Owned and Operated #110 - Avoid These Mistakes and Save Money with Your Home Service Business

Learn From Their Mistakes.
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John and Jack share their top three business mistakes, emphasizing lessons learned from these expensive errors. John highlights missteps like adopting a cost-saving-first philosophy by relocating the entire call center operations to the Philippines, expanding to multiple locations prematurely, and appointing the wrong person for crucial accounting roles. Meanwhile, Jack discusses his mistakes, including inadequate due diligence in acquisitions, underestimating the value of customer lists, and flaws in hiring practices. Both hosts explore how these mistakes, often driven by short-term cost-saving measures, resulted in significant financial losses and operational challenges.

Episode Hosts: 🎤
John Wilson: @WilsonCompanies on Twitter
Jack Carr: @TheHVACJack on Twitter

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John Wilson, CEO of Wilson Companies

Jack Carr, CEO of Rapid HVAC

Owned and Operated Episode #110 Transcript

John Wilson: I'm John Wilson. Welcome to Owned and Operated. Twice a week, we talk about home service businesses, and if you're a home service entrepreneur, then this is going to be the show for you. We talk about our own business in residential, plumbing, HVAC, and electric, and we also talk about business models that we just find interesting.

Let's get into it.

Hey, this episode is sponsored by Service Scalers. So Service Scalers is actually a brand that I've used personally with our companies for a little bit over a year now. They've helped us manage our digital advertising. Frankly, they did a lot better than our last agency. Leads went through the roof and cost per click went way down.

Check out Service Scalers if you're a plumbing, HVAC, or electrical home service company. That's what they knock out of the park and they did a great job for me.

Welcome back to Owned and Operated. Today on Owned and Operated, Jack and I share, our three biggest mistakes, each. Mine are super embarrassing and I feel that I'm being held at gunpoint telling them, so I'm sure that you will enjoy them. Thanks for tuning in.

Welcome back to Owned and Operated.

Jack Carr: What's going on.

John Wilson: Dude, I'm ready to humiliate myself.

Jack Carr: Yeah. So I'm really excited about this episode. This one stems because I have made a lot of mistakes specifically around acquisitions, but also in business. We've been around a lot. Shorter timeframe than you. So today's question is top three mistakes you've made in your business. What do you think? Do you only have three?

John Wilson: Yeah. Yeah. I only have.

Jack Carr: Only have three.

John Wilson: Only have three.

Jack Carr: If you want to think about it, I can start cause I know mine are

John Wilson: I've got mine reared up.

Jack Carr: So, no, we're going with you then first.

John Wilson: All right. Okay. So top three mistakes. First one was a cost saving first philosophy. And the way that manifested was in 2020, we moved our entire call center to the Philippines.

No, I actually think that we have an episode on this, like one of our first episodes and I don't remember if we took it down or not, but we talked about that, about like, yeah, we just did this and it was one of the worst mistakes we ever made. We never developed the skill to run a real call center and like basically net result was we tried to, which is also the second biggest mistake, but like we put cost savings first and because of that we did reputational harm. Like customers had a tough time dealing with our call center, customer service went down, we got a lot of complaints, and we probably lost millions of dollars over the course of a few years in revenue in order to save grand or 100 grand.

Jack Carr: How long did you run it for overseas?

John Wilson: It took us a few years to unwind it, is the problem. Yeah, it took us a couple years to unwind it.

Jack Carr: You have to rehire everyone back to

John Wilson: You had to rehire everyone, you had to restart the process over, you had to bring on a call center manager. Like, it took a lot of time to undo. It was very easy and quick to do.

You just fire up a hundred people and hire remote people. Like, that's the quickest thing in the world. You can do that in literally a day. It's not hard. It's much more challenging to re in house it when you're not used to having that capability in house.

Easily top three mistake. Next one was multi location too soon.

So, that was just a huge error. A lot of that was, You know, I'm just an uneducated man, Jack. And, when we were a small company, smaller company, we still are a small business, but when we were a small company, I thought that we were, like, hitting, The cap on our available market and we were like two and a half three million dollars Which like obviously like I think is nonsensical now and in the same rough market We're gonna do like a hundred million in the next over the next like however many however much time so like ridiculous thought and we I was trying to figure out like how to continue growing and how to keep doing the thing because I was obsessed with Crossing five million dollars and I just couldn't see a path to doing that When really all I had to do was like figure out how to drive more leads.

So the way I thought to solve it was multi location So we ran multi location for like three years. Huge mistake. And like to the tune of tens of millions of dollars of like revenue

Jack Carr: When you say run multiple locations, what do you mean? Like you started up a second facility to try and grab market share

John Wilson: Started up a second facility, kept second facilities when we bought businesses instead of like immediately rolling it in. Tried to figure out multi location unnecessarily. So we did that for three years, from 2020 to 2023. And like we added complexity, we added drive time, we lost focus. Like it was just a huge waste of time.

And I talk about this a lot on the show, or at least in real life of like many of the things that I say, Hey, we're doing this. Hey, we just started this. Hey, we're trying this. It's only happened in the last six months. And the reason it's been six months is because six months ago is when we all moved into one building. So, my business is exploding because we started running one location. And all I can think about is, oh my god,

Jack Carr: That's also all I think about.

John Wilson: What would have happened if I did that three years ago. And, like, we would literally be tens of millions of dollars ahead. Which is like, that's a tough nut to swallow.

Cause the difference between this year and last year in revenue is gonna be above 10 million dollars gain this year. And that's just one year. Like, would we be at 35 or 40 this year? Like, drives me nuts. So multi location. And I see, I talk to a lot of people that all want to do it. And it's just like, it's a huge mistake.

It's going to hold you back, and it's completely unnecessary. Like, just have your guys drive. So that was mistake number two. And then the other big one, and this is back to cheap, of like, I was trying to save money, I continually put the wrong person in charge of accounting. That was a huge mistake that I also see other people make.

And, like, you could come up with any number of reasons but like, that has cost me dearly over the years. And the number is hard to come up with but I'm sure that is also in the millions.

Jack Carr: You've also heard the horror stories of other people who've done something similar and then it goes 10 times worse embezzlement and, or just running a company into the ground.

I'm like not even trying so those are good.

John Wilson: Each of those mistakes costing in the millions and the humbling thing about each of those mistakes, Especially costing the amount of money that they did, is they were decisions that I made at your size.

Jack Carr: I have learned from you not to make those mistakes. So like we have multiple locations and we're like as fast as I can. I am looking at, like, I looked at real estate today to lease cause we're at 3, 000 square feet as our main like 2, 500 3, 000 as our main and I'm going we are already too small We have three desks per office

We could oh just you know, run call center.

I have a different location No one location, one location and be able to eat growth for a little while.

John Wilson: If you like what we talk about on our social media, on Twitter, on this podcast, then you should be signed up for our newsletter. Go to ownedandoperated. com where every Friday we break down our business, we break down insights, things we're learning, things we're working on, and it's good stuff. Check it out, ownedandoperated. com.

Jack Carr: Question for you. So do you still use overseas talent though for call center? Just differing positions over time after

John Wilson: Yeah, Yeah. We still have overseas talent.

Jack Carr: But you don't use a call center. You've just like made them like individual hires your call center.

Correct. yeah, Cause they're,

John Wilson: They're part of the team.

No use overseas talent. Like a hundred percent. We have like, 10 folks overseas and we're getting ready to bring on, I think, 20 more this year in call center roles. What I think was the issue was making that one, we weren't discerning enough about it, and we were looking at it as a cost savings, and we just like, we stopped looking at like, enhancing the call center.

So it was more than that, it was like negligence on our part of like, out of sight, out of mind with call center. And we basically, saw call center as something that we could offload, which now, like, the way I think about, different parts of our business is like, If something is a real needle mover like one of the most critical parts of your business you in house the hell out of that So like marketing is like the thing that gets us to 100 million dollars I need every single capability in house.

Like I can't bring on agencies and be like grow us that doesn't make any sense call center is the same thing

Jack Carr: Yeah, that makes sense. And then the second one was location, third one was accounting. Those are really good,

John Wilson: Yeah, I lost millions doing each one each and every one of those I really wish that I didn't have more multi million dollar mistakes, but like, I know that I do. It's

Jack Carr: It happens. It just, you know, happens.


John Wilson: Huh.

Jack Carr: It doesn't just happen. It just only happens to a select few people who are grinding and achieving big. So, congrats to you. Our big three. First big mistake was in acquisitions. It was improper due diligence as a cost savings feature. So rather than bringing in people for full due diligence and pushing on lawyers, it's a little bit of, you don't know what you don't know, but we didn't have the correct verbiage.

And the reason that I had to be an HVAC tech from the day one was because of errors and due diligence. In the sense of there was no non compete clause to the extent that it needed to be and non solicitation clause. And so it allowed for loopholes in the system. And that's where I'll leave that one.

The second one is also with the due diligence and it's making sure that you are getting a better understanding of the individual's customer list. I didn't understand the importance of the customer list. I thought it was more of a lead generation business like this brings in leads But the customer list actually is almost more valuable even if they're not members because you can go back and outbound them They've used your service before the customer list is more important than I think most people realize And so, I spent, didn't spend enough time on the customer list, and what we found was in the CRM system, the way that they entered it in showed a higher number, but certain entries had multiple entries.

So we overpaid for a customer list that had, you know, Jack Carr, and then Jack Carr HVAC, Jack Carr, HVAC 2, and it was all the same person that also screwed us up on transition into service Titan too. Very difficult to weed all that out. Their data team did a pretty good job though. Biggest mistake.

Number three, that's a hard one. I mean, we haven't been around to make like million dollar mistakes. So you set the bar really high.

John Wilson: Dude, Jack, I hate to tell you, but you're actively making them right now.

Jack Carr: I know that's the worst person to look back going. There it is.

John Wilson: Yep, there it is. Yeah, it's like, people started telling me that I needed, the role that I needed in accounting at like 7 million. And I didn't, want to fork over the money. And, huge mistake.

Jack Carr: Yeah, I think our third largest mistake is probably around hiring out of just wanting to hire people versus really focusing and looking at us and saying, Hey, why aren't we able to hire the people we want? I mean, it's 2022, but. That shouldn't have been an excuse. Like that was our excuse saying, Hey, and we probably missed a full year of, revenue generation at where we should be because we weren't able to fully hire techs because we were looking at ourself or we were looking outward saying 2022, the market's crazy.

We're not going to pay that. We should have just paid it one. We should have had the correct pay structure in place to be able to pay for people. And then two said, well, what aren't we offering as a reason? You know, this is the market, whether we like it or not, we're not going to get top tier techs trying to skimp and that's it.

So, due diligence on hiring make sure that you pay your lawyers and a due diligence person correctly So that you can actually get good due diligence. Two, make sure customer lists on acquisitions are as robust as they say they are Or you are going to overpay and then three making sure that Or messed up on looking and saying the world is the problem for why I can't hire and the market's a problem versus I and the company and the problem, something internally is at fault.


John Wilson: Yeah, these were good. And I think this combined with our last episode of really just like most of the mistakes I've made and sounds like you too have been from the perspective of cost savings. And I will submit that most of the mistakes that I know other people make. Are also from cost savings.

The biggest reason people don't choose ServiceTitan is cost savings. like, there is no other option. But, it's a cost savings, so they, you know, find another option.

Jack Carr: That's interesting. I think I might need to like go back into like a meditative state and go, what am I doing? Cost saving zone. Cause instantly, as you say that I'm going. I'm not wrapping any of my vans right now. How much am I losing in marketing potential by not wrapping my vans? Versus like just spend it do it

John Wilson: I'm obviously not irresponsibly but like maybe there's like a matrix of like urgent and important That type of matrix to the business of like is this going to move the needle because there are some things That there's no business Like, you have no business overspending on.

So like, my philosophy on like warehouse is one of my examples there. Like, if I ran the best plumbing HVC warehouse in the world, it would not grow my business a percentage point. And that would be if I was world class, like, fucking Jeff Bezos

Jack Carr: 100 million dollar mistake right there.

John Wilson: Yeah, that would be a hundred million dollar mistake trying to figure that out.

Jack Carr: I meant the other way. I said you're making it right now.

John Wilson: Oh, yeah. I mean, maybe.

Jack Carr: We'll see in six months you, when you come back on and say, this was a mistake.

No, I'm just kidding. I think you've actually thought through that one very well.

John Wilson: Yeah, I think like, How urgent and important is it to the business? Because what I don't want people to think between this episode and the last one is like, Oh, I just need to overpay for everything.

And that, I don't think, yeah, that's not what I'm saying at all. It's just like, what are the things that are gonna move the business the most? Or what are the things that are gonna hold the business back the most? Like, having an accounting department that works is gonna hold the business back.

Jack Carr: I think you said it best last episode. It was like, is this holding the business back in a capacity standpoint or is it, am I not spending something that's going to generate revenue, huge amounts of revenue. And so that's how we need to think about it. And so that's why I'm going back in my mind going, what are we cost savings on?

And like you said, service time is a great one. That's a perfect example. It is brutally painful to pay that service Titan bill every month. But when I can see which of my techs is better at selling water heaters,

John Wilson: Yep.

Jack Carr: And then put that good tech on the water heater job and have everything I need in a singular platform.

Hmm. Worth it. I mean, we had this conversation at the workshop quite a few times too. It was like, we know it's expensive, but capabilities in the long term. Yes, it doesn't help you out at 2 million, but it helps you out at 5. It helps you out at 10 and then it helps you out at

John Wilson: It helps you get there. and like we have to do the same thing of like buildings was another one like building people look at as a cost saving but like it's not and that's the wrong way to look at it. Like that'll be a mistake that somebody will list on a podcast at some point.

there's a lot like what's going to move the needle. Does this drive revenue or does this reduce constraint and like service Titan reduces constraint

So like worth the dollars

Jack Carr: Sweet.

John Wilson: Good if you like what you heard Give us a five star wherever you listen to podcasts it makes us You know helps other people discover us and really get to you know hear Jack and John on sure you check out owned and operated comm we have a newsletter which is dope.

We break out more stuff than this. I don't know if we're linking to our YouTube a bunch, but we're on the tube. And make sure you check out the next workshop, which is June 4th through the 6th. And our first one was amazing, so, we think the next one is going to be even better.

Jack Carr: And we're selling tickets for that currently, correct John?

John Wilson: Yeah, com.

Jack Carr: So, take a look at that. Get your reservers spot, we only have 30 spots a

I don't

John Wilson: even remember how many, yeah, I think about a third is already

Jack Carr: Already booked. So, Huge win.

John Wilson: Cool. Alright. Thanks, everyone.

Thanks for tuning in to Owned and Operated, the podcast for home service entrepreneurs. If you enjoyed today's episode, please hit the like button and subscribe to the podcast. If you have any questions or topics you'd like us to cover, feel free to reach out. You can find me on Twitter at at Wilson companies.

I'll see you next time.

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