Owned and Operated #79 - Key Roles for Growth from 3 to 20 Million

The Roles Needed To Grow.
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Join John and Jack in this episode as they discuss the essential core of any business: support staff and how to grow your business in that 3 to 20 million dollar range. Prepare to learn about smart hiring in accounting and why it's not just about filling seats but finding the perfect fit for your growing venture. From proactive recruitment strategies to the real deal about theft prevention, they share practical tips for handling business growth like pros. This episode acts as a valuable roadmap for business owners. Tune in as they highlight often overlooked yet essential roles that can lead to a thriving future in your business journey.

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

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John Wilson, CEO of Wilson Companies
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‍Jack Carr, CEO of Rapid HVAC
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Owned and Operated Episode #79 Transcript

Today on Owned and Operated, Jack and I talk about support staff inside your business. What does your accounting team look like as you grow from 3, 5, 10 to 20 million? How are you thinking about hiring a head of revenue? And how do you get ahead of these big hires that will hold your business back the longer you wait?

It's a great episode, and what I hope this episode does is it gives people a little bit of a roadmap as they're thinking over the next couple years of their business and think about roles that maybe they didn't even think about. You know, a dangerous owner is an owner that doesn't know he's gonna need a strong accounting team in a year.

So, thanks for tuning in, and make sure you give us five stars.

Welcome back to Owned and Operated.

Jack Carr: What's going on, John?

John Wilson: Living the dream, dude. Getting ready for Christmas. Today was our first snowfall of the season. When does it even start snowing where you are? Or does it snow?

Jack Carr: Last year at this time we were getting ready for those negative three temperatures. This year it's 61 and sunny. So absolutely terrible.

John Wilson: It is the worst ever. Okay, yeah, so we got like 6 inches today. My kids and I were making snowmen in the backyard right after work. That was a lot of fun. And all I'm thinking about is skiing. That's it. If I'm looking at you, if I'm talking to you, if I'm texting you, if I'm emailing, I need you to know that from now to March All I'm thinking about is skiing.

That's it. So that's pretty much, pretty much I'm at.

Jack Carr: Yeah, man that's probably what I miss most. As many of you know, I'm from the west coast and my wife is from Lake Tahoe. And we met, and we love skiing. That's all we did when we were dating. And then we'd go on these big 14 day trips around to, like, Alta, Snowbird, Utah, Colorado, Aspen. And we just, I miss it.

There's nothing out this way. You can't go skiing in the South. It's just not the same.

John Wilson: I'm going to Breck I think in a couple weeks, you're welcome to go. Tickets are like 100 or something ridiculously cheap to fly out there.

Jack Carr: Yeah, that's not bad.

John Wilson: Let's do it. Alright. Yeah. Good snow, weather's good. Prepping for the final weeks of the year. How about you? What you got going?

Jack Carr: Typically, I'm guessing this week is like Thanksgiving week. Is that how you feel going into the week before Christmas?

John Wilson: So the week before Christmas is usually okay. It gets a little bit slower. You gotta work hard. You gotta work hard to keep that board full. You have to work hard to keep the board full next week. That week between New Year's and Christmas, it's a tough week. We're really determined to hit it as hard as we can though, and still maximize.

Jack Carr: Yeah. That's all you can do. We came into the week a little bit underprepared, which I looked at the board and went, Whoa, this is not where we want to be. It picked up though quite a bit towards the end of the day and we filled out the rest of this week. It was just not what I expected.

Like I said it's been 61. It's mild. It's ridiculous. It needs to get cold. Normally we were at teens last year and we haven't even hit teens yet.

John Wilson: Yeah, that is tough. HVAC It, you know, weather enhanced. There's still stuff you can do. You still have levers to pull, but weather obviously impacts it quite a bit.

Jack Carr: But the cool part though, is I actually get to see though, like the plumbing side is actually picked up to a point where it's almost, I wouldn't say it's self sustaining, but it's like chugging along. And I see why these people love plumbing, right? So we have one plumber. And he's booked out all week.

Like I don't have to touch him. I don't to look at him. His schedule is just steady. And I'm actually thinking the other thing is like we got this week cause he's got some big jobs. Like I don't, he's not like a remodel, but it's just a big job and it's going to take two or three days with him.

And I'm thinking, man, I'm double booking him during that time. Like we have too much you. And so I get why everyone loves plumbing and how it kinda offsets the HVAC slumps.

John Wilson: I've heard there's a lot of different phrases for this. I think you shared one on the last episode but HVAC is like, the hottest girl you've ever met, but she's on crack. So when it's good, good. And when it's bad, it's really bad. So that's HVAC. I basically agree with that. Whereas like, yeah, plumbing is pretty steady. you'll have these like On a revenue to tech basis, HVAC just blows the other trades out of the water. But, if there's nothing going on, it just sucks up cash. you really have to be careful about that as you think about it. But yeah, plumbing's great. We like it. We accidentally made plumbing the base of our company. And HVAC will probably pass plumbing and total revenue in the next 2 3 years. Just because it is so much. Once HVAC gets rolling and that ball gets going, I can understand how HVAC becomes the Goliath.

Because the tickets are so big, you don't need that many calls to drive a ton of revenue. It's easy to see how it happens. I think uh, probably 2025, 2026 HVAC will pass plumbing. Which would be big for us, because plumbing currently is two and a half times HVAC.

Jack Carr: No, it's definitely, you can see how the scale of multiple units and as you can learn how to really pull those levers to get unit, unit, unit, unit, unit. It adds up real quick, whereas in, plumbing, if you're doing a re pipe or something, you just do one re pipe or

John Wilson: It's the same thing. It's like the flywheel in general. Maybe that's an episode we make sometime, but like, we talked about it last time. Your service guys got stuck an install, and because they got stuck on an install, they couldn't do service, which meant your salespeople didn't get continuous leads, and like, that's the flywheel.

And, what eventually happens is that flywheel just really starts turning and churning, which is awesome. And I I feel like we've just gotten there in the last year. Where now most of our job is just like keeping the flywheel going which is mainly just dumping leads into service because if we can keep service full, then service will keep sales full, which will keep install full and it just goes round and round. And that's just like staffing, right? Like, what's the ratios of staffing? How do you think about your sales guys? How do you think about your install capacity? Because you don't want to overstock sales and then not have enough install guys to keep up with it because then you'll run up with the exact problem that you had which is you have to, you know, people are without heat so you have to like, take your service guys and put them into install which then slows it all down.

So you have to like, try to grow them in tandem together or within reason.

Jack Carr: We're finding a really good sub crew that can come in. I know there's some groups out there that do get slow on kind of new construction work. There's very few and far between, but I know one or two that have five or six crews of guys who could really step in needed it.

But man, it's hard to pull food from the techs love it, right? Service guys love it because it's good money. We're on that flat rate, so it's, like 800 for a day for just throwing a package in it. It's hard to turn that down.

John Wilson: 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.

Well today we were going to talk about something a little bit different Jack and I are in a group chat together and a conversation came up about accounting staff like literally who's in your accounting team what's their role, what do they do, and I think we realized that we really haven't done an infrastructure staffing episode we've obviously talked about call center, we've talked about managers, we talked about recruitment too. We haven't really talked about the staff and what that looks like as a business grows and I think that really surprising for me learning it and we're still actively learning it and it was a conversation earlier because it seems to be about 15 million.

That seems to be the number that this really starts to take effect but you can grow your business really fast up to a certain point and then the business will literally break on itself because there's this time in your business where, like, your people literally can't sell more stuff. Most of the time, you take a small company, you add incentives, you add flat rate, you add marketing, you add all these things to grow as fast you can, and you hit a really big wall. There's always these plateaus and the 15 million plateaus specifically, and there's other plateaus further down, and they're all roughly the same thing, like, what's the infrastructure?

At 3 million, that first big plateau is uh, usually gonna be recruitment and field management so that's the big plateau that you have to cross. And then usually starting to market but that becomes like bigger later on. 5 million is now you have multiple managers. You have to separate dispatch call center .That's the big infrastructure play that you have there. 10 million is HR and accounting. Like those are the big things. Like have a lot of people. Payroll might be a full time job for somebody.

Jack Carr: Not to mention, if you didn't line out your 3 million and your 5 million, now those start to become issues, bigger issues that j ust double to down on themselves.

John Wilson: Yeah. it's like, you know, everyone, myself included, gets so pumped up to keep driving revenue and keep driving revenue and keep driving revenue. But hey, the fact that you didn't invest in that payroll that's coordinator when you were at like 40 or 50 employees .Payroll was like becoming a mostly a full time job. Now, you have guys quitting that used to be your highest performers because they don't trust their paychecks anymore, because you're doing a bad job. Like, whoever is doing payroll, right? And everyone's got some sort of commission structure, so payroll's really complicated or you keep hiring these awesome guys to perform work, or sell a ton of work, and yeah, you don't have payroll, you don't have HR, so their benefits suck.

You don't have a fleet manager, so trucks go down and you lose five grand a day because you don't, you know, it's just you, like, trying to throw together this system of how to do all this stuff. It's company breaking stuff when you get big enough where like the investments that you're choosing not to make now so that you can go invest into something else.

Maybe it's marketing. Maybe it's a vacation house. I have no idea are going to hold you back later so that was this conversation we had earlier, I think, do you want to start at the bottom or do you want to start at the top?

Jack Carr: Let's start at the bottom. So accounting specifically, I mean, I feel like when you start, you have a bunch of different positions. You have AR, you have AP uh, you have. payroll. You have

John Wilson: Just general bookkeeping,

Jack Carr: bookkeeping, you have a bookkeeping

John Wilson: Budgeting, projections, reporting

Jack Carr: And so all of that falls usually on the owner or a mix of the owner and the CSR dispatcher front lady, Bertha, who's been there for 15 years.

John Wilson: I see a lot of, like, full time accountants even cashing checks right, or running credit cards, just cash management. We'll see that. We'll see a lot of people use some of the vendors on System 6 Chris, they do a good job. Patrick at AppleTree, they do a good job. They come in and they're like outsourced bookkeeping basically so they'll take some of the load off your hands but they're not gonna deposit checks. not manage your AP. They're not gonna manage your AR

Jack Carr: Yeah, that's what we do currently. We have a bookkeeper slash CPA who we pay monthly to manage all of the finances, but it's fairly minimal other than creating PNL and doing stuff for taxes, which is usually driven by myself. You know, you're getting very little value from it versus having somebody in house that this full time job is to be the controller of the CPA in house or whatever you need.

John Wilson: Yeah, I would say there's like five distinct roles inside an accounting department . Money in, money out, reporting and daily journal entries. And those are like the five distinct things that need be inside an accounting department and as you're growing your accounting department from maybe nothing.

Maybe it's like the CSR or office manager person doing some of that stuff maybe that plus a external vendor. You just have think of those five things when you're thinking about new hires and really what's going to be the like biggest bang for your buck right? It's not complicated so if you're a b2b business and you have a big uh Ar on your balance sheet then probably like somebody to manage credit full time. Heck. Yeah, that sounds like a really good thing to do.

Jack Carr: When looking at businesses for like bolt on acquisitions. That's what we see a lot actually is we see these three million dollar companies like 1. 5 to 3 million dollar companies .They do maybe 50 percent commercial, 15 percent residential and almost every single one of them has an AR issue. Every single one because they're just too small to have an in house AR person but they're big enough that they need an AR person. I was just looking at one that had over 300,000 on the books. For a $3 million company, 10% of its gross revenue was sitting a 60 day plus

John Wilson: I think this whole conversation like you just summed up the infrastructure conversation which is, they have the problems that they need it, they can't afford it. And that can sum up everything when we talk about, cause like recruitment was the same conversation.

Like hey, you should get a recruiter 3 million in revenue. And like anyone 3 million in revenue is trying to punch me face cause I think that's insane. And it's like, I get that seems insane. But like, you're trying to grow, and to do that you need people. And like, you need a constant supply of them. I think the infrastructure problem is hiring before revenue, and trying to hire, like, you can't afford this role now. But can you afford it in 90 days, after whatever it is that they're gonna do creates enough of an impact in the rest of your organization that your other people focus. So for us maybe AR mea ns that your managers, who normally would have been chasing down that AR, can now focus on better operations.

Which means that they can each take on one to two or three more field techs apiece, which just increased your output significantly, so that's how we think all of our infrastructure hires is what does the next six months look like what do we need? And then how is that going to reduce burden and continue to tighten up people inside their lanes.

Jack Carr: Yeah. it's a great conversation on, getting rid of the generalists, which I find interesting, right? 'cause when you're small, you have a lot of generalists wearing big hats. And then soon, it's just cutting their roles and responsibilities down to their lane only. And finding, the people who do best at whatever the job is.

John Wilson: Yeah. So accounting specifically. It's really whatever the highest and best need is so you know, you still need to do those five things if you have a big AR in your balance sheet, then yeah, probably an AR person. It's not an overly complicated hire. They don't need an accounting background.

You can just go hire someone that's willing to have tough conversations with people. Cause that's mostly what it is. AP could be next. It was for us. It's just that we have enough transactions a day that somebody has to put that all together. Somebody has to make sure that, yeah, we ordered that.

That was according to our PO system. It gets classified into this department. Uh, we're gonna job cost it. We're gonna time it up for payment. We're gonna communicate with vendors when they ask when the next payment's coming. For us, that's a full time job, more than a full time job. We have a lot of vendors.

So that became the next big pain point eventually, as the business grows, so like, maybe in this range now we're talking 7 to 10 million, before that, what most people can do just fine with, let's say we're 5 million dollars and you have some AR. Like a staff accountant and an AR clerk is probably going to be enough.

Cause that AR clerk can keep your AR good, they can help with daily cash reconciliations, they can deposit checks, they can handle the daily credit card and then your staff accountant can handle money out. And you pretty much always want to separate those two, right? Money out from money in As soon as you can, as soon as is reasonable for the size of your business, you should separate those two functions.

Just for good risk management. Yeah. But yeah, if you're 5 million bucks then yeah, that's a good measurement. If you're 2 to 3 million bucks, maybe it's just one staff accountant, and that staff accountant has to wear a lot of different hats.

They're doing journal entries, they're doing deposits, they're managing credit, and they're probably not doing any of it very well because they're doing five very different jobs but, that's the size of the business so that's what you gotta do.

Jack Carr: Okay. So now you're hitting that 5 million mark you said, or the 7 million mark, what's that next position? You've gotten about two or three. Is it time to start bringing in someone who's managing them or is the owner still managing each individual person?

What does that look like?

John Wilson: Yeah, the owner's probably still gonna be managing them until you really get a department head, which is usually a controller. A controller's a pretty big hire for most small businesses. It's an expensive hire. Like base is six figures. It's an important hire. You're entrusting them with a lot.

And I didn't used to think this. I think this now. I think ten million is about the time you want to be thinking about a controller or earlier if you can. Cause the sooner you do it the better. The sooner you basically professionalize your accounting department, the better because what ends up happening is accounting, as the business grows it all interlocks tighter, and every department really has to pull their own weight. And accounting becomes a department that will hold back the rest of your organization in a number of ways. So maybe, simply, if you're not managing credit very well, like, cash is gonna hold back the organization. Like, you don't have the cash flow. You're not managing the credit that you extended to whoever.

So that's obviously a big one. The reporting needs that, like, my business needs now on a daily or weekly basis is very different than what we needed five years ago. And putting in senior leadership into accounting as soon as you can helps get that stable and it also just prevents mistakes.

Like, we've spent a ton of money over the last year and a half and are still spending a ton of money fixing all the mistakes that were done in my books because I kept trying to hire junior people to do a senior person's job. So like staff accountants to do a controller's job. So like we've spent well multiples of the staff accountant salaries Trying to like having people clean up what they've done inside the books So I wish we would have brought a controller at 10 million

Jack Carr: That's interesting. so, at 10 million, you have your controller, you have their team, they're being managed.

John Wilson: Our stack at tem million was three people. We're now at like four and a half Inside accounting, so at 10 million it was like it should be maybe an AR, AP, and a controller, and then it depends on where you put payroll so I wasn't really counting payroll in there. That was inside our HR department, but really, most people have payroll inside accounting, so it'd be a fourth person. become like a full time job relatively quickly after 60, 70 employees.

Jack Carr: Yeah, definitely. And now that you've grown, you've double, tripled, whatever from that 10 million mark, has that department, just out of curiosity, grown much more or was it are those people, do they have enough on their plates that they're able to just keep that same about five person stack? Or did you have to double it, triple it, it? Is there efficiency of scale? What does that look

like?

John Wilson: infrastructure support staff is just like any other part of the business. It's you know, you growth comes in steps and that's what makes this current plateau breaking painful, because you have to hire ahead of revenue. You have to grow in the step. Like, if revenue is right here, this is the step, and then you go here, and then, revenue flows past it. We were in the phase where we were in investment, so we were investing ahead of revenue, and I suspect a lot of your base, I'll probably try to bring this back down to like two to three million because I don't want it to be not relevant to a lot of listeners.

Jack Carr: Yeah, it was more just a curiosity at that point. And how do you make those decisions? Because I think those decisions are still relevant at the two to three million or even more so, right?

John Wilson: It becomes more of the same. So like you think of it like a field team, Hey, I'm going to hire a service manager and I'm going to hire a service tech and I'm going to hire install tech and I'm going to hire an install manager and you keep going in that way.

And accounting or the infrastructure teams in general are very similar or call center's another one. So like, hey, now we have multiple people on credit. And maybe, you handle this type of account, you handle this type of account. The accountabilities are a little bit different, what you're expecting to collect.

You divide up AP. So maybe you're the job costing person. You're the bagging and tagging person. You're the person that cuts the checks. So you, take those roles and you isolate them even further down because like AP really, that's still a very generalistic role. I know it doesn't sound like that if you're looking at it from the perspective of like, I have a bookkeeper that does everything, but accounts payable in and of itself, is five roles.

Accounting is five roles, and accounts payable is five roles, and AR is probably five roles. Like, you just keep separating it down and down until it's, everyone's inside their very niche specialty. AR, maybe it's like you're the credit person, and all you do is review people before they come to credit.

So, like, that's keep it on top of your credit lines that you've extended to commercial clients. Contacting them frequently. Maybe you have someone that all they do is send statements. Someone that just deposits checks. That's their entire freaking job. The larger you get, the same as anything else, right?

You build this infrastructure. Here's how the reporting's gonna work. Here's the rough roles that are inside that department. And the larger we get, the more granular each individual person gets until they become hyper specialists. Same as in the field or inside call center.

Jack Carr: And then so now, bringing it back down to that, that three million level they're going to be the ultimate generalist. Who are you looking for when you're trying to find that role?

Cause that's, where we are. So we're like, that's the next step for us. We're trying to figure out, what does this person look like other than passionate about numbers.

John Wilson: Yeah I think, gonna say some very basic stuff. And that's not me talking down, it's like, the important thing is basic. Which is like, what's is their integrity? Have you talked to other people? The easiest way to steal money is to be somebody's bookkeeper. So how do you control it?

How do you make sure you have two party signing? How do you make sure you're the signer on everything and you control it? I've been made fun of a lot throughout my career like I really keep an eye on cash like very heavily and many of my peers my size and maybe different industries are like really surprised when they're like if there's a paper check, that paper check is still being signed out by me. And I'm like, no one's ever stolen 3 million from me. So like, I don't care. I'm going to keep doing my thing, so I think trustworthy integrity, making sure you're checking references to really quadruple check that cause obviously that's hard to pick out in an interview. Next one. Yeah. Numbers would be good. I would really dive into communication style. How are they going to talk to you about stuff? They're going to have to be a bit resilient because they're gonna be flexible, right? So you want them to be able to bend. They need to be able to work on credit one moment, work on AP the next moment.

Yeah, and they have to be highly accountable.

Jack Carr: Yeah, I think that first point is really important because we hear the horror stories and even people like when we had Damon on a few episodes ago, it doesn't take but a couple singular instances to really sink a business at three million. You look in and it's gone and, what are you going to do?

Fighting to get out of that back is way harder than doing the right things on the front end to make sure you brought in the right person who's integrical.

John Wilson: I think the right person but I also think like what are the systems you have in place to protect yourself?

Jack Carr: Definitely still keeping that dual signing and I think we talk about this a lot you brought it up to me as a good point when I asked you and it still sticks in my head when we were talking about landing pages and you said, Jack, don't take your eye off your landing pages like that's your responsibility at the end of the day, it's not any third party SEO or PPC company, you're in charge of your landing pages and I think that's, it's the same thing as, ultimately at the end of the day, right?

The owner is responsible for whatever key pieces, that being one of them, but also the business itself and making sure that the money's coming in and going to the right spots. And if somebody's stealing from you, it's because, one, you didn't hire well, but also two, you're not putting enough checks and balances in place to be able to watch them appropriately.

John Wilson: Yeah, and I think you know theft I don't know that this was what this was about but like theft is you could have hired right

Jack Carr: That's a good part of accounting though.

John Wilson: Like, if there's no accountability, and there's no easy checks, and someone has their own signer, and they have full and limited access to a lot of money they're probably gonna steal. you should just assume that they're gonna steal.

Jack Carr: That is a fun ending to this episode.

No, I'm kidding. But it's

reality

John Wilson: reality. And, I think that you should just expect it. like, there's no reason to be surprised. When you're like, oh my god, I was stolen from? Yeah, you were stolen from. You gave them full signing authority on your checking account.

You don't ever check in on what they're doing. There's zero accountability. There's, like, no process to what you're doing. And you've heard the story a million times that other people stole from their owners and they were the bookkeepers. Like, yeah, you were stolen from what else did you expect? So just walk into expecting it.

That way, when you get punched you'll need to know what side it's coming from. Build some process, make sure you're the signer. That's probably the biggest stuff, most important stuff you can do as a small business. I always feel like I read these articles, and it was like, the bookkeeper of 15 years had taken 3 million dollars out of this, plumbing company.

For the 15 years that she worked there or something like that. And it's just like Yeah, who was looking? The opportunity was there, and she takes her first ten bucks, nobody notices, and there you go. Also, I said she intentionally. There's a lot of data there, it's interesting.

Women are much more likely to steal in the accounting position than men.

Jack Carr: There was an episode on I think it was HBO or something. And it was talking about the accounting person for a city. And she stole like something crazy, like 21 million dollars over the course of like 10 or 11 years. She had horses and like, giant facilities, and real estate, and all she did it's crazy simple.

She just set up another account that only her name was on, and then was depositing checks from the city into that account. She was the sole signer. Wild.

John Wilson: It's wild. But yeah. As you grow your need for infrastructure it gets bigger and you will have to hire ahead of revenue and this will hold your business back if you Opt to not do it or choose to not invest yet. So the game that we are often playing is hey, I need this role, how long can I go without hiring this role before it gets very painful because I'm not ready to fork over the 80 grand a year, or whatever that role is going to cost, and usually you're just accepting that it's going to be bad. The dangerous person is the person that refuses to accept that they even need that role, or maybe they just assume that sales will go up and up and up forever, not really thinking about how this will crumble down around them if they don't put some process in place. And process isn't like a mystery word. Process usually starts with people. Who's going to administer the process? So like, yeah, I can write 10 steps for anything, but who's gonna run with it? Who's gonna deposit the checks? Who's gonna make sure people get paid? Who's gonna follow up on your people that owe you money?

And who's gonna make sure you have good relationships with your vendors? Like, these are important things in order to get to 50 or 100 million. You're gonna stall out pretty quick if you don't do it So you always be thinking of that next one and then get more and more niche as you go and talk to other people in your industry about when they hired key roles, you know for us and home service and for some reason i'm thinking about manufacturing right now, but for us in home service like these were the benchmarks we used was 10 million was a good time to have three people right now We have four we expect, seems like every five million is like another person.

I'm sure it'll step up even beyond that at some point where, hey, suddenly there's so much volume of checks that it's like two people or three people. So we have to over invest a little bit more but yeah, it's ever evolving. So I would just try to always be looking ahead on infrastructure.

The other things that are coming to mind are like fleet management, that's something that really creeps up on you really fast. IT management too, this is something that most small businesses don't ever really think that they're going to need until they have 300 mobile devices. And they're like, what am I doing?

You know, suddenly buying computers is a part time job because your call center has 30 people and you have 150 iPads and whatever else. Ask me how I know. So then it becomes this whole thing, or like infrastructure, who's gonna manage your facilities and janitorial? I think the point here is always try to be looking ahead at what possible pain points you'll have.

And attempt to invest in them early, to avoid some pain down the road. And I think sub 10 million seems to be the biggest guilty folks here.

Jack Carr: Yeah,

it all culminates there.

John Wilson: Yeah. like, cause that 5 to 10 is such a formative, size. Like the big problem that you need to break 10 is leads and people. Leads and people. What's your recruitment stack? What's your lead gen? And because of that, people either choose to ignore or like don't know that they need to be focusing on well, okay, once you break 10, payroll's a full time job now. You got that? Warehouse management is a full time job, maybe three. Hey, now you have 50 vans on the road. You got a warehouse, or you got a fleet guy, that's different from the warehouse guy? Cause that's a full time job

too. it really takes off at that 10 mark, where people just, all the things that got you over 10 aren't gonna get you over 20 is maybe the point.

Jack Carr: Yeah. No, I think that's a good point. Or, and it won't sustain the business I mean, you can get to 10, but you still will burn out anybody wearing those hats? 'cause they can't run and grow on those.

John Wilson: Yeah, and they're like, man, why am I losing all these managers? Oh, it's because your manager is also your accountant, credit manager, your warehouse manager, your fleet manager, your HR. They're doing the hiring, the firing. Yeah, they're doing everything.

Yeah. So it's hard not to tell why. That was John's pedestal conversation on mainly try to figure out what's coming next in your business. When you get to big plateau points, 3, 5, 10, 15, 20 try to figure out what roles are going to be a problem, and invest ahead of time. And really when you break 5, just be investing ahead of time. You've got the cash flow you don't need that extra Range Rover at home.

Like, just invest ahead of time, and make your business easier.

Jack Carr: No comment on that one. I still drive an old, beat up truck. So I'm not in that category, I've seen it. I've definitely seen it.

John Wilson: This is like a, maybe a totally different conversation, but owners will get a tiny taste of success. And usually the business is like really small. like, let's say the business profits a quarter of a million a year, which, for a W 2 employee, that would be a lot of money.

Like, for anyone, that's a lot of money. A quarter of a million dollars is a lot of money. I'm not, like, arguing. As a business, that's not a lot of money. Not when most of that should go back into the business, in order to keep fueling the business. So it drives me nuts a little bit when I see these businesses stall out at like two or three million dollars.

And then you like, look at why, and it's the owners just absolutely siphoning cash out of this business to like, do just dumb stuff. And yeah, it's like, businesses profits are not your profits, it's the businesses profits. And now you have to allocate.

Jack Carr: We ran across one the other day when we were looking at him and once again, this is a whole different conversation, but there was a family of five in all five cars and of course they're giant lifted diesels, all decked out, all five cars and the wife's Range Rover. So four trucks and a Range Rover.

Three for the kids, two for the parents, all on the company. I'm just thinking they're looking at that payment going, man, that is just eating you guys alive. Anyway, I'm not going to get too much into it cause we'll get in trouble, but still wild to see.

John Wilson: I think it's tempting. Again, it's a lot of money, and if you aren't used to having to, like, allocate a lot of money or basically invest. you know, what you do with profits is investing. And people just usually do it wrong. They buy a car instead of, like, maybe let's figure out how to make an enterprise.

Jack Carr: Yeah, we'll get to the next level.

Anyway, so we went over on this one. On this episode, we hit on quite a few things. We hit on at what point you should be hiring. We hit on the framework at why you should be hiring and hiring ahead of revenue and how to do that. We talked about theft. I think that should definitely be in the caption on this episode.

Jack Carr: And, to maneuver around it. What am I missing?

John Wilson: We talked about sizes of when to bring on specific roles. I didn't want to get too in the weeds, but like, here's roughly what your accounting team should look like at 3, 5,

10,

John Wilson: 15, 20 million.

Jack Carr: And before we close out, one more question. Do you think that This is really from a home services point of view. But if you could just imagine a scenario where you're running, lawn care company or a septic business or whatever, do you think that would still be valid?

John Wilson: So accounting teams revenue does matter. But the biggest differentiator is number of transactions. If I was the same size business, but instead of like 5, 000 transactions a month, maybe I did like a hundred, but each of those transactions was way larger. Then that's a totally different accounting team than what I have.

You just need less people. There's less activity. And likewise, if we were a coffee shop my size, and every transaction was 3 dollars, and we had to do 10 to 15 times the amount of orders that I would have to fill, that's more cash receipts. That's more credit card transactions to true up. That's more potential problems.

Number of transactions and total revenue are going to be the big distinguishing factors inside your accounting team.

Jack Carr: Perfect. Yeah, that makes sense. If you had one transaction versus, just to make it a, yeah. A thousand, you'd be in two different spectrums. You could probably keep it in house even if it was that case. Awesome

John Wilson: Yep, thanks everyone for tuning in. Hire ahead of revenue. Always be reinvesting. Maybe that's the better phrase. Always be reinvesting.

Jack Carr: This is a great point and I think we'll cover this more too in our zero to 5 million workshop that we're having upcoming here on,

John Wilson: March, baby.

Jack Carr: what's the dates?

John Wilson: Check it out on ownedandoperated. com.

John Wilson: Yeah, it'll be good. we'll probably have to end up doing a whole spiel just because it's annoying on how not to spend your business's profit and how to reinvest it. But yeah, thanks for tuning in to Owned and Operated. We're about to go four times a week, so make sure you tune in.

We're dropping mini episodes bonus episodes in addition to the two big ones a week. Thanks for hanging out. Make sure you give us a five star wherever it is that you listen to podcasts.

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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