51. The 10 Professional Builder Levels Explained With Russ, Sky & Andy

There's a difference between building a house and building a business, then one of the things that you've got to have if you want to sell a building business is profit.

If you're specializing in new homes, you need to be hitting above 25% gross margin.

A lot of the money sitting in your bank account belongs to your subcontractors and your suppliers.

It is very, very easy to scale an unprofitable building company.

This is Professional Builder Secrets, the number one podcast to help you grow your building company safely and securely. Brought to you by the association of Professional Builders. Join us every week as we talk to industry experts and your fellow professional builders on everything you need to know to generate more leads, more sales and higher margins while improving the building experience for alliance. Hello and welcome to the Professional Builder Secrets podcast, a podcast by the association of Professional Builders for building company owners, general managers, VPs and emerging leaders. Here we discuss all things running a professional building company from sales, processes, financials, operations and marketing. We have another exciting episode from the Professional Builders Secrets podcast. I'm joined today by co founders sky and Russ Stevens, as well as head coach Andy Scarter for the association of Professional Builders. Sky, lovely to have you join us as always.

Thank you. Bosco, great to be here.

Russ, great to have you back again.

Hey, Bosco, how are you doing?

I'm doing well, mate. And Andy, a pleasure as always, jamming with you again.

Always a pleasure, Bosco, nice to be here.

Well, look at apb. You have a really interesting way to guide a building company through success. And it's called the professional builder levels. I'm just curious, what are they?

Well, the professional builder levels, these are a structured pathway for a residential building company in order to grow safely and securely. Now, I think typically when builders think of growing their building company, they instantly are drawn towards lead generation, or they certainly were before COVID hit. And then we had this, this boom where sales were easy. But generally when builders think about scaling building company, they think, if I can get more leads, I'm going to get more sales. If I get more sales, I'm going to get more revenue and more revenue. Well, that leads to more money. And the trouble is that's not necessarily true. It's very important that you scale a residential building company in a structured way and a particular way to ensure that it does grow safely and securely. And of course, the goal at the association of Professional Builders is all about profit. Yeah, we're not chasing the vanity of revenue. It's profit that we really care about. And the Objective for the professional builders levels is to get builders to a 10% net profit after drawing a salary at market rates.

Okay, and how and why did you come up with these levels when you were determining this in the first place?

So, following on from exactly what Russ said, we needed a way of very evenly grading any building company that we came into contact with. There's a lot of different ideas of even if you count revenue or size of projects. And it's very easy for us to be talking to one builder about their unique building company, but they've potentially seen case studies or success stories about other builders working with us. But they're so much bigger than them or they're so much smaller than them. And they always found a way to sort of, I suppose, communicate to us that it wasn't relevant to their building company. And we work with so many different sizes of building companies, from, you know, the smaller companies to quite large organizations. And we needed a way to really benchmark each and every one of them. And it's not just on margins. It's not just on revenue. It's not just on client happiness. We've put together these professional builder levels are 10 unique levels that a professional building company can walk through to ultimately become a certified professional builder. And you know that they've got a robust, profitable, and professional building company that doesn't only have the systems in place, but it has the profit to back it up. And it's a proper business because it is investing in marketing as well. So it's a very sequential natural progression through those 10 levels. And it's given us a way of really grading and moving through any building company to ensure they've got a robust business.

Can you walk me through these levels? And how do you avoid people getting their feelings hurt because they might come in with their own perceptions about what level they should be, and then all of a sudden, they get a reality check. So I'm just curious how you manage the egos in the room.

Oscar, you are so special. How do we make sure their feelings don't get hurt? You're talking to a South African. What are feelings? No, let me be serious for a second. It's as sky has said, what we looked for was a way to kind of benchmark where somebody is on the journey. So we're not for one second saying that's good or bad. We're just saying that's real. If you follow these steps, you will get to where you want to be in terms of a profitable business that has some value. And on previous Podcast episodes. We've spoken about selling a building business, and one of the things that you've got to have if you want to sell a building business is profit. Nobody wants to buy a business that's, that's running at a loss. So you said, can we walk you through the levels? Level one, we look for a builder to be calculating their work in progress accounting adjustment accurately every month. And there's obviously three pieces to that. They've got to understand what the work in progress accounting adjustment is. They've then got to work on the fact that it's accurate, accurate, and it's reflecting the real scenario. And then it's got to become a habit. It's got to happen every single month. And anybody that's listened to the episode where we spoke about this particular accounting adjustment will know that it is focused on making sure that we can accurately determine exactly how much profit the business is making. So as Russ said earlier, we want to make sure business is profitable. We're not going to help anybody scale until they are. And therefore we need to know right at the outset, off the bat, are they profitable or not and is it a genuine profit. So that's level one in terms of keeping the business running. Once we know that they are profitable, we've got to get them away from this concept that what's in the bank is actually their money. Because the truth is, in a building business, in 99% of the cases, we're actually running in a payment in advance kind of scenario often. And that means that a lot of the money sitting in your bank account belongs to your subcontractors and your suppliers. Therefore, we've got to make sure that we have the cash to cover that upcoming liability, make sure we can pay our bills in addition to being able to make profit. So the second level is that they must have the liquid cash. They must have the resources in the bank to be able to cover the WIPA liability that they are carrying. So that's, that's one and two, both focused on profitability and making sure that they are financially sound.

So it sounds like a lot of this is financial awareness and then usability of that financial awareness and how they manage their funds.

Yeah, and. And kind of moving their mindset from money in the bank equals, I'm doing well because money in the bank isn't mine and therefore I might not be doing well.

Then take me through the next step. So we got through 1, 2 and 3. What happens next?

Well, that was 1 and 2. So level 3, that's when we Start to talk marketing and that's because marketing is linked to margins and that's all because of supply and demand. So level three is about creating a lead generation website. So a high converting website that is also content rich. Now I don't think I've ever seen a building company operating at scale that was profitable and by that I mean they were generating decent net profit. I don't think I've ever seen a company operate in our industry without a good website behind them. You know, it is so, so fundamental. It's where people will go to research you, it's how you'll create awareness from your blog. And that's what we mean by content rich content there and is fundamental to the success of a building company. So that is level three and it comes early on. And of course we've got a very structured, systematic approach to what makes a successful website. And of course we've got preferred partners as well that we work with that follow our processes that we can guide our members to, which shortcuts the process for them. But once the website's in place, level four, the next step is all about amplifying that content. So this is where we want to see the building company achieve a level which is investing 3% of their revenue into marketing and advertising. Now the exact breakdown of that 3% can vary from company to company. It will depend on their niche, it will depend on their strengths and weaknesses. But this is where our executive coach give our mentoring clients a lot of guidance on exactly how they should be spending that typically as a rough guide, it could be around 2% on advertising, 1% on marketing. It could be another quick, easy ratio. 1% on the handover process which we spoke about on an earlier episode. 1% on marketing, 1% on advertising. But it really does come down to the strengths of the building company as to where they need to be diverting more of that revenue. And of course, if they're in a strong financial position, having corded their WIPA and having the cash to cover it and they are in a position to grow even faster, they could ramp up that 3% to 4 or even 5%.

Yeah, and I think Bosco, if I can just jump in on something that you said earlier. These are not necessarily sequential. So particularly in the, in the private mentoring program, we will often be already starting to work on creating that content while we are monitoring the work in progress accounting adjustment. So they're not, they're not necessarily a linear process. Some of them can actually get started with they starting on level three before They've finished level two. That's quite possible. But what we're making sure is that the fundamentals are in place and there is profit that can be invested, if that makes sense, and then obviously we'll go from there.

That's a really good point to make actually, because if you were to only work on the next level as you get there, it's going to take a lot longer. So obviously, if step number one is calculating your work in progress each and every month, it's a simple calculation that's not going to take too long, you're not going to do nothing else for that whole month. So you can look ahead at the rest of those levels. And like you say, if level three is creating a content rich website, you can start putting all of that in place. It doesn't mean you're a level three builder, you're still on level one until you nail it it, but you can look ahead and start preparing and working on so that by the time you get to work on it, you can tick it off a bit faster.

And it's a fine balancing act as well, isn't it, really? Because this is where the expertise of the coach comes in. Because it'll be very easy to think, okay, well it makes sense for me to work on all 10 at once, then I'll just get there quicker. And of course that dilutes the resources and doesn't give you a clear objective there. So this is where the expertise of the executive coaches will guide the mentoring clients as to exactly when they need to be opening up a new front and opening up a secondary direction.

So we've got levels that focus on the financials, we've got levels that focus on the marketing and then reinvesting some of that marketing budget back into the plans. What's next?

So level five is where we come back into financials, but specifically on margins. So to clarify, levels one and two were very much to do with accurate financial data. That's the basis of work in progress. We've done a whole episode on it. So the work in progress accounting adjustment is ensuring that your accounts get correct so that we can start making a lot more informed decisions for the building company as we're working through the rest of the levels. So once we've got level three in place, as Russ said, high converting website that's content rich and move on to level four and start paying to amplify it. It's very specifically put in this order because by the time you get to level 5, this is where you need to Start incre your margins. Level 5 in the professional builder levels is having your gross margins exceed industry benchmarks. And we focus on gross margins first. As Russ said, margins are linked to marketing. We couldn't put this level before the content rich website and before investing in marketing and advertising. It doesn't work like that. You can't just put your prices up and expect people to pay them. You need to make that investment so that really, by the time you've completed level four and you're starting to work on level five, it's not going to take you an eternity because you've got a lot of stuff backing it up. So when a building company's gross margin exceeds the industry benchmark, you're reaching level five. And obviously those benchmarks, if you're specializing in new homes, you need to be hitting above 25% gross margin, which as we know, that means your markup is over 33 and a third. And if you're completing renovations or you're a remodeler, your gross margins need to be over 30% or 33 and a third percent for remodeling. And just remember, when we talk about margins, we're not talking markup. So level five is gross. Level six. Once we've achieved those gross margins, we need to really focus on our net profit margins. And our net profit margins need to be in excess of 10%. That is level six in the professional builder levels. Now, when you're going through all our financials trainings, it really should, it's almost like it should be hit at the same time, level five to then going into level six, because we always want to be monitoring our fixed expenses as a percentage of our revenue. And naturally it will unfold quite logically. However, sometimes you just need to systemize the building company a little bit more in order to hit it. So step number one are gross margins. Step number two are your net margin. So that's levels five and six.

And I love the fact that what does Scar do? She tease me up beautifully for level seven and eight with the word systemize. And there it is. That that's exactly what comes with 7 and 8. So if you look at what we've, we've got the company's numbers accurate, we've changed the messaging to attract a different type of client who understands the value we now adding, now we can push up our margins. So now we've actually got the company solid in terms of profitability. Now we move to the other leg of growing value and that is systemization. And because the first Discipline in that process is selling. The first thing that we want in place is a dedicated sales manual that literally allows a 10 year old to walk into your office and to work through your process. When I say about that, I don't mean we actually expect people to employ children. We're not going back to the dark ages. But what we're saying is we want a sales manual that is structured and set up in such a basic instructional way that a 10 year old can actually understand it. Now, little quick anecdote if I may. One of our elite mentoring clients daughter's name happens to be Summer and she was 10 years old when I was working with him on exactly these things. And he got it straight away because we could talk about Summer izing this process so that she would understand it. And really what we're talking about there is the language. So that's level seven and then level eight. It's seven is kind of the stepping stone. It's one of the disciplines. Level 8 is building out the rest of your company manual so making sure that your other four disciplines and your leadership structure is then put into a written format. And essentially what that now does is it adds that second leg of value. So now you've got profitability, you've just added systemization. Now this thing's starting to cook. And now it has real value in terms of you starting to think about an exit strategy, which we've obviously covered in previous episodes.

And when you talk about systemization, does that also include technology or is it just operational systemization?

Well, you can't do one without the other. You know, love and marriage, horse and carriage, that's the way it goes. So you literally cannot technologize. And of course the real word is, you know, automate. In most cases you can't do that unless you've got the system in place first. Essentially all that you're doing with that automation is you are speeding up, up the execution of that system by using technology to assist you. That's essentially. So you must first systemize and then you can, you can automate what happens next.

So level nine is back into financials. We've talked about this a lot. It's a big backbone of, of what we teach at apb. But level nine is to have more than three months of your fixed expenses available as working capital. And it really is the reason we put such a focus on financials. It's, it's really ultimately the financial health of your building company is what determines if you're going to make it through any kind of downturn. This is what calms you. We, we've, we've talked about holding more than three months worth of fixed expenses and working capital for as long as we've been around. And this is just the beginning because ultimately the goal is to get to 12 months worth of your fixed expense available as working capital. And a lot of people have pushed back on this. A lot of people have said that's too much, specifically accountants, specifically bookkeepers like you do not want to be holding on to that much. It's, it's too much. However, all of our clients, and this is actually really important, all of our clients that have been with us for a really long time, for as long as we have been preaching this and have been working through before we even created these as official levels, we've been talking about holding more than three months of fixed expenses available as working capital. As soon as 2020 hit and there was so much uncertainty, so much fear in not just the marketplace, but really the whole world. Our long term members who had been preparing for this and following that trajectory and I suppose advice of running their building company with reserves, as scary as it was, they were nowhere near 10 out of 10 on the fear factor. They were a lot more reserved, they were able to stay a lot calmer and make better, more informed long term decisions because they didn't need to worry about short term cash. They knew they would actually be okay because they had months, if not a year's worth of their fixed expenses available to them so that whatever happened, they could survive for the next year. Now they made smart decisions, but it makes you a lot steadier. You're a better leader, you're a better business owner and that's why it's a really important thing to have. And we made it entire level, level nine, more than three months worth of fixed expenses in working capital. Ultimate goal though, remember, 12 months.

And basically you're creating an arena of safety for the people around you as well when you're getting to these levels. Because whether it's 312 months, you know, some of, some of the historians will tell you that, you know, people have sustained themselves over time because of planning for, for the worst case scenario as well.

Yeah, well, absolutely. Why would we spend all this time having correct financial information, investing all of this time and money into our marketing, increasing all of our margins to just withdraw everything we, we need to then build that secure company.

And our granny taught us from the time we could understand that we need to save for a rainy day. And the reason she did that was that. Strangely enough, it rains occasionally. So, you know, the bottom line here is creating those reserves. I always tell the clients that I work with, this is your. This is your sleeping tablet. It. You sleep well at night when you know that you've got 3, 4, 5, 6, up to 12 months of the running costs of your business available to you at any time.

I can remember when Covid did hit in what, March, and probably more severely in terms of business, April 2020. And someone said to me, and I said, you know, are you concerned about, you know, your builders? Because at that point, sales funnels were emptying quite quickly. And I said, no. Our members have been preparing for this moment for the last four or five years. It was more of an exciting challenge. And we practice what we preach ourselves. We too hold strong reserves, not just in the company, but personally as well. And with the uncertainty that hit in April 2020, we immediately suspended our own drawings from the company company to protect the company. And we could do that because we had 12 months reserves of our own. And we also looked at battening down the hatches on the fixed expenses, which meant all of our staff, their futures were secure for the next 12 months. Because regardless of what happened in the business, we knew that we could write this out and see our way through to the other side. Because at the time we were kind of thinking, and this could go for around about two or three years. I mean, little did we know that the economic boom that we experienced, it, it was a different kind of challenge that we ended up pitting. But it's exactly what Andy said. We could sleep at night. It didn't matter what Black Swan event was coming out and hitting us. We knew that we'd been preparing for it and we were ready for any challenge. Which I guess then brings us to the finale. The level 10 10. And for a building company to reach level 10, they will be consistently producing 10% net profit after drawing a market salary. Now, typically, that market salary is going to be in the region of about 500,000 plus, because they are going to be running a $10 million plus building company by that stage. And I think what's really important is they grew their building company profitably all the way through. Now, it doesn't mean they're capped at 10 million. We've got, yeah, we've got clients that do 50, 60, 70, $80 million. But the fundamentals are the same. It's not about the revenue that they're achieving. It really is about the net profit. And it has to come in line with the market salary as well, because there's no point in sacrificing your own salary to artificially boost your net profit. You're not kidding anyone when you do that. In fact, it reminds me, we did a live event recently where this guy. They weren't members, but they attended it. And they had a reasonably successful building company. They were doing about 5 million and they were operating on about 5% net profit, although it wasn't clear if they were actually drawing a market salary or if they were drawing a salary at all. All. So that could just be 250,000, which was then being drawn out as a salary, which would be about the rate, really, to run a building company of that size. But they couldn't comprehend when we spoke about 10% net profit. They just did not feel it was realistic or possible. And it didn't matter that we've got members that have come through and actually demonstrated that they've achieved this. It doesn't matter that you can look up public records of any residential building company. Not so much in Australia. They're difficult to get hold of. But you look at places in the US or the UK where you can access that financial information, you'll see that the benchmarks are 10% net. The benchmark for the fixed expense ratio is 15%. You talk to any accountant that understands construction, they will tell you the fixed expense ratio is in the region of 15. Sometimes it can go up, sometimes it can go down, depending where you're on the growth scale. But, you know, these. These fundamental ratios, we didn't invent these. Yeah. We didn't create them. They are fact.

They.

This is how the industry operates. So we simply got to follow them and benchmark our building company against what the rest of the industry is doing and then simply do it better than they are.

And I think, Bosco, just to amplify what Russ has just said, we. We get a lot of people frown at us when we quote some of these percentages and numbers. We just had a really, really interesting case in the private mentoring program with a client who, who joined the program and openly admitted that he did not believe that what we were saying was possible was actually possible. And in the private mentoring program, he's been working at the process and he's just sold his first contract at exactly the 25% gross margin that we told him was possible. And he wasn't a believer. And now he is.

I suppose you could even argue that mindset should be a level, but really it's not a level. It's a prerequisite because if you don't have the right mindset, you can't progress through these levels. You'll get stuck.

And I think Russ, we are going to maybe argue with you a little bit for a change is mindset doesn't affect skill. And a lot of what we're talking about here is actually developing the necessary skills to run the business professionally. So absolutely, mindset is critical.

You do have to have a growth mindset, an open mind in order to learn, develop and acquire those skills.

Yeah. And even believe it's possible, I guess. Which is a very valid, valid point. So Bhaskar there you've got. Those are the 10 levels at the end of that process, the builder then what we call a certified professional builder. And as sky mentioned earlier, really all that that certification means is that they've now put all of the fundamentals in place that are required for us to be able to comfortably say this business is now safe and secure. And what it then does above all else for for our members is it now gives them choice and options. They can now decide what they want to do from this point onwards, both internally within the business and then extern a on a broader scale.

The way we sort of think about our certified professional builders, that they now just get to focus on growth, like annual growth on their building company, they've achieved or unlocked all 10 levels. And think about it like they are now the real owner of the building company that gets to build out their circle of influence. Kind of like the Richard Branson of the company. You know, they are, they are working on deals that takes the company forward, but they're no longer involved in day to day. And I'll you tell you what's really special about these levels. Nowhere in any One of these 10 levels have you heard us say the words getting off the tools. You know, employing these kinds of people, having this kind of an org chart. It's not about that. If we can focus on numbers, they are measurable and you know, whether you, you did or didn't hit it and it's still applicable with all of these ratios. If you're a 2 million dollar building company or an $80 million building company, it will all still apply. And so we didn't need getting off the tools or hiring x amount of people or anything like that because you will not be able to to do what you need to do to unlock a level if you do not progress and grow as the owner of a building company. We were literally at one of our live events. I remember There was one of the live events we hold of for non members like Russ was, was talking about before and there were, you know, we have like notepads and pens that people can write notes as we're presenting. And there were some builders that were there, they left the event and they left their notepad on the table and just always interesting, you go and see what notes they were taking down, what was getting written down. And they were passing notes to each other and there was one note in there and it was as we were going through the presentation. We talk a lot about numbers, we talk a lot about margins and growth and how to move through these levels. And one of the notes was, was how are you supposed to run a building company with all this data rubbish? Like it's taking too much focus off of the important thing of building. Like how are you supposed to run a company if you're focused on all of this stuff? And it was, it was just perfect. Obviously they weren't the builders for apb. You know, there was no alignment, there was no match there. And this is how you run a successful building company. It's about the numbers rather than, you know, anything else.

That's such a good point. I think Bosco, we've covered this to some degree in previous episodes as well. There's a difference between building a house and building a business business, you know, and, and we're not, we're not sitting here saying every person that wants to build houses should or must necessarily build their business. But what we are saying is if they want to, we've come up with a step by step process that will allow them to do that safely and securely.

It's a good point, Andy, because I think really we probably only appeal to Maybe the top 20% of residential home builders. We, we're not an association that sets out to recruit every builder in the industry. That's not our goal and that's not what we're about. We're all about attracting the guys that do want to grow, both themselves and their business and of course their, their income. But that's not for everyone. And that's not to say what the other guys are doing is wrong. Yeah, if you've reached a point in your life and you're quite happy and you don't want to grow, that's fine as well. But if you do want to grow, they're the kind of building companies that we work with.

I want to explore a little bit about how you unlock the levels. How does a builder progress to the next level? Is that Something that the coach comes to the table with the builder. Is that something the builder comes on their own measurements and say, I'm ready for the next level. How does that work?

Well, it's a bit of both. Obviously, the coaches are trained and focused on, on moving their clients through these levels. So as coaches, we review on a monthly basis who's moved and which levels they've moved from and to we. Obviously, the beauty of those levels, as you would have heard, is that they're practical things. So don't tell me you're calculating wipa, because I can go and check the calculator and if it hasn't been done. And of course, we've been around a bit, so we don't just accept that it's been done. In their KPI workbook, which all of our mentoring clients get as part of their program, we always ask to see their profit and loss statement. Yeah, there we go. Trust but verify. That shows us that the journal entries that take that work in progress into account, that they've actually been processed and we check that every month for three months. We've also got processes just staying on that one for a second, where we actually get them to list their bank account at the end, bank balance at the end of every month, month. And we don't need to know the total amount that's in the bank. We just want to see $1 more than their WIPA liability in terms of confirming that it's there. If you think through all of the other levels, we can literally track them actually in reality, and we then work the, the clients through that process step by step.

Is it only your members that can be on a particular level or, or can builders in general be on different levels?

Any builder can slot on in to any level. These, these aren't exclusive to any of our members. We set up these levels. So even if you're not a member of apb, you can go and reference and see, hey, like, where do you actually fit? Because I suppose the benefit, just like Andy was saying, our private clients, I suppose get verified by the coaches. It's like an independent verification. If you can be like, look, I'm. Actually, this happened, didn't it? One of our clients was like, I'm, I'm looking at the levels when we first launched them was like, oh, I'm a, I'm a level four builder. Oh, no, no. I think they were saying, I'm a level 5 builder because their gross margins were at the industry standard. And it was like, yes, well done. You do have good Gross margins, but you don't calculate your whipper every month. So technically you could have, you know, mix and match, you could have a level six. Just because you're getting your great net margin doesn't actually mean you're on level six because unless you do level one, which is calculating your WIPA accurately every single month, you can't progress. And it's, and it's a great way of bringing people back down and working sequentially because at the end of the day, how accurate is that 10 net profit margin if you don't calculate it?

That's the point, isn't it? I think they're on a level six, but if you're not calculating your whipper, in all honesty, you don't even know. And it's probably not a level six. Six, probably not even five.

And it literally happened and it happened to. I don't know, there's one client that stands out to me, but I'm sure it happens to multiple. In mentoring. You'd know of Andy, because it's sort of, you know, it's just you either do or you don't. And that's the best part about the levels. You are or you are not and you, you can work through it. But, but to answer your question, Bosco, no, you don't have to be a member of APB to be on a particular level. I'd literally encourage every builder to look at the levels right now and see where you do fit in. The benefit of being is it's probably just on your mind a bit more and especially in mentoring or even elite, you've got it verified and a coach pushing you to keep going and keep going forward.

I think as well you've got the solutions in the members portal to get you through that level and onto the next level.

That's a good point. Yeah, yeah.

And I mean, I think that's a very, very important thing for us to stress, Bosco, that, that although we're talking about the levels today, these are backed up by nearly 50 training programs that are available to all of our members that help them to understand why this is important and then show them exactly how to implement what they need to do to achieve this. So when you say, is it only members and. No, it's not only members, but it's going to be a whole lot easier for our members because they get the support that they need in order to achieve them.

It's like a self diagnostic, isn't it really? The levels show the gap and then the, the members portal contains the, the Solutions in the pathway.

I love the training. I affectionately call the training the Netflix for professional builder training because there's so many different videos and so many different training programs that I've already been accustomed to.

Now, Netflix without the ads.

Yes, without the ads. I've got a question for you, and this is for the competitive business owners in the room. How long does it take to work through all these levels? And has they been a builder that you can think of that has exceeded expectations from the average benchmark?

Yes, no, and maybe. So there we go. The answer, unfortunately, Bosco, is it is entirely dependent on where they are when they start. Because the truth is, very few of our very few people join the APB even knowing that the work in progress, accounting, adjustment even exists. So the truth is, and sky touched on this, we could, we could very easily have somebody that has 90% of a sales manual in place. They might be. It might even, once we check their wipa, be close to achieving the industry benchmarks. They may have a company manual in place. So it's quite possible that somebody could come in, have to work on levels one and two, and then have 3, 4, 5, 6 and 7, 90% ready to go and kind of bang, bang, bang, bang, bang. Those things happen very, very quick. What do we aim for? We aim that everybody has worked through the levels in our private mentoring program in somewhere between 18 and 24 months, and then we move them into what we call an optimization phase. So probably, if somebody was looking at realistically, what's this going to take, it's going to probably take you three years to get all your way through starting from scratch. Now, some people take longer, quite simply because the way their business is set up, we've got to undo some of what's going on and then kind of rebuild from scratch. And some people will join the program, and I'm talking about the private mentoring program. They'll join the program to get specific pieces of it done because that's what's lacking in their business. So it's a difficult one to kind of give you a give me six weeks of your life and I'll make it happen. You spoke about the competitive guys in the room.

Room.

They love this because they get to, you know, move to the next level and. And that in itself is a motivator. The beauty is there's no downside, you know, that competitiveness is simply taking you to a better place in terms of your business. So that side is fine, but we don't make it competitive. Our focus is really to make sure that each step is in place before we move to the next one so that you'll hear us. The three of us, we live it because it's the truth. This must happen safely and securely. We want to minim. There's enough risk in business just generally. We don't want to add to it. We want to in fact reduce it if we can.

That's a good point. When we launched these, it wasn't even for the gimmick factor to, to get people to compete with each other and you know, have like little trophies for everyone. It's completely not the point. It was a way of, you know, we've got over 100 private clients that we've got five coaches on our coaching team. We need a way like what is our baseline? What is success? Success in these building companies that have all different kinds of revenue and size projects. Like we needed that measuring stick that could work on every, every building company.

What's the big incentive for any owner of a building company to follow this level? You know, follow these levels. And what does success look like to them?

Well, I think it is fundamentally to grow their building company safely and securely. And a common overstate the importance of that statement enough because it is very, very easy to scale a building company, an unprofitable building company. It's extremely easy. And I think that was highlighted to us a few years ago and I know we've shared this story before but I think it's worth repeating. And this goes back pre Covid I think everything like post Covid or pre Covid now but it was a few years ago and a marketer, a very well known marketer in Australia was running an event. He packed the place to the rafters. He's very good at what he does. He's a great entertainer, had great stage presence. However, as part of his proof into how successful his methods were, one of his examples was a building come company that he scaled up into bankruptcy because his techniques were just so successful and so powerful that they grew too quickly and we were horrified. But it really does highlight the dangers of following advice or not even following advice, but scaling the building company before you get the margins in place. And as you can see from the levels that we've gone through that that is like so, so important is to get a good understanding of the financials and understand exactly where you are and that way you know exactly where you need to be heading to before you start scaling up. I guess success, it leaves clues along the way. And what we've done here is we have mapped out the pathway that a builder can be successful without the risk associated with growing.

And I think just to kind of talk about some of the stuff we've covered in previous episodes, when you get to level 10, you actually have something you can sell. The crazy part is at the level that you'll be at, you probably won't want to sell it at that point because it's going to be an absolute dream to be running that kind of company. But you know, we keep talking about the fact that not a lot of building businesses get solved and the primary reason for that is that there's not a lot of value in them because there's no profitability and there's no systemization and really that's what these 10 levels bring.

I think for me the biggest incentive is you're also teaching them how to be a sustainable business legacy. You're leaving a sustainable business behind during times of uncertainty. So I think there's a lot to unpackage there. Where for our listeners, where can they find these levels so they can follow the progress of their own building customers company super easy.

It is on our website under resources but I what, what I reckon we could do is actually put a direct link to our professional builder levels in the show notes of this episode so that literally anyone listening, go look at the levels, recap on what 1 to 10 are and just see where you fit and then see it has a full description like what the level is, what it means, like what you actually need to get done and what the next level is so you know what you need to work on to to move on up and grow that building company re margins or both safely and securely.

My final question for you is I've been keeping up with the socials on APB and you recently had a retreat and you're announcing a future retreat as well. And I'm just curious if these retreats that you do with your clients are associated to the levels and if so, what level do they need to get to come and hang out with the APB crew?

16.

No, our, our retreats are firstly an amazing event. We're headed to Hawaii in 2023. It is sold out. We have a wait list if you are interested if, if we can secure some more spaces. But the retreats, they're not locked to a certain level. We actually lock a level of our mentoring. So we have a higher level of mentoring. It's called elite mentoring. But that is a locked level. We do not allow people under a certain level in the professional levels to get that level of mentoring, or elite mentoring, I should say. But our retreats are actually predominantly focused on legacy planning, succession planning, exit planning, which it weaves the levels in so beautifully.

That's awesome. Well, as always, I wanted to thank you all for being here today and for sharing so much value and insights to another insightful podcast episode.

Thanks Moscow. Great catching up with you again.

Cheers.

Thank you for listening. Remember to subscribe to Professional Builder Secrets on your favorite podcast platform and leave a review. To learn more about how the systems at the association of Professional Builders can help you grow your building company, visit associationofprofessionalbuilders.com See you next time.