October 10, 2024 • 46 mins
Discover the remarkable journey of Brett Lawton, CEO of Lawton Construction and Restoration, as he shares his insights on scaling a service-based business. From his humble beginnings in construction to transforming a family-run operation into a bustling multi-location enterprise, Brett unpacks the challenges and triumphs along the way. Learn how he mastered the art of scaling by understanding essential metrics, building robust infrastructure, and navigating the complexities of growth. Brett's story is a masterclass in turning potential pitfalls into stepping stones for success.
Gain a deeper understanding of the strategies behind managing labor efficiency and scalability. Brett candidly explains the transition from owner-operator to a larger operation, highlighting the importance of setting clear expectations with Key Function Flow Maps (KFFMs) and the role of analytics and technology in streamlining processes. Explore the evolving landscape of skilled labor and the growing demand for tech-savvy workers. Brett provides compelling insights into how trade careers are becoming increasingly lucrative, urging us to rethink our perceptions of the industry.
Finally, tackle the tough issues of working with Third Party Administrators (TPAs) and the significance of diversifying work sources to maintain efficiency and customer satisfaction. Brett emphasizes the value of building strong relationships and leveraging networks for business growth, sharing how connections with entrepreneurial groups can open doors to new markets. With practical advice and a wealth of experience, Brett invites listeners to engage with experts and resources that will aid in mastering business growth strategies. Stay connected with Brett and the Restoration Domination podcast for ongoing tips and motivation.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to the Restoration Domination Podcast,
where you learn actionableadvice that moves the needle and
helps service-based businessesdominate.
Here's your host, Rico GarciaJr.
Speaker 2 (00:16):
What is going on?
Dominators Rico Garcia here,super excited about this
particular episode.
Brett, thank you so much forjoining us today.
Are you ready to help usdominate?
Speaker 3 (00:28):
Yes, sir, thanks for having me.
Speaker 2 (00:30):
Awesome man Cool.
Hey, for those that may not befamiliar with the name and the
organization, do me a quickfavor and just introduce
yourself.
Let everybody know exactly whoyou are and what you're doing in
the industry.
Speaker 3 (00:40):
Sure.
Well, my name is Brett Lawton.
I'm CEO of Lawton Constructionand Restoration.
We're a full-servicerestoration contractor in
Northern California and NorthernNevada.
We do textile restoration, GCconstruction, abatement,
mitigation, the whole thing.
Speaker 2 (00:57):
Nice.
So give us a little bit ofbackground about how you got
into the business and,eventually, what I want to do on
this conversation is I want toreally pick your brain and let
the audience, you know, kind ofget a uh, you know, a 30,000
foot view of what you personallybelieve.
Uh, for anybody who's enteringthe business now, what kind of
(01:19):
mindset they need to be goinginto this business with in order
to really make it successful.
Cause there's a lot ofindividuals out there there, as
you know, that are reallystruggling.
They see the financial gains,but they haven't cracked the
code yet, right?
So honestly you've been in thegame for a while.
Kind of take us to thebeginning about how you got into
the business and some of thechanges that you've seen.
Speaker 3 (01:40):
Sure, we'll do an origin story.
So I got into construction whenI was about 16 years old,
working for my dad just doing GCconstruction.
My dad moved up fromBakersfield in the 70s, came up
to Northern California and thenstarted doing some work with AAA
insurance back in the day, backwhen it was just paper
estimating.
I jumped in when I was 16,graduated early, started working
(02:02):
with my dad just working forhim full-time.
Around 2006 2008 we rebrandedthe lot in construction and
restoration.
I took over as ceo at thatpoint.
At that point we only had acouple trucks.
We were mainly gc contractors,we were only doing the
reconstruction side and at thattime I was meeting adjusters and
I started seeing how themitigation teams were coming out
(02:24):
and they were doing a lot lesswork for the same scope of work
that we were doing.
So I'd see $10,000 for us.
I'm there with Mrs Smithpicking out paint colors and
baseboard.
They're there for $10,000 forfour or five days dropping off
blue machines.
So I'm like man, I want to getinto that.
So I got certified watermitigation.
I CRC certified.
So you know, got certifiedwater mitigation, icrc certified
, started dabbling with thatwith AAA insurance.
(02:46):
Took a while to get past thegatekeepers.
Then we started doing watermitigation and then from there
learned about asbestos abatement, then got asbestos abatement
certified in California, starteddoing that, then doing bio
cleanup and then from therewe're doing subbing out a lot of
our packouts, and then fromthere I started seeing the same
thing.
(03:06):
I'm like well, it's kind of oursame wheelhouse.
Why can't we bring textile into?
You know our same businessmodel, so that we brought in
contents and got the warehousefor that.
So we started pretty muchscaled from 2006, 2008 from like
two trucks and then scaled allthe way up to about 2020 where
we had about 150 employees,three locations, about, I'd say,
about 80 trucks.
(03:26):
And then now we've scaled backa little bit now trying to go,
you know, profit first now, andI can kind of get into that in
more detail later.
Speaker 2 (03:35):
Yeah, that's awesome man.
So what during that growthperiod?
Right, because a lot of peoplehear the story and they're like
man.
Wow, okay, you know, it seemslike everybody just has this
miraculous growth story.
And they're like man, wow, okay, you know, it seems like
everybody just has thismiraculous growth.
It's a feel good story, likeeverybody's, like man, they're
like you know, we're breakingtons of money, but it's not
always an easy road, right.
(03:55):
So what were some of the biggestgrowing pains right For the
people that are listening and orwatching and they're like man,
okay, what is it where?
Where are the landmines thatyou should be willing to expect
and almost be willing to step onand know that if you can get
past that, you'll be okay?
Speaker 3 (04:15):
sure I understand.
I mean we'll start.
We mean it's not all.
It's not all happy kumbaya,that's for sure.
I mean we're still goingthrough growing pains and we're
still stepping on landmines.
So I mean when, in the earlystages, let's start in the.
I mean we're still goingthrough growing pains and we're
still stepping on landmines.
So I mean in the early stages,let's just start.
In the early stages.
When you're an owner operator,say, I mean you are the man
right, you got a couple oftrucks.
It's left hand, right hand.
You look at your bank statement, you know what your payroll is.
(04:36):
It's pretty much basic stuff.
So you really do know allfacets of your business because
it's really small.
When you start scaling up, whatyou don't take into
consideration is all the metricsand analytics it takes to run a
business, and that's what Ithink I failed at.
And what a lot of businessowners fail at is the idea of
scaling sounds sexy, but theamount of work behind the scene
(04:59):
that takes to put the brick andmortar and the foundation in.
It's not just hiring people andbuying trucks, it's all the
infrastructure that goes into it.
I mean you go from a coupletrucks to looking in the parking
lot, knowing your managers areworking to.
You get to a size where thetrucks in the parking lot people
sitting at desks don't meanyou're making money.
And that changed a lot,especially more recently, as the
(05:21):
insurance has got moreregulated, pricing's being cut,
your margins are less, soeverything comes into play and
that's why I want to touch onanalytics and how to run your
business off of spreadsheetsmore than just off of basically
looking at your trucks on theroad.
But yeah, it's a definitelearning curve, for sure.
Speaker 2 (05:40):
Yeah, no-transcript us, right.
(06:12):
And look, we get exhaustedright, we get tired because
you're thinking about payroll,you're thinking about the
projects that you got to go doand everything else, what your
next?
Deal is coming from you know,chasing down money from
insurance, You've got all ofthese things, and sometimes we
kind of push that off untilwe've already scaled or started
to scale right.
And I'm using scale in variousterms.
(06:35):
Right, Because scaling fromowner operator to your first,
you know, three to fouremployees, that's a scaling
system from five employees to 10, 15.
Speaker 3 (06:45):
It's a big big difference, right.
Absolutely yeah.
Speaker 2 (06:47):
So when did you start really putting pen to paper and
start organizing and gettingeverything out of your head onto
SOPs and really having systemsfor your business, or is it
still?
Speaker 3 (07:02):
consistently an evolution.
It's still consistently anevolution, but back probably
around 2016,.
We started putting more effortinto that, but it was still
archaic at that point.
And also the industry has madeus shift because in the earlier
days we were making money.
Even without all the metrics inthere, even without our labor
efficiency rates, even withmessing up a whole bunch of
(07:23):
stuff and screwing things up,the margins were better.
So the industry, as it getstighter, forces you to become a
better business owner, likeevery industry, because
competition I mean it just makesyou have to be leaner and
meaner.
So as we started learning thatour margins are going down, as
we kept scaling up, our netprofit was going down.
So we're getting bigger andbigger.
We're looking more sexy tobanks and more sexy to venture
(07:44):
capitalists, but we weren'tbringing as much home.
And then we actually went tohaving a couple of downturn
years from 2020 to 2023.
We lost money in scaling andthose were our biggest years.
And so we learned a lot oflessons with regards to how many
managers it takes and how manyoffices you can run and all the
different mid-level managers.
(08:08):
You have all these giantpayrolls that start sucking up
all the GP right, because whenyou're writing a scope, whether
it's Xactimate or Solitaire, youhave labor and materials.
That's what you're sellingright At the bottom line.
You have your profit andoverhead.
All your office staff is justfeeding off of that, right.
So you've got projectcoordinators, project managers,
estimators, marketers, officestaff, ar, ap all of them are
feeding off of that sameexactimate scope, right.
(08:28):
And you you think you're goingto make money.
You were making money when youwere the ar person, ap person.
You had two trucks.
You could keep all that.
Right now, as you scale up alittle bit, estimate hasn't
changed.
You just got to do a shit tonmore of it now at volume to make
up for it.
Otherwise, if you're stuck inthat mid-level spot, it's almost
like a death sentence becauseyou're not making enough gross
(08:49):
volume to justify the jump inthe amount of payroll.
It takes an HR division, allthese different divisions.
When you go from 20 employeesto 50 employees, 50 employees to
80 employees, 80 employees to100, everything's a milestone
leap.
That involves infrastructureand additional teams, additional
managers, and all of that youdon't take into consideration
until you're in it and you know.
(09:09):
And then I think I always saywe're controlled by volume.
So if they say, if you're aheavy tpa, um restoration
contractor, like we are, we haveso much opportunity and they
call us up hey, can you takethis territory, can you take
that territory?
We've got all this work andthey just keep feeding your work
.
Well, that that's controlled byvolume.
It's like you talked aboutearlier.
You're chasing that new shinynugget and you're not paying
(09:30):
attention to your business.
You're being a yes man or a yesperson chasing after that new
dollar while you're just lettingRome burn behind you.
It's this carnage behind you.
You're chasing it because allof us are salespeople at heart,
right, that's why we got intothis.
We all love that dopamine hit.
But what you realize?
(09:51):
So so I mean, I'm the same way.
You look back and go, oh, holyshit, like all of this, all this
more volume, has made me a badbusiness owner and you know, so
opportunistic.
I want to go after it, but Idon't have the infrastructure,
so we're squandering it.
So that we had to, really, youknow, and we had, we call, we
call that right relationshipreview.
We started going over what TPAswork for us, scaling back and
then start building theinfrastructure to support the
different programs and differentvendors and different, you know
(10:12):
, because every vendor isdifferent, and if you can't do
all that, you really have yourteam spinning in circles.
Speaker 2 (10:18):
So here's a what I think is a tough question,
because I don't think anybodyreally has the concrete answer,
because every business is sodifferent, but I want to get
your take on it.
Speaker 3 (10:29):
Yeah.
Speaker 2 (10:30):
When is the right time to scale Right?
Because, again, even as anowner operator, I mean it's
you're keeping a hundred, butbasically, for all intents and
purposes, you're keeping ahundred percent of the money
right.
You send out a $30,000 invoice,you whatever you know, you
(10:50):
cover your assistants, you knowwhoever was helping you on the
project, whatever material costsyou had.
For the rest, for the most part, you're pocketing the rest of
the money right, which is whereI think a lot of people in the
beginning they're like holy shit, I just won the lottery.
I do a few projects a month andwe're kind of here and there's
truth to that.
(11:12):
Actually you start gettingbigger and you start hopefully
your days are packed and you'rein high demand and you're like,
okay, I need to start bringingpeople on.
But at what point is there ametric?
Is there a number?
Is there a percentage?
Is there a dollar figure thatbusiness owners should look at
and say, okay, are we reallyready to scale?
And what kind of mental shiftsdoes the owner need to take?
(11:33):
Because, again, going back toyour point, every time you scale
and you bring on more people.
You have more responsibility,more weight on your shoulders.
There's less money.
That's going to you right,correct?
Responsibility more weight onyour shoulders, there's less
money that's going to you rightCorrect In a roundabout way.
You have to be really reallycomfortable either with your
existing lifestyle and knowingthat more money is coming in but
(11:54):
you're not really going totouch that money Exactly.
Talk to us about that.
Speaker 3 (11:57):
Sure.
Well, there's a couple of goodpoints in there.
I'll see what I can do todecode that a little bit.
So I would say in the beginning, when it comes to scaling up, I
mean, for us it was opportunity.
So I started scaling based offof opportunity.
There was a need in theindustry.
We were getting more leads,more leads than I could get to.
So I know what my operationalcapacity is.
So let's just go over laborefficiency rate.
If you're an owner-operator,your labor efficiency rate is
(12:19):
insane.
You're probably 100x multiplierbecause you have all the
initiative.
It's on you, you.
You're the man right.
When you bring on managers, whatdo you expect their labor
efficiency to be?
So for me, you can only do somuch in a day.
So, like when I was driving mytruck, I couldn't go to more
than 10 jobs a day.
Even writing scope on site.
Even being a bit trying to be abad-ass like that was
exhausting and that takes a tollon you.
(12:40):
That takes a toll on yourfamily.
You know, if you're workingweekends, you're doing night
calls like it's.
It's taxing.
So there's no way to stay asingle shop and do all that at
scale.
And do you know and thinkyou're going to do more than
like a million dollars ofrevenue and there's nothing
wrong with a million dollars ofrevenue whatsoever but like
you're just not going to do thatalone, without you know, five
or six technicians and yourself,maybe one office staff, you're
(13:01):
gonna, you're burn out.
So for me, it was theopportunity.
I wanted to scale, wanted toget into more areas, wanted to
get bigger than that, and thenalso wanted to have time for my
family, because we all read thebooks and we always have this
pipe dream of I'm going to buildthis and I'm going to sit back.
You know what I mean.
So we're all chasing, like, oh,I've been doing this, you know.
(13:22):
So I, the first 10 years, Ijust grinded.
I mean, I was in the fielddoing inspections, and then I'm
like man, I got to, I want tostart becoming, I want to be an
entrepreneur.
Now I want to want a business,I want to be a CEO.
And then you start shiftinggears right.
You start hiring people.
My first mistake was hiringpeople thinking they're going to
be the next me, peoplerealizing that they're not going
to do the same amount of workas you, so now their labor
(13:43):
efficiency rate is different.
And then also with regards totheir bonus, how much work they
can get done, their efficiencyrate.
All that is difficult whenyou're an owner-operator and
you're expecting someone to be aminiature you.
That just doesn't exist.
So we call them KFFMs keyfunction flow maps.
With regards to what I expectan estimator whether it be a
write and run, which is aproject manager, estimator combo
(14:05):
, or a project manager andestimator separate.
They have a KFFM and, based offtheir salary and their bonus
request, we pump in the numbers.
It tells them what their grossrevenue needs to be, what their
net profit needs to be, how manyjobs they need to do, what
their cycle time needs to be.
All of that shit pumps it outand they have to sign it.
And's just been a very recentone, I, but we've done and it's
been freaking pivotal for usbecause I could hold their feet
(14:27):
to the fire.
Because, as you know, whenyou're interviewing people, if
you're an owner operator,everybody coming to you just
jump ship into the company andthey all, they all interview
great, I could do it all.
We all, we all know thecautionary tale.
How many people jump ship andthen, in this industry
especially, it's a, it's arevolving door of the same guy,
different shirt.
We all know the guy.
They jump around fromrestoration company to
restoration company.
(14:47):
They go over here, getcertified, take that
certification.
Go over here, get a pay raise.
It's a very tumultuous industry, right?
So for me, having those numbersset up and holding them to the
fire in the first 90 days waspivotal, and we weren't doing
that.
First 90 days was pivotal andwe weren't doing that.
So back two, three years ago wewe had they had over over 10
in-house estimators and wehadn't figured out the KFFM yet
(15:10):
and these guys were just, theywere just not even close to even
breaking even and it took ustoo long to catch up.
So we burned through all of ourcashflow by making those bad
decisions.
So my big no-transcript, right?
(15:59):
So, like you know, all theanalytic programs we're using
that runs Microsoft Word, thatblends QuickBooks with Xactimate
, with Stash Solitaire, with JOC, they're all there now, like a
few years ago, we had to go outthere and seek them out and we
found them.
Now they're like right in yourface.
So I'd say, go there, talk tothe guys that are talking about
analytics, all the boring tradeshow people that have to have
(16:20):
all the boring iPads up to showyou how to run your business.
Speaker 2 (16:23):
Those are the ones you want to talk to those are
the ones you want to talk to.
Speaker 3 (16:26):
That's how you run your freaking business.
Everybody wants to go.
Look at the new moisture meterand the new dryout machine and
the new semi truck.
Screw all that.
You don't know how to run yourbusiness.
Speaker 2 (16:40):
That's always been ludicrous.
I mean, and you know, there'sso many, there's so many people
in the industry to talk aboutthe equipment it's like, and
they, they bore.
Oh my god, like the equipmentit's like nobody gives a shit
about it in theory like yeahmaybe it's a little bit more
efficient, but like it's notgoing to move the needle enough
correct you really need to havesystems in place.
Yes, and understand the movie,the mechanics of your, and
understand the mechanics of yourbusiness and the mechanics of
(17:02):
your personnel and the mechanicsof your management team in
order for you to becomeefficient.
Speaker 3 (17:09):
Even to go backtrack a little bit.
So you say you're anowner-operator, you don't have
the infrastructure of all that.
You got to figure out yourlabor efficiency rates.
So you can go even Google, lookat basic construction trends to
see labor labor efficiency rate.
Is it 20x?
If 15x is 30x, what are youpaying your guys?
You're paying your guy 35 bucksan hour.
Is he a 20x employee?
Technician is he a 10x employee?
(17:30):
What's the median?
If you don't even know that?
You don't even know.
But you don't know if yourtechnicians are a baseline.
So if you don't know that yetand you're an owner-operator,
I'd start there.
Do you know?
Are your technicians a C-rate,B-rate player, A players?
Where are they at?
Are they just a body with apulse?
I mean you need to know.
But before you scale from there,if you're starting with that,
(17:53):
like that's how mostowner-operators start with
technicians, then they usuallyorganic growth.
Is you hire a project managerthat now takes on that portion
of it?
Right, and most owner operatorsusually dabble in estimating
and back office and the PM runstheir projects and the same
employees that used to work foryou now work for your PM.
Well, you better have the rightemployees in place.
Otherwise you're going to have,you know, a whole bunch of
(18:14):
issues just right there in thebeginning and then turnover
ratio there.
And you don't want to haveturnover ratio when you hire a
new project manager because nowhe has no one to run Right.
So I would start with yourlabor efficiency rates and just
doing basic stuff like that.
You can just do them off ofGoogle spreadsheets and then
same with the same with theproject manager too.
Speaker 2 (18:33):
One of the I think this is kind of a good segue
here is you know talking aboutscaling.
Obviously, good segue here isyou know talking about scaling.
Obviously, in our business youscale when, when you scale
regardless of what you do on amarketing side, right, or
regardless of whether you signup with traditional programs and
you start getting all of thesecalls and all these leads, you
can't be just a one man show,right, or you can't even when
(18:55):
you scale.
You need people in thisbusiness.
Topics for a very, very longtime, and I think it's always
going to remain hot, is howdifficult it is to find good
quality personnel.
Oh, yeah, talk to us about thatand talk to us about what you
feel the labor market landscapelooks like and what's required
(19:17):
nowadays from a, from anemployer to you know, to to
really bring in and to create anattractive environment for a
good quality employee, because alot of employees don't want to
work now for 15, $20 an hour.
I mean it's very difficult tomake a living, you know, at 15,
(19:39):
20, $25 an hour right Correct,especially if it's a family man,
or whatever the case may be.
Exactly so that clearly puts alot of pressure even on the
company right.
Because hey you want to getgood quality people.
Well, you need to have a goodcompensation package, right.
Speaker 3 (19:54):
Correct, absolutely.
Speaker 2 (19:55):
Talk to us about the general labor market and where
an organization needs to be inorder to attract those top
players.
Speaker 3 (20:02):
I mean so in the labor market.
With regards to actual skilledlabor in the field, we know that
the price has gone, hasskyrocketed, minimum wage has
skyrocketed.
I'm here in Northern California, so I mean $15 an hour doesn't
even exist in my world, like itsbaseline is $20 minimum and
then from there it goes up.
(20:23):
So for us to find good skilledtechnicians, actually what we're
looking for mainly is peoplethat have IT experience with
regards to how to run iPads,their iPhones, laptops on site.
Everything now is all techie.
So the old school guys that comein, all the abatement guys that
can't run tech, they have a useto me, but they're not the next
generation.
I want technicians that can doeverything remote on site,
because that's part of the laborefficiency rate.
So when I'm looking for newtalent, I'm looking for people
(20:45):
to have some kind ofconstruction skills, also some
basic computer skills, obviouslyclean driving, record, all
these things, and also theemotional intelligence to deal
with clientele that can also goat a job site and also make the
homeowner feel happy, and that,to me, is the most important
part.
A lot of these guys have theskill set, but they're too rough
around the edges and there's atime and place for that.
Most of us are in people'shomes while they're still there,
(21:07):
so we're looking for peoplethat fit the mold for that as
well, and we have a whole HRteam now To do what most
companies are trying to do,which is basically polished
turds which is basicallypolished turds, correct, exactly
, exactly.
And that's where the laborefficiency rate comes in.
So for us, for our HR team, wehave them come in.
The same thing we give themtheir labor efficiency rate.
(21:28):
So we give them their bidsheets.
And same thing.
It's a three-month trial period.
So it's baptism by fire.
We send them out there.
If they say they can do watermitigation they have their certs
we send them out.
Manager oversees them, checksin on quality control, sees if
they're doing it as per ourstandards.
If they keep faltering overthree times, we cut them.
(21:48):
But like it's a constantrevolving door.
So I mean we've had techniciansthat have been here 15 years.
We have had technicians thatlast two weeks, it's just so.
I mean you're always going tohave that.
As you're scaling too, you'regoing to have both of those.
And you also have predatoryemployees.
We've had.
We've had our first class actionPaga case, where we hired
people and they're literallytrained and they come in here
(22:09):
predatory, to try to sue you andyou don't even realize it.
And as you get bigger, when youget over 100 employees, you
become a target and thenattorneys seek you out because
they.
So that's a very dangerous spot.
We learned the hard way on that.
So that's a whole notherepisode right there, exactly
(22:29):
exactly.
But you know, for me, my hrteam, I gave them basic always.
Obviously we can do the clichethings.
We have our core values and ourcore purpose and like our core,
we say we're gonna hire andfire based off of our core
values.
So our hr team goes over ourcore values and goes over our
work ethic, tenacity, hard work,being being, you know, humility
.
Do these things appeal to you?
And that they say yes, and thenyou know we usually bring them
(22:51):
on.
Speaker 2 (22:51):
But like we look for red flags, obviously yeah, the
general responsiveness to thejob market, though how have you
seen that over the years?
Do you feel that people arelining up at the door like
several years ago, or do youfind that the younger talent,
frankly, is more concerned aboutjust making money?
Speaker 3 (23:11):
online?
Oh, 100 percent.
There's a giant generationalgap between people who are
looking for jobs now it seemslike, and there are a few of the
next generation that areactually workers, but it's not
the norm.
So in general we have a hugegap.
Most of our technicians areliterally almost senior citizens
and then we have them late 30s.
(23:33):
But looking for new up andcoming out of high school hardly
any applications whatsoever.
We go to the colleges, we dotheir college days there, we
sponsor it.
High school hardly anyapplications whatsoever we've
got, you know.
We go to the colleges, we do,you know, their, their, their
college days there, we sponsorit.
We get hardly any.
Everybody wants to be anengineer.
Everyone wants to sit behind adesk.
Everyone wants to be anarchitect.
There, no one, no one says Iwant to go pound a hammer and
like, but and when I, when I dospeaking gigs and stuff, I tell
(23:55):
everybody I'm like you'remissing out on a huge market
because there's a wholegeneration of people that don't
have to do shit anymore so thatI'm all.
You make more money poundingthat hammer.
Now I mean, so then you'regoing to be sitting at a desk
because you, uh, you have acommodity that most people don't
have.
You can fix things and that'swhy I think trade schools are
super important.
Um again, for for kids comingout of high school, because you
(24:16):
can make a great living comingout of high school being a
plumber, hvac, single, tradeperson, because you are a
commodity, you're not the norm.
Speaker 2 (24:25):
Yeah, no, exactly.
I think eventually, what'sgoing to end up happening is is
that you know that pay ratependulum is just going to swing
to where, if you are skilled,labor that quick and easy
hundred thousand dollar,$150,000 a year job is going to
be in the trades it's not goingto be the office job anymore.
Right, it's not going to beit's like holy shit, I got my
(24:45):
bachelor's degree.
Speaker 3 (24:47):
Exactly Basically guaranteed a position now.
Speaker 2 (24:49):
That's not going to happen anymore.
Speaker 3 (24:50):
Yeah Well, perfect analogy of that is the minimum
wage for, like, all the fastfood places there.
But it's like, oh, butcelebrating minimum wage being
raised with celebrating minimumwage being raised.
Well, all of us that arebusiness guys and entrepreneurs
knew we're like they're phasingthemselves out of the market.
Now you look at all theseplaces that are all just robots.
Well, they literally signedtheir own death warrant by
wanting this pay raise.
You think that these giantfranchises that keep paying
(25:10):
these rates they're going tofind out a way to make it
obsolete completely.
So now that whole.
Pretty soon, the next fiveyears, fast Food will probably
be mainly 80% automated.
So all those jobs are gone.
Speaker 2 (25:23):
All those jobs are gone.
You go into a McDonald's now,which I don't recommend.
Many people go into McDonald's,but if you do, you'll notice
it's like you've got one personbehind the counter, and then
you've got four kiosks, right.
Speaker 1 (25:32):
Yep Bingo what is?
Speaker 2 (25:34):
it Checkers or rallies or depending on where
you're at.
I think there's a companythey've got.
If you go through like theirdrive-through, it's a hundred
percent ai, that's wild robot,that talks to you and it takes
your order and which, by the way, it is the perfect employee.
It asks all the right questions.
(25:55):
Would you like to wear theirversion of super sizes?
You know I had bacon.
Would you like to wear theirversion?
Speaker 3 (25:58):
of super sizes.
Speaker 2 (25:59):
Would you like to add bacon Would?
You like a milkshake, likeevery single customer.
It's asking those questions,like if you can train the hell
out of an employee to say, hey,every time you get a customer,
make sure that you ask them foran upgrade for a dessert, and if
they'd like a shake, they'llprobably do that out of a
thousand times.
They'll probably do that 60% ofthe time.
(26:19):
Oh, if that, yeah, right, likeyeah, yeah, sure, sure, yeah,
you've got this system thatautomatically is just taking
your order.
Speaker 3 (26:29):
It takes it perfectly .
And more 100?
Speaker 2 (26:30):
yeah, it's probably increasing your ticket.
Speaker 3 (26:32):
Your average order value oh, absolutely doing the
thing every time.
It never misses.
Speaker 2 (26:37):
Yep, so it's like you know, you look at this stuff
and you look at the landscape.
You're like holy shit, yeah,you guys are really phasing
yourselves out of the marketcorrect yep what does that do?
Right, like what.
What does that do?
Speaker 3 (26:47):
and again, I think it really does present an
opportunity, for you know thatpendulum swing I, I agree, and I
think it's going to shift backto to um, to the trades again,
because those are a few of thethings that have that automation
is still far, far away from.
So.
I mean even projectcoordinating, project managing.
So much ai technology andoutsourcing is happening.
Companies like ours areutilizing every possible way to
(27:10):
not pay the amount of the payrate we have to pay in
california even for a projectcoordinator, project.
Go back, you know a 75, 80 000salary for somebody who takes
notes is no longer attainable.
With the same exact to make bidsheet, you know that person
used to be 55 000, you know,five years ago.
Then it's 65, now it's now it's85.
Like you're damn, you're at ahundred thousand dollars for an
(27:32):
admin position I can outsourcefor probably 20 000 or an end up
for you.
I could probably automate itfor free, right.
So and these, so these are thekind of you know, desk jobs that
are going to be going away.
So now you know it's acautionary tale, but
unfortunately business is roughand like you can't go out of
business, you feel bad forpeople, but in general, at the
end of the day you have to keepthe doors open.
(27:52):
You got to do what you got todo so.
Speaker 2 (28:04):
A hundred percent, A yeah 100%.
Let's talk about.
You said that your company isTPA heavy.
Talk to us about yourperception of any potential
pitfalls on being so TPA heavy.
Yeah, sure, and mitigate thatright.
Yep, and this is again.
This is one of those storiesthat it's not exclusive to you,
it's pretty much everybody inthe business right, oh yeah,
correct.
Speaker 3 (28:21):
Yeah, it's pretty much the norm now, so kind of
give us your view on that.
I mean TPA when it first cameout was like the best thing ever
, right, because it wasguaranteed work, they were up
and coming, all the insurancecompanies wanted to go with them
.
It was literally just like yourgateway into getting just tons
of work, as long as you couldfollow their compliance.
As you know, it shifted fromthat in the early days to now
(28:43):
this over-regulated, red tape,bureaucratic nightmare where you
have multiple layers ofmanagement all chipping away at
your profit margin, all cutting,and you have to hire teams
inside of your company.
For us at Lawton, if we want towork for a certain TPA say
they're very strict we've got tohire project coordinators that
know just everything about allthe regulations just to get an
(29:05):
estimate approved.
So I've got an estimator, aproject coordinator and a PM
that know how to work with thisTPA and the amount of admin work
.
So a $3,000 scope probably has30 to 40 notes, maybe 15
revisions.
That means my estimator istouching that thing 15 times
average of a couple hours.
You're spending a couple ofweeks dicking around with a
$3,000 estimate, whereas beforeit was boom, boom like one and
(29:30):
done, and so the naturalprogression of that has been we
kind of got to a boiling pointjust recently.
I think a lot of restorationcompanies are jumping ship and
we had to take a look back, likeI said earlier about right
relationships, with regards towhich tpas are working with us,
that are working side by sidewith us and not against us.
Because in our industry wenoticed, like, as a contractor,
(29:52):
all for some reason, like we are, we're demonized.
For some reason, even though weare the ones restoring, we're
the only missing piece.
For some reason, even though weare the ones restoring, we're
the only missing piece.
For some reason, we're the onesthat are always being gone
after as being predatorial,charging too much, but literally
it's the opposite, it's beingnickel to dime the other way
around.
Your estimate for $3,000 has anupload of 8%.
(30:13):
You got to pay 8% to a TPAmiddleman and then from there
then the adjuster takes that$3,000 estimate, chews it apart,
takes it back down for $2,600.
And then you have to take 8%off of that and you're going
back and forth as your officestaff and overhead is working
there, not making any money,just fighting over that scope,
back and forth, office staff,admin time, and you start
realizing you go.
This is insane, the amount oftime and effort it takes to get
(30:35):
this done.
You realize that at scale iskind of how you go out of
business and we were doing over$20 million just last year in
just TPA and we lost our assbecause the amount of admin
staff it took like we we hadlike over over 20 office staff
to do that and the margins arejust shit Right.
So that's why so my caution andnot getting better.
(30:56):
And, like I said, honestly, itkeeps the doors open.
It keeps your.
I'm not saying not do it, justdon't make it your only
wheelhouse, because putting allyour eggs in one basket, that's
not your way to success andfreedom.
That keeps your guys busy,keeps consistent work coming in.
It's a great avenue to havewhen things are slow, of course,
but you got to spread out pastthere because it's to me.
It also teaches you to run asloppy company.
(31:20):
I built my company around TPAregulations and not around how
to build my company to makemoney.
For years we worry more aboutapprovals and timelines and
upload scores and cycle timesthan we did about profit first
and about customer service,because our customer was the TPA
, our customer is the adjuster.
(31:41):
We got to make everybody happy.
It's miss smith and the tpa andthis person who want everybody
happy and they're never allhappy, right, so so so my
cautionary tale is you build aninfrastructure around that.
It teaches you to be a badbusiness owner because your
labor efficiency rate is shitlike you make, if I told you.
I told you I had a businessmodel for you and you had to
hire former office staff, butalso it's less money you can
(32:01):
make over here.
You tell me to take a hike,right, but for some reason all
these restoration guys go oh,how much work do you have?
Oh, I can't wait.
Oh, I mean, we get all excitedbut we don't realize we're being
controlled by volume.
Speaker 2 (32:13):
We're not going to make money at that if all we do
is that because theinfrastructure takes too much
right it's the busy so, yeah,it's the busy work, correct it's
the busy work and a lot oftimes like people confuse being
busy with being efficient orbeing bingo.
Speaker 3 (32:26):
It's great.
Yeah, with making money correct, exactly it's like well, great
well, hold on.
Speaker 2 (32:30):
Let's take a step back here, but are you making
money and this?
Speaker 3 (32:33):
is correct now in the industry it's kind of like whoa
, yeah, out, I mean, and we losta lot Talk about retaining
staff, we lost a lot of managers.
So they wake up in the morningto nothing but emails, escalated
emails, revision emailsescalated, and like their heart,
like your heart rate is like ata huge high level because you
(32:54):
feel like the world's collapsing, because everybody wants this
stuff done now and it's likevery demanding, it's very and
it's all above the tree linelike all these little items that
might be adjusting base servicecharges but it takes, it sucks
up your manager's time.
They have no time forexponential thinking, no time
for sales, no time for customerservice.
They're just at their computer.
Try not to get yelled at bywhatever TPA or adjuster is
(33:16):
sending out their next revisionor they're going to cut us off
or you know, we receive theemail.
If you don't get these uploadedtoday, we're shutting you off,
like it's always height, heightand flight, like and it wears on
you, it wears on your team anda lot of guys and we lost a lot
of managers saying that we won'tdo it.
And I I've been doing all theinterviewing now from and I have
pms that'll send out theirresumes and they'll state right
(33:37):
on there no tpa.
I've actually been seeing thaton the resumes now I was like
holy shit, I've never seen that.
But I've seen some guys thathave been ops managers for
bigger companies that burnt out.
They just know they want towork B2B.
They don't want to work withTPAs, right.
Speaker 2 (33:56):
So that's one side right.
So how are you offsetting that?
What kind of offsetting actionshave you put into place to kind
of get some of that direct, youknow B2C type business?
Speaker 3 (34:09):
Yeah, I mean.
So we started brick and mortarwith hiring a couple marketers
to really go after propertymanagement.
My ops manager was reallypushing for us to diversify a
bit and so our first main coursewas going after GC contractors,
property management companies,stuff that's already symbiotic
to what we're doing and justtrying to get out of that
wheelhouse.
We had some pretty decentsuccess there and like the real,
(34:30):
the real thing is getting yourfoot in the door and like we
started writing what's calledemergency response programs.
So you go to a propertymanagement company with
emergency response program andobviously they've been pitched
by 10 different companies, right, so you got to have a really
good marketing person to go inthere or even go speak yourself
and try to get, try to get thosedoors open.
I think really honestly dependson where you're at in
(34:51):
california.
Man, I'm gonna be dead on it, Idon't want to get sued, so I
choose really good.
So I mean I mean we're in a suehappy state over here.
So I think the whole um, themarketing with regards to which
I mean obviously law ofattraction, it's it's good to be
charismatic and good looking,but if you're just sending out,
you know a bunch of, uh, reallypretty people that have no
(35:12):
industry experience, you're notgoing to get very far.
So I mean I like to have peopleactually have industry
experience.
I like my sales people actuallycome from construction a little
bit, I mean, because otherwise,so they go pitch something.
Yeah, they go.
They go to a party magiccompany, they go.
What about this?
They'll be like oh, here's ourpamphlet.
Like you like wine, like likeI'm like shit?
(35:36):
I mean, exactly, you gotta atleast get your foot in the door.
So we started there and thenobviously, as you know, we we
linked up with you and you'vebeen super helpful, helping us
on the seo piece, which has isthat we're super old school.
I know I look younger, but likeI was trying to keep that under
wraps.
Speaker 2 (35:49):
I didn't want to know Promotional piece, now that you
kind of put that out there.
Speaker 3 (35:55):
I mean I'm ready and I know.
Speaker 2 (35:59):
Is a marketing client of ours, and let me just give
you a quick shout out.
A quick shout out, brett,because look A, I've done a fuck
ton of podcasts and I've gottento peek behind a lot of the
curtains of some of thecompanies that have been that we
perceive to be extremelysuccessful, some of those that
we perceive to be not sosuccessful.
And then my line literallyblows up and my email is blowing
(36:23):
up every single day, withpeople just kind of saying hey,
can you help me with marketing?
Speaker 3 (36:27):
And.
Speaker 2 (36:28):
I'll tell you one thing that really separates you
and your caliber of individualas a business owner is we jumped
on the phone on a zoom call andI was like, hey, brad, this is
what you need.
You need A, b and C.
You're like, let's fucking doit.
(36:48):
Let me get back to you.
It wasn't a let me think aboutit.
It was like I'm not sure itwasn't 35 different questions.
It was like right there on thespot, attacking the action and
saying, okay, cool, this is,this makes sense, let's, let's
move forward.
And that, to me, this, this isone of those things that, as a
business owner and as someonewho has gotten tons and tons of
(37:11):
applications from the marketingside man, I've spoken to so many
of these business owners andeverybody wants the exact same
thing.
Everybody wants more business.
Nobody, very, very few people,are willing to do what it takes
in order to get there.
It's the growing pain, it's thefear of what's on the other
side, and one of the things thatI appreciate about you and your
organization, it's like, hey,look what needs to be done,
(37:33):
let's do it and just moveforward and I think as a CEO,
that's your job when you get toa certain caliber.
Speaker 3 (37:39):
It's not to sit there and micromanage, it's to make
the big decisions quickly and Ialways like that the death by
meeting book as well.
Like you can sit there andoveranalyze something.
You just want to get the bottomline.
I'm the bottom page kind ofperson.
The rest of my team lives inanalytics.
I like to live in the verysmall section right there and
just make it actionable and thenhold people accountable.
That's really it.
Basically.
Speaker 2 (37:59):
It so um, and then we've been doing route marketers
and, uh, real quick cause thisis kind of a topic about what
some of the best methods are, uh, to really maximize, um, your,
your route marketers, or yourbusiness development team, or
whatever it is that your jobtype for them.
Um, you and I have spokenbriefly about some of my
philosophies and my ideas abouthow you can maximize that Cause
(38:22):
again.
X amount of hours in the dayyou can only share hands and
kiss so many babies.
Speaker 3 (38:26):
Exactly.
Speaker 2 (38:27):
There's some really cool automated things that you
can do on the backend, but sofar, in your experience, what do
you feel are some of the mosteffective ways to leave a
lasting impression and tocontinuously circle back around
to these people?
To?
Romance them for lack of abetter word to say look, this is
the company that I want to dobusiness with.
Speaker 3 (38:46):
Yep, I mean in the early stages.
We've had our first marketinglady.
She was doing a great job, butshe was going out to too many
different companies.
We had probably 600 differentleads in our CRM software and it
wasn't really producing muchand so just like too much TPA
work.
The right relationship is whatyou need to go after.
Okay, where do I have an inwith these certain companies?
(39:06):
And for us, our size company,has actually been networking
even with my in my network.
So, being a local entrepreneurand being in different
entrepreneur groups and I'm alsoI'm also a member of EO and my
chapter forum I get front dooraccess to a lot of other elite
business owners.
I've used that as a gateway in.
So some of the bigger productmanagement companies I've gotten
are actually in differentforums and they meet with me.
(39:29):
I deploy my marketing team Ialready have a direct line and
I'm more of the.
I kick the door in and then myteam goes from there and then
from there, that relationshipdoesn't take 15 phone calls
because it'd be like me and youtalking.
You know me, I know.
You see your propertymanagement guy, you like me,
you're going to give me a shotas long as I don't fuck up, I'm
(39:49):
already there.
Versus sitting at a marketer, acold call.
It's like a 1 in 100 chance ofhaving that work right.
One-on-one relationship andfriendships are usually 90%
success.
So some of our bigger propertymanagement companies have
actually come that way.
And then from that, from that,that guy like, so that you have
a big wig CEO at a big propertymanagement company.
(40:11):
Well, guess what?
He knows other managementcompanies.
So now you use that as agateway into the next.
All you, if you're, if you're asmaller shop, you're doing less
than 20 million.
All you need is five or sixbigger property management
companies.
If they got 500 plus storeseach, that's a lot.
You don't need as many as youthink if they actually produce.
And that's the rightrelationships part.
(40:33):
And so we went from having ourmarketers just do overall
marketing to being sales repswhere they handle the whole
account.
So I shifted our first marketersentire sales package based off
of basically, you eat what youkill, so it's not, it's not just
go out and you do it all you.
You find a company that's yourcompany, you keep that company,
you're, you're the pr person forit, you're the after out, like
(40:54):
that's yours.
And if you get that.
You get a profit.
Share off that entire account,whether or not they call you or
not, to every office, if they're, if they're in nevada and east
bay, whatever they're at.
You get a piece of that, aslong as we keep the account nice
.
So, whether it be like mercy,housing or you know anything,
conrad or a different federalcontract, if she grabs that that
she gets to keep it and then.
(41:14):
So now I don't have her going athousand spots she can now do a
route of 20 versus a route of200.
Yeah, so I would.
I would say yes, exactly.
I would suggest that first andas a local business owner,
you're the gateway in first,like you're the dude, right, I
mean your marketing team.
I don't care how attractive orhow great they are, at the end
(41:34):
of the day they got to like yourteam.
So for me the gateway was me in, and then from there, marketing
team backing it up and thenfrom there our actual workers
being able to do what they saythey can do.
So that's one avenue.
And then I went in every avenue.
I hired another marketingperson and he comes from a
government, federal backgroundand he already knows that
(41:54):
wheelhouse.
So as you grow in business.
You can't know it all right.
So, like, if I want to go intoa new market, I'm not going to
learn it myself, I'm going tohire somebody that says they can
do it.
I'm going to to, I'm going to,but I'm going to write them a
KFFM, I'm going to write them abusiness scale, how long they
had to do it.
They sign it and then you showme if you're the man.
You show me you have.
You have 90 days to prove it,or six or six, or whatever six
months, whatever it is, and thenthey go out there and they
(42:15):
prove it to you.
So that's.
I look for marketing experienceand whatever fact, whatever
area I want to get into, that Idon't personally know yeah, yeah
.
Speaker 2 (42:25):
So obviously we covered a lot of ground, um,
yeah we did you know we, wecould probably do.
What is it that you that Ididn't cover, that I didn't ask
that you really wish that morepeople within the restoration
business knew, or at leastthought about and contemplated?
Speaker 3 (42:43):
I mean I think, when it comes to scaling up, and with
regards to my I mean I thinkpeople within the restoration
business new or at least thoughtabout and contemplated.
I mean I think, when it comesto scaling up and with regards
to, I mean I think, focus onyour education.
If you're a younger owner,business owner, like when I
started out, young, you havenothing but energy and time.
Which you lack is experience.
As you get older, you got abunch of experience, but you're
tired, you're cranky.
You know what I mean.
Like as you get, get older,like you just don't have the
(43:04):
same pep on your step.
So if you're a youngentrepreneur, young business
owners, use that to youradvantage.
Soak up as much knowledge aspossible.
Read the right books you know.
Read, read scaling up, read.
Read the e-myth like there's,there's so many good books out
there.
Yeah, profit first, and thoseare ones that you know people
don't think about.
It's like you.
You get so built in yourbusiness.
You you're taking all thesedifferent ideas like there's
(43:25):
some basic business principlesthat if you follow will, will
echo through time.
I don't care how the book waswritten in the 70s or written
last week.
There's a certain principlesthat you should never falter
from and profit first.
A huge one about that.
If you can't keep a little bitof profit every single month in
your business, then you knowyou're running a business wrong,
right?
Um, like, unless you're vcbacked or you're being acquired
(43:46):
by someone or a bunch of capitaland you're in a scaling, but,
like, that's not the norm, right, if you're the normal brick and
mortar with its own set of apps, absolutely, absolutely, yeah,
sure, exactly, well, yes,there's gonna.
I mean, there's a honeymoonperiod and then there's a
divorce.
Speaker 2 (44:04):
Yeah, pretty much that's kind of how it works, you
know yeah awesome man, so cool.
So let me ask you this if, ifanybody listening anybody you
know who's watching to thepodcast uh, they're like man
brett just seems like one of thecoolest guys I've ever seen.
Um, they want to go ahead andreach out.
What's the best way?
For them to reach out to you.
Speaker 3 (44:24):
I mean, they can email me, they can go on my
Instagram.
It's Brett underscore LCR.
I gave you the link to myLinkedIn page as well, and
that's all going to be, by theway, Dominators.
Speaker 2 (44:38):
All of Brett's information is going to be in
the video description below, aswell as in the show notes.
Final thoughts Brett, Anythingelse that you want to go ahead
and leave us dominators withSome additional food for thought
.
Maybe an additional nuggetthere.
Speaker 3 (44:51):
I'm trying to think Honestly, I can't think of
anything.
I think we went over almost allof it, but I wish I had a final
punchline for you.
Speaker 2 (45:03):
That's what happens when you cut a lot of ground.
Speaker 3 (45:06):
Exactly yeah.
Speaker 2 (45:07):
By the way, for those dominators out there, every
time that I do speak to BrettBrett's an extremely busy guy.
I'm busy, so we don't get toconnect probably as much as we
would like, and we enjoy thiscompany, but every time we talk
it's literally at this speedExactly, I know right.
Which is totally amazing,that's awesome.
At this speed Exactly.
Speaker 3 (45:27):
I know right, that's awesome yeah thanks for having
me.
Speaker 2 (45:28):
Thank you so much for taking the time out of your day
sharing with us your story inthe restoration.
Speaker 3 (45:32):
Absolutely.
You're amazing.
It was a blast.
Speaker 2 (45:34):
Your amazing growth and you know again what you're
doing inside of yourorganization is absolutely
amazing.
I'm super excited to be workingwith you guys.
Speaker 3 (45:41):
Absolutely.
We are too man Part of the team, so again, dominators.
Speaker 2 (45:45):
Make sure that you check out the video description
and the show notes below.
If you have any questions forBrett he's a super cool guy
Reach out to him If there'sanything he can help you out
with.
He most certainly will, andwith that, make sure that you
tune in for our next episode and, as always, hustle, hack
dominate.
I'll catch you guys on the nextone.
Speaker 1 (46:05):
You've been listening to Restoration Domination, your
number one resource for tips,tricks and hacks to help your
business grow.
Subscribe to our channel andfollow us for more Restoration
Domination, and follow our hostat Rico Garcia Jr on Facebook,
instagram, tiktok and LinkedIn.
Till next time, this isRestoration Domination.
(46:28):
Hustle, hustle, hack, hack,dominate, dominate.
Welcome to the Restoration Domination Podcast,
where you learn actionableadvice that moves the needle and
helps service-based businessesdominate.
Here's your host, Rico GarciaJr.
Speaker 2 (00:16):
What is going on?
Dominators Rico Garcia here,super excited about this
particular episode.
Brett, thank you so much forjoining us today.
Are you ready to help usdominate?
Speaker 3 (00:28):
Yes, sir, thanks for having me.
Speaker 2 (00:30):
Awesome man Cool.
Hey, for those that may not befamiliar with the name and the
organization, do me a quickfavor and just introduce
yourself.
Let everybody know exactly whoyou are and what you're doing in
the industry.
Speaker 3 (00:40):
Sure.
Well, my name is Brett Lawton.
I'm CEO of Lawton Constructionand Restoration.
We're a full-servicerestoration contractor in
Northern California and NorthernNevada.
We do textile restoration, GCconstruction, abatement,
mitigation, the whole thing.
Speaker 2 (00:57):
Nice.
So give us a little bit ofbackground about how you got
into the business and,eventually, what I want to do on
this conversation is I want toreally pick your brain and let
the audience, you know, kind ofget a uh, you know, a 30,000
foot view of what you personallybelieve.
Uh, for anybody who's enteringthe business now, what kind of
(01:19):
mindset they need to be goinginto this business with in order
to really make it successful.
Cause there's a lot ofindividuals out there there, as
you know, that are reallystruggling.
They see the financial gains,but they haven't cracked the
code yet, right?
So honestly you've been in thegame for a while.
Kind of take us to thebeginning about how you got into
the business and some of thechanges that you've seen.
Speaker 3 (01:40):
Sure, we'll do an origin story.
So I got into construction whenI was about 16 years old,
working for my dad just doing GCconstruction.
My dad moved up fromBakersfield in the 70s, came up
to Northern California and thenstarted doing some work with AAA
insurance back in the day, backwhen it was just paper
estimating.
I jumped in when I was 16,graduated early, started working
(02:02):
with my dad just working forhim full-time.
Around 2006 2008 we rebrandedthe lot in construction and
restoration.
I took over as ceo at thatpoint.
At that point we only had acouple trucks.
We were mainly gc contractors,we were only doing the
reconstruction side and at thattime I was meeting adjusters and
I started seeing how themitigation teams were coming out
(02:24):
and they were doing a lot lesswork for the same scope of work
that we were doing.
So I'd see $10,000 for us.
I'm there with Mrs Smithpicking out paint colors and
baseboard.
They're there for $10,000 forfour or five days dropping off
blue machines.
So I'm like man, I want to getinto that.
So I got certified watermitigation.
I CRC certified.
So you know, got certifiedwater mitigation, icrc certified
, started dabbling with thatwith AAA insurance.
(02:46):
Took a while to get past thegatekeepers.
Then we started doing watermitigation and then from there
learned about asbestos abatement, then got asbestos abatement
certified in California, starteddoing that, then doing bio
cleanup and then from therewe're doing subbing out a lot of
our packouts, and then fromthere I started seeing the same
thing.
(03:06):
I'm like well, it's kind of oursame wheelhouse.
Why can't we bring textile into?
You know our same businessmodel, so that we brought in
contents and got the warehousefor that.
So we started pretty muchscaled from 2006, 2008 from like
two trucks and then scaled allthe way up to about 2020 where
we had about 150 employees,three locations, about, I'd say,
about 80 trucks.
(03:26):
And then now we've scaled backa little bit now trying to go,
you know, profit first now, andI can kind of get into that in
more detail later.
Speaker 2 (03:35):
Yeah, that's awesome man.
So what during that growthperiod?
Right, because a lot of peoplehear the story and they're like
man.
Wow, okay, you know, it seemslike everybody just has this
miraculous growth story.
And they're like man, wow, okay, you know, it seems like
everybody just has thismiraculous growth.
It's a feel good story, likeeverybody's, like man, they're
like you know, we're breakingtons of money, but it's not
always an easy road, right.
(03:55):
So what were some of the biggestgrowing pains right For the
people that are listening and orwatching and they're like man,
okay, what is it where?
Where are the landmines thatyou should be willing to expect
and almost be willing to step onand know that if you can get
past that, you'll be okay?
Speaker 3 (04:15):
sure I understand.
I mean we'll start.
We mean it's not all.
It's not all happy kumbaya,that's for sure.
I mean we're still goingthrough growing pains and we're
still stepping on landmines.
So I mean when, in the earlystages, let's start in the.
I mean we're still goingthrough growing pains and we're
still stepping on landmines.
So I mean in the early stages,let's just start.
In the early stages.
When you're an owner operator,say, I mean you are the man
right, you got a couple oftrucks.
It's left hand, right hand.
You look at your bank statement, you know what your payroll is.
(04:36):
It's pretty much basic stuff.
So you really do know allfacets of your business because
it's really small.
When you start scaling up, whatyou don't take into
consideration is all the metricsand analytics it takes to run a
business, and that's what Ithink I failed at.
And what a lot of businessowners fail at is the idea of
scaling sounds sexy, but theamount of work behind the scene
(04:59):
that takes to put the brick andmortar and the foundation in.
It's not just hiring people andbuying trucks, it's all the
infrastructure that goes into it.
I mean you go from a coupletrucks to looking in the parking
lot, knowing your managers areworking to.
You get to a size where thetrucks in the parking lot people
sitting at desks don't meanyou're making money.
And that changed a lot,especially more recently, as the
(05:21):
insurance has got moreregulated, pricing's being cut,
your margins are less, soeverything comes into play and
that's why I want to touch onanalytics and how to run your
business off of spreadsheetsmore than just off of basically
looking at your trucks on theroad.
But yeah, it's a definitelearning curve, for sure.
Speaker 2 (05:40):
Yeah, no-transcript us, right.
(06:12):
And look, we get exhaustedright, we get tired because
you're thinking about payroll,you're thinking about the
projects that you got to go doand everything else, what your
next?
Deal is coming from you know,chasing down money from
insurance, You've got all ofthese things, and sometimes we
kind of push that off untilwe've already scaled or started
to scale right.
And I'm using scale in variousterms.
(06:35):
Right, Because scaling fromowner operator to your first,
you know, three to fouremployees, that's a scaling
system from five employees to 10, 15.
Speaker 3 (06:45):
It's a big big difference, right.
Absolutely yeah.
Speaker 2 (06:47):
So when did you start really putting pen to paper and
start organizing and gettingeverything out of your head onto
SOPs and really having systemsfor your business, or is it
still?
Speaker 3 (07:02):
consistently an evolution.
It's still consistently anevolution, but back probably
around 2016,.
We started putting more effortinto that, but it was still
archaic at that point.
And also the industry has madeus shift because in the earlier
days we were making money.
Even without all the metrics inthere, even without our labor
efficiency rates, even withmessing up a whole bunch of
(07:23):
stuff and screwing things up,the margins were better.
So the industry, as it getstighter, forces you to become a
better business owner, likeevery industry, because
competition I mean it just makesyou have to be leaner and
meaner.
So as we started learning thatour margins are going down, as
we kept scaling up, our netprofit was going down.
So we're getting bigger andbigger.
We're looking more sexy tobanks and more sexy to venture
(07:44):
capitalists, but we weren'tbringing as much home.
And then we actually went tohaving a couple of downturn
years from 2020 to 2023.
We lost money in scaling andthose were our biggest years.
And so we learned a lot oflessons with regards to how many
managers it takes and how manyoffices you can run and all the
different mid-level managers.
(08:08):
You have all these giantpayrolls that start sucking up
all the GP right, because whenyou're writing a scope, whether
it's Xactimate or Solitaire, youhave labor and materials.
That's what you're sellingright At the bottom line.
You have your profit andoverhead.
All your office staff is justfeeding off of that, right.
So you've got projectcoordinators, project managers,
estimators, marketers, officestaff, ar, ap all of them are
feeding off of that sameexactimate scope, right.
(08:28):
And you you think you're goingto make money.
You were making money when youwere the ar person, ap person.
You had two trucks.
You could keep all that.
Right now, as you scale up alittle bit, estimate hasn't
changed.
You just got to do a shit tonmore of it now at volume to make
up for it.
Otherwise, if you're stuck inthat mid-level spot, it's almost
like a death sentence becauseyou're not making enough gross
(08:49):
volume to justify the jump inthe amount of payroll.
It takes an HR division, allthese different divisions.
When you go from 20 employeesto 50 employees, 50 employees to
80 employees, 80 employees to100, everything's a milestone
leap.
That involves infrastructureand additional teams, additional
managers, and all of that youdon't take into consideration
until you're in it and you know.
(09:09):
And then I think I always saywe're controlled by volume.
So if they say, if you're aheavy tpa, um restoration
contractor, like we are, we haveso much opportunity and they
call us up hey, can you takethis territory, can you take
that territory?
We've got all this work andthey just keep feeding your work
.
Well, that that's controlled byvolume.
It's like you talked aboutearlier.
You're chasing that new shinynugget and you're not paying
(09:30):
attention to your business.
You're being a yes man or a yesperson chasing after that new
dollar while you're just lettingRome burn behind you.
It's this carnage behind you.
You're chasing it because allof us are salespeople at heart,
right, that's why we got intothis.
We all love that dopamine hit.
But what you realize?
(09:51):
So so I mean, I'm the same way.
You look back and go, oh, holyshit, like all of this, all this
more volume, has made me a badbusiness owner and you know, so
opportunistic.
I want to go after it, but Idon't have the infrastructure,
so we're squandering it.
So that we had to, really, youknow, and we had, we call, we
call that right relationshipreview.
We started going over what TPAswork for us, scaling back and
then start building theinfrastructure to support the
different programs and differentvendors and different, you know
(10:12):
, because every vendor isdifferent, and if you can't do
all that, you really have yourteam spinning in circles.
Speaker 2 (10:18):
So here's a what I think is a tough question,
because I don't think anybodyreally has the concrete answer,
because every business is sodifferent, but I want to get
your take on it.
Speaker 3 (10:29):
Yeah.
Speaker 2 (10:30):
When is the right time to scale Right?
Because, again, even as anowner operator, I mean it's
you're keeping a hundred, butbasically, for all intents and
purposes, you're keeping ahundred percent of the money
right.
You send out a $30,000 invoice,you whatever you know, you
(10:50):
cover your assistants, you knowwhoever was helping you on the
project, whatever material costsyou had.
For the rest, for the most part, you're pocketing the rest of
the money right, which is whereI think a lot of people in the
beginning they're like holy shit, I just won the lottery.
I do a few projects a month andwe're kind of here and there's
truth to that.
(11:12):
Actually you start gettingbigger and you start hopefully
your days are packed and you'rein high demand and you're like,
okay, I need to start bringingpeople on.
But at what point is there ametric?
Is there a number?
Is there a percentage?
Is there a dollar figure thatbusiness owners should look at
and say, okay, are we reallyready to scale?
And what kind of mental shiftsdoes the owner need to take?
(11:33):
Because, again, going back toyour point, every time you scale
and you bring on more people.
You have more responsibility,more weight on your shoulders.
There's less money.
That's going to you right,correct?
Responsibility more weight onyour shoulders, there's less
money that's going to you rightCorrect In a roundabout way.
You have to be really reallycomfortable either with your
existing lifestyle and knowingthat more money is coming in but
(11:54):
you're not really going totouch that money Exactly.
Talk to us about that.
Speaker 3 (11:57):
Sure.
Well, there's a couple of goodpoints in there.
I'll see what I can do todecode that a little bit.
So I would say in the beginning, when it comes to scaling up, I
mean, for us it was opportunity.
So I started scaling based offof opportunity.
There was a need in theindustry.
We were getting more leads,more leads than I could get to.
So I know what my operationalcapacity is.
So let's just go over laborefficiency rate.
If you're an owner-operator,your labor efficiency rate is
(12:19):
insane.
You're probably 100x multiplierbecause you have all the
initiative.
It's on you, you.
You're the man right.
When you bring on managers, whatdo you expect their labor
efficiency to be?
So for me, you can only do somuch in a day.
So, like when I was driving mytruck, I couldn't go to more
than 10 jobs a day.
Even writing scope on site.
Even being a bit trying to be abad-ass like that was
exhausting and that takes a tollon you.
(12:40):
That takes a toll on yourfamily.
You know, if you're workingweekends, you're doing night
calls like it's.
It's taxing.
So there's no way to stay asingle shop and do all that at
scale.
And do you know and thinkyou're going to do more than
like a million dollars ofrevenue and there's nothing
wrong with a million dollars ofrevenue whatsoever but like
you're just not going to do thatalone, without you know, five
or six technicians and yourself,maybe one office staff, you're
(13:01):
gonna, you're burn out.
So for me, it was theopportunity.
I wanted to scale, wanted toget into more areas, wanted to
get bigger than that, and thenalso wanted to have time for my
family, because we all read thebooks and we always have this
pipe dream of I'm going to buildthis and I'm going to sit back.
You know what I mean.
So we're all chasing, like, oh,I've been doing this, you know.
(13:22):
So I, the first 10 years, Ijust grinded.
I mean, I was in the fielddoing inspections, and then I'm
like man, I got to, I want tostart becoming, I want to be an
entrepreneur.
Now I want to want a business,I want to be a CEO.
And then you start shiftinggears right.
You start hiring people.
My first mistake was hiringpeople thinking they're going to
be the next me, peoplerealizing that they're not going
to do the same amount of workas you, so now their labor
(13:43):
efficiency rate is different.
And then also with regards totheir bonus, how much work they
can get done, their efficiencyrate.
All that is difficult whenyou're an owner-operator and
you're expecting someone to be aminiature you.
That just doesn't exist.
So we call them KFFMs keyfunction flow maps.
With regards to what I expectan estimator whether it be a
write and run, which is aproject manager, estimator combo
(14:05):
, or a project manager andestimator separate.
They have a KFFM and, based offtheir salary and their bonus
request, we pump in the numbers.
It tells them what their grossrevenue needs to be, what their
net profit needs to be, how manyjobs they need to do, what
their cycle time needs to be.
All of that shit pumps it outand they have to sign it.
And's just been a very recentone, I, but we've done and it's
been freaking pivotal for usbecause I could hold their feet
(14:27):
to the fire.
Because, as you know, whenyou're interviewing people, if
you're an owner operator,everybody coming to you just
jump ship into the company andthey all, they all interview
great, I could do it all.
We all, we all know thecautionary tale.
How many people jump ship andthen, in this industry
especially, it's a, it's arevolving door of the same guy,
different shirt.
We all know the guy.
They jump around fromrestoration company to
restoration company.
(14:47):
They go over here, getcertified, take that
certification.
Go over here, get a pay raise.
It's a very tumultuous industry, right?
So for me, having those numbersset up and holding them to the
fire in the first 90 days waspivotal, and we weren't doing
that.
First 90 days was pivotal andwe weren't doing that.
So back two, three years ago wewe had they had over over 10
in-house estimators and wehadn't figured out the KFFM yet
(15:10):
and these guys were just, theywere just not even close to even
breaking even and it took ustoo long to catch up.
So we burned through all of ourcashflow by making those bad
decisions.
So my big no-transcript, right?
(15:59):
So, like you know, all theanalytic programs we're using
that runs Microsoft Word, thatblends QuickBooks with Xactimate
, with Stash Solitaire, with JOC, they're all there now, like a
few years ago, we had to go outthere and seek them out and we
found them.
Now they're like right in yourface.
So I'd say, go there, talk tothe guys that are talking about
analytics, all the boring tradeshow people that have to have
(16:20):
all the boring iPads up to showyou how to run your business.
Speaker 2 (16:23):
Those are the ones you want to talk to those are
the ones you want to talk to.
Speaker 3 (16:26):
That's how you run your freaking business.
Everybody wants to go.
Look at the new moisture meterand the new dryout machine and
the new semi truck.
Screw all that.
You don't know how to run yourbusiness.
Speaker 2 (16:40):
That's always been ludicrous.
I mean, and you know, there'sso many, there's so many people
in the industry to talk aboutthe equipment it's like, and
they, they bore.
Oh my god, like the equipmentit's like nobody gives a shit
about it in theory like yeahmaybe it's a little bit more
efficient, but like it's notgoing to move the needle enough
correct you really need to havesystems in place.
Yes, and understand the movie,the mechanics of your, and
understand the mechanics of yourbusiness and the mechanics of
(17:02):
your personnel and the mechanicsof your management team in
order for you to becomeefficient.
Speaker 3 (17:09):
Even to go backtrack a little bit.
So you say you're anowner-operator, you don't have
the infrastructure of all that.
You got to figure out yourlabor efficiency rates.
So you can go even Google, lookat basic construction trends to
see labor labor efficiency rate.
Is it 20x?
If 15x is 30x, what are youpaying your guys?
You're paying your guy 35 bucksan hour.
Is he a 20x employee?
Technician is he a 10x employee?
(17:30):
What's the median?
If you don't even know that?
You don't even know.
But you don't know if yourtechnicians are a baseline.
So if you don't know that yetand you're an owner-operator,
I'd start there.
Do you know?
Are your technicians a C-rate,B-rate player, A players?
Where are they at?
Are they just a body with apulse?
I mean you need to know.
But before you scale from there,if you're starting with that,
(17:53):
like that's how mostowner-operators start with
technicians, then they usuallyorganic growth.
Is you hire a project managerthat now takes on that portion
of it?
Right, and most owner operatorsusually dabble in estimating
and back office and the PM runstheir projects and the same
employees that used to work foryou now work for your PM.
Well, you better have the rightemployees in place.
Otherwise you're going to have,you know, a whole bunch of
(18:14):
issues just right there in thebeginning and then turnover
ratio there.
And you don't want to haveturnover ratio when you hire a
new project manager because nowhe has no one to run Right.
So I would start with yourlabor efficiency rates and just
doing basic stuff like that.
You can just do them off ofGoogle spreadsheets and then
same with the same with theproject manager too.
Speaker 2 (18:33):
One of the I think this is kind of a good segue
here is you know talking aboutscaling.
Obviously, good segue here isyou know talking about scaling.
Obviously, in our business youscale when, when you scale
regardless of what you do on amarketing side, right, or
regardless of whether you signup with traditional programs and
you start getting all of thesecalls and all these leads, you
can't be just a one man show,right, or you can't even when
(18:55):
you scale.
You need people in thisbusiness.
Topics for a very, very longtime, and I think it's always
going to remain hot, is howdifficult it is to find good
quality personnel.
Oh, yeah, talk to us about thatand talk to us about what you
feel the labor market landscapelooks like and what's required
(19:17):
nowadays from a, from anemployer to you know, to to
really bring in and to create anattractive environment for a
good quality employee, because alot of employees don't want to
work now for 15, $20 an hour.
I mean it's very difficult tomake a living, you know, at 15,
(19:39):
20, $25 an hour right Correct,especially if it's a family man,
or whatever the case may be.
Exactly so that clearly puts alot of pressure even on the
company right.
Because hey you want to getgood quality people.
Well, you need to have a goodcompensation package, right.
Speaker 3 (19:54):
Correct, absolutely.
Speaker 2 (19:55):
Talk to us about the general labor market and where
an organization needs to be inorder to attract those top
players.
Speaker 3 (20:02):
I mean so in the labor market.
With regards to actual skilledlabor in the field, we know that
the price has gone, hasskyrocketed, minimum wage has
skyrocketed.
I'm here in Northern California, so I mean $15 an hour doesn't
even exist in my world, like itsbaseline is $20 minimum and
then from there it goes up.
(20:23):
So for us to find good skilledtechnicians, actually what we're
looking for mainly is peoplethat have IT experience with
regards to how to run iPads,their iPhones, laptops on site.
Everything now is all techie.
So the old school guys that comein, all the abatement guys that
can't run tech, they have a useto me, but they're not the next
generation.
I want technicians that can doeverything remote on site,
because that's part of the laborefficiency rate.
So when I'm looking for newtalent, I'm looking for people
(20:45):
to have some kind ofconstruction skills, also some
basic computer skills, obviouslyclean driving, record, all
these things, and also theemotional intelligence to deal
with clientele that can also goat a job site and also make the
homeowner feel happy, and that,to me, is the most important
part.
A lot of these guys have theskill set, but they're too rough
around the edges and there's atime and place for that.
Most of us are in people'shomes while they're still there,
(21:07):
so we're looking for peoplethat fit the mold for that as
well, and we have a whole HRteam now To do what most
companies are trying to do,which is basically polished
turds which is basicallypolished turds, correct, exactly
, exactly.
And that's where the laborefficiency rate comes in.
So for us, for our HR team, wehave them come in.
The same thing we give themtheir labor efficiency rate.
(21:28):
So we give them their bidsheets.
And same thing.
It's a three-month trial period.
So it's baptism by fire.
We send them out there.
If they say they can do watermitigation they have their certs
we send them out.
Manager oversees them, checksin on quality control, sees if
they're doing it as per ourstandards.
If they keep faltering overthree times, we cut them.
(21:48):
But like it's a constantrevolving door.
So I mean we've had techniciansthat have been here 15 years.
We have had technicians thatlast two weeks, it's just so.
I mean you're always going tohave that.
As you're scaling too, you'regoing to have both of those.
And you also have predatoryemployees.
We've had.
We've had our first class actionPaga case, where we hired
people and they're literallytrained and they come in here
(22:09):
predatory, to try to sue you andyou don't even realize it.
And as you get bigger, when youget over 100 employees, you
become a target and thenattorneys seek you out because
they.
So that's a very dangerous spot.
We learned the hard way on that.
So that's a whole notherepisode right there, exactly
(22:29):
exactly.
But you know, for me, my hrteam, I gave them basic always.
Obviously we can do the clichethings.
We have our core values and ourcore purpose and like our core,
we say we're gonna hire andfire based off of our core
values.
So our hr team goes over ourcore values and goes over our
work ethic, tenacity, hard work,being being, you know, humility
.
Do these things appeal to you?
And that they say yes, and thenyou know we usually bring them
(22:51):
on.
Speaker 2 (22:51):
But like we look for red flags, obviously yeah, the
general responsiveness to thejob market, though how have you
seen that over the years?
Do you feel that people arelining up at the door like
several years ago, or do youfind that the younger talent,
frankly, is more concerned aboutjust making money?
Speaker 3 (23:11):
online?
Oh, 100 percent.
There's a giant generationalgap between people who are
looking for jobs now it seemslike, and there are a few of the
next generation that areactually workers, but it's not
the norm.
So in general we have a hugegap.
Most of our technicians areliterally almost senior citizens
and then we have them late 30s.
(23:33):
But looking for new up andcoming out of high school hardly
any applications whatsoever.
We go to the colleges, we dotheir college days there, we
sponsor it.
High school hardly anyapplications whatsoever we've
got, you know.
We go to the colleges, we do,you know, their, their, their
college days there, we sponsorit.
We get hardly any.
Everybody wants to be anengineer.
Everyone wants to sit behind adesk.
Everyone wants to be anarchitect.
There, no one, no one says Iwant to go pound a hammer and
like, but and when I, when I dospeaking gigs and stuff, I tell
(23:55):
everybody I'm like you'remissing out on a huge market
because there's a wholegeneration of people that don't
have to do shit anymore so thatI'm all.
You make more money poundingthat hammer.
Now I mean, so then you'regoing to be sitting at a desk
because you, uh, you have acommodity that most people don't
have.
You can fix things and that'swhy I think trade schools are
super important.
Um again, for for kids comingout of high school, because you
(24:16):
can make a great living comingout of high school being a
plumber, hvac, single, tradeperson, because you are a
commodity, you're not the norm.
Speaker 2 (24:25):
Yeah, no, exactly.
I think eventually, what'sgoing to end up happening is is
that you know that pay ratependulum is just going to swing
to where, if you are skilled,labor that quick and easy
hundred thousand dollar,$150,000 a year job is going to
be in the trades it's not goingto be the office job anymore.
Right, it's not going to beit's like holy shit, I got my
(24:45):
bachelor's degree.
Speaker 3 (24:47):
Exactly Basically guaranteed a position now.
Speaker 2 (24:49):
That's not going to happen anymore.
Speaker 3 (24:50):
Yeah Well, perfect analogy of that is the minimum
wage for, like, all the fastfood places there.
But it's like, oh, butcelebrating minimum wage being
raised with celebrating minimumwage being raised.
Well, all of us that arebusiness guys and entrepreneurs
knew we're like they're phasingthemselves out of the market.
Now you look at all theseplaces that are all just robots.
Well, they literally signedtheir own death warrant by
wanting this pay raise.
You think that these giantfranchises that keep paying
(25:10):
these rates they're going tofind out a way to make it
obsolete completely.
So now that whole.
Pretty soon, the next fiveyears, fast Food will probably
be mainly 80% automated.
So all those jobs are gone.
Speaker 2 (25:23):
All those jobs are gone.
You go into a McDonald's now,which I don't recommend.
Many people go into McDonald's,but if you do, you'll notice
it's like you've got one personbehind the counter, and then
you've got four kiosks, right.
Speaker 1 (25:32):
Yep Bingo what is?
Speaker 2 (25:34):
it Checkers or rallies or depending on where
you're at.
I think there's a companythey've got.
If you go through like theirdrive-through, it's a hundred
percent ai, that's wild robot,that talks to you and it takes
your order and which, by the way, it is the perfect employee.
It asks all the right questions.
(25:55):
Would you like to wear theirversion of super sizes?
You know I had bacon.
Would you like to wear theirversion?
Speaker 3 (25:58):
of super sizes.
Speaker 2 (25:59):
Would you like to add bacon Would?
You like a milkshake, likeevery single customer.
It's asking those questions,like if you can train the hell
out of an employee to say, hey,every time you get a customer,
make sure that you ask them foran upgrade for a dessert, and if
they'd like a shake, they'llprobably do that out of a
thousand times.
They'll probably do that 60% ofthe time.
(26:19):
Oh, if that, yeah, right, likeyeah, yeah, sure, sure, yeah,
you've got this system thatautomatically is just taking
your order.
Speaker 3 (26:29):
It takes it perfectly .
And more 100?
Speaker 2 (26:30):
yeah, it's probably increasing your ticket.
Speaker 3 (26:32):
Your average order value oh, absolutely doing the
thing every time.
It never misses.
Speaker 2 (26:37):
Yep, so it's like you know, you look at this stuff
and you look at the landscape.
You're like holy shit, yeah,you guys are really phasing
yourselves out of the marketcorrect yep what does that do?
Right, like what.
What does that do?
Speaker 3 (26:47):
and again, I think it really does present an
opportunity, for you know thatpendulum swing I, I agree, and I
think it's going to shift backto to um, to the trades again,
because those are a few of thethings that have that automation
is still far, far away from.
So.
I mean even projectcoordinating, project managing.
So much ai technology andoutsourcing is happening.
Companies like ours areutilizing every possible way to
(27:10):
not pay the amount of the payrate we have to pay in
california even for a projectcoordinator, project.
Go back, you know a 75, 80 000salary for somebody who takes
notes is no longer attainable.
With the same exact to make bidsheet, you know that person
used to be 55 000, you know,five years ago.
Then it's 65, now it's now it's85.
Like you're damn, you're at ahundred thousand dollars for an
(27:32):
admin position I can outsourcefor probably 20 000 or an end up
for you.
I could probably automate itfor free, right.
So and these, so these are thekind of you know, desk jobs that
are going to be going away.
So now you know it's acautionary tale, but
unfortunately business is roughand like you can't go out of
business, you feel bad forpeople, but in general, at the
end of the day you have to keepthe doors open.
(27:52):
You got to do what you got todo so.
Speaker 2 (28:04):
A hundred percent, A yeah 100%.
Let's talk about.
You said that your company isTPA heavy.
Talk to us about yourperception of any potential
pitfalls on being so TPA heavy.
Yeah, sure, and mitigate thatright.
Yep, and this is again.
This is one of those storiesthat it's not exclusive to you,
it's pretty much everybody inthe business right, oh yeah,
correct.
Speaker 3 (28:21):
Yeah, it's pretty much the norm now, so kind of
give us your view on that.
I mean TPA when it first cameout was like the best thing ever
, right, because it wasguaranteed work, they were up
and coming, all the insurancecompanies wanted to go with them
.
It was literally just like yourgateway into getting just tons
of work, as long as you couldfollow their compliance.
As you know, it shifted fromthat in the early days to now
(28:43):
this over-regulated, red tape,bureaucratic nightmare where you
have multiple layers ofmanagement all chipping away at
your profit margin, all cutting,and you have to hire teams
inside of your company.
For us at Lawton, if we want towork for a certain TPA say
they're very strict we've got tohire project coordinators that
know just everything about allthe regulations just to get an
(29:05):
estimate approved.
So I've got an estimator, aproject coordinator and a PM
that know how to work with thisTPA and the amount of admin work
.
So a $3,000 scope probably has30 to 40 notes, maybe 15
revisions.
That means my estimator istouching that thing 15 times
average of a couple hours.
You're spending a couple ofweeks dicking around with a
$3,000 estimate, whereas beforeit was boom, boom like one and
(29:30):
done, and so the naturalprogression of that has been we
kind of got to a boiling pointjust recently.
I think a lot of restorationcompanies are jumping ship and
we had to take a look back, likeI said earlier about right
relationships, with regards towhich tpas are working with us,
that are working side by sidewith us and not against us.
Because in our industry wenoticed, like, as a contractor,
(29:52):
all for some reason, like we are, we're demonized.
For some reason, even though weare the ones restoring, we're
the only missing piece.
For some reason, even though weare the ones restoring, we're
the only missing piece.
For some reason, we're the onesthat are always being gone
after as being predatorial,charging too much, but literally
it's the opposite, it's beingnickel to dime the other way
around.
Your estimate for $3,000 has anupload of 8%.
(30:13):
You got to pay 8% to a TPAmiddleman and then from there
then the adjuster takes that$3,000 estimate, chews it apart,
takes it back down for $2,600.
And then you have to take 8%off of that and you're going
back and forth as your officestaff and overhead is working
there, not making any money,just fighting over that scope,
back and forth, office staff,admin time, and you start
realizing you go.
This is insane, the amount oftime and effort it takes to get
(30:35):
this done.
You realize that at scale iskind of how you go out of
business and we were doing over$20 million just last year in
just TPA and we lost our assbecause the amount of admin
staff it took like we we hadlike over over 20 office staff
to do that and the margins arejust shit Right.
So that's why so my caution andnot getting better.
(30:56):
And, like I said, honestly, itkeeps the doors open.
It keeps your.
I'm not saying not do it, justdon't make it your only
wheelhouse, because putting allyour eggs in one basket, that's
not your way to success andfreedom.
That keeps your guys busy,keeps consistent work coming in.
It's a great avenue to havewhen things are slow, of course,
but you got to spread out pastthere because it's to me.
It also teaches you to run asloppy company.
(31:20):
I built my company around TPAregulations and not around how
to build my company to makemoney.
For years we worry more aboutapprovals and timelines and
upload scores and cycle timesthan we did about profit first
and about customer service,because our customer was the TPA
, our customer is the adjuster.
(31:41):
We got to make everybody happy.
It's miss smith and the tpa andthis person who want everybody
happy and they're never allhappy, right, so so so my
cautionary tale is you build aninfrastructure around that.
It teaches you to be a badbusiness owner because your
labor efficiency rate is shitlike you make, if I told you.
I told you I had a businessmodel for you and you had to
hire former office staff, butalso it's less money you can
(32:01):
make over here.
You tell me to take a hike,right, but for some reason all
these restoration guys go oh,how much work do you have?
Oh, I can't wait.
Oh, I mean, we get all excitedbut we don't realize we're being
controlled by volume.
Speaker 2 (32:13):
We're not going to make money at that if all we do
is that because theinfrastructure takes too much
right it's the busy so, yeah,it's the busy work, correct it's
the busy work and a lot oftimes like people confuse being
busy with being efficient orbeing bingo.
Speaker 3 (32:26):
It's great.
Yeah, with making money correct, exactly it's like well, great
well, hold on.
Speaker 2 (32:30):
Let's take a step back here, but are you making
money and this?
Speaker 3 (32:33):
is correct now in the industry it's kind of like whoa
, yeah, out, I mean, and we losta lot Talk about retaining
staff, we lost a lot of managers.
So they wake up in the morningto nothing but emails, escalated
emails, revision emailsescalated, and like their heart,
like your heart rate is like ata huge high level because you
(32:54):
feel like the world's collapsing, because everybody wants this
stuff done now and it's likevery demanding, it's very and
it's all above the tree linelike all these little items that
might be adjusting base servicecharges but it takes, it sucks
up your manager's time.
They have no time forexponential thinking, no time
for sales, no time for customerservice.
They're just at their computer.
Try not to get yelled at bywhatever TPA or adjuster is
(33:16):
sending out their next revisionor they're going to cut us off
or you know, we receive theemail.
If you don't get these uploadedtoday, we're shutting you off,
like it's always height, heightand flight, like and it wears on
you, it wears on your team anda lot of guys and we lost a lot
of managers saying that we won'tdo it.
And I I've been doing all theinterviewing now from and I have
pms that'll send out theirresumes and they'll state right
(33:37):
on there no tpa.
I've actually been seeing thaton the resumes now I was like
holy shit, I've never seen that.
But I've seen some guys thathave been ops managers for
bigger companies that burnt out.
They just know they want towork B2B.
They don't want to work withTPAs, right.
Speaker 2 (33:56):
So that's one side right.
So how are you offsetting that?
What kind of offsetting actionshave you put into place to kind
of get some of that direct, youknow B2C type business?
Speaker 3 (34:09):
Yeah, I mean.
So we started brick and mortarwith hiring a couple marketers
to really go after propertymanagement.
My ops manager was reallypushing for us to diversify a
bit and so our first main coursewas going after GC contractors,
property management companies,stuff that's already symbiotic
to what we're doing and justtrying to get out of that
wheelhouse.
We had some pretty decentsuccess there and like the real,
(34:30):
the real thing is getting yourfoot in the door and like we
started writing what's calledemergency response programs.
So you go to a propertymanagement company with
emergency response program andobviously they've been pitched
by 10 different companies, right, so you got to have a really
good marketing person to go inthere or even go speak yourself
and try to get, try to get thosedoors open.
I think really honestly dependson where you're at in
(34:51):
california.
Man, I'm gonna be dead on it, Idon't want to get sued, so I
choose really good.
So I mean I mean we're in a suehappy state over here.
So I think the whole um, themarketing with regards to which
I mean obviously law ofattraction, it's it's good to be
charismatic and good looking,but if you're just sending out,
you know a bunch of, uh, reallypretty people that have no
(35:12):
industry experience, you're notgoing to get very far.
So I mean I like to have peopleactually have industry
experience.
I like my sales people actuallycome from construction a little
bit, I mean, because otherwise,so they go pitch something.
Yeah, they go.
They go to a party magiccompany, they go.
What about this?
They'll be like oh, here's ourpamphlet.
Like you like wine, like likeI'm like shit?
(35:36):
I mean, exactly, you gotta atleast get your foot in the door.
So we started there and thenobviously, as you know, we we
linked up with you and you'vebeen super helpful, helping us
on the seo piece, which has isthat we're super old school.
I know I look younger, but likeI was trying to keep that under
wraps.
Speaker 2 (35:49):
I didn't want to know Promotional piece, now that you
kind of put that out there.
Speaker 3 (35:55):
I mean I'm ready and I know.
Speaker 2 (35:59):
Is a marketing client of ours, and let me just give
you a quick shout out.
A quick shout out, brett,because look A, I've done a fuck
ton of podcasts and I've gottento peek behind a lot of the
curtains of some of thecompanies that have been that we
perceive to be extremelysuccessful, some of those that
we perceive to be not sosuccessful.
And then my line literallyblows up and my email is blowing
(36:23):
up every single day, withpeople just kind of saying hey,
can you help me with marketing?
Speaker 3 (36:27):
And.
Speaker 2 (36:28):
I'll tell you one thing that really separates you
and your caliber of individualas a business owner is we jumped
on the phone on a zoom call andI was like, hey, brad, this is
what you need.
You need A, b and C.
You're like, let's fucking doit.
(36:48):
Let me get back to you.
It wasn't a let me think aboutit.
It was like I'm not sure itwasn't 35 different questions.
It was like right there on thespot, attacking the action and
saying, okay, cool, this is,this makes sense, let's, let's
move forward.
And that, to me, this, this isone of those things that, as a
business owner and as someonewho has gotten tons and tons of
(37:11):
applications from the marketingside man, I've spoken to so many
of these business owners andeverybody wants the exact same
thing.
Everybody wants more business.
Nobody, very, very few people,are willing to do what it takes
in order to get there.
It's the growing pain, it's thefear of what's on the other
side, and one of the things thatI appreciate about you and your
organization, it's like, hey,look what needs to be done,
(37:33):
let's do it and just moveforward and I think as a CEO,
that's your job when you get toa certain caliber.
Speaker 3 (37:39):
It's not to sit there and micromanage, it's to make
the big decisions quickly and Ialways like that the death by
meeting book as well.
Like you can sit there andoveranalyze something.
You just want to get the bottomline.
I'm the bottom page kind ofperson.
The rest of my team lives inanalytics.
I like to live in the verysmall section right there and
just make it actionable and thenhold people accountable.
That's really it.
Basically.
Speaker 2 (37:59):
It so um, and then we've been doing route marketers
and, uh, real quick cause thisis kind of a topic about what
some of the best methods are, uh, to really maximize, um, your,
your route marketers, or yourbusiness development team, or
whatever it is that your jobtype for them.
Um, you and I have spokenbriefly about some of my
philosophies and my ideas abouthow you can maximize that Cause
(38:22):
again.
X amount of hours in the dayyou can only share hands and
kiss so many babies.
Speaker 3 (38:26):
Exactly.
Speaker 2 (38:27):
There's some really cool automated things that you
can do on the backend, but sofar, in your experience, what do
you feel are some of the mosteffective ways to leave a
lasting impression and tocontinuously circle back around
to these people?
To?
Romance them for lack of abetter word to say look, this is
the company that I want to dobusiness with.
Speaker 3 (38:46):
Yep, I mean in the early stages.
We've had our first marketinglady.
She was doing a great job, butshe was going out to too many
different companies.
We had probably 600 differentleads in our CRM software and it
wasn't really producing muchand so just like too much TPA
work.
The right relationship is whatyou need to go after.
Okay, where do I have an inwith these certain companies?
(39:06):
And for us, our size company,has actually been networking
even with my in my network.
So, being a local entrepreneurand being in different
entrepreneur groups and I'm alsoI'm also a member of EO and my
chapter forum I get front dooraccess to a lot of other elite
business owners.
I've used that as a gateway in.
So some of the bigger productmanagement companies I've gotten
are actually in differentforums and they meet with me.
(39:29):
I deploy my marketing team Ialready have a direct line and
I'm more of the.
I kick the door in and then myteam goes from there and then
from there, that relationshipdoesn't take 15 phone calls
because it'd be like me and youtalking.
You know me, I know.
You see your propertymanagement guy, you like me,
you're going to give me a shotas long as I don't fuck up, I'm
(39:49):
already there.
Versus sitting at a marketer, acold call.
It's like a 1 in 100 chance ofhaving that work right.
One-on-one relationship andfriendships are usually 90%
success.
So some of our bigger propertymanagement companies have
actually come that way.
And then from that, from that,that guy like, so that you have
a big wig CEO at a big propertymanagement company.
(40:11):
Well, guess what?
He knows other managementcompanies.
So now you use that as agateway into the next.
All you, if you're, if you're asmaller shop, you're doing less
than 20 million.
All you need is five or sixbigger property management
companies.
If they got 500 plus storeseach, that's a lot.
You don't need as many as youthink if they actually produce.
And that's the rightrelationships part.
(40:33):
And so we went from having ourmarketers just do overall
marketing to being sales repswhere they handle the whole
account.
So I shifted our first marketersentire sales package based off
of basically, you eat what youkill, so it's not, it's not just
go out and you do it all you.
You find a company that's yourcompany, you keep that company,
you're, you're the pr person forit, you're the after out, like
(40:54):
that's yours.
And if you get that.
You get a profit.
Share off that entire account,whether or not they call you or
not, to every office, if they're, if they're in nevada and east
bay, whatever they're at.
You get a piece of that, aslong as we keep the account nice
.
So, whether it be like mercy,housing or you know anything,
conrad or a different federalcontract, if she grabs that that
she gets to keep it and then.
(41:14):
So now I don't have her going athousand spots she can now do a
route of 20 versus a route of200.
Yeah, so I would.
I would say yes, exactly.
I would suggest that first andas a local business owner,
you're the gateway in first,like you're the dude, right, I
mean your marketing team.
I don't care how attractive orhow great they are, at the end
(41:34):
of the day they got to like yourteam.
So for me the gateway was me in, and then from there, marketing
team backing it up and thenfrom there our actual workers
being able to do what they saythey can do.
So that's one avenue.
And then I went in every avenue.
I hired another marketingperson and he comes from a
government, federal backgroundand he already knows that
(41:54):
wheelhouse.
So as you grow in business.
You can't know it all right.
So, like, if I want to go intoa new market, I'm not going to
learn it myself, I'm going tohire somebody that says they can
do it.
I'm going to to, I'm going to,but I'm going to write them a
KFFM, I'm going to write them abusiness scale, how long they
had to do it.
They sign it and then you showme if you're the man.
You show me you have.
You have 90 days to prove it,or six or six, or whatever six
months, whatever it is, and thenthey go out there and they
(42:15):
prove it to you.
So that's.
I look for marketing experienceand whatever fact, whatever
area I want to get into, that Idon't personally know yeah, yeah
.
Speaker 2 (42:25):
So obviously we covered a lot of ground, um,
yeah we did you know we, wecould probably do.
What is it that you that Ididn't cover, that I didn't ask
that you really wish that morepeople within the restoration
business knew, or at leastthought about and contemplated?
Speaker 3 (42:43):
I mean I think, when it comes to scaling up, and with
regards to my I mean I thinkpeople within the restoration
business new or at least thoughtabout and contemplated.
I mean I think, when it comesto scaling up and with regards
to, I mean I think, focus onyour education.
If you're a younger owner,business owner, like when I
started out, young, you havenothing but energy and time.
Which you lack is experience.
As you get older, you got abunch of experience, but you're
tired, you're cranky.
You know what I mean.
Like as you get, get older,like you just don't have the
(43:04):
same pep on your step.
So if you're a youngentrepreneur, young business
owners, use that to youradvantage.
Soak up as much knowledge aspossible.
Read the right books you know.
Read, read scaling up, read.
Read the e-myth like there's,there's so many good books out
there.
Yeah, profit first, and thoseare ones that you know people
don't think about.
It's like you.
You get so built in yourbusiness.
You you're taking all thesedifferent ideas like there's
(43:25):
some basic business principlesthat if you follow will, will
echo through time.
I don't care how the book waswritten in the 70s or written
last week.
There's a certain principlesthat you should never falter
from and profit first.
A huge one about that.
If you can't keep a little bitof profit every single month in
your business, then you knowyou're running a business wrong,
right?
Um, like, unless you're vcbacked or you're being acquired
(43:46):
by someone or a bunch of capitaland you're in a scaling, but,
like, that's not the norm, right, if you're the normal brick and
mortar with its own set of apps, absolutely, absolutely, yeah,
sure, exactly, well, yes,there's gonna.
I mean, there's a honeymoonperiod and then there's a
divorce.
Speaker 2 (44:04):
Yeah, pretty much that's kind of how it works, you
know yeah awesome man, so cool.
So let me ask you this if, ifanybody listening anybody you
know who's watching to thepodcast uh, they're like man
brett just seems like one of thecoolest guys I've ever seen.
Um, they want to go ahead andreach out.
What's the best way?
For them to reach out to you.
Speaker 3 (44:24):
I mean, they can email me, they can go on my
Instagram.
It's Brett underscore LCR.
I gave you the link to myLinkedIn page as well, and
that's all going to be, by theway, Dominators.
Speaker 2 (44:38):
All of Brett's information is going to be in
the video description below, aswell as in the show notes.
Final thoughts Brett, Anythingelse that you want to go ahead
and leave us dominators withSome additional food for thought
.
Maybe an additional nuggetthere.
Speaker 3 (44:51):
I'm trying to think Honestly, I can't think of
anything.
I think we went over almost allof it, but I wish I had a final
punchline for you.
Speaker 2 (45:03):
That's what happens when you cut a lot of ground.
Speaker 3 (45:06):
Exactly yeah.
Speaker 2 (45:07):
By the way, for those dominators out there, every
time that I do speak to BrettBrett's an extremely busy guy.
I'm busy, so we don't get toconnect probably as much as we
would like, and we enjoy thiscompany, but every time we talk
it's literally at this speedExactly, I know right.
Which is totally amazing,that's awesome.
At this speed Exactly.
Speaker 3 (45:27):
I know right, that's awesome yeah thanks for having
me.
Speaker 2 (45:28):
Thank you so much for taking the time out of your day
sharing with us your story inthe restoration.
Speaker 3 (45:32):
Absolutely.
You're amazing.
It was a blast.
Speaker 2 (45:34):
Your amazing growth and you know again what you're
doing inside of yourorganization is absolutely
amazing.
I'm super excited to be workingwith you guys.
Speaker 3 (45:41):
Absolutely.
We are too man Part of the team, so again, dominators.
Speaker 2 (45:45):
Make sure that you check out the video description
and the show notes below.
If you have any questions forBrett he's a super cool guy
Reach out to him If there'sanything he can help you out
with.
He most certainly will, andwith that, make sure that you
tune in for our next episode and, as always, hustle, hack
dominate.
I'll catch you guys on the nextone.
Speaker 1 (46:05):
You've been listening to Restoration Domination, your
number one resource for tips,tricks and hacks to help your
business grow.
Subscribe to our channel andfollow us for more Restoration
Domination, and follow our hostat Rico Garcia Jr on Facebook,
instagram, tiktok and LinkedIn.
Till next time, this isRestoration Domination.
(46:28):
Hustle, hustle, hack, hack,dominate, dominate.
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