Toolbox On Call: Training, Risk, and the Scarcity Mindset | Podcast Ep. 102 | Toolbox for the Trades

Hello, contractors, and welcome to Toolbox for the Trades. I have something very special for you today, this Tuesday, that I hope you're going to enjoy. It is an idea that was pitched to me by former Toolbox guest Tom Howard, who is the VP of Customer Service at ServiceTitan. He listened to a radio show. I'm gonna go ahead and say, 100 years ago, that was all he sees. He's here, he's on mic. He is smiling and shaking his head. But he listened to this advice show called Click and Clack back in the 1800s, and he wanted to replicate that for our incredible Toolbox audience. With him is Eddie McFarlane, who is the CEO of Haller, President, president of Haller. And what we're doing for today's episode is we got a bunch of questions that folks called in and asked. And Tom and Eddie are using their industry expertise, their collective industry expertise. And to answer some of these questions, we talked a bit about inventory. We talked a bit about starting your own school. We also talked about, you know, just finding the confidence to grow and to not kill yourself emotionally while you do it. You guys are going to hear the answers to those questions in just a bit.

But I want to let you know.

That this is a total experimental format that we are playing with, but we had a great time recording it, and I hope you guys will like it. So, Tom, say hi. Say what you're doing. Give me all your titles, please.

Yeah, so, hi. I do work at VP of customer Experience at Service, but more importantly, I think is that I've been in the trades for years, and I still own. I have several companies that are air conditioning, plumbing, and actually one pest control company still have them. Still work in the trades and still. Yeah, grind it out like everyone else is doing.

Fantastic. And, Eddie, tell us about you.

Yeah, yeah. So as we mentioned, currently have the privilege of working with the team at Haller Enterprises in Pennsylvania. We do plumbing, heating, electrical.

And you didn't mention the privilege of working with Tom Howard.

I was getting to that. Something about saving the best for last.

Okay. I was just making sure.

And I figured you'd bring it up.

I'm always there for you.

That's good. And so I get to do that. I also have the pleasure of serving on the board of directors for the NA organization. And of course, I'm on the executive board of the Air Conditioning Contractors of America. And I get to work and represent and talk to hundreds probably like Tom. I think a lot of what we share is really, we get to reap the Benefit of the hundreds of contractors that we've spoken to over the last couple of years. You've traveled a lot. I've talked to a lot over the last four or five years. And a lot of what we share is really the benefit of all those that have been kind enough to share with us and a few hard lessons I learned on the way.

So what we're going to do for today's show, which still haven't figured out a name, I'm liking Toolbox After Hours. Now, it was originally Toolbox At Night.

Or after Toolbox After Dark.

Toolbox After Dark. It's going to be After Hours.

After Hours. So we're going to Toolbox on Call.

Toolbox On Call.

Toolbox After Dark. Sounds like some kind of weird.

Well, you're the one talking about Speedos, Tom.

Howard's gonna start taking his shirt off.

As long as it rapes, I'm in. No, but Toolbox on Call, because it's typically after hours and people are calling in.

Yeah, I like that. I like that.

Okay.

It might be Toolbox on Call. So this is an experimental format. I hope you guys like it. There's a ton of information. I know because I just listened to Tom and Eddie give their expertise. I'm really excited for y' all to hear it. So I hope you enjoy this special version of Toolbox, and I will give you instructions as to how to leave feedback on it, how to call in with your own questions, and hopefully we'll have more episodes like this for you guys to enjoy. Eddie and Tom, let's get into our questions.

Wow.

We did it. After one year of Tom saying, hey, I really want to do this question and answer show.

Actually succeed in this.

You're going to do great. You're going to do great.

I was told there was no right answers.

So there are no right answers.

There's two kinds of answers. There's right answers, and then there's his answers. Those are the two options you have.

They can decide whose is whose.

Okay. All right, let's go. We're going to do this. So here is our first ever question on Toolbox After Dark.

Hi. So my question is, how do you train young service technicians? The other question I have is, what does building a training school look like.

With those young technicians?

Thanks so much and have a great day.

So how do you train young service technicians, and what does building a training school look like with these young techs, which you guys want to take? Which of you wants to take it first? This very simple question.

Well, I. I Think Eddie can take it first. But I can tell you what it looks like. It looks like the reason I don't have hair is after getting through building a training school. Yeah. And my first round of training, this is how it ended up. But Eddie, do you have any thought on there?

I had a few punchlines, but I'll give them to myself. I mean, listen, please. There's, there's a lot of talk about this generation, that generation, whatever. I, you know, I think the, the answer to training young technicians is the same as training the other technicians. There should be sort of a five dollar word alert. There should be a. I think it's pedagogies and children. Adagogy, an adult.

Sorry, what?

Huh? Huh?

Pedagogy. It's like someone can leave an angry note at the bottom of the screen. If I mispronounce it, I will. Thank you. You can do it right now if you want. No, there's a point and an arc to learning and you don't start in the middle, you start the basics. And it's a cumulative, you know, we don't learn things in the abstract. We learn things relative to other things we learn. So there's an old saying that if the, if the student hasn't learned, the teacher hasn't taught, and there's a lot of finger pointing like, oh, these people can't learn anything. Well, you know, you look in the mirror, did you have a good structure? Was it clear? Did you have like learning milestones and objectives? And that's not really an age thing. If anything, it should be. You know, since I think that was Ross Albert from Arctic Area, New Jersey. Hey, buddy, good question. I, I think if anything, that younger generation, they've just come out of school and they're, they have a learning mind. You know, a learning mind is different than a mind that hasn't been learning. The good news about the trade is you sort of learn something every day. But I would say the answer to the first half of the question is just be thoughtful, have a point, recap.

Make it interesting to them.

Yeah, the mind can absorb what the but can endure. So like, you see these people that like pack 20 people in a room for eight hours and I wonder why they didn't learn anything. It's like, take a break and mix it up and do hands on and figure out, you know, what's the best method. Is this a PowerPoint lesson? Is this a hands on lesson? Is this something in the field? Is this something to bring a vendor in?

Well, I heard two points on what you're saying there. So one is, I heard that basically older ones and younger ones, you got to train them either way and older ones have been in the trades for a long time. You shouldn't stop, stop training them. Right. So that's one point I'm getting out of there. Second point that I'm getting out of what you said is basically like make it not too boring for them. They're not especially. The younger generation doesn't want to sit in a room for eight hours and quite frankly if they did they probably would have gone to a four year university for something else. Not what they're into. So the hands on stuff's always going to be better. I think the big thing that I get out of this is also is that a lot of people, you know, they're in the industry and they don't have a ton of money. They just got in, they got a couple of texts going and like, gosh, I need to train some more people. I see. Oh, the big shops. They've got a giant school. I have a school now at my shop but it took me a long time to get there to make it valuable. I think one of the big things we need to remember is don't get too excited on. Oh, it has to look super cool like the big shops. I have to spend half a million dollars.

But I saw on Instagram.

Yeah, I saw an Instagram. Look at, look at their nice chairs like and look at that lab they have. I mean if you've got, if you.

Don'T have a neon sign, you do not have a training center.

Yeah, exactly.

Make sure number one, you're charging your customers appropriately to be able to afford some training. The training doesn't have to be super high end. You can have a ride along program with a checklist. That's what we started with was a checklist of all the things that person had to cover. Don't just put them in a truck with no outcome.

Oh, learning by osmosis.

Yeah, yeah, okay, great. But if they're riding along, they've got a checklist. Here's the things I need them to cover. I want that person you're riding along with a second sign off on those things one at a time. Maybe it'll take you a month, maybe it'll take you three months to get there. But I want them you to adequately show that you've covered all those things. That can be your base. Did you have something you're saying?

Well, I was just going to say you reminded me of the person that knows the most isn't necessarily the best teacher. You know, when you talk about people, there's people and they may be the best technician, they may be your stopper, they may be your golden goose. But if you put a junior tech or someone that's new at the field, by day three, they're like, they're on. Indeed. And looking for a new job because this is killing them.

We've all had those.

And so maybe the best person to do the training is the person that you trained last, who's got a super great communication, who's excited about the job, who's excited to meet the customer, who follows processes and you know, that can get the foundation and then sure. For other technical things, you can do other things.

So I get them in those ride alongs with someone that can train and like, like Eddie said, it's not always your number one technician. In fact, most of the time it's not, It's.

No, that's actually something I've learned from Toolbox for the trades is it's never your number one technician.

He doesn't know why they don't understand this already. He's explained it once.

You should never go to your number one technician basically for anything other than to be your number one technician.

Yeah, exactly. And then that one always wants to be pulled out of the field to be the manager, by the way. And it's like, oh my gosh, worst guy in the world to be the manager.

Yes.

It's like, sorry, you know, compressors don't talk back to you. People do. You're gonna have to learn how to take that. I mean, so smaller size, keep it cost effective. Now there's other things you can do as far as sending them out to third party trainers. We did that like that.

Yep.

I mean, yeah, especially when we were, you know, a smaller company that we did that a lot.

And they're really good. And that may be the perfect answer if you're bringing on one tech a year, you know, and that's doubling your business. That may be the perfect answer.

I'd say on those to watch out for is don't send them once and then expect it to be good now. And people say, oh, should I send them twice weekly and follow up and make sure that you're having those, you know, weekly meetings, reinforcing what they learned for that week at that one training they went to in whatever XYZ state.

And you just bring up an excellent point. I'm fortunate to have a lot of friends that actually I tell people I'm not qualified, I'm just opinionated. But I do hang out with a lot of qualified people. Right. And what they talk.

You're welcome.

Thank you, sir.

Best friends. Just all it took was a two hour drive from Fresno to la.

Flew by, flew by.

But what they tell me is repetition is the key because when we learn things, it goes to one part of our brain and that's where recalling and then rebuilding on top of those lessons. So repetition and knowing what's being covered, you've probably seen this. I'll bring in a trainer and the owner or the service manager, whoever doesn't sit in with it. And the training sort of happens for a day or two or whatever and they come out and there's no real reinforcement. They don't use the same vocabulary, they're not focused on the same thing. And then, then you're wondering, why didn't that work? That was a crap trainer. And the reality is reinforcement is key. How are you going to use it in your KPIs, your one on ones? And I'll tell you, the last thing I would, I would say is the training has to have a point. A lot of people say, well, I don't know, I feel like I do it, but I don't really know. Well, if you can't measure it tells me that you, you, you haven't designed it with an outcome. We were talking about Stephen Covey earlier and you know, you start with the end of mind. Okay, so what, what are you really trying to impact? What is the point of training? Right? Is this because sometimes, you know, I'm fortunate to work with people and they'll be like, hey, we need dust sales training for techs. I'm like, okay, why? And when you ask, that's the symptom. Maybe it's a low average ticker or something. But really, if you do the sort of five whys, you know, you get to the root cause analysis and it's really like they need to know 110% about this product in case they get asked a question. Because their personal fear is that if being exposed of not knowing absolutely everything about it, so they just won't bring it up. It's not that they need sales training, it may be a technical training piece. So. Thank you.

I'll look at that. That's a good co host right there.

There you go.

I want to actually ask something because you said there could be like a dis, like the language doesn't translate from your vendor to the way you talk about it. So do you recommend that managers kind of, like, oversee the training or, like, how do you prevent that from happening?

Well, I'm curious on Tom's answer. For me, we lead by example. You know, you can't tell people to. They need to be continuous learners, and you're not. And it's sort of, you know, as I. My kids are a bit older, but the one thing I learned that I took with me in my career is, you know, your kids, they don't really listen to what you say. They watch what you do. And our teams are exactly the same. It doesn't matter how much you pontificate about it or how important you say it is. It's not important enough for you. I mean, some of these trainings are expensive, not just the. The wages of the lost revenue. If you're bringing in a trainer, yeah, I'd be in the room. Darn right.

Yeah. I 100% agree. Yeah. Just go out there, go through the train yourself, learn what they're doing so you can speak intelligently about it, or else you'll lose all the respect to your people now. So as you get bigger, though, as we talked about, smaller companies, do it cost effectively. If you get bigger and you want to build a training center, I've seen people go too overboard on these training centers, spend half a million, million bucks.

Hey, I told you that in confidence.

And quite frankly, I mean, I. The first time.

That's why Eddie's doing this podcast. He's in the red.

I'd say if you've got a spot to put it in, could be in your existing office. You don't have to have a giant lab right away. You could use, you know, old toilets, air conditioning equipment. I've seen people do it with garage doors. Tommy Mello has an amazing training center down in Phoenix that I've seen. You've seen a lot of different training facilities, but they're different. You can spend more money on training centers with the larger volume of people you're putting through. If you've got two people to put through a training center, please don't spend 400 grand.

Just send the money to us care of.

Care of Jackie Aubel.

Eddie could use it made out to.

Cash out of a training center to pay for.

Yeah, but as you get into them, look at what you're gonna put out and then. And then look at how much money you need to put into it. The other thing, I learned a big lesson here. Be careful on selecting the people you put through the training center, because keep in mind, you're spending in my case, I was paying for their wages plus their training. I put 40 people through in about five months. And by we're an air conditioning company. About half of those were plumbing plumbers and about half of those were air conditioning guys. Have the AC guys. As soon as they had 110 degrees outside, they were done. It was like the first week of summer gone. I this isn't like the classroom. Yeah. I was like, oh shoot. I mean we literally had to go to our training center. We installed a furnace. We had to take out the high limit safety switches so that we could get the heat up hot enough to really heat it up in there.

It's gonna be a real simulation.

Yeah. Yeah. Now it's like if you can make it through training, you can make it in the field.

But yeah, we had something where we were really focused on the experience and what was happening. We were creating such a great experience in that fight showing and they got, you know, they had this complete sort of cultural disconnect. There was no one yelling at them in the classroom. Yeah. To google some of those words on the job site. It was not okay. And yeah it was, it was almost like it was too unrealistic. And so you make a great point about being selective. And I would say as counter to this as to many of our characters where we really want to pay it forward. We really want to advance the trades. You think you're doing that person a favor by keeping them in? I would look if you're doing this over a multi week curriculum or whatever, I would look very hard at your cut rate. It should be like the Navy seals. There's no point delaying the inevitable. Set the bar, make it realistic.

Give them heat stroke.

And you know what?

This week.

Yes.

It's the compassionate thing to do. You're gonna waste, you're gonna waste their time. I mean, yeah, you're getting five, six months. Waste their time, waste your money. Both you were frustrated in the end. The longer it goes, might as well. Hey if you know they're not gonna.

Work field like have to pay because they're really the finishing school.

Oh gosh. Yeah.

And so they don't want to put up with that. Yeah. And it's like then all of a sudden, you know, they're like, you guys don't have an eye for talent. And it's like yeah, we do. We're just super, super nice. Well stop delivering quote, quote a product to. We need to make sure that we're comfortable putting our name on it. They know our Systems, our service systems, they know technically, but we really need to hold that bar. And you're not doing anybody any favors by being nice to anybody.

It's kindness.

Yes.

After a three hour drive with him, I can assure you he lives by that mantra.

Noted, noted.

He made me sit in the back. He's like, hey, I just need to stop for a minute. The next thing you know, I'm turning.

Like quiet in the back, like a limo.

He just like has like the window that just shows up. One thing I wanted to ask before we move on to the next question is I hear this a lot and I see it a lot in the Facebook groups, like how to keep young people interested. And the joke is Minecraft TikToks. But like, seriously, like, what are some legit, like, legitimate ways that you get young guys right out of high school or girls right out of high school who, how do you keep their attention?

So for me, I'm actually, it's been.

A long time since I've tried to keep little girls attention. But moving on, I didn't know that was a question that was coming up in there.

Young women, young female texts.

I say this as someone that's, you know, had to learn meditation and Adderall for my add. So like physician, heal thyself. Right. I think there's a legitimate thing and we live in a different age now and I would encourage everybody go actually learn something new if you're seriously considering this. I don't care. Get involved and enroll in something, take a class in something. What you'll learn is that there are all kinds of tools for learning. Whether it's quiz tools that make it fun, whether there's, I mean, there's chrome tab extensions that, you know, record screens. There's all kinds of tools to make it interactive. There's, there's some great vendors that have, there's VR training, there's online training, there's third party associate associations that have material to quantify the learning. And so I would say go and do it and then make it, you know, chunked. And I typically recommend no longer than an hour and take breaks and then come back and do a different style of learning. It's been debunked over the years, but a lot of people still put weight in the sort of three types of learning. You know, was it audio, kinesthetic and visual? Right. You learn by seeing, hearing and doing. And if you talk to most of the people in the trades after a half hour of instruction, they're going to be like, yeah, just let Me get my hands on it.

Yeah, yeah. Give them to prove it. Give them a stack of like instruction manuals and see how many of them will actually read them. By the end of the day. It's like, no, that's someone else opinion about how to do this. Just give me the stinking thing.

That's right. And give me half an hour.

Yeah, yeah. I'd add to it. I mean competitions help. I remember learning in school and you know, we're both from the east coast. I started, all three of us are.

From the east coast.

Hey yo.

So we have boilers out there. Yeah, we, you know, we have boilers out there and we were, we would. Part of our schooling. You had to learn how to thread pipe. Well, you know, we had those large rigid pipe threaders and you could stick them in, no big deal. But we also, in order to start we had to learn to thread by hand. And so they made a competition. Who could thread pipe with a 2 inch diameter pipe. I was a hundred and probably pounds in high school. I mean I could like jump up and down on that lever and you know, it'd be slowly turning anyone. I think I thread nose.

Yeah, gosh darn it.

But I mean we would all get really into it. Even my 130 pound, you know, 29 inch waist out there jumping up and down trying to win this thing. I was probably like number 29 out of 30.

You were at my goal weight when you were doing that competition.

It's good to have goals.

Yeah. So but I mean almost everyone I know in the trades is extremely competitive. Putting on that competition in there, it's a ton of fun. We all learned how to thread pipe. I mean every single one of us knew how to do that. By the end of the time our teacher would do, he'd have competitions about diagnosing things. We had an oil burner and you know you've got these electric eyes on it that verify that you've got flame. So it's a flame sensor and it's, it's basically sensing to see for those of you who are not in boilers, they want to make sure that the flame lights and it's an optical sensor. So it's going to close the switch once that. So bottom line is what my teacher did is he took and this is brilliant of him. Well he basically he told us, hey, go ahead and diagnose this. And every day we come in, we have a new thing to diagnose and we see a competition who could diagnose it. And bottom line was, is that we knew that it was, that the optical sensor wasn't closing and so it wasn't keeping the system running. And so we went and got a new optical sensor and we put it in and still didn't run. And then we got another one and put it in, still didn't run. And we could not figure out why it wasn't working. Do you're smiling. Do you know what he had done? Do you have any guesses?

No.

So what he did was he took. We found out he took clear nail polish and put it on the electrodes on the end of the sensor. And so it would stop the connection. He coated them with nail polish.

Oh, my goodness.

Then he went into every single one of them in the warehouse and slit open the baggie, coated each one with nail polish, and then closed it with glue and left them up there. So even if we got a brand new one, it still wouldn't work. And what he did was he's trying to show that because this happens in a fire, sometimes you get a bad batch and you need to think through it. What. Why is it not doing so why don't I just take my freaking meter and check to see if I've got continuity even when it's pointing the light first before I stick it in there. Just verify this thing works.

I think I just heard the origins, the villain origin story.

But the bottom line was we got really excited about trying to outsmart the teacher and he would, you know. And all of a sudden now, yeah, we're learning. To this day, I don't trust a part coming out of the box. That's for sure. Good. Just because it came out of the box.

How lucky are the trades? I think every true craftsman that we all, we all and everyone listening probably knows and hopefully has a few on their team. We all stand on the shoulders of those that went before us. And if you're really lucky, Scott Rule was my teacher. And man, there's a special place for those people that are just really dogmatic about order of operations and process and doing things for a reason. And you still remember this, this guy.

His name is Joe Steinmetz from, yeah, Derry, New Hampshire. If he's out there, he was at Pinkerton Academy. Still remember this day. He actually teaches at a community college up there, New Hampshire to stay. I called him. Yeah. Hope he's listening to this.

That's awesome.

Yeah, it's the last thing I would say is start.

The SOB that put all the nail.

Polish on is the SOB that made you who you are today.

I think start where you are. Don't, you know, think of as a crawl, walk, run, fly. Just. Even if it's just ripping out one of those technical challenge questions in one of the, like Contractor Business magazine or whatever or I think the ACA magazine has. And just pin it on a notice board in your, in your break room. Start there, start there, make it fun and have a point and measure. Go rinse, lather, repeat.

Love that.

All right, let's move on to our next question.

We're short winded. Spent 20 minutes on it. First question. Hey, Ed, Matt Murciculi or Colin.

Question is, with the increase in material.

Cost, what is everybody doing to control inventory in and out of their warehouse? And what are the allowable variances based on trade? So plumbing H vac, install, H vac service.

This is, this is actually a super simple one. I'll just, I'll just put this to bed. We had hired a guy called Jimmy no Fingers. And so he stands in front of the, the warehouse door and you just, you know, you really, you have to explain it to him. And if he, if he's not buying, you're not getting it. And we've had no, no problem with controlling him. No, I'm just kidding. I got nothing. That's, that's a really good question. How often do you get asked about inventory?

Oh, gosh. So I think, here's the thing. I asked about inventory all the time. I think Eddie and I come from similar backgrounds of inventory is really a four letter word. It's like a necessary evil. And quite frankly, I hope everyone hears this. I don't care how big you are. Inventory is something that you may have to carry depending on your circumstances, but it is not something to be proud of. I've seen so many contractors look at all my inventory. I'm like, oh my gosh. That is, that is cash rotting on a shelf that should be in your bank account. Preach that. It can get stolen, it can get broken, it can get lost, it can depreciate. It can depreciate.

Become obsolete.

Yeah. I was talking to Eddie earlier. We did what's called a lean management training where we brought in a consultant. He was teaching us how to basically control our processes. And we realized we had all this inventory that we just need to get rid of. And we had a rule. Anything with an inch of dust on or more just needs to go right. I called up my supplier and told him to send a flatbed. We sent 19 pallets of stuff back to the shop. I started calling him and said, hey, can you just run this thing and see when the last time I bought this motor was? He's like, you bought that motor eight years ago. @ least the last one you bought.

I call these. This is, you know, I'm gonna date myself but one time at band camp. Right. So what happens is somebody somewhere on call at 2 in the morning, and it's always a holiday, runs into a situation and, and it's the way our brains are wired. We sort of, sort of anthropologically where we, we just remember painful situations way more and way more often because that's what.

Negativity bias.

Right.

And so, so when technicians and owners and all of us, we all have this, this bias, after that we swear we will never. You know what, and you know what? While we're at. Let's put two on our truck.

Yeah. Just in case. Because this one motor I had one time. Yeah. I needed it. And a couple things happen there. So basically we get that motor and. And it's always two. We take that one motor off. That was the wrong motor that got delivered. We're like, oh, we're gonna keep this.

Well, you.

Because, you know, we're gonna need it someday. And. And then we'll know it's here. And then you get this stack of motors with random like, I got a, you know, 843 horse RPMs, air 43 RPM, 1.278 horsepower. Right. Yeah. With. With an odd size shaft. I mean, it's just the weirdest thing comes up and. But you have one on the shelf just in case. So what happens is. But I ask people, like, okay, let's just say that you ran a call right now and you needed that exact motor. Which, by the way, it's probably never going to happen. But let's just say you did. Let's say you're a technician in the field. What's that technician going to do? Is he going to go, oh, I happen to know we have this in stock.

No. Because it's hot dog day at the supply house.

Weenie Wednesday. Yes. At the supply house.

Yep. Yep.

So I'm going to go to the supply house. I got to pick one up because.

I'll stop at the gas station while I'm there.

Because he probably correctly thinks, no moron would carry this motor in stock for this long. So then he's gonna go buy another one. Guess what? That's one still gonna sit on your shelf. Even if you're out on a Saturday and exhausted and nothing's open or a Sunday night. And by the way, if you call the supply house and give them enough money, they will open on a Saturday guarantee. I don't care if it's two in the morning anyway, you're probably still not gonna think you have it and you're gonna say, sorry, Mrs. Jones, we're gonna have to get this on Monday. So the reality is that stuff just sits on your shelf. It takes up space. Not only that, you have to get around it to find the things that you actually do need. So now you can't find as easy. So we sent 19 pallets back. I found two variable frequency drives. That's where in the back I bought them for. I looked them up, $5,000 each that we had bought and we should have returned them. We did. Oh, we're definitely going to need these. And we're doing a lot of commercial at the time. And by now they're worth like 10 cents because all the new drivers come out.

Best paperweights ever.

I'm like five grand. I'm like, what in the world? And by the way, we didn't know they were there. We had to get all the other garbage off the top of it to find them.

Right, and you didn't count it in inventory because it doesn't have a number, it doesn't have a parts number.

And what, what, what message does this send to your technicians? It sends, it's okay to stack crap up. Then we get ticked at them when their trucks are filled with garbage and junk and they're like pulling up to the supply, to the warehouse that you have and they see the piles of junk in your warehouse that you have must be okay. And it must be okay. I mean, this stuff causes, it is, it is poison to a business, I promise you. It depletes your resources of cash, space, mental reserves and contributes to hair loss. I'll add that one on that one there too.

I think Tom's a little passion.

What do you have?

So here's the thing. I, I had the pleasure of actually visiting one of Tom's places this morning. And man has a tight inventory system. Great, great systems. Hopefully we can maybe talk about that in a future podcast. Because here's the thing. The warehouse, the inventory you keep, the power levels you have, they're all a second order consequence of how you do business. So you know, to the extent that you're good at replenishing truck stock, you may not need to keep it. And so sometimes there's a story about operational efficienc there, but we also need to Remember, the world's a little different. This is something. So I'll be honest. This is a great question, because my inventory is out of control. That's one of the things I was talking to Tom about this morning. And, you know, in a world where we're so busy running our business, taking care of our people, taking care of our customers, imagery just becomes a thing that we have to do business. And unless someone is, you know, actively thinking about it all the time, it can really take on a life of its own. Because it's there. It's always been there.

Well, let's talk about, like, what are the reasons for inventory? Then we'll get to what he's talking about with costs. So a couple of reasons why you might need a lot of inventory. One is if you live. If you work for. In the middle of, like, Lufkin, Texas. Sure. Yeah. Mick Williams. I'm calling you guys out right now. Their. Their closest supply house is, like, two hours away. Okay.

But have you had their hot dogs? Well, well worth the drive.

Every Wednesday, our gross margin would tank. This is in U. Yeah, this was down at Western Hingen area in Orem, Utah. I worked there, and Ryan Stone was trying to figure out why they always had lower gross margin on Wednesdays. And we couldn't figure out. And one day, he and I were in the truck, and he pulls up to supply house.

It looks like a showroom, and it.

Was literally called Weenie Wednesday. And our techs are there. One of them had driven 45 minutes. They find a reason to show because it's free hot dogs.

I needed more coil cleaner.

I'm like, you just cost the company. I don't know how many dollars, probably hundreds of dollars to drive.

I just picture the face of someone's got half a weenie in their mouth, and the door opens, and his boss walks in, and it's like, yeah.

All of a sudden, we solved the problem. Why is our margins always lower and our sales always lower on Wednesday? Because the supply house had Weenie Wednesday. By the way, I told my supplier, this is in Fresno.

He's not allowed to do that.

We actually had them remove, and they were really cool about it. They took out all the bar stools out of the supply house. So we'll do business with you if you remove the bar stools. We don't want them coming in here and sitting on our bar stools hanging out. We don't want them.

Fun fact. That was the. That was the week that Tom started his Winnie franchise. So if you will put A link in the bottom $5,000 gets you in. I don't want to say too much.

So. All right, we got inventory. Reasons to have inventory. One, if you're far away from a supply house.

Leftkin, Texas.

Texas. Number two, if you've got supply chain issues, which a lot of people during.

Yes.

Covid and Pandemic, with all the supply chain problems, there might be certain pieces that you need to track and track the living snot out of it. And number three is if you're in a very specialized field where, let's say that the part has to be delivered from Germany.

Yep.

Like, and you have a. I don't.

Know, sometimes air conditioners.

Yeah, yeah. You have some special sla.

Some of those commercial. Yep, that's right.

Yep. Like, then you need it. But outside of that, these you can get really good just in time. Inventory or some consignment programs where. What Eddie was talking about was that we have a. For our install system, we have bins that our supplier actually fills for us. And it's paid for by the supplier. The supplier does it all, delivers the bin. It has everything we need for an install on it. It's one bin for every install. So it has a 30amp disconnect and 60amp disconnect on it. It's got every type of fuse on it. So whatever the fuse size is for the unit, we just take those fuses out. They replenish what we used. We have both types of thermostats. We have a low end thermostat, high end thermostat. Now this has to be thought through because you have to have a good sales process where you only sell certain things. You and I were talking about that today.

This is what we're talking about. And just to add context, because there's probably people going like, yeah, kits I get, I do that. One of the things that was a light bulb for me is we, we do kits, but because it's, you know, retrofit and you got to take a bunch of stuff because, you know, once you open the walls, you don't know what you're gonna find it. It's a lot of vendors won't do returns. And so this is where a good vendor relationships and a solid plan of how you're gonna handle those returns. Because after a while you end up with 3 million sort of PVC, you know, 3 quarter elbows because they don't want to take them back. Right.

Slip on one side, thread it on the other, and. And some sort of hybrid in the middle.

Yeah.

Like. Yes, you just have to have that one.

Just in case.

Yeah, just in case.

Just in case.

In case this happens. Yeah, so those get replenished. So I don't have to worry about install inventory that much at all. We do not care. And then for our units and other things there we have a vendor managed inventory. So the. We don't pay for that. The vendor has two or three warehouse people. Inside my warehouse, they actually lease out a space. The fence around, it's theirs. On the service side, we thought, wow, we can really get rid of all these extra marginal stuff and get it down to like two shelving units. And the thing is, you've got two shelves of inventory and it's really. By the way, it's almost all you need, basically one truck worth of stock. So that way, if they need something, that just has to be happen, whatever, one person can manage that very easily. Now, I don't want to pay my. You're paying your supplier to manage inventory, by the way. Your supplier, that's their core competency. They handle inventory, they handle pricing, they handle all those fluctuations. Why are they gonna order it from the manufacturer, inventory it, track it, stock it, mark it out, then give it to you so you can bring it in? Because we're really good at that. Yes. This is our core competency.

Is details garbage. Yes. Yes.

No, just let them do it.

I think there's two things that. Again, so much of what we battle in our own head and in our businesses is human nature. Right. When I looked at the footprint this morning of your setup, I was struck by how sparse it was. Well, we just talked about how emotional. There's this great book by Daniel Arielli which talks about how human nature is irrational, but it's predictably irrational. And that's the name of the book, what I think of. Vendors aren't going to get emotional. They're going to. Actually, you've done this before. I'm sure you've pulled the usage reports and said, see, you don't. You don't use this. You haven't used it in five years. They're like, yeah, but you know, they get cases. Yeah, but that vendor manager, they're going to believe the data and they're going to go. They're going to stock what they need and that's it. And then the other thing, and this is something that happens at scale. That's really interesting. You know, at some point. Yeah. The handiest place to find that thing that you need is in your warehouse. But, you know, if you're A company of a hundred service trucks. And they've all got standardized inventory. The nearest thing you're looking for isn't actually in your shop. You probably have a hundred. And if you have a par of five on your shelf of the warehouse and one on every truck, well, you have 104 somewhere else. If you're out and it may be five miles down the road, you got 104.

Warehouses is what you have.

All wheels. That's right. And so that's where you know, in God we trust all others, bring data and like, believe it and then share the why. I think one of the hardest things getting, because I think everybody intellectually gets what we're talking about. It's doing it to the getting the team's buy in. So you really. I just spent some time this week talking about good context for things because even sometimes we think we've explained it, but we need to. So you explain, hey, if I've got 10 or $15,000 worth of tools on a truck, another $10,000 worth of, you know, parts that we're taking for a drive, that's money that I can't use for anything else. And I pay for $8 at a time. You know, when we take that capacitor off now, that's fine. When you have two trucks, when you have 100, that 30 grand means I can't invest that in you. And so what I need is you want the latest, greatest tool. So I just said this to my team this week. They're like, we'd like to make pro press standard and hardschool Plumbers are gonna like, that's not real plumbing.

I get it.

I totally get. I'm on your side. Take a deep breath and I'm like, okay, so find me three and a half grand on your truck that you're not using. Right. Because the other thing that techs know is they're always moving.

By the way, if you're buying the bigger sets of Jaws, it's gonna be more than three and a half grand because they want those too. Just in case they need 3 and 7, 8 diameter pipe with, you know, pro press fitting. Just in case.

There's so many.

Just in case.

That's twice you mentioned. Nevermind, we're moving on. So like, like explain it. Like, I don't want you to not have what you you need and. And I'd rather you have what you do. Like our job is just to make. We only make money when the people turning a wrench are doing it. And so let's make it as easy as possible for them, but we got to do it with the people and not to them. Sometimes that takes a little bit longer to explain, but that's why processes and changes stick when they understand the context behind those, you know?

You know what the funny thing is? I bought a bunch of tools the other day and I brought them home.

And my wife just take the Fisher Price label off for.

Sorry, no, that's why you're here. I spent a good amount of money on these. The funny thing is there's. Imagine this. They still look brand new. And anyway, it hasn't been fairy log. But my wife looks at me, she's like, when are you ever gonna use that? I'm like, I don't know. I'm just. I just. I just have to have them, though, you know, I saw them. She's like, isn't this what you complain about, about your technicians?

It's so true.

I don't want to talk about it. Okay. These are going.

You don't understand me.

These are for my house. These are for my house.

These are for you. I do this for you. No. My wife says that I am white collar, but I identify as blue. I was sure, sure. I was doing a site visit and I was with one of her field managers. Hey, Alan. I was with. And I had been issued a new hard hat. And he just. Sorry. He's looking. He's looking above. Above my eyeline, at my hat. And I'm like, boy. He goes, do you want to drag that around the parking lot a little first, or are you comfortable going in like that? I was like, I've never been called out in my life. I wouldn't mind, but I had an ex, an extra large high vis vest, because that's what he had. Like, it comes in contactor sizes. It starts at 1x, you know, and I look like I was wearing my dad's suit to an interview. I was like, this is good. This is good.

I can't. Yeah. I can't tell you how many tools I have in my toolbox at my house that sell the price tags on them stuff, everything. I mean, they're still in the. That plastic clamshell packaging. And it's like. I'm like, well, you know, you need.

A tool to open that.

So I have to. I have to give the tech some credit there. But the reality is, you know, Eddie's right. We have to make sure that we're actually stocking with what we use. Now, what he got to about pricing and all these price changes and this is critical because I took a real beating because we didn't raise our prices fast enough. A couple of things we learned. Yeah. I mean, yeah, we had a contract with our vendor managed inventory process, so they couldn't raise our price for a certain time. And then we were like, oh, gosh, they made up for. They made up for one month. And we're like, oh, my gosh. And we went like two or three months before we caught up. Anyway. Took a lot of losses because of it. I just want to speak to that one. Is if you get your inventory under control and lower, it's going to be much easier to manage. Now, what you do manage, you should be considering raising prices as it goes and watching those closely. One of the things we did is we found, I mean, we had to do like a 20% price increase on our equipment, and it really hurt for salespeople. Our close rate did go down for that first month. Now, it's not because the customers wouldn't pay. It's because salespeople. It's all mental, right? Gulp. It shouldn't be this expensive. Now they're questioning themselves in the field, and you don't want that to happen. So one of the things we realized was, look, we know price increases are coming.

Yep.

So we just sat down as a group, we said, hey, why don't we just like, incrementally. Incrementally, 2 to 3% just every month. Yeah. Which, by the way, that'd be like 35, 40% over the next 12 months. Because you got compounding, right? Yeah. 3% a month, that's 36. But then you're compounding on that. And guess what? Nobody cares.

Right? Right.

Nobody. Nobody feels it. Because a month goes by 2%, 3%. Another month goes on, another two. Yeah.

Butter's going up.

Yeah. Gas is high. I highly recommend this. I'm like, gosh, how high can this go? Just let it go. Why not? Takes the emotion out of it.

It's amazing how much correct pricing fixes performance issues. You know, while we're talking about the material price increase for our construction friends, one of the things that we notice is sometimes when you're dealing with GCs or developers or whatever, you know, you're bidding some of this stuff 18 months before, you know, it wraps up or you get to that phase of a project.

And so I'm getting, like, PTSD hearing you say the words construction. Eddie does construction. I. I avoid. I got that a long time ago.

I don't deal in that game anymore.

How dare you get out. Good day, sir. No. So one of the things that you know, we've been talking about is making sure our contract language has us protected or, or you know, if, if they want to do a buy down then, you know, paying for storage and things like that and you can't always get away with it. Sometimes, you know, you're, you're sort of stuck with those things. But when you were talking about raising prices, it's funny how, you know, a lot of estimators will use. Well, yep. No, don't worry. I just checked today what our labor rate is. It's accurate. But meanwhile we're going to be paying the guys a year from now. I don't know if any. About your office. If anyone say, you know what I'm going to take, give me, I don't want a pricing. Why don't you take some money back, boss? I don't need a race. You know, we know it's going to come. And so it's especially on that construction side when you're forecasting and, and you're doing look aheads we tend to do with commodities but we forget things like labor and stuff like that because you know, we're trying to win the job with a tight bid and so. But make sure you're protected on that when it comes to material price increases.

Oh, go for it.

I'm super surprised. If you don't have a credit card that has a 2% cash back. Cash back. Not airline miles. Cash. Go out and get one. There's a couple places I don't want endorsing on here. But like a couple of them. I will, I know, send them to your blog. Yeah. When you get your affiliate weenies. Yeah. So I will say Capital One has one. That's 2% cash back that I use. I know Divi has worked out agreements on that. There's. I, I don't get, I don't get any money or any endorsement.

This is just on the largesse of your heart. You're sharing.

Yeah. I'm telling you, it's a game changer. I mean all of a sudden I, I just went to my control, I said just pay with this. And almost all the vendors, we fought with them a little bit. We just do it. It's 2%. If I spend a million dollars in parts in a month, which I have, that's 20 grand. It's free money.

Did you see how quick he did that math?

Yeah.

And that's why he runs a business and I don't. I just organize podcasts.

It sounds funny because, you know, the other thing we were talking about earlier is everyone's looking for the magic bullet. And quite often it's not that one big thing, that next ideation or sort of massive step forward. It's a lot of the little things. It's why you got to show up every day and grind it out. You know, that's what that. That whole thing is.

Everyone says, I'm going to go in, I'm going to get at least one gold nugget out of this conference. I'm like, if I can get gold dust, I'm happy, because gold dust makes millions, period.

You know how many people walk away with gold nuggets and do zero with it?

Yeah.

Yeah. Because it's execution.

One thing that I was thinking of when you guys were talking about inventory is the idea of a scarcity mindset. Because I think. I wonder if contractors who were so hit by Covid and the supply chain, maybe stockpiling inventory out of fear.

Yeah, a lot of them are. I mean, some of them, it's out of fear. Some it's just because they just know these things. And a lot of the vendors are being honest.

Hey, some of them want to hurt their competition. If they have it, the other people don't. And if they've got this. Yeah, I know people like that.

Yeah.

Yeah.

I'm just hoping this goes away pretty soon. In those cases you might have. I have to stock some stuff. You saw some stock that I had just because. And in our case, it was duct work because, you know, ductwork slowed down. Yeah. We did have a couple of tankless water heaters in there for a while on our plumbing side because we had a shortage there.

I would say for us, we're mostly through it, except for electrical panels and switch gear and stuff. But it's funny because I was just talking to. Actually, it was an industry event I was at last week, and I reminisce about the great toilet paper wars of 2020. Do you remember those?

I had toilet paper shipped to me from New York from my mother because I couldn't find it.

Local New York toilet paper.

Yeah, the famous water and toilet paper from Fresno. We got all the tortillas you could possibly just sell.

Really? Well, how the. How the other half live?

Well, we had to argue about whether it was going to be corn or flour.

The.

The reality is, I think they have tortillas in Pennsylvania.

You're mispronouncing pretzel. It's.

I can only imagine. Now I know why you're so now.

I know it's wars.

Yes, exactly. If I was using pretzels, I'd be going for wars as well.

I've said too much. The issue is nobody was actually going to the bathroom that much more. It was a scarcity mindset, and I would say contractors definitely fell into that. And this is why cash flow is so important and inventory management is so important. Because when the time comes that you need to execute something that takes cash you need to have on hand. And the other part is, don't sleep on that. If you did set up, you know, you went from consignment to a purchase agreement or bulk buy, summer's over for most of the country. Take a look in your warehouse. What do you have? What do you need? What's still there? What's still on automatic par levels that you raised because of issues if you know it's over. Does the person issuing your POS at your company know it's over? Does the per. Like who's watching the ship and so. And did the word go out to all hands that, you know, steady as she goes and we're in camera waters. Apparently I've turned into a sailor. So join me on my next podcast, Rough Nights at Sea and Other Shanties.

Fantastic.

All right, well, it was not fantastic, but thank you.

No, it was fantastic. We've got. We've been going. I just want you guys know for about 45 minutes, so way to go.

Yeah, let me know when we're start recording.

We've got our next. Our next and final question and also let you know it's 3.

25.

Here we go.

Hey, my name is Aaron Zambrana out.

Of Lincoln, California, with A to Z window screens, and I've got a question for you. I've often wanted a big business with big growth, massive growth, but it's always.

Been a little daunting because what I.

Have right now is so overwhelming. I don't. I can't imagine growing to be something bigger. So I'm really looking for the keys and the clues to help me become bigger, achieve my dreams without killing me.

Emotionally and rubbing me off to the.

To the point where I'm all wore out.

So anyways, hope you guys have some.

Good answers for me.

I appreciate your help.

Bye. Great questions. For five easy payments of 29.95, send a postcard to Tom's Weenie Shack.

And what was your. What was your fake business name? Sea Shanties by McFarlane.

Yeah, it's, it's. It's sort of like one of those CDs of the month club.

Oh sure, sure.

It's a different sea shanty every month.

Now that's what I call Shanties.

Volume 17 club hits.

Speaking of Tom's Weenie Shack, the way I met Aaron Zamrano Zamrana, he's. He's up there in Northern California. It was actually through Service Titan we had a. We sent out surveys that say rate our company on a scale of 1 to 10. And he rated us a 9 out of 10. And then the next question is always, what could we have done to make your score better? And he said you could send Tom Howard up here in a loincloth with a palm frond in one hand fanning me and a grapes on the other hand feeding me.

I thought I was the only one that had that image.

I know I'm giving it to you all. Too late.

It's in our heads now.

I've got some premium content on this for 9.99 to Tom's weenie Shack.

Yes.

Anyway, I told this to Richard Coburger who makes our videos and I told him what happened and he said, Tom, you know what we got to do? I said, absolutely. I know what we got to do. So we actually. I ordered a. I couldn't use a loincloth because if the, if the wind blows in the wrong direction. Of course.

Sure. That's the reason.

Ye. Whatever. I put on a. I got a leopard print Speedo.

You just had one handy? Yeah, it wasn't even Tuesday.

I actually had three to choose from. I mean it just depends on which. Yeah, that's right. So and then I got this fake pomfron, some grapes and he's actually like 20 minutes from my shop in Northern California. So I went up there, surprised him. Well, I told his son.

Did you have tear away pants?

They scheduled it. Oh, I went in there just straight.

No, because that would have messed up with the baby oil, you know.

Sure, sure.

I actually was there in costume.

It was like 100 degrees outside so that you were comfortable. The pavement was extremely hot, so I wore the speedo and flip flops and yeah. Went into his shop. His office manager knew the whole thing. Said all of. As if I was going to interview him. Anyway, walked in. It was quite funny. I'm hoping that this video comes out pretty soon because we filmed the whole thing.

Well, I will 100% link the video.

Well, it'll be behind a paywall, so get your credit card ready.

29.99 Tom's Winnie Shack. Okay, so yeah, going big Dreaming of being big. Yeah. With Aaron, I mean, on a lot of these things. And I, I hear his question, I hear from a lot of places.

Yeah.

Especially in today's world, we, it's too easy to see on like social media and highlight real.

You're looking at other people's highlights.

Oh my gosh.

Yeah. And I mean, I get it a lot of different ways too. It's like some will say, you know, I'm really. Some like Aaron, he's very open about, he's like, look, I'm afraid of growing. Others will say, oh, I don't want to grow. Sometimes it's because they're farther on in their career. Some of them honestly are just afraid and they don't want to admit it. So it comes in a lot of different directions. And almost every time what I find is one, they have a lack of understanding of the business and how to get there. Number two, almost every single time, they don't have a business plan and they don't have a budget for that plan. And because the thing is, you get terrified if you don't have a business plan, you don't have a budget. Your budget's going to tell you, look, this is how much revenue I should expect per month and do it in some kind of spreadsheet. Microsoft Excel, Google sheets is free. There's no reason to not use it. There's a million tutorials out there. It's pretty easy. This is how much revenue I should expect. This is what my cost of sales should be. This should be my gross profit percentage. And by the way, if you're doing this, do it with your team.

Yep.

Make sure that you're going out there, they all understand what these numbers are and they're putting in the effort. So they know and they've got buy in now. Yeah, we could do that. That much revenue.

And it's their number, not yours.

Yeah, it's their number. 55% gross margin, 60% gross margin, 50% gross margin. Whatever your gross margin number is, whatever it is, they're like, yeah, that's what I should get. I should be able to do that. And then below that you got all your fixed costs, your rent and everything else. And then below that you're showing your profit.

Yep.

And then you start going, wow, yeah, I guess I could hit that number. It's very realistic. Now wait a second now, if I have to buy a truck or whatever and I have to put in the 50, 60 grand, plus the 10, $20,000 in tools, depending if it's H vac, plumbing, electrical, garage door, water treatment, whatever. It's all different rates anyway. If I got to put in that money, this is the return I can expect to get. Or, by the way, even if I don't do well this year, I could still afford that extra expense.

Yep.

Or what if I have to put in an extra amount of marketing? What could I expect to find work for that van? To find work for that van. Now I build it in a plan, and then I can see worst case scenario, I'm still gonna do X percent profit. I'm okay. Your stress levels come way down. Then what happens is the next month goes by and you see, oh, wow, I actually outperform budget. You start getting confident. Here's the interesting thing. Especially in air conditioning, because we're so seasonal. I've seen this a lot in pest control, too. Pest control is very seasonal.

Is it?

Yeah, you'd be surprised. It's.

I was.

I bought one. Bought pest control got me thinking I was getting away from seasonality because it's all contract.

Yeah.

The bugs come out in the summer. You sell a ton of content. Wait a minute. Yeah, it's less.

I've seen this episode before.

Yeah. So the problem is, is that, you know, some companies will lose money. Let's say in California, making money in, like, February when it's 71 degrees outside the whole month in an air conditioning company. I mean, your air conditioner could blow up off your roof, and you're like, I'll get around to it.

Like, I'm a marketing genius when it's 105 and sticky.

Yeah, I know.

It's.

We're all. We're all business gurus. We're like, oh, yeah. Oh, yeah. 110 in Fresno, California. I could sell air conditioning. Yeah. Show me. We all feel like idiots when it's 71 degrees outside. We're like, what are we gonna do?

Yep.

This is why plumbers generally have it a little better than hr. They're literally laughing.

They're standing by the warehouse door, like, watching us run around.

I know.

Crazy kids.

So in this case, like, let's say that you build your budget and you, like, realistically, you think, gosh, I'm gonna lose $30,000 in the month of February. But then you only lose 20.

It's a win, baby.

You're a win. You're happy.

Yep.

But if you don't have your budget and you lose 20 grand, oh, my goodness. You're flipping out. Every month you're flipping out. You don't. And even when you make money. You think you should have made more money.

Yep.

You're just going around, you're sweating, you're freaking out all the time. So you can't make to grow. You have to take a little risk. You have to buy certain things. If you don't have a budget, you can't quantify the risk. So you have unlimited risk all the time in your mind.

Yep. When I. When I hear this, I think of, you know, fear. And I love when people are honest. It's like, man, I don't know. It's because I'm this. And, you know, I've got all my savings in this, and this is. This is my retirement plan at the moment. So it's. I mean, it's realistic to have some sort of crazy not to be scared. And I think about the old maps of the world where, like, there be dragons or kids that are afraid of things under the bed. Like, what we don't know can scare us. And so what Tom's talking about is quantifying the unknowns. Okay, well, let's put it down on paper, and that exercise alone will show you that. Yeah, that's right. Because we also tend to over complicate it because we're looking. We're comparing our beginning to someone else's middle or end of the race, as my buddy Jerry says. And so sitting down and doing the same process you've done before and calculating it and going, okay, so. And then I like to call playing what if. Okay, well, what if I. What if I added two vans? What would that do to my marketing costs? Like, to keep them busy, but look what it does to mine. Okay, well, what if I decided to take less bottom line to spend on marketing and to grow, to set me up for next year? Or what? If you're just looking at it, it's like, well, where am I gonna get money to pay for those vans? So, like, the whole process you're talking about. I mean, it sounds sensible when we. But it's amazing how we Psych yourself out. But it's very realistic because we're. We're afraid of things that we don't know. That's right.

And we.

You know, and that's.

And we always assume the worst.

Always assume the worst. I think there's. There's. I. Back when I was a different person and healthy, I. Young or younger? No, young.

I stick with young. I think we're at that point. Hold on.

The crowd has spoken. The. The. I used to do these triathlons. Just. Just local ones. Nothing Crazy.

Nothing crazy, just running, biking and swimming.

All in the same day. Inside pro tip for those with add, It's a great sport because anytime you've been doing anything for like half an hour, it's time to change.

It's perfect.

But you know, you would go in this, you would train for these, you would go in the pool, you would go, you would do all this thing and you'd have a training plan put together and you would, towards race time, you'd put all together and hopefully the weekend before you would actually get to do all of it. Like it was race day. And there's a funny thing that happens. You know, you either start on the lakeshore side or it can be an in water start. But you're standing there and you're all going together. They blow a whistle and it's timed by your age group or you know, in my case, the special group. But you're all going together and what happens is you're special one, special one, capital S. You're all heading for the same choke point in the water. And what happens is even though you've trained to run your race, you see everybody else taking off and the temptation, what happens, especially the first time you do it, first off, you're getting clobbered by like there's, there's 80 people swimming in one lane. And I don't know if you know this, but they don't put, you know, those like black lines at the bottom of pools.

Oh, they don't exist in lakes.

They do not put them on there. Don't ask me how I know. I got very off course one time. But the. Sorry, I like this story. No, the, the, the issue is that you're seeing people. Even though you're swimming at a pace that you know is good, it's in time. This is, this is, this is what you've trained for.

Temptation to compete.

You were like, oh my gosh, they're doing so much better than me. I need to kick it up. And so you kick it up a gear. But guess what? That's not the cadence you trained at. So now you're halfway around a lake and you're like, I'm going to die in front of all these people. Oh, I'm so glad my kids brought a sign. Right? Like, and you have to get out of the water and you're completely gassed. And it's like, oh, but you get psyched out by other people's races. And I think when you run your race, you follow your plan and if you don't do what you were suggesting, Tom, and putting that plan together, you're gonna run other people's. And that's no bueno. Right. Because how do you know what margin they're going at? You go to a conference or you listen to, God forbid, a podcast, and they're like, this is what you should be doing. And they're like, okay, they're not getting that. And so now they're, like, thinking, I'm doing it wrong.

And, you know, most people either listen to a podcast or go to a conference or listen to a webinar. They're looking for a silver bullet. And, yeah, Eddie and I have always talked about there's no. There's no such thing as a silver bullet. I think what the budget and the plan does is it puts all the things together, all the bullets, so to speak, together that you're gonna have to fire to get to where you need to be. When people go to these conferences, typically, they find whatever they're looking for. If you're looking for a silver bullet, you'll find something you think is a silver bullet.

It's amazing because there's a guy there selling a course.

Yeah. And it's always like, oh, this one. Indoor air cleaner. This is going to be the solution to all my problems.

That's it.

Yeah.

And they're going to come home and they're going to put all their effort into it.

They're going to buy a lot of them, put them on the trucks.

Yeah. Let's say they're going to put a lot on their trucks. They're going to end up in inventory. Yeah. Have a ton of inventory. Or they're gonna. They're gonna do all their tech training, but they're not gonna buy enough of them. Or they're gonna do that, but they're not gonna train their CSRs to prep the customer, to get the tech on there to sell them. So all those things have to be built into a business plan and into a model that says, this is how we're gonna sell them. This is how we' stock them. This we're gonna have them. Or you get everything trained, but then you can't get them enough in stock to sell them.

Yep.

Like. Or you didn't build it in your sales process. I mean, there's just so many things to go wrong. So going and building that budget and that plan allows you to take those bullets, organize them, make sure that you can look at the whole thing holistically and say, does this make sense?

Yep.

What you're going to Find is almost none of those new products are going to solve all your problems.

And you also tend to avoid distractions like that because you've got plan.

Exactly.

Yeah.

And you're not distracted by the bright new, easy, shiny.

Yeah. And you know, like, hey, by the way, I only lost 20 grand this month. I'm supposed to lose 30. I'm 10 grand ahead of plan for the year.

I'm buying everybody a steak.

Yeah. And I'm going to keep on hot dogs for everyone.

Well, it's.

We don't even need to subscribe to Weenie Wednesday.

That's right, honey. Put the weenie. I don't like the way I said that. Well, we're going for steak as a long one.

But.

But I think if you don't know where you're going, every road will get you there. Right. And so, and the one thing I do want to stress is, even if it's as simple as. As the process you laid out, which it doesn't have 52 line items, it just has those major. That's still better than nothing.

Yep.

You know, and so start where you are and, but make it your plan and make it one that you're comfortable with the rest because, you know, but.

Make sure your whole team knows about it.

Yep.

And every month, follow up with that consistency.

Even if, even if your whole team just consists of your partner. Yeah, right. Like they deserve to know. And, and whether you're a one man, you know, master of all, or, you know, you're running, you know, multi state, you know, plan.

So it sounds like using the business plan, budgeting to look under the bed, so to speak. Look at, look at what's scaring you. And then once you get comfortable, get a little bit more confident. Oh, I supposed to lose 30. I only lost 20,000. Now we can start thinking about. Okay, what are some things I've heard from podcasts, from webinars. How can I start implementing those and bringing my whole team on board to make them happen?

Use those, those gurus, those seminars, whatever they are, to supplement your plan. Don't go there with no plan and hear one thing and try to, oh, this is going to save my business. And then, and then it doesn't. And then you get freaked out on the next thing. Now you don't trust anything.

Yep. Yeah, but run your race, baby.

Yeah, run your race, baby. All right, so to close out today's episode, the very first episode of Toolbox After Dark.

Which Toolbox After Dark.

I really like the name. I think I'm going To keep it even though it's really toolbox in the afternoon. But what are you guys learning right now? What are. What's getting you guys excited about the trades, about the industry? Tom, why don't you go first?

Gosh, that was not the question I was expecting.

What is the question you were expecting?

I can tell you what I'm reading right now.

Do what I do when I'm at conference and people ask me a hard question. You know, that's a really, really good question. But aren't you really asking this or. Before I answer that, let's talk about.

Yeah, so I mean as far as like what am I learning in the trades right now? The interesting thing is that I've kind of looked at the pieces that I'm deficient in and pieces. But mine aren't necessarily trades. Things specific. But I'm deficient in certain pieces of the business and so I try to focus on those things. So I, I actually bought a couple of books on financing, lending and private equity. I read those. I read. And then now right now I'm focusing on. I've got a couple of books I've been reading on marketing.

Oh, nice.

There's one called Storybrand.

Donald Miller.

Yeah, at least I think it's Don. I can't remember that. I'll take your word for it.

Someone will correct.

Is this the Internet Unmarketing is really cool. I, I've just finished reading that one as well and yeah, I just, I take those subjects one at a time and try to focus a couple books on.

There it is. By Donald Miller.

Awesome.

You were right, Eddie.

You should see me at Pub Trivia.

Called it a pub.

Unless it's a music, sports, history or science. Other than that I'm no good.

What about you, Eddie? What are you learning about?

Yeah, very similar. I'm learning about fundamentals. In many ways it's an inflection point for me in my incredible circuitous journey in the trades. I'm the luckiest guy in home services.

I'm to going start learning new vocabulary words after listening to this guy talk.

I know, right?

Circuitous.

Well, it's a roundabout way of saying. See what I did there, folks?

Thanks.

Tip your waitress.

So no, I don't. Go ahead.

For me it's as wide ranging and as deep as my career has been in different areas. It's amazing how much it comes back to fundamentals and sort of what I call first order principles. Like things that, you know, fads come and go, trends come and go, markets come and go. But there's some things that just never change. And you know, specifically focus. I'm thinking about, you know, in a world where you've got infinite access to. We just spent an hour talking about different ideas. What should you focus on? And what does focus actually look like? And how do you measure it? And so what is focus versus sort of that, you know, when you're trying to boil the ocean. Right. It's too hard and you end up getting nothing done. You don't move the needle.

Got any books, Eddie? Any authors on Focus?

Focus by Edward McFarlane? What am I excited about? The trades and that's. I'm learning it. It's all coming back to.

The book's called focus by Andrew McFarlane. No, that was okay. Oh, got it. Yeah.

You know, it's funny because we had to explain it. No, no, it's a joke.

Who laughs last?

I'm really excited about that. Regardless of how much the circumstances change. Now listen, there's so many external things we can't control, but when it comes back to those that are really successful, they.

They focus on the things that matter. Yeah.

And the things that they can control. And then they execute the whole team and they hold their team accountable. And so it's about those fundamentals. And focus is a big one for me. If you know me. That makes a lot of sense.

I love that.

Making lots of sense.

What books are you reading, Tom?

I just listed off a couple but a second ago. But the one that I just finished, that isn't necessarily a training book or anything. It's on. It's called Red Notice. It's about a guy who went into Russia after the Soviet Union fell and found all these businesses that are worth almost nothing at the time. No one's paying anything for them. But he realized their earnings are fantastic and he bought them all for pennies on the dollar. Became the biggest private equity investment banker. Basically biggest investment banker in all of Russia. Ends up getting kicked out and arrested and all this other stuff. But great book. Won't let you know how it ends. But yeah, awesome. And I think, you know, there's a lot of businesses out there that are undervalued in our, our industry for a long time. Yep. Was greatly undervalued. And right now multiples are going up and up and up. But because. Yeah, because companies finally realized what our industry is worth. And I just think it's really cool. Yeah.

I'm usually reading, listening to a bunch. One that I really enjoyed was Emotional Agility by Susan David. We all work with people, whether it's customers, team building. And the more you understand people, the better it'll be. And the secret is you're a people, too, and the more you understand yourself. It's really good. I just wrapped up.

You looked at Tom right when you said that.

The more. Listen, if you're reading that into that, that's. That's on you. And then another. Another good one that I'll throw out. There was bias. Interrupted by Jonesy Williams. You know, it's for the, you know, HR is called people team these days. It's for that stuff. But it's, again, it's really important to understand your own operating system because that's going to be one of your biggest limiting gating factors. And so to the. To the extent that you can understand your. Your own operating system and the hacks in it and the blind spots, the higher your performance will be, that's fantastic. I love it.

Guys, thanks so much for doing the first episode of Toolbox After Hours.

Toolbox, Toolbox after dark.

Toolbox in the afternoon.

Toolbox in a small room.

I'm excited to do this again.