What does it actually take to grow a service business from under $2 million to eight figures in revenue?
John Wilson sits down with Stephen Olmon, co-owner of Alarm Masters, to break down how they've scaled a fire and security business through strategic acquisitions, organic growth, and a repeatable sales process.
They discuss the operational playbook behind Alarm Masters' expansion across Texas, from acquiring smaller competitors and cross-selling existing customers to building a dedicated commercial sales team and increasing recurring revenue.
Plus, why buying a larger business can actually be easier than acquiring a smaller one, how AI and data are uncovering new sales opportunities, and what most service business owners get wrong about hiring salespeople.
Whether you're acquiring your first business or scaling an existing home service company, this episode explores the systems, sales strategies, and acquisition decisions that drive sustainable growth.
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In This Episode:
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• Scaling a service business from under $2M to eight figures in revenue
• How acquisitions and organic growth work together to build a larger company
• Building a commercial sales team that consistently generates new business
• Why recurring revenue and customer retention drive business valuations
• Using AI and customer data to uncover missed sales opportunities
• Why buying a larger business can be easier than acquiring a smaller one
• Expanding into new markets and building an acquisition playbook
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Sponsors
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Big Reputation
Get more from your Google Business Profile with Big Reputation. Automate reviews, improve local visibility, and turn more Google searches into inbound calls. Learn more: https://www.bigreputation.ai/oao?utm_source=oao&utm_medium=paid
Avoca
See how Avoca helps home service companies book more jobs with AI that handles calls, texts, follow ups, and dispatching without adding more chaos. Book a demo: https://www.avoca.ai/partners/oao
Profit & Grit
Running a $3M–$15M home service business? Profit & Grit helps contractors improve cash flow, pricing, forecasting, and profitability with guidance from an operator who's built and sold a $25M service business. Book your free 20-minute strategy call: https://www.profitandgrit.com
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Connect
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John Wilson
https://www.linkedin.com/in/johnbwilson1/
Stephen Olmon
Alarm Masters
https://entryandexit.co/
More Ways To Connect with OAO
John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC
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There's so many people. The only thing they know how to do is like buy business. Our growth has been nearly 50-50, kind of organic versus inorganic.
What you guys are really doing that is cool is like you have an operational playbook to drive like real value into these businesses once you buy them.
We're probably about double from where we were. That's crazy. A lot of this for us has been test measure, test measure. It's impossible to improve something if you're not measuring it. So what you measure improves.
What would you do differently if you had to start over again on Alarm Masters?
That is an extremely easy question.
Welcome back to Owned and Operated the Top Hundred Business and Entrepreneurship Podcast. I'm your host, John Wilson, and on this show we talk about the home service industry. We talk about my own home service business, and we talk about how to buy and build within it. Today I'm joined by my very good friend, Steven Ullman. Steven, welcome back to the show. Thank you. I feel like you've been on here like four times. Like you're OG. Like you're like an original 50 episodes. Very different, Steven, to today. Yeah.
Just can't get enough.
Yeah.
Can't get enough.
That was, I think we talked about this last time too. Um I I need to re-listen to that episode. Just like all the context of like five years of friendship later. Uh just like let's re-listen to that one. Yeah. Because it was, it was 50 businesses by 2050. That was like the premise of the, and obviously we've, you know, we've we've uh evolved. Yes, we have. Um to now like building like a baller as hell platform. Um yeah. But I I always remember that because it was like back in 2022. I was in Florida, and like we had to figure out like a mic setup. So like, yeah, we're going on almost five years ago.
I'm grateful for your friendship. I look forward to year 35.
Hell yeah. Me too. Um, okay, before we get too deep, Kristen's gonna kill me if I don't talk about Catalyst. We're having an event, about a hundred home service operators. Steven, I'd love to see you there. You should bring your friend Colin. And uh we're gonna be talking home service, how to buy, how to build, how to market, all that stuff, May 3rd to the 5th, Akron, Ohio.
It's beautiful that time of year.
I like normally, yes. So what is what is kind of funny about Ohio right now? I had breakfast with my dad this morning. And my dad's like, you know, he ran Wilson, this business, for like 35 years. So in his mind, October is the start of heating season, and May is the start like of HVC season. Yeah, like AC. I'm like, yeah, dad, totally. That's normally how it works. Um, but now May is still snowing sometimes, and it's definitely 90 degrees outside, and it's the end of October. So, like all of summer got pushed back a month. So my point is May 3rd to the 5th, we're really hoping it's beautiful.
Who knows? You know what? Either way, you'll be there.
Yeah, I will be there regardless.
Okay, so today we're gonna be talking about um Alarm Masters, which will be pretty fun. We did an intro with uh you and Colin, and this was like a year and a half ago. Probably, and I think it was talking then about like, hey, here's what we think. Uh so this will be like a fun check-in because now it's hey, here's what we did. Yeah. Which is like those are always two good things to compare against.
I mean, hopefully they're good, you know. Yeah, it could be it could be awful. It could be terrible.
It could be terrible, it could be terrible. All right, well, let's talk about Alarm Masters a little bit more. You want to explain the business for the folks that didn't listen to the last episode?
Yeah, absolutely. We acquired a 35-year-old life safety business, um, kind of fire insecurity three and a half, four years ago in Houston, beautiful Houston, as they say. And um the goal was to kind of execute a roll-up in Texas and surrounding states. And we had started the last time, you know, we were on, we had started to make progress on that, but we've taken that further. And we are uh both commercial and residential. So we are you know relevant on the home service side, but we also do commercial as well. And um, we are now in multiple markets in Texas and have a growing team, and we are you know monitoring, we're installing and servicing, so we're kind of full scope across fire and security in the state of Texas.
Do you remember um do you remember size and scope last time you were on?
Probably about half. Uh we were halfway away. The same scope in terms of what we were offering, but in terms of size, um, from a head count and a top line perspective, we're probably about double from where we were.
Yeah. I think that one of the cool things um about what you guys are doing, I think is a lot of cool things, but like one of my favorite parts of it. Uh, I just I know and I'm sure you do too. Like I'm sure you can think of a bajillion examples, but there's so many people that it's like one trick pony where like, hey, the only thing they know how to do is like buy business.
Yeah.
And I think that what you guys are really doing uh that is cool is like you're you have an operational playbook to drive like real value into these businesses once you buy them, which is cool, like it's super cool. Yeah, and uh most of it's like the cross sale and the remarketing, like what what else is sort of like big. Maybe you walk us through the playbook again for that the listener.
Yeah, so we bought a small, modest sized platform originally, and we started to tuck in with other small acquisitions in that market. And our original growth, well, we did a great job. I mean, my partner Colin is, you know, iced to an Eskimo sort of salesperson. So we did start to grow organically in the first year, but we definitely had an inorganic playbook that we intended to execute on, and then we did. And that was buying, tuck-in accounts, kind of adding them under the alarm masters brand, and then uh cross-sell upsell because many of them had like a single line of service, whereas we offer five different services. And so there was a lot of ability to cross-sell, upsell. And so we started to walk that out, and that was going really well. But you're right that our growth has been nearly 50-50, kind of organic versus inorganic since inception.
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No, it was Royal Blue and Bright Red. And uh, if you know any Aggies, we we are both Aggies and we love maroon. So we did turn it, you know, kind of maroon and white. Uh, throw a little black in there when we're feeling edgy. And um and we went away from the the royal blue and bright red. Um, although love that kept uh you know a bit of a shield type of icon, but we kept the name.
Yeah, yeah. Um, and how much of the business today is residential service?
We uh residential, we're about 7525, so we are heavier on the commercial side. Yeah.
And the for um the commercial side is the valuable part of this industry, right?
Well, residential recurring revenue, which for any of my software friends to confuse you, uh, in our industry, it's RMR, not MRR. Um, it's like the only industry that uses that nomenclature, which confused me very badly originally. But residential RMR can still be really valuable if you've aggregated enough of it. But kind of on the lower end of the market, the smaller it is, the less and less and less valuable it is. Whereas a small set of commercial RMR still might hold decent value. Um, so that's that's kind of the difference. Um, and it really just depends on the buyer, right? So if you're looking at a large um residential only buyer this strategic, they may value a bit more than someone that like us that's hybrid.
Yeah, a friend of mine, I don't remember. I I don't I didn't really ask him, I guess I should what his RMR would be the measurements or like number of doors or number of systems. I'm sure there's a like a bunch of different ways to measure scale. Sure. Um, but he built a giant one in like the resi side a couple years ago. And I mean it they he started it 10 years ago, he sold it two years ago, um, for I think a very large number, which is really cool. But yeah, to your point, it was hum it was humongous. Like uh it was a it was a big business. Um like I don't think they hit half a billion of revenue, but like they weren't that far off, so it was a big business, but they were competing against like Vivant and Nest. I mean, it is just it's a lot, it was a big space.
Yeah, you'll see acquisitions in that space for two reasons. What I've seen recently is one, they're trying to buy out a competitor who's aggressive and growing quickly uh to try to insulate themselves from that threat. And then the other side is if they just don't have a strong presence in that region, then they're just basically buying, you know, that region out to have, you know, that's that's happened a ton in the state of Texas. People are all after the Texas triangle, and so you've seen a lot of that type of activity.
Yeah, that's interesting. For uh how big was the business originally when you guys bought it? It was I'm sure this was on the go ahead.
Yeah, originally it was sub two million top line, like it was very small. Um yep.
And I'm remembering like half of that was recurring, and then the other was like project work, like remodeler.
We were we were probably 37, 38% recurring when we bought it. Okay. Um, and we've done our best to kind of hold that ratio um over time. It's difficult when we we've started to do much larger installation work. So you go do a six, seven, eight hundred thousand dollar install job, that starts to skew your numbers a bit. So it's hard to hold that ratio. But we definitely we actually think about recurring like RMR and also reoccurring, which is service done on the base of the accounts that are subscribers as kind of a connected metric. And so our aim over the long haul is to be at kind of 60 plus percent between recurring and recurring. And obviously, the more that that's contracted recurring, the better, the more valuable. But those two combined being over 60%, pushing 70% is kind of what the healthiest, fastest growing, most valuable businesses in our industry would would kind of uh be at from like a ratio perspective.
That is interesting. We I don't think we had a metric on that. Um I started reading Sims a couple months ago of just like, hey, who's who's doing this better than me? Right? Like who's like 50 or 100 million of EBITDA and like did what was their KPI like data book? And that was in every single one of them, which I thought was kind of interesting. It was the you know, for us, I obviously much less it's fifteen dollars a month or something for membership. So the actual revenue that's derived from our membership programs in our industry is like less than a half a percent of revenue. Like it's something, but it's you know, not significant. But 56% of our revenue is from those members, which is crazy.
So I assume you have a higher percentage of repeat revenue when they are a member. Yeah.
Yeah, LTV uh member to non-member is like 1.7 times.
Yep.
That makes sense. It was really it was really interesting. Uh in our like AI project that we we did this like data warehouse. I think you guys did this a long time ago, if I understand it right. But like we we basically combined all of our data from everywhere and we just started extracting insights. Every time I talk about this, I feel like I'm on a LinkedIn ad. I love it. Our disaggregated info. We use the data lake. Yeah, yeah, yeah. No, I feel like yeah, I'm I'm on a LinkedIn ad. Uh it feels ridiculous. But uh, but it it was it was awesome. We we paid someone um like six hundred dollars three years ago to tell us that piece of information. Okay. And we discovered it in like three seconds, a week, two weeks ago, or whenever we turned on that part of the yeah. All right, so 60 to 70 percent is either recurring or recurring, like those customers are calling you in from service work.
That's our goal. Yeah, we're probably a little under 60% today. So we're not dramatically far off from that goal, but um, that is definitely kind of the North Star.
Um, trying to think what we didn't cover inside the playbook. Uh any of it like the sales, I mean, is it cross-selling?
We've expanded what we do, you know, outside of that. We're going outbound a lot more with success.
Um, we found some really existing or to like new to new logo.
Uh we're going outbound. Yeah. I mean, even I mean, we just had a uh multifamily focused outbound email campaign that was 51% open rate and had in the teens reply rate. And so that's crazy. I think not surprisingly, like you get this like as you spend time in the business, you start to really understand your customer better and your ICP per vertical for us, like on the commercial side. And then we also understand the residential customer better and better just as we spend more time with them and we understand, like, hey, from a case volume perspective, like we're extremely data driven. So we know like what are what is our highest percentage of case reasons, you know. So we can message better, be more relevant, uh, market to pain, you know, that sort of thing. And um, we're doing all sorts of creative things on the marketing side now. Um, and some of it is early and we're doing tests, some of it is more proven. Um, but I would say still overall the bread and butter where we just keep driving um net new revenue constantly is going to see our current customers. Um, we're doing some really fun stuff on the AI side, which I can get into later or now. But I mean, even just one thing, like the fact that we have we're kind of like agentically listening to all calls and finding missed opportunities on those calls. So someone says, Oh, my other building, but our rep doesn't catch it, like we actually flag that building sales team.
Let's go check that out or something.
Yeah, and that's resulted in several deals. One that's interesting. So, yeah, all sorts of fun stuff along those lines that we're doing on uh on the sales and marketing front. Um, just a kind of a work smarter, not harder type of mindset.
Yeah.
How much of the business, like how much do you spend on marketing?
Very little as a ratio of top line that's going to grow, but uh, I would say as a ratio of top line, like we don't spend a lot on marketing. Um we probably spend less than two percent. Um but we are heavy from a sales headcount perspective. So that's where we spoverspend probably because we're so believe so much in field sales, like having people out in the field walking into locations. So we've gone heavier on that front as a ratio.
That has been a hard thing for us to spin up. Like we've talked a lot about that concept on the restoration side or even on the plumbing and HVAC side, like I know people uh really successfully driving like referral networks basically. Uh, but it starts with exact like this in-person sales model, and I have consistently found it challenging to hire that human being. Like, any advice for me?
Um, we believe in aggression and competitiveness over any sort of industry knowledge. We think we can teach that all day long. So we've hired several former D1 athletes, um, things like that. People also like a couple trainers, former uh like personal trainers from like a discipline, um, work a process type of mindset that's been very successful. Um, those are the types of people that we've targeted. Um, we we've also hired some industry vets. Um we're careful about that. We're very specific about that. Um, I definitely don't think we will probably continue to hire more on that first uh, you know, kind of segment, if you will, than we will the industry vets because a lot of them have bad habits.
Was there much of a training program involved, or is it just like go knock on doors and start conversations and then I'll help you from there?
We definitely have a bit of a training process now for the first handful of weeks to get them the right vernacular to understand solutions. Um, you know, you want that solution to fit a real need or pain point, and you don't want them uh just slinging random stuff to the wrong people and the wrong solutions. So there's kind of a four to six week upfront uh process, and then they'll do right-alongs and shadowing that sort of thing. But pretty quickly we want to get them out and just drop them into the deep end on low value targets or low value opportunities to just let them kind of sink or swim. And it's okay to fail, like we push that. We just want them out there, but not like week one. That's probably a mistake. So uh kind of in the middle. Um, we don't do six months of training, but it's also not six minutes.
How do you select target? Um like we one of the challenges we've had when we've done this is like, hey, here's a list of 50 property managers, go knock on their doors until someone says yes. Like, is that what it looks like?
Or yeah, there's a few there's a few data sources that we're comfortable burning. Um we're fine, like the cost is low for us to generate those prospects. And so because our cost is low and they typically aren't large value opportunities, then we're fine, quote unquote, wasting them on training. So um, one of them is an example is we've found a way to methodically get data on brand new LLCs in the state of Texas. So we will have them go run at brand new entities that have spun up in the last typically seven to 14 days, and it just lets them get shots on goal, um, but it's not always the highest value targets.
Okay. Is there ever uh like for a more seasoned person, is it like, hey, you did you said your property management thing the other day? Was that like an but that was only email? Like, does anyone ever just like, hey, I'm gonna go run a list of 200 plumbing companies?
Yeah. Um, like one of the people that joined us recently in North Texas um was like, get out of my way, basically, like in the kindest way. It was just like, I've got this. Like, I, you know, and he he's older um and he's got lots of experience, and it's like I don't need training, I know what I'm selling, just kind of you know, get out of my way. And that's a funny thing in business when people say they know what they're doing or they have a Rolodex or whatever it may be. Yeah, um, sometimes people prove it. This guy within a couple weeks had a million dollars of proposals out. So it's like, well, I guess I guess you do know what you're doing. Um yeah, it's uh again, like I just think you kind of have to know who you're hiring or have maybe different um archetypes or different types of people you hire. And for us, it's either been someone who's really experienced or really green. We have not done a great job somewhere in the middle.
I don't know where I don't know where we've gone wrong. Uh well, I I think so it's not like a full focus, so that's probably like the most important place that we've gone wrong is like side project. Um and like compensation's always hard to get right. Like, what does comp look like?
Well, again, uh our historically our reps are typically chasing after commercial, and then we you know inbound get resi and they will go tackle it like a light commercial project almost is kind of the mentality. And so because of that, um, you know, um roughly a 50 50 OT is kind of where we've been. It's not always perfect, but it's somewhere around there where someone's base is, you know, maybe it's forty, fifty, sixty, you know, whatever it may be, and then they've got a fifty percent uh commission on the OTE side. It's not perfectly like that. And then uh we also, because of how important RMR is in our business, they have a headline revenue number, but within that context, they also have an RMR number that they're chasing throughout the year. And the headline revenue number, like a million dollars or two million dollars or yeah, for someone who's really green, like we will try to hang a million dollar number out there knowing they'll probably underperform. Um and so realistically that might be 600, 750, something like that. But we will we will try to anchor them to a million. And then once you've hit quota, stayed around, typically, especially if they're getting really quality leads, like house leads, then that looks more like 125, 15.
How many appointments a day?
It depends. We we we do uh we work really hard to try to put meetings on their calendar, whether it is from internal um existing clients or else. Um, but yeah, uh we we also will try to cluster, like based on Houston's a really big place, North Texas really big place. We'll try to do our best to be geographically relevant for them. We're we're focused on that, trying to do a better job along those lines to be more efficient with their time. Um but I've seen as many as eight or ten appointments in a day when someone's hitting a really tight area and maybe not everyone's available. And then at times it's zero or one in a given day because they're more in office focused on you know proposals or you know, things like that, potentially, or maybe they had a really long meeting with a large opportunity. Um, but the average, like we're basically trying to get people kind of 10 to 20 meetings a week. Um, so that's two to four a day.
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Are you you're saying you guys put stuff on their calendar? Like, how much of this is like the business getting the lead for them and booking it and all that stuff versus like what I was originally imagining is like, hey, go knock on some fucking doors.
As much as we can prevent that, we're trying to prevent that. As much as we can be their legion solution so that they can be we we take a software approach, we take a segmented sales approach on the really on the entirety of the business, but especially on the commercial side. So we have like appointment setters, SDRs, like we're kind of an SDR BDR type function um within our business so that our salespeople can do what they're doing.
I think that's the thing I was missing.
And we we also don't they will at times work on proposals, um, but we are trying to take that more and more off their plate as much as possible. Sometimes they have to give us context or you know help clarify things, but as much as we can take a proposal generation away from them, we do.
Okay, okay, I got it. All right, so this is like uh you are driving up leads either through SDR, which is I think calling your own, or BDR, which is outbounding email. Um, you're surfacing opportunities for them, they're calling on those opportunities, but they're almost never cold contacting, dropping off a business card.
Um they will they will do it some. And so maybe they're in an area, like one specific thing that we've been chasing is senior living. And so, and we've had some success there, some actually notable success. A couple of our largest deals recently this year have been senior living. And so they realized, man, there's a bunch of senior living facilities within a couple miles of where I am right now. So they just walked in and instantly found a couple opportunities that afternoon by just walking in, and people are saying, Man, we can't get anyone to come service us. And that's a big deal in our industry's service. Yeah, a lot of the big boys are willing to go do some $300,000 install project and then collect the recurring revenue on the back end, but they don't want to do the messy middle, they don't want to do the service. And that's our big deal is we we try to overstaff so we can say see you tomorrow. Like that's our one of our main company slogans. Um, to try to kind of be the Chick-fil-A of the fire and security industry, if you will, where people have like this consistent level of service that they get from us. And we're not perfect, but we are putting a lot of resources to that end to try to be that from an identity perspective in our space.
Yeah. Is is there normally like a big service back? Maybe non-existent, but like if I call a large provider, they're like two weeks out or something on service.
Exactly. That's right. Okay, and we win a lot of business and and take business away by being readily available. That makes sense.
Yeah, that makes sense. Okay, yeah, I appreciate the master class there on a sales team. That that's something that like we have really I've never gotten right. We've tried it like five times, and it's very annoying. Um but I think like after like listening to this, some big areas that we totally whiffed on. We got comp right, uh, or at least I think we did, but like we're basically like we did we were in the range you're talking about. We did not set them up properly at all with appointments, and I think that was our big area that like what you're saying makes total sense to me. Because what we've really struggled with is um like it's the per restoration's the perfect example, uh, where like you grow a restoration business by doing BDR, like that's it. Like you go call on other plumbing companies. Uh, but one of the challenges we've had is like it's an embedded restoration company, so everybody knows it's a Wilson's restoration company. It's like Rotor Rooter has a restoration department, right? So I would never send Rotoroter a lead. Uh so um, but there's property managers and it just all these other ways to like still drive. Uh, but we've struggled. Now I think it's because we didn't we didn't put the work in, we just sort of like hired somebody and where's like, hey, go, you know, find appointments, and we didn't set up the system to let them succeed, which that that makes a lot of sense.
Yeah, even trying to set up referral meetings, you know, for them. Yeah, that type of thing. Um
yeah, and uh we're also just a really big advocate. You referenced data earlier. Uh we are we really try to be data driven to the nth degree, and a big part of that was us being having all of our data on one platform, which for us is Salesforce.com. A lot of people love to hate on Salesforce, but if you actually go all the way in, like it's been a huge blessing for us. And um what you measure improves. Like it's impossible to improve something if you're not measuring it. And so a lot of this for us has been test measure, test measure.
Yeah, yeah. That makes a ton of sense. Uh, how big is the business now?
Uh I will say we are into the eight figures. Um, so let's go. We are yeah, feeling really good, really excited for 2027. Um, feel like we have an opportunity to take another really large step forward. And um, we did make a strategic acquisition in North Texas this year. And so um, that's you know, we we acquired the business in Houston originally. I've always been in North Texas and gone down to Houston, you know, quarterly, that sort of thing. My business partner, Colin, um, who's the president, is in Houston. But now I'm like, man, North Texas is gonna compete, you know, against Houston, just you know, uh friendly competition internally. And I just believe in this market. I I believe I think North Texas might be the single greatest place to do business on planet Earth over the next five, 10 years.
So I think I think you're right. The the thing that I always reference is uh like both Dallas and Fort Worth are both individually in the top populated cities. Yeah, like that's insane. That is insane.
And there's there's significant growth extending from both of those markets. Like Fort Worth is heavy north and west, and then Dallas is kind of north and certain parts east, um, heavy growth. So it's really exciting to be where we are, and eventually we we want to be in central Texas as well and kind of complete the triangle. Uh but for now, like I feel like next year we can just go gangbusters.
In central Texas, uh that's like Austin's Austin, San Antonio. Okay. Yeah, I think the Texas um my first exposure to like being in a growing market was earlier than because you know, my whole career, like I've I've been in Akron, Ohio, which like shrinks like like two people a year, right? Uh and then Cleveland, I think Cleveland like posted a growth year a couple years ago, and it was like, whoa, hold on. Um, but you know, Columbus is like one of the fastest growing metros, uh, and it's like 90 minutes south of us. And um can't believe it. Why?
Yeah, I no, I just I when when I went to shout out hold co conference, when I went to the original Hold Co conference, yeah, I found out about Columbus, Ohio. Like I knew Ohio State was there. That's about all I knew. And then it was like, no, it's like the 13th largest market in the country.
I was like, it's crazy. It's crazy.
Excuse me. What do you mean?
Yeah, it it's growing um like triple the national average rate. Like it's absolutely nuts. Uh it's awesome. We we did our first dollar of revenue there last week, so you know, soon. Uh soon we'll be there. But but anyways, my my first shot at uh like being in a a growing market was we partnered with Jack Carr in April of this year. And it is it is totally different, and I'm like, this is kind of fucking awesome. Like this is awesome, like this, yeah, yeah. I mean, and it makes sense, but you know, my whole career I've only ever competed for share in a shrinking market. So the idea that like there's just this ever-expanding share in these other like geos is just totally new to me. Uh I mean, I but it has been kind of fun.
I went and visited Jack this summer in Nashville. Um, and everything south. Actually, we had two different sets of friends leave DFW and move to that area. I also couldn't believe it. I was like, what is happening? Like, yeah, Nashville's going to be a little bit more.
It feels like it. Yeah, it feels like it's crazy. Yeah, yeah. The growth there is just nuts. Uh yeah, it it is kind of interesting. It's kind of interesting, but yeah, it it has been fun. Um there's I keep running into these businesses that uh like you know, we're we're actively sourcing opportunities um with with with and with like with and for Titan or like different you know partners inside Titan. And uh we keep finding uh these opportunities in like growing markets, and I'm like you meet you meet the owners, and like I'm I'm not saying anything bad about anybody, it's just like there's there it is for some businesses it is much easier. I knew and it is like I want to blow my fucking brains out when I talk to some of these people because they built like big businesses, and then you'll ask them like the most basic question, like something that we had to figure out at like two million of revenue because we're competing for share in a shrinking market, like we had to know our numbers early, and they're like, Yeah, I don't, I don't know. And I'm like, You guys are doing 30 million dollars revenue, but like, yeah, people buy tankless water heaters.
I I don't know, and it it's just like this is crazy. Like, it's kind of oh my god, it's such a gift grew, and I wouldn't really make the same comparison. Houston's a phenomenal market, but it is not growing as fast as North Texas is, and so it is an interesting thing. I haven't actually really slowed down to think about this commercial or resi or whatever, but just operating in a really challenging competitive market that doesn't have as much population or growth or like business momentum, and then beginning whether you acquire a greenfield in another market that feels much easier to compete in, that's got a ton of like tailwinds behind you. You you typically probably could capitalize on that to a greater degree just because of what you went through in your original location. That's a really good point. I had not thought about that.
Well, we just have like tight processes, um, which I always assumed that when you got to a certain size, you have to have tight processes, but it's just like where we grew our business. And we are being continually proven wrong by finding businesses at like 30, 40, 50 million of revenue, and like they literally don't know how much they spend on marketing, or they don't know like what gross margin is, or they've never thought about how much their equipment costs. And it's like this is stuff we had to figure out at like three million dollars, and like somehow you're you know halfway through your eight figures, and we're like sort of figuring out it. It would be fun to be at 50 million and still have the lowest of low-hanging fruit in front of you. Like to me, I think that'd be like holy shit, you could just you just it's like found found money. We could just try and suddenly we would have like a valuable business.
Exactly. Yeah, for for us and our industry, what that is for us is everything related to sales process. People don't know their conversion rates, people don't know how many leads they've had, they have no idea how many appointments, like they're not looking at conversion rate down a funnel at every step. Yeah, like what's your close loss to close one ratio in the last 90 days? Uh a little. I don't know, like you know, so that is a very typically a very immature area of businesses that might even be an order of magnitude larger than us. That's what we found, you know, kind of comparing those with friends.
Yeah, no, I I I believe you. I I feel like that one, that specific one comes up a lot for us too. Uh it's like, hey, what's your close rate? Everyone says the same answer. 30%. Close rate's 30%. I'm like, really? Yeah, you you and the other hundreds of people that have given me that same answer. Yeah. That's funny. I stopped believing it after the first couple, but it's always like, yeah, about 30%. That's right.
Yeah.
Do you ever get the 30% answer?
Oh, literally, all like that's actually.
Always just 30. Like it's actually that number.
It really, it really is. Or or like everyone's totally convinced. About about a third, you know.
About, you know, one, three. Come up with any way to answer it. It's always the same answer.
The reality is, if that's the answer, it's so much lower than that. So much worse.
It's like two. It's like, yeah, we could we converted a lead last year. We're really proud of that one. That's funny. It was my buddy Jibby. Oh, that's funny. That's good
stuff. Um, what would you do differently if you had to start over again on Alarm Masters?
Yeah, that is an extremely easy question for me to answer, actually. Um, hell yeah.
I'm glad I could toss you a softball.
So I'm not going to get into any like formerly known as Twitter beef, um, but I did publicly get into an argument a few years ago with someone who was all up in the business buying world, and they were right, and I was wrong, because I made a case that you can have phenomenal acquisition opportunities sub a million dollars of EBITDA. And while there can be accretive acquisitions, I would say a tuck-in can very much be that. But I would say Colin and I both wish that we, even though there's so many reasons why the business we bought was perfect for us, it was great. We do wish that we would have uh bought something two to three times the size.
Yeah, I mean I had the same opinion as you, and I've also changed it since. I think um it's there's just so many of the smaller ones, and I think, and you probably feel the same way that I do. I think part of it for me, uh just like agreeing with you, part of it for me when people said that, on one hand, I was like kind of like I don't know if offended was the right word, but more like I wasn't yet a million of revenue. And I'm like, this feels like a real business to me, so like why wouldn't this be valuable? Yes. So part of it was a very like, this is my personal opinion, just because hey, this business has sustained my family for three generations, it has to be worth something. Right. Also, so like that can be true, but also uh like totally agree. It is it is really hard. Um, and I think it's a time and energy problem. That's what that's what we keep that's what we keep finding. So like we're we it takes so much time and energy. There's a there's a phrase that gets tossed around an MA. It's like, oh, a million dollar deal takes as much effort as a $10 million deal, or about the same amount of effort. And what I'm finding is it is actually the opposite. Like a million dollar deal takes far more energy than a $10 million deal, and like it's kind of not close. Uh and that's consistently what I keep, you know, getting punched in the face with because I keep wanting to look at these smaller deals because like it's small, it's easy. But then when you get into the operational reality of what you're gonna be left with, it's like this isn't easy at all. This is gonna take a ton of my personal energy. Whereas if I go buy this $10 million business over here, I don't even think I'll need to talk to him for the first 90 days. Like, I'll just like say what's up, and then like I'll see him in March, you know?
Yeah, the other big difference is talent and the talent you can afford at that size. And so that was one of the things that was very painful, is that we were not able to necessarily make the hires that we knew we needed at the level of talent that was our standard and what we felt we were like convicted to um bring to the business. And so that was also very difficult to be patient and wait. Now we're there and we've I really love our team. Um, but we had to be patient to get to a financial place to make certain hires. Whereas if we could have done that right out the gate because we were sitting at 1.8 million Avibita at the beginning, you know, with some like a healthy amount of leverage, um, then it would have been a whole different world.
I agree with you completely. That uh I feel like I'm still actively learning that one. Like I keep looking at deals and I'm like, John, stop it. Stop it right now. Yeah, you do not because the the I literally don't have the time to take on a sub-million EBITDA business right now. But I have all the time in the world to take on a two million EBITDA business because it won't take any of my time.
Yeah, it's so interesting.
It is um, yeah. No, I I kind of agree with that.
I kind of felt like it was a private equity elitist type of thing. Like, oh well, like nothing is worth my time if it but actually it was really just all the practical realities of time and energy and talent and scalability.
As your business grows, the financial decisions get a lot more expensive. Things like hiring techs, buying trucks, raising pricing, and marketing. If you're making those decisions without really understanding your numbers, you're probably leaving a pile of money on the table. And that's where profit and grit comes in. Tyler has built, scaled, and sold a $25 million service business. So his advice comes from real operating experience. You'll work with him directly to improve your cash flow, understand your margins, and build better forecasts to make you more confident as you make decisions as you grow. One client increased bottom line profit by 11% after fixing pricing, improving job mix, and stabilizing their cash flow. If you're doing between three and five million a year and you want more clarity around your finances, book a free 20-minute strategy call at the link below. Well, you have to go in, you have to build stuff, you have to like I think it makes sense eventually. Um but I I yes, so I I think part of it is it makes sense eventually. Like what's gonna happen for us, what we're trying to do is we're in Akron, Cleveland, Medina, Fort Wayne, Dayton, Nashville. Let's go. We're about to be in Detroit. So we're missing Toledo, Columbus, Cincinnati, Grand Rapids, and Louisville and Indianapolis. So like once we connect our dots, so like those six missing markets, and like roughly we're trying to get to like 10 million of revenue each, and most of them are like pretty close. Okay. I think what starts happening is then we start turning back on the small acquisitions inside those markets. Because a lot of the ones I'm looking at now, like I looked at one and it was like three million of revenue in a market that I have no presence in. And I'm like, okay, there's one manager in that business. If that manager quits, I like what do I do? Do I just like shut down this thing or like who's gonna manage, you know, just like very practical? Like, who's gonna lead this team if this guy doesn't like me? Um but I do think it gets turned on again once you have like your presence in each market. That's that's I think what's gonna happen for us. Like we're looking at one in Nashville, and I'm like, okay, I think we might be able to do this one because we have Jack and his team right there to like gobble it.
The exact same experience we had. Like we had so many opportunities to buy in Dallas, but we didn't have a really a kind of like a platform or real operation there, and so we just kept saying no. But now Yeah, now you do green green light, baby.
Green light, all funds go. The wire's gonna clear, I promise, guys. Yeah, this was awesome. Thanks for coming on today. This was uh this was pretty cool. People want to hear more about you, more about alarm masters, aside from the podcast. Where else can they find you? LinkedIn, your personal blog, your personal blog on YouTube, your only fans linked.
Oh, my Only Dads. Umly Dads. Yeah. Um, you can find me on LinkedIn, on X. Um, and then yeah, the podcast is at entryandexit.co.
Amazing. Thanks for coming on today, Steven.
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