He Stopped Loving The Business And Wanted To GIVE UP | Confession Booth

Today was the first day when I was ready to give up after 5 years.

$160,000 in debt on a $1.5 million business is not a death sentence. You build a $1.5 million business over the course of 5 years, and less than 10% of people that start a business will get to where you're at. We have to do a price increase. We have to. I understand that might be scary, but like, at this point, if you lost 3 out of the 10, but we raised prices by 15%, you'd still do $1.2 million, but you'd be more profitable. So the fact that someone can be in the top 5 or 6% of entrepreneurs and still feel like they want to quit is crazy. And it's crazy because we put pressure on ourselves to keep growing the business. It comes down to success is determined by whether or not you are content. And if your level of what you need to be content is lower, don't be ashamed by the fact that you don't need a bigger business.

So. Today was the first day when I was ready to give up after 5 years of my business. And I just, I don't know if it's just, you know, it's a bad period or I should just scale back. So last year we did $1.5 million, we profited about $150,000. We're definitely in growth mode. Uh, at the beginning of the year, we had a month's worth of cash in the bank, so everything looked good. I was kind of ready to turn, turn things into profit mode, but then things fell apart real quick. Just a couple of bad hires and just, uh, bad decisions on my end. Um, So right now I have $150,000 in loan and about $60K cash in the bank. And so we have more than enough work to handle. And on paper, we should be able to turn a profit on them, like on 40-45% margins. However, all those mistakes and decisions that happened earlier this year, I'm kind of trying to somehow get out of them. But at the same time, I feel I kind of pivoted from hiring less experienced guys, hoping to train them, to let's just hire like actual experts and on a higher rate. Uh, but I just feel like I'm like, maybe I'm 3 months late. I should have made the decision earlier.

Why do you want to quit though? Why do you want to quit? Is it the cash being low? Is it the fact that your margins have collapsed? Or was there some mistakes that were made? Like, why do you want to quit?

Um, Sorry, I'm getting emotional. It's just— You're good.

Take your time.

I just don't know if I have the skill or have the energy to keep moving and keep going.

Is a lot of that pressure coming from the business's cash position, or is there things happening inside the team or at home that are causing that desire to want to quit?

A mix of everything. Obviously, cash position is not great. Employees, I mean, I'm not kidding, in the past 4 or 5 weeks, every single Monday, I have minimum one guy calling for, I would say, understandable reasons. But at the same time, I'm like, thanks for letting me know. 9:00 AM in the morning. So now what? Uh-huh. Elvis, I'm trying to, uh, I'm trying to keep things together, but definitely it's affecting things at home.

So, so, uh, I think a couple things. I think first and foremost, a lot of this pressure is actually caused from the last part. Which is the pressure at home. And I understand you want to grow the business, but I have to ask, would a business that does half as much in revenue but only has a couple employees and you make way more profit and you're able to pay them more and they show up more on time, they're more reliable because of that, is that a business that serves you and your family more? Because I just don't want you to—

I don't know.

I mean, I just don't want you to quit.

Yeah, as I said, like, beginning of the year, things look really good. So it's just kind of like, yeah, I mean, we were supposed to be on track of $2 million this year, and right now we a month behind every single, like, month. So, you know, I have— oh, I could pay off that loan with the receivables that I have easily. It's just like constantly have something hold us up where I'm like, okay, we cannot finish the project, we're not going to hit billing cycle, therefore I got to wait again. So it's just like, I feel like every month I'm getting thrown back to that same spot where I was the month before. And to get out of it, so my mistake was that I thought I can hire less costly on an hourly basis employees, train them up in a few weeks to do our way, and then they will be able to produce the work. But I was wrong. So then I was like, okay, I have the demand still. I mean, uh, so I got— I need guys. So then, okay, let's find experts who've been doing this for at least a decade. Yeah, they're gonna cost $40 to $45 an hour, uh, but they, they have the experience. And I mean, it seems to be working out just, uh, because it's been like maybe 6 weeks when I turn things around to go this way. It's just, I feel like I kind of missed.

Yeah, I'll say this though, you're just going to have problems with this too, because like when someone has 10 years of experience, there's other problems that show up. You might not have to micromanage them on the job, but now all of a sudden there's cultural issues, there's expectations around wages, there's now financial pressure because you have to pay them twice as much. They're harder to find. So now it becomes stressful to get more employees. They're trained incorrectly because they came from another position. They're expecting things like in terms of management that you can't offer. And so the way that you're feeling, the temporary band-aid, many times people think I just need to hire people more experienced, but they wake up in a couple years and realize now they just have other problems. And so what services are you providing now? Like, what's, what's the business's services?

Plumbing and heating.

Plumbing and heating. So that is very technical and that is where skill is gonna be important.

Yeah.

I would say when you were doing, because like, here's the thing, at the end of the day, you build a $1.5 million business over the course of 5 years and less than 10% of people that start a business will get to where you're at. And I don't know why there's pressure to build a $2 million business this year and it's so much pressure. Like we're one month behind. When you have done something what most people will never do, and you're not negative profit, it's a profitable business doing over $1 million. And so I don't know why there's this expectation for you to keep growing on this treadmill, 'cause this treadmill's exhausting you, and I just need you to get off this treadmill of expectation that you need to keep growing this thing so fast. Like, are you comparing yourself to someone? Is there pressure to keep growing? 'Cause like, I see this as you have done very well. You've grown this thing extremely fast, and growth sucks cash, it creates loans, it creates pressure on profit margin, but in 5 years you build a $1.5 million business and there's nothing wrong with saying, I don't need to get to $2 million this year. Why is there that pressure?

Yeah, it was kind of an organic, so we didn't, I wasn't, let's say, planning to, it's just based on the demand we have from current customers we have. It's was basically like, okay, all I gotta do is add one or two people and then, you know, just keep working the same people. I don't have to like network my way into new places or anything. So it wasn't like a, oh, we must do this, just more like the opportunity is there, uh, therefore, you know, and let's— and those customers are all happy with us. Um, So I was like, let's just go and keep going. And honestly, around $2 million, that was my limit. Like, okay, I'm going to stop here, make some money, and then figure out if I want to keep going towards more or just netting 20%, 25% at the end of the year and just live my life.

But what I want you to do is get clear on how the business serves you. When I hear someone say that because there's customers that are happy and they keep trickling in and we just kind of kept growing, I hear one, awesome, they do great service. I also hear you are serving the business. I want the business to serve you. And being really clear in terms of how many employees does that mean? Like, what's my personal capacity? You could be an amazing $1 million operator and stink at $1.5 simply because you don't have the personal capacity yet to get there and be able to manage that size of business and handle the stress that comes with more employees, more loans. You should not grow the business because employees trickle along and opportunity showed up. There's opportunity to go climb Mount Everest. I don't do it. It's too high risk. It doesn't align with my goals. And so if the, the growth of the business and more, more opportunities and customers trickling in leads you to have moments like you're having now, it's not worth it. The business should serve you. Okay. So let me just stop and say, this is exactly why I started Home Service Boardroom, which is just for businesses that are doing over $1 million in annual revenue, because I can guarantee you almost everyone who knows this owner thinks that they're doing super successful. They're doing great. They're probably the richest person or most successful person in their friend group. And it's very difficult to open up and have these kinds of conversations. And it's one thing to do it anonymously like we do inside the confession booth, but it's another thing to be able to actually learn and talk to other business owners that are going through the exact same thing as you, that are trying to work from $1 million up to $10 million in annual revenue, trying to organize the business, trying to create systems, trying to hire managers, trying to delegate, trying to become a better leader. And that's what Home Service Boardroom is all about. So whether you're in this situation or you're doing $3, $4 million, doing good, but you just cannot figure out how to delegate and become the leader that is required to attract great talent and get to $10 million, If that's you, I'd love to see you inside of Home Service Boardroom. All right, back to the episode. And so I would strongly recommend talking to your spouse and, and, and getting on the same page of like, what do we want this business to do? How many employees does it have before I start getting overwhelmed? Because I can guarantee you, if you had less employees, you'd spend more time with them, you'd train them better, you wouldn't feel the same level, you'd be able to afford a little bit more to pay them if you raise prices by 15 or 20%. And you're like, well, I'm not going to— Who cares? You're going to hit zero if we, if we throw in the towel and we give up. If there's enough moments like this. And so I'm giving a little bit of tough love, but I just want you to, to know that there's no one expecting you to build a $2 million business. And I guarantee if you talk to your spouse, she could care less. It doesn't serve you. And getting off this treadmill is potentially the most liberating thing you'll ever find. Is you do not serve the business. You built this business for you and for your family. Over 5 years, built to $1.5 million. There's nothing to hang your head about. You're doing a phenomenal job. Statistically speaking, you're in the top probably 5 to 6% of entrepreneurs. But there's no reason to stay on this treadmill if it's going to cause you to die. Like, it's going to cause you to give up and throw in the towel. And if it's causing struggles at home, personal relationships, personal health, like, it's not worth it. It's, it's not.

How do I do this? Because obviously I have, uh, I have the loans, I have obligations, I have a certain amount of overhead that I can just like— my— what I'm like, I wish there was a plug that I can just unplug it and okay, it's done. But at the same time, I just feel like it's a little bit more complex than just okay. From tomorrow we are targeting 1.5 and then, uh, not worry about all those decisions that have been made in the past. It's just I feel like there is no— I don't see the way out of this, like, in a couple weeks, let's say.

Yeah, I get you. So first thing we got to do, and I know it sounds like, hey, like, this doesn't change anything tomorrow, I agree, but the first thing we have to do is change our expectations. 'Cause the reason you wanna quit, the same reason why most employees quit, is 'cause expectations don't meet up with reality. And so they quit after 2 or 3 weeks, they just, they leave. The same thing is true with yourself. You don't need to build a $2 million business to be happy and have everything you want in life and for your family to be happy. You don't. And so expecting yourself to build a $2 million business, you're gonna drive yourself into the ground. And it doesn't mean that down the road you won't build a $2 million business. It just means right now you don't wanna build it. Because it's going to cause you to want to quit. So that's the first thing, it's expectations. Now let's get into like the nitty-gritty details because like you do have loans. How much is the total principal and what's the monthly payments on the loans?

160,000 and, uh, I pay a little bit over $8,000 a month. It's a 2-year, 2-year thing because my thought was like, okay, all I gotta do, just collect receivables and I'll pay it back in a couple of months. But since then, I'm having these issues with like last-minute calls, last-minute like, oh, something happened. Oh, we got to go back because whatever issues happen.

Just so I'm clear, did you say $560,000 in loans?

$150,000. $160,000. Sorry.

Okay.

One six.

One six. Okay. Got it. Okay. Right now, when it comes to the work that you have on the schedule, how far are you booked out?

We are pretty much full summer.

Okay. And right now, what's your close rate look like?

Since we have a kind of added customers, we work with a lot of general contractors. So I would say like 100%, but obviously they know our prices, so projects being priced away with our rates. So it's not a competitive bidding or anything.

Okay, so why— like, we have to raise our prices, and I know that's scary because it's contractor relationships, but like, if you lose one or two of them, it doesn't matter. The reason we need to raise our prices is because I genuinely believe you raise your prices by just a little bit, you wipe out this monthly loan payment very quickly. If you raise your prices by 10%, that's going to be more than $8,000 a month to the bottom line. And that would take a little bit of stress off. It would also allow us to be able to pay employees more. That would allow us to be able to expect more of them because they come more qualified. And so if you're— if we're closing 100% of bids, how many— how many contractors, like, let's just call them customers, do you work for? Is there only like 1 or 2, like, major contractors, or is there—

do you have more than 2? No, it's about I would say 8 to 10.

Okay.

But we work with like 3 or 4, like almost on a week-to-week basis. So, right. So pretty frequent.

We have to do a price increase. We have to. I understand that might be scary, but like at this point, if you lost 3 out of the 10, but we raised prices by 15%, you'd still do $1.2 million. But you'd be more profitable.

Yeah, it's— I mean, I have no issue raising prices. It's more about, uh, let's say for example today, this is the second week I call on this customer that you're not showing up last minute. So, and here you go, actually we are charging 10% more because— and I mean, I feel like from their perspective, and I know I should not care, but it's just like 'Okay, you're charging me more, but your service is just degrading. Like, how's that? How does that make sense?' And he's not the only one. I have like several customers now we had to do this like in the past few weeks, quite frequent, more frequent than I would like. I mean, they understand like, okay, life happens, but it just seems to be happening way too frequently as it used to be.

This is part of growth though. Like, if you have 100% close rate and they're still not saying no, they're voting with their dollars that they still see more value than the price that you're charging. And so I actually need some of them to say no, 'cause I want you to have less employees. I want you to be able to feel like you have a handle on quality control, 'cause you're a perfectionist, you love these customers, you want to do great work, and it's killing you right now when you get bad reviews, when customers say stuff like that. That's, that's what's sapping your energy because you're a perfectionist. You love doing great work, and I want you to focus on that instead of trying to get to a $2 million arbitrary number and then having stuff like contractors saying that stuff about your work and you just feeling gutted. I, I need some customers to leave. I need you to have less employees so your personal capacity, you can grow the business with inside of that.

Okay. And I know I'm taking too much of your time, but how do I speak to the team that like—

You already know one of these employees that you're hiring that you need to let go. The one that's causing you all the grief. You cut that person immediately and you're like, oh my goodness, what am I doing? You're going to go raise prices and lose a couple customers. But now you're going to make more profit on the customers you do keep. And you're going to have a smaller team that you feel like you can manage and have high quality standards. Without all the drama. There's no pride in having a whole bunch of employees or a bunch of trucks or getting a $2 million revenue if you hate the business. I want you to fall back in love with the business as to why you started it 5 years ago and why you've grown in 5 years to $1.5 million is because you do great work. And right now you're letting these certain employees that you have that you know you need to let go, you're, you're, you're tied to them because you're trying to make this arbitrary $2 million marker. And so the third thing is we just gonna, we're gonna cut the employee. Like they're, they're making you resent your job every single day. We're gonna get rid of them. You're like, well, I'm not gonna have enough. I'm gonna, I'm not gonna have enough guys do the work. No, we're gonna raise prices to reduce the amount of workload that we have. And now you're gonna be able to pass some of those, the extra money down up to your team. And they're gonna be higher compensated, higher skilled people that you love working with. That love working for you, and you're going to go out and now not have this cloud over your head of contractors calling you saying that you're not doing good work and all the rest of it. $160,000 in debt on a $1.5 million business is not a death sentence. This is— you have fell out of love with the business, and the moment you do that, it's a slippery slope. And I just want you to get off the treadmill of you've got to grow this thing and get it back to where it's underneath your personal capacity. And my friend, you will win.

Alright.

Alright, brother. I'll be, I'll be rooting for you. I appreciate you tremendously calling in and my thoughts and prayers are with you. I think it is a good example of for anyone that's doing less than $1.5 million and like, if I just go to $1.5 million business, all my problems will be solved. Not true. Building the business that you love, that has systems that can run without you is the reason you build a business. And if you have a $1.5 million business that goes bust because you hate the thing, it's left with a whole lot more collateral damage in terms of employees, debt, and a lot of problems. And I just encourage everyone to get off this idea that you need to keep growing your business. Like, if I grew 50% last year, I've gotta grow 80% this year. And if I gotta, then I gotta grow, why? Like, the whole reason you started this business is to provide for your family or to be able to take a vacation or to be able to put your kids through college. You already have done that. And yet you put yourself through all this extra stress and hassle and wanting to quit, wanting to give up. It's causing damage in the relationship at home when it's just like, it's simply a matter of expectations on yourself versus like, my personal capacity is here. The business has grown too far. I am going to reduce the size of the business so that I can feel more in control and not quit. Because you will want to quit in the long term. If you exceed capacity, you'll want to, you will burn out. Long term, you will burn out if you're running a $1.5 million business and your capacity personally is to manage 3 or 4 employees at a million. And for people that think that I always tell people they should stop growing their business, and I see in the comments, oh, he says to stop growing their business at 6 or 7 or 8 employees because he wants them to just not grow and he wants to take all the customers himself for Gus. That's a bunch of hogwash. It's the fact that when you start getting a larger business, this happens. And I hate seeing people at this point and I want them to be able to grow the business that serves them and their family and the whole reason they started the business. And so the fact that someone can be in the top 5 or 6% of entrepreneurs and still feel like they wanna quit is crazy. And it's crazy because we put pressure on ourselves to keep growing the business instead of asking ourselves, how big of a business do I need to build for it to serve me? And for the vast majority of us, that is 6 to 8 employees, be able to manage them ourselves, be able to still go away for a week vacation, and we don't need to keep growing to $2, $3, $4 million. Not everyone needs to do that. And no one building a $5 million business is any better than the person that does $800,000 with a few employees, is able to take vacation, makes really good healthy profit margins, and is living a good lifestyle. It comes down to success is determined by whether or not you are content. And if your level of what you need to be content is lower, don't be ashamed by the fact that you don't need a bigger business. Determine what you need to be successful and achieve your goals. And then work backwards in terms of how big of a business do I need to build in order to achieve these things? Personally, I wanna change the level of professionalism in the industry. That's gonna require a billion-dollar business. But if your aspirations and goals are not that, you don't need to do it. You will run yourself ragged. You'll want to quit. You will likely end up in div— This is why billionaires have like 3 or 4 wives and none of their kids wanna spend time with them. It's 'cause they just sacrificed everything for this one objective and then they get there and realize like, "Oh, actually what I wanted, the whole reason I started this business, the reason I clawed my way out of poverty was to provide for my family and now my family doesn't wanna be with me."