What does it take to scale a $30M+ home service business? Ron Weatherly shares his journey and lessons learned from scaling his foundation repair and crawlspace encapsulation company and exiting to a private-equity-backed company rolling up operators. This candid conversation delves into the strategies, challenges, and key decisions that fueled Ron’s growth and success. From navigating the complexities of scaling operations to assembling a winning team and leveraging systems like EOS, this episode offers a behind-the-scenes look at what it took.
—
Watch the episode here
Listen to the podcast here
Lessons From Scaling A $30M+ Home Service Business And Exiting To A Roll-Up Buyer With Ron Weatherly
Welcome back to the show. It’s been a while and I couldn’t think of a better person. I genuinely mean that to come back on. Ron Weatherly is joining me. Ron built a big ass home service business and had a very successful exit and he’s very humble and that’s part of his success, but we’re going to get into the ins and outs and the pros and cons and all the ups and downs of scaling a home service business and entrepreneurship and all that stuff. Ron has a lot of experience with franchising as well. Ron, welcome to the show. Glad to have you here.
Dru, excited to be here and love talking about this stuff. Let’s dive in and see if we can help people grow some businesses.
There are a lot of people who listen to this show who are in-home service franchises and businesses. Depending on where people are at in their journey, they will be able to pull out a nugget or two because I was thinking about this way back when—this is probably 20 years ago. Remember that uptown live event that Dry Pro did with AdvantaClean with the oxygen bar?
Yeah.
Remember that? I was having flashes. I think that was 20 years ago, man.
It doesn’t take to get a lead. We’re talking about trying to figure out how to get leads. We bought an oxygen bar and we went to a booze-type event where people were going down the street, just trying to get them in to talk about an AvantaClean.
Dry Pro. That was when Dry Pro, I think you were just getting it going at that point.
Three million, if I counted what the budget was supposed to be, maybe, I don’t know.
Rod, give us a little bit about your story here because we’re going to jump into it a bit. I think you were involved in one of the more interesting overlooked niches in the home service space being in the waterproofing side of things and foundation repair. Love to just kick it off with your story and all that good stuff.
From Carpets To Crawl Spaces: An Entrepreneur’s Journey
A hundred percent. Really it started back up Army brat grew up on an Army base to some degree, a handful of different ones ended up before Campbell, Kentucky. There was some deployment that happened. I just needed to find a job. My uncle asked me, “Do you want to come to LinkedIn, North Carolina?” Didn’t have many options. Went to LinkedIn, worked at a textile mill, third shift and started doing carpet cleaning on the side. I bought a truck, actually borrowed the money from Uncle Lane and started doing carpet cleaning.
For three years, I tried to figure out how to go full time on that, just could not get it off the ground but something interesting, and this is a life lesson. When bad stuff happens, typically that’s a growth point to the next level in your life. Three years of what I felt then was wasted. Shut the business down. What was interesting was when I was in business, some of the customers that called me were after rainstorms. They said, “Ron, can you come suck this water out of my basement?” I got the equipment to do that. “No problem.”
When bad stuff happens, typically, that's a growth point to the next level in your life. Share on XI did that. I went into textiles and then over a period of some years, I just wanted to work for myself. When I started looking at different businesses that I could be a part of, I actually looked at basement waterproofing. I bought a franchise, which is a crook out of Maine. I don’t know if I can say this, it was originally Dry Co. I don’t think they’re a business anymore. I changed the name to Dry Pro tweak the logo and I’m in business the basement waterproofing. What I didn’t know then Dru was what a whole lot of basements in North Carolina.
You just got in. I love it.
You just get into it. Did a trade show. Very first trade show, I’m sitting behind this table with a banner. It says, “Wet basements.” People are coming up. They’re booking appointments with me. I go to the gentleman’s house and I show up at the door. I’m in these khakis and just a nice shirt, knock on the door. He walks me around this door, which looks like a three-foot. “I’m here to look at your basement.” He said, “Yeah, that’s it.” We are back and forth though, that’s what I want you to look at. I’ve never been in a crawl space in my life.
No way. That was the first time.
Did not have knee pads. I had a flashlight. I came out of that crawl space, just muddy, and that was my start to Dry Pro. What’s interesting is I came into the business and I didn’t know any better. I’m willing to learn. A lot of other businesses, they’ve been doing the same thing for 10 plus, 20 years. I came at a time where there was some change going on and everybody thought that the way that you fix crawl spaces is ventilation. I didn’t know any better.
I was open to learning and doing different things. We were the first ones in North Carolina really to do crawlspace encapsulations and start advertising it. We started building business that way, and joined up with AvantaClean, 5 or 6 franchises there. In 2016, I decided I needed to focus just on Dry Pro and we ended up building Dry Pro at about 30 million and 160 employees. Had a successful exit and there’s lots of stuff I love. That’s how we got here today. That was about four years ago.
Thinking you’re in the basement business to having success in the crawlspace. At the same thing, but I love it. You probably went through like so many different inflection points to go from one truck to 30 million and 160 employees. That’s massive growth. As you reflect on growing it, are there any defining moments or just big decision points, good or bad, that you look back on or these couple of things happened and it opened up the next phase, and you kept going from there?
The biggest one for me was, I wanted to grow quickly, and I think all business owners fall into that same mentality, like they want to grow, it’s all about revenue. When I look back, really, I had to grow me first. One of my rules now is that grow the business owner or the leaders inside the business and the business will follow. Same thing you take in individuals that win lotteries, you see it all over the place. You read about five years later, they’re worse off financially than they were before they won the lottery. It’s no different when I’m in the business.
Business owners that wherever they’re at from a level of growth standpoint, the business is going to rise to that level. If you see an event happen and the business goes past wherever the business owner’s level’s at, eventually right sides back to wherever they’re at. Now, one different piece with that is they might have a manager that comes in that they might be the GM, there might be something with them that allows the business to, that might be a little different there, but the business always going to follow the level of the manager.
That’s interesting. You’re big and one of the big defining moments in your success was realizing that you had to look in the mirror and work on yourself in order to scale the business.
Yes. I don’t know where that came from. It might’ve been way before probably what put the bug in me originally was there used to be this way before your time, Dru. There was this business called Amway Network Marketing. They were really big about educational and building dreams and that thing. Whether it was that, I’m not really sure where, but I’ve always worked on growing myself. My challenge was it took me twenty years to get to a point where I could exit. It really wasn’t twenty years. It was sixteen years of me growing. The last five years were really taking advantage of where I was at personally.
Lessons On Scaling Your Business From The Inside-Out
Are there any things that you found very helpful to help you grow? Like master my group books. Were there some things that you plugged into that helped them leach?
100%. Vistage was huge for me. There are different types of peer-to-peer groups. Coach, find a coach that can help you because like somebody who’s done it before you, somebody that’s already ran the path, they know the pit holes you need to look for but creating a habit of reading daily. Daily reading. Start with 15 minutes, but 30 minutes to an hour of reading daily, audible. I got to the point where I would listen to my books while driving because it was a long time. I was in sales.
Anytime I’m in the car, I’m listening to a book. If I really like the book, then I’ll read it. The other piece that I want to talk about is a painted picture, which is a little bit different than growing yourself, but we can get into that in a minute, a painted picture. There’s almost too much to choose from now. The point that there’s there’s like, you just need to feed content in when you’re available. Create a habit of it and you will grow.
You found your zone, it sounds like. You found the zone, visage, consuming, like testing out books and then if they were good, you’d buy them and then fully consume them. Like you found your zone and rhythm to be able to constantly bring in new ideas and all that stuff.
I don’t want probably not too deep on this, but part of it is our belief levels. Our parents, our environment, people we grew up with, we developed these beliefs in our heads on how we see the world. Through reading and listening to other people and getting around other people that’s done things that I’ve not done yet, I was able to start questioning some of my beliefs and realized that maybe that is possible. Maybe I can do that. If they can do it, I can do it. That’s my rule because I’m not the smartest guy. I struggle with lots of things from an education standpoint. I know that if somebody else can do it, I just have to work harder and I can do it. That applies to pretty much everybody.
What they say, and I subscribe to this a lot is you don’t want to be the smartest person in the room. Like get into rooms, get into groups, and get exposed to other people who have done things that are way ahead of you that you can learn from and keep growing from that. When you become the smartest person in that room, go find the next room and keep doing it. Do you think there’s a level of humility that people have to have in order to work on their belief systems and grow as a person?
I almost wonder if it’s emotional intelligence. The humility. That’s a good question. Maybe I’m always curious and I just want to know what I don’t know. Maybe it was just, “I had some mentors early in my life that got me the habit of reading. I’ve just always done it.”
Paint A Picture: Planning Ahead
I bet it ties into your paint a picture. Like you had probably a vision, like you had a goal. You were trying to get to and didn’t necessarily maybe know how you’re going to get there, but you knew where you’re trying to go, so you were head on a swivel, paying attention to that stuff, I would imagine. You didn’t talk about the painted picture. How does that tie in?
Love the painted picture. By the way, I didn’t come up with that term. I don’t remember his name, but 1-800-GOT-JUNK.
Scudamore.
Yes, that was the first place I’d heard of a painted picture. First of all, when I started, and I think as most of us start, we didn’t think, “I’m going to build this out.” As you go, you start seeing further in the future and you can think bigger. This is a process that I try to take people through. “Let’s look something, by the way, that I communicate to employees and company meetings, which I think you should have monthly, a monthly company meeting.
I think you should have quarterly, like a seven-year review, seven years, just repaint that picture so that you’re not the only one communicating it, that other employees are communicating that same picture. You got the seven-year picture like you can almost see what everything’s going to look like. How many vehicles are you going to need? How many employees? You just got to be able to describe everything in detail. Seven years, Dru, I cannot do anything today really to affect that 7, 10-year picture. I go back to three years because three years I can pretty much it’s a lot closer.
I’ve got a three-year picture. I always have a three-year target in mind, but even that is three years out. There are a lot of things that could change in the economy. There’s just a lot of stuff that can happen. Really the magic is in the one year. Right now, what my 2025 is going to look like. I know what 2025 is going to look like at the end, but working in 90-day sections. I think EOS talks about, people get off track every 90 days.
Work in 90-day segments. If I’ve got a lot going on in the business, I actually cut it down to 60 days. I look at what can I do to these 90 days to move me toward my one-year picture. Every day, Dru, every morning, I spend five minutes, I go through my ten years, I go through my three years, I look at my one year, and then I concentrate on the next 90 days. That’s my magic to how I build anything out.
If you think about it, and it’s funny, like every single successful entrepreneur I’ve had on this, I’ve talked to on the podcast and EOS is some form of it they were running or using, but like three years out, I mean, on the 90-day cycles, that’s only 12 cycles. It’s not like it’s a hundred like you’ve got 12 cycles to get something done to keep moving your business forward. Sometimes figuring out what to focus on and saying no to could be the hard part.
I think that saying no to is huge, by the way. You think?
A hundred percent. What was the common temptation for you, the squirrel that would come running across and you’d want to go chase it?
Scaling a Business: If you’re not good at marketing and/or sales, you better hire somebody that’s good at it and then you can work on other stuff.
Let’s talk, when we say no, let’s even just talk about something smaller. What are the things that eat up your time? I can promise you 3 to 5 times a week, I had an advertiser calling me wanting to pitch whatever they’re getting and I need more leads. I’m interested in doing that. I’d spend five hours a week just listening to pitches from advertisers in this being able to just anything that distracts you from what you’re wanting to do, you don’t really have time for that right now.
Building A Referral Machine: Sales And Marketing For New Businesses
You need that 90 days. That 16 to 90 days, whatever it may be. Like you developed a pretty good knack for sales. You mean you built a machine like a radio, TV. Ron, if you’re in Charlotte, North Carolina, you know Ron Weatherly, because you’ve either heard his voice on the radio or seen his face on TV. There were great ads. It’s expensive to start advertising on radio and TV, so how do you think about sales and marketing? If I’m just getting going first year, or second year into business, should I be thinking about radio advertising or what advice would you have for somebody?
First of all, you need to start tracking your calls per lead. You got to know your numbers. My go-to is always referrals. Typically with the franchises, or even if you’re starting a new business, you’ve got some type of a 90-day plan and you’re going to have a minimum of a hundred, hopefully 200 plus people that you know. You don’t even have to know them, they just have to know who you are. You’re reaching out to and let them know what you do. You’re trying to create referrals. I’ve got a program that I can share about referral partners because that’s different than referrals.
Creating a referral partner is someone that continually sends you business on a regular basis. That is very high-value activity if you’re starting small. The next thing that I’m going to do is going to be Google. I’m going to spend money at the Google marketplace to some degree. I’m going to make sure that I’ve got Google reviews coming in because people, they look at your ad, they go and they look at your Google page, see how many reviews you got and does that give you credibility or not. I hate Angie’s list and HomeAdvisor, but sometimes they’re necessary.
There are certain times that they work and they don’t work. You got to be an answer the phone really quick. If you don’t have a good system, I wouldn’t spend money on that. If you’ve got a good system, you might look at it. Facebook ads are really cheap, but they convert really low. You got to go through a lot more of them to get them. If your team has got the bandwidth to do it, it’s worth trying it. You try different ads, but you just got to know that yeah, they’re like $20 a lead, but it’s going to take a lot more time to convert a lead into a soldier.
For smaller businesses, and I say smaller, under 2 million, 3 million, I do not like postcards and magazines. The cost per lead is too high. What I like is about a hundred. It depends on what your ticket is. All this varies depending upon what your average job is but in my world, I like about $100 a lead, $150. When you start getting into magazines and postcards, you get up to $200, $250 range. That’s if you got the right ad and the right demographic is going to. When you start getting a radio and TV that now you’re talking $500 a lead. Those are very important down the road, but not when you’re starting out or even under 5 million.
It was interesting. The first thing you said was referrals and building referral partners, not all this fancy advertising stuff like that. You cannot build a home service business just trying to rely on advertising. You’ve got to get into the referral community somehow. I think that it’d be interesting on your opinion on this, because that’s what I see a lot of people don’t want to do, even though they probably know they have to do it. It’s not fun. It’s not fun shaking hands or kissing babies, and most people don’t like that. Did you find a framework that worked well for you to go about cultivating referrals and referral partners?
Yeah, it wasn’t like, “One, I come up with this great plan.” This was developed over five or more years and then my sales manager improved upon it. Referrals. I define a referral as somebody calls in that I didn’t pay for. Where this gets interesting is when you can create referral partners that send you business on a regular basis. Super simple process. First, you need a list of individuals that can send you business. What industries can send you business? I am always adding to that list as I’m driving through the neighborhood and I see somebody sign that works in my space, I put them on the list.
A truck passes me. I put them on the list. I’m at home with a customer. Before I leave that customer after I’m done, always ask them, “Mr. Smith, I know you probably got somebody that’s your guy.” Like, “Who do you really like?” “I’m looking for somebody to be able to send business to that take care of my customer. Who’s your guy?” They always have somebody. I call the guy and say, “I was over at the Smith’s and they just couldn’t stop talking good enough things about you. I would love to get with you. I’m going to be doing some work at their house. I think I can send you some business.”
You got to have a list, somebody to call. You’re always going to have time during the day where things like you’ve got extra time. If you don’t have a plan, then you’re going to use that time on social media, and scrolling feeds. You’re going to waste that. If you got a plan when you got time and that’s where the list comes in. It’s just reaching out to people and just sharing, “I’m in this industry and I’m seeing this stuff all the time. I think I can send you some businesses. It makes sense for us to meet.”
I just want to understand what they do. I want them to understand what I do. Every month and maybe every two weeks, depending upon what industry they’re in, I’m going to reach out to them, whether it’s through text, or call, I’m going to drop something off. I’m going to follow their social media. I’m going to comment on something. Here’s a pro tip.
I set up a Google alert for their business and their name. Anything happens in Google that hits either of those two, I get an alert and I can reach out to them and say, “This was pretty cool.” It’s all about touches. It’s no different than advertising. You don’t just think that “I’m going to advertise. The first time they see me, they’re going to, they’re going to call me.” You really got to be, they’ve got to see you like seven times before they buy from you.
Typically, I think this is the number.
It’s the same thing with referral partners. You cannot think that, “I called him one time. Why is he not calling me?” You got to call them on a regular basis. They’re just busy. You develop these people that call you for everything and they’re your rock stars and you don’t have to track them anymore because you guys are texting back and forth all the time. I don’t know if that helps.
Yeah. Using a common customer is a way to introduce yourself to other companies or people that you want to, that seems like the easiest “way in”, we’ll call it but just trying to do business together and help the customers and all that stuff. That’s what it’s all about.
You don’t need hundreds of these people. You just need to be working on 15 to 25 on a consistent basis. Ones that don’t want to work with you, they go off and you add new people on.
You might have to, I don’t know, get 75, 80 on the list and work through whatever the number is and work through to get to that 15 to 20 that ends up being in the stable.
That’s right.
This worked so well for you. You created the app to help people stay more organized about everything that you just said.
Yeah, that’s right. Yourgenerez.com is the app that we work off of.
What is it called?
It was cool because the developer reached out to me. It was simple and it helped you stay focused.
It does, but you can do the same thing. You take that list and you just put it in your calendar to call that person back every month. You just got to have a system and we can help you with that or you can do it through what you already have in front of you.
Just do it. Just Google Sheets, whatever works for you. If you’re not willing to do that referral development, then it’s going to probably be a long road. What I find is the people who build big businesses, they’re pretty good at marketing and/or sls. If you’re not good at marketing and/or sales, you better hire somebody that’s good at marketing and/or sales. You can work on other stuff, but you got to have somebody pushing that envelope.
Hiring And Empowering The Right People
At what point did you start bringing in people that you felt could add a lot of value to your organization as you started getting much bigger? You’re always looking. You’re always bringing on, you’re adding people, you’re always hiring. I think when we got to $5 million, that was when I realized that I no longer had control of everything. The culture that I set, actually each leader is going to set their own culture in that individual compartment. I think 5 million is where I realized that I cannot do everything but 3 million is probably when you need to have leaders in different areas and you’ll have them much sooner than that but definitely about 3 to 5 million.
You can tell me that we can go in a different direction and cut this but like I am curious like you sold to institutional level, your exit was to an institutional level buyer. What was that process like just going through that transaction?
I’ve bought a couple of businesses and I should be a lot more diligence when I do that but it’s like, “Send me your tax returns. Send me this.” It’s like they can have it done if they’ve got their stuff together. A couple of hours, they would have me everything they need. Dru, this process took us weeks with an accounting team. It was quite the process which I’m really happy that I had clean numbers.
That was it. Like you can never probably be ready for that level of intense scrutiny, but like you knew where everything was and didn’t have to do too much cleanup.
I was very fortunate that I hired at some point along the way, a fractional CFO. Actually, do you know Paul Daniel?
Yeah.
Paul did an amazing job of teaching me about the business from a number standpoint. I didn’t go to college, a high school graduate. It was just a side of the business. I just didn’t know or understand. I can remember when we first started like budgets, I hated budgets. This is something I got to hold to. I don’t want to do this. You’re going to hold me accountable to this hated budgets. Didn’t understand a balance sheet but now when I look at the P&L, I care more about the balance sheet than I do the P&L.
Why is that?
Cash vs. Accrual Accounting: Understanding Your Financials
I think because it just tells me it shows a different side of the business. I can determine from a balance sheet, whether a business is healthy or not. A P&L is more really a snapshot of whatever that time is but a balance sheet gives me all the information. While we’re talking about financials, cash versus accrual is huge. Run your business off accrual, run your taxes off cash.
You can determine from a balance sheet whether business is healthy or not. Share on XReally? Run your business off accrual, cash is off tax.
Yeah. When you get bigger, the IRS will make you change, but pay your taxes based off a cash-based business. Accrual, if you don’t know like so many people that I know, they look at their P&Ls two months later, by the way, maybe a month later, but they’re looking at cash. That doesn’t give you a picture of what you actually did that month prior.
They’re looking at their bank accounts.
That’s true. Are they going to pay this bill today or not?
What advice do you have for folks that might be at that level where it makes sense to look at the cash and accrual distinction? What advice do you have for folks on setting that up?
It’s really just the click of a button. One click, it’s accrual, the other click it’s cash. That’s easy enough but probably the biggest thing though is making sure your cost of goods sold is clean. It matters, but I’m going to say, it doesn’t really matter how you do it. It may be that I determine that I want gas in the cogs but somebody else terms it as an expense. I don’t know that it really matters as long as you do it the same way every time.
My belief is that all labor, all material, anything it costs me to get that job and do not get it. Anything that costs me to do that job needs to go and cost a good soul and then everything else is an expense. That’s important that you’re putting things at the same place all the time because then you can start getting percentages and now you can create a budget based off these percentages. You can tell that when you’re out of whack on something.
The accrual is a more accurate real-time picture of how your team’s producing out in the field, production, holding margins, and all that stuff, or if there are any issues that you need to address to fix stuff versus waiting for the waiting for the customer to pay to then reconcile the jobs and all that stuff?
Scaling a Business: If you don’t form a habit right now when you’re young in business, you’re going to really struggle when you get a big business.
100%. Yeah. I could not imagine running even a $200,000, even a $100,000 business off of P&L because off of cash, because you might’ve got one big job. You think you’re doing good, but really you suck to win four months out of the year and then you had two months that was decent. It’s just a matter of when it hits, when that revenue hits, as far as you receive the income in, if you’re running cash, it’s not a clear picture. From a taxes standpoint, yes, running on cash.
When you’re running and gunning, when you’re at some of the different levels, maybe like the 3 million to 5 million, getting up to 10 million, 20 million, being an entrepreneur. You have good instincts, where there like certain things especially as you get bigger, you have access to so much data, so much information. Were there like a handful of things that you just like were laser-focused on that could tell you if there was anything going on that you needed to drill down deeper into?
It was my conversion rate. When I talk about conversion rates, I talk about the leads come in. The lead came in, did we book the lead? We booked the lead, but do we actually run the lead? We ran the lead, but do we actually provide a proposal? We provided a proposal, did we close it? If we closed it, what was the size of the job? Most people think I need more leads. No, what you’ve got is you’ve got leakage somewhere, probably multiple places.
I’ll just go through like leads come in. I think you should book 95% of them, maybe 92%. It depends on the industry. Like if a lot of them are not qualified, then I would look at your advertising a little bit closer, but 95% there. Once it’s booked, 85% of those should be run. You should have very few cancellations. If you do have cancellations, do you have a system set up to where you’re going back and you’re calling them to reset that appointment? You go out there and you run the lead, but did you actually provide a proposal?
That’s super important. You’d be surprised how many times we had salespeople go out and they run the lead and what they called us out for is not what we can help them with, but we offer other stuff. “Does this bother you?” “Yeah, it does bother me. Cool. Let’s look at that.” You got to be an offer proposal. There’s a percentage there and then closing. Closing is what I find my best salespeople is really, they’re passionate about what they do. People buy that. Like they trust them. They buy because they trust them.
The best salespeople are those passionate about what they do. People buy because they trust them. Share on XWithout getting too deep into the sales piece of it, just hiring salespeople that can be passionate about your product. How do they’re passionate? They’ve been passionate about other stuff. If when you’re talking to them in the interview, you cannot find anything they’ve been passionate about. What makes you think they’re going to be passionate about your stuff and then the size of the job? One of the things I struggled with was when my team came to me and said, “Ron, we need to do a price increase.” I’m thinking, “I don’t know about that.” I cannot tell you how many times we ended up 10%. We kept adding film and it didn’t change any of our numbers except for our bottom number.
Really?
Yeah. There’s a point you can go to where it’s crazy. If you’re just doing normal business, don’t miss out on the price increases on a yearly basis.
If you have good salespeople who are passionate and connect with the customers and are trying to help them solve a problem and when you have all those pieces in place. That’s when you can start to see an increase in the price and see where it can go.
Yeah. I’ve done it the other way as well. I’ve had low prices and I got to tell you, and that’s where the cost of good sold comes in. You have to do so much more work to cover your expenses. The other thing, Dru, while we’re talking about this is knowing your break even. You got to know from a business standpoint, how much volume you got to do to break even. To know that number, you got to know your cost to get sold. Just having clean financials.
I can remember the last few years of our business. We might be mid-month and my accounting team will come to me and say, “This is where we’re going to end up if we just keep pacing where we’re at now.” I can remember looking at it and saying, “Our profit goal is 14%. We’re going to come in at 12%. We need to cut something and hit that 14%. Now I can go down to expenses and I can trim something out maybe if I choose to do that so that I can hit my target.”
It sounds like your instincts led you to getting the revenue coming in and paying close attention to all the different steps in the process that lead to revenue coming into the door to get booked for the teams to go out there and produce. That was your laser focus as the leading indicator, not everything, but that’s what you were checking on in a meeting thing.
It’s going to be important to have a weekly meeting where you’ve got a scorecard and the scorecard shouldn’t be twenty items. It should be starting out, it might be five. Later, it might be ten, but really I like 5 to 8. If one’s off, then we can dig into more later, which brings us into CRM. A lot of small businesses don’t want to put the information in. I can tell you, if you don’t form a habit right now when you’re young in business, you’re going to really struggle when you get a big business and you’re not going to be able to take advantage of all the data because you don’t know the data. If you do have it in, it’s probably not accurate because people don’t really think it’s important.
That’s a good point. Are you seeing any big trends out there that are sticking out to you that you think are worth talking about?
Scaling a Business: It’s okay to have a lifestyle business but just know that you’ll never have true freedom down the road because you’re spending it all before it turns into what it could be.
Yeah. I think there’s a wave right now of equity companies coming in and buying these blue-collar businesses. I don’t know how much longer that wave is going to last, but there’s most certainly a wave there and there’ll always be a demand for these types of businesses, but right now, at least in the past, they’ve been paying a little bit bigger multiples than probably almost think it’s almost like stock prices, they go up. I almost think right now they’re overvalued to some degree, but they’ll level back out. They’re still very valuable if you build them.
There are probably not that many like super successful, well-run home service-based businesses at a level of scale that might be attractive to institutional-level buyers.
There’s not. I mean most businesses never get above 500,000. I thought about like, “Why is that?” I think that let’s pretend that somebody grows themselves so they’re doing what they need to do in a lot of areas, but when they hit the first roadblock, they might get past that one but then they’ve got these other roadblocks and at some point they just quit. Another thing that I wanted to bring up that I see people from a roadblock standpoint that really hurt them is maybe they build it to like 2 to 3 million or even a million and they’re kicking off a lot of income from it and they start buying toys.
They buy a bigger house. They start to live in, it’s more of a lifestyle business. If you want freedom, then take that extra cash and put it and invest it in your business. It’s okay to have a lifestyle business, but just know that that’s what you’re doing and you’ll never have true freedom down the road because you’re spending it all before it turns into what it could be.
It’s probably not big enough to be attractive to too many buyers. If you ever want to exit, because that owner’s probably still pretty involved at that level.
Versus taking that money and hiring a salesperson. Taking that money, hiring a sales manager. You’re investing in the business instead of spending it on toys.
Outside of the toys and enjoying the success you’ve built, what are some of the other common roadblocks you see people run into are at that half-a-million to a-million-dollar level? Any advice for folks on how to break through those?
I see a lot of times as businesses grow, they’ve got somebody that comes on board with them and they’re the right person. They’re helping you grow and you take that person, you make them the GM of the business. When that business gets to 2 million, that is not the right person for that business. It’s really hard to save that person at that point. If you demote them, they’re going to quit because their ego cannot handle it. Just be very careful about giving people titles. Bringing in the family is very tough. My father had 30% of the business.
My wife was in the business. We all had a very clear understanding that we would have quarterly shareholder meetings and they got to share their direction on what they thought the business needed to go. Running the business, I was the CEO and it was my direction. Like I got information, I got opinions, but whatever path we took, good or bad, it was my path. Be careful about bringing family members in. Also, other team members see when you promote a family member and that creates a culture problem there, it’s okay to promote a family member if they’re winning but don’t promote them just because they’re family.
It's okay to promote a family member if they're winning, but don't promote them just because they're family. Share on XOn that note, culture, which is something we haven’t really talked about which is important. To casting and paying attention to and cultivating. Are there any things that you found useful and effective at creating that culture and getting it really instilled in your team, especially as you grew?
Yes. I call it the employee experience. What that is is we mapped out from the time that an applicant comes in our door, how they’re treated, how people wave at them, say hi to them, smile at them, all the way to the point to where a 15, 20-year employee, what gifts they get for that. Every company’s got a culture. The question is, is it an intentional culture or is it something that just happened because that’s created itself? We want to be very intentional about every experience our employees have. We actually concentrated more on our employees than we did on the customers.
Really?
The bet that we made was I would rather have an inspired employee or actually if you’re the customer, you’d rather have an inspired employee working on your house versus somebody just making an hourly wage. I’m not of the mindset that every employee in my company is going to be inspired, but I need a large amount of them to be inspired. Being very intentional, like I cannot tell you how many times I’ve met somebody. I used to send birthday cards out. I would write something, an individual note.
On every one of them, they get mailed out. There’s a system I put in place. It gets mailed out. I meet their wife at some point. I cannot tell you how many times they said, “They still got that birthday card on the fridge.” Little things like that. Anniversaries go up to them in the warehouse. “I don’t know. You know what today is?” “No.” “Five years ago, you joined my company. I just want to say thank you.” It’s the little things about being intentional and you’ve got to have systems and processes for that. You just put systems in place.
I’m sure you did a lot of things, but you would just put yourself in the mind of the employees and were very intentional from that first time that they walked in the building, that experience that they had from when they walked in the door to being an employee for however many years they were.
Don’t get the thought like, “We had problems, we weren’t perfect, but we worked our butts off. We tried to make it as good of an experience as possible. We definitely screwed up.” We had managers they’d do something boneheaded and hurt the employee experience, but we were trying to be very intentional about providing a particular experience to our employees.
That’s interesting. I don’t think I’ve ever heard anybody say that they paid more attention or I forget exactly how you framed it, but more intentional about the employee experience and the customer experience?
What’s your cap in business? Is it leads? I can get more leads. Dealing with resources in a business, I can buy more trucks. I can get more equipment. I can get this other stuff, but the thing that’s the most hard to get is inspired employees. That’s the cap on my ceiling. I cannot grow my business past my employees, really. That’s really where we try to put most of our efforts on.
That’s important advice. Anything else bouncing around that you want to share, or talk about?
Let’s talk about hiring for a minute. That’s super important. One of the pitfalls I see with business owners that need people, they always need them too late. You want to treat hiring the same as advertising. You need to have a budget for it. It might only be $250 a month. You need to continually spend money on hiring and you’re always interviewing. I treat my interviewees the same as I do referral partners. What I mean by that is if I find somebody and I don’t have space for them right now, but they’re a good candidate or they turned me down.
Scaling a Business: The hardest thing to get is inspired employees. That’s the capital. You can’t grow your business past your employees.
Like I want this person on my team, but they’re whatever, something doesn’t line up quite yet. I keep them on my list. I reach out to them every month. Maybe it’s quarterly. I say they follow them on Facebook. We just want them because at some point their manager, something’s going to happen in their work life and they’re not going to be happy and I’m always looking for great employees. You just got to treat hiring like you do advertising. You’re always looking.
Well said. Be intentional about it. Have a system for it. Whatever works for you the best to stay consistent with it, but make sure it’s top of mind.
A lot of stuff talks about it. That’s been fun.
Brilliant, man. I was thinking about this, man. It’s been a long time because we’ve known each other and I cannot think of a better person to watch you have the success you’ve had and all that good stuff. I do miss now I got to listen to Mike Rowe’s name or voice on the radio and not yours anymore as I think the licensing rights to your voice may be expiring.
They replaced me but I cannot think of a better person. What Dru’s talking about is they’re using Mike Rowe for Dry Pro commercials now and really groundwork commercials. He’s doing a great job.
There was a gap there where they weren’t very good. I think they were trying to figure out that.
They’ve gotten a lot better. Very excited about the direction. Dry Pros going, and groundworks are going. They’ve got some really cool things going on there. Again, none of our businesses are perfect, but they work their butts off.
I think like for anybody that’s thinking about getting into the home service space, you see the HVAC and plumbing like that’s where a lot of the stuff that I see is getting like more of like the headlines with like all the money that you were talking about pouring in. I mean, you want to talk like a good, great business with amazing fundamentals. It’s the business that you built.
It’s any business that’s not sexy. I almost wonder like septic-type businesses, any business other people don’t want to do.
Good point especially like I’ve heard a lot about like as the younger generation becomes more like homeowners, they tend to be more of the do it for me crowd or of the do it for me mindset. Did you notice or do you see any of that trend actually happening?
I think it probably is. I see the younger generation now I think they’re mid 20s 30s, and they’re more about and I don’t think it’s about doing it for me as much as about my time. Their time is very valuable and where they want to spend their time is different than where my mom and dad or even me would have spent my time at at their age.
Not as many weekend warriors doing projects, and stuff like that.
Yeah, maybe. I think you’re probably right about that.
I hear about it. I haven’t seen the data, but I was just curious what you thought. cool, man. If people want to get in touch with you to chat, if you want to have people get in touch with you, what’s the best place for them to reach out?
I would say RonWeatherly.com. Ronweatherly.com and most certainly follow me on Facebook and LinkedIn. Comment on my stuff and share, that’d be great.
Ron’s got some great content coming out around just his experiences and stuff like that. We’ll put the website in the show notes and all that stuff. People can easily find it. Ron, thanks, man. I really enjoyed it. Hope you have a great end of the year.
Thank you, brother. We’ll talk soon.