What actually drives growth in home services?
In this compilation episode, John Wilson shares the systems and strategies behind scaling a $40M home service company — including how his team doubled a plumbing business in 90 days, improved cash flow, increased average tickets, and expanded through acquisitions.
From pricing strategy and speed-to-lead automation to technician training and buying businesses, this episode breaks down the fundamentals top operators use to grow faster and more profitably.
In this episode, you’ll learn:
• How to double revenue with operational fundamentals
• Why cash flow matters more than profit
• How better training increases average ticket
• The role AI and automation play in growth
• Why acquisitions can outperform organic expansion
• How top operators think about scaling
More solo episodes: @JohnWilsonStudio
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More Ways To Connect with O&O
John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC
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I just bought a business and in the first 90 days we doubled their sales. None of these changes are revolutionary. I went in and did kind of the basics. This was just making a few key decisions that had big impacts. And we were rewarded with 100% growth. My name is John Wilson, and I'm the CEO of a $40 million home service company in Ohio. Today we're talking about how we doubled a plumbing business this year, the steps we took, what went right, what went wrong, and how you can do it too. Now, the important thing to note is that this company wasn't broken. This company was functional, it was extremely profitable, but it was small and it had some really low-hanging fruit. So some of the low-hanging fruit was how they were investing in their marketing, what they were using for their tech stack, how they were pricing their services, and how they thought about hiring new technicians. And if you know what to look for, there's a couple really easy changes you can make in a week or two weeks that can dramatically impact the outcome of that business. So that's what we did. We didn't overhaul everything, we didn't break the business and rebuild it from the ground floor. We took a functioning business that was operating profitably and we made it better. To give a little bit of perspective, here's what the business was doing. The business was doing around $100,000 in December. And when we took it over, our first month was January. We did $120,000. In February, we did $140,000. And in March, we did 170. This wasn't luck. This was just making a few key decisions that had big impacts.
The first big change was marketing. As you think about a business of this size, the way you should be thinking about filling your board every day is very lead-driven and high contact marketing. So that's going to be investing in Google, investing in Angie, maybe Meta leads, calling your customers, texting your customers. And if you try to make it, hey, let's go do billboards or let's go do TV or radio or whatever it is, we're probably on the wrong step. We have to be focusing on filling the board every day, and we have to be focusing on delivering leads for our technicians to go do their thing. And that was probably one of the biggest impacts that we had is we just came in and we started focusing on filling the board every day, and we changed our focus from a brand over time. Now, eventually we're gonna have to add that branding advertising back in. But over the next couple of years, we're gonna be able to probably get to five, 10 million of revenue, and we will be able to afford that branding while still keeping our boards full. So that's probably the biggest change, and it only took about an hour. The second change was adding speed to lead technology. Now, speed to lead technology is something that you put in place and it's in between your marketing source and your CRM. So the way it works is I go to Modernize or I go to Angie or I go to Homebuddy or whoever and I buy leads. Those leads would go to my call center as an email, as a contact form, something like that. And we call them as soon as we see it. Now the problem is that there's often a pretty big gap. There might be an hour gap or 20 minutes gap or whatever it is between getting that lead and contacting that customer. And that amount of time is where you lose the lead. Because whoever responds first to the lead typically gets the lead. So speed delete technology automates that and you can add it into a business relatively quickly. Now there is regulation on TCPA, and it takes a week or two to add this in for approvals to be legal. TCPA is a series of regulations around when and how to contact your customers via SMS. So there's a governing body that says yes or no to what you're allowed to do. Once you get the ball started, it can move pretty quick. For us, that was a week one change where we had to begin that integration as fast as we could because we knew it took a week or two to get approved by TCPA. And we could, as soon as possible, add the speed to lead. The third change we added was 24-7 phone coverage. When we bought the business, they only had a part-time call taker that was picking up calls as they came in and then responding to a lot of voicemails. Very similar to the last one that we talked about. Hey, if you're not picking up that phone, if you're not booking that lead, someone else is. So as soon as we could, we added additional humans to the call center. And then we also added backup support with our AI call center partner, Avoka. Before we were getting missed calls, we were responding to voicemails, we were checking emails, and now every call is answered 24-7. The schedule is easier to book than ever because we're constantly on top of those calls. Change number four was a pricing adjustment. We adjusted pricing by about 15%. So it wasn't a huge overhaul. Probably gonna do another one here shortly, but they were on the lower end of the market, and we just did a little bit of market research to find out what are other people charging, what's a water heater charge, what's the hourly rate for this market. So we called around, we uh secret shopped a little bit, we found out that we had uh frankly a lot of room. So they were about 20 to 30 percent below market. So we raised it up to 15 to be a little bit more competitive with what all the big boys were charging. Price changes are one of the fastest ways to improve your net profit. There was no additional cost, our closing rate didn't drop at all, we lost no customers at all, and the revenue just went up. I actually think that pricing adjustment took me about 10 total minutes. Downloaded the price book, applied a 15% jump, put the price book back in, done. Our fifth change was our tech training. Now, this business was functioning and functioning at a pretty high level. They were doing a great job, and they were already doing very consistent technician training on objections and how to talk about price and how to talk about options and how to present. So they were already doing a really good job. We started at second base instead of home. All that we did there was ensure that it was consistent. We supplied them with a little bit more of our internal resources, things that we've built over the past 10 years. We supplied them with more scorecards to help them. And we just really helped their leader, their service manager there, be better educated on what he was doing so he could provide a better experience for the techs during training. What we found over the years is the more you invest into the leader that is leading that team or leading that company or branch or whatever, the more that that leader is going to pour into his team. It is an endless bucket. As much as you can give your leaders, uh, they will be able to give to your team. And the that team will be able to give to your customers. So you'll be happy the whole way around. Change number six, we changed their commission structure. We made it slightly juicier. We were able to up compensations because they were slightly below market. We were able to make the commission a little bit more enticing for these technicians. So now they're making more money, which is awesome, in addition to better benefits. So it was a net win for those field professionals. The seventh and final change is we removed the admin work from that branch. This might be something that you're not able to do, but for us, because we were buying this company and making it a branch, we were able to take on all of their administrative burden. We took over their accounting, we took over their marketing, we took over their call center, we took over their dispatch. We made it so the thing that they had to focus on every day was presenting great options, closing sales, and having happy customers. That alone allowed our team to focus and grow revenue.
None of these changes are revolutionary. I wasn't a mastermind or extremely creative. I went in and did kind of the basics. I bought leads, I booked those leads, and I helped technicians sell those leads. Now there's a few other steps, there's a little bit more nitty, there's a little bit more detail, but at the end of the day, all we're doing is the basics of what we should be doing as business owners. And we were rewarded with 100% growth. This is the kind of stuff I love because the bigger the business gets, the more I realize how it really is just the fundamentals over and over and over. And if you could focus on those fundamentals like we just focused on those fundamentals, you can also be rewarded with fast growth inside your business. There's a book that I love, Only the Paranoid Survive. And it talks about the reinvention of Intel. So Intel is going through this dramatic reinvention and they're trying to figure out how do they navigate this new world, which is similar to how we're feeling every day with AI and private equity and consolidation. And every day is a new world for us. And the sentence still hits me, I think about it almost every day. If I was fired today, what would the new CEO do? So if I walked into your business tomorrow, what would I do? Most home service companies don't stall because of demand. They stall because they run out of good people. Finding solid help fast is hard, especially in this industry. And that's where Quick Staffers comes in. They help home service companies build reliable virtual teams that actually understand how the trades work. Quick Staffers provides vetted, remote staffed who are already trained on Service Titan and use proven SOPs, the same as the ones that I use at Wilson. These are VAs you can plug in from day one to handle customer service, lead follow-up, scheduling support, and a ton more. They've been a huge help in scaling my team without the usual hiring headaches. Check them out at the link below.
Rule number one, never run out of cash. Rule number two, don't forget rule number one. Today we're talking about cash flow. I'm John Wilson, I'm the CEO of Wilson. We're around 40 million in revenue with roughly 200 team members across Ohio, Indiana, and Nashville. Now, cash flow is a big broad term, but we're gonna try to break it down in a way that makes sense and why focusing on it, aside from the obvious, is the important thing to do. Your accountant has just filed your taxes and you get a call saying, Hey, you had a great year. Here's how much you owe in tax. Well, that amount of profit that you're telling me that I earned isn't in my bank account, but yet I still owe tax on it. Somebody walk me through what happened. Most businesses feel that way. You can be profitable and still be broke. Most businesses are profitable, but still broke. There's a lot of layers to it that we're going to be solving today, but this is essentially the cash flow problem. Cash flow is a pretty simple core concept. How much cash is in my bank account versus how much cash leaves my bank? Are you paying bills? Are you paying debt? What are you doing with the cash? It's how fast you get paid, how fast you have to pay out, how much you get to keep, and how much of it can you reinvest into new equipment or marketing campaigns or staff members. Before we dive too deep, let's talk about what does not show up on your books. That way you know like what will impact cash. Accounts receivable. If people owe you money, you don't have that cash. So if you had a million dollars of profit, but you have a million dollars of accounts receivable, you might have nothing in your bank account, despite having a million dollars of profit. Your accounts payable, you might actually have more cash in this case because if you've received all your cash, but you haven't paid your vendors yet, you could have an excess of cash, which could be a problem if you don't know that and understand. Maybe you go buy a new car or new truck or something, and you didn't realize that, hey, I still owe all this money. This cash really isn't mine. Debt touches cash, but doesn't touch net profit. So if you're paying off auto loans, if you bought a business, if you bought a new building, if you have a line of credit, those are decisions that absolutely impact cash, but do not impact profit. There's a ton of these examples, but the core concept is net profit does not equal cash, and EBITDA does not equal cash. So we have to install some systems into our business to understand what is cash, where is it going, and how's it coming in? That way we can truly understand cash flow. As a big example, there was a company for sale in our industry two or three years ago, and they were doing $12 million of EBITDA, which is a way to measure profit. Now that company was losing $2 million of cash flow a year. How on earth was that company doing that? And it's honestly not that complicated. They had some auto debt, they had some MA debt because they were buying companies, they had some real estate debt. Lo and behold, it happens really fast. We self-funded our growth. We're called a bootstrapped company, which means that we took no outside funding to get to where we are today. We started at a million of revenue, and today we sit at around $40 million of revenue 10 years later. That was bootstrapped. We took on some debt, we reinvested all of our profits, and we learned most of the lessons that we're going over in this video the hard way. We learned it by living out the failure. We learned by buying too much equipment and not paying enough attention to this or buying a ton of inventory, but not having the cash when we needed it. So most of these decisions we learned in the tough way, the school of hard knocks. And what we learned over the past decade is that nearly every decision that we make comes back to cash. If I buy inventory, maybe I can get it 30% off, but I also have to buy it, which means my cash shrinks significantly. Okay, can I buy, can I cover payroll? Can I pay for marketing? Will I be okay for my debt payments? Will I be okay for my payroll? Hey, that software, it requires an annual upfront payment versus monthly. Well, can we do that? We have to be focused on our cash flow, not just the price. And this is the difference between your cash flow and your profit and loss statement. On your profit and loss statement, those two decisions are great decisions. If I get to buy inventory at a deep discount and then cost it properly, well, that's amazing. Because on my on my profit and loss statement, I will show even more profitably. But on my balance sheet, I'll have no more cash. And you don't want to be in a situation where you have no more cash. Here's a couple other examples that can impact cash. Pricing to customers, pricing from vendors. Cutting or renegotiating vendors should add more cash as you drive less cost. The timing of payments that can be really important. Is payroll every week? Is it every two weeks? How often are you paying your vendors? How long do you have to pay your vendors? Marketing can be a huge cash suck. If you're doing broadcast media, well, that might take 12 months to get a return on. Whereas if you're doing Google, it might take a day. So be thoughtful for what you're investing in because broadcast will probably work, but it takes a big investment before it starts spinning off new cash. Rebates, credit card returns, how to buy vehicles, all these things impact cash in a big way. Cash flow is a million of micro decisions. Every single day, all of these micro decisions add up to your actual cash flow. If we're running a profitable business, we're paying taxes to our community, we're creating new jobs, we're creating growth, which creates opportunity. We are creating for our team and our community. In order to run a profitable business, we need to be cash flow positive. Businesses don't actually go bankrupt because they're not profitable. They go bankrupt because they run out of cash. You can be not profitable for a very long period of time, but if you have cash flow, you can be net profit negative forever as long as you still have cash flow. And there's tons of businesses doing it. As CEOs and operators of our businesses, we are active investors. It is our job to take the incoming cash and allocate it to whatever the best return for that cash is. Maybe that cash is a hire, maybe it's inventory, maybe it's a marketing channel, maybe it's an acquisition. I don't really know for your scenario, but that is your job as the CEO of your business is to allocate capital. The smaller the business, it's probably just you thinking about this. You probably don't have a CFO, you probably don't have a real thought partner in this. It's just going to be you. And whether or not you make the right decision is basically going to determine what happens with your business. If you make the right decision, like MA or a marketing channel that works or effective buying decisions on your vehicles, your business can continue to grow and grow and grow because you have more cash flow to invest into marketing and people, and you have a you'll be able to create a safety net so that you can scale. But if you don't pay attention to this, then you're just going to get stuck. The best contracting businesses out there actually grow cash faster than they grow their core business. Because if they get paid a customer deposit, they get paid upon completion, they pay payroll two weeks later, and they pay their supplier 30 days after that, you're actually getting paid to grow your business. You're getting all of your money up front, and then you're paying out costs on the back end. So the best contracting businesses out there are self-funding their own growth because they're prioritizing their cash flow and they're dialed in and focused on it. And then they're paying their costs in 14, 30, 60 days. And that's allowing them to fuel themselves as they scale. Now, this one might be a little bit controversial, but I think over the last few decades, we have been served up metrics for what is good in our industry. Good might be 50% gross margin, 40% overhead, and 10% net. But today in 2026, I don't know how right that is. As an example, today we're running in a mid 20% EBITDA margin, which is a lot for a business our size. Now, 24% is a big difference from 4%, which is our industry average. The way that I like to think about this is the cost in your business something that a customer would care about? If you remove that cost, would the customer care? If you added a new cost, would the customer pay more for your service because they like your service better because of this new cost? And if it's not, then you should probably work to eradicate. But if you're overpaying for your office or you're doing some other luxury spending, but you're skimping on your call center, well, the customer is probably going to care a lot more about the call center. And when they call in, will they get served than they did about the fancy office? My firm belief is if you are benchmarking against 20 years ago KPIs for profit, you're measuring against the wrong thing. Most contracting companies today, I believe, should be between 50 and 60% gross margin with a mid 20% profit. I think in the next few years, with all of the AI and automation that is coming out, I think we will start to see at scale contracting businesses in the 30% free cash zone, which is absolutely unheard of. If I was back at 1 million, here's a couple of things that I would do. One, I would start tracking cash weekly. This isn't complicated. We still do this to this day. We call it our cash out, and it's cash in, cash out. Two, I like separate accounts. I always love the book, Profit First. And in that book, there's a profit account, we call it our capital account, where every day or every week or every month, we just automatically transfer money to that account and then we use that money as our profit account. Uh, maybe we buy some vehicles, maybe it's a distribution for the owners. Three, can you pull cash forward? How do you get paid faster? How do you make it so easy to pay you that you get paid immediately? The back half of that is delay your payments. Negotiate terms with every vendor that you can possibly negotiate terms with. If you're buying goods, if you're buying services, push for terms. The difference between getting your cash and paying your costs is cash flow. Just doing those four things, if you did them for a month, you would understand your business better than 90% of contractors out there. You'd know where you're hurting, where you can cut, where you can optimize, and how to drive more cash so you can keep scaling your business. The way I like to think about this and the way I talk to my team about this is this is less cash flow and this is just control. Do I have control over where the cash is coming in and where it's going out? Do I feel like I'm in control? Or do I feel like I'm held hostage by whatever cash reality is happening in our business? For the first six, seven years of my career, I felt like I was hostage to the business. And it was only after the we installed some of these disciplines that I feel like I am in control. And that's the difference of a $1 million plumbing company and a $40 million plumbing company. Most marketing agencies will show you clicks, impressions, and maybe even traffic, but none of that really matters if the phone's not ringing. And that's why we partner with Service Scalers. They are built specifically for home service companies and they focus on one thing, which is driving real, high-quality calls and book jobs. This is a no-brainer. They're offering a 60-day money-back guarantee on LSA management, Google Business Profile Optimization, and website builds. If you don't get more visibility, more calls, and better leads, then you don't pay. If you want more book jobs without the marketing headache, click the link below and book a free strategy call with Service Scalers. If
your techs aren't selling high ticket, it's probably not their fault. Most owners, when they look at their numbers, they think that they have a sales problem, but really they have an organizational problem. Maybe their training's bad, maybe they're solving for the wrong thing, or maybe how they present it is just not in a way that a customer would buy. Most businesses are just solving for the wrong pain point, and they're solving for the pain point that isn't valuable enough. I'm John and I'm the CEO of Wilson Plumbing Heating and Cooling in Ohio. And we run a $40 million plumbing, HVAC, and electric business. Over the years, we bought 14 companies. And in most of those businesses that we're acquiring, we notice the same problem over and over again. And it's that people are solving the wrong problem. And when they solve the wrong problem, they're not getting enough value for the solution that they're there to solve. So a few examples. One would be in HVAC. There's a lot of companies out there that believe that the best way to service their customer is to repair that system until the end of time. And for some customers, that is the exact right thing to do. But for others who don't want to keep paying tax to a problem, they would rather put in a new system that's more high efficient, that would save them fuel costs, and that they can finance over time. So you'll find that people are fixated on the wrong problem, which, hey, every customer wants to save money, and not, hey, every customer over the long term might be better suited with this solution. And the difference is humongous. The repairs might be a few hundred dollars, the replacement might be fifteen thousand dollars. They're just focused on the wrong problem and they're presenting the wrong solution to that customer. You see it in the way they market, they're chasing these low value jobs with the hope that over a long enough period of time, someone will. Accidentally realize that, hey, I do need this bigger solution. So that way the company doesn't feel like they have to bring it up or try to upsell it or offer it as solutions. A lot of companies out there get sort of weirded out by the concept of sales, but at the end of the day, we we're all in sales. Everyone is in sales every day. In order for our company to run, in order to cover payroll and rent and marketing, we have to sell something. Someone has to sell something and someone has to pay you for that thing. As you're focusing on your business and what your average ticket is and what your average sale is. And if you want to drive it higher and improve it, you have to start with where are you at now. What are the solutions you're trying to solve inside your business? What are the solutions you're offering to your customer every day, right now? And how are you packaging it in a way that makes sense to them? One of the most important concepts in iTicket sales is are you solving a high value problem? Is your problem going to spare someone some inconvenience? Is it a small issue or is it humongous? As a couple examples, I'm going to use DocuSign and I'm going to use an attorney. So DocuSign, I think I pay $100 a month for DocuSign and it allows me to sign contracts. I can also use ChatGPT to create contact contracts. And maybe that's great. For another $100 a month, I could potentially replace an attorney by having ChatGPT draft me a contract and DocuSign to sign it. I'm probably not solving big deals. I'm not going to be buying a company with the help of Chat GPT drafting my contract. I'm not going to be doing something meaningful. I might be drafting a small agreement for a small problem. Maybe it's a few thousand dollars, but it's not going to be tens of millions of dollars. That is too valuable of a problem to trust to too cheap of a solution. So you pay an expensive attorney. You're working with somebody that's $2,000 an hour. High ticket sales is solving high ticket problems. So I would expect to pay my attorney hundreds of thousands of dollars on a deal that's worth tens of millions of dollars. And I would expect to pay DocuSign almost nothing for something that's not that valuable. Take the same prompt to your own business as you're thinking about what problems are we here to solve. For us, we're a plumbing HVAC and electric business. So I the last example was HVAC. We'll use uh sewers for this one. We go in and someone has a backed up drain. Backed up drains are an unpleasant experience. There's water in their basement, there's potentially damaged walls, damaged carpet, damaged stuff that they were storing down there, and it has sewage all around it. Pretty like unpleasant experience. What a lot of companies do is they go in and solve the immediate problem. There's a lot of pain, but they just go and here's the $300 solution, which is the band-aid, but it doesn't actually solve the problem. The valuable problem is hey, drains aren't supposed to back up at all. So we have a high value problem, which is there was property damage, there was discomfort, there was pain, there was inconvenience. And most people are attacking it with the low value solution that they will have another problem if that's all that you offer them. As you're thinking about the high value problem and the high value solution, the way you want to do this is you want to create a value ladder. So inside home service for HVAC, a value ladder is hey, here's the reason I came out. And maybe that's the repair, maybe it's the annual tuneup. The next one could be a repair or an upgrade. So, hey, I came out here to do this thing and you need this other thing. Maybe you want this other thing. And then the highest rung is the big job, the big pain point solve, the big valuable part for you and the customer. And that's the top of the value ladder. So as you're thinking about setting up your offering, you want to be able to have this value ladder that lets you come in at the bottom and be able to offer a stack of solutions to whatever that customer wants along that value ladder. Now we look at our team. And there's three different ways to look at this. So the first one, are we tracking the data? I'm always amazed at how often I find companies not even knowing their average ticket or their close rate. Well, how are we going to improve if we don't know where we are today? Our second one is how often are we doing trainings? How good the training is is a part of that too. But hey, are we training at all? Are we training every day? Are we training once a week? Are we training once a month? And then are the trainings quality? Are you bringing in outside professionals? Do you have a curriculum that you've sort of worked with? Are you doing role play or practice? And finally, are you doing ride-alongs? Are you seeing it in the field? Are you watching as your team offers the value ladder to help coach them to improve? The best operators out there have a pretty sophisticated sales setup. They have a great offering that solves the immediate problems as well as the big valuable problem. They have consistent training to teach their reps to bring people up the value ladder to the profitable big average ticket. They're doing regular one-on-ones. They're regularly training and enhancing their sales model. And they're doing ride-alongs to see reality and then scorecarding. The best way to think about this is there are inputs and outputs. And most of us, when we're looking at measuring our reps performance, we're only looking at the output. We're looking at the sales number or the closing rate or the average ticket, but we're not looking at all of the things that went into that. The offering, the ride-alongs, the trainings, the scorecarding, all of that is input that you expect to drive a greater outcome. But you have to look at both in order to understand where you are and how to improve it. The way we started this was kind of easy. We sat down and we said, hey, what are our best jobs? What are our most profitable jobs, our biggest tickets? If I could only do one or two or three jobs every single day for the rest of my life, what would those jobs be? Maybe it's replacing water heaters or generators or sewers or furnaces, whatever it is. But we picked those and we called them our core service. And then we made it our mission to drive as much of our revenue through those core services as possible. As you think about building around that, what's the materials that we're going to put out for marketing? How do we talk about this on socials? Are we putting in an email and SMS? Are we training our techs to help support that one thing? Are we paying attention to leads? Are we making sure every opportunity can have the ability to turn into that one thing? That is how you build a higher average ticket is you get the team fully aligned on the lead, the sales, the training, and just a cycle over and over again. And finally, we want to install some just basic cadences. We want to be reviewing our job tickets, we want to be doing monthly or quarterly ride-alongs with our guys. And we want to be doing it at a minimum one training a week, ideally two or three. Because that is where you're going to see performance improve. In closing, if your average ticket is low, if your average sale is low, it's probably not just your text. What's the offering? Are you solving a valuable enough pain point? How often are you training? How often are you riding along? And is your company set up to succeed around this idea? Google keeps getting more expensive and affiliate leads are getting worse. And somehow you're paying more for fewer, lower quality leads. And that's pretty much the game right now. So here's something that most operators are missing Yelp. I know what you're thinking, but Yelp is way more than just a restaurant rating app. Last year, over 125 million home service leads were generated on Yelp. And almost 50 million homeowners are searching there every single month. Here's the real kicker though. Their data powers answers across JatGBT, Google AI, Apple Maps, and Alexa, basically everywhere people are searching before they even know your company name. So instead of fighting over the same expensive Google clicks, you're showing up where customers are actually discovering and deciding who to hire. One company fused service out in the Bay Area, HVAC Plumbing Electrical, does 20 million a year from Yelp alone. They're closing 75% of their Yelp leads and about 70% of their entire customer base comes from the platform. So if you're serious about leveling up your lead gen, go to business.yelp.com
slash owned and operated and book a call. One of the biggest opportunities out there today is buying a business. Periods of uncertainty like 2000 and 2001, and today more businesses are started during economic downturn because people still need to pay their mortgage. They still need to live their life. And if there's record layoffs happening, we have to be able to move forward. Today we're going to be talking about how do you get prepared to buy a business? Should you be buying a business at all? And what's the pro and con of starting versus buying? We've been releasing episodes in our podcast where we've talked about the businesses that we bought this year. We've bought three, and I've had friends text and call and reach out and say, hey, I'm thinking about expanding into this new market, or I'm thinking about adding this service. How do you think about buying versus starting a business? So that's the question that we're going to be answering today. To try to reframe this question, I think it's important to acknowledge a couple of things. One, entrepreneurship is the same thing as buying a business. My friend Walker Dybel wrote a book called Buy Then Build. It's an incredible book and it really helps frame this uh psychology of you can buy a business and then go build that business, and that's entrepreneurship. It's also potentially an easier path to entrepreneurship because you are starting off day one with revenue, you're starting off day one with customers, you're starting off day one with a team, which is much easier than starting off day one with nothing. As you buy a business, you're still doing a lot of the same stuff you were going to be doing. You're still leading people, managing chaos, making sales, fixing problems. You just shortcut it the first couple years. Over the years, we've started a number of businesses and a number of projects. And consistently, the hardest thing is that first employee, that first sale, that original infrastructure. So when you can walk in day one and the business already has all that stuff, it is much faster. Overwhelmingly, I think that the easiest path is you just go buy something in Y City and you're roughly going to spend the same amount of money. The way that I would think about this is if I have to spend a million dollars on this business versus a million dollars of marketing, well, the million dollars of marketing, all it got with me was marketing. I still have to hire people, I still have to make the sale, I still have to get vans, I still have to get rent, I still have to do all of those things. But if I go buy that business for a million, it probably has all of that already. And that's what we've done three times this year. We've moved into a new city, we bought a brand inside that city, we've added our systems in playbook, and then the business started growing, and it shortcutted years off of our growth. Said a little bit differently, the hardest part of a business is the zero to one. And if you can shortcut all of that by two or three years, it's the easy answer. Buying versus building are just different types of risk. There's much more risk associated with buying. You're probably bringing on some debt, you're bringing on HR problems you might not be aware of, you're bringing on customer problems you might not be aware of. There's a lot of other risk associated. This isn't a free, easy pass. It's sort of like starting on second base. We're not buying a perfect business. We are buying problems that have cash flow. My job is to look at your business and figure out how I can make more money than you do. I'm going to walk in and I'm going to analyze what's broken, what could be working better. Can I fix it? Can I improve it? You walk in and you look for what's broken because if something's broken, it is opportunity. It's not a reason to run away. Some of our best deals over the last 10 years of doing this have been broken businesses. They were fundamentally broken. And we walked in and we could roughly fix most of the problems in those first 30 days. Now, here's a little bit of a readiness check to see are you ready to buy a business or are you ready to expand your business? The first one's leadership. Can you operate the business or can you lead or find someone who can? How do you give a branch to a general manager that you know can trust and will do a great job with your team, your brand, and your money? Now you don't need to be an expert in the trade. They might not need to be an expert in the trade, but they do need to understand the business. They need to understand how it works. And that is harder to find than you would think. Second, is do you know how to get customers? Do you know how to market? Do you understand Google? Do you understand Meta? Do you understand the channels that drive this business forward? And if you're expanding geographically, do you understand the channels that drive that market forward? What information do you have so that you can confidently say, I can launch in that market and we will do a great job? Here's a big one. Can your business handle fluctuation? Can it handle uncertainty? When you go to buy or launch a new location, you're gonna be investing dollars, you're gonna be investing time, and revenue is gonna fluctuate, employees are gonna leave, things are gonna break, and your core business, or if this is your core business, has to be able to withstand that shock. Number four, do you have access to a buffer or additional capital of any time? If you're buying a business, you're probably gonna need to flow some extra cash in there. How are you gonna support it? I don't know, but where are you gonna get the extra cash? Number five, potentially the most obvious, but do you actually want to run this business? You can just go hire an operator and walk away forever and never have to actually run your business. Just buy a business, hire an operator. Uh, that's ridiculous, right? Like if you own it, it is your business. That operator can quit any day of the week and you are the one running that business. And you're either gonna do a great job or you're gonna run into the ground. But you have to be prepared to run that business, not just own it. Okay, we're gonna talk about buying versus building. I think that the best in class businesses do both. I don't think this is either or. The best in class businesses have a really effective MA strategy to grow inorganically, and they are powerhouses at marketing and sales and deploying into new markets organically. Starting a business from scratch makes sense if you have time but not money. If you want to learn from zero, learn all the steps, learn all the processes, and most importantly, you are okay going slow. So you're gonna trip and fall a lot. Buying a business makes sense if you want or need speed. If you want to be in a market in six months, buying is faster. If you have capital or access to capital easily, buying is a cheat code. If you have a playbook to improve an existing operation, if you run a franchise, if you run a company like mine, if you know how to do this and you can go find companies that don't, it's easy. People are asking a lot about hey, what do you think about organic expansion? What do you think about buying? How would you do it? And the answer is I would buy. Currently, I would buy. I think that that answer is going to change over time. Because, like I just said, I think best in class companies do both. But right now, to me, it feels less risky to just go buy a business in a market. We get to start at second base, we get to have a leader already in place, we have a team already in place, and day one, there's revenue. And I like that. So the way that I like to think about it is currently we are acquiring. I'm sure in the next few years we will start expanding organically to fill in the gaps that we can't find an acquisition target. But my first inclination as I think about a new market is to acquire into that market. I would rather improve what is already there with our playbook than have to invent it from scratch and trip and fall a lot and waste time. Here's what you should do next. Go by buy then build, go by HBS's guide to buying a small business and consume them. There's a lot of content out there on our channel, our podcast is all about this, on how to run the business once you buy it. Start looking at deals through BizBySell, start contacting brokers and trying to understand the industry that you're thinking about and what's a reasonable price and what should be the playbook. We've had people come through our business for years that are considering buying into the industry and the doors are open. If you're thinking about plumbing HVAC or electric, you can often just call contractors and say, hey, can we look at the business? We're thinking about this, we're in a different state. And most people will open the doors. Don't rush into buying a business, but don't ignore it either. For the right person, this is the fastest path to growth that I know. If you like what you heard, make sure you like and sub.
