#246 From $700K to $30 Million With Multiple Locations!

Your life would be easier if you stayed at one location. That said though, we're not $30 million today if we didn't go multi-location.

$700,000 of revenue to $30 million in 5 years is kind of crazy.

Some people, when they're talking about doing an acquisition, they, they talk about don't touch anything for 6 months. We don't see it that way. There was one technician there that was a high producer. He ended up getting his head cut off 10 days in because he's a prick.

But like, how are you thinking about driving culture in these new branches?

When guys who maybe haven't been listened to for many years, they float an idea and then see rapid action on that idea, that's how you like turn someone on.

Yeah. We're about to go multi-location in like the next 30 days.

What's your couple pieces of advice for me?

Um, uh, I'm John Wilson. I run a podcast called Owned and Operated, uh, and during the day I run a $30-ish million plumbing HVAC electric company up in Cleveland, Ohio. So that's who I am. I'm joined today on stage by one of my good friends, Rich Jordan. And Rich Jordan has grown a business from the last 5 years, from first acquiring in 2019 a small business in New Jersey. And I think unfortunately, after just relentlessly chasing me for 5 years, has officially passed my revenue. So he's like low 30s now, 3 branches across 2 states.

Yeah. Started at $1 million in 2020 and now, yeah, just, uh, just about $30 million. 3, 3 branches, 2 states.

Yeah. Yeah. That's awesome. All right. So today what we're going to be talking about is, uh, scaling through multi-location and, uh, how Rich thought about that, how he approached it. And, uh, we're going to try to dive into this a little bit deeper. So I'm ready to rip it.

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Well, I would love to start off— $700,000 of revenue to $30 million in 5 years is Kind of crazy, right? Like that's a crazy jump. And like, not only that, like, but you also did it with multi-location, multi-state. So we're not going to focus on the first acquisition. We're just going to go straight to the second.

Yeah.

If you could help walk us through, you've got this business in New Jersey, you're like, hey, I think I want to go buy something in a different state. Like walk me through what you're thinking.

Yeah, I wish I could sit here and say that this was like a strategic, you know, like very measured decision at the time. The reality was, and some of you guys may empathize with this or have been here, is, you know, we were a very small, you know, we started at a million in 2020. By late 2021, we had grown that company significantly at that small size to like $2.5 million. And $2.5 to $5 million, it's like a real dogfight.

Yeah.

Right? You're starting to add, you know, ad costs. You're not making any money. You're trying to push. And an opportunity came across our plate sort of serendipitously to purchase another business. It was a $3 million business in a different state.

Yeah.

And we're like, well, this will take us to $5.5 million. That sounds amazing. This'll solve all of our problems. Yeah, for sure.

Yeah, for sure.

So that was basically the strategy. And what we quickly found out was that running 2 businesses in 2 states is about 5 times harder than running 1 business in 1 state.

Yeah.

And took our lumps for a little while there, for sure.

Yeah. What'd the first, like, couple of lessons in that first 6 months? Like what were the big ones?

Yeah. So we, I think, I think anyone who's like multi-business, multi-location wrestles with this like centralization of services and decentralization of services. It felt like at the time the right answer was, well, let's centralize. Let's, let's gain some synergies. Right. And, and, and the business that we bought, the second business that we bought had, um, call center issues. Like they had missed 12,000 phone calls the previous year at a $3 million size. So—

12,000?

12,000. Yeah. And so we tackled that right away. And one of the reasons, one of the ways we tackled that was centralizing the call center. But the reality was like, we were a small business with a, like a janky call center looking back. And then we tried to basically double the volume, on the same team with, you know, the training that you would expect of a $2.5 million call center team, the dispatch training you'd expect at that size. And I mean, like, we just basically like did poorly. Um, so about like 6 months into that, we, or maybe 9 months into that, we decentralized again. Um, and, and basically like split those 2 businesses completely at the time. Now, you know, 3 years later, we've recentralized everything, but we're a much more robust business and like have our shit together a little bit more. And we're actually doing a decent job of it this time around.

Yeah. I think something to note, because you're on your 3rd location now and like thinking about 4th, or 4th in the next 6 months. The way that you've approached growth so far has been like very high touch. Like you're going to walk in the door, sort of bang it down with a shot Is that fair?

Yeah, I would say that is a fair characterization.

Perfect. As you're thinking about that for that specific deal, do you feel like that deal showed you how to do it and that's now the playbook, or how do you think that changes from now on?

Like the second deal or this third deal we just did?

Both.

Yeah, certainly. I mean, we have our integration style and we're a small team, we're bootstrapped. Our integration style is very high touch and very like force of will and cult of personality. Proximity is important. And so certainly in that second acquisition, we were very much dove right in, in the trucks, in the office. At one point in the first month, like I had a headset and I was answering the phones myself. And that's, I mean, that's kind of the character with which we've gone forward. Even this third acquisition that we just did 2 and a half months ago was very high touch from the executive leadership, right? With great results. But at some point that is going to become difficult to do. And certainly like the last, you know, so now we have 3 branches and while we were doing this third deal, we were also recentralizing the call center, trying to help out our New Jersey business get to where our New Hampshire business is. So I've spent a lot of days on the road the last 120 days. So I think at some point we're going to have to assess either hiring for some of our frontline management and elevating leaders to help me do that, or Bringing in additional leaders to help me do that. Right now, there's a lot, like integration is very much like my box.

As you've thought about bringing these other branches into your culture, like how do you think about doing that? You talked about force of will. I'm going to use magnetic personality. I don't remember what you said, but—

That's very nice of you.

Yeah.

Thank you.

Yeah. But like, how are you thinking about driving culture in these new branches?

Well, I think like the way you integrate is super important, right? We tend to lean a little bit, like some people when they're talking about doing an acquisition, they talk about, don't touch anything for 6 months, watch and observe, keep your kid gloves on, be respectful of the seller's business, don't screw it up.

Right?

We don't see it that way. So we're a little bit more of like a smash and grab, Like get in there, get your arms around it, bear hug it, and remain flexible. So like we, we don't, so like it is a bear hug and it is a fast pace. However, it's not like a fixed 100-day plan. It's like very flexible and adaptable. And we're really like trying to read the room on like, what is this team ready for?

Mm-hmm.

For us, like we, we have all these things holstered, chambered, And we're ready to execute them. Not execute the team.

Okay.

I realized what I just did with my hand right there. So trying to think of maybe some examples. For instance, things like price increases, right? Or dispatch methodologies.

Yeah.

We know that the price needs to increase at this acquisition. They're way below market. They're not making any money. Okay. We don't have to do that immediately. We can kind of get some feedback from the team, get into the truck, talk to the technicians, hear the feedback. This recent acquisition, the feedback was we're charging too little from the techs. Like, yeah, say less.

Good feedback.

I'm ready. So really trying to solicit feedback from the team and then be ready to rapidly execute. our plays relative to that feedback, which gets you coming from a culture standpoint, when guys who maybe haven't been listened to for many years and like now new ownership, new leadership is here and they float an idea in the cab of the truck, in the service meeting, whatever. And then they see rapid action on that idea. That's like, that's how you like turn someone on.

Yeah.

You know what I mean? Like really like get them Bought in. And that's basically how we operate.

What's it look like? How are you driving? That makes sense for as you activate it. 6 months later, a year later, how do you keep people inside the fold?

Right now we're 3 branches across 2 states. We're also currently 3 brands across 2 states. And it is, difficult to drive culture and values and shared mantras and ways of operating across 3 different brands. Even something as different as, as little as different colors, different hats, different names, just makes it more difficult. So we're actually rebranding, our 3 branches, we're rebranding right now. We're going to rebrand it all to a single name.

Yeah.

And that's going to happen here in the next 60 days. And it's like a huge project of ours right now that I think will help. But really it's for us, like our, we place enormous emphasis on the ability and the approach of our frontline leaders. So we do a lot of like, we have very, well, I would say well-articulated leadership standards and we coach on leadership and we really place a lot of training and effort into our frontline leaders.

Yeah.

And I think that's really where culture really hits the road. And so certainly this acquisition we just did, I spent a lot of my time coaching that manager on how we lead and what expectations are of him and like how I can help him get there and stuff like that. And I think that's a good part of it.

Yeah, that makes sense. And you've talked a few times now about leadership. How are we finding these leaders, especially being remote? Like leaders are hard enough to find when I'm recruiting outside of my headquarters. Like how are they, how are you finding them states away?

Yeah, so we basically, I mean, really we have 2, I would call like 2 channels for leadership primarily. The first is from the field. So especially like frontline leaders, like I'm, I'm a believer that our frontline leaders ought to be from the trade. Um, and if we can take a guy who we have operated with and we know, we know who he is, we know what makes him tick. He's seen us lead, and then I can kind of shepherd him into a leadership role and really put a lot of time and effort and development into that person's development. We've had really great success with taking people from the frontline of, say, the field and also the frontline of the office.

Mm-hmm.

We've got 2 people here from Sanford today, former dispatcher, now customer experience manager, Former technician, now service manager, that are both kicking ass and doing a great job and are great examples of this. I'd say the second channel that we're starting to tap more and more is my and Connor, my number 2, our military background. We're just starting to reach back into the military and pull guys out and pull them into the team. And so we've done that now with one and early innings with him, but it seems like we're going to have a good— Good outcome there.

How are you guys thinking about balancing speed and control as you're doing this? Like safety?

We don't place a whole lot on safety, safety of the business, I would say. We definitely are risk-on. And generally we lean towards a bias for action. So if something needs to be done, we will make it happen. We're going to attack that problem today. And we will move with speed and sometimes we break things and sometimes we make the wrong decision. But again, we will move with speed and pivot again. So generally we lean into like our, one of our like competitive advantages against problem sets, challenges, competitors is that we move with a lot of speed.

Yeah. You just took over a brand 75 days ago. Can you walk us through like the wins, the Ls in this new acquisition?

It was a small team, so it was a $3 million plumbing branch, pure plumbing, about 10 people. Small, but really easy to get our arms around.

Yeah.

So a lot of ride-along time. The nice thing now is that we have, with a little bit more infrastructure and some centralized services, in previous integrations, dispatch, payroll, onboarding, like HR onboarding, Payables. Like, I'd have to take care of all that. I might get suppressed with that and I can't do the leadership things that I want to do. Now we have the team, the process, the centralization where a lot of that stuff is happening in the background.

Yeah.

Right? My HR guy's taking care of stuff, call center's taking care of things. And I was able to really just dive in, jump in the trucks, get with the managers, and like really drive meaningful outcomes in the field. And culture wins. So we really leaned into that. There was one technician there that was a high producer and had everyone fooled that he was the right guy. He ended up getting his head cut off 10 days in because he's a prick.

Yeah.

To everybody.

Yeah.

So that was actually a huge cultural win. And that was some of my ride-alongs in the trucks with the other plumbers made me aware that, hey, we have a problem over here and this is actually a really systemic problem. So when we sort of made that seemingly difficult decision, we gained a lot of credibility with the team immediately, and that was able to push change faster. We were able to really lean in after that. So the following week, we made price changes, and in some cases, they were drastic, but armed those technicians in the ride-alongs, in the service meetings, with the training to weather that. That price increase, and they've nailed it. So for instance, in June, we took over July 1st. In June, these plumbers were generally at $20,000 or $19,000 to $25,000 a month of revenue, which is not great for a plumber, in my opinion. In August, those same plumbers were doing $120,000 out of one truck, $76,000 out of the next truck, $56,000 out of the next truck. price had to do with that, but also conversion rate, close rate. These guys were getting told no a lot, even at a lower price. Now they're asking for a higher price and converting at a much higher clip. And so what did that mean, say for the P&L, is that we pushed the gross margin up 10 points in 60 days and pushed EBITDA to— of course, we're assuming a lot of costs centralized, But for that branch level, even does like 28% at that branch today.

Yeah, I would take 28% all day. You're getting ready to start greenfielding. How are you thinking about that as a part of the whole, everything we've talked about so far?

Yeah, so we have never greenfielded a location. We've only purchased in new locations. And our And of course, like, and we have done deals, we know how to do deals. We feel comfortable in our ability to integrate. We could just keep doing that, but it feels prudent to us that we ought to build a competency in greenfielding, right? We should know how to start a new branch in the location. So that's kind of the bet that we're making right now.

Yeah.

You know, basically what we determined, you know, almost a year ago was that the Some of the hurdles we had to clear that we hadn't cleared already was leadership. So what is it? What's the chicken or the egg on the leadership for that greenfield location? If we're going to be hiring technicians in a new market that have never worked with us before, how do we get them trained up quickly onto our system while not necessarily having ad hoc osmosis proximity that we really lean into now?

Mm-hmm.

And then of course, the marketing and the leads and things like that. So we've basically— and recruiting. So how do we— over the last 10 months, we really tried to check those boxes, hired a recruiter, built out a recruiting plan, brought on an ATS system, started building out more robust training that we can really put the technician through and try to Slam them through in like three weeks to get them lethal in the field, and like kind of like indoctrinate them into our values. Hired a leader. This is that military leader. Trained him up to have him kind of like running point on the project of launching this greenfield. So these are like some of the things that we're fighting through right now. But certainly, like I think, I think it's going to be tough. Like the the variable that is still unsolved is like what is it going to look like from a marketing perspective?

Yeah.

Like, what can we expect? Like, so we have a plan to go in and spend a certain amount of dollars in a certain way, but what is that going to bear as far as like lead volume and how fast is it going to come and what kind of staffing can we feasibly like be comfortable starting with?

Yeah.

And that's, uh, that's still TBD. Um, right now I think we're, we're budgeting for that, like a lead is going to cost us about $400. Yeah, not being known in the market, and then try to, try to fight that down over the course of 12 months.

Yep.

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What's your advice for somebody wanting to get like me? You know, me. Yeah, I want to go— we're about to go multi-location in like the next 30 days. We close mid-October. What's your couple pieces of advice for me? Keep me on the straight and narrow here.

Yeah, I think you— and this is an acquisition.

Yeah.

Correct?

Yeah.

I think you have to quickly assess what are the things that you can tolerate not changing, and then what are the things that you really want to bring for strategic reason and also for new wins with your new team, and an assessment of the leadership on site and whether they're capable. And my understanding is that the leadership is capable at this one.

Yeah.

I think that's understanding what your non-negotiables are, what you want to go in and really, really push for, and then what are you willing to be flexible and adaptable. Like we were saying, like I was saying, you know, you have the playbook for, but you, you don't necessarily have to play it until the team's ready to receive it.

Yeah.

Or your team's ready to bring it.

Right. Yeah.

Um, so that's what I would, uh, advise. Yeah.

Yeah. That feels pretty good. What should everybody be taking home with them as we end this out? That's advice for me. Anybody else? Just like stay in one location, make your life easy. Or buy a small plane.

Yeah. Your life would be easier if you stayed at one location.

Yeah.

It is harder. That said though, we're not $30 million today if we didn't go multi-location.

Yeah. Period.

Yeah. Actually, my second location is now my largest location and my most robust, and it's the reason that we're operating the way we are is that we've learned all those lessons in the second location. Yeah. I mean, I think multi— understand that If you're like me in 2021 and you think a second location in a new market is going to help you get over the hump, it's not. It's going to make the hump bigger for you to try to climb over. But certainly it can be done. And I think a mix of competency and greenfield and small tuck-in M&A could be very powerful for bootstrap owners.

Awesome. Well, thanks for jumping on tonight with me, and thanks for like talking to everybody. I know it's late, and I appreciate the story. And $700 to $30 million in five years is nuts. So I appreciate you walking us through it. Cheers. Thanks, Rich.