From Stress to Success: How to Take Control of Your Business | Part 2

I'd rather be rich than be right. I'd rather be rich than let my ego drive stupid decisions. So focus on profit. Here's some flawed thinking for you. If we just sell more, we'll make more. We'll make it up in volume. How many have heard this one before? And I said this a minute ago, if your profit model is broken at $2 million, what makes you think you'll fix it by doing $7 million?

Have you ever felt like there's a secret club of successful contractors and you're left outside? Want in? Well, you just found the entry door. Welcome to the Wealthy Contractor Podcast. Each episode, we pull back the curtain, revealing the stories, strategies, and secrets that top leaders use to grow their home improvement business and enjoy more success, more wealth, and more freedom. Discover more at thewealthycontractor.com. Now let's get into today's episode. Hey everyone, Brian here. So today's episode is part 2 of 2 of my 2024 opening presentation at our big annual conference for home improvement business owners and leaders, Accelerate Live. The presentation itself was a bit longer than our average podcast episode with a ton to take in and think about, so I split it into 2 parts. If you haven't already listened to the first half, go back to episode number 225 now. Then return to this episode to finish the session. Remember, if you like the content of this and other Wealthy Contractor episodes, but are craving deeper dives into what's working today in lead gen, sales, production, profitability, leadership, and more, and you like the sound of achieving more in 2 days than what most companies or businesses will take 2 decades to do, then you need to drop what you're doing and go register for the next Accelerate Live accelerateevent.com. That's accelerateevent.com. Our huge early bird discount is just about to end. So secure your tickets with coupon code PODCAST25. Then listen to this episode, relaxed and confident that you've just made a career-defining decision. As always, thank you for tuning in. I hope you get a ton of value from this episode and it gets you really excited about joining us in person at the next event. I look forward to seeing you there.

Now shit's gonna show up, cuz guess what? This is outta your comfort zone. This is gonna be out of it. 4Xing income was way outside of my comfort zone, but I wanted it bad. I was done. I was done with accepting less. Now here's, here's one of my problems, and it might be a problem with some of you. Because once you get that number, you're going to do something to yourself that's going to ruin it. You're going to ask yourself this question. This is the worst question you can ask yourself. How? Some of you are laughing. I'm going to say it again. This is the worst question you can ask yourself, because in most cases you have no idea how that result is going to come about. So don't go there. This is the kind of the engineer mind. John is going to talk tomorrow about DISC profiles and how, you know, you know who we are, you know. Is this a C? A C wants to know how. Yeah, a C wants to know how. Now, a lot of us in here have this, and I would sit and I had this goal when I had my early on in my business, and I, like a moron, would sit there on the 8th of the month Some of you probably do this. Okay, we did whatever, uh, what divides into 8 easily? $24,000. We did $3,000 a day. Okay, so now for the rest of the month, we can expect, you know, if that keeps going, we can expect to be at whatever that— $90,000 a month. Okay, it's all right. But then I was trying to figure out, okay, well, how is that going to happen? Well, what's going— what's the— and The wrong question. Here's, here's your job and my job. Okay, you ready for this? What is our job? It's just to believe. And trust me, I know how that sounds. By the way, anybody watch Ted Lasso? Some of you. Great show. Great show. That's from Ted Lasso. The first thing he did when he got there to his new coaching assignment was he put that sign up on the wall. Your job, my job, is only to believe. Here's what Steve Jobs said, and he's absolutely right. You cannot connect the dots looking forward. You can only connect them looking backwards. Think about something. Think about one of the greatest things that's ever happened to you in your life. Could you have predicted how that would happen? Probably not. I think back about the stuff that's happened to me. There's no way. Now it makes sense. Oh, okay. This happened, and then that led to that, and then that led to that, and then that led to that, and that. Oh, and all of a sudden, now this. But if you're sitting here, you want to go here, and you're trying to figure that out, all it's gonna do, all it's gonna do is break you down. All it's gonna do is destroy your confidence because too hard to figure out. You can't connect the dots looking forward. You can only connect them looking backwards. So you have to trust that the dots will somehow connect in the future. So what is that? That's this, isn't it? You have to trust in something. Your gut, destiny, life, karma, God, whatever. This approach has never let me down, and it has made all the difference in my life. So the first one is dream. Second piece, plan. So I'm a big believer in reverse engineering success. When planning, most contractors start— most business owners, I should say, start with revenue numbers. We want to do $7 million this year. We want to do $10 million this year. We want to do $20 million this year. Why? I don't know. Good number. We did $5 million last year, so why can't we do $7 million this year? The problem with that is in most cases, most business owners are somehow trying to shoehorn in profitability somewhere in there. Profitability is like the third or fourth or fifth thing they talk about, and then they wonder why they aren't getting the results. Because you're focused on the wrong thing. You're thinking about revenue, not about profits. So yeah, you want to do $7 million, great, go do $7 million. But are you going to make any money? Those of you that have had conversations with me, you know one of my questions. You'll tell me, oh, this and this and this about my— your business. And what am I going to ask you almost every time? Do you make any money? And it is absolutely shocking to me How many of you say no? Or, well, we're, yeah, but we, we're reinvesting in the business. The hell does that mean? Did $12 million last year. Did you make any money? Well, this year we're going to do $15 million. I always say, what makes you think if you can't make money at $2 million, what makes you think you're going to make money at $5 million? You can't make money at 5. What makes you think you're going to make money at 12? But that was me too. That was me too, right? Well, if we get big enough, we're going to make a boatload of money. No, not unless you plan for it. Not unless you plan for it and you focus on it. So I say, let's do this instead. Let's begin with the end in mind. What does winning look like? So let's work backwards. So what is your profit target? And then work the numbers backwards to determine what your business needs to look like in order for you to achieve your desired outcomes. For time, for money, for freedom. So let's take our $500,000 income goal and let's break it down. Now look, is what I'm going to show you perfect? No. It's a good roadmap though. So this is a tool that we use with our, with our clients. Where we put in our profit target. And then based on our profit model— and you know, if you've been around me at all, 15-20%. So if you're saying— if we're saying 15% and you want to make half a million bucks, you need to do $3.3 $1 million in sales. From that job average, so let's say the job average is what, $12,500? We need to install and collect money on 267 jobs. In order to sell that many jobs, we have to issue 860 leads. This business is very formulaic. It's very predictable. Again, is this perfect? No, but it's better than— I see what— better than what most people are doing. You have to plan for profitability. Mark Curry is going to talk about profit tomorrow, but you got to plan for profitability. There are too many people in business today that do not understand the economics of their business. And they're doing millions of dollars and they don't understand the economics. You gotta understand the math. Money math. It's one of the most important things for you to understand as an owner. Because if you don't understand it, how are you ever gonna make money? There's a whole list of things that you need to understand. Profit is not something that can magically be added on at the end. You got to plan for it from the beginning. And it's a math problem. It's a math problem. You only have 100%. You don't have 110 magically or 120. You have 100. So if you want to make 15— and by the way, these numbers are only just a model. They're just one way of skinning the cat. This is not anything definite. Okay. But it's just to give you an idea. But if you want to net 20%, you got to work to a certain model. If you want to make 15%, you can spend 85%. That's it. So as part of the other tool, we also come up with a profit model and budgets, and we got to work to the budgets. So in this example, our gross margin is 51%. Now our pricing model, okay, so pricing model goes with profit model. That gross margin number is almost entirely driven by your price. And again, it's shocking to me how many people in this industry work on margins under 30%. You can't afford marketing. You can't afford good people on a 30% gross margin. Can't. You got to understand marketing costs. If your marketing costs go up, go up, what do you do? You raise prices. Exactly, because who pays for that? Customer. Now look, when it comes to marketing and advertising, you want to be the person that can spend the most, not the person that could spend the least. Now when I say spend the most, you got to do it profitably. You got to understand that if my marketing cost is 16%, I better get that number from or, or the, the spread somewhere. And it's generally gonna come from your gross margin. So if your gross margin can't support a 16% marketing cost, and that's what's required in your market, you're in trouble. You're not gonna get the leads that you need. And then if your overhead is out of whack, what's gonna happen? Oh, we're gonna cut back on marketing. Our overhead is still high. And then what happens? You end up making no money. It's a math problem. Overhead and then net. Okay, you got to plan for your profitability. I just threw this together. I thought, okay, if you want to make, let's just say, a million bucks a year from your business, a million bucks a year, which business would you rather have? $5 million at a 20% net, $7 million at a 15% net, or $20 million at a 6% net? I'm gonna make $1 million on a quarter of the work. I don't know, that sounds pretty good to me. But $20 million, oh, I can go to events and I can tell my friends and I can tell other people in the industry, especially the people that I don't like. That think they're better than me. Eh, I did $20 million this year. What'd you do? Eight. Now, I didn't make any money, but we're not going to talk about that. But I did $20, so I'm better than you. I'm bigger than you. I don't know about you. Where's J.R. Ronan? He's one of the things J.R. Ronan said to me early on. I'd rather be rich than be right. I'd rather be rich than let my ego drive stupid decisions. So focus on profit. Here's some flawed thinking for you. If we just sell more, we'll make more. We'll make it up in volume. How many have heard this one before? And I said this a minute ago, if your profit model is broken at $2 million, what makes you think you'll fix it by doing $7 million? Hardly ever happens unless you get educated. Always remember, revenue for vanity, profit for sanity. Mark, do you know, did, did Grosso make that up or did he get it from somewhere else? That's where I learned it from, Grosso. No idea. All right, well, we'll attribute it to, to the great Rick Grosso. Revenue for vanity, profit for sanity. I wish I had known that when I was in my 30s. And the last piece is execute. So here's what we now know. We know what the dream business looks like. We know why we want it. What it'll do for us, and who it will impact. Because of your plan now, you know what the numbers look like. You know what the numbers need to be in order for you to get the outcome that you want. Now what's left? The fun part, making it happen. It's the hard part. I'm gonna tell you one of the things that I have learned over the last 12 years or so is execution is king. Those who execute and execute quickly generally win. Now, the caveat there is execute on the right things, right? Understanding how profit works, how the model works, how pricing works. But execution is key. Now, in order for you to create the business that gives you the success, the wealth, and the freedom you deserve, You must work on two things simultaneously. Okay, two. One, what you do. What you do as the owner in your business. This is mechanics. This is mechanics and some skill set. Mechanics and skill set. The second piece is who you are. Who you are. Again, most contractors too busy, distracted, and tired to focus on what matters. This is what makes them a slave to their business. They act as firefighter, salesperson, secretary, They allow themselves to be reactively dragged around by the business rather than proactively driving results. And to say that again, they allow themselves to be reactively dragged around by the business rather than proactively driving results. So you want to do this instead. Every single week, your job is to ensure that your plan is being executed. The right number of leads are being issued. Those leads are being converted into sales at the right price, that you're creating raving fans, that your customers are receiving a 5-star experience, that you're continuously recruiting so you have the right people in the right seats. You're holding your team and yourself accountable for results. And you're bringing in the money. Never lose sight of the money. By the way, in this example here, the most important piece is the planning piece down at the bottom where we break down each quarter And we want to understand in each quarter, what do we have to do every single week in order for us to hit our quarterly goal? For those of you— some of you are— do EOS or you do some other sort of system, right? Uh, Ryan is actually going to talk about EOS later this afternoon. But what you want to know is every single week— in this example, every single week we have to bring in $51,200. $1,082 every single week. And we want to have a meeting every week, and we want to know, are we on track or are we off track? On track or off track? Now, if we're on track, great. But if we're off track, when do we want to know? Now. I want to know as soon as possible. I want to know in week 1. I don't want to find out at the end of the quarter— come to the end of the quarter and say, oh, we missed our target by $40,000 or $400,000, whatever it is. I want to know now because I can do something about it now. So when I know that number, I know this week we need to issue 13 leads, and we got to close 4 jobs. Make sense? So this framework— so in your books, I gave you the framework, and I wrote, I wrote about it over the next couple of pages there. But we have this framework, we call it the Wealthy Contractor Success, Wealth, and Freedom Framework. This is really all about— it's about what you do in the business, but it's really about creating leverage. The only way you can scale a business and multiply results is if you create leverage. So what's a good example of leverage? You guys, most of you have a sales team, right? Most of you probably started off running leads yourself. But at some point you started to bring on salespeople. Now you've got 3, 5, 50, whatever, every single day running leads while you are in the office or on your boat. That's leverage. That's how you multiply results. Now, in this framework, there's 3 big pieces: people, process, and profit. People, process, and profit. Let's talk about people. People's about having the right people in the right seats working towards the same vision. As an owner, your job is to have a big vision that your team can get around. And by the way, just making money is not a good enough vision. You want to think who, not how. There's a great book called Who Not How. The entire book, by the way, is in the title. It's a very simple concept. The concept is I need something done. I ain't going to figure out how to do it. I'm going to find somebody that's an expert at that and they're going to do it. Who? That's my question, not how, because people wait for years and never figure out the how when all they had to do was hire somebody to do it for them. Most of you probably aren't really great sales managers. When the time comes, you need to put in place a great sales manager. So when you're on vacation, somebody's there. And even when you're not on vacation, somebody is accountable for results. Did we hit our numbers this week? Are we on track or are we off track? It's a who problem, not a how problem. A-players, your job is to develop winners. Hire for attitude and aptitude, then teach your system. How many times have you heard this? I ain't the first one to say it. Hire for attitude and aptitude and then teach your system. John's gonna talk a little bit about this when he talks sales later. Surround yourself with winners. You know what's awesome about— there's so many awesome things about winners. Winners love being held accountable. Love it. You know why? They like to win. It's in the name. Winners. Winners like to win. Who doesn't like to be held accountable? You guys said it, I didn't. And pay your people well. Pay them very well. Ideally, small salary, but big upside bonuses for performance. Process. Process. It's really all about having reliable, consistent, and predictable results. When John talks about selling system, this is what it's all about. Reliable, consistent, predictable. If I do this and this and this and this and this and this, this should be my result. When it's predictable, when it's predictable, now my planning really means something. Because if I know that we're— again, I'll use sales as an example. If I know we're closing at 32%, I can build my model around 32% close rate to get where I want to go. That doesn't mean that we're not going to try and improve it, but when it's predictable, we can build on it. Each process has to be measurable. It's got to be easy to teach. You've got to be able to replicate it over and over and over again. How many of you have sales classes every month? Should be the same thing over and over and over again. It can be created, bought, modeled, or borrowed. You're going to hear more from Addie, not my Addie, another Addie later today, I think, today or tomorrow, about process. And from her, you could buy it. She'll do it for you. Right. There's all different ways to skin this cat. Process is about design, creation, testing, implementation, training, practice, measurement, holding accountable, evaluating, and improvement. What'll kill your process? Inconsistency, erratic results, random acts of execution. All of this will kill process, will kill results, profit. Again, if you're going to do it, do it big. 15 to 20% net. You guys should all consider, by the way, 10% as breakeven. 10%, you should consider breakeven. If you're under 10 right now, you're leaving a lot of money on the table. So if you get nothing else out of these 2 days, if you get that into your head and you go home and you fix that, this will have been well worth the time and effort. Of being here. But you could do 15 to 20%. I got lots of clients that do it. Lots. Okay. But it requires an understanding of the economics of your business, the math. You got to have a right pricing model. You've got to work to a budget, to a plan. You got to have your P&L and your balance sheet ready by the 10th of each month. By the way, it's shocking to me. Mark and I do a profit workshop and we did a survey. We asked the question, how many of you get your P&L to look at by the 10th of the month? Was under 50%. Under 50%. That's your scorecard for the business. That's what matters. And most business owners don't even look at it. They don't get one. And even if they did get one, they don't know how to analyze it. They don't know if it's right. Do you know how many P&Ls I've looked at where I'll, I'll go through? I looked at one recently where I looked at the top number Okay, this is probably what most of us would do, look at the top number. And then what I do next, I went straight to the bottom line. Let me see what the bottom line is. Bottom line looks really good. It was like $400,000-something for whatever this period was. But then I went and looked at the in-between. Now, first off, the way it was set up and structured was a mess. But there was a negative in the P&L that was like $200,000-something. And I asked, what's this? Oh, we don't know. The accountant— and listen, these are great people. These are great people. You know, and they're working hard, but their accountant told them to do this journal entry. I said, well, what the hell is the journal entry? Because that ain't right. So now the entire P&L was suspect. I don't believe any of it because of that one line item. And it's amazing to me how many people in business today allow that of themselves and of their people. Comes down to financial discipline. Do you have it or do you not? I'll tell you something. All my friends and clients that are rich, they got financial discipline. Who you are, developing yourself. In order for you to build the business of your dreams, you must grow and evolve as a person and as a leader. As a person and as a leader. This requires working on your own internal operating system. Your mindset, what you think and believe about yourself and the world around you. This quote, I, I use this a lot. I think it's loosely based on something Les Brown said, but I love it. To do something you've never done before or to have something you've never had before, you have to become someone you've never been before. I was talking with somebody, I think yesterday, about income. When you make a couple hundred thousand dollars a year, you're up in the top, um, 10%, I think, of income, or top 5, top 10. When you go from there to half a million dollars, the complexity multiplies. When you go from half a million dollars to over a million dollars of personal income, It's a whole nother world. The language is different, the skill set required to think about it and manage it and deal with the taxes and deal with the accountants and deal with the whoever else, the financial advisor that's involved. Very, very different. There are levels of sophistication, and it's the same thing with when you're growing a business. At $2 million, you are one owner. To go to $5 million, you got to be a different owner. You have to change. Your skill sets change. Your mindset changes. Now, if you try and do this by just the mind— or the skill sets, Just people, process, and profit without working on yourself, your chances are good. I'm not gonna say never, but chances are good you won't get where you want to go. This is like the most important work you can do. How many are familiar with Jim Rohn? I love Jim Rohn. He said, learn to work harder on yourself than you do on your job. If you work hard on your job, you can make a living. A lot of people in this business make a living. Some make a pretty good living. If you work hard on your job, you can make it. But if you work hard on yourself, you'll make a fortune. He also said, and the reason I'm giving you all of this is to prove it, okay? I'm just giving you proof. It's not coming from me. Become a millionaire not for the million dollars, but for what it will make of you to achieve it. I don't know how many of you have a million dollars in an investment account, in cash, but boy, it feels different when you've got a million bucks. Life— you look at life different, see things differently. It's not about the money. It's about who you had to become in order to have a million dollars. How many people do you know that have a million dollars in cash? You know, there aren't a lot of people that have a million dollars in cash. Now, in our circles, I mean, in my circle, almost everybody's got— but for most folks, they don't know anybody that's got a million bucks. Success is not to be pursued. It is to be attracted by the person we become. Success is not so much what we have as it is about what we are. Do you need both? You need skill set. You need mindset. What you do and who you are. How many are familiar with the Groundhog Day idea, right? Same day over and over and over. How many business owners have you met that have been in business for 15 years but are in the same place now that they were 12 years ago? They had this— they're doing— they— now, we've been in business for 15 years. Well, arguably, you've been in business for a year. You've just done it 15 times. 'Cause you haven't learned anything. You haven't grown as a person. You're still doing the same things. You still have the same problems. Insanity is what the definition of insanity, doing the same thing over and over again, but expecting different results. John talks about the hamster wheel. That, my friends, is a formula for living your life on a hamster wheel. So dream, plan, execute. I believe, I believe that if you're clear about what it is that you want, like crystal clear, and you feel it in your gut and you want it bad, you have a burning desire for it, And then you create a plan and then you get to work on that plan. I think you can make almost any goal happen within 36 months. Our income that went up 4 times, it did end up going up 4 times in 18 months. From the moment I made the decision, it took 18 months to accomplish the goal. What changed? I changed, and the world around me changed because of who I became. Hope you enjoyed this week's episode.

For insights on skyrocketing your home improvement business and accelerating your journey to the success, wealth, and freedom you've always dreamed about, be sure to get your free copy of my bestselling book, The 7 Secrets to Becoming becoming a wealthy contractor at www.thewealthycontractor.com. And don't forget to follow us on your favorite podcast platform so you never miss an episode. See you next time.