Test is something I think everybody should do. And, you know, sometimes I found in my past I've kept guys –

Typically technicians that could sell well, but were cancer. And I learned the hard way that. Well, let me add to that too, because there is this very egomaniacal assumption in that I'm doing them a favor by keeping them.

that I shouldn't let go. Like why? Because that person would never be successful without you. How many times has that person left and gone on to do great things at a company that's a much better fit? Just like we're not the only path to greatness. - I think most people keep these performers. I don't think it said they don't think that. I think it said they don't like giving up the profit.

especially when you're small. But I would say there's actually in my experience, there's more of this loyalty. Well, they've been with me for 20 years. They've always shown up. But at some point, if they're not performing, and you know what? This happens a lot is when someone moves into like service manager. Now they're not in the field every day. They're at a desk and they really don't have enough to do

And so they're maybe a glorified dispatcher at this point, but they're a good person. You have to watch for that person has to either grow or go. And that can be really tough. Grow or go. I love that. You've heard of the law of the lid? The law of the lid? The law of the lid is, it's John Maxwell. What he explains is the chief, the leader, the CEO or founder,

typically becomes the threshold of where the company will grow. So the lid, think about a jar that's tiny. There could only be so much water in that. But as it grows, the lid goes up, the whole company. So my job is continuous learning and continuous improvement. And then I started taking guys like Luke.

and Leanne and all my guys to Pantheon. And we started going on shop tours together. It's so funny. What I've realized, Alan, is I was allowed to dream, but no one else was. I was allowed to get these ideas and do shop tours. And now that they're involved, they're just loving it. They got ideas. It's their ideas. And I always got to warn them. I'm like, we're not changing a lot.

We'll take one thing from each company or one thing from Pantheon. But we are very successful. So let's not rebuild the ship. It's a pretty good ship. But, you know, they're so involved now. And it doesn't need to be my ideas. In fact, if they are my ideas, I don't know if I told Al Levy this. I told somebody recently, I said, if it's my idea, it's going to fail. Because the team doesn't rally behind it. If it's their idea, they're going to run hard.

You know, you know who taught me a lot about this topic is Jack Stack, who wrote The Great Game of Business. I don't know if you've read it. Yeah, you told me about it. I read it. Yeah. And I just love him so much. What I've learned over the years, when you say shop tours, go to see someone shop, go once a month. Wyatt Hepworth's story is the shop tour. He and Dustin took off on the Good to Great Road Trip and just went to see some shops.

and blow their minds. They could do it. We can do it. You know, that kind of thing after being in business for 50 years, 20 years under his helm and why it starts these shop visits changes everything. Shop visits, ride along side by side. You got to walk among the troops to see what's actually happening and where the problems are. And what I found over and over again is your team knows what's wrong and they will help fix it.

Sometimes they don't have the, either the house dialed in or the construct. This is where planning power comes in. The construct, how to run a project to get a project done. But, oh, I'm getting goosebumps when you connect the dots with this, the great idea and planning power. Now these guys are just taking it and run with it. It's so exciting, but you gotta spend some time. You don't gotta do anything, but I'm, you asked me on, I'm telling you what I think.

The shop tour, the ride along and the side by side are always your job. Abraham Lincoln was losing the Civil War so badly. Up to 750 people, Americans, brothers, killed each other in this horrible war. And he knew it had to end. And so what he did is he just started going to the battlefield and talking to the soldiers about their leaders.

Are we going to get this done? Do you know what you're doing? Do you know what the cause is? And this is where General Grant I'm super simplifying the story, but basically General Grant, he was considered a loser. Yeah, I don't know if it was Ulysses S. Grant. I don't know. It was I don't know. We have to fact check.

But he was drunk. He was considered by the higher ups to be a not great leader. But his men loved him and his team believed in him. And that's how we identified, okay, it's you and me. We got to end this war. And that was really a turning point. Again, I'm oversimplifying history and that's what happened.

But the inspiration is your team will know who the leaders are, what the steps that we need to take. They won't know how to do a project. So this is where planning power or EOS, Gina Wickman, Trackman, something, some formal way of then empowering whoever you go to Pantheon with and they come back with that one great idea that will turn into ether unless there's some formal project management.

Yeah, I know, 100%. Ideas go somewhere to die. And, you know, Al taught us the top five, the top 30, the top 100. And I just brought on a very, very high level. And I've been working with her at the family office. She just came on full-time as a project manager day one. And my brother-in-law, she used to work at GE under him. He managed 800 people. He goes, you know, Joan can handle 50 people in her sleep. He's like, she will hit...

She's so good. She starts out with going, what's the end goal? What's the priority? Is everybody rowing in the same direction? Because these projects at my level, they don't just live in marketing. They live in operations. They live in the finance department. There's got to be this unsiloing. And here's what happens. You'll know exactly what I'm talking about. And this is the most frustrating thing is a manager. We're in 40 markets, 22 states. They'll call the marketing team and they'll go, we need more leads.

But yet they're getting zeros. They're not getting reviews. Their conversion rate's not where it needs to be. So now I'm like, no more. I know we live, die, and breathe by our budget, and we love our budget. But in certain markets, we're not going to hit our budget. And in markets, we're going to exceed our budget. Don't worry about that, even though everybody's bonuses depends on it. If you do not have your key performance indicators dialed in, we're not going to overspend, period. That's where I'm at now.

That's what Jim Abrams meant about make money with the sales you have today. The budget is terrific.

But you've got to start living on what you're making on a monthly basis in order to survive long enough to start playing a budgeting game. And at the beginning, you really don't know. There's so much guessing that goes into a greenfield or something like that. So absolutely. If we want to get into this a little bit too, like if I was going to look at a company, big or small, I would suss out whether or not they

They know what they're doing when it comes to accounting. And can I give a couple tips about this? Because I felt like when I was getting ready for this, I thought this is what I've learned recently. And these might be some really hot tips. You're looking at a company and they give you their financials and you're like thinking, okay, are they, are they any good? Are we going to be able to, uh, uh, are we going to be able to, um,

- Fix it. - Improve them? Is it true? Like I always question, we never know if it's right unless we audit the financials, never know. But you as the owner, like Al Levy will say that ultimately there's two managerial positions you can't give up. Do you remember this one? - Marketing and the finance.

Exactly. And what he means by that doesn't mean you're not going to have a CFO or good bookkeepers or an accountant to help you with your tax strategy and all that. You'll have all that, but you manage them. If something happens with the money, they don't go to the pokey. You do. You are ultimately always responsible for the money. So adopt that stewardship, you know, lay claim to that.

I'm going to pay attention. And that's really all it takes because you can ask a lot of questions. So my tip is that when you go through a set of financials and I only look at two reports to start, if these are crap, then I don't go any further. But the balance sheet and the profit and loss, every other report is a subset, including your statement of cash flows. It's a subset. It's how these two interface. But the balance sheet and the profit loss, only two reports and everything else is a subset of that.

So you're going to go line by line, start with the balance sheet and start with cash. Is it right? How do you know it's right? And then what I would do is read the right side by side with the accountant. Or if I knew how I do it myself and I do go into the report and see when was the last time cash was reconciled. Like it says there's a date, there's a stamp. Like you can check this stuff out. And if cash is right at a company,

This is going to sound super nerdy, but if debits equals credits, if for every debit we have a credit, if cash is right and more than 90% of all transactions end up going through your cash accounts,

then half of all your transactions are right. It's a big deal for cash to be right. And if cash is wrong, if I'm buying a company, a smaller one, one that doesn't have any kind of real, right there, I can't trust the EBITDA. Like if the cash is wrong, everything else is suspect. So just knowing that cash is right

adds value if you're trying to sell your company, make sure cash is right. Or it gives you an opportunity that, hey, there might be a way I'm going to discount the purchase price of this company because it just got riskier. But there might be a way that I could add some value here by getting the financial straightened out. And you're just going to go line by line. Is AR right? AR is almost always wrong. If I were a betting man, I bet every time it's wrong. Same with AP, same with inventory. Inventory is never right. I bet it's not right at your shop.

That's how certain I am. No, it's not. You know, inventory is one of those hard things, but I'll tell you, AR, one of the big magnifying glasses we put on to the business after we transacted was why is your business 6.2% AR? When you collect the money that in there, we dug in just, you know, because these financials actually give you insights and the installers were not collecting. They said, well, the homeowners weren't home.

And how what kind of recourse do we have when the once the door is installed to collect? We can't just go repo the door. So we did a pretty good job. But this was a two year assignment. I mean, it was and now you don't get paid. You do not leave that job. You do not leave until you will not make any money on that call. Like we used to pay them if they ran the call.

well this is i'm getting excited about this because where the problems with accounting usually emanate so cash is wrong undeposited funds has never been connected you're bringing money in from the bank and from service titan and all of a sudden we have 5.8 million in undeposited funds like things like this happen but the problem

emanated at the call taker, the dispatcher, the service tech, the price book, like that flow of information. Part of the auditing is you have to be willing to look at business units and job types and are the business units pointing where you think they're going to go? And are there just a few classes or a few departments like the balance sheet and the profit loss should give you the

summary information because you get the detail from the additional reports and there's so much detail in Service Titan. I don't know. This is not going to be an appropriate conversation for you, but if you're listening, touchless journal entry integration with Service Titan, especially for a smaller company, one that isn't imminently going to private equity right this second, I'd do it in a heartbeat. I'd do it in a heartbeat because it, it,

insists that the bookkeeper, the controller, the CFO consider

that the service Titan software and the accounting software are one system. Yeah, right. They reconcile. Yeah, they wreck it because so often and this is one of the reasons why the books are so messy service Titan data is going on over here. There's a hot mess with the accounting. It hasn't been reconciled in forever and we're just driving blind and that's happening a lot. And it's the owner's job to nail it down. And it's a project.

That's what we talked about at Home Service Freedom last year. Yeah. Make it a project. Yes. You know, you're different than I am, but you've got so much more experience with financials. I know my CFO would have a field day. I would just say, look, is your service time today to accurate? And I can see that very quickly. What's your booking rate? What's your conversion rate? What's your average ticket? What's your cost per lead? Those four things are how I build the whole business. And I'd say, look, it's so simple.

You look at their cost per lead and you say, could I get more leads? And then you say, could I increase booking rate? Could I increase conversion rate and increase average ticket? If that's the case, typically you could triple the company very quickly. And then on top of that, there's arbitrage, which is my favorite word. It's on my license plate, arbitrage.

And people don't understand that. Ishmael gets mad at me. He's like, quit explaining that bull to people. It's too complicated. I'm like, it's not complicated. If you buy it for five and it's worth 10, you double that's five turns of arbitrage. You know what I mean? Now tying that together, what you just described, and it's the tech close rate, the CSR close rate, your cost per lead. And what's your opportunity job average, your average ticket.

So your average ticket conversion rate, booking rate, and cost per lead. Okay. And I'm 100% agreeing with you. Now, where your CFO will get excited is you do that and your sales, profits, and cash should go up.

And so unless those are dialed in, we won't be able to know that. And now we don't have the evidence to go to private equity. Like that's the, that's the dovetail point of your stats and the three main stats is that we've got to pull those into the biggies, which is the balance sheet and the profit and loss. And then, you know, the statement of cash flows is really just like, well, how did that profit make it through the balance sheet? So we can, um,

We can get a little more detailed there, but the importance of the stats you just talked about, those are the driving stats. Those are the ones that'll impact it. I could just say to someone, you need more sales. And I can't tell you how many times I've been given that advice, duly noted, we need more sales. But the four you just described are how you get more sales. And those are all coachable moments and they involve the frontline team.

That's it. You know, that's the connection. You're, you're helping a lot with service. So service Titan, by the way, the listeners need to understand that if you're not on service site in the home service space, there's going to be a discount given on the company. I mean, it's weird that, that like, I don't have anything against job or a house call pro or anything else, but it almost shows that,

That you're less sophisticated. It's like Service Titan is the machine that gets you a premium price. And by the way, this is what I do is I go into the company. Just real quick, I'd renegotiate with all the vendors. I'd buy absolutely all new trucks with Dan Antonelli's logos. I'd appreciate it all, you know, because there's a lot there with just culture and the perception of the clients. Oh, stop.

So true. So good. Yeah. Sorry to interrupt. Yeah. Well, then I'd go to service. There's a lot of things, a lot of pro products at service Titan. I'd get on intact because it's easier to get on that tool than wait for yourself to outgrow QuickBooks. Cause I believe that no matter what company I was invested in, I'm really good at generating leads and attracting talent. And I think that's both in the marketing realm and you know, just these fundamentals, people like, what do I do today?

And I'm like, well, I had one guy. He heard a podcast. He went and hired Dan Antonelli, spent 30 grand. And he goes, no, I don't have enough money for inventory. I go, dude, I didn't. There's an order of operations if you're broke. By the way, if you're broke today, don't quit your job. You're going to have to be working 80 hours a week. I'm sorry. It's called sweat equity. And don't go get a big loan from the SBA either because you'll lose it. You want to make these mistakes small.

Yeah. And you will work a lot, but this is another thing. The good stuff is the hard stuff. When you write the book, that's the story that goes in it. You know, backing up to Service Titan is going to add value as you go to the PE market. There's no doubt about it. Moving to Intacct, it's because that's the language spoken there. And good on Service Titan for getting there, and they deserve to.

And ARA, and you know, I'm big fans of the founders. That's why I'm here. I love them. ARA and Vahe. ARA and Vahe. When I went to the party in Glendale celebrating the IPO, did ARA tell the story of...

The days that went super smooth, like you came in at nine o'clock and things went well and everyone was happy and you went home. No, he told the stories of the day that everything fell apart and the bank was calling the loan. And this is because those are the good moments. I think there is this understanding, like what is hard? Jim Rohn says that easy is something you can do.

And if you can do it, is it one more phone call? Is it, it's usually one more phone call. It's one more relationship. It's one more connection. And none of it's that hard. Is it? Like being a single mother with nine kids, I would say that's hard.

but like some of the things that we call hard i think are just like that's really the good stuff that's the thing you'll talk about in your book that's the story you'll tell when you go public you know these are the things that make it fun i don't know i've just got a different perspective about it but i'm always looking around like that's that hard you had to add you had to put an indeed ad together oh my god how do you get through your day yeah you know what real hard is hard is uh

Last week, I went out to a client's house and their daughter is in remission of five years of cancer. She was at Ronald McDonald. And I was crying profusely. And we just we gave him the door and opener. The family. I mean, you should have seen. It's just devastating. But she's OK. I mean, thank God.

But, you know, all I pray for is I'm going to be a little bit of an older dad. But, you know, health is such an important thing. Like you go to like a third world country. We got it made, man. Like if our heart is are we going to make 150 or 200,000 this year as a business owner? It's like, you know, jealousy and envy of trying. It's the worst thing is when you look at people and I do it, too.

Robert Dirkovich or whatever, the Shark Tank guy goes, man, when I got a G4, all I wanted was a G6. When I got this, all I wanted, because comparison is the thief of all joy. And he goes, now I kind of figured out, I just want to say that everything in my power

On my deathbed. Like I went for it and I failed a lot, but I, you know, the failures are who make us. It's not when we tell this story, it's definitely try triumph over these, these they're just speed bumps. Really? It's just some people stay in that course for 10 years. I see them 10 years ago and they're still in the same place. Well, I think a lot of it comes with how we talk.

We, you know, thoughts become things. Words have power. In the beginning, there was the word and the word became flesh. And that's the end of my Bible quoting because I will burst into flames if I continue on that path. However, that is how the universe works, right? That's that we think about something. If you're going to create a garage door, somebody thinks about it and then they draw it.

And they talk about it and then they write out, then it becomes something. So when we talk about the last 20 years and how it sucked or how your mother ripped you off, or if we continue, and I believe in therapy and I think there's places to get that out, but I am not your therapist. And so I will suggest you get therapy, but when you're in my presence and my team members will attest to this.

I will say, watch your words. Don't speak into power those things that you do not want because don't we hear this over and over again of how hard it was or where we are, how long it took and the reason we're here. None of that matters because the point of power is now. Jim Abrams' partner was John Young and John Young taught me something really powerful. He said, if you're going this way and you want to go this way,

All you have to do is do that. It's just one, it's like just one step. It's not from there to there. It's just one step. And if you're really, really clear on what you want, maybe it's your first million, maybe it's 10 million, maybe you wanna buy companies, maybe you wanna sell your own.

The clearer you are, this is where Jim Abrams geniuses. I tell you this, I would never bet against Jim Abrams because Jim Abrams taught me the clarity, the power of intention. He does what he's going to do and it may take a different how, but by God, he will get there. And you have that, you have that you're getting clearer and, and why not just for the game of it, even if you fail,

Just for the game of like, this is the vision and who wants to go on this journey with me? That's worth, that's worth thinking about what is it that you really, really want. And then speaking of that. Optimistically, the way we talk to ourselves matters. I always find a way to say yes on a lot of things. And so many people, you know, my buddy Joe Paul says it's got to be elf, easy, lucrative and fun. Nothing's easy, but you know, I was on a podcast. Easy is something you can do.

I was just on a podcast with a guy. His name's Ivan. He started BNI 40 years ago. Oh, I know him. I met him with Howard Partridge. Yeah. He's amazing. Yes. Phenomenal. Okay. And he goes, let me leave you with this, Tommy. He said, and I believe in this and I don't think this is authentic to him, but he said, you don't need to do a thousand things. Great. When you look at business, sometimes we think we need to do a thousand things. Great. He goes, you need to do five things a thousand times. Great.

But you don't need – like if you get good at the call center, and I go back to my stuff, you knock on the door, you earn your business. You earn the client's business. You make offers. You know, what should we do, Joe? You know, get the right offers out there. And you just learn a lead gen. I'm hearing that people are not getting good leads right now. Yeah.

Not every industry, not every company. I mean, you know, I talked to Aaron Gaynor this week and he's murdering it. But there's a lot of people that there's a lot of uncertainty in the air. And they always go, I need more leads. I'm like, your booking rate better be through the roof. You better be calling customers back. Zero abandonment rate, zero cancellation rate. You know, do more with what you got first before you pay for more leads. Yeah.

Well, when we get a bad lead, who would call a drain cleaner if they didn't need one? Who would ever pick up? Who would search it? I'd rather slit my throat and I'm in the business than deal with a drain problem today. No one wants to call an HVAC company. So if they've called,

There's something there. Now you may not be able to help that person, but it's a chance to practice. And there are shops, there are technicians, God bless them, who look at every opportunity as a chance to practice their craft.

I'll go. Warranty calls? I'll go. The best calls can be warranty calls. Now you did what you said you were going to do. Oh my God. And there's just, there should, the close rates should be minuscule. The dog got out and the customer went after the dog. And so I didn't get to sale. Like that should be the only reason. But when you ride along, what you realize is first off,

techs often don't know why they're bad and i want to compliment who was the guy on ishmael's mastermind i was on one day and he was the star and i was listening in and he was so good and he's your trainer is it mike or matt who's like the you're talking about brian burton oh no john no john yeah john is one of my trainers yeah john john was on ishmael's mastermind and i'm going back a

everything he said, just, he's a guy who has refined his craft. Now you could aspire to be that good, but you could be 80% of good that John is and still close 95% of all your calls. He was just so like when you ride along, when you go to a shop

Don't always just talk to the owners. Here's another tip I wrote down. Ride along with the tech and watch him. What's he saying? What's he doing? So often they don't say a lot. I know some really great techs who are really quite introverted. Customer talks. They have a lot of confidence in their technical skills. And then they say, how would you like me to proceed? And they shut up.

Customer thinks about it for a while and says, let's go with the gold grandiose premium platinum package. And they go, great, you've made a good decision. Here's what happens next. I mean, it doesn't have to be that complicated. Now, John was so good because he wouldn't use all those tools if he didn't need to. A guy came to my office.

A guy came to my door, knocking on doors, which I love. Somebody going to knock on the door. I'm going to be nice to him. Knocks on my door. I open up and there's two, two kids and they're looking at each other. Like, are you going to go? I'm going to go. And I'm like, oh, I can't wait to see what happens here. So the one kid, you know, gets brave and he says, you know, we're going to wash your windows. And Barb signed up. My neighbor signed up. I'm already, Barb is the best person in the world. If she signed up like that was testimonial like that, I'm already like, okay, windows washed. Yeah. My other guy, wasn't that great? Let me do it.

I'll say yes. And then I said, yeah, when are you going to do Barb's Tuesday? Okay, you could stay and do mine. And then he started talking about price. And I said, I'm going to tell you something that will change your life. I've sold millions of dollars of intangible assets in my life. Here's something. When your customer says yes, stop talking. Yeah. Yeah. No, that's you. You can undo it. You can undo it.

You can undo it. And that's where John was so good because he's reading that. Why is that person saying that now? Maybe I should ask him a question or they said, yes. Okay, great. Here's what happens next. I'll let you know. How would you like text or email text? Great. And the whole time I'm on the phone, I'm on the phone with Howard Bartridge thinking, oh, I shouldn't have put it on mute. He would love this conversation right now. But this is like, you can get guys good

If you have a system, if you know the stats, and then you engage them in why they would want to be good. And I think that's one of the things that A1 that I see when I go down to your shop is that the meetings

you have a lot of communication that happens on the tech, on the trainer, on the service manager level. Like it's not just people coming to hear from Tommy Mello. They can get you on stage or in podcasts, but that moment where, that's why Pantheon is so great. Bring your team. How many people do you bring to Pantheon? - 20.

20 people. So you can talk to Tommy. Of course you can. But I would find John. I'd talk to John at Pantheon. I'd talk to the, you know, who's in charge of the call. Talk to the people actually doing the work every day at a company that's crushing it. And you're going to come up with that one idea that you can go home and pitch your boss on. You know, I got it.

I'll go ahead. Oh, are we over time? I love you so much. We're going to close out here. I just wanted to tell you one thing. I interview a guy each week, one of the top performers, and he came up with this line and it's, you know, the garage door is the number one ROI in the home. It is. It's 194%. So when you ask me how much is a new garage door, his response is, it just depends on how much you want your house to go up in value.

And it's been working so good. So the power of the team of 500 guys out there learning from each other and trying new things and then sharing it with the group is so powerful. So Ellen, let's just, let's close out here. So we've got Signature Financials coming out. We've got Pantheon. We've got some stuff in Australia. Talk to me about what's coming. Yep, yep, yep. Pantheon, Tommy, thanks for bringing up Pantheon. You're such a great...

ambassador for your super ambassador for Service Titan. And it's because you're just a great person for Service Titan to work with. I'm now their brand and brand and marketing lead, which means I'm in charge of setting up this brand ambassador program, shining a light on people in the trades who are doing really cool things and who have the personality to share their thoughts, their visions. And so I was happy to be able to reconnect with you in this role. Like, yay, Tommy can be on my

team and it's been really fun to uh to get to visit with you along the lines i know we're are you present you're presenting it pam yeah yeah i think me and uh hoffman are doing something actually

Oh, fun. Chris Hoffman? Yeah. Oh, what a company. What a guy. What a family. They're absolutely amazing. So why would you come to Pantheon? This is my endorsement of Pantheon. I have been, I'm old. I've been to thousands of trade shows. This is the one. This is the gold standard. You're going to meet people, I think 5,000, 6,000 people are going to be there, play

Players are going to be there, you know, folks who can help you get to the next level and you're going to have fun and you're going to learn stuff. And certainly you'll get a good look at the software, how to use it better. Bring your whole team because you can divide and conquer. I love Pantheon. I'm super excited to be there. And I can't wait to give you a big hug when we see each other there.

It is, you know, my first year was 2017, 2016, 2017 first Pantheon. I met Tom Howard. He had his backpack on it. I met all the guys. I met all the guys that buddies with, I got introduced to Ken Goodrich. I met Ken Haynes. I Darius livers was speaking. And I don't think people understand that community and what, what you can do with it. If you're, if you treat them right, they'll give you everything, including myself. Um,

Did you want to just real quick for those Australian listeners?

We're going to come to Australia. I don't have all the details yet, but hang tight. That's what I'm going to say. Hang tight. And Tommy, you and I will let our Australian friends know the details of our adventures in Australia. But you have business there and you're going and I really want to leverage that opportunity. Yeah. We'll teach all of our friends, all the down under friends. What's up? Yeah. I love them so much.

And then signature. They swear down there. I love that. Signature, the signature financials. What's, do you want to just give a brief overview and then we'll wrap it up? Well, you know, you said moments ago that you don't have to do a thousand things, right? This is what Ivan said. You just have to do a few things, right? That's really Al Levy's concept with the,

seven power contractor. There's seven areas of your business. And if you just do the basics in each of these areas, you got a good chance of being very, very successful and you're evidence of that. So with Helena and Xavier and your team, what we're developing is Al Levy's seven power construct, and it's called the Signature Power System, I think.

Now, Al always deferred to me on the financial piece, and that's something I'll do the rest of my life. So I put together a program. We're going to be launching it this summer where you can learn your asset from your elbow, financial basics. And they did such a nice job with that product. And then Al and I are going to connect to do sales coaching power, which is combining

a better way to pay your team, simple accounting methods for making sure they trust and believe you when their paycheck comes out, having it be productivity based, some kind of compensation program that rewards the right stuff.

as well as then how do we keep score with the guys, with service Titan, with job costing, with those great features that we have at our fingertips now with service Titan, it's going to be really exciting. So thanks. I'm so happy. Thank you for asking me to play. I love your team. I love you. I love you too. And let's do this again. I got 20 things we didn't even talk about here. We're great. No, I'm looking forward to seeing you and you have a fantastic day. I appreciate your time today. All right. I love you. Bye guys. Thanks.

Hey there, thanks for tuning into the podcast today. Before I let you go, I want to let everybody know that Elevate is out and ready to buy. I can share with you how I attracted a winning team of over 700 employees in over 20 states. The insights in this book are powerful and can be applied to any business or organization. It's a real game changer for anyone looking to build and develop a high-performing team like over here at A1 Garage Door Service.

So if you want to learn the secrets that helped me transfer my team from stealing the toilet paper to a group of 700 plus employees rowing in the same direction, head over to elevateandwin.com forward slash podcast and grab a copy of the book. Thanks again for listening and we'll catch up with you next time on the podcast.