Owned and Operated #84 - Breaking $5 Million in Your Business

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John shares his strategy for scaling your home service business to reach the $5 million mark. Picture this: an exceptional team, a steady lead flow, and a business rhythm that just clicks. John gets straight to the point, offering practical advice like keeping a close eye on personal spending to reinvest in your business. But hitting the $5 million mark is more than just a number or making money. It's a reflection of your company's growth and the real impact it's making. Stick around as John talks about the strategies to reach this goal and why it's worth aiming for.

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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 #84 Transcript

If you're a home service entrepreneur that's just starting out, or is early on in the journey, and you haven't broken the five million dollar revenue mark, we've got an event for you. This spring in Cleveland, March 19th to the 21st, we're hosting an event at my office. It's going to be awesome. Honestly, some of the most impactful visits of my career have been visits to companies that were larger than we were, that we could take lessons from, and see how they're doing stuff.

Like get a behind the scenes look, how are they structuring warehouse? How are they thinking about call center? Can I talk to their managers? Can I understand what their KPIs are? We're going to dive into all that stuff. We are here to help people get above 5 million in revenue. So join us in Akron, Ohio, March 19th to the 21st for a breaking 5 million event.

Love to see you there. Details are owned and operated dot com.

Jack and I talk a lot about getting to your first 5 million in your home service company here on the show and in the newsletter and on our other socials because 5 million is really the big number. So 5 million is that big number where you can finally start to really meaningfully reinvest and you can take a bigger step back from the business.

So at $5 million, you probably have two, maybe three, four managers. You have enough lead gen to sustain a real company, and you have the flywheel that we talk about running on the regular. Today I just wanted to give a quick, here's how to think about getting to 5 million as fast as you can. 'cause that's really the big number.

We do have a session on this in March in Ohio at my headquarters. So check out owned and operated.com. If you wanna learn more about that or just continue to read the newsletter and listen to the podcast you're gonna get a lot of good stuff. Depending on where you're starting, getting to 5 million is obviously easier or harder and probably the most important way that you can personally control how fast you scale your business is what do your personal expenses look like? Now, most business owners don't wanna talk to me about that, or they don't wanna think about that, or, you know, whatever. But I'll walk into businesses that the business is doing 3 million bucks and the owner's driving a Beamer and his wife's in a rover right $3 million. $3 million is not a lot of money. it's a lot. If you came from nothing, right? So 3 million bucks. If you were a technician and you're starting a business You were working in the field or it's your first thing and you're like, man, 3 million bucks, you know, heck yeah. That's so much money.

Until you realize that, of that $3 million, a million of it's payroll. And probably another 500,000 of it is gonna be materials. Then you have marketing, then you have rent, then you have vans, and hey, you wanna keep growing. So guess what? That profit that you made most of that, instead of buying your little Beamer or your rover, should be going back into your business.

So the biggest thing that you can be focusing on when you're under 5 million is the drag of your personal expenses. Now, how much money do you make from the business? How much money do you cost the business? 'cause every dollar that you pull out of that business, that does not go towards growing that business, but instead fueling an irrelevant lifestyle is holding your business back.

So you are in the way. That is the single most impactful thing that you can do when your business is small. Reduce your living expenses live conservatively. Don't make business decisions because of your personal life. More common than you think. Guys will buy planes. They'll buy beamers, they'll buy rovers. They'll buy vacation houses, and their business does 2 million bucks.

Okay? So you just saved all that money. You're not paying 20 grand a month or a year in car payments. You don't have the vacation house. You didn't buy the plane. So now you get to take that extra 50 to $60,000 and you get to reinvest it.

That's a big deal. Like 50 to 60 grand on a $3 million business. That's enough to be investing into marketing. That's another 2% towards marketing, which means you get to grow faster. So the biggest things that I see companies struggle with under that 5 million is frontline leadership. Who's gonna be managing the techs and are they sales focused? And how often are we generating leads? So I'll talk to small companies and let's say they're like two to $4 million a year in revenue. Good sized little company, and they'll say, oh my God, we're so slow today. I'm like, oh wow, okay.

Alright. Cool, let's talk about that. Uh, What are you doing for lead gen? How much are you spending on marketing? Like, how are you thinking about that? Are you outbounding? Are you using LSA? Are you doing PPC? Did you partner up with service scalers? What are the different things that you've done to drive lead gen?

And then we find out that, oh no, I had this one agency burn me one time, so now I spend . 1% of revenue on marketing or 2% of revenue on marketing. That is not possible. People will see me or they'll see a much more extreme example. They'll see Chris Hoffman or they'll see a much larger business and like we spend about four and a half, 5% on marketing.

That's because we are a larger business that has other ways to drive leads. As a smaller business, you cannot use me as an example. You cannot use Chris Hoffman as an example who is running a business five times my size. You need to be spending 10 to 12% a month on new lead generation you are tripping over dimes.

You're tripping over dollars to get to dimes, so you're focusing on the wrong thing. You're trying to save a buck, but by saving a buck, your guys don't run at full capacity. And because they don't run at full capacity, you don't get full revenue and your slow periods are worse, and getting that flywheel going is the next most important thing that you can be doing.

So the flywheel is your guys are always busy, which means they're always selling stuff, which means they're always installing stuff, which means you can always recruit, which means you can always market. And that's the flywheel. So you market, you sell, you install, you recruit, you market, you sell, you install, you recruit.

That is the continuous flywheel that you need to get your business on when you start to really hit growth curve, it's because that flywheel is working the way that you need it to. You're driving a ton of leads. You're able to continue to add great quality talent. So that way if somebody leaves or if you have to fire somebody you're not hurting.

But you're also able to net grow with good people. You're able to keep investing in the company because you're continuing to grow and revenue's moving in the right direction. So that's the second most important one, is getting your flywheel going. And most of the time, the biggest failure that I see is just spending enough on marketing, right?

So if you are slow and you're not spending 10% of revenue on marketing, what are you doing? Like literally, what are you doing? Because you can take that up to 10% and your business needs it. So those are the two most important things that I see between getting a business from that one to 2 million, up to five and beyond is what's the drag?

How much do you cost your business because all the money that you are costing can't go towards marketing, which is the second one, which, how much are you spending on marketing so that you can keep the flywheel going and continue to grow? So that's how you get past 5 million. If you wanna learn more about this, we talk about it every week in our newsletter.

We talk about it on the podcast, and we also have that event in March. So check out owned and operated.com. We will break this out in greater detail.

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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