The Big Squeeze - Introduction

Hey, Everybody. Welcome to 2026 Contractor Training Room. Doing these live to help you guys out there as contractors get better at what you do. And we're going to be doing a series I'm super excited about called the Big Squeeze. There's a big squeeze happening to you guys where your revenues for your jobs that you're selling have risen since 2019, but they're starting to taper off. Your costs are still rising at a pretty high rate, and thus your profits are being squeezed. We're going to talk about exactly what we need to do to widen that gap again, make sure that we stay healthy in our businesses and the changes that are coming in 2026. So I just want to start off real quick with this. Right here is your profit. These are the dollars that you make after all the work and the effort that you put in each year. And here in 2025, after literally hundreds of phone calls with you guys as contractors, we have found since, hey, if we could mute ourselves, that would be wonderful. Sorry about that. We found that since about June, we started to see this trend where the sales weren't quite where they were for what you built in overhead in your business. And as the season went along, we didn't quite catch it quickly enough. And we found a lot of contractors really struggling towards the end of the year. And so this dollar sign that your profit is being squeezed by two different things. So think of it like that and this. The things that are squeezing your profit are market conditions. And economics, which are related to each other. So market conditions, we have things that are like. Like not as many storms as there have been in the past throughout the year. And I'm going to be real honest, a lot of what I'm talking about is to you guys that are storm restoration contractors or do any kind of insurance work out there, but also to you retail guys that the market shifted whenever things don't go the way we think they're going to go with the volume we believe we're going to get based on past history. And so first year in my history as I've been alive, that there wasn't a hurricane that hit anywhere along the American coast. And so that severely affected results. We also have economics. We're starting to bump up against what a homeowner is willing to pay and what an insurance company wants to pay out. There's fear out there from an economic perspective because we don't know what's going to happen with the economics of our country. Sometimes we also have interest rate problems. So people are holding on to their money more than they ever have before. And what that's done is it's reduced people's closing rates even though they might have the same number of leads. So you have this pressure on the revenue side that's coming into your profit and it's starting to taper off a little bit. We're not closing as many jobs as we thought we were. And we built a company with the overhead to handle that kind of stuff. And so we start to run into some problems. Now on the other side, we have our cogs. So this would be our cost of goods sold, right? This is your material, your labor, your permits, your Eagle View measurement type stuff. Those are your costs directly related to the job. And even commissions are included in there because they're directly related to the job. And those are also rising, and they're rising faster than they ever have. I've been in this industry for 28 years. I have never once seen a year like 20, 25 ever where the cost kept just going through the roof, but the volume didn't relate to those rising costs. And I'm talking to you guys out there, if you're a supplier and you're on here watching this, guys, it's time to start lowering your prices. Just gonna be blatant about that. Whether you like it or not. You, hey, think Jim Johnson is the worst guy on the face of the planet. Market conditions do not allow for the prices that you're charging right now. Based on what we can generate from a revenue perspective, you can only keep pushing prices so high before a client goes, you know what, I'll wait on that. It's not the right time for it. It's not leaking right this second. Just do a repair. All these new objections start coming into play that weren't there before. And so our cost of goods have gotten a lot of pressure, especially from employment and salaries and things like that. Those numbers have gone through the roof just to live in the country that we have here in America. And then on the other side of the equation, you have overhead. I was just talking about that with the salaries, the insurance, your rent, all of those have also gone up in a dramatic fashion. So this is the squeeze that's happening to your profit. And I'm going to bet that a lot of you, and I would love for you to, like, take just a moment as you're listening to this, maybe write down a little bit to share at the end and we can talk about a few things. But I would bet that a lot of you as you sat down with your P and L at the end of the year, you went, whoa, what just happened? We're used to making 10, 12, 15, whatever. All of a sudden it's 6, 5, 4, 2. And this is what I've been experiencing with a lot of clients. We were at roofcon. We heard a lot about it. And it's not everywhere, but it's most everywhere. There's little pockets throughout the country that did okay, but most of the country did not. We're going to walk through that here today of what that looks like, and then we're going to walk through, like, what the solutions are to resolve it. So let me go ahead and move this up out of the way, and I have my notes right over here, so I can just stay where we are. But ultimately, just real quick, before you leave here, I want to really put something point across to you. Because of these pressures squeezing in on your profit, you're starving your business, and your business is starving, so you can't reinvest. You're not taking as much home as you used to. And because of those factors, you're probably dealing with quite a bit of stress. You're trying to figure out, what do I do next? You're. You're probably in the situation of having to lay people off and do some things you really don't want to do with your business just to survive. We're not here to survive. We're here to thrive. When there's obstacles, there's always opportunity. So we're going to talk about what this opportunity is as we move into what I believe is the new golden age of roofing. Everybody talks about here in the past was our golden age. I don't think it was our golden age. Like, if you look historically, like at that type of stuff, you have the copper and bronze and an Iron Ages are kind of moving forward. And then you moved into what was called the golden age. And I think our industry has gone from the bronze to the. To the iron. And everybody thought the iron was the golden age, but the reality is the golden age is what's coming is the time that's coming. We just have to mind shift just a little bit to go, hey, we can actually take advantage of this opportunity, not see it as an obstacle. So let's move forward just a little bit. We're gonna draw a little bit of a timeline here so that we can all understand this a little bit better. There we go. Good. So we've got a timeline moving in this direction towards 2026. All right. And back here is 2019. And right here, we're going to put 2025. We're going to try and demonstrate what's going on. And I'm also going to kind of hit 2024 here. So since 2019, our revenue, this line right here, kind of rose a little bit and then started spiking way up all the way through about 2024. And then what it did through 2025 is kind of started tapering off. Okay, I'll move this just a little bit so I can get this all on the screen. There we go. Good. And so that's what our revenue has looked like. Let's just write that on this line. This is revenue. Okay. Now, our costs have done a very similar thing. Make sure I got the right color chosen here. Yep. Our cost since 2019 kind of lagged a little bit behind, but started to follow our line into 2024 and has continued to rise and continue to rise. Well, when 2025 hit, we continued with our green line here to increase slightly, but our cost have continued to rise to the beginning of 2025. And then this is what happened at this point, and this is where we're starting to struggle, is we could not bear any more here. And our revenues have started to drop as companies. So this is building for a company that's growing. You're putting in overhead and stuff like that for new growth and all of those things. And there was no growth. As a matter of fact, the industry is down. The industry is down overall, 40% across the nation. That's data from suppliers, that's data from contractors. That's data from overall work being done by roofing companies throughout the nation. A lot of that we can relate to storms and not having that opportunity, but there's also market barrier, like, we're starting to reach what people are willing to pay, and with interest rates and stuff like that, they're even less likely to pay. So our overall revenue started to drop. So think of this as overall revenue for our business kept rising, Kept rising, kind of tailed and been kind of slightly rising. Then all of a sudden, it just started dropping, and it continued to drop. And you're back here saying, hey, I'm going to be a. Let's call it a $5 million company, and I want to grow to a $7.5 million company here. And so when we do that, we take on a lot of overhead there, and. And bam, everything dropped off, and I actually ended up being a $5 million company again, or maybe even worse. And so you Start to have that line dropping, but you also, at the same time, have this line rising. So think of that arrow moving that way and this arrow moving this way and everything in between here, try to grab a different color. Oh, I got a better way to do this. Do it like so. Everything in here, that is. Your profit. And as you can see, those profits were really healthy, really healthy. And now they're starting to squeeze down. And what we have to do, we must do. This is not an option if we're going to stay in business as a viable business is we have to do two things. We have to drive this number back down and we have to lift this number back up. We have to drive our revenue back up to where we want to be as a company, but we absolutely have to drive our cost down. So this is the timeline of what's happening in our businesses. Probably what you're experiencing with a lot of overhead out there, a lot of expense, and the season didn't go the way you thought it was going to go. And it's. This is not new. The drastic ness of it is what's new. Because overall, the opportunity for markets down 40%. Now, a couple of other few stats for you that I think might be real important for you to understand. So, materials up 40%. So let's go. Materials up here, up 40% since 2019. Labor up 20% since 2019. So those are two significant factors that are affecting your squeeze in profit. Your Insurance is up 30% in just 2024. I want to say that again. Your Insurance is up 30% in just 2024. We've had dozens of contractors calling me going, hey, do you know anybody else for insurance? Because ours is outrageous. It's just, we don't know what happened, but it is out of control. And then finally, direct overhead is one of your biggest expenditures. But we're going to talk marketing here. Your cost per lead is up 118% as a whole. All of those are why your business is starving. It's eating all the profit that you would normally make, especially when you have a downturn. So how do we solve this problem? This is a super important thing. Again, I want to remind you, write down questions, write down takeaways from this. When you watch somebody talking about these type of things, when there's an important point, if you write it down, you're more likely to remember it. And if you have questions, try to answer those at the end. For you. Now, knowing this is a problem, we would all probably agree on that. What do we do about it. So let's talk about that because there's a couple of solutions for this. And what I'm going to do is I'm going to try my best to give you a visual representative of how to possibly solve this. So think of this. That's terrible, but close enough as a boat, okay? You got this boat right here. We're looking top down on it. And this boat needs to go forward. That's your business. And you have two sides of that boat that need to be propelled forward. Or think of them as maybe engines or power of your boat. And so we're going to grab those real quick and let's see, get a good color for those. There we go. And so the first or that we need to consider. So think about it like this. That's a paddle. I'm not here to be an artist, I'm here to be a coach. And so that's a paddle. And I got to push that thing forward. And we could certainly do that in sales. We could get better at sales. We could practice our sales. We can install new systems and stuff like that that would help us improve our sales and really focus there. But what that's going to do, this is going to spin your boat around in circles, okay? You're only going to solve part of the problem and you're going to probably stagnate a little bit all in one place. Because while my sales go up, that doesn't do anything to reduce my cost. And so over here we've got our other or, and we can think of this or as operations or ops. Okay, so sales and ops. And so what can we do about these two aspects so that we're rowing the boat forward, straight ahead and optimizing the best way possible. So I want to draw a little bit of idea for you on what you might consider doing. And so the first thing we have to understand is that especially in storm restoration, it has been for the last, as long as I can remember, pretty much an order taking type situation. Hey, Mr. Jones, you have damage to your roof. We can get the insurance company to pay for it. Would you like us to do that? And they go, yeah, that sounds great and wonderful. But over the last few years, some things have changed with that. The amount of time it takes to get those things resolved, battling for supplements that are necessary to make it profitable, higher deductibles, making all of this insurance thing much more difficult. Which affects two things. Number one, our ability to close people and generate revenue. And then number two, the fact that if we do Close somebody. The cash flow has become much further out to bring into our company, creating, creating us to be literally a bank for all the business that we do. And if we get out too far on our cash flow, we'll submarine. Our business will sink that boat. We don't want to sink the boat. And so what do we do to change that? And I'm going to argue, and I have been arguing for the last several years is for lack of a better term, we got to become true salespeople. We've got to learn how to sell. And so we have this concept called neuro. Story selling. We got to improve our game. And so we have to understand psychology. We have to understand how to separate ourselves from other people and we got to understand how to tell stories. We've been studying the data on salespeople that are being successful versus salespeople that aren't. There's tools out there like Rilla and Xero that are recording millions and millions of sales interactions. And we've learned two things, two things about the top salespeople that separate them from everybody else. And those two things are, number one, they ask more questions than other sales reps. They speak less because they ask questions. They ask questions that help them understand the problem of the homeowner better so that they can solve the problem better. And that's where they use stories. And I'm not talking about your company story necessarily, they use stories that are examples that the homeowner can relate themselves to. And so over the last 18 months or so, we've been fighting fine tuning this neuro story selling system specifically for the hybrid aspect of insurance conversion to retail. How to psychologically allow a homeowner to choose what's best for them and then work down from there to get what fits their best value for the money they have available. Most of us are starting at the bottom and selling up from there with upgrades, which feels awful. Nobody likes to pay more. We're starting with the best and stories of people that have chosen the best and why they chose it, with the homeowners choosing those solutions and then finding out, wow, that's a little bit out of my budget. And then every time we take a little few dollars off, it feels better. So there's psychology that's neuro important to the brain, that allows us to sell our jobs at higher rates. So neuro storytelling is going to be something that is a necessity, not a maybe it's a necessity at this point, especially with deductibles being outrageous, cash flow taking forever. How do we speed that whole entire system up so our businesses are healthy? If we can just raise the price of our jobs just slightly by 5 to 10%, it can make a dramatic difference. Now, on the other side of the equation, so this is all, hey, how do we optimize every league close at higher percentages for more revenue per job? That's how we're going to do it. And then finally, on the ops side of things, what do we need to do there? And so the thing that we've been working on for everybody on the off side of things is what we call the scaling engine. And this is a combination of factors. The scaling engine is a combination of factors. Number one, we'll get a different color here. Number one, we have to buy, right? So we teach how to get the right price from your suppliers to make sure that you fit the market or even below the market if you're a high volume contractor, in order to allow you to generate the margin that's necessary to operate in a healthy way. We have some amazing tactics on how to do that. And I'm going to be talking, talking about those tactics throughout this series and how to go about doing them. The other thing is we have to pay market. Rate. We have to pay market rate for our crews, for our labor. That doesn't mean cut all their costs. It means to get clear on what the costs are for, for your work and measure it to make sure that you're staying within market rate. We're going to teach you exactly how to do that as well. So that's more on the what I would call the financial side of things that if we can just move those cost of goods down 1%, it makes a dramatic difference in the long run over a full season. $500,000 or, sorry, a $5 million business, that's another $50,000 in your pocket if we can just move it 1%. But we can actually move it anywhere from 5 to 10% if we do things right. We've been able to prove that over and over with our clients over the years, and we've still been able to prove it here in 2025. So think of that as kind of one side of the coin. We're going to flip that coin over right here and we're going to talk about what we call a hybrid workforce. Okay. And so there's two things on this side as well. Hybrid workforce. So we don't want you to fire people. That's the last thing we want to do. We want to amplify the people that you have. But I want to talk about what happens when we build a company to grow and the infrastructure it takes to do that. Especially if you're in what we call Death Valley. Death Valley is between about 5 and 12 million in our industry that if you're there you're adding a bunch of overhead, trying to scale up and if you can't get out of that quickly enough it's going to eat all of your profits. So you got to make that move from that number to that number pretty quickly. Or with technology today we can run things lean and with the hybrid workforce we can run things lean. So that's part two is tech and specifically in that technology. And I'll just put it right over here so we can see it. Automations. And AI. Now I don't know if any of you guys went to roofcon. If you did, I hope I saw you there. If you didn't, what you'll notice is about a third of the vendors that were there had some kind of AI stuff and no offense to my vendor friends, I love you guys. Most of that stuff was AI agentic, front facing type stuff like taking in appointments, confirming appointments, putting people on a calendar. More sales oriented type of stuff. Where I want to talk about the repetitive tasks and those are fine, I love them, I think they're great. But I want to talk about the other repetitive tasks that we do in our business. Paying commissions, that's a repetitive task. It's the same thing every week. But it's difficult and confusing, especially if you have a complicated system. So you have to figure out a way to do that the most efficient way possible. And if I could say, hey, instead of this person that I'm paying $60,000 a year to spending half of their time doing commissions, what could they do with the other half of that time? If they could get it back and I could do commissions in five minutes because it's possible it exists out there today. And I have to think about where else is my boat leaking from. So my boat's leaking in material purchasing, my boat's leaking in labor and what that's costing me. My boat's also leaking in. Am I looking at my business in a way that verifies that I'm paying out correctly to my commissions and to my crews and am I also paying to my vendors specifically what I'm supposed to pay them? Now you guys tell me you get an invoice in from one of your suppliers, I'm going to bet you look at the job number. There's the job number. And I'm going to go put that in QuickBooks, I'm going to go put that in the CRM. And there they go. Nobody looked at it to go. Are the prices right with what we agreed to with our supplier and what we're finding is in about 40% of the cases it's off, sometimes up, sometimes down 90% of the time up 10% of the time down. We're leaking money right there. We can't be leaky in times where we have economic stress and AI and automations can allow us to do this. We can actually automate quite a bit of what's going on in your business throughout the entire time. From the first time we meet a homeowner until we get a signed contract and even touch points after that. That would be time that somebody's spending to help a customer move forward in your business. We're also finding that you're losing 20 to 30% of the opportunities that you should get because you're not following up. And when implementing automations and AI to do so, we're picking those up. And what would you do with another 20 or 30% of your sales that you're missing? How much of a difference would that make to your bottom line? And so these tools are available, but it's confusing, absolutely confusing to everybody out there because we're having to learn a new thing very fast. And so how do we solve those problems? Well, that's what I'm going to try and do over the next several episodes. We're going to do seven of these. This one is like introduction. Let's explain the concept of what's going on and then I'm going to dig in, into neuro storytelling and what we have to do in that. I'm going to do three episodes on that and then I'm going to do two episodes on the hybrid ops aspect of things. How to have a global workforce that does the repetitive tasks so that the workforce we have here is doing the high level stuff. And like I said again, I don't want to see anybody lose their job. But what I do want to see is us run our businesses efficiently. We want to make sure that we can scale up and we can scale down quickly without the overhead eating us alive doing so. So that's the concept of the big squeeze. How do we increase our revenues and our closing percentages and those type of things and then how do we push our costs down and get more efficient and more effective? And so what if a storm doesn't come to Save you this year. I, you know, I've talked to a lot of contractors here this last year, and there's a lot of hail, dances, prayers, things like that going on. And in reality, I don't know how good of a thing that is, because if that's all your business relies on, do you really have a business that's sustainable? Do you really have a business that can win in a down market? And that's my goal. This has really been bothering me for the last six months, and it's time to do something about it. It's time to inform, first off, you guys that this is going on. You're probably experiencing it, but you haven't been able to like, go, hey, this is exactly what's going on. I'm just having to let people go. I'm having to cut costs. I'm having to do things. And so many of you have ramped way down to just try and stay alive. Well, if we're going to build it back up, let's build it back up right, so that we can scale when we need to scale and we can come down when we need to come down and still be the same level of profit the entire time. It's the idea of running lean as possible while creating as much opportunity as possible. And we know and we believe that we can do that. We've been able to prove it over and over again with our clients. So that's the idea. I hope you guys have some questions. I'm going to do one more thing here. We're going to just move this up. I'm going to talk a little bit about what we're going to do after this series, because this series, I'm going to talk about all of the things that you could do on your own. Do it yourself. Hey, if you feel like you can handle it, go do it. Seriously. But if for some reason you need some help along the way or you want some guidance, if in doing this and doing this. Well, we're going to do a couple of things, okay? And so what we're doing is the write this up here so you guys get it. Profit, mind shift model. And in February, we're going to do a workshop on this. Okay? We're going to do a workshop. It's going to be virtual. I am going to go do some live ones. I've already got some planned with RCAT here in Texas, more than willing to come and do some live out there in the rest of the country. If there's any vendors or anybody watching this, hey, you Want to reach out and have me come do this? Love to do it. Because I want you guys to be successful. It's my number one mode of operations to achieve your goals without sacrificing everything that matters. Which means, hey, I want you to do really, really well, but I don't want you to sacrifice your lives for it. Your health, your bodies, your relationships, your family, the things that you need to do. There is a way to get those done and be highly successful out there in the world. And so I'm going to just kind of draw a box here and think of this as a day, okay? And somewhere in mid February, we haven't gotten a specific date yet. We are going to split that day in half. And think of this as am too fast. A M&P M. AM. Send us all your sales guys. Send us all your sales guys. And for three hours straight, we are going to go through the Nero story selling system and exactly how to do it. They'll all get a copy of that recording all three hours available to them. But on top of that, they're going to get a 200 page field guide. This field guide covers everything and anything about Nero storytelling. The system, the process, the flow, when to say what, how to say it, what tone to say it in, what psychology you're doing, who's doing it, what's happening, how to do it and why. Every single time handles every objection. And it's literally like a hard copy. You can have it, it's yours to walk away with. And it's. I don't like to use the word bible, but hey, it's your reference for getting out there and doing this very, very well. Even after the event, it's something for you to keep. And then in the pm, what we're going to be doing and I'm going to use a different color just because I want to make it pretty. We're going to be doing scaling engine and during the scaling engine side of things, we're going to talk about that hybrid workforce and how to find them and get the right ones. We have relationships with people we trust there to do that. Well, There's nest there. There we go. Hybrid workspace. And we're also going to be talking about automations. And AI. Every checklist, the right tools, the workflows, everything you need to do it very, very well. A little roadmap to installing this into your business. We're going to have one of our key ingredients here at Contractor Coach Pro Online with us. His name is Noah. We've actually done this with several of our companies at this point to install these automations so that they can scale up really fast without adding more manpower. And if they have to scale down, it doesn't put them in a position of having to fire people. And what we're finding is it amplifies the people that they already have to do 10 times what they were doing before. And that's the beauty of automations and AI. It enables us, empowers us and equips us to do more in the time that we have, affording us more time to spend with those we love and care for and take care of ourselves. So if that's the type of business that you want, that's what we're going to be doing now in the morning. This is for sales guys right here. And Those sales guys, 249 each. Okay. Three hours. Intensity four full out. Workbook. That workbook has taken me months to put together to get it right and make sure it's perfect for you guys. And then in the afternoon, this is by company. You can have up to three people attend. And I strongly suggest that the people that you have attend are your CEO or owner. Think of that person and your operations person that has some technical skill or wants to learn technical skill. And that one's going to be put that in a different color so it looks right 999. And you're going to walk away with the roadmap on exactly how to do that. Now, if that's something that's interesting to you, you want to learn more about it, you're not truly committed to it yet. What we've done is we've created a place for you to go to. Just let us know you're interested. Let us know that this is something that I want to do for my business because. Because I'm sick and tired of trying to scale up, scale down, create a bunch of overhead thinking we're gonna do great and then all of a sudden it falls apart. What do we do next? Like I said, this is not something new. Companies deal with this all the time. I can remember a specific case a couple years ago where a company had done amazing. They had done $60 million, one of our clients, $60 million. And just out of the blue they said we're gonna do 80 the next year with no real data to validate. Why they're going to do 80 is like we're going to get a storm. We know we are. We had a storm that helped us do 60 million. So we must be going to be getting Another to help us do 80. So they installed all of this overhead and systems and expense and costs. They didn't do 80, they didn't do 60, and they didn't do 40. And imagine what you have to go through after that. All the people you have to let go, all the costs you have to cut. All of those things that are very difficult things for most of us to do and we wait too long to do can compromise the business so badly it's either going to starve you or at worst kill you. We don't want that. We want to. We want you to be successful. We want you to do very well out there. If this is something that you think, hey, I'm interested, I want to. I want to do this thing. Here you go. Just tell us you're interested. You don't have to sign up for anything. You're not going to pay anything yet. Just keep it on the radar. We'll get more information out there for you. I'll make that a little bigger so everybody can see it. Shoot that QR code with your phone. Just put in your name and email. That way we know that you're interested and we'll keep getting you information about this. I hope that you continue to watch these. I'm going to be putting these out pretty quickly because this is such an issue. I'm going to be doing two to three times a week, coming on live and finishing up this series of seven videos about the big squeeze, where we're going to focus on how to sell at higher rates and to get those closed at a higher percentage. Most of you, your closing percentages are down. They're down because we cannot convince the homeowner that we're anything different than anybody else. So they're shopping, shopping, shopping, and sometimes even ultimately deciding to wait. It's not a big problem right now. I'll get a handyman guy to do some repairs for me. Call it good, and we'll just wait to see if things get sane again, which they're not going to. Prices are going to continue to rise. And then on the other side of the coin, what do we do to reduce our cost of material, labor and our overhead overall when it comes to insurance, our automations and tools, our overhead or salary, all of those things. So there's a QR code. Get a click on that. Go put in your name and email. We will get you information on it. There's no obligation or anything. Like if you end up, hey, I don't want to do this thing, cool, but if you do. We're only going to be able to handle about 50 to 75 sales reps and 20 to 25 companies. So let us know and that's all we can handle. Because I want to be very in relationship with you when we do this. I want to be able to afford the opportunity to ask questions, get those answers to you and supply you with the information that you need. So that's contractor training room for today. I hope you enjoyed. I hope you learned something from it. I hope you're wondering, hey, which one of those or should I be doing? And most of us are kind of doing this or a bunch of this right now. Let's get them going together. Let's go out there and turn 2025's obstacle into opportunity in 2026. Because now we get to build the golden age business. This business that's going to be this business that runs lean, makes lots of money. It's a well oiled machine and you get to take care of yourself, be involved in relationships with your family and those that you care for. Those are the important things. That's what matters most. So thank you very much for being here. That's the end of the show. We will come back on our next episode. Make sure you go register for those at the links that we send you guys. Those that you have registered, pay attention on Facebook, YouTube, everywhere else. We'll put those links in as well. Get out of here. Go be good humans and start thinking how do I start rowing my boat. Talk to you later. Bye.