The Contractor Growth Playbook Behind 5x Profit | Kyle Erdmann (Ep. 256)

In 2024, my wife and I took over operations of the business. We were able to really fix what needed to be fixed and take the great foundation that my dad built and build it into something that we're proud of. So in the past couple of years, we've gone from a $5 million business to a $15 million business. And boy, do we love every day of it.

And very profitable, right?

Very profitable. We're not profit chasers, but the profit comes when you do the right thing.

Welcome everybody to another episode of the Wealthy Contractor Podcast. This is Brian Kaskavalciyan, and with me today is Kyle Erdman. Kyle, welcome.

Thank you for having me, Brian.

So we were recently introduced by our mutual friend Brian Gottlieb, and Brian told me, hey, Kyle is doing some really great stuff and he's got a really cool story. And so you should not only have him on your podcast, but you should also invite him to come to Accelerate and tell his story. And so we're doing both. Today we're going to do the podcast. We'll introduce you to everybody, but then we'll invite everybody to come to Accelerate where they're going to hear the real, like, nitty-gritty of your story and what you've accomplished and what you've learned over the last couple years here, which has been intense. So Kyle owns Erdman Exterior Design. With his lovely wife, and she is quite the—

she's quite the firecracker.

She's quite the firecracker. That's a nice way to put it. She reminds me a lot of Addie, where she's like, no nonsense. It's— this is what we need to get done. Let's go do it. You are like me. You got these big ideas, but when it comes to the details, oh boy. All we do is make messes and chaos, and we're like the Tasmanian devil going through the business. So tell us a little bit, you have a great story. Tell us like the 2-minute version of the story.

Sure, so my name's Kyler, and once again, I'm 37 years old in the Chicagoland area. Short story, I was born in the business, so I joined the business when I was 12 years old. I like to say I was the best floor sweeper in the market. Uh, my dad dropped me off at job sites and told me, follow that guy and clean up after him. Uh, I, I later evolved into a full-time truck driver, which, uh, the bliss of driving a box truck unair, unair conditioned in the middle of summer is just the best. After that, I got, I cut my teeth framing houses and, um, went away to school where I was gonna become a professional baseball player. Uh, got drafted by the Astros and, uh, all that fell apart shortly after career-ending injury. So I came back to the family business. I had a mentor tell me to join my family's business. Don't look at it as working for your dad. Think of it as creating your own business within your dad's organization. So I took his advice, came home, joined my family's business. We were sitting about $750,000 a year in revenue. My dad had been an owner-operator since 1982, and me and him ran the business together for quite a while. So from about 2013 till 2020, it was just me and him and a couple of employees. 2020, I had the lovely fortune of having my wife join the business. That's where things really started to ramp up a little bit, but we were still stuck at about the $5 million mark last year. So in 2024, my wife and I took over operations of the business. We were able to really fix what needed to be fixed and take the great foundation that my dad built and build it into something that we're proud of. So in the past couple of years, we've gone from a $5 million business to a $15 million business. And boy, do we love every day of it.

So, and very profitable, right?

Very profitable. We're not profit chasers, but the profit comes when you do the right thing.

Let me ask you this. So you had this dream to be a professional baseball player, and it happened, and then it didn't. How did you deal with that?

So two things. First, I realized when it comes to goal setting, set your goals a little higher. I had a dream when I was little to get drafted to play professional baseball. Little did I know you can get drafted and not play professional baseball. So I achieved my goal. So the first thing I learned was set your goals higher because then you'll make it farther.

And with more clarity.

Correct.

We talk a lot about clarity at The Wealthy Contractor. You got to be really clear about what you order from the universe, but go on.

Be abundantly specific when you're making your goals. Uh, otherwise you'll get the vague result that you're shooting for. The other thing I struggled for a long time with identity, because I always identified as a baseball player. So it took me a really long time to get past the idea that there was life after baseball, that there was another path that I could make to be successful. I did think for a very long time that after baseball was done, that that was my path. I missed my chance. And now I have to settle into this middle-class life. Little did I know that the construction world can be very fruitful as well. And my wife and I have taken a lot of what we've learned from our mindset coach and really built a business and really fixed our brains to, to really think bigger, to think clearer, and to set very specific goals like we talked about.

One of the things that I've noticed is that when you meet an entrepreneur, or even when you go to hire team members. There's something special about people that have played competitive sports. How do you think that that's helped you as an entrepreneur?

So the first thing we were just talking about this morning with the new, new hire class that we had in our office is it's really taught me to be— to look at everything holistically as a team. You know, there's a lot of people that hire these stud individuals, but when you start to put it together as this team, it just never quite gels. And all it causes is friction within your organization. So when we're hiring, we hire to the team that we want, to the personalities that we want. But also, I mean, from a personal standpoint, it's just made me very resilient. It keeps me pushing. I take criticism extremely well. I'm used to being, you know, from coaches talking down, yelling, screaming, you know, when you play sports at a high level, it's just brutal. So Hard work doesn't bother me. Persevering through hard times doesn't bother me. Harsh criticism really doesn't bother me at all. Direct criticism, I love it. I relish in it. I've taken a lot of that and become what I call, I'm the greatest hype man in the office. So, and it's taught me how to be a better leader within my team too.

Yeah. Do you look for that when you're, when you're hiring? What are you looking for? In a person? What are the characteristics you're looking for?

So we DiSC profile every hire that we have. I think that that's very important. And I think that each position has specific profiles that work best for them. You know, we're hiring salesmen. I prefer DIs. I think that IDs, while being direct, can still be a little too nervous about what people think about them. IS people are too customer service driven. So when we hire for call center, we want more IS people. SC people for our design and production departments, um, and then DCs for management level people. So we have these different personality types for each position that we hire. And then we really look for motivators too. We really like people who are individualistic, like myself and Becca, highly competitive people, uh, utilitarian. We want people to really focus on the return. Uh, high theoreticals are nice. Salespeople, I like high aesthetics. So each position we kind of have different, like I said, different, uh, profiles and different motivators that we look for that we've found to be successful within our organization.

Yeah. In the last couple of years, you guys have tripled the size of the business, right? It was 5 and now it's 15. How many people have you hired?

So a couple of years ago, we had a staff of about 10 people. This year we'll cross 50 people. And as we open our Scottsdale location, we'll probably start getting over 60 people next year.

That's a lot of people to hire in a short period of time. That stops people in their tracks when they think about, you know, how do you create a business that works without relying on you? Which is really kind of, to me, is the goal. You'll know you have a real business when it doesn't rely on you to operate. And as you build out a team, there, they have to be You know, they have to be very clear on what they're expected to produce, what their results need to be, what the company's results need to be. They need to be accountable to those results, but somebody has to hold them accountable to those results. How have you dealt with going from a relatively small team of 10 people to a pretty big team of 50, how have you dealt with the accountability side of it?

It was one of the harder things. So the two hardest things as you grow a team is to pull yourself out of the team so you can focus on the team. It's something that I, I still struggle with. I, I love being in the mix with my team. I love being, uh, just involved with every aspect of the business, but I know that if I stay involved, I'm just going to become the logjam of the business really quick. So it took a lot of awareness for me to realize that while I'm good at some things, there's some things I'm just really bad at. As we built out the team and as we started building out leadership, especially leadership was the most terrifying thing for me to hire. When I'm hiring leadership, I'm looking at a person and having to admit that this person's probably better than me at, at the aspect of the job they're going to be doing, which for somebody who's always been very competitive and self-sufficient, I don't like admitting when people are better than me. But having the leadership team in place is really what's been able to change how we, we being Becca and I, are able to work on the business that are working in the business because now we have leaders to hold our employees accountable. Our employees now go to our leaders with their issues and problems, and it only comes to us if it needs to come to us. So that allows us to be gone for, you know, I was just gone for 2 weeks and the business went on without me and it was great. I got my updates when I needed my updates. I talked to my leadership team at least once a day, usually just to check in for about 5 minutes, see how things are going. And by the end of the trip, I sent a text to my director of sales who was doing my new employee onboarding to cover for me. And I asked him, I just said, surviving? And he said, nope, thriving. And that was all I needed to hear. So I know that, I know now that I have the right people in place to keep going.

Well, and you'll get to a point where you will love hiring people that are better than you. You'll love it. I mean, I, I, when I see somebody in our organization do something better than I could have ever done it. It like, I love it. It just makes me feel good that, man, we've got a great team. I remember, you know, years back, me and Addie, you know, like you and Becca, we did everything at the business until we really got serious and said, look, we— this is not the way to build a business. And we started to build that leadership team, and it is scary. To build that leadership team, because not only are you hiring high-level people, but you're paying them a lot of money. And you got to make sure that they— that you have a system in place where they can thrive, where they can perform, and where they can win. And that is a little scary at first. But when you understand how to hire these people and how to give them direction and how to lead them, it changes everything in the business. I'm curious about something you said. There's things that you're not good at. What are some of those things that you're not good at? Because you're not— I will say this ahead of your answer. You're not the only one of us that's not good at the things you're going to say. I can almost guess them, but I want to hear them from you.

So I am an awful implementer of process. Uh, I'm a, I'm a great guy at coming up with ideas. Uh, I know, I know what point A needs to look like. I know when it gets to Z what it will be like, but filling in that middle part, oh my gosh, I am the worst. When you talk about the Tasmanian devil, uh, that was me in the business when I was running it with my dad. I mean, me and him were the exact same person. And we just kept throwing ideas at our staff and our staff would go bananas. It was just so unorganized. So having a great implementer was the first thing that really pushed the business forward, which Becca thankfully is, in my opinion, one of the best implementers in the industry. Maybe biased, but I do think that's a—

Listen, I talked with her for what, 10 minutes? And I'm convinced. I'll put her up there with, with just about any other implementer I've seen. She's, she's pretty badass. The reason I asked you that, Kyle, is because it's not unique. Those things that you just said are not unique. The problem for a lot of us is we don't know how to get out of our own way. I think your dad was like that, no offense, but your dad was like that. He could not put himself aside to say, hey, wait a minute, if we really want to grow this business and we really want to make money at this business, I can't be in the middle of everything. And that's what too many people in business do. The owners is they're in the middle of everything. They're the bottleneck. They're the problem. And their ego, or their fear, or whatever, doesn't allow them to get out of the way.

A lot of people have a fear at if you're not doing everything that people are going to think you aren't doing every— anything. When really the truth of it is, and thankfully my director of sales really harps it down on my entire team, that by allowing Kyle and Becca to be free to work on the business, the business will keep moving forward. The more you have to ask them questions and bring them back in, the more you're holding the business back and holding it in place. And if we can keep moving the business forward, it's only going to create more opportunities for every single person that works for us. And mine and Becca's theory is it's been really cool to hit our goals and to keep moving the business forward. But it's even cooler to create an organization where people can meet their goals because of what we're building. And that feeling is a lot cooler than, than doing things for a selfish reason when really being in the middle of the business is just a selfish thing.

So the listener, hit the back button twice on that and listen to what he said again, because he's absolutely right. There's a fear of, well, they're going to think, oh, I'm making all the money and I'm not doing anything. There's the guilt of, well, I'm not working hard enough. And one of the biggest things that an owner needs to get over is the feeling that as the business makes more money, or if the business makes more money, people are now going to start looking down on me. People are now going to start to expect me to work as hard as they do. And there's nothing further from the truth. The reality of it is, so you were gone for 2 weeks. Did your team, like, did they give you any crap when you came back?

I had 3 people reintroduce themselves to me as a joke. As a joke?

Okay.

As a joke. Everybody understood what we were doing. Everybody understood that the business doesn't need me here. And I had a few people tell me I could have stayed longer and it would have been fine.

Yeah, I always say, and I was telling you about the new, the new book I'm, I, I'm soon to release. And it's really, it's all about creating a business that doesn't rely on you. And what I mean by that is that if you are gone from the business, like you were for 2 weeks, the business still operates. The business markets, makes leads, the business sells, the business produces, the business creates an amazing customer experience. The business gets reviews, the business gets referrals, and the business makes a profit. What you're doing is you're looking at this thing holistically and you're saying, what is it going to take in terms of people, capabilities, resources, tech, whatever, to move this thing forward in a way where it doesn't all fall apart, in a way where not only do me and Becca, me and Addie win, but the whole team wins. And what a lot of people don't get is that if you are not profitable, if you are not profitable, like, and to me, you know, you know, you've heard me say this, minimum 10%, ideally 15 to 20%. That's the reward for you doing a good job for your customer, for your people, and for your community. If you are not making that kind of net profit, there's no way you can grow your people. There's no way you're gonna attract great people. There's no way you're gonna be able to provide great service to your customer. I can keep going with the, the list is long, but I think you get the, you know, we get the point here. And so people have gotta get past this idea that It's all on me. You don't grow your business from $5 million to $15 million. And what did you like, triple or quadruple the profit margin, didn't you?

So we went from a 3% net to this year, we'll drop about 15% to the bottom line.

Okay, so you 5x'd profit. 3%, by the way, is like having a horrible job. A $5 million business with a 3% profit is the worst flipping job in the world. All it is is stress and heartache and, oh, it's just a mess. But, you know, 15% lets you breathe. 15% lets you go live your life. And a lot of people, that's the other thing that a lot of people don't understand is that you, this business needs to essentially fuel your ideal life, whatever that looks like. I mean, look, you guys are opening up in Scottsdale. Why are you opening up in Scottsdale? Tell us about that.

Two reasons. First, because we can. But more importantly, a manufacturer called us and said, hey, you know, you guys had a lot of success in Chicago. Do you know anybody in the Scottsdale market who can duplicate what you're doing? Becca and I have had a long-term dream of opening a second location down there. We were down there on a trip last year and we said, man, in like 20 years, it'd be really cool to have a second place down there. Fast forward 12 months later, we get that call and now we have the business that's going to be funding a second place for us down there. But once again, we were very, very specific on what we wanted. We wanted to have a condo in a specific area of Scottsdale with a business that did a specific thing. And since we were so specific about our goals, we hit them. It just, it happened faster.

You used the business to give yourself and your family more life. And along the way, you're going to build a business that's going to give more life to your team members. You're going to build a business that's going to serve your community. And because you guys have the systems and the processes down, you're going to do a good job for those customers. You're going to make people happy. And that's the name of the game here. And too many people complicate this thing. I mean, did you hear? I kind of knew the answer. I mean, if anybody listening has been to Scottsdale, I love Scottsdale. I absolutely love it. I used to feel like when, when I lived in California and we would go to Palm Springs. So there's this moment when you get to Palm Springs and there's— have you been to Palm Springs?

I love that airport. When you walk out of the terminal and you go down the stairs and all of a sudden you're outside. It's amazing. It's that feeling that you're, you're in it. You're in it.

Yeah. So when you come from LA, and you come down, I think it's the 111 is the, is the highway that cuts through the desert and takes you into the main town. There's this sign there that says welcome to Palm Springs. I swear to God, I would see that sign, whatever stress I was feeling, whatever anxiety I was feeling, whatever, whatever bullshit was going on in my head, all of a sudden, boom, it was gone. Just, I just felt at peace. And I don't know why, but I just felt that way. Scottsdale is another one of those places. So I see why when you said Scottsdale, remember my reaction? It was like, whoa. That's amazing. I love that place. But, but the point here is that you had this goal, you had this dream to have a place in Scottsdale. Well, how do you have a place in Scottsdale? You might as well have a business that pays for it. You know, it's pretty simple. That's the beauty of being in business for yourself. That's why you went into business for yourself in the first place.

The big thing for us, and it was just, it was a coincidental timing thing. So right about the time we were buying the business in July, my wife and I were also reading Who Not How, and we always just focused on how do we do this? How do we do that? How do we do this? All we had to do was just hire people, just find the who. And all of a sudden everything just happens. That once again, that goes back to acknowledging what you're not good at, realizing that you can't do everything and just hiring to it. It was as simple as that. I mean, I don't want to say it was simple because mentally it was very hard, but once you get over that paradigm shift, it was very simple.

Yeah. Now, also, one of the things I think that has helped lead your success, or contribute to your success, is that you're not doing this alone.

Correct.

You have mentors.

I do.

You have a group of people that you meet with. And you talk about business. And you talk about what's going on. So you guys, you and Becca, are not being the Lone Ranger and, and Tonto out there, you know, doing it on your own. You're actually working inside of a community, kind of like what we do at Success Society. You're working inside of a community and with mentors, great mentors. Like, I mean, Gottlieb is amazing. I'm talking to him next, by the way.

Just so you know, Becca's main mentor is Charlie, which I mean, Charlie Gindal. Charlie Gundel. I mean, one of the best.

Okay. Yeah, one of the best. Yeah. How has that helped kind of shape your— this journey that you've been on, this growth that you've been on?

So I mentioned it on stage when I was at QR. It's been interesting because— and me and Becca realized it as soon as we had— we had separate conversations with Brian and Charlie. So I had called Brian, Becca called Charlie, and we were talking about the window business because we do— part of our business is doing windows. I didn't mention what we do as a company, but part of our business is doing windows. So we were just going over different KPIs and different things to look at for a window business. And I mean, I kid you not, Brian and Charlie in two separate conversations without talking to each other, their KPIs were the exact same down to, we're not talking like, oh, roughly 25, this roughly that it was like 28% here, 17% here. And they were identical. And that's when me and Becca realized like, oh my God, these guys have the playbook. And everybody, it's the formula, it's the playbook. Everybody is in this industry is so worried about how do I reinvent the playbook? Whenever everyone's just overthinking it, just, just follow the playbook, the playbook's out there. These guys are on stage giving the information away and telling you how to do it. Yeah, just follow the playbook. So it's been instrumental in how we've grown so successfully and quickly. Because we know all we have to do is just call one person, they're gonna give us the next step in the playbook. And all you have to do is just follow it.

Yeah, and that's exactly what the Success Society is. I mean, you're, you're very fortunate that you've got this tight little group, but most people don't have that group. They don't have access to a group. So that's why we created Success Society and we have the playbooks. Here's the formula. Now it's up to you to go and execute. We're going to support you. We're going to give you, we're going to put you in a mastermind group. We're going to have coaches. We're going to have facilitators like Charlie. Like Scott Berman, like Vince Nardo. I mean, like the, some of the smartest people in this business. And we're going to show you those playbooks. And so that's a good segue into Accelerate because Accelerate is all about exposing people to these playbooks. And so like when you come, you're actually going to be with a couple of other real powerhouse young people like Ryan Keene is, is going to be up there with you. And Ryan Keene just had his first million-dollar month 2 months ago. He did it again the next month. And I mean, he's, he's trending to $15 million next year, maybe potentially even more. There's a deal that we're working on with him, but he's 28 years old. And, you know, he's just, he's following the playbook. He's following the playbook. So I'm excited for you to be there because you're going to, you're here, here we don't really have the opportunity for you to go into the whole story of how you did this, how you go from 5 to 15, how you go from 3% net to 15% net, but we're going to dive deeper into that definitely at Accelerate. And I will want to have you back next year because I want to update. I like doing that. I like getting updates, especially with things like this, because I know you guys are going places. And so it'll be really exciting to have you back. But I'm really looking forward to you being at Accelerate. So I think that— let's see, is there anything else I want to ask you? Anything else we should talk about?

When we talked to QR, we talked briefly about, um, because we just bought the business this year, and it was the— how, how did we reorganize the business as we bought it? What were the steps we took to, yeah, to, uh, to take it from that meandering thing to, to a thriving company to where we can scale? So if you want to talk about that, we can talk about that. Uh, we could talk about how the Bears are good.

Are they really?

The Chicago Bears? Yeah, come on, man.

Oh, the Chicago Bears. I was thinking— I, I'm sorry, I got it confused with the Browns, the Cleveland Browns.

Oh, they're awful.

How is it that they're never— I'm not a football fan, but I know the Cleveland Browns are bad. They never win anything. How is that possible? There must be a strategy for losing and making a crapload of money. There's got to be. Yeah. I mean, I'm a White Sox fan, so I know the only thing that makes sense, though. Of course, there has to be a financial incentive for losing.

Otherwise, I'm sure there is keeping payroll low while you can make money by fans coming in. I'm sure there's some way they do it.

I mean, look, isn't a professional team is like a business? You know, I tell people all the time, you're like your sales team. You can either have a, you know, you can either have the Cleveland Browns or you can have a championship team led by, you know, Belichick and Tom Brady. Those names I do know. That's about all I know, you know, and anything in between. It's up to you. And so if you want a Belichick, what are the things that, you know, that the leader, the coach needs to do in order to create a great team? Well, one of the things is they don't just show up on game day and just put on their uniform and go play. And yet, how many companies do you know out there who basically do that with their sales team. Oh, here's a lead. Good luck.

I mean, I've been to $10 million companies where sales reps still call and set their own appointments. I just spoke to a guy who was telling me about his successful business as he was telling me that he emails quotes to everybody, by the way.

But those are both surefire ways of not making any money. Go on.

You said it. Yeah, but no, I mean, for us to, to make sure we have a successful team, build a successful team, we, we base everything off of our three— we call it our three justs. It's something that I coincidentally just put into the business. So number 1 is just grow. We want all of our employees to always just grow, just grow professionally, just grow personally. Do everything you can to just be 1% better every day. If you need help with it, we'll get you in touch with other people in the industry that can help mentor you to network with, but just grow. Number 2 would be just own it. Own everything you do. If you make a mistake, own it. Even if it wasn't on you, just own it because Otherwise you're gonna be spending more time trying to figure out whose mistake it was. Just own it and stop it. And then the third one is just win. We love winners. So I do usually have some colorful words that I put with that too, to really get everyone going. But yeah, I mean, if we can just grow, just own it and just win, it's going to be a great environment that's going to— everyone will thrive together. So that's, you know, that's how you get Belichick and Brady.

So I will say with that, I will say just get yourself to the listener. Just get yourself to Accelerate Live in February. I'm going to do a little, a little pitch here. You probably already heard a commercial for it, but this is going to be our biggest event yet. I can't encourage you enough to get out of your business for 3 days and get to Clearwater Beach February 10th and 11th. We have a bonus day with Brian Gottlieb on the 12th, if you're interested in staying for that. But Kyle is going to be there. Charlie will be there. Brian Gottlieb will be there. Scott Merman will be there. We have a killer, absolutely killer marketing panel, 3 of the best in the business are going to be up on stage together talking to us about what's working, how to create marketing plans, how to create budgets, all that stuff. It's going to be incredible. Go right now and secure your seat. Go to accelerateevent.com. accelerateevent.com. I believe the coupon code is PODCAST26. And I think you save a little more money if you use that coupon code PODCAST26. Kyle, thank you so much for being here.

Can I add one thing to your— can I add one thing to your Accelerate promo?

Absolutely, you can.

Okay, so if you are a contractor that's been going to events for years and keep saying every event is the same thing, and I never get anything out of it, and I keep going to them, my business isn't growing, none of their stuff works, I'm going to challenge you. And this is, this is something that Becca, my wife, has really coined. So I'm going to give her all the credit for this. Go to the event. Accelerate is a fantastic event, one of, if not the best event in the industry. So go there. And then when you're done, blank out a spot on your calendar for about 2 weeks after for 2 hours and think of one thing that you are going to implement from that event. Make your list of all the things you want to do, but take 2 hours, 2 weeks after, after you digest everything to implement one thing. And if you implement one thing from your business, it more than pays for this event itself. That's the problem though, is no one ever implements anything but just one thing. If you can take away one thing, you'll be great. So I would highly encourage everybody to go.

I love it. Kyle, thank you. Look forward to seeing you in February. And to everybody listening, great episode. I think Kyle is going places, and of course with Becca by his side. Can't wait to see her again. And Until next time, this is Brian Kaskavalciyan and this is the Wealthy Contractor Podcast. Thanks for listening.