58. I Thought APB Was Lying To Me With Sam Swartz

What you do with the small details is just as important, if not more important than the big ones. The red flags are different, but you just have to be paying close enough attention to see them that Our margin's up 250% since signing up with Eric's help. You have to spend money to make money, right? You have to invest in yourself. Building the house isn't the hardest part. It's running the business. 70 hour work work week is, is not sustainable. It's not healthy. We're going to do it right. We're going to do it right the first time.

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 your clients.

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 Builder Secrets podcast. I'm joined today by Sam Schwartz, president and owner for True North Custom Homes. Sam. Sam, thanks for being here today.

Absolutely, thanks for having me.

Well, Sam, tell me a little bit about True north and what you specialize in and tell me a little bit about yourself.

Appreciate the opportunity to be on and be on with the apb. I'm a small little custom home builder here in Lincoln, Nebraska, in the middle of the US When I say small, that was the plan when we started, but right now we have about 18 to 20 projects going on at any given time and building mainly custom single family homes, but we also have rolled out a line of high end townhomes in the last six to nine months as well too. So that's the main focus right now.

I've actually been to Nebraska, so I actually know where you are. And for our listeners out there, I'm sure they'd be fascinated to learn a little bit about Nebraska as well. But how did you get started in the industry? You know, was this an accidental sort of career or, you know, did you know at a very young age that this was going to be your purpose in life?

You know, no, in, in high school it was, it was my first job junior year in high school. I started as the low man, if you will, making minimum wage for a remodeling company and moved on into into college and actually went started college and my mom told me she didn't want me working so hard the rest of my life. So she made me get my four year degree and went to college, got my degree, ended up on a different path and about 15 years later on my back into home building. So was not the plan but that's, that's kind of how life goes, I suppose. Right.

I guess the industry picked you in.

Some ways it sucked me back in. Thankfully it did too. Yes.

That's cool. Well, you know, I think when people look back at their illustrious career, it's typically defined by milestones. But you can also find your growth in mistakes, you know, as people say. So I'm going to ask you this question because obviously we all get defined and change our ways through mistakes. But what were some of the memorable mistakes you made when you first got started that really just changed your trajectory and where you were going because you had a non negotiable that you wouldn't do that again.

That's good. We'll go way back actually. I was in a job working an 8 to 5 that I couldn't stand the work and so I'd actually found kind of the, the beginnings of my entrepreneurship that I didn't even realize I was destined to be in actually. And so I had this job for about a year and a half and finally thankfully one of the best things that ever happened to me in my career was my boss fired me the day after Thanksgiving of all things. Pretty low humbling spot but kind of set me completely changed my trajectory. I was know working for Fortune 100 companies thinking that that was the safe way to go and finally realized when I got pushed out of the nest if you will, I was meant to blaze my own trail and, and be an entrepreneur and been on that path since 2010 now. So thankful to have have found that hopefully that, that not quite in the building world but it certainly is what led me to two here else I'd probably still be punching a clock making somebody else money today.

Well, if you, if you think about the clients I'm sure you've had, you know, the best of the best and potentially clients that you didn't want. I'm going to ask you this in both spectrums. What did you learn from your best client and what about the worst client? How do you avoid getting more of those?

Well, the, the, the easier one to answer is probably the, the worst client, the worst client. There's always a, a handful of red flags that come out right the the red flags are different, but you just have to be paying close enough attention to see them. And as I've kind of thought about this, the. The two worst clients, if you will, that I've ever had to deal with absolute just beat your head against the wall clients, we've all had them was they came in, we designed what they wanted, we gave them everything they asked for, and then we gave them the price. And it was, it was too much. It wasn't what they wanted to spend, but everything that they wanted was in the house. So we go back and we do all this work and spend hours and hours redesigning and rebidding and come back with a price that they're more comfortable with. Well, then we get into the build and everything gets changed back to the way that they wanted it, and they end up spending even more than what the initial contract was. And the whole time, the whole process, their expectation level, I was never going to meet, no matter what, how hard I tried and all of the work that we did. So I think if anything, it's. It's give them exactly what they want. And if they're not willing to do what it takes to get that, then you just have to gracefully move on. But as for best clients, I would, I would say my favorite clients are, are the ones that, that have the same energy as me, the, the talkative, the people that, that enjoy life, the people that kind of live for today, if you will, and just want things done the right way. And they don't all want to pay for doing it the right way, but they, they see the value in having it done the right way. So when you have a client that you can, you can hang out with and want to break bread with after the house is built, that's always, always a blessing. From time to time, even you have homeowners over to your house for dinner and a movie after the house is done and get to make lifelong friends. At the end of the day, that's, that's kind of that extra cherry on top for me.

So what are you known for today in the industry by your clients? And let's just hope that your good clients, you know, supersede the ones that you don't want. But what are you known. Known for by your clients in the industry today?

I would say, you know, kind of the narrative from what one client will share with their friends or even what the realtors in my market would say is the narrative I hear often is just the attention to detail. And that's, that's really what we try to sell. I want things done right and you can rub off on my team the wrong way sometimes, but we're going to do it right the first time. And every little detail when it comes to building a house, there's hundreds of details that you have to sweat, if not thousands, frankly. And so what you do with the small details is just as important, if not more important than the big ones. Because if you're not sweating the small ones, you're going to let everything else slide, I think. So. Paying attention to detail and then really doing. We do a great job, I think, at setting expectations out of the gate. We don't just bid off of a set of plans, we build off of a 25, 30 page spec document where we're going to take the client's home and break it down detail by detail and really show them exactly what they get. The things that they don't know that they need or want at the beginning, but they're always thankful that those things are identified once we get into the build.

And having that 30 page document, did that come from years of experience and sort of wanting to reinvent yourself or was that just something that you guys discovered would just, you know, eliminate some of the problems down the track?

Yeah, a little bit of both. We definitely had a great baseline to start with, but the document is even today, ever breathing and evolving document. Anytime that something doesn't quite go right in a project, we'll go back and identify it in the specs and update it for the next projects moving forward. So it certainly looks a whole lot different than it did on day one. But I think that it's important to not just assume that it's right, but always changing and evolving. So.

Well, let's, let's go to the sort of semi present day. You've given me a little bit about your past, but tell me, what were you struggling with before you met the team team at the association of Professional Builders? And tell me, how did that story, you know, come to life?

So actually just this last February, I was in, I was at IBS in Orlando and, and I saw the APB's class. I don't even remember what the subject line of the class was, but I, I know it was something about, you know, building for profits or something geared towards margin and profitability. A numbers fanatic. I sweat the numbers and so anywhere somebody's got something to teach me about numbers and how to make the numbers better, I am, I am all in. So went to the class and Eric, my now business coach, was There presenting on what the APB recommends for margins and what they recommended for, for profitability. And frankly, I thought the APB was lying to me when they told me what they thought the margins would be or should be. And I can even remember sitting in the meeting with my one employee, I was texting him going, you wouldn't believe what these guys are telling us our margins should be. So to say that we were a little bit off where we needed to be, where our trajectory was way out of touch. And so just really digging into the APB and what they have to offer, not just telling you what you should be charging, but showing you the roadmap of how to do it. That's the key. I mean, I've had other, other builders, other mentors tell me, hey, you need to be charging X and kind of going, yeah, that's, that's not realistic. But for whatever reason, the way the APB put it together and the way they presented it in that class, it just, it clicked. And I was a sponge. I wanted to, wanted to take in as much as I could and went to a couple more classes there and then right away when I got back, reached out for the, a bunch of free literature that they have and then signed up for a call and really jumped right in.

So, so I mean, I find that really fascinating because obviously you had some resistance, obviously. And you were sitting there going, this number sounds, sounds too good to be true, obviously. So something must have compelled you to jump on and eventually, you know, join the mentoring program. What do you think that was? Was it a curiosity to prove them wrong? Did you feel like perhaps there was something there that you needed to open and discover?

I think it really goes back to why I went and signed up for the classes and signed up for the education. With my building background, I really felt like in Lincoln, Nebraska, I was, I was on an island kind of by my, by myself. I, I only knew what I knew and I had no idea what I didn't know. But I was, I was able to identify that there has to be a better way and was really went to the conference searching for a way to do things better. My company was still, is still pretty young and trying to find the right ways to make some changes from the past. So really just being open minded and them saying, hey, this is what you can do. I certainly like to joke, I'm a capitalist. So I, if, if you're gonna, if you've got a roadmap to tell me how I can be more profitable, I'm.

All ears so what was some of the significant impacts you've had through the mentoring program as well? And, you know, you transfer that to the business that's made it, you know, really worthwhile for you.

It's exciting because we. I've been in the mentoring program for right around six months now. Five, six months. And I feel like I've just touched the tip of the iceberg and already I'm kind of dumbfounded on. I made a mention earlier, but I didn't know, man. There's. There's a whole lot more that I didn't know that I didn't know, which really makes me sound intelligent here. But I would say that the biggest things obviously were margin. That's where we, where we jumped in first. We jumped in first on revenue forecasting. And the WIPA calculator for me is I'm a sole proprietor owner of my company, and so all of the decisions obviously fall on me, which is what I wanted. But that comes a lot of responsibility. So being able to know and plan out six months and being able to go to a spreadsheet that the APB provided and be able to see that, hey, I have, I have revenue and I have my overhead covered for the next four, five, six, seven months, whatever it might be, certainly gives you a lot of peace. Whereas before, it's like I knew there was projects and margins that were booked and sold and under contract, but being able to lay it out on a monthly basis and see it in front of me, I can, I can go right now to January of 23 and know exactly what my gross profit is going to be as of today. So when I'm looking at hiring new employees or making different purchases, changes, when you know you've got a lot of run in your revenue, it just really gives you a lot more peace to make wise decisions, if you will.

It sounds like you've had a lot of financial awareness as well that's come from this process as well. You talked a little bit about margins. How did you get more confident selling, you know, higher margins as well. Where did the confidence come from?

I would say honestly, it came from Eric, my business coach, pushing me constantly in those first three or four coaching sessions, it was one seeing what, what my overhead really was and really digging into what my overhead number was and knowing what I had already spent, you know, with. With those commitments and knowing that I had to have a margin to be able to cover it to be sustainable and stay in business. So Eric did a really nice job at helping me understand my, my overhead I thought was much less than what it was, which kind of sounds negligent, I guess, but until you really jump in and study what it's going to be month to month and then especially when you're on a growth rate that we've been on, we've hired since, since February. We just hired our, our fifth employee. So now there's a. We're a team of seven. So we've been constantly growing and adding to overhead and every time we add to the overhead, Eric's there to go. See, this is why you have to increase margin. This we have to increase margin. So really his push has been pretty remarkable. I'm a little reluctant to say that, that Our margin's up 250% since signing up with, with Eric's help and really being able to see. I don't think that we fully captured the margin that we need to, but we're certainly on our way to where it should be.

That's pretty impressive. Of all the APB systems and there's quite a few, as you said, and action plans and the different areas of innovation, which one did you guys implement? That was a game changer where you look back and go having that system in place or having that action plan really just transformed everything for, for you.

Definitely the first one we jumped into was revenue forecasting and then right behind that was construction slots. I signed up with, wanting help with production and when we. And being able to get a lot of the jobs that we'd already sold, being able to manage, getting them done. But when we jumped into the, the mentoring program, really seeing that our finances needed more attention first. So being able to do that and then the construction slot planning was obvious. The next obvious fit for us. I almost feel like we're a little, a couple months early on being able to talk about this because I think the biggest changes are come in the next three to six months with the push. The two I've been most excited about using or getting to is the marketing action plans and the sales action plans. So after seeing what the APB recommends, a marketing budget, I was probably spending a quarter of total revenue and APB's push is 3%. Right. So we've been making big changes in our marketing program and actually just offered last week a new marketing manager to come on and take care of basically all of the marketing modules that APB has. So their first two weeks on the job is going to be watching a whole bunch of videos and reading a whole bunch of action plans. And basically the APB has laid out for me there, my new employees entire workforce focus.

So not only are they your mentors, but they're also providing the onboarding for your new employees. Yes. That's great.

It's great. So I do all the sales here at True north and so the client calls meets, wants to meet with us. I'm doing all that and I have not done as good a job about tracking and writing everything down that needs to when it, when it comes down to following up and having systems and automation. So I'm feeling the extra push to. With the new marketing push, I know I'm going to be a whole lot busier on the sales side. So both of those marketing action plan and sales action plan are going to get implemented heavy here in the next 30 to 60 days. So that's where that next three to six months. I'm ecstatic to see what, what changes are going to come.

And let's talk a little bit about softwares as well. What type of software are you using within the system and also a little bit about leads. You talked the fact that you're doing sales, you might be getting someone to do marketing as well. What type of systems you've got for the leads and the software as well that you're using for the business today.

Yeah, that's where I'm going to probably myself in trouble a little bit. My sales leads tracking. I'm a little bit old school. I love a whiteboard and I've got my whiteboard here with names and phone numbers and email addresses on it. And that will be the first thing that we are implementing obviously is we'll be jumping into some software to help track it. We've done a lot of tracking also capturing leads from our website with buildertrend. Everything goes from our website through Builder Trend and to my email, which is great. We can look back and we've got have all of those captured. But Builder Trend has a huge side of it that we haven't really used. That'll be one of the things that we're implementing. They're right up the road here from LINCOLN about, about 45 minutes. So my excuses for not implementing them on the sales side are a little weak. But I will say Builder Trend has been huge, huge for us on the, the production side. We have a production schedule that is built out that I would put up against any builder. Frankly, the attention to detail and just the every minute detail that you can think of that goes into building a house, scheduling, the gas meter, all the little things that when they're supposed to happen We've got cues to make sure the superintendents are getting things scheduled and set up. So huge, huge builder trend fan. Honestly don't know how we would be able to run production without those guys.

I've actually had the good fortune of interviewing, I think the CEO at the time. Yeah, I think it was the CEO. Yeah. On the podcast as well. And he was an amazing guy and lots of insight shared from it.

Their product is. Yeah, obviously those guys are a whole lot smarter than us. I won't speak for you, man. Sorry. But they came up with, I mean I don't know of anybody that rivals it. So thankful to have them in our process and being able to communicate with clients and be able to communicate with subs within the scheduling modules. I mean it's, it's been great, great for us.

Now let's talk a little bit about the future. Obviously we're living in some interesting times right now, but you know, when you think about where we're going and what you want to focus on and obviously you're still doing the mentoring, you're implementing systems. How are you future proofing your business long term?

Well, I pray a lot that's probably if I've learned anything about this business, you can plan and plan and plan and when, when my plans aren't the Lord's plans, they certainly change and change quickly. So. But still a planner, still a goal setter, still focused on, on driving the business forward, has actually had the good fortune of, of getting my name in on a large 70 acre development here in Lincoln where we'll be putting in 101 lots. So being able to control and have places to build is going to be huge for our company for the next three to four years. And really I'd say the biggest catalyst for our growth into the future is going to be my team. I have some, some remarkable people that I've been, been blessed to hire here in the last three, four months, especially my, my cfo. Being able to have people on my team that I trust and can, can put in charge of important tasks like the finances, like production, even all the way down to my, my superintendents in the field day to day. I don't think I'd ever be able to, to dream about the future the way it's shaping up without them. When we started this company, my wife and I, 18 months ago, the goal was to, to build five houses a year. I was going to be very content with, with five contracts and kind of run on myself and kind of do everything like most of the builders do but been able to to grow and make some good decisions and lot purchases in different areas. And we're up to, like I mentioned earlier, 20 houses in production right now. So having the team underneath me to help accomplish all of that work is impossible without them. So I would say that having the right people is the most important part of how I'm going to build True North's future.

When we talk about time, you know, I usually meet builders that are on the business, some are in the business. How much time do you spend working either on or in the business? I guess you talked a little bit about the fact that you're doing the sales right now too.

Yeah, I would say my biggest problem right now is, is not enough time to work on the business. We've got so much growth and going on and projects coming in with a large number in design. So I walk everybody through the design and sales process. So I would say an average week probably somewhere between 70 to 85 hours and frankly maybe 5 to 10 of that is on the business. Unfortunately it's usually late at night after the phone stops ringing. Able to spend more time focused on the business as opposed to in the day to day. But we're making changes to try to help free up some of that time. 70 hour work week is not sustainable. It's not healthy. But again, when we're, we're only 18 months old after starting fresh, I'd say that that's okay for a little while longer to make sure we're up off the ground and on solid, solid footing.

Well, you're in good hands with Eric. So I'm sure, I'm sure he'll be, he'll be cracking the whip sometime if he already has yet.

Absolutely. Every month. I look forward to it actually. Yes.

So look, I'm going to ask you a question about perception from build other builders. And maybe, you know, there's two parts to this question. One is what are your thoughts around how do you compare amongst other builders? And then what do you think other builders think about your company? Obviously now that you're growing and you've been there, like you said, you know, and making a name for yourself too.

That's a tough one to answer what others think of you. But I will say that we tried to position ourselves. I spent a lot of time out of the gate thinking about at the beginning, thinking about how I wanted my brand and my company to be perceived. You don't just come up with a name and throw something on the side of the truck and run out there and think you're going to do business if you want to do business. Right, right. So that attention to detail goes all the way down into, into the, the logo, the color scheme, the planning, the, the narrative on your website. All of those things are vastly important. And that's, that's probably my marketing degree coming out in me a little bit, but just kind of the way I'm wired. But I would say that we positioned ourselves to be more to the high end. We're marketing a little more towards the, the affluent that can afford maybe that top 10, 15% of homes in our market. That's was kind of an intentional pursuit. How other builders perceive or look at us. I'm going to hope that they respect what we're doing. I know that they see that we're working hard. I know that they're going to see that our attention to detail from the street is there. My superintendents, they have daily checklists and everything from making sure the street signs are stood up to the weeds are trimmed, that the trash is off of the yard and off of the job. All of those little things are things that are big hot buttons to me. And so if another builder is driving by, they're going to notice that we also have a great association, the Home Builders association of Lincoln. I'm on the board of directors for that. So I get to spend a lot of time with other builders in my market that I respect and learn from. And we're able to work together to accomplish some pretty cool things in our community as well.

So what advice would you give other builders considering joining the AAPB membership and mentoring program? And what do you think they need to be successful?

Well, my mindset is you have to spend money to make money. Right. You have to invest in yourself and you certainly have to invest in your business. And if you aren't willing to do those things first, you're probably a guy that's wired or gal that's wired to be working for somebody. Now you got to have the money, you got to be able to afford it. But to invest in your education and to not think that, you know, everything is, is huge. Most builders, you know, they were framers or trim carpenter that, that did a lot of work building a house and they know how to build a house. But any, most people building the house isn't the hard, the hardest part. It's running the business and working with the clients. That is what trips most people up. So would you rather be great at building a house or great at running a business? I think you have to learn to do both really well to be successful. And with all of the content that APB puts together, constantly coming out with new information and I sit here and I look at all the modules and action plans that I haven't had time to watch yet. There's so much for me that it's just a matter of finding the time in my schedule to work on it. So I would say that if your business is important to you and growing and being the best at it, it's such a small investment with such a high opportunity of return that for me it's been a no brainer. And I certainly think that it's worth diving into that first coaching session to really get a grasp for where the value really is.

Now, if they invented a time traveling machine and most of the time you go back in time as well. But let's just say your time traveling machine takes you to the future where you're not working 75 hours a week. What do you tell a younger version of yourself in the future? What's the advice that you'd give yourself from the future?

I put a great focus on today already. One of the, my biggest pain points in this business and in this industry is how much time I'm. I have to spend working to build this company. And I have two beautiful kids that my ultimate goal is, is to be able to spend more time and, and be able to do more fun things with them. That's my focus now. And I think I'm telling myself that every day. Hurry up and get home. As I sit here at my desk and it's seven o' clock on a Monday night, but I would say I already do a pretty good job of making sure that today's right. But investing in and continuing to invest in people and the people around me, family and friends would certainly be the ultimate lesson to take from this, I suppose.

Appreciate the honesty. Look, it's been a pleasure talking to you, Sam. I've learned so much about you in this very short time. Sounds like you're on a very exciting journey. I'm glad that the association of Professional Builders weren't lying to you. And actually you're having a great time with Eric. I look forward to bringing you back on the show and seeing where you've progressed as well. And hopefully you're not working 75 hours a week.

I like it. I look forward to our next chat, man. It'll be fun. Thank you for having me.

Appreciate it, man.

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 association of Professional Builders.com See you next time.